Exchange Bank (OTC: EXSR) saw a 2% decrease in net income for the first quarter compared to the same period last year.
This decline in earnings over 12 months ending March 31 coincides with a decrease in net interest income and an increase in non-interest expenses, the Santa Rosa financial institution reported Wednesday. The latter is characterized as operational costs associated with employees and equipment.
These costs rose by over 8% to $17.1 million, compared with 2021’s first quarter.
Net interest income, defined as the difference between revenue generated by interest bearing assets and the costs of servicing liabilities, went down by over 3% to $22.38 million in contrast to the period ending March 31, 2021.
The loss in interest income is attributable to a decline in fees from the U.S. Small Business Administration’s Paycheck Protection Program. The bank processed $383 million in loans in a few rounds under the program, intended as a safety net for businesses during the coronavirus crisis to retain employees on payrolls.
Exchange Bank CEO and President Troy Sanderson and Chief Financial Officer Shari DeMaris told the Business Journal they’re not surprised by the outcome of the quarterly report.
“We got the benefit of those fees last year,” Sanderson said, adding the bank is “sitting on an extraordinary amount of liquidity.”
With that, Sanderson and DeMaris expect to take that financial capital into the recovery stage of the pandemic this year, while working on the challenges associated with its net interest margin due to the financial arena’s competition to gain loans.
All eyes remain on the Federal Reserve, which has promised higher interest rates to stabilize an economy bent on the high costs of goods and demand for them.
Meanwhile, non-interest income — which is derived by consumer fees — rose by 12% to $6.1 million. While not to pre-pandemic levels yet, these usage-based fees have recovered substantially, according to the report. The bank is no longer waiving fees.
In other financial markers, deposits spiked by 10% this past quarter for Exchange Bank to $3.23 billion. The increase brought the bank’s level of assets up to $3.54 billion for this past period ending March 31, up by over 7% compared to the same period in 2021.
DeMaris said the bank has forecasted this two- to three-year period of deposit growth.
“Of course, things can change quickly in this economy. We’ll just have to see what happens,” she said.
Founded in 1890, the Sonoma County community bank manages 18 retail branches in Sonoma County, a commercial branch in Roseville as well as trust and investment offices in its home base of Santa Rosa, along with those in Roseville and the Silicon Valley.
Susan Wood covers law, cannabis, production, tech, energy, transportation, agriculture as well as banking and finance. For 27 years, Susan has worked for a variety of publications including the North County Times, Tahoe Daily Tribune and Lake Tahoe News. Reach her at 530-545-8662 or susan.wood@busjrnl.com
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May 07, 2022 at 04:12AM
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Sonoma County's Exchange Bank earnings dip 2% in Q1 - North Bay Business Journal
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