SANTA ROSA -- Net quarterly income at Santa Rosa's Exchange Bank was up 34 percent comparing the three -month period ended June 30 to the same period last year, driven largely by new loans and improvements to asset quality, the bank announced today.

Exchange Bank earned $3.81 million in after-tax income for the second quarter. The $7 million in net income the bank reported for the first half of the year was up 21 percent over the same period in 2012.

"We are pleased to report these stronger-than-expected results for our second quarter," said William Schrader, president and chief executive of Exchange Bank, in a statement. "We are grateful for the good work by our employees and appreciate the support from the community. We also remain mindful that our work is not yet finished, many of our customers are still struggling and there remain some uncertainties in the health of our local and national economy."

Subtracting the allowance for loan losses, net loans increased $22.6 million compared to the same period in 2012, at $1.06 billion. A 6.36 percent increase in the bank's real estate loan portfolio dollar volume drove that increase, while consumer loans declined in volume by nearly 9 percent and commercial loans by 3.6 percent.

The bank had a loan loss provision of $800,000 for the quarter, compared to $2.5 million during the same period last year. As a mark of steadily improving asset quality after the worst of the recession, the bank has had less than $100,000 in loans charged off through the first half of this year. Exchange Bank saw net charge offs of $1.6 million for the same period last year.

Exchange Bank had net assets of $1.69 billion at the end of the quarter, up 3.65 percent. Total deposits were up $88 million versus the comparable quarter, at $1.49 billion.

The bank decreased its overhead by more than $2 million comparing the six-month periods. Its efficiency ratio -- describing expenses as a percentage of revenue -- was 66 percent for the recent quarter, compared to 68 percent for the same quarter in 2012.

Diluted earnings per share were $2.10 for the quarter, compared to $1.32 in the same three months period last year. Equity available to shareholders was $146.9 million, compared to $167.7 million as of June 30 last year.

Exchange Bank paid a quarterly cash dividend of 25 cents per share to its common stockholders on June 21. The dividend amounts to a payment of $218,579 to the Frank P. Doyle and Polly O'Meara Doyle Trust, which administers the Doyle Scholarship at Santa Rosa Junior College and owns 51 percent of Exchange Bank stock.