American Riviera Bank Reports Earnings and Community Support - American Riviera (OTC:ARBV)

American Riviera Bank (OTC Markets: ARBV) announced today unaudited net income of $1,171,000 ($0.23 per share) for the quarter ended March 31, 2020. This represents a decrease in net income from the $1,768,000 ($0.35 per share) for the same reporting period in the prior year. The Bank reported an annualized return on average assets of 0.67% and return on average equity of 6.27%. The variance from prior year is attributed to conservative risk management practices with the Bank providing $783,000 in allowance for loan losses primarily due to anticipated economic impacts from the COVID-19 pandemic, an increase of $608,000 from the same reporting period in the prior year.

American Riviera Bank entered the COVID-19 crisis in a position of strength and remains well capitalized and highly liquid. The Bank offers robust electronic banking services, including mobile deposit for consumers and remote deposit capture for businesses. We have been able to successfully modify branch operations to safely meet all the needs of our customers despite the need for appropriate social distancing and continue to see tremendous growth of new and existing relationships.

Jeff DeVine, President and Chief Executive Officer stated, "Our thoughts go out to our Central Coast community, individuals, and businesses most deeply affected by the COVID-19 pandemic. American Riviera Bank is playing an important role in the economic stability of Santa Barbara and San Luis Obispo Counties. We are taking extraordinary steps to provide much needed financing and relief to our clients and community during this difficult time."

As a SBA Preferred Lender, we were able to move quickly and deploy an automated Paycheck Protection Program (PPP) loan application portal. To date, the Bank has funded 416 applications, with an average loan amount of approximately $230,000, for existing business clients in the first round of the CARES Act funding. We have already obtained 134 more SBA PPP approvals thus far with the second round of funding recently announced. Our PPP loans currently represent over $113 million of much needed small business relief and could save almost 12,000 jobs in our community. The number of SBA PPP loans represents almost 2 years of normal new loan production for the Bank, which will be processed, approved, documented and funded in the span of approximately one month. The dollar volume of SBA PPP loans represents over 18% of the total loans outstanding at March 31, 2020.

At the same time, American Riviera Bank has been working closely with existing loan clients negatively affected by the COVID-19 pandemic, and has provided temporary payment deferrals through the date of this release covering $109 million of loans. Approximately 92% of such deferrals are to borrowers wishing to conserve cash for the economic uncertainty and have asked for the principal portion of their payments to be deferred while continuing to pay interest. The remaining 8% is predominantly 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 this quarter was primarily driven by qualitative factors in our modeling and a general expectation of expanded credit risk due to the economic effects of COVID-19. For the reasons above, we anticipate continued above-average provisioning and reserve build in subsequent periods, but anticipate that the origination fees paid by the SBA on PPP loans may substantially offset such incremental credit expenses.

The Bank reported strong loan growth, with gross loans increasing $83 million, or 16% from March 31, 2019, reaching $604 million at March 31, 2020. This increase in loans is primarily due to new loan origination with the Bank originating $39 million in new loans outstanding, excluding draws on existing lines of credit, in the first quarter of 2020.

The Bank has experienced significant growth, reporting $743 million in total assets as of March 31, 2020, representing a $105 million, or 16% increase from March 31, 2019. Total deposits increased 18% from March 31, 2019 reaching $645 million at March 31, 2020. Non-interest bearing demand deposit accounts increased $32 million, or 17% from the same reporting period in the prior year, reaching $219 million at March 31, 2020. Interest bearing demand deposit accounts increased $41 million, or 54% from the same reporting period in the prior year, reaching $117 million at March 31, 2020. Net interest margin increased to 4.27% for the quarter due to the Bank's ability to deploy excess liquidity into loans and a reduction in the cost of deposits due to Federal Reserve actions during the quarter.

As of March 31, 2020, American Riviera Bank has a strong capital position 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 is $14.30 at March 31, 2020.

Company Profile

American Riviera Bank is a full-service community bank focused on serving the lending and deposit needs of businesses and consumers on the Central Coast of California. The state-chartered bank opened for business on July 18, 2006, with the support of local shareholders. Full-service branches are located in Santa Barbara, Montecito, Goleta, San Luis Obispo and Paso Robles. The Bank provides commercial, residential mortgage, construction and Small Business Administration lending services as well as convenient online and mobile technology. For ten consecutive years the Bank has been recognized for strong financial performance by the Findley Reports, and has received the highest "Super Premier" rating from Findley every year since 2016. As of December 31, 2019, the Bank was rated five stars by BauerFinancial.

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)
	Mar 31,			Mar 31,			One Year
		2020			2019		Change
Assets
Cash & Due From Banks	$	59,793		$	48,835		22	%
Fed Funds Sold		-			-		-
Securities		50,518			44,123		14	%

Loans		603,631			520,857		16	%
Allowance For Loan Losses		(7,171	)		(5,661	)	27	%
Net Loans		596,460			515,196		16	%

Premise & Equipment		6,832			5,588		22	%
Goodwill and Other Intangibles		5,293			5,472		-3	%
Other Assets ^(a)		24,514			19,524		26	%
Total Assets	$	743,410		$	638,738		16	%


Liabilities & Shareholders' Equity
Demand Deposits	$	219,331		$	187,048		17	%
NOW Accounts		117,453			76,370		54	%
Other Interest Bearing Deposits		308,666			282,874		9	%
Total Deposits		645,450			546,292		18	%

Borrowed Funds		10,000			15,000		-33	%
Other Liabilities ^(a)		10,723			6,562		63	%
Total Liabilities		666,173			567,854		17	%

Common Stock		55,084			54,513		1	%
Retained Earnings		22,395			16,600		35	%
Other Capital		(242	)		(229	)	6	%
Total Shareholders' Equity		77,237			70,884		9	%

Total Liabilities & Shareholders' Equity	$	743,410		$	638,738		16	%

Notes:
	(a) Other assets and other liabilities primarily increased due to lease commencements for the main branch and lending office in San Luis Obispo and the renewal of main branch lease in Santa Barbara. As of March 31, 2020 the right-of-use asset totals $7.3 million and the operating lease liability is $7.7 million.

Balance Sheets (unaudited)
(dollars in thousands)
	March 31,			December 31,			September 30,			June 30,			March 31,
		2020			2019			2019			2019			2019
Assets
Cash & Due From Banks	$	59,793		$	66,472		$	79,101		$	47,640		$	48,835
Fed Funds Sold		-			-			-			-			-
Securities		50,518			43,403			41,797			42,961			44,123

Loans		603,631			578,458			547,956			541,869			520,857
Allowance For Loan Losses		(7,171	)		(6,366	)		(6,145	)		(5,883	)		(5,661	)
Net Loans		596,460			572,092			541,811			535,986			515,196

Premise & Equipment		6,832			6,878			6,812			6,528			5,588
Goodwill and Other Intangibles		5,293			5,337			5,382			5,427			5,472
Other Assets ^(a)		24,514			24,753			22,364			23,054			19,524
Total Assets	$	743,410		$	718,935		$	697,267		$	661,596		$	638,738


Liabilities & Shareholders' Equity
Demand Deposits	$	219,331		$	216,671		$	207,643		$	186,845		$	187,048
NOW Accounts		117,453			87,906			79,509			73,782			76,370
Other Interest Bearing Deposits		308,666			316,586			316,124			304,223			282,874
Total Deposits		645,450			621,163			603,276			564,850			546,292

Borrowed Funds		10,000			10,000			10,000			15,000			15,000
Other Liabilities ^(a)		10,723			11,629			9,452			8,806			6,562
Total Liabilities		666,173			642,792			622,728			588,656			567,854

Common Stock		55,084			55,034			54,889			54,739			54,513
Retained Earnings		22,395			21,224			19,653			18,105			16,600
Other Capital		(242	)		(115	)		(3	)		96			(229	)
Total Shareholders' Equity		77,237			76,143			74,539			72,940			70,884

Total Liabilities & Shareholders' Equity	$	743,410		$	718,935		$	697,267		$	661,596		$	638,738

Notes:
	(a) As of March 31, 2020 the right-of-use asset totals $7.3 million and the operating lease liability is $7.7 million. The San Luis Obispo branch was added for the quarter ending June 30, 2019 and the Santa Barbara Branch increased as of December 31, 2019 with the expectation to extend the lease term.

Statements of Income (unaudited)
(dollars in thousands, except per share data)
	Quarter Ended
	Mar 31,			Mar 31,
		2020			2019		Change
Interest Income
Interest and Fees on Loans	$	7,537		$	6,680		13	%
Net Fair Value Amortization Income		115			222		-48	%
Interest on Securities		323			284		14	%
Interest on Fed Funds		0			1		-100	%
Interest on Due From Banks		187			198		-6	%
Total Interest Income		8,162			7,385		11	%

Interest Expense
Interest Expense on Deposits		862			825		4	%
Interest Expense on Borrowings		53			141		-62	%
Total Interest Expense		915			966		-5	%

Net Interest Income		7,247			6,419		13	%
Provision for Loan Losses		783			175		347	%
Net Interest Income After Provision		6,464			6,244		4	%

Non-Interest Income
Service Charges, Commissions and Fees		502			427		18	%
Other Non-Interest Income		193			166		16	%
Total Non-Interest Income		695			593		17	%

Non-Interest Expense
Salaries and Employee Benefits		3,452			2,692		28	%
Occupancy and Equipment		685			494		39	%
Other Non-Interest Expense		1,383			1,313		5	%
Total Non-Interest Expense		5,520			4,499		23	%

Net Income Before Provision for Taxes		1,639			2,338		-30	%
Provision for Taxes		468			570		-18	%
Net Income	$	1,171		$	1,768		-34	%

Shares (end of period)		5,047,696			5,020,829		1	%
Earnings Per Share - Basic	$	0.23		$	0.35		-34	%
Return on Average Assets		0.67	%		1.19	%	-44	%
Return on Average Equity		6.27	%		11.90	%	-47	%
Net Interest Margin		4.27	%		4.42	%	-3	%

Five Quarter Statements of Income (unaudited)
(dollars in thousands)
	Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
		2020		2019		2019		2019		2019
Interest Income
Interest and Fees on Loans	$	7,537	$	7,387	$	7,224	$	6,992	$	6,680
Net Fair Value Amortization Income		115		62		71		86		222
Interest on Securities		323		247		264		230		284
Interest on Fed Funds		-		-		-		-		1
Interest on Due From Banks		187		290		291		205		198
Total Interest Income		8,162		7,986		7,850		7,513		7,385

Interest Expense
Interest Expense on Deposits		862		1,085		1,065		998		825
Interest Expense on Borrowings		53		43		32		60		141
Total Interest Expense		915		1,128		1,097		1,058		966

Net Interest Income		7,247		6,858		6,753		6,455		6,419
Provision for Loan Losses ^(a)		783		205		205		220		175
Net Interest Income After Provision		6,464		6,653		6,548		6,235		6,244

Non-Interest Income
Service Charges, Commissions and Fees		502		566		523		580		427
Other Non-Interest Income		193		199		216		113		166
Total Non-Interest Income		695		765		739		693		593

Non-Interest Expense
Salaries and Employee Benefits		3,452		3,212		3,137		2,881		2,692
Occupancy and Equipment		685		665		653		546		494
Other Non-Interest Expense		1,383		1,309		1,303		1,366		1,313
Total Non-Interest Expense		5,520		5,186		5,093		4,793		4,499

Net Income Before Provision for Taxes		1,639		2,232		2,194		2,135		2,338
Provision for Taxes		468		660		647		629		570
Net Income	$	1,171	$	1,572	$	1,547	$	1,506	$	1,768

Shares (end of period)		5,047,696		5,033,348		5,031,788		5,028,906		5,020,829
Earnings Per Share - Basic	$	0.23	$	0.31	$	0.31	$	0.30	$	0.35

Notes:
	(a) On March 31, 2020 the Bank recorded an additional $600k of allowance for loan loss provision due to anticipated 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
		March 31,			December 31,			September 30,			June 30,			March 31,
			2020			2019			2019			2019			2019
Income and performance ratios:
	Net Income	$	1,171		$	1,572		$	1,547		$	1,506		$	1,768
	Earnings per share - basic		0.23			0.31			0.31			0.30			0.35
	Return on average assets		0.67	%		0.85	%		0.89	%		0.95	%		1.19	%
	Return on average equity		6.27	%		8.04	%		8.09	%		8.46	%		11.90	%
	Net interest margin		4.27	%		4.06	%		4.23	%		4.27	%		4.42	%
	Efficiency ratio		69.18	%		68.49	%		68.46	%		66.90	%		63.40	%

Asset quality:
	Allowance for loan and lease losses	$	7,171		$	6,366		$	6,145		$	5,883		$	5,661
	Nonperforming assets		341			284			276			281			292
	Allowance for loan and lease losses / total loans and leases		1.19	%		1.10	%		1.12	%		1.09	%		1.09	%
	Net charge-offs / average loans and leases (annualized)		-0.01	%		-0.01	%		-0.04	%		0.00	%		0.04	%
	Texas ratio		0.43	%		0.37	%		0.37	%		0.38	%		0.41	%

Other ratios:
	Tier 1 risk-based capital ^(a)		11.17	%		11.35	%		11.56	%		11.56	%		11.76	%
	Total risk-based capital ^(a)		12.30	%		12.40	%		12.62	%		12.61	%		12.81	%
	Common equity tier 1 risk-based capital ^(a)		11.17	%		11.35	%		11.56	%		11.56	%		11.76	%
	Tier 1 leverage ratio ^(a)		10.04	%		10.04	%		10.32	%		10.48	%		10.55	%

Equity and share related:
	Common equity	$	77,237			76,143		$	74,539		$	72,940		$	70,884
	Book value per share		15.35			15.15			14.81			14.49			14.16
	Tangible book value per share		14.30			14.09			13.74			13.41			13.07
	Stock closing price per share		12.00			19.80			17.85			18.35			18.25
	Number of shares issued and outstanding		5,048			5,033			5,032			5,029			5,021

Notes:
	(a) Presented as projected for most recent quarter and actual for the remaining periods.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200428006048/en/

Market News and Data brought to you by Benzinga APIs