News
American Riviera Bancorp Announces Earnings for the Fourth Quarter of 2022
Santa Barbara, California (January 26, 2022) – American Riviera Bancorp (“Company”) (OTCQX: ARBV), holding company of American Riviera Bank (“Bank”), announced today unaudited net income of $13.5 million ($2.37 per share) for the twelve months ended December 31, 2022 compared to the $11.8 million ($2.09 per share) earned in the same reporting period in the previous year. Unaudited net income was $4.0 million ($0.70 per share) for the three months ended December 31, 2022, compared to the $2.7 million ($0.49 per share) earned in the same reporting period in the previous year. The increase in year-to-date unaudited net income in 2022 compared to 2021 is primarily attributable to loan growth, increased interest income on liquid assets, and a strong deposit base.
We are pleased to report improved profitability, continued loan growth, expanding capital ratios, strong credit quality, and a balance sheet supported by local deposits from relationship clients. The Federal Reserve’s actions to date to increase rates and remove excess liquidity from the financial system have only modestly decelerated loan growth and increased funding costs.
Jeff DeVine, President and CEO
Fourth Quarter Highlights
Fourth Quarter Earnings
For the fourth quarter of 2022, unaudited net income was $4.0 million, compared to $3.8 million in the third quarter of 2022, and $2.8 million in the fourth quarter of 2021. For the fourth quarter of 2022, unaudited net income pre-tax, pre-provision, pre-PPP fees (a non-GAAP measure) was $5.6 million, compared to $5.4 million in the third quarter of 2022, and $3.3 million in the fourth quarter of 2021.
Net interest income continues to benefit from the Federal Reserve’s actions to increase short-term rates as evidenced by the $0.3 million or 26% increase in Interest on Due From Banks from the previous quarter, and $1.2 million or 852% increase from the same quarter last year. However, deposit rates have adjusted upward from historically low levels as interest expense on deposits increased $0.4 million or 152% during the fourth quarter of 2022 compared to prior quarter and increased $0.5 million or 223% compared to the fourth quarter of 2021.
Non-Interest Income and Expense
Non-interest income was $0.7 million for the fourth quarter of 2022, compared to $0.8 million for the third quarter of 2022 and $0.8 million for the same quarter last year. Variances between the quarters relate primarily to SBA loan sale premium, mortgage broker fees and loan prepayment fees. Aggregate non-interest income has remained consistent over the periods analyzed.
Non-interest expense was $8.4 million for the fourth quarter of 2022, compared to $7.8 million in the third quarter of 2022 and $6.7 million for the same period last year. The increase in non-interest expense in the fourth quarter of 2022 is primarily attributable to additional incentive plan accrual based on the strong performance of the Bank and timing of certain expenses, such as advertising and annual sponsorships. With the relaxing of COVID restrictions, expenses related to business development and marketing have moved back to historical levels. The Company remains committed to making investments in systems and staffing to support continued growth while maximizing efficiencies. Occupancy expenses are temporarily elevated as the Company is in the process of consolidating office space which is expected to result in efficiencies in the second half of 2023.
Loans and Asset Quality
Total loans, excluding PPP loans, reached $907.6 million at December 31, 2022, an increase of $21.5 million or 2.4% from the prior quarter end and $154.1 million or 20.4% from December 31, 2021.
The Allowance for Loan Losses increased $0.1 million to $10.6 million at December 31, 2022 with a resulting coverage ratio of 1.17% of total loans, as compared to $10.5 million or 1.18% at September 30, 2022 and $9.4 million or 1.18% at December 31, 2021. The Allowance percentage has remained consistent over the periods analyzed with increased dollars primarily attributable to continued organic loan growth and not credit quality concerns.
Loan charge-offs totaled zero and loan recoveries totaled $0.1 million for the entire year of 2022. As of December 31, 2022, non-accrual loans totaled $3.1 million, down $3.3 million compared to the previous quarter. The decrease in non-accrual loans during the quarter relates to two loans fully paid off. $2.3 million of the non-accrual total at December 31, 2022 is comprised of one loan which is real estate secured at a 29% loan-to-value based upon a recent appraisal and is paying full principal and interest payments monthly. Credit quality remains strong.
Deposits
Total deposits were $1.2 billion at December 31, 2022 representing a decrease of $100.3 million, or 7.9%, from September 30, 2022, and a decrease of $38.6 million, or 3.2% since December 31, 2021. This reduction in deposit balances occurred late in the fourth quarter of 2022 as some Bank clients decided to reinvest their excess cash in non-FDIC insured, external investment products. Total non-interest-bearing deposits represented 41.1% of total deposits at December 31, 2022. The Bank had no brokered deposits or Federal Home Loan Bank advances in its funding base as of December 31, 2022.
Shareholders’ Equity
Total shareholders’ equity was $87.1 million at December 31, 2022, a $5.0 million or 6.0% increase since September 30, 2022, and a decrease of $9.2 million or 9.5% over prior year. The tax adjusted unrealized loss on securities, which is a component of equity (accumulated other comprehensive income or “AOCI”), reduced slightly from $24.7 million at the end of the third quarter of 2022 to $23.9 million at the end of the fourth quarter of 2022, resulting in an additional $0.8 million expansion of shareholders equity for the fourth quarter. Industry-wide there has been a material decline in market value of fixed income securities in 2022, consistent with the significant increase in market yields. These securities have a maturity and minimal inherent credit risk; therefore, the Bank expects to receive principal in full when the investments mature.
Company Profile
American Riviera Bancorp (OTCQX: ARBV) is a registered bank holding company headquartered in Santa Barbara, California. American Riviera Bank, the 100% owned subsidiary of American Riviera Bancorp, 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 business, commercial real estate, residential mortgage, construction, and Small Business Administration lending services as well as convenient online and mobile technology. For twelve 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. The Bank was rated “Outstanding” by the Federal Deposit Insurance Corporation in 2020 for its performance under the Community Reinvestment Act.
American Riviera Bank
www.americanriviera.bank
805-965-5942
Michelle Martinich
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.
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