American Riviera Bank Reports on Earnings and Paycheck Protection Program

SANTA BARBARA, Calif.--(BUSINESS WIRE)--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.