Exchange Bank Announces Third Quarter Earnings Increase 5%

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Oct 19, 2016, 05:37 ET

SANTA ROSA, Calif., Oct. 19, 2016 /PRNewswire/ -- Today Exchange Bank (OTC: EXSR) announced results for the third quarter of 2016 with a profit after tax of $5.4 million, compared to $5.1 million in the third quarter of 2015. This represents an increase of $257 thousand or a 5% increase compared to the same period a year ago. "The increase in earnings for the third quarter is a significant accomplishment in this low rate environment that is posing a challenge to the entire banking industry. The meaningful increases we have witnessed during this past year in both loan and deposit volumes, are a result of the hard work and dedication of our employees, as well as the continued loyalty of our clients and support from the communities we serve," stated Gary Hartwick, President and CEO. The Bank singled out strong loan activity and the continued expansion of the Bank's Trust and Investment Management business as key contributors to the success in financial results.

The core earnings of the Bank are driven primarily by continued growth in loans which were funded by growth in deposits. Loan growth of $140 million or 11.3% during the 12 month period ending September 30, 2016 was funded by deposit growth of $127 million or 7.2%.This asset growth led to an increase in net interest income of approximately $900 thousand during the third quarter of 2016, a 5.3% increase over the similar quarter in 2015.

During the nine-months ending September 30, 2016, the Bank achieved net earnings of $16.05 million, compared to $15.9MM during the similar nine-month period in 2015. During the nine-months ending September 30, 2016 the Bank's core earnings as measured by net interest income increased $3.3 million over the similar nine-month period in 2015, an increase of 6.6%. Net earnings for the Bank rose by $144 thousand or approximately 1% year-over-year as this increase in net interest income was largely offset by the decline in the recapture of provision for loan loss which fell from $3.2 million for the nine-months ending September 30, 2015 to $900 thousand during the similar nine-month period ending September 30, 2016.

Exchange Bank paid a quarterly cash dividend of $0.70 per share on common stock outstanding to shareholders on September 16, 2016. 51% of the cash dividend goes to the Doyle Trust which funds the Doyle Scholarships at the Santa Rosa Junior College.

FORWARD-LOOKING INFORMATION:

The following appears in accordance with the Private Securities Litigation Reform Act of 1995:

This press release may contain forward-looking statements about the Company, including descriptions of plans or objectives of its management for future operations, products or services, and forecasts of its revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may."

Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors — many of which are beyond the Company's control — could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made.

EXCHANGE BANK
and Subsidiaries

Consolidated Balance Sheet
(Unaudited)

September 30, 2016 and 2015
(In Thousands)
			Change	% Change
ASSETS	2016	2015	16/15	16/15

Cash and due from banks	$ 31,249	$ 27,453	3,796	13.83%
Fed Funds Sold	31,507	78,702	(47,195)	-59.97%
Total Cash and cash equivalents	62,756	106,155	(43,399)	-40.88%

Investments
Interest-earning deposits in other financial institutions	78,500	71,000	7,500	10.56%
Securities available for sale	518,612	488,401	30,211	6.19%
FHLB Stock	10,015	9,036	979	10.83%

Loans and leases
Real estate	937,385	830,868	106,517	12.82%
Consumer	113,975	102,771	11,204	10.90%
Commercial	337,211	314,362	22,849	7.27%

	1,388,571	1,248,001	140,570	11.26%
Less allowance for loan and lease losses	(37,962)	(37,676)	(286)	0.76%

Net loans and leases	1,350,609	1,210,325	140,284	11.59%

Bank premises and equipment	17,372	16,133	1,239	7.68%
Other assets	81,404	69,701	11,703	16.79%

Total Assets	$ 2,119,268	$ 1,970,751	148,517	7.54%


LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
Non-Interest Bearing Demand	712,334	664,010	48,324	7.28%
Interest Bearing
Transaction	339,570	291,596	47,974	16.45%
Money market	262,923	234,811	28,112	11.97%
Savings	393,237	368,495	24,742	6.71%
Time	193,136	215,247	(22,111)	-10.27%

Total Deposits	1,901,200	1,774,159	127,041	7.16%

Other borrowings	8,000	8,000	-	0.00%
Other liabilities	22,801	14,777	8,024	54.30%

Total liabilities	1,932,001	1,796,936	135,065	7.52%

Stockholders' equity	187,267	173,815	13,452	7.74%

Total Liabilities and Stockholder's Equity	$ 2,119,268	$ 1,970,751	148,517	7.54%

EXCHANGE BANK
and Subsidiaries

Consolidated Statement of Operations
(Unaudited)

For the Period Ended September 30, 2016 and 2015
(In Thousands, except per share amounts)					Nine Months Ending
	Quarter		Nine Months Ending		Change	% Change
	2016	2015	2016	2015	16/15	16/15

Interest Income
Interest and fees on loans	$ 15,784	$ 14,630	$ 46,752	$ 44,219	$ 2,533	5.73%
Interest on investments securities	2,628	2,614	7,978	7,767	211	2.72%

Total interest income	18,412	17,244	54,730	51,986	2,744	5.28%

Interest expense
Interest on deposits	188	235	585	796	(211)	-26.51%
Other interest expense	96	95	286	656	(370)	-56.40%
Total interest expense	284	330	871	1,452	(581)	-40.01%

Net interest income	18,128	16,914	53,859	50,534	3,325	6.58%

Provision (reversal of) for losses on loans	-	(300)	(900)	(3,200)	2,300	-71.88%

Net interest income after provision for loan and leases	18,128	17,214	54,759	53,734	1,025	1.91%

Non-interest income	5,474	5,407	15,356	16,028	(672)	-4.19%

Non interest expense
Salary and benefit costs	8,414	7,430	25,356	23,825	1,531	6.43%
Other expenses	6,510	6,712	18,887	19,566	(679)	-3.47%
Total non-interest expense	14,924	14,142	44,243	43,391	852	1.96%

Income before income taxes	8,678	8,479	25,872	26,371	(499)	-1.89%

Provision for income taxes	3,283	3,341	9,821	10,464	(643)	-6.14%

Net income	$ 5,395	$ 5,138	$ 16,051	$ 15,907	$ 144	0.91%


Basic earnings per common share	$ 3.15	$ 3.00	$ 9.36	$ 9.28	$ 0.08	0.91%
Dividends per share	$ 0.70	$ 0.55	$ 2.05	$ 1.60	$ 0.45	28.13%