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American Riviera Bank Reports Earnings and Community Support

American Riviera Bank (OTC Markets: ARBV) announced today unaudited net income of $1,171,000 ($0.23 per share) for the quarter ended March 31, 2020. This represents a decrease in net income from the $1,768,000 ($0.35 per share) for the same reporting period in the prior year. The Bank reported an annualized return on average assets of 0.67% and return on average equity of 6.27%. The variance from prior year is attributed to conservative risk management practices with the Bank providing $783,000 in allowance for loan losses primarily due to anticipated economic impacts from the COVID-19 pandemic, an increase of $608,000 from the same reporting period in the prior year.

American Riviera Bank entered the COVID-19 crisis in a position of strength and remains well capitalized and highly liquid. The Bank offers robust electronic banking services, including mobile deposit for consumers and remote deposit capture for businesses. We have been able to successfully modify branch operations to safely meet all the needs of our customers despite the need for appropriate social distancing and continue to see tremendous growth of new and existing relationships.

Jeff DeVine, President and Chief Executive Officer stated, “Our thoughts go out to our Central Coast community, individuals, and businesses most deeply affected by the COVID-19 pandemic. American Riviera Bank is playing an important role in the economic stability of Santa Barbara and San Luis Obispo Counties. We are taking extraordinary steps to provide much needed financing and relief to our clients and community during this difficult time.”

As a SBA Preferred Lender, we were able to move quickly and deploy an automated Paycheck Protection Program (PPP) loan application portal. To date, the Bank has funded 416 applications, with an average loan amount of approximately $230,000, for existing business clients in the first round of the CARES Act funding. We have already obtained 134 more SBA PPP approvals thus far with the second round of funding recently announced. Our PPP loans currently represent over $113 million of much needed small business relief and could save almost 12,000 jobs in our community. The number of SBA PPP loans represents almost 2 years of normal new loan production for the Bank, which will be processed, approved, documented and funded in the span of approximately one month. The dollar volume of SBA PPP loans represents over 18% of the total loans outstanding at March 31, 2020.

At the same time, American Riviera Bank has been working closely with existing loan clients negatively affected by the COVID-19 pandemic, and has provided temporary payment deferrals through the date of this release covering $109 million of loans. Approximately 92% of such deferrals are to borrowers wishing to conserve cash for the economic uncertainty and have asked for the principal portion of their payments to be deferred while continuing to pay interest. The remaining 8% is predominantly associated with our residential mortgage portfolio loans where the temporary deferral of both principal and interest is currently industry practice. The sizeable increase in loan loss provision this quarter was primarily driven by qualitative factors in our modeling and a general expectation of expanded credit risk due to the economic effects of COVID-19. For the reasons above, we anticipate continued above-average provisioning and reserve build in subsequent periods, but anticipate that the origination fees paid by the SBA on PPP loans may substantially offset such incremental credit expenses.

The Bank reported strong loan growth, with gross loans increasing $83 million, or 16% from March 31, 2019, reaching $604 million at March 31, 2020. This increase in loans is primarily due to new loan origination with the Bank originating $39 million in new loans outstanding, excluding draws on existing lines of credit, in the first quarter of 2020.

The Bank has experienced significant growth, reporting $743 million in total assets as of March 31, 2020, representing a $105 million, or 16% increase from March 31, 2019. Total deposits increased 18% from March 31, 2019 reaching $645 million at March 31, 2020. Non-interest bearing demand deposit accounts increased $32 million, or 17% from the same reporting period in the prior year, reaching $219 million at March 31, 2020. Interest bearing demand deposit accounts increased $41 million, or 54% from the same reporting period in the prior year, reaching $117 million at March 31, 2020. Net interest margin increased to 4.27% for the quarter due to the Bank’s ability to deploy excess liquidity into loans and a reduction in the cost of deposits due to Federal Reserve actions during the quarter.

As of March 31, 2020, American Riviera Bank has a strong capital position with a Tier 1 Capital Ratio of 11%; well above the regulatory guideline of 8% for well capitalized institutions. The tangible book value per share of American Riviera Bank common stock is $14.30 at March 31, 2020.

Company Profile

American Riviera Bank is a full-service community bank focused on serving the lending and deposit needs of businesses and consumers on the Central Coast of California. The state-chartered bank opened for business on July 18, 2006, with the support of local shareholders. Full-service branches are located in Santa Barbara, Montecito, Goleta, San Luis Obispo and Paso Robles. The Bank provides commercial, residential mortgage, construction and Small Business Administration lending services as well as convenient online and mobile technology. For ten consecutive years the Bank has been recognized for strong financial performance by the Findley Reports, and has received the highest “Super Premier” rating from Findley every year since 2016. As of December 31, 2019, the Bank was rated five stars by BauerFinancial.

Statements concerning future performance, developments or events concerning expectations for growth and market forecasts, and any other guidance on future periods, constitute forward looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, effects of interest rate changes, ability to control costs and expenses, impact of consolidation in the banking industry, financial policies of the US government, and general economic conditions.

Balance Sheets (unaudited)
(dollars in thousands)

Mar 31,

Mar 31,

One Year

2020

2019

Change

Assets
Cash & Due From Banks

$

59,793

$

48,835

22

%

Fed Funds Sold

-

-

-

Securities

50,518

44,123

14

%

 
Loans

603,631

520,857

16

%

Allowance For Loan Losses

(7,171

)

(5,661

)

27

%

Net Loans

596,460

515,196

16

%

 
Premise & Equipment

6,832

5,588

22

%

Goodwill and Other Intangibles

5,293

5,472

-3

%

Other Assets (a)

24,514

19,524

26

%

Total Assets

$

743,410

$

638,738

16

%

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

219,331

$

187,048

17

%

NOW Accounts

117,453

76,370

54

%

Other Interest Bearing Deposits

308,666

282,874

9

%

Total Deposits

645,450

546,292

18

%

 
Borrowed Funds

10,000

15,000

-33

%

Other Liabilities (a)

10,723

6,562

63

%

Total Liabilities

666,173

567,854

17

%

 
Common Stock

55,084

54,513

1

%

Retained Earnings

22,395

16,600

35

%

Other Capital

(242

)

(229

)

6

%

Total Shareholders' Equity

77,237

70,884

9

%

 
Total Liabilities & Shareholders' Equity

$

743,410

$

638,738

16

%

Notes:
(a) Other assets and other liabilities primarily increased due to lease commencements for the main branch and lending office in San Luis Obispo and the renewal of main branch lease in Santa Barbara. As of March 31, 2020 the right-of-use asset totals $7.3 million and the operating lease liability is $7.7 million.
Balance Sheets (unaudited)
(dollars in thousands)

March 31,

December 31,

September 30,

June 30,

March 31,

2020

2019

2019

2019

2019

Assets
Cash & Due From Banks

$

59,793

$

66,472

$

79,101

$

47,640

$

48,835

Fed Funds Sold

-

-

-

-

-

Securities

50,518

43,403

41,797

42,961

44,123

 
Loans

603,631

578,458

547,956

541,869

520,857

Allowance For Loan Losses

(7,171

)

(6,366

)

(6,145

)

(5,883

)

(5,661

)

Net Loans

596,460

572,092

541,811

535,986

515,196

 
Premise & Equipment

6,832

6,878

6,812

6,528

5,588

Goodwill and Other Intangibles

5,293

5,337

5,382

5,427

5,472

Other Assets (a)

24,514

24,753

22,364

23,054

19,524

Total Assets

$

743,410

$

718,935

$

697,267

$

661,596

$

638,738

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

219,331

$

216,671

$

207,643

$

186,845

$

187,048

NOW Accounts

117,453

87,906

79,509

73,782

76,370

Other Interest Bearing Deposits

308,666

316,586

316,124

304,223

282,874

Total Deposits

645,450

621,163

603,276

564,850

546,292

 
Borrowed Funds

10,000

10,000

10,000

15,000

15,000

Other Liabilities (a)

10,723

11,629

9,452

8,806

6,562

Total Liabilities

666,173

642,792

622,728

588,656

567,854

 
Common Stock

55,084

55,034

54,889

54,739

54,513

Retained Earnings

22,395

21,224

19,653

18,105

16,600

Other Capital

(242

)

(115

)

(3

)

96

(229

)

Total Shareholders' Equity

77,237

76,143

74,539

72,940

70,884

 
Total Liabilities & Shareholders' Equity

$

743,410

$

718,935

$

697,267

$

661,596

$

638,738

Notes:
(a) As of March 31, 2020 the right-of-use asset totals $7.3 million and the operating lease liability is $7.7 million. The San Luis Obispo branch was added for the quarter ending June 30, 2019 and the Santa Barbara Branch increased as of December 31, 2019 with the expectation to extend the lease term.
Statements of Income (unaudited)
(dollars in thousands, except per share data)
Quarter Ended

Mar 31,

Mar 31,

2020

2019

Change

Interest Income
Interest and Fees on Loans

$

7,537

$

6,680

13

%

Net Fair Value Amortization Income

115

222

-48

%

Interest on Securities

323

284

14

%

Interest on Fed Funds

0

1

-100

%

Interest on Due From Banks

187

198

-6

%

Total Interest Income

8,162

7,385

11

%

 
Interest Expense
Interest Expense on Deposits

862

825

4

%

Interest Expense on Borrowings

53

141

-62

%

Total Interest Expense

915

966

-5

%

 
Net Interest Income

7,247

6,419

13

%

Provision for Loan Losses

783

175

347

%

Net Interest Income After Provision

6,464

6,244

4

%

 
Non-Interest Income
Service Charges, Commissions and Fees

502

427

18

%

Other Non-Interest Income

193

166

16

%

Total Non-Interest Income

695

593

17

%

 
Non-Interest Expense
Salaries and Employee Benefits

3,452

2,692

28

%

Occupancy and Equipment

685

494

39

%

Other Non-Interest Expense

1,383

1,313

5

%

Total Non-Interest Expense

5,520

4,499

23

%

 
Net Income Before Provision for Taxes

1,639

2,338

-30

%

Provision for Taxes

468

570

-18

%

Net Income

$

1,171

$

1,768

-34

%

 
Shares (end of period)

5,047,696

5,020,829

1

%

Earnings Per Share - Basic

$

0.23

$

0.35

-34

%

Return on Average Assets

0.67

%

1.19

%

-44

%

Return on Average Equity

6.27

%

11.90

%

-47

%

Net Interest Margin

4.27

%

4.42

%

-3

%

Five Quarter Statements of Income (unaudited)
(dollars in thousands)
Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2020

2019

2019

2019

2019

Interest Income
Interest and Fees on Loans

$

7,537

$

7,387

$

7,224

$

6,992

$

6,680

Net Fair Value Amortization Income

115

62

71

86

222

Interest on Securities

323

247

264

230

284

Interest on Fed Funds

-

-

-

-

1

Interest on Due From Banks

187

290

291

205

198

Total Interest Income

8,162

7,986

7,850

7,513

7,385

 
Interest Expense
Interest Expense on Deposits

862

1,085

1,065

998

825

Interest Expense on Borrowings

53

43

32

60

141

Total Interest Expense

915

1,128

1,097

1,058

966

 
Net Interest Income

7,247

6,858

6,753

6,455

6,419

Provision for Loan Losses (a)

783

205

205

220

175

Net Interest Income After Provision

6,464

6,653

6,548

6,235

6,244

 
Non-Interest Income
Service Charges, Commissions and Fees

502

566

523

580

427

Other Non-Interest Income

193

199

216

113

166

Total Non-Interest Income

695

765

739

693

593

 
Non-Interest Expense
Salaries and Employee Benefits

3,452

3,212

3,137

2,881

2,692

Occupancy and Equipment

685

665

653

546

494

Other Non-Interest Expense

1,383

1,309

1,303

1,366

1,313

Total Non-Interest Expense

5,520

5,186

5,093

4,793

4,499

 
Net Income Before Provision for Taxes

1,639

2,232

2,194

2,135

2,338

Provision for Taxes

468

660

647

629

570

Net Income

$

1,171

$

1,572

$

1,547

$

1,506

$

1,768

 
Shares (end of period)

5,047,696

5,033,348

5,031,788

5,028,906

5,020,829

Earnings Per Share - Basic

$

0.23

$

0.31

$

0.31

$

0.30

$

0.35

Notes:
(a) On March 31, 2020 the Bank recorded an additional $600k of allowance for loan loss provision due to anticipated economic impacts from the COVID 19 pandemic.
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
At or for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2020

2019

2019

2019

2019

Income and performance ratios:
Net Income

$

1,171

$

1,572

$

1,547

$

1,506

$

1,768

Earnings per share - basic

0.23

0.31

0.31

0.30

0.35

Return on average assets

0.67

%

0.85

%

0.89

%

0.95

%

1.19

%

Return on average equity

6.27

%

8.04

%

8.09

%

8.46

%

11.90

%

Net interest margin

4.27

%

4.06

%

4.23

%

4.27

%

4.42

%

Efficiency ratio

69.18

%

68.49

%

68.46

%

66.90

%

63.40

%

 
Asset quality:
Allowance for loan and lease losses

$

7,171

$

6,366

$

6,145

$

5,883

$

5,661

Nonperforming assets

341

284

276

281

292

Allowance for loan and lease losses / total loans and leases

1.19

%

1.10

%

1.12

%

1.09

%

1.09

%

Net charge-offs / average loans and leases (annualized)

-0.01

%

-0.01

%

-0.04

%

0.00

%

0.04

%

Texas ratio

0.43

%

0.37

%

0.37

%

0.38

%

0.41

%

 
Other ratios:
Tier 1 risk-based capital (a)

11.17

%

11.35

%

11.56

%

11.56

%

11.76

%

Total risk-based capital (a)

12.30

%

12.40

%

12.62

%

12.61

%

12.81

%

Common equity tier 1 risk-based capital (a)

11.17

%

11.35

%

11.56

%

11.56

%

11.76

%

Tier 1 leverage ratio (a)

10.04

%

10.04

%

10.32

%

10.48

%

10.55

%

 
Equity and share related:
Common equity

$

77,237

76,143

$

74,539

$

72,940

$

70,884

Book value per share

15.35

15.15

14.81

14.49

14.16

Tangible book value per share

14.30

14.09

13.74

13.41

13.07

Stock closing price per share

12.00

19.80

17.85

18.35

18.25

Number of shares issued and outstanding

5,048

5,033

5,032

5,029

5,021

Notes:
(a) Presented as projected for most recent quarter and actual for the remaining periods.

Contacts:

American Riviera Bank
www.americanrivierabank.com
805-965-5942
Michelle Martinich

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