Exchange Bank Announces Fourth Quarter and Year Ending 2016 Earnings

SANTA ROSA, Calif.--()--Exchange Bank reported net income of $5.45 million in the fourth quarter of 2016, compared to $5.14 million for the same period in 2015, an increase of 6.1%. Net income for the year ending December 31, 2016, totaled $21.5 million, compared to $21.0 million a year ago, an increase of 2.3%. The Bank’s core earnings however, which represents income before provision for income taxes and excluding provision for loan loss, increased $2.9 million or 9.4% above the reported core earnings of $30.8 million reported in 2015. The largest component of the adjustment to core earnings was the decline in the reversal of the provision for loan losses, which declined from $3.2 million in 2015 to $900 thousand in 2016. “Given the continued low interest rate environment within which the Bank operated through most of the year, the Bank’s increase in earnings is truly noteworthy. All things considered, we are very pleased with the significant improvement in the financial results and overall condition of the Bank,” stated Gary Hartwick, President and CEO.

The core earnings of the Bank were driven primarily by continued growth in loans, which were funded by significant growth in deposits. The growth in loans led to an increase in net interest income of approximately $4.9 million for the year ending December 31, 2016, a 7.3% increase over the year ending December 31, 2015. The Bank experienced loan growth of approximately $148 million or 11.6% over 2015, which represented the strongest year of loan growth we have witnessed since the economic downturn in 2008. This growth in loans was funded primarily by growth in deposits of approximately $104 million, an increase of 5.7% over 2015. “The Bank’s financial accomplishments and the success in growing the loan portfolio is a reflection of the continued improvement in the local economies in which we operate. The Bank’s ability to grow the loan portfolio can be further attributed to the dedicated efforts of our team at Exchange Bank, and our customers’ confidence in Exchange Bank to help meet their financing needs,” said Gary Hartwick, President and CEO.

Contributing to the increase in core earnings was the Bank’s Trust and Investment Division which experienced a growth in revenues during 2016 of 4.5% to approximately $6.4 million as compared to $6.1 million for the 2015 period. Additionally, the Bank’s focus on efficiency led to a modest 2.1% growth in total operating expenses. “Despite many uncertainties, such as the impacts of potential changes to fiscal and monetary policy, we believe the Bank is well positioned to deal with the challenges ahead,” stated Greg Jahn, Executive Vice President and CFO.

The Bank’s credit quality remains strong, with non-accrual loans declining to just 0.17% of total loans at December 31, 2016, from 0.33% of total loans a year ago. Despite our significant loan growth, as a result of the continued improvement in asset quality and net loan recoveries, the Bank did not make any provision for loan losses in 2016, and was able to maintain a strong ratio of loan loss reserves to total loans of 2.68%. In addition, the Bank’s capital ratios remain in excess of the regulatory definitions of “well capitalized.” As of December 31, 2016, the Bank reported total risk-based capital of 12.71%.

Exchange Bank paid a quarterly cash dividend of $0.75 per share on common stock outstanding to shareholders on December 9, 2016. Total dividends paid to Exchange Bank common shareholders during 2016 were $4.8 million and represented an increase of approximately 26% above total dividends of $3.8 million paid to common shareholders during 2015. The Doyle Trust, which funds the Doyle Scholarships at the Santa Rosa Junior College, receives 51% of all cash dividends paid by the Bank.

About Exchange Bank

Founded in 1890 and headquartered in Sonoma County with assets of $2.2 billion, Exchange Bank is a premier community bank providing a wide range of personal, commercial and trust and investment services. Exchange Bank has 18 branches in Sonoma County and a commercial and SBA lending office in Roseville and Marin, California. The Bank’s legacy of financial leadership and community support is grounded in its core values of Commitment, Respect, Integrity and Teamwork.

Exchange Bank is an 11-time winner of the North Bay Business Journal’s North Bay Best Places to Work survey and received the 2016 Healthiest Companies in the North Bay award. NorthBay biz magazine named Exchange Bank 2016 Best Business Bank. Exchange Bank can also be found in the North Bay Business Journal’s listing of leading SBA 7(a) Lenders, Wealth Management Advisors and Wine Industry Lenders. www.exchangebank.com.

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 Sheets
(Unaudited)
 
December 31, 2016 and 2015
(In Thousands)
Change % Change
ASSETS   2016   2015   16/15   16/15
 
Cash and due from banks $ 31,519 $ 27,688 $ 3,831 13.84 %
Fed Funds Sold   36,470     95,244     (58,774 ) -61.71 %
Total Cash and cash equivalents   67,989     122,932     (54,943 ) -44.69 %
 
Investments
Interest-earning deposits in other financial institutions 76,500 76,000 500 0.66 %
Securities available for sale 514,245 495,250 18,995 3.84 %
FHLB Stock 10,015 9,036 979 10.83 %
 
Loans and leases
Real estate 994,452 875,285 119,167 13.61 %
Consumer 114,261 104,266 9,995 9.59 %
Commercial   317,979     299,354     18,625   6.22 %
 
1,426,692 1,278,905 147,787 11.56 %
Less allowance for loan and lease losses   (38,009 )   (37,830 )   (179 ) 0.47 %
 
Net loans and leases   1,388,683     1,241,075     147,608   11.89 %
 
Bank premises and equipment 17,681 16,478 1,203 7.30 %
Other assets   105,850     101,737     4,113   4.04 %
 
Total Assets $ 2,180,963   $ 2,062,508   $ 118,455   5.74 %
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY                
 
Deposits
Non-Interest Bearing Demand $ 726,107 $ 677,539 $ 48,568 7.17 %
Interest Bearing
Transaction 369,441 331,565 37,876 11.42 %
Money market 261,296 238,181 23,115 9.70 %
Savings 396,591 377,549 19,042 5.04 %
Time   189,975     214,143     (24,168 ) -11.29 %
 

Total Deposits

1,943,410 1,838,977 104,433 5.68 %
 
Other borrowings 8,000 8,000 - 0.00 %
Other liabilities   40,381     42,423     (2,042 ) -4.81 %
 
Total liabilities   1,991,791     1,889,400     102,391   5.42 %
 
Stockholders' equity   189,172     173,108     16,064   9.28 %
 
Total Liabilities and Stockholder's Equity $ 2,180,963   $ 2,062,508   $ 118,455   5.74 %
 
 
EXCHANGE BANK
and Subsidiaries
           
Consolidated Statements of Operations
(Unaudited)
 
For the Period Ended December 31, 2016 and 2015
(In Thousands, except per share amounts) Twelve Months Ended
Quarter Ended Twelve Months Ended Change % Change
    2016   2015   2016   2015   16/15   16/15
 
Interest Income
Interest and fees on loans $ 16,474 $ 15,160 $ 63,226 $ 59,379 $ 3,847 6.48 %
Interest on investments securities   2,890   2,635   10,868     10,402     466   4.48 %
 
Total interest income   19,364   17,795   74,094     69,781     4,313   6.18 %
 
Interest expense
Interest on deposits 182 225 767 1,018 (251 ) -24.66 %
Other interest expense   96   96   382     753     (371 ) -49.27 %
Total interest expense   278   321   1,149     1,771     (622 ) -35.12 %
 
Net interest income   19,086   17,474   72,945     68,010     4,935   7.26 %
 
Provision (reversal of) for losses on loans   -   -   (900 )   (3,200 )   2,300   -71.88 %
 

Net interest income after provision for loan and leases

  19,086   17,474   73,845     71,210     2,635   3.70 %
 
Non-interest income 4,948 5,028 20,304 21,056 (752 ) -3.57 %
 
Non interest expense
Salary and benefit costs 8,673 7,387 34,029 31,212 2,817 9.03 %
Other expenses   6,564   7,466   25,451     27,034     (1,583 ) -5.86 %
Total non-interest expense   15,237   14,853   59,480     58,246     1,234   2.12 %
 
Income before income taxes 8,797 7,649 34,669 34,020 649 1.91 %
 
Provision for income taxes   3,346   2,528   13,167     12,992     175   1.35 %
 
Net income $ 5,451 $ 5,121 $ 21,502   $ 21,028   $ 474   2.25 %
 
 
Basic earnings per common share $ 3.18 $ 2.99 $ 12.54 $ 12.27 $ 0.28 2.25 %
Dividends per share   $ 0.75   $ 0.60   $ 2.80     $ 2.20     $ 0.60     27.27 %

 

Earnings per share is computed by dividing net income, by the weighted averaged number of shares outstanding during the year.

 
Total average shares outstanding for both 2016 and 2015 was 1,714,344
 

Contacts

Exchange Bank
Greg Jahn, 707-524-3218
EVP, Chief Financial Officer

Contacts

Exchange Bank
Greg Jahn, 707-524-3218
EVP, Chief Financial Officer