American River Bankshares (NASDAQ:AMRB) today reported net income
of $1.3 million, or $0.22 per diluted share for the second quarter
of 2018 compared to $1.3 million, or $0.20 per diluted share for
the second quarter of 2017. For the six months ended June 30,
2018, net income was $2.6 million or $0.44 per diluted share,
compared to $2.5 million or $0.38 per diluted share for the six
months ended June 30, 2017.
“During the quarter we began to see the results of the hard work
from our new lending team,” said David E. Ritchie, Jr., President
and CEO of American River Bankshares. “While we experienced a
decrease in loans outstanding due to higher than usual loan
payoffs, we did record $30 million in new loan commitments during
the quarter and included in that total was $8 million in commercial
loans.” Ritchie continued, “Of the $30 million in
commitments, $13 million funded in the second quarter and it is
anticipated that many of these remaining commitments will begin
funding in the third quarter of 2018.”
Financial Highlights
- Core deposits increased $47.0 million (10.3%) from June 30,
2017 to June 30, 2018. Net loans decreased $25.6 million
(8.1%) from June 30, 2017 to June 30, 2018. During the first
half of 2018, core deposits increased $27.7 million (5.8%) and net
loans decreased $18.2 million (5.9%).
- The net interest margin for the second quarter of 2018 was
3.36%, compared to 3.29% for the first quarter of 2018 and 3.41%
for the second quarter of 2017. The net interest margin for
the six months ended June 30, 2018 was 3.32%, compared to 3.43% for
the six months ended June 30, 2017.
- Net interest income was $5.1 million in the second quarter of
2018, compared to $4.9 million in the second quarter of 2017.
For the six months ended June 30, 2018, net interest income
was $9.9 million, compared to $9.7 million for the six months ended
June 30, 2017.
- The allowance for loan and lease losses was $4.5 million (1.52%
of total loans and leases) at June 30, 2018, compared to $4.9
million (1.52% of total loans and leases) at June 30, 2017.
Nonperforming loans were $1.9 million at June 30, 2018, compared to
$1.9 million at March 31, 2018 and $12,000 at June 30, 2017.
- Shareholders’ equity was $71.9 million at June 30, 2018,
compared to $72.1 million at March 31, 2018 and $81.4 million at
June 30, 2017. Tangible book value per share was $9.48 at
June 30, 2018, compared to $9.48 at March 31, 2018 and $10.23 at
June 30, 2017. Book value per share was $12.26 per share at
June 30, 2018, compared to $12.26 per share at March 31, 2018 and
$12.80 per share at June 30, 2017.
- The 2018 Stock Repurchase Program resulted in the Company
repurchasing 34,600 shares of its common stock at an average price
of $16.00 per share during the second quarter of 2018, totaling a
repurchase of 298,778 shares at an average price of $15.53 per
share in the six months ended June 30, 2018. The Company
continued the quarterly cash dividend by paying a $0.05 per share
cash dividend on May 16, 2018.
- The Company continues to maintain strong capital ratios.
At June 30, 2018, the Leverage ratio was 8.8% compared to 8.7% at
March 31, 2018 and 10.2% at June 30, 2017; the Tier 1 Risk-Based
Capital ratio was 17.6% compared to 17.0% at March 31, 2018 and
18.4% at June 30, 2017, and the Total Risk-Based Capital ratio was
18.8% compared to 18.3% at March 31, 2018 and 19.7% at June 30,
2017.
Northern California Economic Update, June 30,
2018.
Each quarter, management at American River Bank prepares an
economic report for internal use that analyzes the recent
historical rolling quarters within the three primary markets in
which the Company does business – Greater Sacramento Area and
Sonoma and Amador Counties. Sources of economic and industry
information include: Colliers International, Keegan & Coppin
Company, Inc., ycharts/housing, State of California Employment
Development Department, US Census, CBRE, Integra Realty Resources,
and Sacramento Association of Realtors and Trading
Economics.
Commercial real estate and employment data continued to be
positive in the markets we serve.
Commercial Real Estate. In the Greater
Sacramento Area, when comparing fourth quarter 2017 to fourth
quarter 2016, commercial real estate vacancies improved in all
segments. Office vacancy decreased from 11.6% to 10.8%,
retail vacancy decreased from 10.3% to 9.1%, and industrial vacancy
decreased from 8.1% to 5.9%. As of first quarter 2018,
Sacramento’s office and industrial decreased further to 10.5% and
4.9% respectively, while retail vacancy increased slightly to
9.2%.
In Sonoma County, when comparing fourth quarter 2017 to fourth
quarter 2016, commercial real estate vacancies also continued to
improve. Office vacancy decreased from 14.7% to 12.5%, retail
vacancy remained flat at 3.8%, and industrial vacancy decreased
from 5.8% to 4.6%. As of first quarter 2018, Sonoma
County’s retail and industrial vacancies decreased further to 3.7%
and 4.2% respectively, while office increased slightly to
12.6%.
In all segments (office, retail, and industrial), the Greater
Sacramento Area reported positive absorption over the past three
years, with the exception of first quarter 2016 (retail and
office). Sonoma County and the City of Santa Rosa has
reported (when data is available) positive absorption over the past
three years for the office and industrial segments (retail data is
not available).
In Greater Sacramento, commercial lease rates have been in a
relatively narrow range over the past two years through the first
quarter 2018 with lease rates ranging from the following: office:
$1.71/SF to $1.85/SF; retail: $1.33/SF to $1.36/SF and industrial:
$0.46/SF to $0.52/SF. At June 30, 2018, lease rates per
square foot were $1.85 for office, $1.34 for retail, and $0.52 for
industrial.
As a proxy for Sonoma County, the City of Santa Rosa’s gross
office lease rates in fourth quarter 2015 averaged $1.75/SF and
industrial rates averaged $0.80/SF. The office lease rates as
of year-end 2016 ranged from $1.75/SF to $2.25/SF depending on the
quality of the property and industrial rents ranged from
$0.85/SF to $0.95/SF with light industrial in certain cases ranging
from $1.15/SF to $1.40/SF. As of year-end 2017, office
rental rates ranged from $1.75/SF to $2.35/SF and industrial rates
ranged from $0.90/SF to $1.10/SF. There was no retail
rental rate data available for Santa Rosa for these time
periods.
The Amador region has the lowest level of commercial real estate
concentration in the Bank. There is limited supply for
commercial real estate in this region and as a result, minimal
information is available.
Multi-family. The multi-family market in
the Sacramento area has reflected high occupancy over the last two
years. The highest occupancy rate within this time range was
in second quarter 2016 at 97.9%, and the lowest was first quarter
2018 at 96.3%. Monthly lease rates during this period ranged
from $1,157 in first quarter 2016 to $1,367 in first quarter
2018.
The trailing 12-month cap rate during the past two years ranged
with minor fluctuation from 5.58% in first quarter 2016 to 6.10% in
third quarter 2017. As of first quarter 2018, the rate
was 5.60%. The median sales price increased from
$106,571 per unit in fourth quarter 2017 to $110,119 per unit in
the first quarter 2018. According to Colliers, it is
expected that 1,440 units will be delivered during 2018, the
highest in a single year since 2008. Similar data for the
Sonoma and Amador markets are currently unavailable.
Employment. National unemployment, which
reached a high of 10.0% at October 31, 2009, has dropped steadily
since and has stabilized. Compared to December 2014, national
unemployment decreased from 5.6% to 5.0% in December 2015, and to
4.7% as of December 2016. As of December 2017, unemployment
dropped further to 4.1% and as of May 2018 the rate was
3.8%.
California unemployment was 6.9% at December 31 2014, 5.9% at
December 31, 2015, and 5.3% at December 31, 2016. As of
December 2017, the rate decreased further to 4.5%, and as of May
2018, the rate was 4.2%. The number of employed Californians
continues to increase. There were 17.5 million employed at
the end of 2014, 17.9 million employed at the end of 2015, 18.2
million at the end of 2016, and 18.5 million at the end of
2017. The State added another 16,000 jobs during the first
five months in 2018.
At December 31, 2015, all three of our markets reported lower
unemployment rates than at year end 2014. Unemployment
rates at the time were 5.5% and 4.2% for the Sacramento MSA and
Santa Rosa-Petaluma MSA, respectively. When comparing
December 31, 2016 to December 31 2017, unemployment rates decreased
from 5.0% to 3.8% in the Sacramento MSA and 3.7% to 2.8% in the
Santa Rosa-Petaluma MSA. As of month-end May 2018, the rate
for Sacramento and Santa Rosa-Petaluma MSAs decreased to 3.3% and
2.4% respectively.
Over the same period, Amador County has been higher than the
State level in nearly every quarter. Amador County has shown
improvement from 7.4% at December 31, 2014 to 6.2% at December 31,
2015, 5.9% at December 31, 2016 and 4.2% at December 31,
2017. As of May 2018, the rate decreased further to 3.5% and
is now below the State average.
Job growth was positive in all of our markets in the past two
years. Compared to December 2015, job growth was 1.81%, 1.38%
and 4.87% for the Sacramento MSA, Santa Rosa-Petaluma MSA and
Amador County, respectively as of December 2016. Comparing
December 2016 to December 2017, job growth was 2.66% for the
Sacramento MSA, 2.41% in the Santa Rosa-Petaluma MSA and 2.80% in
Amador County. As of May 2018, job growth was negative 0.67%
for Sacramento MSA, however Santa Rosa MSA and Amador County
continued to see job growth at 2.4% and 1.36%
respectively.
Balance Sheet Review
American River Bankshares’ assets totaled $675.3 million at June
30, 2018, compared to $655.6 million at December 31, 2017, and
$641.6 million at June 30, 2017.
Net loans totaled $290.6 million at June 30, 2018, compared to
$308.7 million at December 31, 2017, and $316.1 million at June 30,
2017.
The loan portfolio at June 30, 2018 included: real estate loans
of $266.9 million (90% of the portfolio), commercial loans of $25.0
million (9% of the portfolio) and other loans, which consist mainly
of agriculture and consumer loans of $3.4 million (1% of the
portfolio). The real estate loan portfolio at June 30, 2018
includes: owner-occupied commercial real estate loans of $64.9
million (24% of the real estate portfolio), investor commercial
real estate loans of $112.7 million (42% of the real estate
portfolio), multi-family real estate loans of $66.1 million (25% of
the real estate portfolio), construction and land development loans
of $6.4 million (3% of the real estate portfolio) and residential
real estate loans of $16.8 million (6% of the real estate loan
portfolio).
Nonperforming assets (“NPAs”) include nonperforming loans,
leases, and other assets and other real estate owned
(“OREO”). Nonperforming loans include all such loans and
leases that are either placed on nonaccrual status or are 90 days
past due as to principal or interest, but still accrue interest
because such loans are well-secured and in the process of
collection. NPAs remained at $2.9 million at June 30, 2018
from December 31, 2017 and increased from $1.4 million at June 30,
2017. The NPAs to total assets ratio decreased to 0.43% at
the end of June 2018 from 0.44% at December 31, 2017 and increased
from 0.21% one year ago.
At June 30, 2018 and December 31, 2017, the Company had one OREO
property totaling $961,000. This compares to two OREO properties
totaling $1.3 million at June 30, 2017. During the second
quarter of 2018, the Company did not add, sell, or modify the value
of any OREO properties. At June 30, 2018, December 31, 2017,
and June 30, 2017 there was not a valuation allowance for OREO
properties.
Loans measured individually for impairment were $12.0 million at
the end of June 2018, a decrease from $13.8 million at December 31,
2017, and $17.0 million a year ago. Specific reserves of
$446,000 were held on the impaired loans at June 30, 2018, compared
to $355,000 at December 31, 2017 and $505,000 at June 30,
2017. There was no provision for loan and lease losses for
the second quarters of 2018 and 2017. The Company had net
recoveries of $4,000 in the second quarter of 2018 compared to net
recoveries of $48,000 in the second quarter of 2017. For the
first six months of 2018, the Company had net recoveries of $14,000
compared to net recoveries of $59,000 in the first six months of
2017. During 2013, the Company participated in a shared
national credit to a large retailer. The Company’s initial
loan balance of $3.0 million was paid down to $2.7 million, as
agreed then during the third quarter of 2017 this retailer filed
for bankruptcy reorganization and the loan was placed on nonaccrual
status. The Company has performed an impairment analysis,
which resulted in reducing the loan balance to $1.6 million as of
June 30, 2018, through charge offs in 2017, totaling $1.1 million
to the allowance for loan and lease losses (“ALLL”). The loan
also carries a $200,000 specific reserve reducing the Company’s
exposure to $1.4 million. The Company continues to gather the
latest information available to perform and update its impairment
analysis. As more information becomes available, the Company
will update the impairment analysis, which could lead to further
charges to the ALLL. The Company maintains the allowance for
loan and lease losses at a level believed to be adequate for known
and inherent risks in the portfolio. The methodology incorporates a
variety of risk considerations, both quantitative and qualitative,
in establishing an allowance for loan and lease losses that
management believes is appropriate at each reporting
date.
Investment securities, which excludes $3.9 million in stock of
the Federal Home Loan Bank of San Francisco (“FHLB Stock”), totaled
$282.0 million at June 30, 2018, up 7.3% from $262.7 million at
December 31, 2017 and up 9.3% from $257.9 million at June 30,
2017. At June 30, 2018, the investment portfolio was
comprised of 91% U.S. Government agencies or U.S.
Government-sponsored agencies (primarily mortgage-backed
securities), 6% obligations of states and political subdivisions,
2% corporate bonds, and 1% U.S. Treasuries.
At June 30, 2018, total deposits were $581.3 million, compared
to $556.1 million at December 31, 2017 and $537.9 million one year
ago. Core deposits increased 10.3% to $504.1 million at June
30, 2018 from $457.1 million at June 30, 2017 and increased 5.8%
from $476.4 million at December 31, 2017. The Company
considers all deposits except time deposits as core deposits.
At June 30, 2018, noninterest-bearing demand deposits accounted
for 38% of total deposits, interest-bearing demand accounts were
12%, savings deposits were 12%, money market balances accounted for
25% and time certificates were 13% of total deposits. At June
30, 2017, noninterest-bearing demand deposits accounted for 36% of
total deposits, interest-bearing demand accounts were 12%, savings
deposits were 12%, money market balances accounted for 25% and time
certificates were 15% of total deposits.
Shareholders’ equity decreased $5.0 million (6.5%) to $71.9
million at June 30, 2018 compared to $76.9 million at December 31,
2017 and $9.5 million (11.7%) from $81.4 million at June 30,
2017. The decrease in equity from December 31, 2017 was due
to a decrease in common stock of $4.4 million primarily related to
repurchases made under the 2018 Stock Repurchase Program and a $2.7
million decrease in accumulated other comprehensive income related
to a decrease in the unrealized gain on securities, partially
offset by an increase in Retained Earnings of $2.0 million due to
the net income for the year less cash dividends declared.
Net Interest Income
The net interest income during the second quarter of 2018 was
$5.1 million compared to $4.9 million in the second quarter of 2017
and for the six months ended June 30, 2018, net interest income
increased 1.8% to $9.9 million from $9.7 million for the six months
ended June 30, 2017. The net interest margin as a percentage
of average earning assets was 3.36% in the second quarter of 2018,
compared to 3.29% in the first quarter of 2018 and 3.41% in the
second quarter of 2017. For the six months ended June 30, 2018, the
net interest margin was 3.32% compared to 3.43% for the six months
ended June 30, 2017. Interest income for the second quarter
of 2018 increased 7.4% to $5.5 million from $5.1 million for the
second quarter of 2017 and for the six months ended June 30, 2018,
interest income increased 3.8% to $10.6 million from $10.2 million
for the six months ended June 30, 2017.
The average tax equivalent yield on earning assets increased
from 3.59% in the second quarter of 2017 to 3.60% for the second
quarter of 2018 and for the six months ended June 30, 2018
decreased to 3.56% from 3.60% for the six months ended June 30,
2017. Much of the decrease in yields from the six months
ending June 30, 2017 to June 30, 2018 can be attributed to an
increase in lower yielding Federal funds sold. The average
balance increased from zero in 2017 to $18.0 million in 2018.
The rate earned on the Federal funds sold in 2018 was 1.66%,
therefore, reducing the average yield on earning assets.
The average balance of earning assets increased $34.4 million
(5.9%) from $583.8 million in the second quarter of 2017 to $618.2
million in the second quarter of 2018 and for the six months ended
June 30, 2018, increased $23.5 million (4.0%) to $605.0 million
from $581.5 million for the six months ended June 30, 2017.
Interest expense for the second quarter of 2018 increased 50.0%
to $378,000 from $252,000 for the second quarter of 2017 and for
the six months ended June 30, 2018 increased 43.1% to $707,000 from
$494,000 for the six months ended June 30, 2017. The increase
in interest expense is related to an overall higher interest rate
environment. The average cost of funds increased from 0.28%
in the second quarter of 2017 to 0.39% in the second quarter of
2018 and from 0.28% in the first six months of 2017 to 0.37% in the
first six months of 2018. Average deposits increased $45.9
million (8.5%) from $542.8 million during the second quarter of
2017 to $588.7 million during the second quarter of 2018.
Average borrowings remained consistent at $15.5 million during the
second quarter of 2017 compared to the second quarter of 2018.
Noninterest Income and Expense
Noninterest income for the second quarter of 2018 was $380,000,
down from $439,000 in the second quarter of 2017 and decreased to
$752,000 for the six months ended June 30, 2018 from $858,000 in
the first six months of 2017. For both periods, the
decrease in noninterest income was predominately related to a
decrease in gain on sale of securities from a gain of $86,000 in
the second quarter of 2017 to a gain of $10,000 in the second
quarter of 2018 and from $142,000 in the first half of 2017 to
$11,000 for the first half of 2018.
Noninterest expense increased to $3.8 million for the second
quarters of 2018 from $3.4 million in the second quarter of 2017
and increased from $6.8 million for the six months ended June 30,
2017 to $7.2 million for the same period in 2018. The
predominant variance between the second quarters of 2017 and 2018
and the six months ended June 30 for each year was the increase in
salaries and benefits of $453,000, quarter over quarter, and
$489,000, year over year. There has been one newly created
Chief Lending Officer position and multiple vacant Relationship
Manager positions have been filled in 2018.
The fully taxable equivalent efficiency ratio for the second
quarter of 2018 increased to 68.9% from 62.3% from the second
quarter of 2017 and for the six months ended June 30, 2018,
increased to 66.9% from 63.3% for the six months ended June 30,
2017.
Provision for Income Taxes
Federal and state income taxes for the quarter ended June 30,
2018 decreased by $240,000 from $643,000 in the second quarter of
2017 to $403,000 in the second quarter of 2018 and decreased
$450,000 from $1.3 million in the first six months of 2017 to
$809,000 in 2018. The lower provision for taxes in 2018
compared to 2017 primarily resulted from the lower federal tax rate
effective January 1, 2018 of 21% compared to 34% in prior
year.
Earnings Conference Call
The second quarter earnings conference call will be held Friday,
July 20, 2018 at 10:30 a.m. Pacific Time (1:30 p.m. Eastern
Time). David E. Ritchie, Jr., President and Chief Executive
Officer, and Mitchell A. Derenzo, Executive Vice President and
Chief Financial Officer, both of American River Bankshares, will
lead a live presentation and answer analysts’
questions. Shareholders, analysts and other interested
parties are invited to join the call by dialing (888) 517-2458 and
entering the Conference ID 6590637#. A recording of the call
will be available approximately twenty-four hours after the call’s
completion on AmericanRiverBank.com.
About American River Bankshares
American River Bankshares (NASDAQ:AMRB) is the parent company of
American River Bank, a regional bank serving Northern California
since 1983. We give business owners more REACH by offering
financial expertise and exceptional service to complement a full
suite of banking products and services. Our honest approach,
commitment to community and focus on profitability is intended to
lead our clients to greater success. For more information, call
(800) 544-0545 or visit AmericanRiverBank.com.
Use of Non-GAAP Financial Measures
This news release contains certain non-GAAP (Generally Accepted
Accounting Principles) financial measures in addition to results
presented in accordance with GAAP. These measures include
tangible book value and taxable equivalent basis. Management
has presented these non-GAAP financial measures in this earnings
release because it believes that they provide useful and
comparative information to assess trends in the Company’s financial
position reflected in the current quarter and year-to-date results
and facilitate comparison of our performance with the performance
of our peers.
Net Interest Margin and Efficiency Ratio (non-GAAP
financial measures)
In accordance with industry standards, certain designated net
interest income amounts are presented on a taxable equivalent
basis, including the calculation of net interest margin and the
efficiency ratio. The Company believes the presentation of
net interest margin on a taxable equivalent basis using a 21%
effective tax rate for 2018 and a 34% effective tax rate for 2017
allows for comparability of net interest margin with industry peers
by eliminating the effect of the differences in portfolios
attributable to the proportion represented by both taxable and
tax-exempt loans and investments. The efficiency ratio is a
measure of a banking company’s overhead as a percentage of its
revenue. The Company derives this ratio by dividing total
noninterest expense by the sum of the taxable equivalent net
interest income and the total noninterest
income.
Tangible Equity (non-GAAP financial
measures)
Tangible common stockholders' equity (tangible book value)
excludes goodwill and other intangible assets. The Company
believes the exclusion of goodwill and other intangible assets to
create “tangible equity” facilitates the comparison of results for
ongoing business operations. The Company’s management
internally assesses its performance based, in part, on these
non-GAAP financial measures.
Adjustments made to reflect certain
expenses
During the fourth quarter of 2017, the Company recorded expenses
related to a change in leadership as well as higher than historical
income tax expense resulting from the Tax Cuts and Jobs Act that
was signed into law on December 22, 2017. Management believes
that presenting the net income and earnings per share adjusted for
these items provides investors with useful information in
understanding the financial performance on a comparative
basis.
Forward-Looking Statements
Certain statements contained herein are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934 and
subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, that involve risks and
uncertainties. Actual results may differ materially from the
results in these forward-looking statements. Factors that
might cause such a difference include, among other matters, changes
in interest rates, economic conditions, governmental regulation and
legislation, credit quality, and competition affecting the
Company’s businesses generally; the risk of natural disasters and
future catastrophic events including terrorist related incidents;
and other factors discussed in the Company’s Annual Report on Form
10-K for the year ended December 31, 2017, and in subsequent
reports filed on Form 10-Q and Form 8-K. The Company does not
undertake any obligation to publicly update or revise any of these
forward-looking statements, whether to reflect new information,
future events or otherwise, except as required by law.
American River Bankshares |
|
|
|
Condensed Consolidated Balance Sheets
(Unaudited) |
|
|
|
(Dollars
in thousands) |
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
June 30, |
|
ASSETS |
|
2018 |
|
2017 |
|
2017 |
|
Cash and
due from banks |
$ |
45,068 |
|
$ |
38,467 |
|
$ |
22,004 |
|
|
Federal
funds sold |
|
8,000 |
|
|
0 |
|
|
0 |
|
|
Interest-bearing deposits in banks |
|
1,746 |
|
|
1,746 |
|
|
1,248 |
|
|
Investment securities |
|
281,990 |
|
|
262,700 |
|
|
257,900 |
|
|
Loans
& leases: |
|
|
|
|
|
|
|
Real
estate |
|
266,844 |
|
|
285,153 |
|
|
288,727 |
|
|
Commercial |
|
25,026 |
|
|
25,377 |
|
|
28,756 |
|
|
Other |
|
3,469 |
|
|
2,863 |
|
|
3,769 |
|
|
Deferred
loan and lease origination fees, net |
|
(295 |
) |
|
(202 |
) |
|
(225 |
) |
|
Allowance
for loan and lease losses |
|
(4,492 |
) |
|
(4,478 |
) |
|
(4,881 |
) |
|
Loans and leases, net |
|
290,552 |
|
|
308,713 |
|
|
316,146 |
|
|
Bank
premises and equipment, net |
|
1,084 |
|
|
1,158 |
|
|
1,275 |
|
|
Goodwill
and intangible assets |
|
16,321 |
|
|
16,321 |
|
|
16,321 |
|
|
Investment in Federal Home Loan Bank Stock |
|
3,932 |
|
|
3,932 |
|
|
3,932 |
|
|
Other
real estate owned, net |
|
961 |
|
|
961 |
|
|
1,348 |
|
|
Accrued
interest receivable and other assets |
|
25,602 |
|
|
21,624 |
|
|
21,431 |
|
|
|
$ |
675,256 |
|
$ |
655,622 |
|
$ |
641,605 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES & SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Noninterest-bearing deposits |
$ |
221,402 |
|
$ |
215,528 |
|
$ |
196,212 |
|
|
Interest
checking |
|
66,729 |
|
|
64,709 |
|
|
63,236 |
|
|
Money
market |
|
145,801 |
|
|
130,032 |
|
|
131,998 |
|
|
Savings |
|
70,184 |
|
|
66,130 |
|
|
65,630 |
|
|
Time
deposits |
|
77,200 |
|
|
79,681 |
|
|
80,804 |
|
|
Total deposits |
|
581,316 |
|
|
556,080 |
|
|
537,880 |
|
|
Short-term borrowings |
|
6,500 |
|
|
3,500 |
|
|
2,000 |
|
|
Long-term borrowings |
|
9,000 |
|
|
12,000 |
|
|
13,500 |
|
|
Accrued
interest and other liabilities |
|
6,547 |
|
|
7,121 |
|
|
6,852 |
|
|
Total liabilities |
|
603,363 |
|
|
578,701 |
|
|
560,232 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
Common stock |
$ |
30,082 |
|
$ |
34,463 |
|
$ |
37,739 |
|
|
Retained earnings |
|
44,801 |
|
|
42,779 |
|
|
42,646 |
|
|
Accumulated other
comprehensive (loss) income |
|
(2,990 |
) |
|
(321 |
) |
|
988 |
|
|
Total
shareholders' equity |
|
71,893 |
|
|
76,921 |
|
|
81,373 |
|
|
|
$ |
675,256 |
|
$ |
655,622 |
|
$ |
641,605 |
|
|
|
|
|
|
|
|
|
|
Ratios: |
|
|
|
|
|
|
|
Nonperforming loans and
leases to total loans and leases |
|
0.66 |
% |
|
0.60 |
% |
|
0.00 |
% |
|
Net (recoveries)
charge-offs to average loans and leases (annualized) |
|
-0.01 |
% |
|
0.25 |
% |
|
-0.04 |
% |
|
Allowance for loan and
lease losses to total loans and leases |
|
1.52 |
% |
|
1.43 |
% |
|
1.52 |
% |
|
|
|
|
|
|
|
|
|
American River
Bank Capital Ratios: |
|
|
|
|
|
|
|
Leverage Capital
Ratio |
|
8.78 |
% |
|
9.32 |
% |
|
10.18 |
% |
|
Common Equity Tier 1
Risk-Based Capital |
|
17.45 |
% |
|
17.71 |
% |
|
18.38 |
% |
|
Tier 1 Risk-Based
Capital Ratio |
|
17.45 |
% |
|
17.71 |
% |
|
18.38 |
% |
|
Total Risk-Based
Capital Ratio |
|
18.70 |
% |
|
18.96 |
% |
|
19.63 |
% |
|
|
|
|
|
|
|
|
|
American River
Bankshares Capital Ratios: |
|
|
|
|
|
|
|
Leverage Capital
Ratio |
|
8.76 |
% |
|
9.45 |
% |
|
10.17 |
% |
|
Tier 1 Risk-Based
Capital Ratio |
|
17.55 |
% |
|
18.08 |
% |
|
18.42 |
% |
|
Total Risk-Based
Capital Ratio |
|
18.80 |
% |
|
19.34 |
% |
|
19.67 |
% |
|
|
|
|
|
|
|
|
|
Nonperforming
loans |
|
1,944 |
|
|
1,892 |
|
|
12 |
|
|
Nonperforming
assets |
|
2,905 |
|
|
2,853 |
|
|
1,360 |
|
|
|
|
|
|
|
|
|
|
American River Bankshares |
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Income (Unaudited) |
|
|
|
|
|
|
|
|
(Dollars
in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second |
|
Second |
|
|
|
|
For the Six
Months |
|
|
|
|
|
Quarter |
|
Quarter |
% |
|
|
|
Ended June 30, |
% |
|
|
|
|
2018 |
|
2017 |
Change |
|
|
|
2018 |
|
|
2017 |
|
Change |
|
|
Interest
income |
$ |
5,498 |
|
$ |
5,121 |
|
7.4 |
|
% |
|
$ |
10,564 |
|
$ |
10,174 |
|
3.8 |
|
% |
|
Interest
expense |
|
378 |
|
|
252 |
|
50.0 |
|
% |
|
|
707 |
|
|
494 |
|
43.1 |
|
% |
|
Net
interest income |
|
5,120 |
|
|
4,869 |
|
5.2 |
|
% |
|
|
9,857 |
|
|
9,680 |
|
1.8 |
|
% |
|
Provision for loan and lease losses |
|
- |
|
|
- |
|
- |
|
% |
|
|
- |
|
|
- |
|
- |
|
% |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
charges on deposit accounts |
|
116 |
|
|
114 |
|
1.8 |
|
% |
|
|
233 |
|
|
231 |
|
0.9 |
|
% |
|
Gain on
sale or impairment of securities |
|
10 |
|
|
86 |
|
(88.4 |
) |
% |
|
|
11 |
|
|
142 |
|
(92.3 |
) |
% |
|
Other
noninterest income |
|
254 |
|
|
239 |
|
6.3 |
|
% |
|
|
508 |
|
|
485 |
|
4.7 |
|
% |
|
Total
noninterest income |
|
380 |
|
|
439 |
|
(13.4 |
) |
% |
|
|
752 |
|
|
858 |
|
(12.4 |
) |
% |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and employee benefits |
|
2,517 |
|
|
2,064 |
|
21.9 |
|
% |
|
|
4,723 |
|
|
4,234 |
|
11.5 |
|
% |
|
Occupancy |
|
262 |
|
|
262 |
|
- |
|
% |
|
|
524 |
|
|
531 |
|
(1.3 |
) |
% |
|
Furniture
and equipment |
|
136 |
|
|
147 |
|
(7.5 |
) |
% |
|
|
274 |
|
|
298 |
|
(8.1 |
) |
% |
|
Federal
Deposit Insurance Corporation assessments |
|
53 |
|
|
52 |
|
1.9 |
|
% |
|
|
106 |
|
|
105 |
|
1.0 |
|
% |
|
Expenses
related to other real estate owned |
|
(3 |
) |
|
12 |
|
(125.0 |
) |
% |
|
|
2 |
|
|
32 |
|
(93.8 |
) |
% |
|
Other
expense |
|
863 |
|
|
831 |
|
3.9 |
|
% |
|
|
1,549 |
|
|
1,598 |
|
(3.1 |
) |
% |
|
Total
noninterest expense |
|
3,828 |
|
|
3,368 |
|
13.7 |
|
% |
|
|
7,178 |
|
|
6,798 |
|
5.6 |
|
% |
|
Income
before provision for income taxes |
|
1,672 |
|
|
1,940 |
|
(13.8 |
) |
% |
|
|
3,431 |
|
|
3,740 |
|
(8.3 |
) |
% |
|
Provision for income taxes |
|
403 |
|
|
643 |
|
(37.3 |
) |
% |
|
|
809 |
|
|
1,259 |
|
(35.7 |
) |
% |
|
Net
income |
$ |
1,269 |
|
$ |
1,297 |
|
(2.2 |
) |
% |
|
$ |
2,622 |
|
$ |
2,481 |
|
5.7 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
$ |
0.22 |
|
$ |
0.20 |
|
10.0 |
|
% |
|
$ |
0.44 |
|
$ |
0.38 |
|
15.8 |
|
% |
|
Diluted
earnings per share |
$ |
0.22 |
|
$ |
0.20 |
|
10.0 |
|
% |
|
$ |
0.44 |
|
$ |
0.38 |
|
15.8 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest margin as a percentage of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average earning assets
(fully taxable equivalent) |
|
3.36 |
% |
|
3.41 |
% |
|
|
|
|
3.32 |
% |
|
3.43 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
diluted shares outstanding |
|
5,882,914 |
|
|
6,428,022 |
|
|
|
|
|
5,957,403 |
|
|
6,540,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
0.75 |
% |
|
0.80 |
% |
|
|
|
|
0.77 |
% |
|
0.77 |
% |
|
|
|
Return on average equity |
|
7.09 |
% |
|
6.35 |
% |
|
|
|
|
7.24 |
% |
|
6.05 |
% |
|
|
|
Return on average tangible equity |
|
9.18 |
% |
|
7.94 |
% |
|
|
|
|
9.33 |
% |
|
7.53 |
% |
|
|
|
Efficiency ratio (fully taxable equivalent) |
|
68.91 |
% |
|
62.27 |
% |
|
|
|
|
66.94 |
% |
|
63.31 |
% |
|
|
|
American River Bankshares |
|
|
|
Condensed Consolidated Statements of
Income (Unaudited) |
|
|
|
(Dollars
in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Second |
|
First |
|
Fourth |
|
Third |
|
Second |
|
|
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
|
|
2018 |
|
2018 |
|
2017 |
|
2017 |
|
2017 |
|
Interest
income |
$ |
5,498 |
|
$ |
5,066 |
|
$ |
5,158 |
|
$ |
5,082 |
|
$ |
5,121 |
|
|
Interest
expense |
|
378 |
|
|
329 |
|
|
288 |
|
|
279 |
|
|
252 |
|
|
Net
interest income |
|
5,120 |
|
|
4,737 |
|
|
4,870 |
|
|
4,803 |
|
|
4,869 |
|
|
Provision for loan and lease losses |
|
- |
|
|
- |
|
|
150 |
|
|
300 |
|
|
- |
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
Service
charges on deposit accounts |
|
116 |
|
|
117 |
|
|
117 |
|
|
117 |
|
|
114 |
|
|
Gain on
sale of securities |
|
10 |
|
|
1 |
|
|
- |
|
|
19 |
|
|
86 |
|
|
Other
noninterest income |
|
254 |
|
|
254 |
|
|
244 |
|
|
241 |
|
|
239 |
|
|
Total
noninterest income |
|
380 |
|
|
372 |
|
|
361 |
|
|
377 |
|
|
439 |
|
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
Salaries
and employee benefits |
|
2,517 |
|
|
2,206 |
|
|
2,584 |
|
|
2,102 |
|
|
2,064 |
|
|
Occupancy |
|
262 |
|
|
262 |
|
|
260 |
|
|
262 |
|
|
262 |
|
|
Furniture
and equipment |
|
136 |
|
|
138 |
|
|
147 |
|
|
141 |
|
|
147 |
|
|
Federal
Deposit Insurance Corporation assessments |
|
53 |
|
|
53 |
|
|
50 |
|
|
51 |
|
|
52 |
|
|
Expenses
related to other real estate owned |
|
(3 |
) |
|
5 |
|
|
8 |
|
|
4 |
|
|
12 |
|
|
Other
expense |
|
863 |
|
|
686 |
|
|
890 |
|
|
752 |
|
|
831 |
|
|
Total
noninterest expense |
|
3,828 |
|
|
3,350 |
|
|
3,939 |
|
|
3,312 |
|
|
3,368 |
|
|
Income
before provision for income taxes |
|
1,672 |
|
|
1,759 |
|
|
1,142 |
|
|
1,568 |
|
|
1,940 |
|
|
Provision for income taxes |
|
403 |
|
|
406 |
|
|
1,534 |
|
|
459 |
|
|
643 |
|
|
Net
income |
$ |
1,269 |
|
$ |
1,353 |
|
$ |
(392 |
) |
$ |
1,109 |
|
$ |
1,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
$ |
0.22 |
|
$ |
0.23 |
|
$ |
-0.06 |
|
$ |
0.18 |
|
$ |
0.20 |
|
|
Diluted
earnings per share |
$ |
0.22 |
|
$ |
0.22 |
|
$ |
-0.06 |
|
$ |
0.17 |
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest margin as a percentage of |
|
|
|
|
|
|
|
|
|
|
|
average earning assets
(fully taxable equivalent) |
|
3.36 |
% |
|
3.29 |
% |
|
3.39 |
% |
|
3.32 |
% |
|
3.41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
diluted shares outstanding |
|
5,882,914 |
|
|
6,032,787 |
|
|
6,253,475 |
|
|
6,366,032 |
|
|
6,428,022 |
|
|
Shares
outstanding-end of period |
|
5,864,802 |
|
|
5,882,214 |
|
|
6,132,362 |
|
|
6,392,570 |
|
|
6,357,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Ratios (annualized): |
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
0.75 |
% |
|
0.80 |
% |
|
-0.24 |
% |
|
0.68 |
% |
|
0.80 |
% |
|
Return on average equity |
|
7.09 |
% |
|
7.39 |
% |
|
-1.95 |
% |
|
5.37 |
% |
|
6.35 |
% |
|
Return on average tangible equity |
|
9.18 |
% |
|
9.47 |
% |
|
-2.45 |
% |
|
6.71 |
% |
|
7.94 |
% |
|
Efficiency ratio (fully taxable equivalent) |
|
68.91 |
% |
|
64.81 |
% |
|
73.99 |
% |
|
62.75 |
% |
|
62.27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table sets forth a reconciliation of adjusted net income
and diluted earnings per share excluding the impact of the Tax
Act and expenses related to the leadership change for each of the
dates indicated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second |
|
First |
|
Fourth |
|
Third |
|
Second |
|
|
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
Quarter |
|
|
|
2018 |
|
2018 |
|
2017 |
|
2017 |
|
2017 |
|
Reported net income
(loss) |
$ |
1,269 |
|
$ |
1,353 |
|
$ |
(392 |
) |
$ |
1,109 |
|
$ |
1,297 |
|
|
Impact of Tax Act |
|
- |
|
|
- |
|
|
1,220 |
|
|
- |
|
|
- |
|
|
Expense related to
leadership change |
|
- |
|
|
- |
|
|
676 |
|
|
- |
|
|
- |
|
|
Tax effect on
leadership expenses |
|
- |
|
|
- |
|
|
304 |
|
|
|
|
|
|
Adjusted net
income |
$ |
1,269 |
|
$ |
1,353 |
|
$ |
1,200 |
|
$ |
1,109 |
|
$ |
1,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported diluted
earnings (loss) per share |
$ |
0.22 |
|
$ |
0.22 |
|
$ |
-0.06 |
|
$ |
0.17 |
|
$ |
0.20 |
|
|
Adjusted diluted
earnings per share |
$ |
0.22 |
|
$ |
0.22 |
|
$ |
0.19 |
|
$ |
0.17 |
|
$ |
0.20 |
|
|
American River Bankshares |
|
Analysis of Net Interest Margin on Earning
Assets (Unaudited) |
|
(Taxable Equivalent Basis) |
|
(Dollars in thousands) |
|
Three months
ended June 30, |
|
2018 |
|
|
2017 |
|
ASSETS |
Avg Balance |
Interest |
Avg Yield |
|
Avg Balance |
Interest |
Avg Yield |
|
Taxable loans and
leases |
$ |
290,933 |
|
$ |
3,483 |
4.80 |
% |
|
$ |
302,062 |
|
$ |
3,458 |
4.59 |
% |
|
Tax-exempt loans and
leases |
|
13,799 |
|
|
153 |
4.45 |
% |
|
|
14,361 |
|
|
180 |
5.03 |
% |
|
Taxable investment
securities |
|
268,731 |
|
|
1,637 |
2.44 |
% |
|
|
243,199 |
|
|
1,363 |
2.25 |
% |
|
Tax-exempt investment
securities |
|
20,773 |
|
|
175 |
3.38 |
% |
|
|
22,811 |
|
|
212 |
3.73 |
% |
|
Corporate stock |
|
- |
|
|
- |
- |
|
|
|
99 |
|
|
6 |
24.31 |
% |
|
Federal
funds |
|
22,209 |
|
|
98 |
1.77 |
% |
|
|
- |
|
|
- |
- |
|
|
Interest-bearing
deposits in banks |
|
1,741 |
|
|
7 |
1.61 |
% |
|
|
1,259 |
|
|
3 |
0.96 |
% |
|
Total earning assets |
|
618,186 |
|
|
5,553 |
3.60 |
% |
|
|
583,791 |
|
|
5,222 |
3.59 |
% |
|
Cash & due from
banks |
|
29,703 |
|
|
|
|
|
29,263 |
|
|
|
|
Other assets |
|
38,533 |
|
|
|
|
|
39,191 |
|
|
|
|
Allowance for loan
& lease losses |
|
(4,490 |
) |
|
|
|
|
(4,864 |
) |
|
|
|
|
$ |
681,932 |
|
|
|
|
$ |
647,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Interest checking and
money market |
$ |
227,094 |
|
$ |
76 |
0.13 |
% |
|
$ |
201,166 |
|
$ |
36 |
0.07 |
% |
|
Savings |
|
70,129 |
|
|
7 |
0.04 |
% |
|
|
63,467 |
|
|
5 |
0.03 |
% |
|
Time deposits |
|
79,204 |
|
|
241 |
1.22 |
% |
|
|
81,643 |
|
|
162 |
0.80 |
% |
|
Other borrowings |
|
15,500 |
|
|
54 |
1.40 |
% |
|
|
15,500 |
|
|
49 |
1.27 |
% |
|
Total interest bearing liabilities |
|
391,927 |
|
|
378 |
0.39 |
% |
|
|
361,776 |
|
|
252 |
0.28 |
% |
|
Noninterest bearing
demand deposits |
|
212,305 |
|
|
|
|
|
196,549 |
|
|
|
|
Other liabilities |
|
5,910 |
|
|
|
|
|
7,195 |
|
|
|
|
Total liabilities |
|
610,142 |
|
|
|
|
|
565,520 |
|
|
|
|
Shareholders' equity |
|
71,790 |
|
|
|
|
|
81,861 |
|
|
|
|
|
$ |
681,932 |
|
|
|
|
$ |
647,381 |
|
|
|
|
Net interest
income & margin |
|
$ |
5,175 |
3.36 |
% |
|
|
$ |
4,970 |
3.41 |
% |
|
|
|
|
|
|
|
|
|
|
Six months
ended June 30, |
|
2018 |
|
|
2017 |
|
ASSETS |
Avg Balance |
Interest |
Avg Yield |
|
Avg Balance |
Interest |
Avg Yield |
|
Taxable loans and
leases |
$ |
292,113 |
|
$ |
6,811 |
4.70 |
% |
|
$ |
303,834 |
|
$ |
6,888 |
4.57 |
% |
|
Tax-exempt loans and
leases |
|
13,879 |
|
|
306 |
4.45 |
% |
|
|
14,424 |
|
|
356 |
4.98 |
% |
|
Taxable investment
securities |
|
257,145 |
|
|
3,028 |
2.37 |
% |
|
|
239,207 |
|
|
2,686 |
2.26 |
% |
|
Tax-exempt investment
securities |
|
22,166 |
|
|
372 |
3.38 |
% |
|
|
22,768 |
|
|
422 |
3.74 |
% |
|
Corporate stock |
|
- |
|
|
- |
- |
|
|
|
103 |
|
|
16 |
31.33 |
% |
|
Federal
funds |
|
17,994 |
|
|
148 |
1.66 |
% |
|
|
- |
|
|
- |
- |
|
|
Interest-bearing
deposits in banks |
|
1,743 |
|
|
13 |
1.50 |
% |
|
|
1,189 |
|
|
5 |
0.85 |
% |
|
Total
earning assets |
|
605,040 |
|
|
10,678 |
3.56 |
% |
|
|
581,525 |
|
|
10,373 |
3.60 |
% |
|
Cash & due from
banks |
|
43,262 |
|
|
|
|
|
34,261 |
|
|
|
|
Other assets |
|
39,341 |
|
|
|
|
|
39,118 |
|
|
|
|
Allowance for loan
& lease losses |
|
(4,488 |
) |
|
|
|
|
(4,846 |
) |
|
|
|
|
$ |
683,155 |
|
|
|
|
$ |
650,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Interest checking and
money market |
$ |
223,317 |
|
$ |
133 |
0.12 |
% |
|
$ |
198,794 |
|
$ |
70 |
0.07 |
% |
|
Savings |
|
69,872 |
|
|
13 |
0.04 |
% |
|
|
63,367 |
|
|
10 |
0.03 |
% |
|
Time deposits |
|
79,447 |
|
|
453 |
1.15 |
% |
|
|
81,971 |
|
|
317 |
0.78 |
% |
|
Other borrowings |
|
15,500 |
|
|
108 |
1.41 |
% |
|
|
15,500 |
|
|
97 |
1.26 |
% |
|
Total
interest bearing liabilities |
|
388,136 |
|
|
707 |
0.37 |
% |
|
|
359,632 |
|
|
494 |
0.28 |
% |
|
Noninterest bearing
demand deposits |
|
214,930 |
|
|
|
|
|
200,086 |
|
|
|
|
Other liabilities |
|
7,078 |
|
|
|
|
|
7,597 |
|
|
|
|
Total
liabilities |
|
610,144 |
|
|
|
|
|
567,315 |
|
|
|
|
Shareholders' equity |
|
73,011 |
|
|
|
|
|
82,743 |
|
|
|
|
|
$ |
683,155 |
|
|
|
|
$ |
650,058 |
|
|
|
|
Net interest
income & margin |
|
$ |
9,971 |
3.32 |
% |
|
|
$ |
9,879 |
3.43 |
% |
|
|
|
|
|
|
|
|
|
|
Investor Contact:Mitchell A. DerenzoExecutive Vice
President andChief Financial OfficerAmerican River
Bankshares916-231-6723
Media Contact:Erica DiasVice President,
MarketingAmerican River Bankshares916-231-6717
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