Exchange Bank (OTC: EXSR) today announced its unaudited
financial results for the first quarter 2024, reporting net income
after taxes of $4.9 million.
HIGHLIGHTS:
- Loan balances have remained relatively constant since prior
quarter, growing by $3.5 million from December 31, 2023. Since
March 31, 2023, loan balances have increased by $68.3 million.
- Loan quality remains strong, nonaccrual loans totaled $4.7
million, or 0.29% of gross loans, as of March 31, 2024.
- The allowance for credit losses, which is based on estimating
credit losses for the life of the loans in the portfolio, totaled
$41.2 million, or 2.58% of total loans.
- First quarter net income after taxes was $4.9 million compared
with $6.8 million for the previous quarter ending December 31,
2023.
- Deposits have decreased $29.3 million since the prior quarter
and $109.8 million since March 31, 2023.
- The Bank’s on balance sheet liquidity (cash and equivalents,
deposits held in other institutions, and unpledged
available-for-sale (AFS) securities) remains strong at $727.2
million or 21.8% of total assets as of March 31, 2024. In addition,
the Bank has available borrowing capacity of $982.8 million or
29.5% of total assets.
- The Bank remains well-capitalized, and all regulatory capital
ratios were well above minimum requirements with a total risk-based
capital ratio of 18.97% on March 31, 2024.
“Exchange Bank is focused on serving our community and being a
partner in the business environment. While the Bank has seen an
increase in the overall cost of funds along with a deposit mix
shift to higher cost deposits, we have maintained core deposit
relationships. We have a strong liquidity position, asset quality,
and conservative lending practices that will allow us to serve our
community for years to come,” said Troy Sanderson, President and
CEO.
INCOME STATEMENT:
The Bank’s net interest income decreased from $24.7 million
during the three months ended March 31, 2023, to $20.3 million for
the same period in 2024, a decrease of 17.96%. The decrease in net
interest income is predominantly due to the increase in interest
expense related to deposits and borrowings. Total funding costs for
the first quarter of 2024 were $10.0 million as compared to $2.7
million for the same period of 2023. In the current quarter, total
funding costs are made up of interest paid to depositors of $7.4
million and $2.6 million paid on borrowings. In the first quarter
of 2024, the annualized cost of deposits was 1.05%, while the cost
of total funding was 1.32%. In the first quarter of 2023, the
annualized cost of deposits was 0.20%, while the cost of total
funding was 0.35%. The Bank expects funding costs to remain
elevated throughout the rest of 2024. The Bank’s net interest
margin decreased from 3.12% in the first quarter of 2023 to 2.57%
in 2024; the Bank anticipates the net interest margin will continue
to decrease as funding costs remain elevated.
The increased interest costs were partially offset by positive
trends in interest income. Interest income on assets increased
compared to the first quarter of 2023 by $2.9 million, or 10.65%.
Interest and fees earned on loans increased $2.6 million to $21.8
million for the quarter due to increased volume and repricing of
variable rate loans.
Non-interest income for three months ended March 31, 2024
decreased from $6.0 million in 2023 to $5.7 million. Non-interest
expenses increased 8.14% from the first quarter of 2023 to $19.6
million.
During the three months ending March 31, 2024, the Bank had net
income after tax of $4.9 million compared with net income of $9.2
million for the quarter ending March 31, 2023.
BALANCE SHEET:
Total assets were $3.33 billion as of March 31, 2024,
essentially unchanged from $3.36 billion as of March 31, 2023.
The market value of the investment portfolio was $1.46 billion
as of March 31, 2024, down $119.0 million from one year prior and
down $38.0 million from December 31, 2023. The change in
investments in the first quarter of 2024 is related primarily to a
decrease in the current fair market value of securities coupled
with normal paydowns and attrition in the portfolio. Based on
current rate conditions, the Bank estimates investment portfolio
paydowns of approximately $128 million through the rest of 2024. We
continue 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 first quarter were $1.59 billion,
representing a $68.3 million increase from March 31, 2023. The
Bank’s largest loan types are commercial real estate loans, making
up 39.34% of the portfolio, followed by 23.92% in residential loans
and 10.02% in multifamily loans. Of the commercial real estate
total, approximately 19% or $119.7 million is considered owner
occupied and the remaining 81% or $509.0 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 $4.7 million, or 0.29% of gross loans, as of March
31, 2024, compared to $2.9 million or 0.19% of gross loans as of
March 31, 2023. The allowance for credit losses, which is based on
estimating credit losses for the life of the loans in the
portfolio, totaled $41.2 million, or 2.58% of total loans. Although
the portfolio has grown, the Bank did not book provision expense as
there is sufficient allowance for credit losses.
Deposits have decreased $109.8 million, or 3.76%, since March
31, 2023, ending at $2.81 billion. In the first quarter 2024,
deposits have decreased $29.3 million or 1.03%. The Bank has seen
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 32.63% of total deposits
as of March 31, 2024, compared to 37.84% as of March 31, 2023. We
estimate approximately 76.45% of all deposits were fully insured by
the FDIC as of March 31, 2024. The Bank’s combined on-balance sheet
liquidity and contingent liquidity equate to 258% of the estimated
uninsured deposits.
The Bank had borrowings of $225.0 million as of March 31, 2024,
unchanged from the prior quarter and compared to $155.0 million as
of March 31, 2023.
The Bank’s regulatory capital ratios remain well in excess of
the minimums to be considered “well capitalized.” As of March 31,
2024, the Bank reported a total risk-based capital ratio of 18.97%
and a leverage ratio of 10.73%. The Bank’s book equity increased
$21.5 million, or 9.3%, since March 31, 2023, to a total of $252.5
million. The increase is due to net income and changes in the
unrealized losses on available for sale securities. The unrealized
losses net of tax on March 31, 2024 were $115.9 million compared to
$123.7 million on March 31, 2023. The Bank has the intent and
ability to hold the investments until maturity, expects full
collection of the carrying amount of these securities, and does not
expect to realize the unrealized losses.
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 $395.9
million as of March 31, 2024, an increase of $9.5 million, or
2.46%, over the same period in 2023.
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 quarter of 2024, dividends to the Doyle Trust totaled
approximately $1.1 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 $3.33 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)
March 31, 2024 and
2023 (In Thousands)
Change
% Change
ASSETS
2024
2023
24/23
24/23
Cash and due from banks
$
31,173
$
38,829
$
(7,656
)
-19.72
%
Federal Reserve Bank
60,735
11,781
48,954
415.53
%
Total Cash and cash equivalents
91,908
50,610
41,298
81.60
%
Investments Interest-earning deposits in other financial
institutions
-
1,000
(1,000
)
-100.00
%
Securities available for sale
1,459,404
1,578,356
(118,952
)
-7.54
%
FHLB Stock
15,000
15,000
-
0.00
%
Loans and leases Real estate
1,255,551
1,150,462
105,089
9.13
%
Consumer
147,447
144,013
3,434
2.38
%
Commercial
195,222
235,441
(40,219
)
-17.08
%
1,598,220
1,529,916
68,304
4.46
%
Less allowance for credit losses
(41,212
)
(43,058
)
1,846
-4.29
%
Net loans and leases
1,557,008
1,486,858
70,150
4.72
%
Bank premises and equipment
18,037
17,307
730
4.22
%
Other assets
194,858
212,525
(17,667
)
-8.31
%
Total Assets
$
3,336,215
$
3,361,656
$
(25,441
)
-0.76
%
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits Non-Interest Bearing Demand
$
916,596
$
1,104,601
$
(188,005
)
-17.02
%
Interest Bearing Transaction
469,319
582,740
(113,421
)
-19.46
%
Money market
501,151
382,693
118,458
30.95
%
Savings
505,834
647,761
(141,927
)
-21.91
%
Time
416,392
201,333
215,059
106.82
%
Total Deposits
2,809,292
2,919,128
(109,836
)
-3.76
%
Borrowings
225,000
155,000
70,000
45.16
%
Other liabilities
49,468
56,558
(7,090
)
-12.54
%
Total liabilities
3,083,760
3,130,686
(46,926
)
-1.50
%
Stockholders' equity
252,455
230,970
21,485
9.30
%
Total Liabilities and Stockholder's Equity
$
3,336,215
$
3,361,656
$
(25,441
)
-0.76
%
EXCHANGE BANK and Subsidiaries
Consolidated
Statements of Operations (Unaudited)
For the Period
Ended March 31, 2024 and 2023 (In Thousands, except per share
amounts)
Three Months Ended
Three Months Ended
Change
% Change
2024
2023
24/23
24/23
Interest Income Interest and fees on loans
$
21,843
$
19,274
$
2,569
13.33
%
Interest on investments securities
8,499
8,148
351
4.31
%
Total interest income
30,342
27,422
2,920
10.65
%
Interest expense Interest on deposits
7,392
1,490
5,902
396.11
%
Other interest expense
2,648
1,186
1,462
123.27
%
Total interest expense
10,040
2,676
7,364
275.19
%
Net interest income
20,302
24,746
(4,444
)
-17.96
%
Provision (reversal of) for losses on loans
-
-
-
0.00
%
Net interest income after provision for loan and
leases
20,302
24,746
(4,444
)
-17.96
%
Non-interest income
5,707
6,025
(318
)
-5.28
%
Non interest expense Salary and benefit costs
10,707
9,845
862
8.76
%
Other expenses
8,890
8,277
613
7.41
%
Total non-interest expense
19,597
18,122
1,475
8.14
%
Income before income taxes
6,412
12,649
(6,237
)
-49.31
%
Provision for income taxes
1,540
3,432
(1,892
)
-55.13
%
Net income
$
4,872
$
9,217
$
(4,345
)
-47.14
%
Basic earnings per common share
$
2.84
$
5.38
$
(2.54
)
-47.14
%
Dividends per share
$
1.30
$
1.30
$
-
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/20240430473984/en/
Charlotte Radmilovic SVP, Chief Financial Officer Exchange Bank
(707) 521-3751