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Exchange Bank Announces First Quarter Earnings

EXSR | April 21, 2016

SANTA ROSA, Calif., April 21, 2016 /PRNewswire/ -- Today Exchange Bank (OTC: EXSR) announced results for the first quarter of 2016 with a profit after tax of $5.21 million, compared to $5.13 million in the first quarter of 2015. This represents an increase of $77 thousand or 1.5% over the same period a year ago.

Exchange Bank celebrates 125 year Anniversary - May 1, 2015 - Santa Rosa, CA.

The strength in earnings was driven primarily by continued growth in loans and deposits, leading to an increase in net interest income of approximately $1.3 million during the first quarter of 2016, an 8% increase over the similar quarter in 2015. Loans grew by approximately $60 million over the 12 months ending March 31, 2016, an increase of 5%. Deposits increased by approximately $140 million over totals reported as of March 31, 2015, an increase of 8.5%. "The Bank remains committed to funding the growth of our community by meeting the needs of small business and consumers, as our local economy continues to move forward in a relatively positive manner despite the turbulence of the global economy and uncertainties presented by future Fed policy as well as the future political landscape," stated Gary Hartwick, President and CEO.

During the first quarter of 2016, $500 thousand of provision for loan loss reserves was taken back into income due to the recovery of loans that had been previously charged off. This compares to a recapture into the provision for loan losses of $400 thousand for the similar quarter ending March 31, 2015. The Bank did not make any provision for losses on loans during the first quarter of 2016 or 2015. The Bank's level of reserves to support future loan losses remains strong in comparison to industry standards and is further supported by reductions in problem assets and the ongoing decline in net loan charge-offs.

The Bank's gains in net interest income and recapture of provision for loan loss were largely offset by declines in non-interest income resulting primarily from a reduction in gains on sale of Small Business Administration (SBA) loans. "While this was another solid quarter of financial performance, given the headwinds to the Bank's net interest margin as a result of the recent decline in interest rates, and uncertainty of future loan loss recoveries, it may be difficult to achieve this level of performance in future periods," said Greg Jahn Vice President and CFO.

Exchange Bank paid a quarterly cash dividend of $0.65 per share on common stock outstanding to shareholders on March 18, 2016. 51% of the cash dividend goes to the Doyle Trust which funds the Doyle Scholarships at the Santa Rosa Junior College.

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 Sheet
(Unaudited)

March 31, 2016 and 2015
(In Thousands)
			Change	% Change
ASSETS	2016	2015	16/15	16/15

Cash and due from banks	$ 23,464	$ 31,226	(7,762)	-24.86%
Fed Funds Sold	91,974	79,227	12,747	16.09%
Total Cash and cash equivalents	115,438	110,453	4,985	4.51%

Investments
Interest-earning deposits in other financial institutions	77,000	60,500	16,500	27.27%
Securities available for sale	514,348	459,360	54,988	11.97%
FHLB Stock	9,036	8,962	74	0.83%

Loans and leases
Real estate	887,948	799,407	88,541	11.08%
Consumer	106,307	96,389	9,918	10.29%
Commercial	279,895	318,776	(38,881)	-12.20%

	1,274,150	1,214,572	59,578	4.91%
Less allowance for loan and lease losses	(37,831)	(37,526)	(305)	0.81%

Net loans and leases	1,236,319	1,177,046	59,273	5.04%

Bank premises and equipment	17,165	16,143	1,022	6.33%
Other assets	77,891	68,301	9,590	14.04%

Total Assets	$ 2,047,197	$ 1,900,765	146,432	7.70%


LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
Non-Interest Bearing Demand	678,424	627,085	51,339	8.19%
Interest Bearing
Transaction	318,417	281,747	36,670	13.02%
Money market	256,600	224,440	32,160	14.33%
Savings	381,786	343,755	38,031	11.06%
Time	205,186	219,687	(14,501)	-6.60%

Total Deposits	1,840,413	1,696,714	143,699	8.47%

Other borrowings	8,000	22,000	(14,000)	-63.64%
Other liabilities	20,162	16,247	3,915	24.10%

Total liabilities	1,868,575	1,734,961	133,614	7.70%

Stockholders' equity	178,622	165,804	12,818	7.73%

Total Liabilities and Stockholder's Equity	$ 2,047,197	$ 1,900,765	146,432	7.70%

EXCHANGE BANK
and Subsidiaries

Consolidated Statement of Operations
(Unaudited)

For the Period Ended March 31, 2016 and 2015
(In Thousands, except per share amounts)
	Year to Date		Change	% Change
	2016	2015	16/15	16/15

Interest Income
Interest and fees on loans	$ 15,442	$ 14,611	$ 831	5.69%
Interest on investments securities	2,678	2,378	300	12.62%

Total interest income	18,120	16,989	1,131	6.66%

Interest expense
Interest on deposits	206	306	(100)	-32.68%
Other interest expense	95	179	(84)	-46.93%
Total interest expense	301	485	(184)	-37.94%

Net interest income	17,819	16,504	1,315	7.97%

Provision (reversal of) for losses on loans	(500)	(400)	(100)	25.00%

Net interest income after provision for loan and leases	18,319	16,904	1,415	8.37%

Non-interest income	4,763	5,601	(838)	-14.96%

Non interest expense
Salary and benefit costs	8,695	7,743	952	12.29%
Other expenses	6,010	6,289	(279)	-4.44%
Total non-interest expense	14,705	14,032	673	4.80%

Income before income taxes	8,377	8,473	(96)	-1.13%

Provision for income taxes	3,166	3,339	(173)	-5.18%

Net income	$ 5,211	$ 5,134	$ 77	1.50%


Basic earnings per common share	$ 3.04	$ 2.99	$ 0.04	1.50%
Dividends per share	$ 0.65	$ 0.50	$ 0.15	30.00%