The annualized return on average assets of 1.03% and return on average equity of 10.19% represent an increase from the 0.73% and 6.61%, respectively, achieved for the same reporting period in the prior year. For the fourth quarter ended December 31, 2018, the Bank reported unaudited net income of $1,492,000 ($0.33 per share) compared to $35,000 ($0.01 per share) for the fourth quarter last year.
Prior year results were negatively impacted by a non-recurring $1,119,000 revaluation of deferred tax assets in the fourth quarter ended December 31, 2017 related to enacted federal tax reform. In 2018 the Bank benefitted from the lower federal income tax rate associated with such reform, and reinvested by hiring 18 new employees and continued our expansion into San Luis Obispo County.
The Bank’s continued organic growth in Santa Barbara County and the opening of our full-service Paso Robles branch resulted in a 20% increase in total assets, with $616 million in total assets reported at December 31, 2018. Asset growth was driven by strong loan demand, with total loans increasing $94 million or 23% from December 31, 2017, reaching $508 million at December 31, 2018 with no loans that were 90 days or more past due and no other real estate owned. The Bank reported an annualized net interest margin of 4.51% for the year ended December 31, 2018.
As of December 31, 2018, the Bank reported $513 million in total deposits. This represents a $65 million or 14% increase from the same reporting period in the prior year. Checking accounts, comprised of non-interest bearing demand deposits and interest bearing NOW accounts, increased by $17 million or 8% from the same reporting period last year.
"2018 was an exciting year of growth for American Riviera Bank with assets increasing just over $100 million. Our bankers are creating lasting relationships with clients in our Central Coast communities by serving their deposit and credit needs. As a result, the Bank continues to grow our client base, asset size and earnings. We are looking forward to further expansion in 2019 with a full-service branch in the City of San Luis Obispo.”
Jeff DeVine, President and Chief Executive Officer
As of December 31, 2018, American Riviera Bank maintained a strong capital position with a Tier 1 Capital Ratio of 10%; well above the regulatory guideline of 8% for well capitalized institutions. The tangible book value per share of American Riviera Bank common stock is $12.51 at December 31, 2018, a 12% increase from $11.16 at December 31, 2017.
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) | |||||||
| Dec 31, | Dec 31, | One Year | |||||
| 2018 | 2017 | Change | |||||
| Assets | |||||||
| Cash & Due From Banks | $ 41,271 | $ 42,999 | -4% | ||||
| Fed Funds Sold | - | 4,040 | -100% | ||||
| Securities | 46,010 | 33,534 | 37% | ||||
| Loans | 508,397 | 414,165 | 23% | ||||
| Allowance For Loan Losses | (5,542) | (4,260) | 30% | ||||
| Net Loans | 502,855 | 409,905 | 23% | ||||
| Fixed Assets | 5,299 | 3,903 | 36% | ||||
| Goodwill and Other Intangibles | 5,516 | 5,695 | -3% | ||||
| Other Assets | 15,501 | 15,046 | 3% | ||||
| Total Assets | 616,452 | 515,122 | 20% | ||||
| Liabilities & Shareholders' Equity | |||||||
| Demand Deposits | 169,549 | 148,332 | 14% | ||||
| NOW Accounts | 73,652 | 77,483 | -5% | ||||
| Other Interest Bearing Deposits | 270,106 | 222,941 | 21% | ||||
| Total Deposits | 513,307 | 448,756 | 14% | ||||
| Borrowed Funds | 40,000 | 10,000 | 300% | ||||
| Other Liabilities | 2,258 | 1,681 | 34% | ||||
| Total Liabilities | 555,565 | 460,437 | 21% | ||||
| Common Stock | 46,477 | 45,895 | 1% | ||||
| Retained Earnings | 14,831 | 8,915 | 66% | ||||
| Other Capital | (421) | (125) | -237% | ||||
| Total Shareholders' Equity | 60,887 | 54,685 | 11% | ||||
| Total Liabilities & Shareholders' Equity | $ 616,452 | $ 515,122 | 20% | ||||
| Book Value Per Share | $ 13.74 | $ 12.45 | 10% | ||||
| Tangible Book Value Per Share | $ 12.51 | $ 11.16 | 12% | ||||
| Statements of Income (unaudited) | |||||||||||||
| (dollars in thousands) | |||||||||||||
| Quarter Ended | 12 Months Ended | ||||||||||||
| Dec 31, | Dec 31, | Dec 31, | Dec 31, | ||||||||||
| 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||
| Interest Income | |||||||||||||
| Interest and Fees on Loans | $ 6,533 | $ 5,272 | 24% | $ 23,827 | $ 20,235 | 18% | |||||||
| Net Fair Value Amortization Income | 423 | 96 | 341% | 847 | 916 | -8% | |||||||
| Interest on Securities | 297 | 120 | 148% | 999 | 265 | 277% | |||||||
| Interest on Fed Funds | 0 | 21 | -100% | 12 | 100 | -88% | |||||||
| Interest on Due From Banks | 165 | 132 | 25% | 601 | 450 | 34% | |||||||
| Total Interest Income | 7,418 | 5,641 | 32% | 26,286 | 21,966 | 20% | |||||||
| Interest Expense | |||||||||||||
| Interest Expense on Deposits | 681 | 276 | 147% | 1,895 | 1,014 | 87% | |||||||
| Interest Expense on Borrowings | 73 | 1 | 7200% | 199 | 25 | 695% | |||||||
| Total Interest Expense | 754 | 277 | 172% | 2,094 | 1,039 | 101% | |||||||
| Net Interest Income | 6,664 | 5,364 | 24% | 24,192 | 20,927 | 16% | |||||||
| Provision for Loan Losses | 369 | 207 | 78% | 1,294 | 914 | 42% | |||||||
| Net Interest Income After Provision | 6,295 | 5,157 | 22% | 22,898 | 20,013 | 14% | |||||||
| Non-Interest Income | |||||||||||||
| Service Charges, Commissions and Fees | 289 | 231 | 25% | 1,531 | 1,094 | 40% | |||||||
| Other Non-Interest Income | (53) | 76 | -170% | 205 | 316 | -35% | |||||||
| Total Non-Interest Income | 236 | 307 | -23% | 1,736 | 1,410 | 23% | |||||||
| Non-Interest Expense | |||||||||||||
| Salaries and Employee Benefits | 2,633 | 2,186 | 20% | 9,694 | 8,066 | 20% | |||||||
| Occupancy and Equipment | 503 | 397 | 27% | 1,806 | 1,553 | 16% | |||||||
| Other Non-Interest Expense | 1,212 | 1,005 | 21% | 4,797 | 4,109 | 17% | |||||||
| Total Non-Interest Expense | 4,348 | 3,588 | 21% | 16,297 | 13,728 | 19% | |||||||
| Net Income Before Provision for Taxes | 2,183 | 1,876 | 16% | 8,337 | 7,695 | 8% | |||||||
| Provision for Taxes | 691 | 722 | -4% | 2,447 | 3,040 | -19% | |||||||
| Non Recurring Tax Provision | - | 1,119 | 100% | - | 1,119 | 100% | |||||||
| Net Income | $ 1,492 | $ 35 | 4223% | $ 5,890 | $ 3,536 | 67% | |||||||
| Shares (end of period) | 4,461,068 | 4,402,841 | 1% | 4,461,068 | 4,402,841 | 1% | |||||||
| Earnings Per Share - Basic | $ 0.33 | $ 0.01 | 3259% | $ 1.32 | $ 0.80 | 65% | |||||||
| Return on Average Assets (annualized) | 0.95% | 0.00% | 1.03% | 0.73% | |||||||||
| Return on Average Equity (annualized) | 9.60% | 0.00% | 10.19% | 6.61% | |||||||||
| Net Interest Margin (annualized) | 4.61% | 4.42% | 4.51% | 4.61% | |||||||||
