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American Riviera Bank Reports on Earnings and Paycheck Protection Program

Santa Barbara, California (July 27, 2020) – 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.

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
  Eamings per share - basic                     0.31                     0.23                     0.31                     0.31                     0.30
  Retum 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.