News

American Riviera Bank Reports Earnings and Growth

American Riviera Bank Reports Earnings and Growth

News item October 26, 2020 by Michelle Martinich

Santa Barbara, California (October 26, 2020) – 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.

“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.”

Jeff DeVine, President and Chief Executive Officer

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.

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 Interest Weighted 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%

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.

Next: American Riviera Bank Reports Record Earnings and Growth