American Riviera Bank Reports Loan & Deposit Growth

News item October 25, 2019 by Michelle Martinich

Santa Barbara, California (October 25, 2019) – American Riviera Bank (OTC Markets: ARBV) announced today unaudited net income of $4,821,000 ($0.96 per share) for the nine months ended September 30, 2019. This represents a 10% increase in net income from the $4,398,000 ($0.99 per share) for the same reporting period in the prior year.

The Bank reported an annualized return on average assets of 1.00% and return on average equity of 9.36%. The Bank reported unaudited net income of $1,547,000 ($0.31 per share) for the third quarter ended September 30, 2019 compared to $1,571,000 ($0.35 per share) for the same quarter last year. Share count has increased primarily due to the $8,500,000 common stock capital raise closed in the quarter ended March 31, 2019.

The Bank continues to experience significant growth, reporting $697 million in total assets as of September 30, 2019. Total deposits increased 20% from September 30, 2018 reaching $603 million at September 30, 2019. Non-interest bearing demand deposit accounts increased $41 million, or 25% from the same reporting period last year, reaching $208 million at September 30, 2019.

The Bank reported strong loan growth, with gross loans increasing $59 million, or 12% from September 30, 2018, reaching $548 million at September 30, 2019, with no other real estate owned and no loans 30 days or more past due. The Bank’s net interest income increased by approximately $2.1 million, or 12% for the nine months ended September 30, 2019, compared to the same reporting period in the prior year. The Bank reported an annualized net interest margin of 4.30% for the nine months ended September 30, 2019, reflecting only modest compression from the 4.47% reported for the same reporting period last year.

“We continue to invest in the expansion of the Bank and consistently report strong earnings. This is a direct result of our loan and deposit growth, expanded regional presence and the strength of our relationships throughout the Santa Barbara and San Luis Obispo Counties.”

Jeff DeVine, President and Chief Executive Officer

As of September 30, 2019, American Riviera Bank has a strong capital position 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 is $13.74 at September 30, 2019, a 15% increase from $11.96 at September 30, 2018.

Balance Sheets (unaudited)
(dollars in thousands)
			Sep 30,		Sep 30,		One Year
			2019		2018		Change
Assets
	Cash & Due From Banks		$                 79,101		$                  31,392		152%
	Fed Funds Sold		-		-		-
	Securities		41,797		46,549		-10%
	Loans		547,956		489,401		12%
	Allowance For Loan Losses		(6,145)		(5,242)		17%
	Net Loans		541,811		484,159		12%
	Premise & Equipment		6,812		5,308		28%
	Goodwill and Other Intangibles		5,382		5,561		-3%
	Other Assets (a)		22,364		16,034		39%
Total Assets			$               697,267		$                589,003		18%
Liabilities & Shareholders' Equity
	Demand Deposits		$               207,643		$                166,145		25%
	NOW Accounts		79,509		86,543		-8%
	Other Interest Bearing Deposits		316,124		250,958		26%
	Total Deposits		603,276		503,646		20%
	Borrowed Funds		10,000		24,000		-58%
	Other Liabilities (a)		9,452		2,295		312%
	Total Liabilities		622,728		529,941		18%
	Common Stock (b)		54,889		46,400		18%
	Retained Earnings		19,653		13,339		47%
	Other Capital		(3)		(677)		-100%
	Total Shareholders' Equity		74,539		59,062		26%
Total Liabilities & Shareholders' Equity			$               697,267		$                589,003		18%
Notes:
	(a) Other assets and other liabilities primarily increased due to the adoption of ASU2016-02, "Leases (Topic 842)" as of January 1, 2019.  As of September 30, 2019 the right of use asset totals $5.6 million and the operating lease liability is $6 million.
	(b) Common stock increased in the first quarter 2019 due to $8.5 million common stock capital raise.

Balance Sheets (unaudited)
(dollars in thousands)
			September 30,		June 30,		March 31,		December 31,		September 30,
			2019		2019		2019		2018		2018
Assets
	Cash & Due From Banks		$          79,101		$          47,640		$          48,835		$          41,271		$            31,392
	Fed Funds Sold		-		-		-		-		-
	Securities		41,797		42,961		44,123		46,010		46,549
	Loans		547,956		541,869		520,857		508,397		489,401
	Allowance For Loan Losses		(6,145)		(5,883)		(5,661)		(5,542)		(5,242)
	Net Loans		541,811		535,986		515,196		502,855		484,159
	Premise & Equipment		6,812		6,528		5,588		5,299		5,308
	Goodwill and Other Intangibles		5,382		5,427		5,472		5,516		5,561
	Other Assets (a)		22,364		23,054		19,524		15,501		16,034
Total Assets			$       697,267		$       661,596		$       638,738		$       616,452		$         589,003
Liabilities & Shareholders' Equity
	Demand Deposits		$       207,643		$       186,845		$       187,048		$       169,549		$         166,145
	NOW Accounts		79,509		73,782		76,370		73,652		86,543
	Other Interest Bearing Deposits		316,124		304,223		282,874		270,106		250,958
	Total Deposits		603,276		564,850		546,292		513,307		503,646
	Borrowed Funds		10,000		15,000		15,000		40,000		24,000
	Other Liabilities (a)		9,452		8,806		6,562		2,258		2,295
	Total Liabilities		622,728		588,656		567,854		555,565		529,941
	Common Stock (b)		54,889		54,739		54,513		46,477		46,400
	Retained Earnings		19,653		18,105		16,600		14,831		13,339
	Other Capital		(3)		96		(229)		(421)		(677)
	Total Shareholders' Equity		74,539		72,940		70,884		60,887		59,062
Total Liabilities & Shareholders' Equity			$       697,267		$       661,596		$       638,738		$       616,452		$         589,003
Notes:
	(a) Other assets and other liabilities primarily increased due to the adoption of ASU2016-02,  "Leases (Topic 842)" as of January 1, 2019. As of September 30, 2019 the right of use asset totals $5.6 million and the operating lease liability is $6 million. The San Luis Obispo branch was added for the quarter ending June 30, 2019.
	(b) Common stock increased in the first quarter 2019 due to $8.5 million common stock capital raise.

Statements of Income (unaudited)
(dollars in thousands, except per share data)
			Quarter Ended						Nine Months Ended
			Sep 30,		Sep 30,				Sep 30,		Sep 30,
			2019		2018		Change		2019		2018		Change
Interest Income
	Interest and Fees on Loans		$        7,224		$        6,256		15%		$        20,896		$        17,294		21%
	Net Fair Value Amortization Income		71		118		-40%		379		424		-11%
	Interest on Securities		264		266		-1%		778		702		11%
	Interest on Fed Funds		0		1		-100%		1		12		-92%
	Interest on Due From Banks		291		167		74%		694		436		59%
	Total Interest Income		7,850		6,808		15%		22,748		18,868		21%
Interest Expense
	Interest Expense on Deposits		1,065		622		71%		2,887		1,214		138%
	Interest Expense on Borrowings		32		6		433%		234		126		86%
	Total Interest Expense		1,097		628		75%		3,121		1,340		133%
Net Interest Income			6,753		6,180		9%		19,627		17,528		12%
	Provision for Loan Losses		205		294		-30%		600		925		-35%
Net Interest Income After Provision			6,548		5,886		11%		19,027		16,603		15%
Non-Interest Income
	Service Charges, Commissions and Fees		523		397		32%		1,530		1,242		23%
	Other Non-Interest Income		216		60		260%		495		258		92%
	Total Non-Interest Income		739		457		62%		2,025		1,500		35%
Non-Interest Expense
	Salaries and Employee Benefits		3,137		2,429		29%		8,710		7,061		23%
	Occupancy and Equipment		653		483		35%		1,693		1,304		30%
	Other Non-Interest Expense		1,303		1,210		8%		3,982		3,585		11%
	Total Non-Interest Expense		5,093		4,122		24%		14,385		11,950		20%
Net Income Before Provision for Taxes			2,194		2,221		-1%		6,667		6,153		8%
Provision for Taxes			647		650		0%		1,846		1,755		5%
Net Income			$        1,547		$        1,571		-2%		$          4,821		$          4,398		10%
	Shares (end of period)		5,031,788		4,459,269		13%		5,031,788		4,459,269		13%
	Earnings Per Share - Basic		$          0.31		$          0.35		-11%		$            0.96		$            0.99		-3%
	Return on Average Assets		0.89%		1.03%		-14%		1.00%		1.06%		-6%
	Return on Average Equity		8.09%		10.39%		-22%		9.36%		10.38%		-10%
	Net Interest Margin		4.23%		4.39%		-4%		4.30%		4.47%		-4%

Five Quarter Statements of Income (unaudited)
(dollars in thousands)
			Three Months Ended
			September 30,		June 30,		March 31,		December 31,		September 30,
			2019		2019		2019		2018		2018
Interest Income
	Interest and Fees on Loans		$            7,224		$            6,992		$            6,680		$            6,533		$            6,256
	Net Fair Value Amortization Income		71		86		222		423		118
	Interest on Securities		264		230		284		297		266
	Interest on Fed Funds		-		-		1		-		1
	Interest on Due From Banks		291		205		198		165		167
	Total Interest Income		7,850		7,513		7,385		7,418		6,808
Interest Expense
	Interest Expense on Deposits		1,065		998		825		681		622
	Interest Expense on Borrowings		32		60		141		73		6
	Total Interest Expense		1,097		1,058		966		754		628
Net Interest Income			6,753		6,455		6,418		6,664		6,180
	Provision for Loan Losses		205		220		175		369		294
Net Interest Income After Provision			6,548		6,235		6,244		6,295		5,886
Non-Interest Income
	Service Charges, Commissions and Fees		523		580		427		289		397
	Other Non-Interest Income (a)		216		113		166		(53)		60
	Total Non-Interest Income		739		693		593		236		457
Non-Interest Expense
	Salaries and Employee Benefits		3,137		2,881		2,692		2,633		2,429
	Occupancy and Equipment		653		546		494		503		483
	Other Non-Interest Expense		1,303		1,366		1,313		1,212		1,210
	Total Non-Interest Expense		5,093		4,793		4,499		4,348		4,122
Net Income Before Provision for Taxes			2,194		2,135		2,338		2,183		2,221
Provision for Taxes			647		629		570		691		650
Net Income			$            1,547		$            1,506		$            1,768		$            1,492		$            1,571
	Shares (end of period)		5,031,788		5,028,906		5,020,829		4,461,068		4,459,269
	Earnings Per Share - Basic		$              0.31		$              0.30		$              0.35		$              0.33		$              0.35
Notes:
	(a) The Bank conducted a Bank Owned Life Insurance carrier exchange that cost $170k in other non-interest income during the quarter ended December 31, 2018 .

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,
			2019		2019		2019		2018		2018
Income and performance ratios:
	Net Income		$            1,547		$            1,506		$            1,768		$            1,492		$            1,571
	Eamings per share - basic		0.31		0.30		0.35		0.33		0.35
	Retum on average assets		0.89%		0.95%		1.19%		0.95%		1.03%
	Return on average equity		8.09%		8.46%		11.90%		9.60%		10.39%
	Net interest margin		4.23%		4.27%		4.42%		4.61%		4.39%
	Efficiency ratio		68.46%		66.90%		63.40%		63.45%		62.55%
Asset quality:
	Allowance for loan and lease losses		$            6,145		$            5,883		$            5,661		$            5,542		$            5,242
	Nonperforming assets		276		281		292		349		359
	Allowance for loan and lease losses / total loans and leases		1.12%		1.09%		1.09%		1.09%		1.06%
	Net charge-offs / average loans and leases (annualized)		0.00%		0.02%		0.04%		0.00%		0.00%
	Texas ratio		0.37%		0.38%		0.41%		0.57%		0.61%
Other ratios:
	Tier 1 risk-based capital (a)		11.56%		11.56%		11.76%		10.30%		10.35%
	Total risk-based capital (a)		12.62%		12.61%		12.81%		11.36%		11.38%
	Common equity tier 1 risk-based capital (a)		11.56%		11.56%		11.76%		10.30%		10.35%
	Tier 1 leverage ratio (a)		10.32%		10.48%		10.55%		9.21%		9.13%
Equity and share related:
	Common equity		$          74,539		$          72,940		$          70,884		$          60,887		$          59,062
	Book value per share		14.81		14.49		14.16		13.74		13.40
	Tangible book value per share		13.74		13.41		13.07		12.51		11.96
	Stock closing price per share		17.85		18.35		18.25		17.85		19.20
	Number of shares issued and outstanding		5,032		5,029		5,021		4,461		4,459
Notes:
	(a) Presented as projected for most recent quarter and actual for the remaining periods.

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