Exchange Bank Announces Fourth Quarter and Year Ending 2023 Earnings

Business Wire
13 min read

In This Article:

SANTA ROSA, Calif., January 30, 2024--(BUSINESS WIRE)--Exchange Bank (OTC: EXSR) today announced its unaudited financial results for the fourth quarter and year ending 2023, reporting net income after taxes of $6.77 million in the fourth quarter of 2023 and $20.19 million for the year ended 2023.

HIGHLIGHTS:

  • In 2023, the Bank grew gross loan balances by $84.77 million or 5.61%.

  • Loan quality remains strong, nonaccrual loans totaled $4.1 million, or 0.26% of gross loans, as of December 31, 2023.

  • The allowance for credit losses, which is based on estimating credit losses for the life of the loans in the portfolio, totaled $41.27 million, or 2.59% of total loans.

  • The Bank had year to date net income after taxes of $20.19 million, compared with $37.48 million for 2022. The decrease in income is partially related to a one-time charge of $9.10 million, net of taxes, related to the voluntary termination of the Exchange Bank Pension Plan in the second quarter of 2023. Additional decreases related to the increased costs of deposits and interest expense related to borrowings.

  • Fourth quarter net income after taxes was $6.77 million compared with $6.34 million for the previous quarter, an increase of 6.75%.

  • The Bank’s liquidity position remains strong with more than $1.59 billion in available liquidity as of December 31, 2023.

  • The Bank remains well-capitalized, and all capital ratios were well above regulatory requirements with a total risk-based capital ratio of 18.84% on December 31, 2023.

INCOME STATEMENT:

The Bank’s net interest income decreased from $99.14 million during the 12 months ended December 31, 2022, to $90.49 million for the same period in 2023, a decrease of 8.72%. The decrease in net interest income is due to the increased costs of deposits and interest expense related to borrowings. Total funding costs for 2023 were $25.06 million as compared to $2.08 million for 2022. Total funding costs are made up of interest paid to depositors of $16.72 million and $8.34 million paid on borrowings. For 2023, the cost of deposits was 0.59%, while the cost of total funding was 0.82%. In 2022, the total funding costs of 0.07% was nearly all allocated to interest paid to depositors. The Bank expects funding costs to remain elevated throughout 2024. The Bank’s net interest margin decreased from 3.01% in 2022 to 2.86% in 2023; 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 in 2023 by $14.34 million, or 14.17%. Interest and fees earned on loans increased $10.48 million in 2023 to $81.92 million for the year due to increased volume and repricing of variable rate loans. Interest income on the investment portfolio increased year over year by $3.86 million or 12.95%.

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