American Riviera Bank Reports Growth and Earnings

SANTA BARBARA, Calif.–(BUSINESS WIRE)–#BankonBetter–American Riviera Bank (OTC Markets: ARBV) announced today unaudited net income of $6,393,000 ($1.27 per share) for the year ended December 31, 2019. This represents a 9% increase in net income from the $5,890,000 ($1.32 per share) for the same reporting period in the prior year. The Bank reported an annualized return on average assets of 0.97% and return on average equity of 9.01%. The Bank reported unaudited net income of $1,572,000 ($0.31 per share) for the fourth quarter ended December 31, 2019 compared to $1,492,000 ($0.33 per share) for the same quarter last year. Share count has increased primarily due to the $8,500,000 common stock capital raise closed in the quarter ended March 31, 2019.

The Bank continues to experience significant growth, reporting $719 million in total assets as of December 31, 2019, representing a $102 million, or 17% increase from December 31, 2018. Total deposits increased 21% from December 31, 2018 reaching $621 million at December 31, 2019. Non-interest bearing demand deposit accounts increased $47 million, or 28% from the same reporting period in the prior year, reaching $217 million at December 31, 2019.

The Bank reported strong loan growth, with gross loans increasing $70 million, or 14% from December 31, 2018, reaching $578 million at December 31, 2019, with 6% or $31 million of growth in the fourth quarter of 2019. At December 31, 2019, the Bank had no other real estate owned and no loans 30 days or more past due. The Bank’s net interest income increased by approximately $2.3 million, or 9% for the year ended December 31, 2019, compared to the same reporting period in the prior year. The Bank’s non-interest income grew by $1.0 million, or 58% for the year ended December 31, 2019, compared to the same reporting period in the prior year. The increase in non-interest income came from diversified sources, including sales and servicing of SBA loans, mortgage broker fees, commercial loan swap fees and Farmer Mac lending.

Jeff DeVine, President and Chief Executive Officer, stated, “2019 was an impactful year for the Bank by significantly growing loans, deposits and increasing earnings. During the year the Bank raised capital, opened a full service branch in San Luis Obispo and added a Chief Technology Officer and Chief Compliance & Risk Officer to the executive team in order to support our growth and expand our relationships throughout the Central Coast.”

As of December 31, 2019, 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 $14.09 at December 31, 2019, a 13% increase from $12.51 at December 31, 2018.

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 nine consecutive years the Bank has been recognized for strong financial performance by the Findley Reports, and received the highest “Super Premier” rating from Findley for 2018 and 2017. As of September 30, 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)
		Dec 31,	Dec 31,	One Year
		2019	2018	Change
Assets
	Cash & Due From Banks	$ 66,472	$ 41,271	61%
	Fed Funds Sold	–	–	–
	Securities	43,403	46,009	-6%

	Loans	578,458	508,397	14%
	Allowance For Loan Losses	(6,366)	(5,542)	15%
	Net Loans	572,092	502,855	14%

	Premise & Equipment	6,878	5,299	30%
	Goodwill and Other Intangibles	5,337	5,516	-3%
	Other Assets ^(a)	24,753	15,590	59%
Total Assets		$ 718,935	$ 616,540	17%


Liabilities & Shareholders’ Equity
	Demand Deposits	$ 216,671	$ 169,549	28%
	NOW Accounts	87,906	73,652	19%
	Other Interest Bearing Deposits	316,586	270,106	17%
	Total Deposits	621,163	513,307	21%

	Borrowed Funds	10,000	40,000	-75%
	Other Liabilities ^(a)	11,629	2,346	396%
	Total Liabilities	642,792	555,653	16%

	Common Stock ^(b)	55,034	46,477	18%
	Retained Earnings	21,224	14,831	43%
	Other Capital	(115)	(421)	-73%
	Total Shareholders’ Equity	76,143	60,887	25%

Total Liabilities & Shareholders’ Equity		$ 718,935	$ 616,540	17%

Notes:
	(a) Other assets and other liabilities primarily increased due to the adoption of ASU2016-02, “Leases (Topic 842)” as of January 1, 2019. As of December 31, 2019 the right-of-use asset totals $7.7 million and the operating lease liability is $8 million.
	(b) Common stock increased in the first quarter 2019 due to $8.5 million common stock capital raise.

Balance Sheets (unaudited)
(dollars in thousands)
		December 31,	September 30,	June 30,	March 31,	December 31,
		2019	2019	2019	2019	2018
Assets
	Cash & Due From Banks	$ 66,472	$ 79,101	$ 47,640	$ 48,835	$ 41,271
	Fed Funds Sold	–	–	–	–	–
	Securities	43,403	41,797	42,961	44,123	46,009

	Loans	578,458	547,956	541,869	520,857	508,397
	Allowance For Loan Losses	(6,366)	(6,145)	(5,883)	(5,661)	(5,542)
	Net Loans	572,092	541,811	535,986	515,196	502,855

	Premise & Equipment	6,878	6,812	6,528	5,588	5,299
	Goodwill and Other Intangibles	5,337	5,382	5,427	5,472	5,516
	Other Assets ^(a)	24,753	22,364	23,054	19,524	15,590
Total Assets		$ 718,935	$ 697,267	$ 661,596	$ 638,738	$ 616,540


Liabilities & Shareholders’ Equity
	Demand Deposits	$ 216,671	$ 207,643	$ 186,845	$ 187,048	$ 169,549
	NOW Accounts	87,906	79,509	73,782	76,370	73,652
	Other Interest Bearing Deposits	316,586	316,124	304,223	282,874	270,106
	Total Deposits	621,163	603,276	564,850	546,292	513,307

	Borrowed Funds	10,000	10,000	15,000	15,000	40,000
	Other Liabilities ^(a)	11,629	9,452	8,806	6,562	2,346
	Total Liabilities	642,792	622,728	588,656	567,854	555,653

	Common Stock ^(b)	55,034	54,889	54,739	54,513	46,477
	Retained Earnings	21,224	19,653	18,105	16,600	14,831
	Other Capital	(115)	(3)	96	(229)	(421)
	Total Shareholders’ Equity	76,143	74,539	72,940	70,884	60,887

Total Liabilities & Shareholders’ Equity		$ 718,935	$ 697,267	$ 661,596	$ 638,738	$ 616,540

Notes:
	(a) Other assets and other liabilities primarily increased due to the adoption of ASU2016-02, “Leases (Topic 842)” as of January 1, 2019. As of December 31, 2019 the right-of-use asset totals $7.7 million and the operating lease liability is $8 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.
	(b) Common stock increased in the first quarter 2019 due to $8.5 million common stock capital raise.

Statements of Income (unaudited)
(dollars in thousands, except per share data)
		Quarter Ended			Twelve Months Ended
		Dec 31,	Dec 31,		Dec 31,	Dec 31,
		2019	2018	Change	2019	2018	Change
Interest Income
	Interest and Fees on Loans	$ 7,387	$ 6,533	13%	$ 28,283	$ 23,827	19%
	Net Fair Value Amortization Income	62	423	-85%	442	847	-48%
	Interest on Securities	247	297	-17%	1,025	999	3%
	Interest on Fed Funds	0	0	0%	1	12	-92%
	Interest on Due From Banks	290	165	76%	984	601	64%
	Total Interest Income	7,986	7,418	8%	30,735	26,286	17%

Interest Expense
	Interest Expense on Deposits	1,085	681	59%	3,973	1,894	110%
	Interest Expense on Borrowings	43	73	-41%	276	199	39%
	Total Interest Expense	1,128	754	50%	4,249	2,093	103%

Net Interest Income		6,858	6,664	3%	26,486	24,193	9%
	Provision for Loan Losses	205	369	-44%	806	1,294	-38%
Net Interest Income After Provision		6,653	6,295	6%	25,680	22,899	12%

Non-Interest Income
	Service Charges, Commissions and Fees	566	289	96%	2,096	1,567	34%
	Other Non-Interest Income	199	(53)	475%	695	205	239%
	Total Non-Interest Income	765	236	224%	2,791	1,772	58%

Non-Interest Expense
	Salaries and Employee Benefits	3,212	2,633	22%	11,922	9,694	23%
	Occupancy and Equipment	665	503	32%	2,358	1,806	31%
	Other Non-Interest Expense	1,309	1,212	8%	5,292	4,835	9%
	Total Non-Interest Expense	5,186	4,348	19%	19,572	16,335	20%

Net Income Before Provision for Taxes		2,232	2,183	2%	8,899	8,336	7%
Provision for Taxes		660	691	-4%	2,506	2,446	2%
Net Income		$ 1,572	$ 1,492	5%	$ 6,393	$ 5,890	9%

	Shares (end of period)	5,033,348	4,461,068	13%	5,033,348	4,461,068	13%
	Earnings Per Share – Basic	$ 0.31	$ 0.33	-6%	$ 1.27	$ 1.32	-4%
	Return on Average Assets	0.85%	0.95%	-11%	0.97%	1.03%	-6%
	Return on Average Equity	8.04%	9.60%	-16%	9.01%	10.19%	-12%
	Net Interest Margin	4.06%	4.61%	-12%	4.24%	4.51%	-6%

Five Quarter Statements of Income (unaudited)
(dollars in thousands)
		Three Months Ended
		December 31,	September 30,	June 30,	March 31,	December 31,
		2019	2019	2019	2019	2018
Interest Income
	Interest and Fees on Loans	$ 7,387	$ 7,224	$ 6,992	$ 6,680	$ 6,533
	Net Fair Value Amortization Income	62	71	86	222	423
	Interest on Securities	247	264	230	284	297
	Interest on Fed Funds	–	–	–	1	–
	Interest on Due From Banks	290	291	205	198	165
	Total Interest Income	7,986	7,850	7,513	7,385	7,418

Interest Expense
	Interest Expense on Deposits	1,085	1,065	998	825	681
	Interest Expense on Borrowings	43	32	60	141	73
	Total Interest Expense	1,128	1,097	1,058	966	754

Net Interest Income		6,858	6,753	6,455	6,418	6,664
	Provision for Loan Losses	205	205	220	175	369
Net Interest Income After Provision		6,653	6,548	6,235	6,244	6,295

Non-Interest Income
	Service Charges, Commissions and Fees	566	523	580	427	289
	Other Non-Interest Income ^(a)	199	216	113	166	(53)
	Total Non-Interest Income	765	739	693	593	236

Non-Interest Expense
	Salaries and Employee Benefits	3,212	3,137	2,881	2,692	2,633
	Occupancy and Equipment	665	653	546	494	503
	Other Non-Interest Expense	1,309	1,303	1,366	1,313	1,212
	Total Non-Interest Expense	5,186	5,093	4,793	4,499	4,348

Net Income Before Provision for Taxes		2,232	2,194	2,135	2,338	2,183
Provision for Taxes		660	647	629	570	691
Net Income		$ 1,572	$ 1,547	$ 1,506	$ 1,768	$ 1,492

	Shares (end of period)	5,033,348	5,031,788	5,028,906	5,020,829	4,461,068
	Earnings Per Share – Basic	$ 0.31	$ 0.31	$ 0.30	$ 0.35	$ 0.33

Notes:
	(a) The Bank conducted a Bank Owned Life Insurance carrier exchange that cost $170k in other non-interest income during the quarter ended December 31, 2018. This loss was reclassified to non-interest expense in the annualized income statement.

Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
		At or for the Three Months Ended
		December 31,	September 30,	June 30,	March 31,	December 31,
		2019	2019	2019	2019	2018
Income and performance ratios:
	Net Income	$ 1,572	$ 1,547	$ 1,506	$ 1,768	$ 1,492
	Earnings per share – basic	0.31	0.31	0.30	0.35	0.33
	Return on average assets	0.85%	0.89%	0.95%	1.19%	0.95%
	Return on average equity	8.04%	8.09%	8.46%	11.90%	9.60%
	Net interest margin	4.06%	4.23%	4.27%	4.42%	4.61%
	Efficiency ratio	68.49%	68.46%	66.90%	63.40%	63.45%

Asset quality:
	Allowance for loan and lease losses	$ 6,366	$ 6,145	$ 5,883	$ 5,661	$ 5,542
	Nonperforming assets	284	276	281	292	349
	Allowance for loan and lease losses / total loans and leases	1.10%	1.12%	1.09%	1.09%	1.09%
	Net charge-offs / average loans and leases (annualized)	-0.01%	-0.04%	0.00%	0.04%	0.02%
	Texas ratio	0.37%	0.37%	0.38%	0.41%	0.57%

Other ratios:
	Tier 1 risk-based capital ^(a)	11.35%	11.56%	11.56%	11.76%	10.30%
	Total risk-based capital ^(a)	12.40%	12.62%	12.61%	12.81%	11.36%
	Common equity tier 1 risk-based capital ^(a)	11.35%	11.56%	11.56%	11.76%	10.30%
	Tier 1 leverage ratio ^(a)	10.04%	10.32%	10.48%	10.55%	9.21%

Equity and share related:
	Common equity	$ 76,143	74,539	$ 72,940	$ 70,884	$ 60,887
	Book value per share	15.15	14.81	14.49	14.16	13.74
	Tangible book value per share	14.09	13.74	13.41	13.07	12.51
	Stock closing price per share	19.80	17.85	18.35	18.25	17.85
	Number of shares issued and outstanding	5,033	5,032	5,029	5,021	4,461

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

Contacts

American Riviera Bank

www.americanrivierabank.com
805-965-5942

Michelle Martinich