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American Riviera Bank Takes Key Steps Toward Profitable Future

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  Published in Business and Finance on Thursday, November 19th 2009 at 15:48 GMT by Market Wire
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SANTA BARBARA, CA--(Marketwire - November 19, 2009) - American Riviera Bank (OTCBB: [ ARBV ]) announced today that it would take dramatic, yet conservative, steps to place the Bank in the best possible position to report solid earnings moving forward.

Jeff DeVine, President and Chief Executive Officer stated, "We are confident and hopeful that with the changes made to bolster our loan reserve discussed below that we will return to profitability in the fourth quarter of 2009 and have continued positive performance in 2010. We realize that economic stress still exists in our market area, but we remain well capitalized and the economic stress has created opportunities to add many new relationship clients and build market share."

The Bank has experienced strong growth through the first three quarters of 2009, with overall deposits up 29% and loan growth of 20%. The Bank's net interest income increased 38% to $3.6 million for the nine-month period ended September 30, 2009 compared to the same period last year. The Bank's net interest margin was 4.15% for the quarter ended September 30, 2009, up from 3.95% for the quarter ended June 30, 2009, which contributed to an increase in net interest income of $100,000 in this quarter.

The Bank has decided to restate its previously released results for the quarter ended September 30, 2009 to make meaningful additions to its reserve for potential future loan losses. DeVine further commented, "Like many other banks, we have decided to take proactive steps to increase our loan reserve given the uncertain economic environment. At this time, 78% of our revised reserve is unallocated and unrelated to specific loans, but rather is attributable to our heightened awareness of economic factors. While we remain hopeful that our strong net interest income and increased reserve will be adequate to cover any necessary loan losses in the months ahead, we realize that tough economic conditions exist and real estate collateral values have not yet stabilized. We perceive these increases to the unallocated loan loss reserve to be conservative and non-recurring."

The loan loss reserve was originally reported at $1,696,000 or 1.61% of outstanding loans as of September 30, 2009. The reserve has now been increased to $2,694,000 or 2.57% of outstanding loans for this same period. As of September 30, 2009, the Bank had only one loan of $124,000 past due 30 or more days and still accruing interest, $6.2 million in loans on non-accrual status, and $2.3 million in other real estate owned. All carrying values for non-accrual loans and other real estate owned are supported by recent appraisals and impairment, if any, has already been charged-off in conformity with the Bank's accounting policies.

The Bank reported a restated unaudited net loss for the quarter ended September 30, 2009 of $2,133,000 that includes $2,197,000 in provision for loan losses and a $312,000 reduction in fair value of other real estate owned. Excluding these items, the Bank would have generated earnings of $376,000 for the quarter ended September 30, 2009. The Bank continues to maintain a strong capital position with a Tier 1 Leverage ratio of 12.9% as of September 30, 2009, well above the regulatory guideline of 5% for well capitalized institutions.

Company Profile

American Riviera Bank is a full service community bank, focused on serving the lending and deposit needs of businesses and consumers in our community. The Bank was founded in 2006 by over 400 local shareholders and has one branch located at 1033 Anacapa Street in downtown Santa Barbara.

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.