Market Overview

American River Bankshares Reports Second Quarter 2017 Results

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SACRAMENTO, Calif., July 20, 2017 (GLOBE NEWSWIRE) -- American River Bankshares (NASDAQ:AMRB) today reported net income of $1.3 million, or $0.20 per diluted share for the second quarter of 2017 compared to $1.3 million, or $0.19 per diluted share for the second quarter of 2016.  For the six months ended June 30, 2017, net income was $2.5 million or $0.38 per diluted share, compared to $2.7 million or $0.39 per diluted share for the six months ended June 30, 2016.

"During the quarter we completed our 2017 Stock Repurchase Plan and continued our cash dividend program," said David Taber, President and CEO of American River Bankshares.  "Compared to the same quarter last year, we had positive increases in loans, deposits, and Earnings Per Share."  Taber continued, "We have a good deal of work to do in continuing to build momentum for our franchise."

Financial Highlights

  • Net loans increased $11.1 million (3.6%) from June 30, 2016 to June 30, 2017.  Core deposits increased $13.7 million (3.1%) from June 30, 2016 to June 30, 2017.  During the second quarter of 2017, net loans increased $2.2 million (0.7%) and core deposits decreased $11.8 million (2.5%). 

  • The net interest margin for the second quarter of 2017 was 3.41%, compared to 3.44% for the first quarter of 2017 and 3.64% for the second quarter of 2016.  The net interest margin for the six months ended June 30, 2017 was 3.43%, compared to 3.64% for the six months ended June 30, 2016. 

  • Net interest income was $4.9 million in the second quarter of 2017, compared to $5.0 million in the second quarter of 2016.  For the six months ended June 30, 2017, net interest income was $9.7 million, compared to $10.1 million for the six months ended June 30, 2016. 

  • The allowance for loan and lease losses was $4.9 million (1.52% of total loans and leases) at June 30, 2017, compared to $5.1 million (1.65% of total loans and leases) at June 30, 2016.  The Company had one nonperforming loan with a balance of $12,000 at June 30, 2017, compared to seven nonperforming loans totaling $1.1 million at June 30, 2016.

  • Shareholders' equity was $81.4 million at June 30, 2017, compared to $83.1 million at March 31, 2017 and $83.6 million at June 30, 2016.  Tangible book value per share was $10.23 at June 30, 2017, compared to $10.20 at March 31, 2017 and $10.10 at June 30, 2016.  Book value per share was $12.80 per share at June 30, 2017, compared to $12.70 per share at March 31, 2017 and $12.56 per share at June 30, 2016.

  • The 2017 Stock Repurchase Program resulted in the Company repurchasing 202,086 shares of its common stock at an average price of $14.97 per share during the second quarter of 2017, totaling a repurchase of 333,086 shares at an average price of $14.99 per share in the six months ended June 30, 2017.  The Company continued the quarterly cash dividend by paying a $0.05 per share cash dividend on May 17, 2017.

  • The Company continues to maintain strong capital ratios.  At June 30, 2017, the Leverage ratio was 10.2% compared to 10.4% at March 31, 2017 and 10.4% at June 30, 2016; the Tier 1 Risk-Based Capital ratio was 18.4% compared to 18.9% at March 31, 2017 and 18.0% at June 30, 2016, and the Total Risk-Based Capital ratio was 19.7% compared to 20.2% at March 31, 2017 and 19.2% at June 30, 2016. 

Northern California Economic Update, June 30, 2017.

Each quarter, management at American River Bank prepares an economic report for internal use that analyzes the recent historical rolling quarters within the three primary markets in which the Company does business – the Greater Sacramento Area, Sonoma and Amador Counties.  Sources of economic and industry information include: Colliers International, Keegan & Coppin Company, Inc., YCharts Housing, State of California Employment Development Department, US Census, CBRE, Integra Realty Resources, and Sacramento Association of Realtors and Trading Economics.

Overall, 2016 commercial real estate and employment trends were positive and have continued into 2017. 

Commercial Real Estate.  In the Greater Sacramento Area, when comparing first quarter 2017 to first quarter 2016, commercial real estate vacancies have improved in all segments.  Office vacancy decreased from 13.0% to 11.4%, retail vacancy decreased from 10.2% to 9.6%, and industrial vacancy decreased from 9.8% to 7.5%.  In Sonoma County, for the same period (first quarter 2017 compared to first quarter 2016), commercial real estate vacancies also improved.  Office vacancy decreased from 15.6% to 13.8%, retail vacancy decreased from 3.8% to 3.6%, and industrial vacancy from 5.6% to 5.0%. 

In all segments (office, retail, and industrial), the Greater Sacramento Area reported positive absorption over the past three years, with the exception of first quarter 2016.  Sonoma County has reported (when data is available) positive absorption over the past three years for the office and industrial segments (retail data not available).

In the Greater Sacramento Area, commercial lease rates have been in a relatively narrow range over the past two years through the first quarter 2017 with lease rates ranging from the following: office: $1.71/SF to $1.78/SF; retail: $1.33/SF to $1.40/SF and industrial: $0.43/SF to $0.47/SF.  At March 31, 2017, lease rates per square foot were $1.72 for office, $1.35 for retail, and $0.47 for industrial.  

As a proxy for Sonoma County, the City of Santa Rosa's gross lease rates from first quarter 2014 through the end of the fourth quarter of 2015 showed some fluctuation in office and industrial segments and a decrease in the retail segment.  The lease rates during the two year period ranged from: office: $1.47/SF to $1.88/SF, retail: $0.90/SF to $1.52/SF, and industrial: $0.66/SF to $0.95/SF.  Year-end 2016 office rents ranged from $1.75/SF to $2.25/SF depending on quality. Industrial rents ranged from $0.85/SF to $0.95/SF with light industrial in certain cases ranging from $1.15/SF to $1.40/SF.  There was no retail rental rate data available for Santa Rosa for this time period.   Lease rate data for office and industrial becomes available after each year end.  

The Amador region has the lowest level of commercial real estate concentration in the Bank.  There is limited supply for commercial real estate in this region and as a result, minimal information is available.

Multi-family.  The multi-family market in the Greater Sacramento Area has reflected high occupancy over the last five quarters (Q116 through Q117), ranging from 97.2% to 97.9%.  As of first quarter 2017, the occupancy rate was 97.2%.  Monthly lease rates during this period ranged from $1,157 to $1,249.  As of first quarter 2017, the average was $1,249 per month which according to Colliers International, is a new record for the region.  The trailing 12-month cap rate during the five quarters ranged from 5.58% to 5.90%.  As of first quarter 2017, the rate was 5.70%.  The average price per unit increased from $101,552 in first quarter 2016 to $114,828 in first quarter 2017 attributing to the slight decline in cap rate.  Similar data for the Sonoma and Amador markets is currently unavailable. 

Employment.  National unemployment, which reached a high of 10.0% at October 31, 2009, has dropped steadily since and has stabilized.  Compared to December 2014, national unemployment decreased from 5.6% to 5.0% in December 2015, and to 4.7% as of December 2016.  As of May 2017, unemployment dropped slightly further to 4.3%, then ticked up to 4.4% at June 30, 2017. California unemployment was 6.9% at December 31 2014, 5.9% at December 31, 2015, and 5.2% at December 31, 2016.  As of May 2017, the rate decreased further to 4.7%.  The number of employed Californians continues to increase.  There were 17.5 million employed at the end of 2014, 17.9 million employed at the end of 2015, and 18.2 million at the end of 2016.  The State added another 93,000 jobs during the first seven months of 2017. 

At December 31, 2014, all three of our markets reported lower unemployment rates than at year end 2013.  This trend continued at a slower pace into 2015, and at December 31, 2015, unemployment rates were 5.5% and 4.2% for the Sacramento MSA and Santa Rosa-Petaluma MSA, respectively.  Compared to December 31, 2016, unemployment rates decreased as of month-end May 2017 from 4.8% to 4.1% in the Sacramento MSA and 3.6% to 3.0% in the Santa Rosa-Petaluma MSA.  Over the same period, Amador County has been higher than the State every quarter with the exception of the third quarter 2015.  Amador County had shown significant improvement from 7.4% at December 31, 2014 to 6.3% at December 31, 2015, and 5.7% at December 31, 2016.  As of month-end May 2017, the rate decreased to 4.4%.

Job growth was positive in all of our markets in the past two years.  Compared to December 2014, job growth was 1.71%, 2.13% and 0.61% for the Sacramento MSA, Santa Rosa-Petaluma MSA, and Amador County, respectively, at December 31, 2015.  Comparing December 2015 to December 2016, job growth was 1.95%, 0.36% and 4.31% for the Sacramento MSA, Santa Rosa-Petaluma MSA and Amador County, respectively.  As of month-end May 2017, the Sacramento and Santa Rosa-Petaluma MSA's job growth was flat compared to December 2016, whereas Amador County's increased by 2.32%. 

Balance Sheet Review

American River Bankshares' assets totaled $641.6 million at June 30, 2017, compared to $651.5 million at December 31, 2016, and $625.8 million at June 30, 2016.

Net loans totaled $316.1 million at June 30, 2017, compared to $324.1 million at December 31, 2016, and $305.1 million at June 30, 2016. 

The loan portfolio at June 30, 2017 included: real estate loans of $288.7 million (90% of the portfolio), commercial loans of $28.8 million (9% of the portfolio) and other loans, which consist mainly of agriculture and consumer loans of $3.8 million (1% of the portfolio).  The real estate loan portfolio at June 30, 2017 includes: owner-occupied commercial real estate loans of $69.8 million (24% of the real estate portfolio), investor commercial real estate loans of $120.5 million (42% of the real estate portfolio), multi-family real estate loans of $71.0 million (25% of the real estate portfolio), construction and land development loans of $9.9 million (3% of the real estate portfolio) and residential real estate loans of $17.5 million (6% of the real estate loan portfolio).

Nonperforming assets ("NPAs") include nonperforming loans, leases, and other assets and other real estate owned.  Nonperforming loans include all such loans and leases that are either placed on nonaccrual status or are 90 days past due as to principal or interest, but still accrue interest because such loans are well-secured and in the process of collection.  NPAs remained at $1.4 million at June 30, 2017 from December 31, 2016 and decreased from $2.8 million at June 30, 2016.  The NPAs to total assets ratio remained consistent at 0.21% at the end of June 2017 and December 31, 2016 and decreased from 0.45% one year ago.  Nonperforming loans decreased $1.0 million (97.9%) from $1.1 million at June 30, 2016 to $12,000 at June 30, 2017, consistent with the $19,000 balance at December 31, 2016.

At June 30, 2017 and December 31, 2016, the Company had two OREO properties totaling $1.3 million. This compares to two OREO properties totaling $896,000 at June 30, 2016.  During the second quarter of 2017, the Company did not add, sell, or modify the value of any OREO properties.  At June 30, 2017, December 31, 2016, and June 30, 2016 there was not a valuation allowance for OREO properties. 

Loans measured for impairment were $17.0 million at the end of June 2017, a decrease from $17.3 million at December 31, 2016, and $20.8 million a year ago.  Specific reserves of $505,000 were held on the impaired loans at June 30, 2017, compared to $421,000 at December 31, 2016 and $904,000 at June 30, 2016.  There was no provision for loan and lease losses for the second quarters of 2017 and 2016.  The Company had net recoveries of $48,000 in the second quarter of 2017 compared to net recoveries of $50,000 in the second quarter of 2016.  For the first six months of 2017, the Company had net recoveries of $59,000 compared to net recoveries of $157,000 in the first six months of 2016.  The Company maintains the allowance for loan and lease losses at a level believed to be adequate for known and inherent risks in the portfolio. The methodology incorporates a variety of risk considerations, both quantitative and qualitative, in establishing an allowance for loan and lease losses that management believes is appropriate at each reporting date. 

Investment securities, which excludes $3.9 million in stock of the Federal Home Loan Bank of San Francisco ("FHLB Stock"), totaled $257.9 million at June 30, 2017, up 1.3% from $254.5 million at December 31, 2016 and up 1.1% from $255.0 million at June 30, 2016.  At June 30, 2017, the investment portfolio was comprised of 89% U.S. Government agencies or U.S. Government-sponsored agencies (primarily mortgage-backed securities), 9% obligations of states and political subdivisions, and 2% corporate bonds.

At June 30, 2017, total deposits were $537.9 million, compared to $544.8 million at December 31, 2016 and $525.9 million one year ago.  Core deposits increased 3.1% to $457.1 million at June 30, 2017 from $443.3 million at June 30, 2016 and decreased 1.0% from $461.8 million at December 31, 2016.  The Company considers all deposits except time deposits as core deposits.

At June 30, 2017, noninterest-bearing demand deposits accounted for 36% of total deposits, interest-bearing demand accounts were 12%, savings deposits were 12%, money market balances accounted for 25% and time certificates were 15% of total deposits.  At June 30, 2016, noninterest-bearing demand deposits accounted for 37% of total deposits, interest-bearing demand accounts were 12%, savings deposits were 11%, money market balances accounted for 24% and time certificates were 16% of total deposits.

Shareholders' equity decreased $2.5 million (3.0%) to $81.4 million at June 30, 2017 compared to $83.9 million at December 31, 2016 and $2.2 million (2.6%) from $83.6 million at June 30, 2016.  The decrease in equity from December 31, 2016 was due to a decrease in common stock of $4.7 million primarily related to repurchases made under the 2017 Stock Repurchase Program, partially offset by an increase in Retained Earnings of $1.8 million due to the net income for the year less cash dividends declared and a $444,000 increase in accumulated other comprehensive income related to an increase in the unrealized gain on securities. 

Net Interest Income

The net interest income during the second quarter of 2017 was $4.9 million compared to $5.0 million in the second quarter of 2016 and for the six months ended June 30, 2017, net interest income decreased 3.7% to $9.7 million from $10.1 million for the six months ended June 30, 2016.  The net interest margin as a percentage of average earning assets was 3.41% in the second quarter of 2017, compared to 3.44% in the first quarter of 2017 and 3.64% in the second quarter of 2016. For the six months ended June 30, 2017, the net interest margin was 3.43% compared to 3.64% for the six months ended June 30, 2016.  Interest income for the second quarter of 2017 decreased 2.1% to $5.1 million from $5.2 million for the second quarter of 2016 and for the six months ended June 30, 2017, interest income decreased 3.2% to $10.2 million from $10.5 million for the six months ended June 30, 2016.  Interest expense for the second quarter of 2017 increased 14.0% to $252,000 from $221,000 for the second quarter of 2016 and for the six months ended June 30, 2017 increased 8.6% to $494,000 from $455,000 for the six months ended June 30, 2016.     

The average tax equivalent yield on earning assets decreased from 3.80% in the second quarter of 2016 to 3.59% for the second quarter of 2017 and for the six months ended June 30, 2017 decreased to 3.60% from 3.80% for the six months ended June 30, 2016.  Much of the decrease in yields from the second quarter of 2016 to the second quarter of 2017, as well as the six months ending June 30, 2017 and 2016, can be attributed to a decrease in the yield on loans.  While the average loan balances increased 5.3% quarter over quarter and 6.9% comparing the six month periods, the yield on loans decreased from 4.92% in the second quarter of 2016 to 4.61% in the second quarter of 2017. The yield on loans decreased from 4.91% in the six months ending June 30, 2016 to 4.61% in 2017.  This decrease is related to new loans being funded at current market interest rates which are lower than the interest rates on the existing loans in the portfolio. 

The average balance of earning assets increased $18.0 million (3.2%) from $565.8 million in the second quarter of 2016 to $583.8 million in the second quarter of 2017 and for the six months ended June 30, 2017, increased $12.9 million (2.3%) to $581.5 million from $568.6 million for the six months ended June 30, 2016.

When compared to the second quarter of 2016, average investment balances increased $1.7 million (0.6%) from $264.42 million during the second quarter of 2016 to $266.1 million during the second quarter of 2017. 

Average deposits increased $21.0 million (4.0%) from $521.8 million during the second quarter of 2016 to $542.8 million during the second quarter of 2017.  Average borrowings increased from $14.3 million during the second quarter of 2016 to $15.5 million during the second quarter of 2017. The average cost of funds increased from 0.26% in the second quarter of 2016 and the first six months of 2016 to 0.28% in the second quarter of 2017 and the first six months of 2017. 

Noninterest Income and Expense

Noninterest income for the second quarter of 2017 was $439,000, up from $363,000 in the second quarter of 2016 and decreased to $858,000 for the six months ended June 30, 2017 from $1.1 million in 2016.   On a quarter over quarter basis, the increase in noninterest income was predominately related to an increase in gain on sale of securities from a loss of $1,000 in 2016 to a gain of $86,000 in 2017.  On a year over year basis, the decrease in noninterest income was primarily due to a decrease in the gain on sale of securities and a decrease in rental income from OREO properties.  Gain on sale of securities was $281,000 in the first half of 2016 compared to $142,000 for the first half of 2017 and rental income from OREO properties was $106,000 in 2016 compared to zero in 2017, as the income producing property was sold in 2016.   

Noninterest expense remained consistent at $3.4 million for the second quarters of 2017 and 2016 and decreased from $7.2 million for the six months ended June 30, 2016 to $6.8 million for the same period in 2017.  While there were many fluctuations in expense related items between the second quarters of 2016 and 2017, two areas of note would be a decrease in salaries and benefits of $37,000 and a decrease in occupancy expenses of $30,000.  On a year over year basis, OREO related expense decreased $328,000 and occupancy expenses decreased $59,000.  The OREO related expense decreased due to the sale of three properties in 2016, including the income producing property which had higher operating costs than the properties currently held by the Company.  Occupancy expense reduction is due to the Company's continued evaluation of efficiencies in existing office spaces and reductions where necessary. In addition, the Company also experienced a decrease in FDIC assessments of $51,000 from 2016 to 2017.  The decrease in the FDIC assessments relates to a lower assessment rate as a result of the Deposit Insurance Fund reached the FDIC's target level of 1.15% during 2016, which resulted in lower assessments for community banks such as American River Bank.     

The fully taxable equivalent efficiency ratio for the second quarter of 2017 remained at 62.3% from the second quarter of 2016 and for the six months ended June 30, 2017, increased to 63.3% from 63.2% for the six months ended June 30, 2016. 

Provision for Income Taxes

Federal and state income taxes for the quarter ended June 30, 2017 decreased by $9,000 from $652,000 in the second quarter of 2016 to $643,000 in the second quarter of 2017 and remained at $1.3 million in the first six months of 2016 and 2017.  The lower provision for taxes in the second quarter of 2017 compared to 2016 and for the first six months of 2017 compared to the first six months of 2016 resulted from a decrease in taxable income.

Earnings Conference Call

The second quarter earnings conference call will be held Thursday, July 20, 2017 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time).  David T. Taber, President and Chief Executive Officer, and Mitchell A. Derenzo, Executive Vice President and Chief Financial Officer, both of American River Bankshares, will lead a live presentation and answer analysts' questions.   Shareholders, analysts and other interested parties are invited to join the call by dialing (888) 517-2513 and entering the Conference ID 9132577#.  A recording of the call will be available approximately twenty-four hours after the call's completion on AmericanRiverBank.com.   

About American River Bankshares 

American River Bankshares (NASDAQ:AMRB) is the parent company of American River Bank, a regional bank serving Northern California since 1983. We give business owners more REACH by offering financial expertise and exceptional service to complement a full suite of banking products and services. Our honest approach, commitment to community and focus on profitability is intended to lead our clients to greater success. For more information, call (800) 544-0545 or visit AmericanRiverBank.com.

Use of Non-GAAP Financial Measures

This news release contains certain non-GAAP (Generally Accepted Accounting Principles) financial measures in addition to results presented in accordance with GAAP.  These measures include tangible book value and taxable equivalent basis.  Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in the Company's financial position reflected in the current quarter and year-to-date results and facilitate comparison of our performance with the performance of our peers.

Net Interest Margin and Efficiency Ratio (non-GAAP financial measures)

In accordance with industry standards, certain designated net interest income amounts are presented on a taxable equivalent basis, including the calculation of net interest margin and the efficiency ratio.  The Company believes the presentation of net interest margin on a taxable equivalent basis using a 34% effective tax rate allows comparability of net interest margin with industry peers by eliminating the effect of the differences in portfolios attributable to the proportion represented by both taxable and tax-exempt loans and investments.  The efficiency ratio is a measure of a banking company's overhead as a percentage of its revenue.  The Company derives this ratio by dividing total noninterest expense by the sum of the taxable equivalent net interest income and the total noninterest income.      

Tangible Equity (non-GAAP financial measures)

Tangible common stockholders' equity (tangible book value) excludes goodwill and other intangible assets.  The Company believes the exclusion of goodwill and other intangible assets to create "tangible equity" facilitates the comparison of results for ongoing business operations.  The Company's management internally assesses its performance based, in part, on these non-GAAP financial measures.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties.  Actual results may differ materially from the results in these forward-looking statements.  Factors that might cause such a difference include, among other matters, changes in interest rates, economic conditions, governmental regulation and legislation, credit quality, and competition affecting the Company's businesses generally; the risk of natural disasters and future catastrophic events including terrorist related incidents; and other factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, and in subsequent reports filed on Form 10-Q and Form 8-K.  The Company does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.

American River Bankshares
 
Condensed Consolidated Balance Sheets (Unaudited)
 
(Dollars in thousands)              
    June 30,   December 31,   June 30,  
ASSETS   2017
  2016
  2016
 
Cash and due from banks $ 22,004   $ 27,589   $ 22,671    
Interest-bearing deposits in banks   1,248     999     999    
Investment securities   257,900     254,503     255,023    
Loans & leases:              
Real estate   288,727     289,400     269,119    
Commercial   28,756     35,374     36,193    
Other   3,769     4,356     5,155    
Deferred loan and lease origination fees, net   (225 )   (222 )   (247 )  
Allowance for loan and lease losses   (4,881 )   (4,822 )   (5,132 )  
Loans and leases, net   316,146     324,086     305,088    
Bank premises and equipment, net   1,275     1,362     1,305    
Goodwill and intangible assets   16,321     16,321     16,321    
Investment in Federal Home Loan Bank Stock   3,932     3,779     3,779    
Other real estate owned, net   1,348     1,348     896    
Accrued interest receivable and other assets   21,431     21,463     19,729    
  $ 641,605   $ 651,450   $ 625,811    
               
LIABILITIES & SHAREHOLDERS' EQUITY              
Noninterest-bearing deposits $ 196,212   $ 201,113   $ 195,903    
Interest checking   63,236     64,652     59,686    
Money market   131,998     131,342     127,864    
Savings   65,630     64,740     59,881    
Time deposits   80,804     82,959     82,599    
Total deposits   537,880     544,806     525,933    
Short-term borrowings   2,000     3,500     5,000    
Long-term borrowings   13,500     12,000     6,000    
Accrued interest and other liabilities   6,852     7,294     5,312    
Total liabilities   560,232     567,600     542,245    
               
SHAREHOLDERS' EQUITY              
Common stock $ 37,739   $ 42,484   $ 42,311    
Retained earnings   42,646     40,822     37,094    
Accumulated other comprehensive income   988     544     4,161    
Total shareholders' equity   81,373     83,850     83,566    
  $ 641,605   $ 651,450   $ 625,811    
               
Ratios:              
Nonperforming loans and leases to total loans and leases   0.00 %   0.01 %   0.34 %  
Net recoveries to average loans and leases (annualized)   -0.04 %   -0.39 %   -0.11 %  
Allowance for loan and lease losses to total loans and leases   1.52 %   1.47 %   1.65 %  
               
American River Bank Capital Ratios:              
Leverage Capital Ratio   10.18 %   10.57 %   10.46 %  
Common Equity Tier 1 Risk-Based Capital   18.38 %   18.93 %   17.69 %  
Tier 1 Risk-Based Capital Ratio   18.38 %   18.93 %   17.69 %  
Total Risk-Based Capital Ratio   19.63 %   20.18 %   18.95 %  
               
American River Bankshares Capital Ratios:              
Leverage Capital Ratio   10.17 %   10.50 %   10.41 %  
Tier 1 Risk-Based Capital Ratio   18.42 %   19.02 %   17.96 %  
Total Risk-Based Capital Ratio   19.67 %   20.27 %   19.21 %  
               

 

American River Bankshares    
Condensed Consolidated Statements of Income (Unaudited)    
(Dollars in thousands, except per share data)    
    Second     Second           For the Six Months
       
    Quarter     Quarter   %       Ended June 30,
  %    
    2017     2016   Change       2017     2016   Change    
Interest income $ 5,121   $ 5,229   (2.1 ) %   $ 10,174   $ 10,505   (3.2 ) %  
Interest expense   252     221   14.0   %     494     455   8.6   %  
Net interest income   4,869     5,008   (2.8 ) %     9,680     10,050   (3.7 ) %  
Provision for loan and lease losses   -     -   -   %     -     -   -   %  
Noninterest income:                            
Service charges on deposit accounts   114     128   (10.9 ) %     231     257   (10.1 ) %  
Gain (loss) on sale or impairment of securities   86     (1 ) (8,700.0 ) %     142     281   (49.5 ) %  
Rental income from other real estate owned   -     -   -   %     -     106   (100.0 ) %  
Other noninterest income   239     236   1.3   %     485     473   2.5   %  
Total noninterest income   439     363   20.9   %     858     1,117   (23.2 ) %  
Noninterest expense:                            
Salaries and employee benefits   2,064     2,101   (1.8 ) %     4,234     4,261   (0.6 ) %  
Occupancy   262     292   (10.3 ) %     531     590   (10.0 ) %  
Furniture and equipment   147     163   (9.8 ) %     298     328   (9.1 ) %  
Federal Deposit Insurance Corporation assessments   52     76   (31.6 ) %     105     156   (32.7 ) %  
Expenses related to other real estate owned   12     20   (40.0 ) %     32     360   (91.1 ) %  
Other expense   831     763   8.9   %     1,598     1,511   5.8   %  
Total noninterest expense   3,368     3,415   (1.4 ) %     6,798     7,206   (5.7 ) %  
Income before provision for income taxes   1,940     1,956   (0.8 ) %     3,740     3,961   (5.6 ) %  
Provision for income taxes   643     652   (1.4 ) %     1,259     1,285   (2.0 ) %  
Net income $ 1,297   $ 1,304   (0.5 ) %   $ 2,481   $ 2,676   (7.3 ) %  
                             
Basic earnings per share $ 0.20   $ 0.19   5.3   %   $ 0.38   $ 0.39   (2.6 ) %  
Diluted earnings per share $ 0.20   $ 0.19   5.3   %   $ 0.38   $ 0.39   (2.6 ) %  
                             
Net interest margin as a percentage of                            
average earning assets   3.41 %   3.64 %         3.43 %   3.64 %      
                             
Average diluted shares outstanding   6,413,473     6,746,099           6,522,254     6,933,435        
                             
Operating Ratios:                            
Return on average assets   0.80 %   0.84 %         0.77 %   0.85 %      
Return on average equity   6.35 %   6.29 %         6.05 %   6.37 %      
Return on average tangible equity   7.94 %   7.83 %         7.53 %   7.89 %      
Efficiency ratio (fully taxable equivalent)   62.27 %   62.26 %         63.31 %   63.20 %      
                                     

 

American River Bankshares
 
Condensed Consolidated Statements of Income (Unaudited)
 
(Dollars in thousands, except per share data)                      
    Second     First     Fourth     Third     Second    
    Quarter     Quarter     Quarter     Quarter     Quarter    
    2017     2017     2016     2016     2016    
Interest income $ 5,121   $ 5,053   $ 5,344   $ 5,304   $ 5,229    
Interest expense   252     242     232     223     221    
Net interest income   4,869     4,811     5,112     5,081     5,008    
Provision for loan and lease losses   -     -     (676 )   (668 )   -    
Noninterest income:                      
Service charges on deposit accounts   114     117     121     124     128    
Gain on sale of securities   86     56     -     33     (1 )  
Rental income from other real estate owned   -     -     173     -     -    
Other noninterest income   239     246     235     242     236    
Total noninterest income   439     419     529     399     363    
Noninterest expense:                      
Salaries and employee benefits   2,064     2,170     2,101     2,073     2,101    
Occupancy   262     269     290     295     292    
Furniture and equipment   147     151     159     165     163    
Federal Deposit Insurance Corporation assessments   52     53     23     77     76    
Expenses related to other real estate owned   12     20     (84 )   (30 )   20    
Other expense   831     767     795     766     763    
Total noninterest expense   3,368     3,430     3,284     3,346     3,415    
Income before provision for income taxes   1,940     1,800     3,033     2,802     1,956    
Provision for income taxes   643     616     1,118     989     652    
Net income $ 1,297   $ 1,184   $ 1,915   $ 1,813   $ 1,304    
                       
Basic earnings per share $ 0.20   $ 0.18   $ 0.29   $ 0.28   $ 0.19    
Diluted earnings per share $ 0.20   $ 0.18   $ 0.29   $ 0.27   $ 0.19    
                       
Net interest margin as a percentage of                      
average earning assets   3.41 %   3.44 %   3.57 %   3.65 %   3.64 %  
                       
Average diluted shares outstanding   6,413,473     6,640,592     6,647,926     6,621,640     6,746,099    
Shares outstanding-end of period   6,357,767     6,545,959     6,661,726     6,656,594     6,655,980    
                       
Operating Ratios (annualized):                      
Return on average assets   0.80 %   0.74 %   1.16 %   1.13 %   0.84 %  
Return on average equity   6.35 %   5.74 %   9.04 %   8.62 %   6.29 %  
Return on average tangible equity   7.94 %   7.13 %   11.21 %   10.70 %   7.83 %  
Efficiency ratio (fully taxable equivalent)   62.27 %   64.38 %   56.98 %   59.88 %   62.26 %  
                       

 

American River Bankshares  
Analysis of Net Interest Margin on Earning Assets (Unaudited)  
(Taxable Equivalent Basis)  
(Dollars in thousands)  
Three months ended June 30,   2017       2016    
                 
ASSETS Avg Balance  Interest  Avg Yield   Avg Balance  Interest  Avg Yield  
Taxable loans and leases $ 302,062   $ 3,458 4.59 %   $ 283,373   $ 3,445 4.89 %  
Tax-exempt loans and leases   14,361     180 5.03 %     17,050     232 5.47 %  
Taxable investment securities   243,199     1,363 2.25 %     240,997     1,441 2.40 %  
Tax-exempt investment securities   22,811     212 3.73 %     23,336     215 3.71 %  
Corporate stock   99     6 24.31 %     76     8 42.34 %  
Interest-bearing deposits in banks   1,259     3 0.96 %     999     2 0.81 %  
Total earning assets   583,791     5,222 3.59 %     565,831     5,343 3.80 %  
Cash & due from banks   29,263           28,070        
Other assets   39,191           36,849        
Allowance for loan & lease losses   (4,864 )         (5,098 )      
  $ 647,381         $ 625,652        
                 
LIABILITIES & SHAREHOLDERS' EQUITY                
Interest checking and money market $ 201,166   $ 36 0.07 %   $ 188,365   $ 35 0.07 %  
Savings   63,467     5 0.03 %     59,679     5 0.03 %  
Time deposits   81,643     162 0.80 %     83,087     142 0.69 %  
Other borrowings   15,500     49 1.27 %     14,286     39 1.10 %  
Total interest bearing liabilities   361,776     252 0.28 %     345,417     221 0.26 %  
Noninterest bearing demand deposits   196,549           190,646        
Other liabilities   7,195           6,258        
Total liabilities   565,520           542,321        
Shareholders' equity   81,861           83,331        
  $ 647,381         $ 625,652        
Net interest income & margin   $ 4,970 3.41 %     $ 5,122 3.64 %  
                 
                 
Six months ended June 30,   2017       2016    
                 
ASSETS Avg Balance  Interest  Avg Yield   Avg Balance  Interest  Avg Yield  
Taxable loans and leases $ 303,834   $ 6,888 4.57 %   $ 281,143   $ 6,807 4.87 %  
Tax-exempt loans and leases   14,424     356 4.98 %     16,621     462 5.59 %  
Taxable investment securities   239,207     2,686 2.26 %     245,310     2,993 2.45 %  
Tax-exempt investment securities   22,768     422 3.74 %     24,446     461 3.79 %  
Corporate stock   103     16 31.33 %     72     14 39.10 %  
Interest-bearing deposits in banks   1,189     5 0.85 %     992     3 0.61 %  
Total earning assets   581,525     10,373 3.60 %     568,584     10,740 3.80 %  
Cash & due from banks   34,261           28,108        
Other assets   39,118           38,723        
Allowance for loan & lease losses   (4,846 )         (5,051 )      
  $ 650,058         $ 630,364        
                 
LIABILITIES & SHAREHOLDERS' EQUITY                
Interest checking and money market $ 198,794   $ 70 0.07 %   $ 188,463   $ 75 0.08 %  
Savings   63,367     10 0.03 %     59,442     10 0.03 %  
Time deposits   81,971     317 0.78 %     83,449     281 0.68 %  
Other borrowings   15,500     97 1.26 %     19,327     89 0.93 %  
Total interest bearing liabilities   359,632     494 0.28 %     350,681     455 0.26 %  
Noninterest bearing demand deposits   200,086           188,791        
Other liabilities   7,597           6,362        
Total liabilities   567,315           545,834        
Shareholders' equity   82,743           84,530        
  $ 650,058         $ 630,364        
Net interest income & margin   $ 9,879 3.43 %     $ 10,285 3.64 %  
                 

 

Investor Contact:
Mitchell A. Derenzo
Executive Vice President and
Chief Financial Officer
American River Bankshares
916-231-6723

Media Contact:
Erica Dias
Vice President, Marketing
American River Bankshares
916-231-6717

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