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American Riviera Bank Reports on Earnings and Paycheck Protection Program

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American Riviera Bank (OTC Markets: ARBV) announced today unaudited net income of $2,736,000 ($0.54 per share) for the six months ended June 30, 2020. This represents a decrease in net income from the $3,274,000 ($0.65 per share) for the same reporting period in the prior year. The Bank reported an annualized return on average assets of 0.72% and return on average equity of 7.23%. The variance from prior year is primarily due to an increase in the allowance for loan losses related to COVID-19 pandemic economic uncertainty, with the Bank reporting $1,493,000 in loan loss provision in the first six months of 2020, an increase of $1,098,000 from the same reporting period in the prior year. The Bank reported unaudited net income of $1,565,000 ($0.31 per share) for the second quarter ended June 30, 2020 compared to $1,506,000 ($0.30 per share) for the same quarter last year.

Jeff DeVine, President and Chief Executive Officer, stated, "We are fully committed to the safety of our employees and clients, while helping the Central Coast adapt to the impact of the COVID-19 pandemic. The Bank's liquidity and capital position provide considerable capacity to lend, and we will continue to build new relationships, provide flexibility to our existing clients and build value for our shareholders despite the pandemic."

American Riviera Bank has been able to continue to provide a high level of service through the COVID-19 pandemic with modified branch hours, robust electronic banking services and quick responses to customers' lending and deposit needs. We originated over 600 Small Business Administration Paycheck Protection Program (PPP) loans, with an average loan amount of approximately $194 thousand, representing $117 million of much needed small business relief to our community and supporting approximately 12,300 local jobs. The Bank has received $4.2 million in PPP origination fees and recognized $397 thousand as income in the quarter ended June 30, 2020, with the remainder to be amortized over the life of the loans.

The Bank has been working closely with existing loan clients negatively affected by the COVID-19 pandemic, and has provided temporary, 90-day payment deferrals as of June 30, 2020 covering $108 million of loans, unchanged from March 31, 2020. Approximately 83% 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 17% are full deferrals of both principal and interest, with almost half of these 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 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 June 30, 2020, the Bank had no other real estate owned and no loans 90 days or more past due.

We continued to see tremendous growth of new and existing relationships, reporting $903 million in total assets as of June 30, 2020, representing a $241 million, or 36% increase from June 30, 2019. Total loans, excluding PPP, increased $73 million, or 14% from June 30, 2019, reaching $615 million at June 30, 2020. Total deposits increased 40% from June 30, 2019 reaching $793 million at June 30, 2020. Non-interest bearing demand deposit accounts increased $142 million, or 76% from the same reporting period in the prior year. Interest bearing demand deposit accounts increased $48 million, or 65% from the same reporting period in the prior year. Although deposit growth was accelerated by the funding of PPP loans into existing client accounts, there were significant new account relationships moved from other financial institutions. New deposit account openings net of account closures are 550 in the second quarter 2020 versus 306 in the second quarter of 2019.

As of June 30, 2020, American Riviera Bank was highly liquid with $142 million in cash and available-for-sale securities, and well capitalized 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 was $14.62 at June 30, 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 March 31, 2020, the Bank was rated five stars by BauerFinancial. The Bank was rated "Outstanding" by the Federal Deposit Insurance Corporation in 2020 for its performance under the Community Reinvestment Act.

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)

Jun 30,

 

Jun 30,

 

One Year

2020

 

2019

 

Change

Assets
Cash & Due From Banks

$

84,722

 

$

47,640

 

78

%

Fed Funds Sold

 

-

 

 

-

 

n/a

 

Securities

 

57,099

 

 

42,961

 

33

%

 
Loans (excluding PPP)

 

615,367

 

 

541,869

 

14

%

PPP Loans

 

116,531

 

 

-

 

n/a

 

Allowance For Loan Losses

 

(7,890

)

 

(5,883

)

34

%

Net Loans

 

724,008

 

 

535,986

 

35

%

 
Premise & Equipment

 

6,731

 

 

6,528

 

3

%

Goodwill and Other Intangibles

 

5,248

 

 

5,427

 

-3

%

Other Assets

 

24,846

 

 

23,054

 

8

%

Total Assets

$

902,654

 

$

661,596

 

36

%

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

328,748

 

$

186,845

 

76

%

NOW Accounts

 

121,741

 

 

73,782

 

65

%

Other Interest Bearing Deposits

 

342,668

 

 

304,223

 

13

%

Total Deposits

 

793,157

 

 

564,850

 

40

%

 
Borrowed Funds

 

20,000

 

 

15,000

 

33

%

Other Liabilities

 

9,772

 

 

8,806

 

11

%

Total Liabilities

 

822,929

 

 

588,656

 

40

%

 
Common Stock

 

55,418

 

 

54,739

 

1

%

Retained Earnings

 

23,960

 

 

18,105

 

32

%

Other Capital

 

347

 

 

96

 

261

%

Total Shareholders' Equity

 

79,725

 

 

72,940

 

9

%

 
Total Liabilities & Shareholders' Equity

$

902,654

 

$

661,596

 

36

%

Balance Sheets (unaudited)
(dollars in thousands)

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

2020

 

2020

 

2019

 

2019

 

2019

Assets
Cash & Due From Banks

$

84,722

 

$

59,793

 

$

66,472

 

$

79,101

 

$

47,640

 

Fed Funds Sold

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Securities

 

57,099

 

 

50,518

 

 

43,403

 

 

41,797

 

 

42,961

 

 
Loans (excluding PPP)

 

615,367

 

 

603,631

 

 

578,458

 

 

547,956

 

 

541,869

 

PPP Loans

 

116,531

 

 

-

 

 

-

 

 

-

 

 

-

 

Allowance For Loan Losses

 

(7,890

)

 

(7,171

)

 

(6,366

)

 

(6,145

)

 

(5,883

)

Net Loans

 

724,008

 

 

596,460

 

 

572,092

 

 

541,811

 

 

535,986

 

 
Premise & Equipment

 

6,731

 

 

6,832

 

 

6,878

 

 

6,812

 

 

6,528

 

Goodwill and Other Intangibles

 

5,248

 

 

5,293

 

 

5,337

 

 

5,382

 

 

5,427

 

Other Assets

 

24,846

 

 

24,514

 

 

24,753

 

 

22,364

 

 

23,054

 

Total Assets

$

902,654

 

$

743,410

 

$

718,935

 

$

697,267

 

$

661,596

 

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

328,748

 

$

219,331

 

$

216,671

 

$

207,643

 

$

186,845

 

NOW Accounts

 

121,741

 

 

117,453

 

 

87,906

 

 

79,509

 

 

73,782

 

Other Interest Bearing Deposits

 

342,668

 

 

308,666

 

 

316,586

 

 

316,124

 

 

304,223

 

Total Deposits

 

793,157

 

 

645,450

 

 

621,163

 

 

603,276

 

 

564,850

 

 
Borrowed Funds

 

20,000

 

 

10,000

 

 

10,000

 

 

10,000

 

 

15,000

 

Other Liabilities

 

9,772

 

 

10,723

 

 

11,629

 

 

9,452

 

 

8,806

 

Total Liabilities

 

822,929

 

 

666,173

 

 

642,792

 

 

622,728

 

 

588,656

 

 
Common Stock

 

55,418

 

 

55,084

 

 

55,034

 

 

54,889

 

 

54,739

 

Retained Earnings

 

23,960

 

 

22,395

 

 

21,224

 

 

19,653

 

 

18,105

 

Other Capital

 

347

 

 

(242

)

 

(115

)

 

(3

)

 

96

 

Total Shareholders' Equity

 

79,725

 

 

77,237

 

 

76,143

 

 

74,539

 

 

72,940

 

 
Total Liabilities & Shareholders' Equity

$

902,654

 

$

743,410

 

$

718,935

 

$

697,267

 

$

661,596

 

Statements of Income (unaudited)
(dollars in thousands, except per share data)

Quarter Ended

 

Six Months Ended

Jun 30,

 

Jun 30,

 

 

 

Jun 30,

 

Jun 30,

 

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

Interest Income
Interest and Fees on Loans

$

7,546

 

$

6,992

 

8

%

$

15,083

 

$

13,672

 

10

%

Interest and Fees on PPP Loans

 

611

 

 

-

 

n/a

 

 

611

 

 

-

 

n/a

 

Net Fair Value Amortization Income

 

46

 

 

86

 

-47

%

 

162

 

 

308

 

-47

%

Interest on Securities

 

246

 

 

230

 

7

%

 

569

 

 

514

 

11

%

Interest on Fed Funds

 

-

 

 

-

 

n/a

 

 

-

 

 

1

 

-100

%

Interest on Due From Banks

 

72

 

 

205

 

-65

%

 

259

 

 

403

 

-36

%

Total Interest Income

 

8,521

 

 

7,513

 

13

%

 

16,683

 

 

14,898

 

12

%

 
Interest Expense
Interest Expense on Deposits

 

501

 

 

998

 

-50

%

 

1,363

 

 

1,822

 

-25

%

Interest Expense on Borrowings

 

48

 

 

60

 

-20

%

 

101

 

 

202

 

-50

%

Total Interest Expense

 

549

 

 

1,058

 

-48

%

 

1,464

 

 

2,024

 

-28

%

 
Net Interest Income

 

7,972

 

 

6,455

 

24

%

 

15,219

 

 

12,874

 

18

%

Provision for Loan Losses

 

710

 

 

220

 

223

%

 

1,493

 

 

395

 

278

%

Net Interest Income After Provision

 

7,262

 

 

6,235

 

16

%

 

13,726

 

 

12,479

 

10

%

 
Non-Interest Income
Service Charges, Commissions and Fees

 

463

 

 

580

 

-20

%

 

965

 

 

1,007

 

-4

%

Other Non-Interest Income

 

159

 

 

113

 

41

%

 

352

 

 

279

 

26

%

Total Non-Interest Income

 

622

 

 

693

 

-10

%

 

1,317

 

 

1,286

 

2

%

 
Non-Interest Expense
Salaries and Employee Benefits

 

3,495

 

 

2,881

 

21

%

 

6,947

 

 

5,573

 

25

%

Occupancy and Equipment

 

666

 

 

546

 

22

%

 

1,351

 

 

1,040

 

30

%

Other Non-Interest Expense

 

1,534

 

 

1,366

 

12

%

 

2,917

 

 

2,679

 

9

%

Total Non-Interest Expense

 

5,695

 

 

4,793

 

19

%

 

11,215

 

 

9,292

 

21

%

 
Net Income Before Provision for Taxes

 

2,189

 

 

2,135

 

3

%

 

3,828

 

 

4,473

 

-14

%

Provision for Taxes

 

624

 

 

629

 

-1

%

 

1,092

 

 

1,199

 

-9

%

Net Income

$

1,565

 

$

1,506

 

4

%

$

2,736

 

$

3,274

 

-16

%

 
Shares (end of period)

 

5,069,523

 

 

5,028,906

 

1

%

 

5,069,523

 

 

5,028,906

 

1

%

Earnings Per Share - Basic

$

0.31

 

$

0.30

 

3

%

$

0.54

 

$

0.65

 

-17

%

Return on Average Assets

 

0.76

%

 

0.95

%

-20

%

 

0.72

%

 

1.07

%

-33

%

Return on Average Equity

 

8.18

%

 

8.46

%

-3

%

 

7.23

%

 

10.06

%

-28

%

Net Interest Margin

 

3.98

%

 

4.27

%

-7

%

 

4.11

%

 

4.34

%

-5

%

Five Quarter Statements of Income (unaudited)
(dollars in thousands)

Three Months Ended

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

2020

 

2020

 

2019

 

2019

 

2019

Interest Income
Interest and Fees on Loans

$

7,546

$

7,537

$

7,387

$

7,224

$

6,992

Interest and Fees on PPP Loans

 

611

 

-

 

-

 

-

 

-

Net Fair Value Amortization Income

 

46

 

115

 

62

 

71

 

86

Interest on Securities

 

246

 

323

 

247

 

264

 

230

Interest on Fed Funds

 

-

 

-

 

-

 

-

 

-

Interest on Due From Banks

 

72

 

187

 

290

 

291

 

205

Total Interest Income

 

8,521

 

8,162

 

7,986

 

7,850

 

7,513

 
Interest Expense
Interest Expense on Deposits

 

501

 

862

 

1,085

 

1,065

 

998

Interest Expense on Borrowings

 

48

 

53

 

43

 

32

 

60

Total Interest Expense

 

549

 

915

 

1,128

 

1,097

 

1,058

 
Net Interest Income

 

7,972

 

7,247

 

6,858

 

6,753

 

6,455

Provision for Loan Losses (a)

 

710

 

783

 

205

 

205

 

220

Net Interest Income After Provision

 

7,262

 

6,464

 

6,653

 

6,548

 

6,235

 
Non-Interest Income
Service Charges, Commissions and Fees

 

463

 

502

 

566

 

523

 

580

Other Non-Interest Income

 

159

 

193

 

199

 

216

 

113

Total Non-Interest Income

 

622

 

695

 

765

 

739

 

693

 
Non-Interest Expense
Salaries and Employee Benefits

 

3,495

 

3,452

 

3,212

 

3,137

 

2,881

Occupancy and Equipment

 

666

 

685

 

665

 

653

 

546

Other Non-Interest Expense

 

1,534

 

1,383

 

1,309

 

1,303

 

1,366

Total Non-Interest Expense

 

5,695

 

5,520

 

5,186

 

5,093

 

4,793

 
Net Income Before Provision for Taxes

 

2,189

 

1,639

 

2,232

 

2,194

 

2,135

Provision for Taxes

 

624

 

468

 

660

 

647

 

629

Net Income

$

1,565

$

1,171

$

1,572

$

1,547

$

1,506

 
Shares (end of period)

 

5,069,523

 

5,047,696

 

5,033,348

 

5,031,788

 

5,028,906

Earnings Per Share - Basic

$

0.31

$

0.23

$

0.31

$

0.31

$

0.30

Notes:
(a) In the first and second quarter of 2020, the Bank recorded additional allowance for loan loss provision due to potential 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

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

2020

 

2020

 

2019

 

2019

 

2019

Income and performance ratios:
Net Income

$

1,565

 

$

1,171

 

$

1,572

 

$

1,547

 

$

1,506

 

Earnings per share - basic

 

0.31

 

 

0.23

 

 

0.31

 

 

0.31

 

 

0.30

 

Return on average assets

 

0.76

%

 

0.67

%

 

0.85

%

 

0.89

%

 

0.95

%

Return on average equity

 

8.18

%

 

6.27

%

 

8.04

%

 

8.09

%

 

8.46

%

Net interest margin

 

3.98

%

 

4.27

%

 

4.06

%

 

4.23

%

 

4.27

%

Net interest margin (excluding PPP loans)

 

4.12

%

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

Efficiency ratio

 

65.96

%

 

69.18

%

 

68.49

%

 

68.46

%

 

66.90

%

 
Asset quality:
Allowance for loan and lease losses

$

7,890

 

$

7,171

 

$

6,366

 

$

6,145

 

$

5,883

 

Nonperforming assets

 

40

 

 

341

 

 

284

 

 

276

 

 

281

 

Allowance for loan and lease losses / total loans and leases

 

1.08

%

 

1.19

%

 

1.10

%

 

1.12

%

 

1.09

%

Allowance for loan and lease losses / total loans and leases (excluding PPP loans) (b)

 

1.28

%

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

Net charge-offs / average loans and leases (annualized)

 

-0.01

%

‐0.01%

 

-0.01

%

 

-0.04

%

 

0.00

%

Texas ratio

 

0.05

%

 

0.43

%

 

0.37

%

 

0.37

%

 

0.38

%

 
Other ratios:
Tier 1 risk-based capital (a)

 

11.31

%

 

11.17

%

 

11.35

%

 

11.56

%

 

11.56

%

Total risk-based capital (a)

 

12.54

%

 

12.30

%

 

12.40

%

 

12.62

%

 

12.61

%

Common equity tier 1 risk-based capital (a)

 

11.31

%

 

11.17

%

 

11.35

%

 

11.56

%

 

11.56

%

Tier 1 leverage ratio (a)

 

8.87

%

 

10.04

%

 

10.04

%

 

10.32

%

 

10.48

%

 
Equity and share related:
Common equity

$

79,725

 

 

77,237

 

$

76,143

 

$

74,539

 

$

72,940

 

Book value per share

 

15.66

 

 

15.35

 

 

15.15

 

 

14.81

 

 

14.49

 

Tangible book value per share

 

14.62

 

 

14.30

 

 

14.09

 

 

13.74

 

 

13.41

 

Stock closing price per share

 

12.25

 

 

12.00

 

 

19.80

 

 

17.85

 

 

18.35

 

Number of shares issued and outstanding

 

5,070

 

 

5,048

 

 

5,033

 

 

5,032

 

 

5,029

 

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 and not subject to provision for loan and lease losses.

 

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