Business & Finance
Business and Finance
Business and Finance 
Fri, October 23, 2009
Thu, October 22, 2009
American River Bankshares: American River Bankshares Reports Third Quarter 2009 Financial Results
SACRAMENTO, CA--(Marketwire - October 22, 2009) - American River Bankshares (
Net Interest Margin
The Company's net interest margin was 4.91% for the third quarter of 2009, compared to 5.14% for the third quarter of 2008. For the nine months ended September 30, 2009, the net interest margin was 4.96%, compared 5.02% for nine months ended September 30, 2008.
Net interest income for the third quarter of 2009 decreased $814,000 (12.1%) to $5,928,000 from $6,742,000 for the third quarter of 2008 and for the nine months ended September 30, 2009 decreased $1,194,000 (6.1%) to $18,285,000 from $19,479,000 for the nine months ended September 30, 2008. Interest income for the third quarter of 2009 decreased $1,441,000 (16.7%) to $7,163,000 from $8,604,000 for the third quarter of 2008 and for the nine months ended September 30, 2009 decreased $3,199,000 (12.6%) to $22,235,000 from $25,434,000 for the nine months ended September 30, 2008. Interest expense for the third quarter of 2009 decreased $627,000 (33.7%) to $1,235,000 from $1,862,000 for the third quarter of 2008 and for the nine months ended September 30, 2009 decreased $2,005,000 (33.7%) to $3,950,000 from $5,955,000 for the nine months ended September 30, 2008.
The average yield on earning assets declined from 6.54% in the third quarter of 2008 to 5.92% for the third quarter of 2009 and declined from 6.54% for the nine months ended September 30, 2008 to 6.01% for the nine months ended September 30, 2009. Much of the decline in yields can be attributed to the overall lower interest rate environment in response to the Federal Open Market Committee's (the "FOMC") decreases in the Federal funds rate. Since September of 2007, the "Prime" rate has decreased ten times for a total of 500 basis points resulting in a steady decline in short-term interest rates. In addition, the yields are also impacted from foregone interest income on nonaccrual loans. During the third quarter of 2009 foregone interest income on nonaccrual loans was approximately $373,000, compared to a recovery of $84,000 during the third quarter of 2008. Foregone interest income on nonaccrual loans for the nine months ended September 30, 2009 was approximately $904,000, compared to $513,000 for the nine months ended September 30, 2008.
The average balance of earning assets decreased 8.4% from $528,981,000 in the third quarter of 2008 to $484,680,000 in the third quarter of 2009 and decreased 4.8% from $525,033,000 for the nine months ended September 30, 2008 to $499,759,000 for the nine months ended September 30, 2009. The overall decrease in the average assets balance during the three and nine-month periods is mainly related to a decrease in securities balances. During the nine-month period the Company experienced a decrease in average deposits from $452,491,000 during the nine-month period in 2008 to $444,090,000, during the nine-month period in 2009. The proceeds from principal reductions, sales, and maturing investment securities were used to offset the decrease in deposits and to increase noninterest-bearing cash balances. The increase in cash balances was used to bolster liquidity during an unsettling time in the banking environment. As deposit balances began to increase, as was the case in the third quarter of 2009, the Company began to use these proceeds to reduce the amount of other borrowings. Average deposits increased from $450,242,000 during the third quarter of 2008 to $456,963,000 during the third quarter of 2009, while average borrowings dropped from $64,423,000 to $35,543,000 during that same time period.
When compared to the third quarter of 2008, average loan balances were down $14,753,000 (3.6%) to $399,739,000 for the third quarter of 2009 and when compared to the first nine months of 2008, average loan balances were up $1,702,000 (0.4%) for the nine months ended September 30, 2009 while average investment securities were down $24,863,000 (22.8%) to $84,339,000 for the third quarter of 2009 and down $23,464,000 (21.0%) for the nine months ended September 30, 2009. Overall, the yield on loans during the third quarter of 2009 was 6.25% as compared to 6.99% for the third quarter of 2008 and 6.33% for the nine months ended September 30, 2009 compared to 7.03% for the nine months ended September 30, 2008, reflective of the declining rate environment and the higher amount of foregone interest.
The average cost of funds decreased from 1.91% in the third quarter of 2008 to 1.31% for the third quarter of 2009. The average balance of interest bearing liabilities decreased 3.6% from $388,760,000 in the third quarter of 2008 to $374,912,000 in the third quarter of 2009. This decrease resulted primarily from the decrease in average borrowings. For the nine months ended September 30, 2009, the average cost of funds decreased 70 basis points to 1.38%, down from 2.08% reported for the nine months ended September 30, 2008. The average balance of interest bearing liabilities increased 0.3% from $382,637,000 for the nine months ended September 30, 2008 to $383,967,000 for the nine months ended September 30, 2009.
Loan Growth and Asset Quality
Net loans outstanding as of September 30, 2009 decreased $33,595,000 (8.0%) to $387,316,000 from $420,911,000 as of September 30, 2008 and decreased $25,040,000 (6.1%) from $412,356,000 as of December 31, 2008. Net loan balances as of September 30, 2009 decreased $10,875,000 (2.7%) from the balances as of June 30, 2009. Average loan balances decreased $14,753,000 (3.6%) from $414,492,000 during the third quarter of 2008 to $399,739,000 during the third quarter of 2009. Average loan balances increased during the nine-month period ended September 30, 2009 compared to the nine-month period ended September 30, 2009 from $407,723,000 to $409,425,000. Real estate loans outstanding decreased $11,870,000 (3.9%) to $289,856,000 as of September 30, 2009 from $301,726,000 as of September 30, 2008, and decreased $11,078,000 (3.7%) from $300,934,000 as of December 31, 2008, and decreased $7,167,000 (2.4%) from June 30, 2009. Commercial loans decreased $21,556,000 (21.4%) to $79,332,000 as of September 30, 2009 from $100,888,000 as of September 30, 2008, decreased $11,293,000 (12.5%) from $90,625,000 as of December 31, 2008, and decreased $3,467,000 (4.2%) from June 30, 2009.
The loan portfolio at September 30, 2009 included: real estate loans of $289,856,000 (73% of the portfolio), commercial loans of $79,332,000 (20% of the portfolio) and other loans, which consist mainly of leases and consumer loans of $26,342,000 (7% of the portfolio). The real estate loan portfolio at September 30, 2009 includes: owner-occupied commercial real estate loans of $119,564,000 (41% of the real estate portfolio), investor commercial real estate of $102,094,000 (35% of the real estate portfolio), construction and land development of $32,874,000 (12% of the real estate portfolio) and other, which consists of residential and multi-family real estate of $35,324,000 (12% of the real estate portfolio).
At September 30, 2009, the allowance for loan and lease losses was $7,572,000 (1.92% of total loans and leases) compared with $6,183,000 (1.45% of total loans and leases) at September 30, 2008, $5,918,000 (1.41% of total loans and leases) at December 31, 2008, and $7,758,000 (1.91% of total loans and leases) at June 30, 2009. The provision for loan and lease losses was $1,001,000 for the third quarter of 2009, compared to $381,000 for the third quarter of 2008 and for the nine months ended September 30, 2009, the provision was $6,030,000 compared to $908,000 for the nine months ended September 30, 2008. Net chargeoffs for the third quarter of 2009 were $1,187,000 compared to $309,000 for the third quarter of 2008 and for the nine months ended September 30, 2009, net chargeoffs were $4,376,000 compared to $608,000 for the nine months ended September 30, 2008.
Non-performing loans and leases as of September 30, 2009 were $18,023,000 or 4.56% of total loans and leases compared to $8,402,000 or 1.97% one year ago and $6,241,000 or 1.49% as of December 31, 2008. Loans and leases past due 30 to 89 days were $11,084,000 at September 30, 2009 compared to $10,135,000 at September 30, 2008, $7,812,000 at December 31, 2008, and $8,251,000 at June 30, 2009.
Non-performing assets were $21,507,000 at September 30, 2009, down $2,786,000 (11.5%) when compared to $24,293,000 at June 30, 2009. Non-performing assets were $14,625,000 at September 30, 2008 and $8,399,000 at December 31, 2008. Non-performing assets to total assets as of September 30, 2009 were 3.80% compared to 1.58% one year ago, 1.49% as of December 31, 2008, and 4.40% as of June 30, 2009. Non-performing assets consist of the following as of September 30, 2009.
Non-performing assets Balance Non-performing loans that are current to terms* (five loans or leases) $2,413,000 Non-performing loans that are past due (29 loans or leases) 15,610,000 Other real estate owned (net) (fifteen properties) 3,484,000 $21,507,000 * loans that are current (less than 30 days past due) pursuant to original or modified terms
The Company evaluates non-performing loans for impairment and assigns specific reserves when necessary. At September 30, 2009, specific reserves of $592,000 were held on the non-performing loans considered to be impaired. In addition to five loans and leases totaling $2,422,000 that are included in the $18,023,000 of non-performing loans and leases that have been modified and considered troubled debt restructures, there were eighteen loans and leases totaling $17,981,000 that were modified and considered troubled debt restructures. All of the loans and leases considered troubled debt restructures are considered impaired and have been evaluated accordingly. There were no loans or leases considered troubled debt restructures as of September 30, 2008.
Other Real Estate Owned
At September 30, 2009, the Company had fifteen other real estate owned ("OREO") properties totaling $3,484,000. This compares to three properties totaling $2,158,000 at December 31, 2008 and no OREO at September 30, 2008. At June 30, 2009, the Company had twelve OREO properties with a net balance of $3,347,000. During the third quarter of 2009, the Company sold one property for a slight gain and added four properties with loan balances totaling $1,168,000. The four properties added during the quarter were simultaneously written down to fair value by $159,000 leaving a net value of $1,009,000. The Company periodically obtains property valuations to determine whether the recorded book value is considered fair value. During the third quarter of 2009, this valuation process resulted in the Company reducing the book value of the properties and as a result added $721,000 to the OREO reserve. At June 30, 2009, the OREO reserve was $300,000. The resulting write-downs during the quarter reduced the reserve balance to zero at September 30, 2009, as the Company believes that all fifteen properties are carried at fair value.
Deposits and Borrowed Funds
Total deposits as of September 30, 2009 increased $29,012,000 (6.7%) to $464,917,000 from $435,905,000 as of September 30, 2008, and increased $27,856,000 (6.4%) from $437,061,000 as of December 31, 2008 and $15,308,000 (3.4%) as of June 30, 2009.
"We're excited about the opportunities that our Company is seeing in the marketplace and that is reflected in this quarter's growth in deposits," said David Taber, President and CEO of American River Bankshares. "We've been successful in focusing our front line employees on providing excellent client service and as a result, it has given them the confidence to continue to bring in new relationships."
Noninterest-bearing deposits decreased $1,813,000 (1.5%) to $118,418,000 as of September 30, 2009 from $120,231,000 as of September 30, 2008, decreased $725,000 (0.6%) from $119,143,000 as of December 31, 2008 and increased $3,382,000 (2.9%) from $115,036,000 as of June 30, 2009. Interest-bearing deposits increased $30,825,000 (9.8%) to $346,499,000 as of September 30, 2009 from $315,674,000 as of September 30, 2008 and increased $28,581,000 (9.0%) from $317,918,000 as of December 31, 2008 and increased $11,926,000 (3.6%) from $334,573,000 as of June 30, 2009. Other borrowings, which include both short- and long-term borrowings, decreased $39,373,000 (53.7%) to $34,000,000 as of September 30, 2009 from $73,373,000 as of September 30, 2008, decreased $23,231,000 (40.6%) from $57,231,000 at December 31, 2008, and decreased $2,000,000 (5.6%) from $36,000,000 as of June 30, 2009.
Noninterest Income and Expense
Noninterest income for the third quarter of 2009 increased $151,000 (33.9%) to $597,000 from $446,000 for the third quarter of 2008 and for the nine months ended September 30, 2009 increased $86,000 (5.1%) to $1,756,000 from $1,670,000 for the nine months ended September 30 2008. The increase during the third quarter of 2009 compared to 2008 was primarily related to gains on security sales. During the third quarter of 2009, the Company sold most of its municipal bonds where the municipality was insured by insurance companies that were no longer rated investment grade. The Company reinvested the proceeds into GNMA securities. During the third quarter of 2009, the Company recorded gains on investment sales of $93,000 while, in comparison, the Company recognized a $233,000 impairment loss on its FNMA preferred stock during the third quarter of 2008. In addition, during the third quarter of 2009, the Company experienced an increase in service charges on deposit accounts ($78,000 or 40.8%) compared to the third quarter of 2008. During the same period the Company recorded decreases from fees on residential lending ($72,000 compared to zero) and lower income from bank owned life insurance ($40,000 or 38.8%).
Noninterest expense for the third quarter of 2009 increased $574,000 (15.5%) to $4,268,000 from $3,694,000 for the third quarter of 2008 and for the nine months ended September 30, 2009 increased $1,143,000 (10.4%) to $12,108,000 from $10,965,000 for the nine months ended September 30, 2008. Much of this increase is related to an increase in costs associated with the Company's OREO. The total OREO expense for the three months ended September 30, 2009 was $760,000 compared to zero for the same period in 2008. In addition, FDIC insurance increased by $130,000 from $36,000 for the three months ended September 30, 2008 to $166,000 in 2009. These cost increases were partially offset by reductions in salaries and benefits. Total salaries and benefits decreased in the third quarter of 2009 by $317,000 (15.1%) from the third quarter of 2008. Most of this decrease resulted from a reduction in the number of full-time equivalent employees and a reduction in the Company's performance based incentive accrual. The total OREO expense for the nine months ended September 30, 2009 was $1,318,000 compared to zero for the same period in 2008. In addition, FDIC insurance increased by $512,000 from $63,000 for the nine months ended September 30, 2008 to $575,000 in 2009. Total salaries and benefits decreased in 2009 by $712,000 (11.5%) from 2008.
The fully taxable equivalent efficiency ratio for the third quarter of 2009 increased to 63.71% from 49.76% for the third quarter of 2008 and for the nine months ended September 30, 2009 increased to 58.72% from 50.20% for the nine months ended September 30, 2008.
Income Taxes
Income taxes for the third quarter of 2009 decreased $753,000 (63.7%) to $429,000 from $1,182,000 for the third quarter of 2008 and for the nine months ended September 30, 2009, income taxes decreased $3,034,000 (85.9%) from $3,531,000 to $497,000. The effective tax rate for the quarter ended September 30, 2009 was 34.2%, a decrease from 38.0% during the third quarter of 2008 and for the nine months ended September 30, 2009 was 26.1%, down from the 38.1% during the first nine months of 2008. The lower effective tax rate in 2009 results from the Company realizing the benefits of tax free income related to such items as municipal bonds and bank owned life insurance against an overall lower amount of taxable income.
Capital
Total shareholders' equity at September 30, 2009 was $63,886,000, up $2,292,000 (3.7%) from $61,594,000 at September 30, 2008, up $439,000 (0.7%) from $63,447,000 at December 31, 2008, and up $1,610,000 (2.6%) from $62,276,000 at June 30, 2009. The Company's subsidiary, American River Bank, remains above the well-capitalized regulatory guidelines. At September 30, 2009, American River Bank's leverage ratio was 8.55%, the Tier 1 risk based ratio was 11.15% and the Total Risk Based Capital ratio was 12.41%. These ratios were all up from one year ago. At September 30, 2008, American River Bank's leverage ratio was 7.98%, the Tier 1 risk based ratio was 9.83% and the Total Risk Based Capital ratio was 11.08%.
Performance Metrics
Performance measures for the third quarter of 2009 (annualized): the Return on Average Assets (ROAA) was 0.59%, Return on Average Equity (ROAE) was 5.22% and Return on Average Tangible Equity (ROATE) was 7.17% compared to the ROAA of 1.32%, ROAE of 12.51% and ROATE of 17.43%, during the third quarter of 2008. For the nine months ended September 30, 2009, the Company had a ROAA of 0.33%, ROAE of 2.96% and ROATE of 4.05% compared to a ROAA of 1.33%, ROAE of 12.63% and ROATE of 17.70% for the nine months ended September 30, 2008.
Earnings Conference Call
The third quarter earnings conference call will be held Thursday, October 22, 2009 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). David T. Taber, President and CEO, and Mitchell A. Derenzo, Executive Vice President and Chief Financial Officer, both of American River Bankshares, will lead a live forty-five minute presentation and answer questions. Shareholders, analysts and other interested parties are invited to join the call by dialing (877) 584-2599 and entering the Conference ID # 36117681. A recording of the call will be available twenty-four hours after the call's completion on [ http://amrb.podbean.com ].
About American River Bankshares
American River Bankshares (
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, 2008, 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 SHEET (Unaudited) SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30 2009 2008 2008 ASSETS Cash and due from banks $ 54,304,000 $ 15,170,000 $ 17,258,000 Federal funds sold - - - Interest-bearing deposits in banks - 4,248,000 4,941,000 Investment securities 84,270,000 91,621,000 94,499,000 Loans and leases: Real estate 289,856,000 300,934,000 301,726,000 Commercial 79,332,000 90,625,000 100,888,000 Lease financing 4,161,000 4,475,000 3,775,000 Other 22,181,000 22,811,000 21,245,000 Deferred loan and lease originations fees, net (642,000) (571,000) (540,000) Allowance for loan and lease losses (7,572,000) (5,918,000) (6,183,000) ------------- ------------ ------------- TOTAL LOANS AND LEASES, NET 387,316,000 412,356,000 420,911,000 ------------- ------------ ------------- Bank premises and equipment 2,168,000 2,115,000 2,028,000 Goodwill and intangible assets 17,029,000 17,228,000 17,299,000 Other real estate owned 3,484,000 2,158,000 716,000 Accrued interest receivable and other assets 17,566,000 18,261,000 19,016,000 ------------- ------------ ------------- $ 566,137,000 $563,157,000 $ 576,668,000 ============= ============ ============= LIABILITIES & SHAREHOLDERS' EQUITY Noninterest-bearing deposits $ 118,418,000 $119,143,000 $ 120,231,000 Interest checking 45,084,000 45,581,000 46,460,000 Money market 126,627,000 105,919,000 112,080,000 Savings 34,404,000 33,438,000 36,519,000 Time deposits 140,384,000 132,980,000 120,615,000 ------------- ------------ ------------- TOTAL DEPOSITS 464,917,000 437,061,000 435,905,000 ------------- ------------ ------------- Short-term borrowings 17,000,000 43,231,000 56,873,000 Long-term borrowings 17,000,000 14,000,000 16,500,000 Accrued interest payable and other liabilities 3,334,000 5,418,000 5,796,000 ------------- ------------ ------------- TOTAL LIABILITIES 502,251,000 499,710,000 515,074,000 TOTAL SHAREHOLDERS' EQUITY 63,886,000 63,447,000 61,594,000 ------------- ------------ ------------- $ 566,137,000 $563,157,000 $ 576,668,000 ============= ============ ============= RATIOS: Nonperforming loans and leases to total loans and leases 4.56% 1.49% 1.97% Net chargeoffs to average loans and leases (annualized) 1.43% 0.42% 0.20% Allowance for loan and lease loss to total loans and leases 1.92% 1.41% 1.45% AMERICAN RIVER BANK CAPITAL RATIOS: Leverage Ratio 8.55% 8.40% 7.98% Tier 1 Risk-Based Capital Ratio 11.15% 10.35% 9.83% Total Risk-Based Capital Ratio 12.41% 11.60% 11.08% AMERICAN RIVER BANKSHARES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) THIRD THIRD FOR THE NINE MONTHS QUARTER QUARTER % ENDED SEPTEMBER 30, % 2009 2008 CHANGE 2009 2008 CHANGE ---------- ---------- ------ ----------- ----------- ------ INTEREST INCOME $7,163,000 $8,604,000 (16.7%) $22,235,000 $25,434,000 (12.6%) INTEREST EXPENSE 1,235,000 1,862,000 (33.7%) 3,950,000 5,955,000 (33.7%) ---------- ---------- ----- ----------- ----------- ----- NET INTEREST INCOME 5,928,000 6,742,000 (12.1%) 18,285,000 19,479,000 (6.1%) TOTAL NON- INTEREST INCOME 597,000 446,000 33.9% 1,756,000 1,670,000 5.1% PROVISION FOR LOAN AND LEASE LOSSES 1,001,000 381,000 162.7% 6,030,000 908,000 564.1% TOTAL NON- INTEREST EXPENSE 4,268,000 3,694,000 15.5% 12,108,000 10,965,000 10.4% ---------- ---------- ----- ----------- ----------- ----- INCOME BEFORE PROVISION FOR INCOME TAXES 1,256,000 3,113,000 (59.7%) 1,903,000 9,276,000 (79.5%) PROVISION FOR INCOME TAXES 429,000 1,182,000 (63.7%) 497,000 3,531,000 (85.9%) ---------- ---------- ----- ----------- ----------- ----- NET INCOME $ 827,000 $1,931,000 (57.2%) $ 1,406,000 $ 5,745,000 (75.5%) ---------- ---------- ----- ----------- ----------- ----- BASIC EARNINGS PER SHARE $ 0.14 $ 0.33 (57.6%) $ 0.24 $ 0.99 (75.8%) DILUTED EARNINGS PER SHARE $ 0.14 $ 0.33 (57.6%) $ 0.24 0.98 (75.5%) AVERAGE DILUTED SHARES OUTSTA- NDING 5,859,536 5,808,514 5,847,955 5,836,430 NET INTEREST MARGIN AS A PERCENTAGE OF AVERAGE EARNING ASSETS 4.91% 5.14% 4.96% 5.02% OPERATING RATIOS (ANNUALIZED): Return on average assets 0.59% 1.32% 0.33% 1.33% Return on average equity 5.22% 12.51% 2.96% 12.63% Return on average tangible equity 7.17% 17.43% 4.05% 17.70% Efficiency ratio (fully taxable equiva- lent) 63.71% 49.76% 58.72% 50.20% Share and earnings per share data have been adjusted for a 5% stock dividend in 2008 AMERICAN RIVER BANKSHARES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Trailing Four Quarters THIRD SECOND FIRST FOURTH QUARTER QUARTER QUARTER QUARTER 2009 2009 2009 2008 ----------- ----------- ----------- ----------- INTEREST INCOME $ 7,163,000 $ 7,321,000 $ 7,751,000 $ 8,119,000 INTEREST EXPENSE 1,235,000 1,303,000 1,412,000 1,673,000 ----------- ----------- ----------- ----------- NET INTEREST INCOME 5,928,000 6,018,000 6,339,000 6,446,000 TOTAL NONINTEREST INCOME 597,000 649,000 510,000 498,000 PROVISION FOR LOAN AND LEASE LOSSES 1,001,000 3,800,000 1,229,000 835,000 TOTAL NONINTEREST EXPENSE 4,268,000 4,239,000 3,601,000 3,236,000 ----------- ----------- ----------- ----------- INCOME BEFORE PROVISION FOR (BENEFIT FROM) INCOME TAXES 1,256,000 (1,372,000) 2,019,000 2,873,000 PROVISION FOR (BENEFIT FROM) INCOME TAXES 429,000 (668,000) 736,000 1,047,000 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ 827,000 $ (704,000) $ 1,283,000 $ 1,826,000 =========== =========== =========== =========== BASIC EARNINGS (LOSS) PER SHARE $ 0.14 $ (0.12) $ 0.22 $ 0.32 DILUTED EARNINGS (LOSS) PER SHARE $ 0.14 $ (0.12) $ 0.22 $ 0.32 AVERAGE DILUTED SHARES OUTSTANDING 5,859,536 5,797,533 5,824,407 5,794,733 SHARES OUTSTANDING-END OF PERIOD 5,797,533 5,797,533 5,797,533 5,792,283 NET INTEREST MARGIN AS A PERCENTAGE OF AVERAGE EARNING ASSETS 4.91% 4.87% 5.08% 5.04% OPERATING RATIOS (ANNUALIZED): Return on average assets 0.59% (0.50%) 0.90% 1.28% Return on average equity 5.22% (4.41%) 8.15% 11.71% Return on average tangible equity 7.17% (6.01%) 11.16% 16.23% Efficiency ratio (fully tax equivalent) 63.17% 61.81% 50.97% 45.03% Share and earnings per share data have been adjusted for a 5% stock dividend in 2008 AMERICAN RIVER BANKSHARES ANALYSIS OF NET INTEREST MARGIN ON EARNING ASSETS (Taxable Equivalent Basis) THREE MONTHS ENDED SEPTEMBER 30, 2009 2008 AVG AVG AVG AVG BALANCE INTEREST YIELD BALANCE INTEREST YIELD ASSETS Loans and leases $399,739,000 $6,302,000 6.25% $414,492,000 $7,283,000 6.99% Taxable investment securities 62,845,000 635,000 4.01% 81,101,000 984,000 4.83% Tax-exempt investment securities 21,494,000 291,000 5.37% 28,101,000 371,000 5.25% Corporate stock 32,000 - - 169,000 5,000 11.77% Federal funds sold - - - 177,000 1,000 2.25% Interest- bearing deposits in banks 570,000 6,000 4.18% 4,941,000 52,000 4.19% ------------ ---------- ------------ ---------- TOTAL EARNING ASSETS $484,680,000 $7,234,000 5.92% $528,981,000 $8,696,000 6.54% ------------ ---------- ------------ ---------- Cash & due from banks 41,026,000 19,224,000 Other assets 41,763,000 39,822,000 Allowance for loan & lease losses (8,019,000) (6,176,000) ------------ ------------ $559,450,000 $581,851,000 ============ ============ LIABILITIES & SHARE- HOLDERS' EQUITY Interest checking and money market $164,654,000 $ 366,000 0.88% $162,985,000 $ 454,000 1.11% Savings 35,879,000 64,000 0.71% 37,798,000 95,000 1.00% Time deposits 138,836,000 567,000 1.62% 123,554,000 866,000 2.79% Other borrowings 35,543,000 238,000 2.66% 64,423,000 447,000 2.76% ------------ ---------- ------------ ---------- TOTAL INTEREST BEARING LIABILIT- IES $374,912,000 $1,235,000 1.31% $388,760,000 $1,862,000 1.91% ------------ ---------- ------------ ---------- Noninterest bearing demand deposits 117,594,000 125,905,000 Other liabilities 4,125,000 5,770,000 ------------ ------------ TOTAL LIABILIT- IES 496,631,000 520,435,000 SHARE- HOLDERS' EQUITY 62,819,000 61,416,000 ------------ ------------ $559,450,000 $581,851,000 ============ ========== ===== ============ ========== ===== NET INTEREST INCOME & MARGIN $5,999,000 4.91% $6,834,000 5.14% ========== ===== ========== ===== AMERICAN RIVER BANKSHARES ANALYSIS OF NET INTEREST MARGIN ON EARNING ASSETS (Taxable Equivalent Basis) NINE MONTHS ENDED SEPTEMBER 30, 2009 2008 AVG AVG AVG AVG BALANCE INTEREST YIELD BALANCE INTEREST YIELD ASSETS Loans and leases $409,425,000 $19,384,000 6.33% $407,723,000 $21,472,000 7.03% Taxable invest- ment securit- ies 63,679,000 2,046,000 4.30% 84,148,000 2,946,000 4.68% Tax-exempt invest- ment securit- ies 24,468,000 981,000 5.36% 27,463,000 1,074,000 5.22% Corporate stock 29,000 6,000 27.66% 216,000 22,000 13.61% Federal funds sold 14,000 - - 541,000 9,000 2.22% Interest- bearing deposits in banks 2,144,000 59,000 3.68% 4,942,000 176,000 4.76% ------------ ----------- ------------ ----------- TOTAL EARNING ASSETS $499,759,000 $22,476,000 6.01% $525,033,000 $25,699,000 6.54% ------------ ----------- ------------ ----------- Cash & due from banks 33,611,000 19,106,000 Other assets 41,948,000 39,136,000 Allowance for loan & lease losses (6,669,000) (6,055,000) ------------ ------------ $568,649,000 $577,220,000 ============ ============ LIABILIT- IES & SHARE- HOLDERS' EQUITY Interest checking and money market $156,950,000 $ 1,007,000 0.86% $166,744,000 $ 1,522,000 1.22% Savings 33,907,000 172,000 0.68% 36,671,000 245,000 0.89% Time deposits 137,464,000 1,897,000 1.85% 121,475,000 2,855,000 3.14% Other borrow- ings 55,646,000 874,000 2.10% 57,747,000 1,333,000 3.09% ------------ ----------- ------------ ----------- TOTAL INTEREST BEARING LIABILIT- IES $383,967,000 $ 3,950,000 1.38% $382,637,000 $ 5,955,000 2.08% ------------ ----------- ------------ ----------- Non- interest bearing demand deposits 115,769,000 127,601,000 Other liabilit- ies 5,338,000 6,211,000 ------------ ------------ TOTAL LIABILIT- IES 505,074,000 516,449,000 SHARE- HOLDERS' EQUITY 63,575,000 60,771,000 ------------ ------------ $568,649,000 $577,220,000 ============ =========== ===== ============ =========== ===== NET INTEREST INCOME & MARGIN $18,526,000 4.96% $19,744,000 5.02% =========== ===== =========== =====