Exchange Bank (OTC: EXSR) reported Friday a 9% decline at the half-year point from the first quarter.
Net income was $7.85 million as of June 30, down from $8.63 million. The annual drop in earnings amounted to 12.8%, down from $9.01 million for the same period in 2019.
With the worsening global COVID-19 pandemic and business shutdowns, bank officials were relieved the results weren’t worse.
“Given the significant negative impact of the coronavirus pandemic on businesses and households, the bank is relatively pleased with the second-quarter results,” Exchange Bank President and CEO Gary Hartwick said.
“In this environment, no activity happened in small business, which impacted our balance sheet in many ways. We’ve also seen consumer spending pull back dramatically, and people weren’t using their credit cards,” Chief Financial Officer Greg Jahn told the Business Journal.
Noninterest income, which is derived primarily by bank and creditor fees, fell to $4.74 million from $6.04 million for the same period in 2019.
Quarterly income from interest-bearing assets dipped slightly to $23.19 million. The quarter experienced Treasury yields in a long decline that plummeted to historic lows as the pandemic took control of the economy and greatly impacted loans and investments.
By the same token, deposits brought about an 18% increase in balances — up by about $415 million in year-over-year results. Both business and consumer clients chose to hang on to liquid assets during this period of great uncertainty.
“To be honest, there are more questions that answers. This is a terribly unsettling time,” Jahn said, further agreeing that coming out of the crisis may result in a significantly changed economic landscape for the community bank’s clientele. “What is the economic situation going to look like? Will those businesses be viable?”
Like Hartwick, Jahn indicated he’s proud of the bank’s achievements in finding breathing room for businesses. It provided deferred payments on loans and waived fees when applicable. The waivers would remain “as long as the crisis is in place,” he added.
Much of the focus for the second quarter centered on offering almost 1,700 Paycheck Protection Program loans guaranteed through the U.S. Small Business Administration to companies trying to hold onto their workforces. The sum of those loans through the bank added up to about $255 million.
Still to come is the cost in resources needed to generate the necessary paperwork to forgive the loans, which can be done if the borrowers keep employees on the rolls.
More time would be needed, if the U.S. Treasury decides to grant total forgiveness on all those loans. Even if it does, banks still need to be paid.
Will the feds take longer to turn around those payoffs?
“We can handle the buffer, if it runs into months with the SBA,” Jahn said.
Hartwick and Jahn expressed gratitude that Exchange Bank came into the crisis in a position of strength with ample reserves, capital and liquidity.
“The key going forward will be our ability to adapt to change,” Jahn said.
With assets of $2.8 billion, Exchange Bank paid a quarterly cash dividend of $1.20 per share on common stock to shareholders on June 19.
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July 25, 2020 at 07:47AM
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Exchange Bank reports 9% quarterly earnings decline, its first look at pandemic impact - North Bay Business Journal
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