Exchange Bank Announces Second Quarter 2026 Earnings

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SANTA ROSA, Calif.--(BUSINESS WIRE)-- Exchange Bank (OTC: EXSR) today announced its unaudited financial results for the second quarter 2026, reporting net income after taxes of $7.3 million.

2026 SECOND QUARTER HIGHLIGHTS:

• Second quarter net income after taxes was $7.3 million compared with $7.0 million for the prior year quarter ended June 30, 2025.
• Net interest income increased by $1.7 million or 7.7% compared to the second quarter of 2025.
• Total assets for the Bank as of the end of the second quarter of 2026 were $3.2 billion.
• 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 $773.6 million or 24% of total assets as of June 30, 2026. 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 20.2% on June 30, 2026.

INCOME STATEMENT:

For the quarter ending June 30, 2026, the Bank had net income after taxes of $7.3 million compared with net income of $7.0 million for the second quarter of 2025.

The Bank’s net interest income, which is the result of the Bank’s gross interest income net of interest expense, increased from $22.5 million during the second quarter of 2025, to $24.2 million for the second quarter of 2026, an increase of 7.7%. Total interest expense has decreased by $1.2 million. In the second quarter of 2026, total funding costs are made up of interest paid to depositors of $7.9 million and $0.40 million paid on borrowings.

Non-interest income for the quarter ended June 30, 2026 was $6.2 million, down from the second quarter of 2025 by $0.4 million.

Non-interest expense increased by 4.6% from the second quarter of 2025 to $20.6 million for the quarter ended June 30, 2026 compared to $19.7 million in the second quarter of 2025.

BALANCE SHEET:

Total assets were $3.2 billion as of June 30, 2026, a decrease of $85.7 million from June 30, 2025.

The market value of the investment portfolio was $1.1 billion as of June 30, 2026, down $175.2 million from one year prior. Decreases are primarily due to paydowns and maturities of the portfolio. Based on current rate conditions, the Bank estimates investment portfolio cashflow of over $160 million through the remainder of 2026. As of June 30, 2026, the Bank estimates that the portfolio has an average life of approximately 3.5 years and an average effective duration of approximately 2.9 years. The Bank continues to maintain its 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 market interest rates and not a result of credit quality related factors. The unrealized losses net of tax as of June 30, 2026 were $56.6 million compared to $72.4 million on June 30, 2025. The Bank does not view the temporary nature of the book unrealized losses to be a significant risk to its long-term capital position.

Gross loans at the end of the first quarter of 2026 were $1.75 billion, representing a 7.3% or $119.5 million increase from June 30, 2025. The Bank’s largest loan types are commercial real estate loans, making up approximately 46% of the portfolio, followed by about 17% in residential loans and about 14% in multifamily loans. Of the commercial real estate portfolio total, approximately 16% is considered owner-occupied and the remaining 84% are non-owner-occupied. The portfolio is well diversified between industries with no significant concentrations. Nonaccrual loans totaled $9.6 million, or 0.6% of gross loans, as of June 30, 2026. The allowance for credit losses, which is based on estimating credit losses for the life of the loans in the portfolio, totaled $30.3 million, approximately 1.7% of total loans as of June 30, 2026. As of June 30, 2026, net charge-offs represented 0.3% of total gross loans.

In the second quarter of 2026, the Bank completed foreclosure proceedings on a property that had previously been classified as doubtful for financial reporting purposes. A portion of the property is owned by a participating institution. As of June 30, 2026, the Bank’s other real estate owned balance totaled $4.7 million.

Total deposits as of June 30, 2026 were $2.8 billion, decreasing by 4.2% or $120.8 million since June 30, 2025. This decrease was, in large part, caused by the planned decrease of deposits from two large depositors totaling $90 million. The Bank continues to experience 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 approximately 31% of total deposits as of June 30, 2026, consistent with 2025. The Bank estimates approximately 74% of all deposits were fully insured by the FDIC as of June 30, 2026.

The Bank had borrowings of $40.00 million as of June 30, 2026 consistent with the balance as of June 30, 2025. 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 $773.6 million or 24.3% of total assets as of June 30, 2026. In addition, the Bank has available borrowing capacity of approximately $1 billion.

The Bank’s regulatory capital ratios remain well in excess of the minimums to be considered “well capitalized.” As of June 30, 2026, the Bank reported a total risk-based capital ratio of 20.2% and a leverage ratio of 12.6%. The Bank’s US GAAP or book equity was $355.4 million as of June 30, 2026 increasing by $39.0 million since June 30, 2025. The increase is due to net income and changes in the unrealized losses on available for sale securities. 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 $440.5 million as of June 30, 2026.

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 second quarter of 2026, dividends to the Doyle Trust totaled approximately $1.17 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. These factors include, but are not limited to, the following: the strength of the United States economy and the strength of the local economies in California in which we conduct business; the effects of, and changes in, immigration, trade, tariff, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market and monetary fluctuations; the effect of acquisitions we may make; the timely development of competitive new products and services, and the acceptance of these products and services by potential and existing customers; the impact of changes in financial services policies, laws, and regulations, including those concerning banking, taxes, securities, and insurance, and the application thereof by regulatory agencies; the effectiveness of our risk management framework and quantitative models; our ability to maintain adequate liquidity; changes in the level of our nonperforming assets and charge-offs; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the Financial Accounting Standards Board or other accounting standards setters; possible credit related impairments or declines in the fair value of loans and securities held by us; possible impairment charges to goodwill, including any impairment that may result from increased volatility in our stock price; changes in consumer or business spending, borrowing, and savings habits; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; periodic fluctuations in commercial or residential real estate prices or values; our ability to attract or retain deposits (including low cost deposits) or to access government or private lending facilities and other sources of liquidity; the possibility that we may reduce or discontinue the payment of dividends on our common stock; changes in the financial performance and/or condition of our borrowers or depositors; changes in the competitive environment among financial and bank holding companies and other financial service providers; technological changes in banking and financial services; losses in our loan portfolio; systemic or non-systemic bank failures or crises; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism, and/or military conflicts, which could impact business and economic conditions in the United States and abroad; catastrophic events or natural disasters, including earthquakes, drought, climate change or extreme weather events that may affect our assets, communications or computer services, customers, employees or third party vendors; public health crises and pandemics, and their effects on the economic and business environments in which we operate, including on our asset credit quality, business operations, and employees, as well as the impact on general economic and financial market conditions; cybersecurity threats and fraud and the costs of defending against them, including the costs of compliance with legislation or regulations to combat fraud and cybersecurity threats; our ability to recruit and retain key executives, board members and other employees, and our ability to comply with federal and state employment laws and regulations; ongoing or unanticipated regulatory or legal proceedings or outcomes;; and our ability to manage the risks involved in the foregoing.

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 except as required by law.

About Exchange Bank

Headquartered in Sonoma County and founded in 1890, Exchange Bank is a full-service community bank with assets of $3.2 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 21-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)
June 30, 2026 and 2025
(In Thousands)
									Change				% Change
ASSETS		2026				2025			26/25				26/25
Cash and due from banks	$	31,223			$	39,055			$	(7,832	)		-20.05	%
Federal Reserve Bank		88,352				121,161				(32,809	)		-27.08	%
Total Cash and cash equivalents		119,575				160,216				(40,641	)		-25.37	%
Investments
Interest-earning deposits in other financial institutions		-				-				-			0.00	%
Securities available for sale		1,127,682				1,302,857				(175,175	)		-13.45	%
FHLB Stock		15,000				15,000				-			0.00	%
Loans and leases
Leasing		82				1,021				(939	)		-91.97	%
SBA		31,165				28,480				2,685			9.43	%
C&I		194,229				171,762				22,467			13.08	%
Consumer		126,857				139,865				(13,008	)		-9.30	%
Residential		305,286				328,440				(23,154	)		-7.05	%
Multi-Family		251,872				200,452				51,420			25.65	%
CRE		808,159				672,153				136,006			20.23	%
Construction		36,702				92,644				(55,942	)		-60.38	%
		1,754,352				1,634,817				119,535			7.31	%
Less allowance for credit losses		(30,339	)			(34,697	)			4,358			-12.56	%
Net loans and leases		1,724,013				1,600,120				123,893			7.74	%
Bank premises and equipment		23,837				22,795				1,042			4.57	%
Other assets		175,171				169,968				5,203			3.06	%
Total Assets	$	3,185,278			$	3,270,956			$	(85,678	)		-2.62	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Non-Interest Bearing Demand	$	860,618			$	898,283			$	(37,665	)		-4.19	%
Interest Bearing
Transaction		399,586				413,842				(14,256	)		-3.44	%
Money market		566,356				593,006				(26,650	)		-4.49	%
Savings		427,992				463,113				(35,121	)		-7.58	%
Time		495,843				502,970				(7,127	)		-1.42	%
Total Deposits		2,750,395				2,871,214				(120,819	)		-4.21	%
Borrowings		40,000				40,000				-			0.00	%
Other liabilities		39,474				43,323				(3,849	)		-8.88	%
Total liabilities		2,829,869				2,954,536				(124,667	)		-4.22	%
Stockholders' equity		355,409				316,420				38,989			12.32	%
Total Liabilities and Stockholder's Equity	$	3,185,278			$	3,270,956			$	(85,678	)		-2.62	%

 

EXCHANGE BANK
and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For the Period Ended June 30, 2026 and 2025
(In Thousands, except per share amounts)
													Six Months Ended
	Quarter Ended						Six Months Ended						Change				% Change
		2026			2025			2026			2025			26/25			26/25
Interest Income
Interest and fees on loans	$	25,476		$	23,806		$	50,561		$	46,448		$	4,113			8.86	%
Interest on investments securities		7,062			8,194			14,847			16,169			(1,322	)		-8.18	%
Total interest income		32,538			32,000			65,408			62,617			2,791			4.46	%
Interest expense
Interest on deposits		7,896			9,089			15,934			18,200			(2,266	)		-12.45	%
Other interest expense		403			404			802			998			(196	)		-19.64	%
Total interest expense		8,299			9,493			16,736			19,198			(2,462	)		-12.82	%
Net interest income		24,239			22,507			48,672			43,419			5,253			12.10	%
Provision (reversal) for credit losses		100			-			100			-			100			0.00	%
Net interest income after
provision (reversal) for credit losses		24,139			22,507			48,572			43,419			5,153			11.87	%
Non-interest income		6,210			6,597			12,538			12,998			(460	)		-3.54	%
Non interest expense
Salary and benefit costs		11,498			10,757			23,003			21,537			1,466			6.81	%
Other expenses		9,074			8,909			18,195			17,910			285			1.59	%
Total non-interest expense		20,572			19,666			41,198			39,447			1,751			4.44	%
Income before income taxes		9,777			9,438			19,912			16,970			2,942			17.34	%
Provision for income taxes		2,481			2,396			5,110			4,314			796			18.45	%
Net income	$	7,296		$	7,042		$	14,802		$	12,656		$	2,146			16.96	%
Basic earnings per common share	$	4.26		$	3.27		$	8.63		$	7.38		$	1.25			16.96	%
Dividends per share	$	1.35		$	1.30		$	2.65		$	2.60		$	0.05			1.92	%
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 2026 and 2025 was 1,714,344

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20260730005245/en/

Charlotte Radmilovic
SVP, Chief Financial Officer
Exchange Bank
(707) 521-3751

Source: Exchange Bank