American Riviera Bank reported record unaudited pre-tax income of $638,000 (25 cents per share) for the third quarter ending Sept. 30, which represents a 47 percent increase from the $433,000 (17 cents per share) reported for the same period last year.
For the nine months ending Sept. 30, American Riviera Bank reported unaudited pre-tax income of $1.3 million (51 cents per share), compared with $1.1 million (45 cents per share) reported for the same period last year. After-tax, unaudited net income was $807,000 (32 cents per share) for the nine months ending Sept. 30.
“We are pleased to report strong growth in earnings to our shareholders this quarter and year to date,” President/CO Jeff DeVine said. “We plan to utilize our stable and growing earnings to invest in our new branch in Montecito, which will open in early 2013. With an additional branch, the bank will further its mission of building lasting relationships in our community.”
Record pre-tax income was achieved through a combination of growth in the loan portfolio, stable funding costs from increased non-interest bearing deposits, and reduced credit costs. Loans averaged $118 million in the third quarter of 2012 vs. $100 million in the third quarter of 2011. The loan portfolio was $117 million at Sept. 30, an increase of 14 percent since Sept. 30, 2011.
Deposits have also grown substantially with a 44 percent increase in non-interest bearing checking accounts compared with one year ago. American Riviera Bank reported $133 million in total deposits with $30 million in non-interest bearing checking accounts at Sept. 30, compared with $108 million and $21 million at Sept. 30, 2011, respectively.
Although there has been some pressure on net interest margin due to competition for quality loans in the community, net interest margin remains well above peer average at 5.22 percent year to date, and 4.96 percent in the most recent quarter, due to the funding advantage provided by growing non-interest bearing deposits.
American Riviera Bank was successful in its efforts to dispose of substantially all other real estate owned during the third quarter of 2012. At Sept. 30, the ratio of non-performing assets to total assets declined to 0.47 percent from 2.85 percent at June 30.
The bank’s non-performing asset ratio is now significantly lower than the peer average of 3.44 percent representing California banks with assets of $100 million to $500 million. American Riviera Bank has no loans past due more than 30 days, no non-accrual loans, and only $550,000 of other real estate owned at Sept. 30. The bank did not need to add to the allowance for loan and lease loss in the third quarter, as the 1.9 percent allowance to total loans was considered adequate given improved credit quality.
As of Sept. 30, total assets were $162 million. The bank continues to maintain a strong capital position with Tier 1 capital to total assets of 13 percent, well above the regulatory guideline of 5 percent for well-capitalized institutions. The tangible book value of one share of American Riviera Bank common stock is now $9.18.
— Michelle Martinich is senior vice president and chief financial officer for American Riviera Bank.