Citing gains from real estate sales and the federal corporate income tax cut, Exchange Bank (OTC: EXSR) on Wednesday announced its first-quarter after-tax profit increased 67.3 percent, or $4.47 million, from a year before.
That quarterly profit amounted to $11.10 million, compared with $6.63 million in the first quarter of 2017.
“During the first quarter of 2018, the bank successfully completed the disposition of other real estate held for sale, which contributed pretax gains of approximately $3.25 million,” the announcement stated.
The Santa Rosa-based bank also estimated that the effect of lowering its federal income tax rate from 35 percent to 21 percent in 2018 contributed about $1.70 million to net income after tax during the first quarter, ended March 31.
“While this was another strong quarter of financial performance, as demonstrated by the increased net interest income, it is important to note that the unusual nature of the gains on the sale of other real estate owned, totaling approximately $3.25 million, is not anticipated in future periods. Conversely, the positive benefit from a lower federal income tax rate will continue to add value for years to come,” stated Greg Jahn, executive vice president and CFO.
“Exclusive of the non-recurring gain on the sale of OREO (other real estate owned), the strength in pretax earnings was driven primarily by continued growth in loans and investments fueled by the strength of an extraordinary increase in deposits, leading to an increase in net interest income of approximately $3.0 million during the first quarter of 2018, a 15.5 percent increase over the similar quarter in 2017. Loans grew by $91 million over the 12 months ending March 31, 2018, an increase of 6.4 percent, while liquid investments grew by $378 million, an increase of 57 percent,” the announcement stated.
The bank also stated a $400,000 increase in noninterest income in the quarter was the driven by increases in gain on sale of Small Business Administration loans, as well as income generated by the bank’s trust and investment business.
“We remain committed to identifying ways in which we can support our community and colleagues after the most devastating wildfires in California history,” stated Gary Hartwick, president and CEO. “We have developed a number of innovative and low cost loan products designed to help finance the rebuild efforts. We are grateful that our positive financial results leave us in a great position to assist the community as we move forward through rebuilding.”
Exchange Bank paid a quarterly cash dividend of 95 cents per share on common stock outstanding to shareholders on March 16. Of the dividend, 50.44 percent goes to the Doyle Trust, which funds Doyle scholarships at Santa Rosa Junior College.
The price of the bank’s stock was unchanged up to a half-hour of the end of the Wednesday session, priced at $165.25 a share.