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American Riviera Bank Reports Earnings and Growth

American Riviera Bank (OTC Markets: ARBV) announced today unaudited net income of $5,000,000 ($0.99 per share) for the nine months ended September 30, 2020. This represents a 4% increase in net income from the $4,821,000 ($0.96 per share) for the same reporting period in the prior year. The Bank reported record unaudited net income of $2,264,000 ($0.45 per share) for the third quarter ended September 30, 2020. This represents a 46% increase from the $1,547,000 ($0.31 per share) for the same quarter last year.

Jeff DeVine, President and Chief Executive Officer, stated, “Despite significant uncertainty in the economy, the Bank generated record earnings in the third quarter, reflecting the diversity of our business model and growing market share position. Thanks to the hard work of our employees and our solid financial footing, we have been able to serve as economic first responders to our clients and Central Coast communities impacted by the COVID-19 pandemic.”

The Bank has experienced a significant decrease in temporary loan payment deferrals for clients negatively affected by the COVID-19 pandemic. Total loans on deferral at September 30, 2020 were approximately $18 million, representing 3% of total loans excluding SBA PPP, and have notably fallen from the $108 million reported at June 30, 2020. Approximately $5 million 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 $13 million are full deferrals of both principal and interest on loans secured by commercial real estate with significant equity cushion (see detail on Loan Deferrals exhibit). 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 September 30, 2020, the Bank had no other real estate owned and no loans 90 days or more past due.

The Bank has experienced tremendous growth in new and existing relationships, reporting $930 million in total assets as of September 30, 2020, which represents a $233 million or 33% increase from September 30, 2019. Total loans including SBA PPP increased 32% from September 30, 2019, reaching $722 million at September 30, 2020. Total loans excluding SBA PPP increased $57 million or 10% from September 30, 2019, reaching $605 million at September 30, 2020. Total deposits increased 37% from September 30, 2019, reaching $829 million at September 30, 2020. Non-interest bearing demand deposit accounts increased $123 million or 59% from the same reporting period in the prior year. Interest bearing demand deposit accounts increased $31 million or 39% from the same reporting period in the prior year.

As of September 30, 2020, American Riviera Bank was highly liquid with $179 million in cash and available-for-sale securities, and well capitalized with a Tier 1 Capital Ratio of 12% (well above the regulatory guideline of 8% for well capitalized institutions). The tangible book value per share of American Riviera Bank common stock was $15.11 at September 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 June 30, 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)
Sep 30,Sep 30,One Year

2020

2019

Change
Assets
Cash & Due From Banks

$

105,157

$

79,101

33

%

Securities

73,886

41,797

77

%

 
Loans (excluding PPP)

604,728

547,956

10

%

PPP Loans

117,361

-

n/a

Allowance For Loan Losses

(8,040

)

(6,145

)

31

%

Net Loans

714,049

541,811

32

%

 
Premise & Equipment

6,634

6,812

-3

%

Goodwill and Other Intangibles

5,203

5,382

-3

%

Other Assets

25,287

22,364

13

%

Total Assets

$

930,216

$

697,267

33

%

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

331,035

$

207,643

59

%

NOW Accounts

110,476

79,509

39

%

Other Interest Bearing Deposits

387,293

316,124

23

%

Total Deposits

828,804

603,276

37

%

 
Borrowed Funds

10,000

10,000

0

%

Other Liabilities

9,311

9,452

-1

%

Total Liabilities

848,115

622,728

36

%

 
Common Stock

55,571

54,889

1

%

Retained Earnings

26,224

19,653

33

%

Other Capital

306

(3

)

n/a

Total Shareholders' Equity

82,101

74,539

10

%

 
Total Liabilities & Shareholders' Equity

$

930,216

$

697,267

33

%

Balance Sheets (unaudited)
(dollars in thousands)

September, 30

June, 30

March 31,

December 31,

September 30,

2020

2020

2020

2019

2019

Assets
Cash & Due From Banks

$

105,157

$

84,722

$

59,793

$

66,472

$

79,101

Securities

73,886

57,099

50,518

43,403

41,797

 
Loans (excluding PPP)

604,728

615,367

603,631

578,458

547,956

PPP Loans

117,361

116,531

-

-

-

Allowance For Loan Losses

(8,040

)

(7,890

)

(7,171

)

(6,366

)

(6,145

)

Net Loans

714,049

724,008

596,460

572,092

541,811

 
Premise & Equipment

6,634

6,731

6,832

6,878

6,812

Goodwill and Other Intangibles

5,203

5,248

5,293

5,337

5,382

Other Assets

25,287

24,846

24,514

24,753

22,364

Total Assets

$

930,216

$

902,654

$

743,410

$

718,935

$

697,267

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

331,035

$

328,748

$

219,331

$

216,671

$

207,643

NOW Accounts

110,476

121,741

117,453

87,906

79,509

Other Interest Bearing Deposits

387,293

342,668

308,666

316,586

316,124

Total Deposits

828,804

793,157

645,450

621,163

603,276

 
Borrowed Funds

10,000

20,000

10,000

10,000

10,000

Other Liabilities

9,311

9,772

10,723

11,629

9,452

Total Liabilities

848,115

822,929

666,173

642,792

622,728

 
Common Stock

55,571

55,418

55,084

55,034

54,889

Retained Earnings

26,224

23,960

22,395

21,224

19,653

Other Capital

306

347

(242

)

(115

)

(3

)

Total Shareholders' Equity

82,101

79,725

77,237

76,143

74,539

 
Total Liabilities & Shareholders' Equity

$

930,216

$

902,654

$

743,410

$

718,935

$

697,267

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

Quarter Ended

Nine Months Ended

Sep 30,

Sep 30,

Sep 30,

Sep 30,

2020

2019

Change

2020

2019

Change

Interest Income
Interest and Fees on Loans

$

7,822

$

7,224

8

%

$

23,127

$

20,896

11

%

Fees on PPP Loans

559

-

n/a

950

-

n/a

Net Fair Value Amortization Income

5

71

-93

%

166

379

-56

%

Interest on Securities

306

264

16

%

874

778

12

%

Interest on Fed Funds

-

-

n/a

-

1

-100

%

Interest on Due From Banks

67

291

-77

%

326

694

-53

%

Total Interest Income

8,759

7,850

12

%

25,443

22,748

12

%

 
Interest Expense
Interest Expense on Deposits

333

1,065

-69

%

1,696

2,887

-41

%

Interest Expense on Borrowings

22

32

-31

%

123

234

-47

%

Total Interest Expense

355

1,097

-68

%

1,819

3,121

-42

%

 
Net Interest Income

8,404

6,753

24

%

23,624

19,627

20

%

Provision for Loan Losses

209

205

2

%

1,702

600

184

%

Net Interest Income After Provision

8,195

6,548

25

%

21,922

19,027

15

%

 
Non-Interest Income
Service Charges, Commissions and Fees

609

523

16

%

1,574

1,530

3

%

Other Non-Interest Income

149

216

-31

%

501

495

1

%

Total Non-Interest Income

758

739

3

%

2,075

2,025

2

%

 
Non-Interest Expense
Salaries and Employee Benefits

3,604

3,137

15

%

10,551

8,710

21

%

Occupancy and Equipment

677

653

4

%

2,028

1,693

20

%

Other Non-Interest Expense

1,434

1,303

10

%

4,351

3,982

9

%

Total Non-Interest Expense

5,715

5,093

12

%

16,930

14,385

18

%

 
Net Income Before Provision for Taxes

3,238

2,194

48

%

7,067

6,667

6

%

Provision for Taxes

974

647

51

%

2,067

1,846

12

%

Net Income

$

2,264

$

1,547

46

%

$

5,000

$

4,821

4

%

 
Shares (end of period)

5,070,556

5,031,788

1

%

5,070,556

5,031,788

1

%

Earnings Per Share - Basic

$

0.45

$

0.31

45

%

$

0.99

$

0.96

3

%

Return on Average Assets

0.98

%

0.89

%

10

%

0.81

%

1.00

%

-19

%

Return on Average Equity

10.95

%

8.09

%

35

%

8.51

%

9.36

%

-9

%

Net Interest Margin

3.86

%

4.23

%

-9

%

4.04

%

4.30

%

-6

%

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

Three Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2020

2019

2019

Interest Income
Interest and Fees on Loans

$

7,822

$

7,766

$

7,537

$

7,387

$

7,224

Fees on PPP Loans

559

391

-

-

-

Net Fair Value Amortization Income

5

46

115

62

71

Interest on Securities

306

246

323

247

264

Interest on Fed Funds

-

-

-

-

-

Interest on Due From Banks

67

72

187

290

291

Total Interest Income

8,759

8,521

8,162

7,986

7,850

 
Interest Expense
Interest Expense on Deposits

333

501

862

1,085

1,065

Interest Expense on Borrowings

22

48

53

43

32

Total Interest Expense

355

549

915

1,128

1,097

 
Net Interest Income

8,404

7,972

7,247

6,858

6,753

Provision for Loan Losses

209

710

783

205

205

Net Interest Income After Provision

8,195

7,262

6,464

6,653

6,548

 
Non-Interest Income
Service Charges, Commissions and Fees

609

463

502

566

523

Other Non-Interest Income

149

159

193

199

216

Total Non-Interest Income

758

622

695

765

739

 
Non-Interest Expense
Salaries and Employee Benefits

3,604

3,495

3,452

3,212

3,137

Occupancy and Equipment

677

666

685

665

653

Other Non-Interest Expense

1,434

1,534

1,383

1,309

1,303

Total Non-Interest Expense

5,715

5,695

5,520

5,186

5,093

 
Net Income Before Provision for Taxes

3,238

2,189

1,639

2,232

2,194

Provision for Taxes

974

624

468

660

647

Net Income

$

2,264

$

1,565

$

1,171

$

1,572

$

1,547

 
Shares (end of period)

5,070,556

5,069,523

5,047,696

5,033,348

5,031,788

Earnings Per Share - Basic

$

0.45

$

0.31

$

0.23

$

0.31

$

0.31

Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)

At or for the Three Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2020

2019

2019

Income and performance ratios:
Net Income

$

2,264

$

1,565

$

1,171

$

1,572

$

1,547

Earnings per share - basic

0.45

0.31

0.23

0.31

0.31

Return on average assets

0.98

%

0.76

%

0.67

%

0.85

%

0.89

%

Return on average equity

10.95

%

8.18

%

6.27

%

8.04

%

8.09

%

Net interest margin

3.86

%

3.98

%

4.27

%

4.06

%

4.23

%

Net interest margin (excluding PPP loans)

3.99

%

4.12

%

n/a

n/a

n/a

Efficiency ratio

62.64

%

65.96

%

69.18

%

68.49

%

68.46

%

 
Asset quality:
Allowance for loan and lease losses

$

8,040

$

7,890

$

7,171

$

6,366

$

6,145

Nonperforming assets

$

12

$

40

$

341

$

284

$

276

Allowance for loan and lease losses / total loans and leases

1.11

%

1.08

%

1.19

%

1.10

%

1.12

%

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

1.33

%

1.28

%

n/a

n/a

n/a

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

0.03

%

-0.01

%

‐0.01%

-0.01

%

-0.04

%

Texas ratio

0.01

%

0.05

%

0.43

%

0.37

%

0.37

%

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

11.82

%

11.31

%

11.17

%

11.35

%

11.56

%

Total risk-based capital (a)

13.07

%

12.54

%

12.30

%

12.40

%

12.62

%

Common equity tier 1 risk-based capital (a)

11.82

%

11.31

%

11.17

%

11.35

%

11.56

%

Tier 1 leverage ratio (a)

8.49

%

8.87

%

10.04

%

10.04

%

10.32

%

 
Equity and share related:
Common equity

$

82,101

79,725

77,237

$

76,143

$

74,539

Book value per share

16.13

15.66

15.35

15.15

14.81

Tangible book value per share

15.11

14.62

14.30

14.09

13.74

Stock closing price per share

12.10

12.25

12.00

19.80

17.85

Number of shares issued and outstanding

5,071

5,070

5,048

5,033

5,032

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.
Loan Deferrals
As of September 30, 2020
 
Principal Only Principal and InterestWeighted
Average LTV
Total Deferred
Loans
Percentage of
Total Loans
excluding PPP
CRE - Retail

$

3,198,603

$

8,727,555

53

%

$

11,926,158

1.97

%

CRE - Special Purpose

$

-

$

3,799,533

65

%

$

3,799,533

0.63

%

CRE - Hospitality

$

-

$

-

$

-

C&I

$

1,901,583

$

-

$

1,901,583

0.31

%

$

5,100,186

$

12,527,088

$

17,627,274

2.91

%

Contacts:

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

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