American Riviera Bancorp (“Company”) (OTCQX: ARBV), holding company of American Riviera Bank (“Bank”), announced today unaudited net income of $8.7 million ($1.50 per share) for the year ended December 31, 2024, compared to $10.5 million ($1.82 per share) earned in the same reporting period in the previous year. Unaudited net income was $2.0 million ($0.35 per share) for the three months ended December 31, 2024, compared to $2.1 million ($0.36 per share) in the previous quarter, and $2.2 million ($0.38 per share) earned in the same reporting period in the previous year.

Total deposits were $1.11 billion at December 31, 2024, an increase of $63.7 million or 6.1% from December 31, 2023. At December 31, 2024, all deposits were “core deposits” from our clients, with no wholesale-funded certificates of deposit.

Jeff DeVine, President and CEO of the Company and the Bank, stated, “The growth in our local deposits is a testament to our dedication to provide high-quality, relationship-based services and response to the needs of our community. Our Atascadero branch has been open less than six months and has already exceeded our expectations for new client relationships with $20 million in deposits. We believe there are opportunities to repeat our Atascadero success in neighboring communities by attracting experienced bankers to join the American Riviera Bank team.”

Fourth Quarter Highlights

• The Company was recognized by OTC Markets with the “OTCQX Best 50” distinction for equal weighted share trading volume and total return in 2024.
• The Bank has the highest “Super Premier” rating for financial performance from the Findley Reports and maintained a “5 Star - Superior” rating from Bauer Financial as of September 30, 2024.
• Total shareholders’ equity of $111.4 million at December 31, 2024, has increased $10.7 million or 10.7% from the same reporting period in the previous year.
• Tangible book value per share of $18.31 at December 31, 2024, has increased $1.72 or 10.4% from the same reporting period in the previous year.
• All Bank and Company capital ratios increased in the fourth quarter of 2024. The Bank’s regulatory capital ratios were all above “well-capitalized” standards. The Company’s tangible common equity ratio at December 31, 2024 was 8.35%, an increase from 7.60% at December 31, 2023.
• Total loans were $989.9 million at December 31, 2024, an increase of $13.7 million or 1.4% from the prior quarter-end, and an increase of $43.5 million or 4.6% from December 31, 2023. The Bank’s loan-to-deposit ratio at December 31, 2024, was 88.9%.
• Non-interest-bearing demand deposits were $431.0 million or 38.7% of total deposits at December 31, 2024. Total demand deposits were $548.0 million or 49.2% of total deposits at December 31, 2024.
• Increased average core deposits in the fourth quarter of 2024 allowed the Bank to significantly reduce average wholesale-funded certificates of deposit and Federal Home Loan Bank (“FHLB”) advances. As a result of the favorable shift in funding mix, total cost of funds decreased to 1.63% for the fourth quarter of 2024, compared to 1.66% in the prior quarter, yet remain higher than the 1.23% for the same quarter in the prior year. Overall funding costs for the Company have increased from prior year due to Federal Reserve policy, but remain modest compared to industry averages based on our relationship banking focus and high percentage of demand deposits.
• On-balance sheet liquidity continues to be substantial with $199.0 million of cash, due from banks, and available-for-sale (“AFS”) securities market value at December 31, 2024.
• Access to available sources of liquidity including fed funds lines of credit with correspondent banks, unused secured borrowing capacity with the FHLB, and unused secured borrowing capacity with the Federal Reserve totaled $455.4 million at December 31, 2024.
• At December 31, 2024, the Bank’s commercial real estate (“CRE”) portfolio is diverse, with only $83.3 million in the non-owner-occupied office category and weighted average loan-to-values of 30% to 54% depending on the individual CRE category. As of the most recent CRE stress test in July 2024, weighted average debt coverage ratios were between 1.86 and 3.16 depending on the individual CRE category.
• The Bank maintained strong credit quality with no other real estate owned, no loans 90 days or more past due and still accruing, and $6.1 million or 0.62% of total loans on non-accrual status, which are well supported by collateral, borrower assets, SBA guarantees, or specific reserves.

Earnings

For the fourth quarter of 2024, unaudited net income was $2.0 million, slightly less than the $2.1 million in the third quarter of 2024, and the $2.2 million in the fourth quarter of 2023. However, unaudited net income pre-tax, pre-provision (non-GAAP) was $3.3 million in the fourth quarter of 2024, slightly more than the $2.9 million in the third quarter of 2024, and the $3.0 million in the fourth quarter of 2023.

The Bank continues to grow interest and fees on loans sequentially over the last four quarters from $12.6 million in the fourth quarter of 2023 to $13.4 million in the fourth quarter of 2024, representing a $0.9 million or 6.9% increase. However, the cost of funding has also increased sequentially due to the Federal Reserve’s higher-rate policy. Total interest expense has increased from $3.6 million in the fourth quarter of 2023 to $4.8 million in the fourth quarter of 2024, a $1.2 million or 33.8% increase. Total interest expense has notably declined over the last two quarters due to the favorable shift in funding mix discussed previously.

Non-Interest Income and Expense

Total non-interest income was $0.8 million for the fourth quarter of 2024, compared to $0.9 million for the prior quarter and $0.3 million for the same quarter last year. The fourth quarter of 2023 included a discretionary $0.5 million pre-tax loss from fixed income security repositioning. Total non-interest income for 2024 of $4.1 million was $1.6 million or 66.5% better than total non-interest income in the prior year. 2024 non-interest income included a non-recurring $0.5 million pre-tax gain on the redemption of $1.5 million in subordinated debentures, as well as improved income from FHLB dividends, SBA loan sale premiums, and cash value life insurance. Variances between the quarters can also be attributed to mortgage broker fees, loan interest rate swap fees, and loan prepayment fees.

Total non-interest expense was $8.1 million for the fourth quarter of 2024, a decrease from the $8.4 million reported for the prior quarter, and the $8.3 million reported for the same quarter of the prior year. Total non-interest expense for 2024 of $32.7 million was notably only $0.6 million or 1.8% higher than total non-interest expense in the prior year. Cost savings generated from our core and online banking vendor contract as well as other proactive cost reductions have allowed for targeted personnel increases in deposit generating roles including staffing and occupancy for our recently opened branch in Atascadero.

Loans and Asset Quality

Total loans were $989.9 million at December 31, 2024, an increase of $13.7 million or 1.4% from the prior quarter-end, and an increase of $43.5 million or 4.6% from December 31, 2023.

The Bank’s Allowance for Credit Losses (“ACL”) was $11.6 million at December 31, 2024, with a resulting coverage ratio of 1.17%, as compared to $11.6 million or 1.23% at December 31, 2023. As of December 31, 2024, non-accrual loans totaled $6.1 million, an increase from the previous quarter-end, and an increase from the $0.6 million reported December 31, 2023. The loans on non-accrual are well supported by collateral, borrower assets, SBA guarantees, or specific reserves.

Deposits & Borrowings

Total deposits were $1.11 billion at December 31, 2024, representing a $19.4 million or 1.7% decrease from September 30, 2024. However, core deposits increased $13.1 million from September 30, 2024 to December 31, 2024. Core deposits increased $63.7 million or 6.1% since December 31, 2023.

Non-interest-bearing demand deposits totaled $431.0 million at December 31, 2024, a decrease of $35.5 million or 7.6% from the prior quarter-end, and a decrease of $12.0 million or 2.7% from December 31, 2023. Non-interest-bearing demand deposits represent 38.7% of total deposits at December 31, 2024, compared to 41.2% at the prior quarter-end, and 42.2% at December 31, 2023.

Interest-bearing demand deposits totaled $117.0 million at December 31, 2024, an increase of $0.4 million or 0.3% from the prior quarter-end, and a decrease of $6.7 million or 5.4% from December 31, 2023. Demand deposits represent 49.2% of total deposits at December 31, 2024, a decrease from 51.5% at the prior quarter-end, and from 54.0% at December 31, 2023.

Other interest-bearing deposits totaled $565.3 million at December 31, 2024, an increase of $15.7 million or 2.9% from the prior quarter-end, and an increase of $82.4 million or 17.1% from December 31, 2023.

The weighted average cost of deposits for the fourth quarter of 2024 was 1.58%, compared to 1.52% for the previous quarter, and 1.00% for the same quarter last year. The increase in the cost of deposits this quarter is related to higher rates on time deposits for local depositors.

As a result of increased core deposits, the Bank was able to reduce more expensive wholesale-funded certificates of deposit to zero from the $32.5 million outstanding at September 30, 2024.

The Bank’s total borrowings increased slightly to $41.5 million at December 31, 2024, from $36.5 million at September 30, 2024. At December 31, 2024, the Bank had a short-term FHLB advance of $15.0 million, $10.0 million drawn on a correspondent bank line of credit at a rate of 3.85%, and $16.5 million of subordinated notes outstanding at a rate of 3.75%. The weighted average cost on all borrowings for the fourth quarter of 2024 was 3.70%, resulting in $0.3 million in interest expense, comparing very favorably to the $0.6 million of borrowing expense for the previous quarter, and $0.9 million for the same quarter last year.

As a result of the increased core deposits and decreased use of non-core wholesale funding, the Company was able to reduce overall cost of funds to 1.63% for the fourth quarter of 2024, compared to 1.66% for the previous quarter. The Company’s net interest margin was stable at 3.32% for the fourth quarter of 2024, compared to 3.33% for the prior quarter.

The Bank’s liquidity position remained strong with a primary liquidity ratio (cash and cash equivalents, deposits held in other banks and unpledged AFS securities as a percentage of total assets) of 13.7% at December 31, 2024, compared to 15.8% at September 30, 2024. As of December 31, 2024, the Bank had available and unused, secured borrowing capacity with the FHLB of San Francisco of $272.1 million, and had available and unused, secured borrowing capacity with the Federal Reserve of $40.4 million. In addition, the Bank had $142.9 million of unused fed funds lines of credit with correspondent banks at December 31, 2024. Available contingent funding sources of $455.4 million remain robust.

Overall uninsured deposits, excluding public agency deposits that are collateralized, are conservatively estimated to be $390.2 million, or 35.0% of total deposit balances as of December 31, 2024. The actual level of uninsured deposits is lower than the percentage stated above, as our knowledgeable bankers have helped clients obtain more than $250,000 of FDIC insurance with vesting structures such as joint accounts, payable upon death accounts, and revocable trust accounts with multiple beneficiaries. In addition, the Bank can offer up to $50 million of FDIC pass-through insurance to clients via the IntraFi network Insured Cash Sweep (“ICS”) or Certificate of Deposit Account Registry System (“CDARS”) products.

Shareholders’ Equity

Total shareholders’ equity was $111.4 million at December 31, 2024, a $0.7 million or 0.7% decrease since September 30, 2024, and an increase of $10.7 million or 10.7% over the same period of the prior year. The tax adjusted unrealized loss on securities, which is a component of equity (accumulated other comprehensive income or “AOCI”), increased $3.1 million or 18.4% from $16.6 million at September 30, 2024, to $19.7 million at December 31, 2024. However, negative AOCI decreased $1.2 million or 6.0% from December 31, 2023 to December 31, 2024. The Bank fully expects to receive all principal when the investments mature. As of December 31, 2024, the Company had not repurchased any shares under the share repurchase program and had $5.0 million available for repurchase.

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, Santa Maria, San Luis Obispo, Atascadero, 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 thirteen 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 2023 for its performance under the Community Reinvestment Act. The Company was named to the “OTCQX Best 50” list for equal weighted share trading volume and total return in 2024.

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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