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American Riviera Bank Reports on Earnings and Paycheck Protection Program

American Riviera Bank (OTC Markets: ARBV) announced today unaudited net income of $2,736,000 ($0.54 per share) for the six months ended June 30, 2020. This represents a decrease in net income from the $3,274,000 ($0.65 per share) for the same reporting period in the prior year. The Bank reported an annualized return on average assets of 0.72% and return on average equity of 7.23%. The variance from prior year is primarily due to an increase in the allowance for loan losses related to COVID-19 pandemic economic uncertainty, with the Bank reporting $1,493,000 in loan loss provision in the first six months of 2020, an increase of $1,098,000 from the same reporting period in the prior year. The Bank reported unaudited net income of $1,565,000 ($0.31 per share) for the second quarter ended June 30, 2020 compared to $1,506,000 ($0.30 per share) for the same quarter last year.

Jeff DeVine, President and Chief Executive Officer, stated, “We are fully committed to the safety of our employees and clients, while helping the Central Coast adapt to the impact of the COVID-19 pandemic. The Bank’s liquidity and capital position provide considerable capacity to lend, and we will continue to build new relationships, provide flexibility to our existing clients and build value for our shareholders despite the pandemic."

American Riviera Bank has been able to continue to provide a high level of service through the COVID-19 pandemic with modified branch hours, robust electronic banking services and quick responses to customers’ lending and deposit needs. We originated over 600 Small Business Administration Paycheck Protection Program (PPP) loans, with an average loan amount of approximately $194 thousand, representing $117 million of much needed small business relief to our community and supporting approximately 12,300 local jobs. The Bank has received $4.2 million in PPP origination fees and recognized $397 thousand as income in the quarter ended June 30, 2020, with the remainder to be amortized over the life of the loans.

The Bank has been working closely with existing loan clients negatively affected by the COVID-19 pandemic, and has provided temporary, 90-day payment deferrals as of June 30, 2020 covering $108 million of loans, unchanged from March 31, 2020. Approximately 83% of such deferrals are to borrowers wishing to conserve cash for the economic uncertainty and who have asked for the principal portion of their payments to be deferred while continuing to pay interest. The remaining 17% are full deferrals of both principal and interest, with almost half of these 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 year-to-date was primarily driven by qualitative factors in our loan loss methodology related to COVID-19 pandemic economic uncertainty, and not by actual delinquencies or defaults. At June 30, 2020, the Bank had no other real estate owned and no loans 90 days or more past due.

We continued to see tremendous growth of new and existing relationships, reporting $903 million in total assets as of June 30, 2020, representing a $241 million, or 36% increase from June 30, 2019. Total loans, excluding PPP, increased $73 million, or 14% from June 30, 2019, reaching $615 million at June 30, 2020. Total deposits increased 40% from June 30, 2019 reaching $793 million at June 30, 2020. Non-interest bearing demand deposit accounts increased $142 million, or 76% from the same reporting period in the prior year. Interest bearing demand deposit accounts increased $48 million, or 65% from the same reporting period in the prior year. Although deposit growth was accelerated by the funding of PPP loans into existing client accounts, there were significant new account relationships moved from other financial institutions. New deposit account openings net of account closures are 550 in the second quarter 2020 versus 306 in the second quarter of 2019.

As of June 30, 2020, American Riviera Bank was highly liquid with $142 million in cash and available-for-sale securities, and well capitalized 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 was $14.62 at June 30, 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 March 31, 2020, the Bank was rated five stars by BauerFinancial. The Bank was rated “Outstanding” by the Federal Deposit Insurance Corporation in 2020 for its performance under the Community Reinvestment Act.

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)

Jun 30,

Jun 30,

One Year

2020

2019

Change

Assets
Cash & Due From Banks

$

84,722

$

47,640

78

%

Fed Funds Sold

-

-

n/a

Securities

57,099

42,961

33

%

 
Loans (excluding PPP)

615,367

541,869

14

%

PPP Loans

116,531

-

n/a

Allowance For Loan Losses

(7,890

)

(5,883

)

34

%

Net Loans

724,008

535,986

35

%

 
Premise & Equipment

6,731

6,528

3

%

Goodwill and Other Intangibles

5,248

5,427

-3

%

Other Assets

24,846

23,054

8

%

Total Assets

$

902,654

$

661,596

36

%

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

328,748

$

186,845

76

%

NOW Accounts

121,741

73,782

65

%

Other Interest Bearing Deposits

342,668

304,223

13

%

Total Deposits

793,157

564,850

40

%

 
Borrowed Funds

20,000

15,000

33

%

Other Liabilities

9,772

8,806

11

%

Total Liabilities

822,929

588,656

40

%

 
Common Stock

55,418

54,739

1

%

Retained Earnings

23,960

18,105

32

%

Other Capital

347

96

261

%

Total Shareholders' Equity

79,725

72,940

9

%

 
Total Liabilities & Shareholders' Equity

$

902,654

$

661,596

36

%

Balance Sheets (unaudited)
(dollars in thousands)

June 30,

March 31,

December 31,

September 30,

June 30,

2020

2020

2019

2019

2019

Assets
Cash & Due From Banks

$

84,722

$

59,793

$

66,472

$

79,101

$

47,640

Fed Funds Sold

-

-

-

-

-

Securities

57,099

50,518

43,403

41,797

42,961

 
Loans (excluding PPP)

615,367

603,631

578,458

547,956

541,869

PPP Loans

116,531

-

-

-

-

Allowance For Loan Losses

(7,890

)

(7,171

)

(6,366

)

(6,145

)

(5,883

)

Net Loans

724,008

596,460

572,092

541,811

535,986

 
Premise & Equipment

6,731

6,832

6,878

6,812

6,528

Goodwill and Other Intangibles

5,248

5,293

5,337

5,382

5,427

Other Assets

24,846

24,514

24,753

22,364

23,054

Total Assets

$

902,654

$

743,410

$

718,935

$

697,267

$

661,596

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

328,748

$

219,331

$

216,671

$

207,643

$

186,845

NOW Accounts

121,741

117,453

87,906

79,509

73,782

Other Interest Bearing Deposits

342,668

308,666

316,586

316,124

304,223

Total Deposits

793,157

645,450

621,163

603,276

564,850

 
Borrowed Funds

20,000

10,000

10,000

10,000

15,000

Other Liabilities

9,772

10,723

11,629

9,452

8,806

Total Liabilities

822,929

666,173

642,792

622,728

588,656

 
Common Stock

55,418

55,084

55,034

54,889

54,739

Retained Earnings

23,960

22,395

21,224

19,653

18,105

Other Capital

347

(242

)

(115

)

(3

)

96

Total Shareholders' Equity

79,725

77,237

76,143

74,539

72,940

 
Total Liabilities & Shareholders' Equity

$

902,654

$

743,410

$

718,935

$

697,267

$

661,596

Statements of Income (unaudited)
(dollars in thousands, except per share data)

Quarter Ended

Six Months Ended

Jun 30,

Jun 30,

Jun 30,

Jun 30,

2020

2019

Change

2020

2019

Change

Interest Income
Interest and Fees on Loans

$

7,546

$

6,992

8

%

$

15,083

$

13,672

10

%

Interest and Fees on PPP Loans

611

-

n/a

611

-

n/a

Net Fair Value Amortization Income

46

86

-47

%

162

308

-47

%

Interest on Securities

246

230

7

%

569

514

11

%

Interest on Fed Funds

-

-

n/a

-

1

-100

%

Interest on Due From Banks

72

205

-65

%

259

403

-36

%

Total Interest Income

8,521

7,513

13

%

16,683

14,898

12

%

 
Interest Expense
Interest Expense on Deposits

501

998

-50

%

1,363

1,822

-25

%

Interest Expense on Borrowings

48

60

-20

%

101

202

-50

%

Total Interest Expense

549

1,058

-48

%

1,464

2,024

-28

%

 
Net Interest Income

7,972

6,455

24

%

15,219

12,874

18

%

Provision for Loan Losses

710

220

223

%

1,493

395

278

%

Net Interest Income After Provision

7,262

6,235

16

%

13,726

12,479

10

%

 
Non-Interest Income
Service Charges, Commissions and Fees

463

580

-20

%

965

1,007

-4

%

Other Non-Interest Income

159

113

41

%

352

279

26

%

Total Non-Interest Income

622

693

-10

%

1,317

1,286

2

%

 
Non-Interest Expense
Salaries and Employee Benefits

3,495

2,881

21

%

6,947

5,573

25

%

Occupancy and Equipment

666

546

22

%

1,351

1,040

30

%

Other Non-Interest Expense

1,534

1,366

12

%

2,917

2,679

9

%

Total Non-Interest Expense

5,695

4,793

19

%

11,215

9,292

21

%

 
Net Income Before Provision for Taxes

2,189

2,135

3

%

3,828

4,473

-14

%

Provision for Taxes

624

629

-1

%

1,092

1,199

-9

%

Net Income

$

1,565

$

1,506

4

%

$

2,736

$

3,274

-16

%

 
Shares (end of period)

5,069,523

5,028,906

1

%

5,069,523

5,028,906

1

%

Earnings Per Share - Basic

$

0.31

$

0.30

3

%

$

0.54

$

0.65

-17

%

Return on Average Assets

0.76

%

0.95

%

-20

%

0.72

%

1.07

%

-33

%

Return on Average Equity

8.18

%

8.46

%

-3

%

7.23

%

10.06

%

-28

%

Net Interest Margin

3.98

%

4.27

%

-7

%

4.11

%

4.34

%

-5

%

Five Quarter Statements of Income (unaudited)
(dollars in thousands)

Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2020

2020

2019

2019

2019

Interest Income
Interest and Fees on Loans

$

7,546

$

7,537

$

7,387

$

7,224

$

6,992

Interest and Fees on PPP Loans

611

-

-

-

-

Net Fair Value Amortization Income

46

115

62

71

86

Interest on Securities

246

323

247

264

230

Interest on Fed Funds

-

-

-

-

-

Interest on Due From Banks

72

187

290

291

205

Total Interest Income

8,521

8,162

7,986

7,850

7,513

 
Interest Expense
Interest Expense on Deposits

501

862

1,085

1,065

998

Interest Expense on Borrowings

48

53

43

32

60

Total Interest Expense

549

915

1,128

1,097

1,058

 
Net Interest Income

7,972

7,247

6,858

6,753

6,455

Provision for Loan Losses (a)

710

783

205

205

220

Net Interest Income After Provision

7,262

6,464

6,653

6,548

6,235

 
Non-Interest Income
Service Charges, Commissions and Fees

463

502

566

523

580

Other Non-Interest Income

159

193

199

216

113

Total Non-Interest Income

622

695

765

739

693

 
Non-Interest Expense
Salaries and Employee Benefits

3,495

3,452

3,212

3,137

2,881

Occupancy and Equipment

666

685

665

653

546

Other Non-Interest Expense

1,534

1,383

1,309

1,303

1,366

Total Non-Interest Expense

5,695

5,520

5,186

5,093

4,793

 
Net Income Before Provision for Taxes

2,189

1,639

2,232

2,194

2,135

Provision for Taxes

624

468

660

647

629

Net Income

$

1,565

$

1,171

$

1,572

$

1,547

$

1,506

 
Shares (end of period)

5,069,523

5,047,696

5,033,348

5,031,788

5,028,906

Earnings Per Share - Basic

$

0.31

$

0.23

$

0.31

$

0.31

$

0.30

Notes:
(a)In the first and second quarter of 2020, the Bank recorded additional allowance for loan loss provision due to potential 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

June 30,

March 31,

December 31,

September 30,

June 30,

2020

2020

2019

2019

2019

Income and performance ratios:
Net Income

$

1,565

$

1,171

$

1,572

$

1,547

$

1,506

Earnings per share - basic

0.31

0.23

0.31

0.31

0.30

Return on average assets

0.76

%

0.67

%

0.85

%

0.89

%

0.95

%

Return on average equity

8.18

%

6.27

%

8.04

%

8.09

%

8.46

%

Net interest margin

3.98

%

4.27

%

4.06

%

4.23

%

4.27

%

Net interest margin (excluding PPP loans)

4.12

%

n/a

n/a

n/a

n/a

Efficiency ratio

65.96

%

69.18

%

68.49

%

68.46

%

66.90

%

 
Asset quality:
Allowance for loan and lease losses

$

7,890

$

7,171

$

6,366

$

6,145

$

5,883

Nonperforming assets

40

341

284

276

281

Allowance for loan and lease losses / total loans and leases

1.08

%

1.19

%

1.10

%

1.12

%

1.09

%

Allowance for loan and lease losses / total loans and leases (excluding PPP loans) (b)

1.28

%

n/a

n/a

n/a

n/a

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

-0.01

%

‐0.01%

-0.01

%

-0.04

%

0.00

%

Texas ratio

0.05

%

0.43

%

0.37

%

0.37

%

0.38

%

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

11.31

%

11.17

%

11.35

%

11.56

%

11.56

%

Total risk-based capital (a)

12.54

%

12.30

%

12.40

%

12.62

%

12.61

%

Common equity tier 1 risk-based capital (a)

11.31

%

11.17

%

11.35

%

11.56

%

11.56

%

Tier 1 leverage ratio (a)

8.87

%

10.04

%

10.04

%

10.32

%

10.48

%

 
Equity and share related:
Common equity

$

79,725

77,237

$

76,143

$

74,539

$

72,940

Book value per share

15.66

15.35

15.15

14.81

14.49

Tangible book value per share

14.62

14.30

14.09

13.74

13.41

Stock closing price per share

12.25

12.00

19.80

17.85

18.35

Number of shares issued and outstanding

5,070

5,048

5,033

5,032

5,029

Notes:
(a)Presented as projected for most recent quarter and actual for the remaining periods.
(b)PPP loans are 100% guaranteed by the Small Business Administration and not subject to provision for loan and lease losses.

Contacts:

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

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