Exchange Bank (OTC: EXSR) today announced its unaudited
financial results for the second quarter 2024, reporting net income
after taxes of $5.2 million.
HIGHLIGHTS:
- Second quarter net income after taxes was $5.2 million compared
with $4.9 million for the previous quarter ending March 31,
2024.
- The Bank’s on balance sheet liquidity (cash and equivalents,
deposits held in other institutions, and unpledged
available-for-sale securities) remains strong at $715.1 million or
21.6% of total assets as of June 30, 2024. In addition, the Bank
has available borrowing capacity of $1.03 billion or 31.2% of total
assets.
- Loan balances have remained relatively constant since prior
quarter, growing by $1.6 million from March 31, 2024. Since June
30, 2023, loan balances have increased by $52.1 million or
3.4%.
- Loan quality remains strong, nonaccrual loans totaled $4.0
million, or 0.25% of gross loans, as of June 30, 2024.
- The allowance for credit losses, which is based on estimating
credit losses for the life of the loans in the portfolio, totaled
$40.8 million, or 2.55% of total loans.
- The Bank remains well-capitalized, and all regulatory capital
ratios were well above minimum requirements with a total risk-based
capital ratio of 19.11% on June 30, 2024.
INCOME STATEMENT:
Second quarter 2024 net income after taxes was $5.2 million
compared with a net loss of $2.1 million in the second quarter of
2023 and $4.9 million for the previous quarter ending March 31,
2024. On a year to date basis, net income for 2024 through June was
$10.1 million compared to $7.1 million for the same period of 2023.
In the second quarter of 2023, the Bank booked a one-time after-tax
expenditure of $9.1 million in connection with voluntary, full and
final termination of the Exchange Bank Pension Plan.
The Bank’s net interest income for the quarter ended June 30,
2024 was $20.3 million, a $2.5 million or 10.9% decrease from the
three months ended June 30, 2023. Quarterly interest income
increased from the prior quarter ended March 31, 2024 by $0.6
million which was offset by interest expense increases of $0.5
million.
On a year to date basis, net interest income through June 30,
2024 was $40.6 million compared to $47.6 million for the same
period of 2023. The decrease in net interest income is
predominantly due to the increase in interest expense related to
deposits and borrowings. Total funding costs have increased by
$12.2 million year over year. Year to date, total funding costs are
made up of interest paid to depositors of $15.3 million and $5.3
million paid for borrowings to the Federal Reserve Bank using the
Bank Term Funding Program (BTFP). Through June 30, 2024, the Bank’s
annualized cost of deposits was 1.10%, while the cost of total
funding was 1.37%. The increased interest costs were partially
offset by positive trends in interest income. Interest income on
assets increased compared to the first half of 2023 by $5.3
million, or 9.40%. Interest and fees earned on loans increased $4.5
million to $44.2 million due to increased volume and repricing of
variable rate loans. The Bank’s net interest margin through the
first half of 2024 is 2.61% compared to 3.06% in the first half of
2023. The Bank anticipates the cost of funds to remain elevated and
the net interest margin will continue to decrease in the near
term.
Non-interest income for the three months ended June 30, 2024 was
$5.7 million. This is a small decrease from the same period of 2023
of $66 thousand and consistent with the prior quarter. On a year to
date basis, total non-interest income for 2024 was $11.4 million
through June 30, 2024 compared to $11.8 million for the same period
of 2023.
Non-interest expense for the second quarter 2024 was $19.2
million, consistent with the same period of 2023 and with the prior
quarter. On a year to date basis, total non-interest expense for
2024 was $38.8 million through June 30, 2024 compared to $37.3
million for the same period of 2023.
BALANCE SHEET:
Total assets were $3.31 billion as of June 30, 2024, a decrease
of $11.5 million from June 30, 2023.
The market value of the investment portfolio was $1.43 billion
as of June 30, 2024, down $89.9 million from one year prior and
down $32.4 million from the prior quarter ending March 31, 2024.
The change in investments from the first quarter of 2024 is related
primarily to normal paydowns and attrition in the portfolio. Based
on current rate conditions, the Bank estimates investment portfolio
cashflow of approximately $105 million through the rest of 2024. As
of June 30, 2024, the Bank estimates that the portfolio has an
average life of approximately 4.4 years and an average effective
duration of approximately 3.8 years. The Bank continues to maintain
our entire portfolio as available for sale, providing full
transparency and management flexibility. The Bank’s portfolio has
unrealized losses that are a direct result of market interest rates
and not a result of credit quality related factors.
Gross loans at the end of the second quarter were $1.60 billion,
representing a $52.1 million increase from June 30, 2023 and an
increase of $1.6 million from March 31, 2024. The Bank’s largest
loan types are commercial real estate loans, making up 40.1% of the
portfolio, followed by 29.3% in residential loans and 11.1% in
multifamily loans. Of the commercial real estate total,
approximately 19% or $121.0 million is considered owner occupied
and the remaining 81% or $520.6 million are non-owner occupied. The
portfolio is well diversified between industries with no
significant concentrations, including no material concentration in
office space.
As mentioned previously, loan quality remains strong; nonaccrual
loans totaled $4.0 million, or 0.25% of gross loans, as of June 30,
2024, compared to $2.9 million or 0.18% of gross loans as of June
30, 2023. The allowance for credit losses, which is based on
estimating credit losses for the life of the loans in the
portfolio, totaled $40.8 million, or 2.55% of total loans. Although
the portfolio has grown, the Bank did not book provision expense as
there is sufficient allowance for credit losses.
Total deposits as of June 30, 2024 were $2.78 billion, a
decrease of $60.0 million, or 2.11%, since June 30, 2023. In the
second quarter 2024, deposits have decreased $33.3 million or 1.2%
since March 31, 2024. The Bank continues to experience elevated
competition for deposits in our market. This coupled with the rate
environment has led the Bank to make strategic decisions to
maintain core deposit relationships. The industry has also seen
consumers use more of their liquid funds instead of borrowing, due
to the elevated interest rates.
Non-interest-bearing deposits made up 32.6% of total deposits as
of June 30, 2024, compared to 36.5% as of June 30, 2023. We
estimate approximately 76.6% of all deposits were fully insured by
the FDIC as of June 30, 2024. The Bank’s combined on-balance sheet
liquidity and contingent liquidity equate to 2.97 times the amount
of the estimated uninsured deposits.
The Bank had borrowings of $225.0 million as of June 30, 2024,
compared to $207.0 million as of June 30, 2023 and unchanged from
the prior quarter.
The Bank’s regulatory capital ratios remain well in excess of
the minimums to be considered “well capitalized.” As of June 30,
2024, the Bank reported a total risk-based capital ratio of 19.11%
and a leverage ratio of 10.89%. The Bank’s US GAAP or book equity
was $257.1 million as of June 30, 2024 increasing by $37.1 million,
or 16.9% since June 30, 2023. The increase is due to net income and
changes in the unrealized losses on available for sale securities.
The unrealized losses net of tax as of June 30, 2024 were $115.5
million compared to $138.3 million on June 30, 2023.
The Bank does not view the temporary nature of the book
unrealized losses to be a significant risk to its long-term capital
position. The unrealized losses reduce the Bank’s accumulated other
comprehensive income, which the Bank has opted to exclude from its
common equity tier 1 capital. Therefore, the Bank’s regulatory
capital is not impacted by the changes in the market value of the
investment securities in the Bank’s investment portfolio. The
Bank’s regulatory capital, as defined by the FDIC, was $398.9
million as of June 30, 2024.
50.44% of the Bank’s cash dividend goes to the Doyle Trust which
funds the Doyle Scholarships at the Santa Rosa Junior College. In
the first half of 2024, dividends to the Doyle Trust totaled
approximately $2.2 million.
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
efforts to update forward-looking statements to reflect
circumstances or events that occur after the date forward-looking
statements are made.
About Exchange Bank
Headquartered in Sonoma County and founded in 1890, Exchange
Bank is a full-service community bank with assets of $3.31 billion.
Exchange Bank provides a wide range of personal, commercial, and
trust and investment management services with 16 retail branches in
Sonoma County, a retail branch in Roseville and Trust &
Investment Management offices in Santa Rosa, Roseville, Marin
County and Silicon Valley. 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
known for its people who care about their customers, their company,
and the communities where they live and work. Exchange Bank is an
18-year winner of the North Bay Business Journal’s Best Places to
Work survey and the 2023 San Francisco Business Times Corporate
Philanthropy Award. Exchange Bank was named Best Consumer Bank by
the NorthBay biz Magazine’s Best of the North Bay readers’ poll.
The Petaluma Argus Courier People’s Choice Awards named Exchange
Bank Best Local Bank 2023 and the Bohemian Magazine’s Best of the
North Bay 2023 named Exchange Bank Best Business Bank and Best
Consumer Bank. www.exchangebank.com
Member FDIC — Equal Housing Lender — Equal
Opportunity Employer
EXCHANGE BANK
and Subsidiaries
Consolidated Balance
Sheets
(Unaudited)
June 30, 2024 and 2023 (In Thousands)
Change
% Change
ASSETS
2024
2023
24/23
24/23
Cash and due from banks
$
34,423
$
35,536
$
(1,113
)
-3.13
%
Federal Reserve Bank
58,698
17,578
41,120
233.93
%
Total Cash and cash equivalents
93,121
53,114
40,007
75.32
%
Investments Interest-earning deposits in other financial
institutions
-
1,000
(1,000
)
-100.00
%
Securities available for sale
1,426,975
1,516,839
(89,864
)
-5.92
%
FHLB Stock
15,000
15,000
-
0.00
%
Loans and leases Real estate
1,257,864
1,184,431
73,433
6.20
%
Consumer
149,317
141,246
8,071
5.71
%
Commercial
192,619
222,014
(29,395
)
-13.24
%
1,599,800
1,547,691
52,109
3.37
%
Less allowance for credit losses
(40,832
)
(43,038
)
2,206
-5.13
%
Net loans and leases
1,558,968
1,504,653
54,315
3.61
%
Bank premises and equipment
17,647
17,444
203
1.16
%
Other assets
196,951
212,090
(15,139
)
-7.14
%
Total Assets
$
3,308,662
$
3,320,140
$
(11,478
)
-0.35
%
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits Non-Interest Bearing Demand
$
905,738
$
1,036,086
$
(130,348
)
-12.58
%
Interest Bearing Transaction
437,444
511,155
(73,711
)
-14.42
%
Money market
535,317
399,340
135,977
34.05
%
Savings
484,810
602,358
(117,548
)
-19.51
%
Time
412,652
286,981
125,671
43.79
%
Total Deposits
2,775,961
2,835,920
(59,959
)
-2.11
%
Borrowings
225,000
207,000
18,000
8.70
%
Other liabilities
50,618
57,202
(6,584
)
-11.51
%
Total liabilities
3,051,579
3,100,122
(48,543
)
-1.57
%
Stockholders' equity
257,083
220,018
37,065
16.85
%
Total Liabilities and Stockholder's Equity
$
3,308,662
$
3,320,140
$
(11,478
)
-0.35
%
EXCHANGE BANK and Subsidiaries
Consolidated
Statements of Operations (Unaudited)
For the Period
Ended June 30, 2024 and 2023 (In Thousands, except per share
amounts)
Six Months Ended
Quarter Ended
Six Months Ended
Change
% Change
2024
2023
2024
2023
24/23
24/23
Interest Income Interest and fees on loans
$
22,325
$
20,389
$
44,168
$
39,663
$
4,505
11.36
%
Interest on investments securities
8,624
8,214
17,123
16,362
761
4.65
%
Total interest income
30,949
28,603
61,291
56,025
5,266
9.40
%
Interest expense Interest on deposits
7,927
3,405
15,318
4,895
10,423
212.93
%
Other interest expense
2,676
2,373
5,324
3,559
1,765
49.59
%
Total interest expense
10,603
5,778
20,642
8,454
12,188
144.17
%
Net interest income
20,346
22,825
40,649
47,571
(6,922
)
-14.55
%
Provision (reversal of) for credit losses
-
-
-
-
-
0.00
%
Net interest income after provision for credit losses
20,346
22,825
40,649
47,571
(6,922
)
-14.55
%
Non-interest income
5,721
5,787
11,428
11,812
(384
)
-3.25
%
Non interest expense Salary and benefit costs
10,833
10,584
21,540
20,429
1,111
5.44
%
Other expenses
8,319
8,597
17,210
16,874
336
1.99
%
Total non-interest expense
19,152
19,181
38,750
37,303
1,447
3.88
%
Income before income taxes
6,915
9,431
13,327
22,080
(8,753
)
-39.64
%
Provision for income taxes
1,686
2,516
3,226
5,948
(2,722
)
-45.77
%
Extraordinary Item
-
9,051
-
9,051
(9,051
)
-100.00
%
Net income
$
5,229
$
(2,136
)
$
10,101
$
7,081
$
3,020
42.65
%
Basic earnings per common share
$
3.05
$
(1.25
)
$
5.89
$
4.13
$
1.76
42.65
%
Dividends per share
$
1.30
$
1.30
$
2.60
$
2.60
$
-
0.00
%
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 2024 and 2023 was
1,714,344
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240725156490/en/
Charlotte Radmilovic SVP, Chief Financial Officer Exchange Bank
(707) 521-3751