Exchange Bank Announces Third Quarter 2025 Earnings
MWN-AI** Summary
Exchange Bank (OTC: EXSR) reported strong financial performance for the third quarter of 2025, with net income after taxes reaching $8.6 million, a significant increase from $4.9 million in the same quarter of the previous year. This marks an approximately 75% growth year-over-year, primarily driven by rising net interest income, which climbed by 17% to $23.3 million compared to the prior year, largely due to increased loan interest and a reduction in interest expenses linked to decreased borrowing levels.
Non-interest income also surged, up 25% to $7.4 million, driven by a $1.4 million gain from the sale of unused bank premises. Total gross loans increased by $103.9 million or 6% from the previous year alongside a healthy asset quality, indicated by low non-accrual loans which stood at just 0.17% of total gross loans.
The bank maintained strong liquidity with cash and equivalents totaling $915.7 million, accounted for 28% of total assets. Regulatory capital ratios remained robust, with a total risk-based capital ratio of 19.46%. With a total asset base of $3.31 billion, Exchange Bank continues to ensure compliance with all regulatory standards while effectively managing its balance sheet.
Looking ahead, the bank is committed to supporting its core deposit relationships amid increased market competition and fluctuating interest rates. Its strategic actions in operational management have positioned it favorably to navigate future challenges. Exchange Bank remains dedicated to its community engagement and financial leadership, evidenced by accolades such as the Best Bank of Sonoma County.
MWN-AI** Analysis
Exchange Bank (OTC: EXSR) has showcased robust performance in Q3 2025, reporting a net income of $8.6 million, a significant increase from $4.9 million in the same quarter last year. This growth can be attributed to a 17% rise in net interest income driven by increased loan volumes and reduced borrowing costs.
The Bank's total loans rose by $103.9 million, highlighting strong lending demand, particularly in commercial real estate. The asset quality remains commendable, with non-accrual loans reduced to $2.8 million, further evidencing the Bank’s effective credit management.
Despite a 3% decrease in total assets year-over-year, primarily due to a decline in the investment portfolio, the Bank maintains a solid balance sheet with total risk-based capital at 19.46%, well above regulatory thresholds. The high liquidity ratio (28% of total assets) instills confidence in the Bank's ability to weather potential economic fluctuations.
Strategically, the Bank has reduced its borrowings significantly from $245 million in Q3 2024 to just $40 million, indicating efficient capital management and a focus on growing deposit relationships amidst a competitive landscape. The increase of $69.7 million in deposits signifies consumer confidence.
Looking forward, investors should consider Exchange Bank as a stable investment opportunity, particularly given the continued expansion in loan volumes and solid income growth. However, caution should be exercised regarding the declining investment portfolio, driven by interest rate fluctuations, which could impact earnings short-term.
In conclusion, Exchange Bank appears to be well-positioned with strong fundamentals and effective cost management. Investors might view current market conditions as favorable to accumulate shares, particularly if the Bank continues to leverage its robust capital position and enhance its lending capabilities.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
Exchange Bank (OTC: EXSR) today announced its unaudited financial results for the third quarter 2025, reporting net income after taxes of $8.6 million.
HIGHLIGHTS:
- Third quarter net income after taxes was $8.6 million compared with $4.9 million for the prior year quarter ended September 30, 2024.
- Net interest income increased by $3.3 million or 17% from the third quarter of 2025 compared to the third quarter of 2024 primarily related to increased loan interest and fees due to volume and reduced interest expense related to a decrease in borrowings.
- Non-interest income increased by $1.5 million or 25% from the third quarter of 2025 compared to the third quarter of 2024 primarily related to a gain on sale of bank premises no longer used of $1.4 million.
- Gross loans increased by $103.9 million or 6% from the third quarter of 2025 compared to the third quarter of 2024 and asset quality remained strong.
- The Bank’s on balance sheet liquidity (cash and equivalents, deposits held in other institutions, and unpledged available-for-sale (AFS) securities) remains strong at $915.7 million or 28% of total assets as of September 30, 2025. In addition, the Bank has available borrowing capacity of approximately $1 billion.
- The Bank remains well-capitalized, and all regulatory capital ratios were well above minimum requirements with a total risk-based capital ratio of 19.46% on September 30, 2025.
INCOME STATEMENT:
During the three months ended September 30, 2025, the Bank had net income after tax of $8.6 million compared with net income of $4.9 million for the quarter ended September 30, 2024.
The Bank’s net interest income increased by $3.3 million or 17% to $23.3 million during the three months ended September 30, 2025. The increase in net interest income was primarily related to increased loan interest and fees due to volume and reduced interest expense related to a decrease in borrowings. Total funding costs for the third quarter of 2025 were $9.5 million as compared to $11.6 million for the same period of 2024. In the current quarter, total funding costs are made up of interest paid to depositors of $9.1 million and $407 thousand paid on borrowings, compared to the third quarter of 2024 interest paid to depositors of $8.7 million and $2.9 million paid on borrowings. Decreased borrowing costs were a direct result of a decrease in the volume of borrowings from $245 million on September 30, 2024 to $40 million as of September 30, 2025.
Non-interest income for the quarter ended September 30, 2025 increased from $5.9 million in 2024 to $7.4 million. The 25% increase can be attributed to a gain on sale of bank premises no longer used of $1.4 million.
On a year-to-date basis, net income for 2025 through September was $21.2 million compared to $15.0 million for the same period of 2024. The Bank’s net interest income increased by $6.1 million or 10% to $66.7 million during the nine months ended September 30, 2025. The increase is primarily attributed to an increase in loan volumes and repricing of variable rate loans plus a decrease in interest expense driven by a decrease in borrowing balances. Non-interest income for the nine months ended September 30, 2025 increased from $17.4 million in 2024 to $20.4 million. This increase is partially due to life insurance benefit received in the second quarter plus the current quarter gain on sale of premises. Non-interest expenses remained relatively constant, increasing by less than 1% from the first nine months of 2024 to $58.4 million.
BALANCE SHEET:
Total assets were $3.31 billion as of September 30, 2025, compared to $3.41 billion as of September 30, 2024.
Cash and cash equivalents have decreased by $6.6 million or 3% from September 30, 2024 to $196.8 million. The decrease in cash is attributable to loan originations and paydown of borrowings offset by cash flows from the investment portfolio plus increases in the deposit portfolio . Cash balances have increased by $36.6 million or 23% since June 30, 2025.
The market value of the investment portfolio was $1.24 billion as of September 30, 2025, down $191.8 million from the comparable quarter-end in the prior year and down $63.5 million from June 30, 2025. The change in investments in the third quarter of 2025 is related primarily to scheduled paydowns in the portfolio. Based on current rate conditions, the Bank estimates investment portfolio paydowns of approximately $45 million through the rest of 2025. The Bank continues to maintain our entire portfolio as available for sale, providing full transparency and management flexibility. The Bank’s portfolio has unrealized losses that are a direct result of fluctuations in interest rates and not a result of credit quality related factors.
Gross loans at the end of the third quarter were $1.7 billion, representing a $103.9 million increase from September 30, 2024 and up $71.7 million from June 30, 2025. The Bank’s largest loan categories are commercial real estate loans, making up 42% of the portfolio, followed by 20% in residential loans and 14% in multifamily loans. The portfolio is well diversified between industries with no significant concentrations.
Loan quality remains strong, non-accrual loans totaled $2.8 million, or 0.17% of gross loans, as of September 30, 2025 compared to $6.0 million as of September 30, 2024 and $5.3 million as of June 30, 2025. From June 30, 2025, non-accrual balances have decreased by $2.5 million primarily due to the payoff of one loan of approximately $2.3 million. The allowance for credit losses totaled $34.0 million, or 2.03% of total loans.
Deposits have increased by $69.7 million, or 2.5%, since September 30, 2024, ending at $2.89 billion. In the third quarter of 2025, deposits increased by $15.9 million or 0.6% from June 30, 2025. The Bank continues to see elevated competition for deposits in our market. This coupled with the rate environment has led the Bank to make strategic decisions to maintain core deposit relationships. Non-interest-bearing deposits made up 30% of total deposits as of September 30, 2025, compared to 32% as of September 30, 2024. The Bank estimates approximately 75.6% of all deposits were fully insured by the FDIC as of September 30, 2025. The Bank’s combined on-balance sheet liquidity and contingent liquidity equates to more than two times that of the estimated uninsured deposits.
As of September 30, 2025, the Bank had borrowings of $40 million compared to $245 million as of September 30, 2024. As mentioned in previous press releases, in January 2025, the Bank paid off a borrowing with the Federal Reserve Bank’s Bank Term Funding Program. The Bank has not replaced the borrowing, primarily due to cash flows from investment securities and higher deposit balances, which have supported overall balance sheet liquidity.
The Bank’s regulatory capital ratios remain well above the minimum thresholds required to be classified as “well capitalized.” As of September 30, 2025, the Bank reported a total risk-based capital ratio of 19.46% and a leverage ratio of 11.81%. The Bank’s book equity increased $38.8 million, or 13%, since September 30, 2024, to a total of $332.7 million. The increase is due to net income and changes in the unrealized losses on available for sale securities. The unrealized losses net of tax on September 30, 2025 were $63.7 million compared to $81.4 million on September 30, 2024. The Bank has the intent and ability to hold the investments until maturity, expects full collection of the carrying amount of these securities, and does not expect to realize the unrealized losses. The Bank does not view the temporary nature of the book unrealized losses to be a significant risk to its long-term capital position. The unrealized losses reduce the Bank’s accumulated other comprehensive income, which the Bank has opted to exclude from its common equity tier 1 capital. Therefore, the Bank’s regulatory capital is not impacted by the changes in the market value of the investment securities in the Bank’s investment portfolio. The Bank’s regulatory capital, as defined by the FDIC, was $423.8 million as of September 30, 2025, an increase of $22.4 million, or 6.0%, over the same period in 2024.
50.44% of the Bank’s cash dividend goes to the Doyle Trust which funds the Doyle Scholarships at the Santa Rosa Junior College. In the first nine months of 2025, dividends to the Doyle Trust totaled approximately $3.3 million.
FORWARD-LOOKING INFORMATION:
The following appears in accordance with the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking statements about the Bank, including descriptions of plans or objectives of its management for future operations, products or services, forecasts of its revenues, earnings, legislative, regulatory issues, 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 Bank’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 Bank undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
About Exchange Bank
Headquartered in Sonoma County and founded in 1890, Exchange Bank is a full-service community bank with assets of $3.31 billion. Exchange Bank provides a wide range of personal, commercial, and trust and investment management services with 17 retail branches in Sonoma County, a retail branch in Roseville and Trust & Investment Management offices in Santa Rosa, Roseville, Marin County and Silicon Valley. The Bank’s legacy of financial leadership and community support is grounded in its core values of commitment, respect, integrity, and teamwork. Exchange Bank is known for its people who care about their customers, their company, and the communities where they live and work. Exchange Bank is a 20-year winner of the North Bay Business Journal’s Best Places to Work survey and a 14-time winner of the Best Bank of Sonoma County by the Press Democrat’s Readers’ Choice 2025 awards. Exchange Bank was named Best Consumer Bank by the NorthBay biz Magazine’s Best of the North Bay readers’ poll and Best Local Bank by The Petaluma Argus Courier People’s Choice Awards 2025. Exchange Bank is also a winner of the 2025 San Francisco Business Times Corporate Philanthropy award, and the Bohemian Magazine’s Best of the North Bay 2025 named Exchange Bank Best Business Bank and Best Consumer Bank. www.exchangebank.com
Member FDIC — Equal Housing Lender — Equal Opportunity Employer
| EXCHANGE BANK | ||||||||||||||
| and Subsidiaries | ||||||||||||||
| Consolidated Balance Sheets | ||||||||||||||
| (Unaudited) | ||||||||||||||
| September 30, 2025 and 2024 | ||||||||||||||
| (In Thousands) | ||||||||||||||
Change | % Change | |||||||||||||
| ASSETS | 2025 | 2024 | 25/24 | 25/24 | ||||||||||
| Cash and due from banks | $ | 48,369 | $ | 37,313 | $ | 11,056 | 29.63 | % | ||||||
| Federal Reserve Bank | 148,408 | 166,112 | (17,704 | ) | -10.66 | % | ||||||||
| Total Cash and cash equivalents | 196,777 | 203,425 | (6,648 | ) | -3.27 | % | ||||||||
| Investments | ||||||||||||||
| Interest-earning deposits in other financial institutions | - | - | - | 0.00 | % | |||||||||
| Securities available for sale | 1,239,399 | 1,431,151 | (191,752 | ) | -13.40 | % | ||||||||
| FHLB Stock | 15,000 | 15,000 | - | 0.00 | % | |||||||||
| Loans and leases | ||||||||||||||
| Leasing | 693 | 2,998 | (2,305 | ) | -76.88 | % | ||||||||
| SBA | 34,211 | 32,787 | 1,424 | 4.34 | % | |||||||||
| C&I | 199,242 | 156,655 | 42,587 | 27.19 | % | |||||||||
| Consumer | 136,726 | 147,268 | (10,542 | ) | -7.16 | % | ||||||||
| Residential | 320,576 | 349,886 | (29,310 | ) | -8.38 | % | ||||||||
| Multi-Family | 232,155 | 179,564 | 52,591 | 29.29 | % | |||||||||
| CRE | 709,923 | 644,514 | 65,409 | 10.15 | % | |||||||||
| Construction | 72,984 | 88,911 | (15,927 | ) | -17.91 | % | ||||||||
1,706,510 | 1,602,583 | 103,927 | 6.48 | % | ||||||||||
| Less allowance for credit losses | (34,012 | ) | (41,014 | ) | 7,002 | -17.07 | % | |||||||
| Net loans and leases | 1,672,498 | 1,561,569 | 110,929 | 7.10 | % | |||||||||
| Bank premises and equipment | 22,831 | 24,691 | (1,860 | ) | -7.53 | % | ||||||||
| Other assets | 161,830 | 175,589 | (13,759 | ) | -7.84 | % | ||||||||
| Total Assets | $ | 3,308,335 | $ | 3,411,425 | $ | (103,090 | ) | -3.02 | % | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
| Deposits | ||||||||||||||
| Non-Interest Bearing Demand | $ | 872,362 | $ | 913,022 | $ | (40,660 | ) | -4.45 | % | |||||
| Interest Bearing | ||||||||||||||
| Transaction | 404,940 | 430,684 | (25,744 | ) | -5.98 | % | ||||||||
| Money market | 656,076 | 540,248 | 115,828 | 21.44 | % | |||||||||
| Savings | 451,683 | 469,885 | (18,202 | ) | -3.87 | % | ||||||||
| Time | 502,076 | 463,606 | 38,470 | 8.30 | % | |||||||||
| Total Deposits | 2,887,137 | 2,817,445 | 69,692 | 2.47 | % | |||||||||
| Borrowings | 40,000 | 245,000 | (205,000 | ) | -83.67 | % | ||||||||
| Other liabilities | 48,486 | 55,083 | (6,596 | ) | -11.98 | % | ||||||||
| Total liabilities | 2,975,624 | 3,117,528 | (141,905 | ) | -4.55 | % | ||||||||
| Stockholders' equity | 332,711 | 293,897 | 38,814 | 13.21 | % | |||||||||
| Total Liabilities and Stockholder's Equity | $ | 3,308,335 | $ | 3,411,425 | $ | (103,091 | ) | -3.02 | % | |||||
| EXCHANGE BANK | ||||||||||||||||||
| and Subsidiaries | ||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| For the Period Ended September 30, 2025 and 2024 | ||||||||||||||||||
| (In Thousands, except per share amounts) | Nine Months Ended | |||||||||||||||||
Quarter Ended | Nine Months Ended | Change | % Change | |||||||||||||||
2025 | 2024 | 2025 | 2024 | 25/24 | 25/24 | |||||||||||||
| Interest Income | ||||||||||||||||||
| Interest and fees on loans | $ | 24,576 | $ | 22,564 | $ | 71,027 | $ | 66,732 | $ | 4,295 | 6.44 | % | ||||||
| Interest on investments securities | 8,241 | 8,954 | 24,403 | 26,075 | (1,672 | ) | -6.41 | % | ||||||||||
| Total interest income | 32,817 | 31,518 | 95,430 | 92,807 | 2,623 | 2.83 | % | |||||||||||
| Interest expense | ||||||||||||||||||
| Interest on deposits | 9,128 | 8,705 | 27,329 | 24,025 | 3,304 | 13.75 | % | |||||||||||
| Other interest expense | 407 | 2,871 | 1,405 | 8,195 | (6,790 | ) | -82.86 | % | ||||||||||
| Total interest expense | 9,535 | 11,576 | 28,734 | 32,220 | (3,486 | ) | -10.82 | % | ||||||||||
| Net interest income | 23,282 | 19,942 | 66,696 | 60,587 | 6,109 | 10.08 | % | |||||||||||
| Provision (reversal of) for credit losses | - | - | - | - | - | 0.00 | % | |||||||||||
| Net interest income after | ||||||||||||||||||
| provision for credit losses | 23,282 | 19,942 | 66,696 | 60,587 | 6,109 | 10.08 | % | |||||||||||
| Non-interest income | 7,435 | 5,925 | 20,437 | 17,355 | 3,082 | 17.76 | % | |||||||||||
| Non interest expense | ||||||||||||||||||
| Salary and benefit costs | 10,401 | 10,677 | 31,938 | 32,212 | (274 | ) | -0.85 | % | ||||||||||
| Other expenses | 8,567 | 8,558 | 26,476 | 25,770 | 706 | 2.74 | % | |||||||||||
| Total non-interest expense | 18,968 | 19,235 | 58,414 | 57,982 | 432 | 0.75 | % | |||||||||||
| Income before income taxes | 11,749 | 6,632 | 28,719 | 19,960 | 8,759 | 43.88 | % | |||||||||||
| Provision for income taxes | 3,192 | 1,687 | 7,506 | 4,913 | 2,593 | 52.77 | % | |||||||||||
| Net income | $ | 8,557 | $ | 4,945 | $ | 21,213 | $ | 15,047 | $ | 6,166 | 40.98 | % | ||||||
| Basic earnings per common share | $ | 4.99 | $ | 2.88 | $ | 12.37 | $ | 8.78 | $ | 3.60 | 40.98 | % | ||||||
| Dividends per share | $ | 1.30 | $ | 1.30 | $ | 3.90 | $ | 3.90 | $ | - | 0.00 | % |
| Earnings per share is computed by dividing net income, by the weighted averaged number of shares outstanding during the year. |
| Total average shares outstanding for both 2025 and 2024 was 1,714,344 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20251029840140/en/
Charlotte Radmilovic
SVP, Chief Financial Officer
Exchange Bank
(707) 521-3751
FAQ**
How does the growth in net interest income for Exchange Bank EXSR, which increased by $3.3 million or 17%, improve its competitive position in the current lending environment?
Given the strong asset quality reported by Exchange Bank EXSR, what strategies does the bank have in place to maintain low levels of non-accrual loans moving forward?
With a total risk-based capital ratio of 19.46%, how does Exchange Bank EXSR plan to leverage its well-capitalized status for future growth opportunities?
Considering the decline in cash and equivalents at Exchange Bank EXSR by 3%, what measures is the bank implementing to improve liquidity in the coming quarters?
**MWN-AI FAQ is based on asking OpenAI questions about Exchange Bank (OTC: EXSR).
NASDAQ: EXSR
EXSR Trading
6.4% G/L:
$148 Last:
9 Volume:
$139.10 Open:
