Santa Rosa-based Exchange Bank earned $12.2 million in net income over the course of 2011, a 19 percent increase from the prior year that the bank attributed to developments such as strong core earnings and a reduction in problem assets.
The 122-year-old bank announced today that its total assets grew to $1.6 billion in 2011, up from $1.52 billion at the end of 2010. Problem assets decreased by 26 percent at the end of 2011, and non-performing assets decreased by 8.5 percent.
Earnings per diluted share were $5.74 in 2011, up from $4.96 in 2010. Exchange Bank will not yet reinstate its cash dividend to common shareholders, which was suspended in 2009 as part of an effort to strengthen the bank’s position during the financial crisis.
That dividend is the primary funding mechanism for the Frank P. Doyle and Polly O’Meara Doyle Scholarship Fund, which has distributed $76 million to over 115,000 students at Santa Rosa Junior College since 1948.
“Our financial performance in 2011 puts us closer to our highest priority objective of reinstating a cash dividend to our shareholders. Continued improvement in problem credit resolution and overall economic stability, which is being tempered by high levels of unemployment and weak consumer spending, will be necessary for us to obtain our primary objective,” said President and CEO William Schrader, in a statement.
Net interest income was $66 million in 2011, and non-interest income was $20.8 million. An increase in core, non-interest bearing accounts lead a $65.7 million increase in deposits over 2011.
Net loans increased by $2.3 million in 2011, to a total of $1.02 billion. In its report, the bank said that the flat growth was “reflective of a cautious approach to additional debt by both customers and businesses.” The bank’s year-end risk-based capital ratio was 15.2 percent.
Net income in the fourth quarter of 2011 was also higher than the same period in 2010, at $3.2 million versus $2.2 million. Total interest income in the quarter was lower, at $17.6 million versus $18.2 million for the quarter ending Dec. 31 in 2010.***
After a spillover of borrowing demand from October, Redwood Credit Union lent a record amount to businesses in December.
Much of that volume involved relatively large real estate acquisitions and debt refinancing, said Michael Downey, the credit union’s senior vice president of business services.
Yet Mr. Downey pointed to a specific metric -- a 40 percent increase in smaller “general business” loans -- as an indicator that the region’s small businesses could be picking up steam going into 2012.
“That’s a big increase in a smaller number, but I think it’s significant,” he said.
The smaller-sized loans represent the lines of credit that business owners use to finance their day-to-day operations, including inventory and some equipment. Matching that cash flow with a forecast for future demand is a constant challenge, particularly at a time of economic uncertainty.
That uncertainty may have diminished for the businesses that have survived the recession: Mr. Downey said that he has observed a growing sense of economic confidence among business owners. While he couldn’t directly credit that sentiment with the uptick, he said it was an “encouraging sign.”
Mr. Downey said that small businesses were the force behind the lending increase, though no particular industry or region stood out. Napa County could prove to be a standout area for commercial lending in the future, however, and Mr. Downey said that he is watching the area with interest as it experiences month-over-month job growth.