Market Overview

American Riviera Bank Reports Earnings and Growth

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American Riviera Bank (OTC Markets: ARBV) announced today unaudited net income of $5,000,000 ($0.99 per share) for the nine months ended September 30, 2020. This represents a 4% increase in net income from the $4,821,000 ($0.96 per share) for the same reporting period in the prior year. The Bank reported record unaudited net income of $2,264,000 ($0.45 per share) for the third quarter ended September 30, 2020. This represents a 46% increase from the $1,547,000 ($0.31 per share) for the same quarter last year.

Jeff DeVine, President and Chief Executive Officer, stated, "Despite significant uncertainty in the economy, the Bank generated record earnings in the third quarter, reflecting the diversity of our business model and growing market share position. Thanks to the hard work of our employees and our solid financial footing, we have been able to serve as economic first responders to our clients and Central Coast communities impacted by the COVID-19 pandemic."

The Bank has experienced a significant decrease in temporary loan payment deferrals for clients negatively affected by the COVID-19 pandemic. Total loans on deferral at September 30, 2020 were approximately $18 million, representing 3% of total loans excluding SBA PPP, and have notably fallen from the $108 million reported at June 30, 2020. Approximately $5 million 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 $13 million are full deferrals of both principal and interest on loans secured by commercial real estate with significant equity cushion (see detail on Loan Deferrals exhibit). 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 September 30, 2020, the Bank had no other real estate owned and no loans 90 days or more past due.

The Bank has experienced tremendous growth in new and existing relationships, reporting $930 million in total assets as of September 30, 2020, which represents a $233 million or 33% increase from September 30, 2019. Total loans including SBA PPP increased 32% from September 30, 2019, reaching $722 million at September 30, 2020. Total loans excluding SBA PPP increased $57 million or 10% from September 30, 2019, reaching $605 million at September 30, 2020. Total deposits increased 37% from September 30, 2019, reaching $829 million at September 30, 2020. Non-interest bearing demand deposit accounts increased $123 million or 59% from the same reporting period in the prior year. Interest bearing demand deposit accounts increased $31 million or 39% from the same reporting period in the prior year.

As of September 30, 2020, American Riviera Bank was highly liquid with $179 million in cash and available-for-sale securities, and well capitalized 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 was $15.11 at September 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 June 30, 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)
Sep 30, Sep 30, One Year

2020

2019

Change
Assets
Cash & Due From Banks

$

105,157

 

$

79,101

 

33

%

Securities

 

73,886

 

 

41,797

 

77

%

 
Loans (excluding PPP)

 

604,728

 

 

547,956

 

10

%

PPP Loans

 

117,361

 

 

-

 

n/a

 

Allowance For Loan Losses

 

(8,040

)

 

(6,145

)

31

%

Net Loans

 

714,049

 

 

541,811

 

32

%

 
Premise & Equipment

 

6,634

 

 

6,812

 

-3

%

Goodwill and Other Intangibles

 

5,203

 

 

5,382

 

-3

%

Other Assets

 

25,287

 

 

22,364

 

13

%

Total Assets

$

930,216

 

$

697,267

 

33

%

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

331,035

 

$

207,643

 

59

%

NOW Accounts

 

110,476

 

 

79,509

 

39

%

Other Interest Bearing Deposits

 

387,293

 

 

316,124

 

23

%

Total Deposits

 

828,804

 

 

603,276

 

37

%

 
Borrowed Funds

 

10,000

 

 

10,000

 

0

%

Other Liabilities

 

9,311

 

 

9,452

 

-1

%

Total Liabilities

 

848,115

 

 

622,728

 

36

%

 
Common Stock

 

55,571

 

 

54,889

 

1

%

Retained Earnings

 

26,224

 

 

19,653

 

33

%

Other Capital

 

306

 

 

(3

)

n/a

 

Total Shareholders' Equity

 

82,101

 

 

74,539

 

10

%

 
Total Liabilities & Shareholders' Equity

$

930,216

 

$

697,267

 

33

%

Balance Sheets (unaudited)
(dollars in thousands)

September, 30

 

June, 30

 

March 31,

 

December 31,

 

September 30,

2020

 

2020

 

2020

 

2019

 

2019

Assets
Cash & Due From Banks

$

105,157

 

$

84,722

 

$

59,793

 

$

66,472

 

$

79,101

 

Securities

 

73,886

 

 

57,099

 

 

50,518

 

 

43,403

 

 

41,797

 

 
Loans (excluding PPP)

 

604,728

 

 

615,367

 

 

603,631

 

 

578,458

 

 

547,956

 

PPP Loans

 

117,361

 

 

116,531

 

 

-

 

 

-

 

 

-

 

Allowance For Loan Losses

 

(8,040

)

 

(7,890

)

 

(7,171

)

 

(6,366

)

 

(6,145

)

Net Loans

 

714,049

 

 

724,008

 

 

596,460

 

 

572,092

 

 

541,811

 

 
Premise & Equipment

 

6,634

 

 

6,731

 

 

6,832

 

 

6,878

 

 

6,812

 

Goodwill and Other Intangibles

 

5,203

 

 

5,248

 

 

5,293

 

 

5,337

 

 

5,382

 

Other Assets

 

25,287

 

 

24,846

 

 

24,514

 

 

24,753

 

 

22,364

 

Total Assets

$

930,216

 

$

902,654

 

$

743,410

 

$

718,935

 

$

697,267

 

 
 
Liabilities & Shareholders' Equity
Demand Deposits

$

331,035

 

$

328,748

 

$

219,331

 

$

216,671

 

$

207,643

 

NOW Accounts

 

110,476

 

 

121,741

 

 

117,453

 

 

87,906

 

 

79,509

 

Other Interest Bearing Deposits

 

387,293

 

 

342,668

 

 

308,666

 

 

316,586

 

 

316,124

 

Total Deposits

 

828,804

 

 

793,157

 

 

645,450

 

 

621,163

 

 

603,276

 

 
Borrowed Funds

 

10,000

 

 

20,000

 

 

10,000

 

 

10,000

 

 

10,000

 

Other Liabilities

 

9,311

 

 

9,772

 

 

10,723

 

 

11,629

 

 

9,452

 

Total Liabilities

 

848,115

 

 

822,929

 

 

666,173

 

 

642,792

 

 

622,728

 

 
Common Stock

 

55,571

 

 

55,418

 

 

55,084

 

 

55,034

 

 

54,889

 

Retained Earnings

 

26,224

 

 

23,960

 

 

22,395

 

 

21,224

 

 

19,653

 

Other Capital

 

306

 

 

347

 

 

(242

)

 

(115

)

 

(3

)

Total Shareholders' Equity

 

82,101

 

 

79,725

 

 

77,237

 

 

76,143

 

 

74,539

 

 
Total Liabilities & Shareholders' Equity

$

930,216

 

$

902,654

 

$

743,410

 

$

718,935

 

$

697,267

 

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

Quarter Ended

 

Nine Months Ended

Sep 30,

 

Sep 30,

 

 

 

Sep 30,

 

Sep 30,

 

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

Interest Income
Interest and Fees on Loans

$

7,822

 

$

7,224

 

8

%

$

23,127

 

$

20,896

 

11

%

Fees on PPP Loans

 

559

 

 

-

 

n/a

 

 

950

 

 

-

 

n/a

 

Net Fair Value Amortization Income

 

5

 

 

71

 

-93

%

 

166

 

 

379

 

-56

%

Interest on Securities

 

306

 

 

264

 

16

%

 

874

 

 

778

 

12

%

Interest on Fed Funds

 

-

 

 

-

 

n/a

 

 

-

 

 

1

 

-100

%

Interest on Due From Banks

 

67

 

 

291

 

-77

%

 

326

 

 

694

 

-53

%

Total Interest Income

 

8,759

 

 

7,850

 

12

%

 

25,443

 

 

22,748

 

12

%

 
Interest Expense
Interest Expense on Deposits

 

333

 

 

1,065

 

-69

%

 

1,696

 

 

2,887

 

-41

%

Interest Expense on Borrowings

 

22

 

 

32

 

-31

%

 

123

 

 

234

 

-47

%

Total Interest Expense

 

355

 

 

1,097

 

-68

%

 

1,819

 

 

3,121

 

-42

%

 
Net Interest Income

 

8,404

 

 

6,753

 

24

%

 

23,624

 

 

19,627

 

20

%

Provision for Loan Losses

 

209

 

 

205

 

2

%

 

1,702

 

 

600

 

184

%

Net Interest Income After Provision

 

8,195

 

 

6,548

 

25

%

 

21,922

 

 

19,027

 

15

%

 
Non-Interest Income
Service Charges, Commissions and Fees

 

609

 

 

523

 

16

%

 

1,574

 

 

1,530

 

3

%

Other Non-Interest Income

 

149

 

 

216

 

-31

%

 

501

 

 

495

 

1

%

Total Non-Interest Income

 

758

 

 

739

 

3

%

 

2,075

 

 

2,025

 

2

%

 
Non-Interest Expense
Salaries and Employee Benefits

 

3,604

 

 

3,137

 

15

%

 

10,551

 

 

8,710

 

21

%

Occupancy and Equipment

 

677

 

 

653

 

4

%

 

2,028

 

 

1,693

 

20

%

Other Non-Interest Expense

 

1,434

 

 

1,303

 

10

%

 

4,351

 

 

3,982

 

9

%

Total Non-Interest Expense

 

5,715

 

 

5,093

 

12

%

 

16,930

 

 

14,385

 

18

%

 
Net Income Before Provision for Taxes

 

3,238

 

 

2,194

 

48

%

 

7,067

 

 

6,667

 

6

%

Provision for Taxes

 

974

 

 

647

 

51

%

 

2,067

 

 

1,846

 

12

%

Net Income

$

2,264

 

$

1,547

 

46

%

$

5,000

 

$

4,821

 

4

%

 
Shares (end of period)

 

5,070,556

 

 

5,031,788

 

1

%

 

5,070,556

 

 

5,031,788

 

1

%

Earnings Per Share - Basic

$

0.45

 

$

0.31

 

45

%

$

0.99

 

$

0.96

 

3

%

Return on Average Assets

 

0.98

%

 

0.89

%

10

%

 

0.81

%

 

1.00

%

-19

%

Return on Average Equity

 

10.95

%

 

8.09

%

35

%

 

8.51

%

 

9.36

%

-9

%

Net Interest Margin

 

3.86

%

 

4.23

%

-9

%

 

4.04

%

 

4.30

%

-6

%

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

Three Months Ended

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

2020

 

2020

 

2020

 

2019

 

2019

Interest Income
Interest and Fees on Loans

$

7,822

$

7,766

$

7,537

$

7,387

$

7,224

Fees on PPP Loans

 

559

 

391

 

-

 

-

 

-

Net Fair Value Amortization Income

 

5

 

46

 

115

 

62

 

71

Interest on Securities

 

306

 

246

 

323

 

247

 

264

Interest on Fed Funds

 

-

 

-

 

-

 

-

 

-

Interest on Due From Banks

 

67

 

72

 

187

 

290

 

291

Total Interest Income

 

8,759

 

8,521

 

8,162

 

7,986

 

7,850

 
Interest Expense
Interest Expense on Deposits

 

333

 

501

 

862

 

1,085

 

1,065

Interest Expense on Borrowings

 

22

 

48

 

53

 

43

 

32

Total Interest Expense

 

355

 

549

 

915

 

1,128

 

1,097

 
Net Interest Income

 

8,404

 

7,972

 

7,247

 

6,858

 

6,753

Provision for Loan Losses

 

209

 

710

 

783

 

205

 

205

Net Interest Income After Provision

 

8,195

 

7,262

 

6,464

 

6,653

 

6,548

 
Non-Interest Income
Service Charges, Commissions and Fees

 

609

 

463

 

502

 

566

 

523

Other Non-Interest Income

 

149

 

159

 

193

 

199

 

216

Total Non-Interest Income

 

758

 

622

 

695

 

765

 

739

 
Non-Interest Expense
Salaries and Employee Benefits

 

3,604

 

3,495

 

3,452

 

3,212

 

3,137

Occupancy and Equipment

 

677

 

666

 

685

 

665

 

653

Other Non-Interest Expense

 

1,434

 

1,534

 

1,383

 

1,309

 

1,303

Total Non-Interest Expense

 

5,715

 

5,695

 

5,520

 

5,186

 

5,093

 
Net Income Before Provision for Taxes

 

3,238

 

2,189

 

1,639

 

2,232

 

2,194

Provision for Taxes

 

974

 

624

 

468

 

660

 

647

Net Income

$

2,264

$

1,565

$

1,171

$

1,572

$

1,547

 
Shares (end of period)

 

5,070,556

 

5,069,523

 

5,047,696

 

5,033,348

 

5,031,788

Earnings Per Share - Basic

$

0.45

$

0.31

$

0.23

$

0.31

$

0.31

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,

2020

 

2020

 

2020

 

2019

 

2019

Income and performance ratios:
Net Income

$

2,264

 

$

1,565

 

$

1,171

 

$

1,572

 

$

1,547

 

Earnings per share - basic

 

0.45

 

 

0.31

 

 

0.23

 

 

0.31

 

 

0.31

 

Return on average assets

 

0.98

%

 

0.76

%

 

0.67

%

 

0.85

%

 

0.89

%

Return on average equity

 

10.95

%

 

8.18

%

 

6.27

%

 

8.04

%

 

8.09

%

Net interest margin

 

3.86

%

 

3.98

%

 

4.27

%

 

4.06

%

 

4.23

%

Net interest margin (excluding PPP loans)

 

3.99

%

 

4.12

%

 

n/a

 

 

n/a

 

 

n/a

 

Efficiency ratio

 

62.64

%

 

65.96

%

 

69.18

%

 

68.49

%

 

68.46

%

 
Asset quality:
Allowance for loan and lease losses

$

8,040

 

$

7,890

 

$

7,171

 

$

6,366

 

$

6,145

 

Nonperforming assets

$

12

 

$

40

 

$

341

 

$

284

 

$

276

 

Allowance for loan and lease losses / total loans and leases

 

1.11

%

 

1.08

%

 

1.19

%

 

1.10

%

 

1.12

%

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

 

1.33

%

 

1.28

%

 

n/a

 

 

n/a

 

 

n/a

 

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

 

0.03

%

 

-0.01

%

‐0.01%

 

-0.01

%

 

-0.04

%

Texas ratio

 

0.01

%

 

0.05

%

 

0.43

%

 

0.37

%

 

0.37

%

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

 

11.82

%

 

11.31

%

 

11.17

%

 

11.35

%

 

11.56

%

Total risk-based capital (a)

 

13.07

%

 

12.54

%

 

12.30

%

 

12.40

%

 

12.62

%

Common equity tier 1 risk-based capital (a)

 

11.82

%

 

11.31

%

 

11.17

%

 

11.35

%

 

11.56

%

Tier 1 leverage ratio (a)

 

8.49

%

 

8.87

%

 

10.04

%

 

10.04

%

 

10.32

%

 
Equity and share related:
Common equity

$

82,101

 

 

79,725

 

 

77,237

 

$

76,143

 

$

74,539

 

Book value per share

 

16.13

 

 

15.66

 

 

15.35

 

 

15.15

 

 

14.81

 

Tangible book value per share

 

15.11

 

 

14.62

 

 

14.30

 

 

14.09

 

 

13.74

 

Stock closing price per share

 

12.10

 

 

12.25

 

 

12.00

 

 

19.80

 

 

17.85

 

Number of shares issued and outstanding

 

5,071

 

 

5,070

 

 

5,048

 

 

5,033

 

 

5,032

 

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.
Loan Deferrals
As of September 30, 2020
 
Principal Only Principal and Interest Weighted
Average LTV
Total Deferred
Loans
Percentage of
Total Loans
excluding PPP
CRE - Retail

$

3,198,603

$

8,727,555

53

%

$

11,926,158

1.97

%

CRE - Special Purpose

$

-

$

3,799,533

65

%

$

3,799,533

0.63

%

CRE - Hospitality

$

-

$

-

$

-

C&I

$

1,901,583

$

-

$

1,901,583

0.31

%

$

5,100,186

$

12,527,088

$

17,627,274

2.91

%

 

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