Exchange Bank announces first-quarter 2009 results

SANTA ROSA, April 29, 2009 – Exchange Bank announced a loss of $10.3 million for the first quarter of 2009, up from a $7.5 million loss for fourth quarter 2008.

The bank took a charge of $20.0 million as a provision for loan losses, which was reflected in the statement for the quarter. Net interest income at $16.2 million and non-interest income at $4.7 million represented 99 percent and 96 percent of the prior year amounts, respectively.

“Our first priority is to return Exchange Bank to sustained profitability,” said William Reinking, the bank’s chairman and chief executive officer. “The board has approved management’s recommendation to deal swiftly and aggressively with distressed loans, to put them behind us and thereby more quickly deliver a return to operating profitability. As we stated a little more than a year ago, with very few exceptions, the credit challenges we face are related to our well-established connection with professional developers who are engaged in the residential construction business. We continue to work through those challenges, and with these steps, we believe we are positioning the bank for accelerated recovery.”

Total deposits were reported at $1.375 billion, slightly higher than the $1.372 billion in same period of last year. Total loans were $1.152 billion, down from $1.195 billion at the same time last year. Commercial loans increased nearly 11 percent year-over-year to $304 million.

“While the impact of the severe economic conditions around us is clearly visible in our results this quarter, there is significant strength in our business and in the confidence expressed by our customers and our community,” said William Schrader, president of the bank. “That support, which translates into one of the strongest positions of liquidity and capital we’ve seen in our history, allows us to take this bold step and better positions us to remove distressed loans from our balance sheet. That, in turn, we believe will pave the way for an accelerated return to profitability, which is job one for all of us at Exchange Bank.”