Exchange Bank Announces Fourth Quarter and Year Ending 2015 Earnings

SANTA ROSA, Calif., Jan. 29, 2016 /PRNewswire/ -- Exchange Bank (OTC: EXSR) reported net income of $5.1 million in the fourth quarter of 2015, compared to $4.6 million for the same period in 2014, an increase of 12.5%. Net income for the year ending December 31, 2015, totaled $21.0 million, compared to $17.7 million a year ago, an increase of 18.6%. "2015 proved to be another year of significant improvement in the financial results and overall condition of the Bank," stated Gary Hartwick, President and CEO.

This year's profitability was influenced by a number of nonrecurring events, which impacted both revenue and expense. As a result of the significant improvement in the Bank's credit quality, demonstrated by the $3.4 million in net recoveries of loans previously charged off, $3.2 million in provision for loan losses was reversed during the year. The Bank's level of reserves available to support potential future loan losses remains strong in comparison to industry peers and is supported by the continued improvement in asset quality. The difference between nonrecurring income as a result of the reversal of provision for loan loss, after tax, provided a positive effect of approximately $2.0 million to the Bank's net earnings for the year. Normalized core earnings for the Bank after removing all nonrecurring events would have been approximately $19.0 million, an increase of 7% over the $17.7 million earned for the year ending 2014. "We are proud of the Bank's continued level of profitability, notwithstanding the impact the unusual level of positive, nonrecurring events had on our earnings. However, due to the recent economic headwinds and the continued pressure on our net interest margin, it will be difficult to replicate the level of earnings achieved in 2015," stated Greg Jahn, Executive Vice President and CFO.

The core earnings of the Bank were driven primarily by continued growth in loans and investments, which were funded by a ten percent growth in deposits. This asset growth led to an increase in net interest income of approximately $3.7 million for the year ending December 31, 2015, a 9% increase over the similar year ending December 31, 2014. The Bank continued to witness meaningful growth in both loans and deposits during the 12 months ending December 31, 2015. Loans grew by approximately $57 million and investment securities by $58 million, funded by growth in deposits of approximately $170 million over totals reported as of December 31, 2014. Net loan growth of $58 million belies the true level of financing provided to the community in the form of consumer and business lending.  Strong, new loan production for the year totaling in excess of $300 million was impacted by significant loan payoffs from our existing customer base reflecting the improvement in the financial condition of our borrowers and the local economy. The Bank's credit quality remains strong with non-accrual loans declining to 0.35% of total loans at December 31, 2015, from 0.94% of total loans a year ago. As a result of the significant improvement in asset quality, and net loan recoveries, the Bank did not make any provision for loan losses in 2015, while maintaining a strong ratio of loan loss reserves to total loans of 2.96%. "The Bank is grateful for the confidence our community has demonstrated in the Bank by its patronage and we intend to reward that confidence by continuing to invest our resources in the financing needs of consumers and small business, which fuel the economic prosperity of the communities we serve," stated Mr. Hartwick.

Exchange Bank paid a quarterly cash dividend of $0.60 per share on common stock outstanding to shareholders on December 11, 2015. Total dividends paid to Exchange Bank common shareholders during 2015 were $3.77 million and represented an increase of approximately 42% above total dividends of $2.66 million paid to common shareholders during 2014. 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

Exchange Bank is headquartered in Santa Rosa and has $1.9 billion in assets. Founded in 1890, Exchange Bank provides a wide range of personal, commercial and Trust and Investment services with 18 branches and three commercial and SBA lending offices in offices in Roseville, San Jose and Lafayette, California. Exchangebank.com

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