SACRAMENTO, CA -- (Marketwire) -- 07/27/09 -- American River Bankshares (NASDAQ: AMRB)
today reported net income of $579,000 or $0.10 per diluted share for the
six months ended June 30, 2009, compared to $3,814,000 or $0.65 per diluted
share for the six months ended June 30, 2008. The Company realized a net
loss of $704,000 or ($0.12) per diluted share for the second quarter of
2009 compared to net income of $1,981,000 or $0.34 for the second quarter
of 2008. The per-share operating results have been adjusted for a 5% stock
dividend distributed in December 2008.
AMRB recorded income before income taxes and loan and lease losses (or
pre-tax pre-provision earnings) of $5,676,000 and a net interest margin of
4.98% for the six months ended June 30, 2009, compared to $6,690,000 and
4.96% for the six months ended June 30, 2008. For the second quarter of
2009, pre-tax pre-provision earnings were $2,428,000 and net interest
margin was 4.87%, compared to $3,392,000 and 4.99% for the second quarter
of 2008.
"Reporting the first quarterly loss in over twenty-five years is a
disappointment, and is directly related to our $3.8 million loan loss
provision and $253,000 special assessment payment to the FDIC," said David
Taber, President and CEO of American River Bankshares. "We're being
prudent with our evaluation of the loan portfolio and as a result, we have
built our allowance to $7.8 million or 1.91% of total loans and leases."
Taber continued, "While it is hard to look past the short term impact these
issues have on profitability, we are proactively addressing the challenges
faced by some of our borrowers and are pleased with both our ability to
maintain a stable net interest margin and our pre-tax pre-provision
earnings of $5.7 million during the first half of 2009."
During the second quarter of 2009, the Company declared a quarterly cash
dividend of $0.143 per share. The Company did not repurchase any of its
common stock in the first half of 2009. As the dividend payout for the
first half of 2009 exceeded net income, the Board of Directors has decided
it is in the Company's best interest to continue to build capital and
temporarily suspend both the cash dividend and the stock repurchase plan.
"The Board of Directors felt it necessary to make the difficult decision to
suspend the cash dividend due to the current economic challenges that both
the Company and country are facing," said Charles Fite, Chairman of
American River Bankshares. "It is in the best interest to our Company's
long-term success to stick to our plan of building capital and increasing
our reserves."
Net Interest Margin
Net interest income for the second quarter of 2009 decreased $377,000
(5.9%) to $6,018,000 from $6,395,000 for the second quarter of 2008 and for
the six months ended June 30, 2009 decreased $380,000 (3.0%) to $12,357,000
from $12,737,000 for the six months ended June 30, 2008. Interest income
for the second quarter of 2009 decreased $931,000 (11.3%) to $7,321,000
from $8,252,000 for the second quarter of 2008 and for the six months ended
June 30, 2009 decreased $1,758,000 (10.4%) to $15,072,000 from $16,830,000
for the six months ended June 30, 2008. Interest expense for the second
quarter of 2009 decreased $554,000 (29.8%) to $1,303,000 from $1,857,000
for the second quarter of 2008 and for the six months ended June 30, 2009
decreased $1,378,000 (33.7%) to $2,715,000 from $4,093,000 for the six
months ended June 30, 2008.
The average yield on earning assets declined from 6.42% in the second
quarter of 2008 to 5.91% for the second quarter of 2009 and declined from
6.54% for the six months ended June 30, 2008 to 6.06% for the six months
ended June 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. The average balance of earning assets decreased 3.8% from
$522,550,000 in the second quarter of 2008 to $502,445,000 in the second
quarter of 2009 and decreased 3.0% from $523,037,000 for the six months
ended June 30, 2008 to $507,425,000 for the six months ended June 30, 2009.
While the overall balance decreased slightly during the three and six-month
periods, the Company did see a positive change in mix with an increase in
average loan balances offset by a corresponding decrease in average
investment securities.
When compared to the second quarter of 2008, average loan balances were up
$5,862,000 (1.4%) to $410,959,000 for the second quarter of 2009 and when
compared to the first six months of 2008, average loan balances were up
$10,046,000 (2.5%) for the six months ended June 30, 2009 while average
investment securities were down $22,248,000 (20.0%) to $89,061,000 for the
second quarter of 2009 and down $22,956,000 (20.3%) for the six months
ended June 30, 2009. This is a direct result of the Company's decision to
use the proceeds from principal reductions, sales, and maturing investment
securities to provide funding for loan growth and to offset decreases in
deposit balances. Foregone interest income on nonaccrual loans during the
second quarter of 2009 was approximately $378,000, compared to $260,000
during the second quarter of 2008. Foregone interest income on nonaccrual
loans for the six months ended June 30, 2009 was approximately $647,000,
compared to $597,000 for the six months ended June 30, 2008. Overall, the
yield on loans during the second quarter of 2009 was 6.21% as compared to
6.90% for the second quarter of 2008 and 6.37% for the six months ended
June 30, 2009 compared to 7.06% for the six months ended June 30, 2008,
reflective of the declining rate environment and the higher amounts of
foregone interest.
The average cost of funds decreased from 1.96% in the second quarter of
2008 to 1.36% for the second quarter of 2009. The average balance of
interest bearing liabilities increased 0.6% from $380,969,000 in the second
quarter of 2008 to $383,067,000 in the second quarter of 2009. This
increase resulted primarily from an increase in average time deposits of
$16,973,000 (13.8%). The increased time deposits were used to offset the
decrease in noninterest demand and money market accounts. For the six
months ended June 30, 2009, the average cost of funds decreased 0.76% to
1.41%, down from 2.17% reported in the first half of 2008. The average
balance of interest bearing liabilities increased 2.4% from $379,541,000 in
the first half of 2008 to $388,569,000 in the first half quarter of 2009.
Loan Growth and Asset Quality
Net loans as of June 30, 2009 decreased $4,240,000 (1.1%) to $398,191,000
from $402,431,000 as of June 30, 2008 and decreased $14,165,000 (3.4%) from
$412,356,000 as of December 31, 2008. Net loan balances decreased
$10,258,000 (2.5%) from the balances as of March 31, 2009. Average loan
balances decreased $6,820,000 (1.6%) from $417,779,000 during the first
quarter of 2009 to $410,959,000 during the second quarter of 2009. Real
estate loans increased $12,736,000 (4.5%) to $297,023,000 as of June 30,
2009 from $284,287,000 as of June 30, 2008, but decreased $3,911,000 (1.3%)
from $300,934,000 as of December 31, 2008, and decreased $3,912,000 (1.3%)
from March 31, 2009. Commercial loans decreased $18,474,000 (18.2%) to
$82,799,000 as of June 30, 2009 from $101,273,000 as of June 30, 2008,
decreased $7,826,000 (8.6%) from $90,625,000 as of December 31, 2008, and
decreased $5,578,000 (6.3%) from March 31, 2009.
The loan portfolio at June 30, 2009 included: real estate loans of
$297,023,000 (73% of the portfolio), commercial loans of $82,799,000 (20%
of the portfolio) and other loans, which consist mainly of leases and
consumer loans of $267,220,000 (7% of the portfolio). The real estate loan
portfolio at June 30, 2009 includes: business property loans of
$120,961,000 (41% of the real estate portfolio), investor commercial real
estate of $102,057,000 (34% of the real estate portfolio), construction and
land development of $38,176,000 (13% of the real estate portfolio) and
other, which consists of residential and multi-family real estate of
$35,829,000 (12% of the real estate portfolio).
At June 30, 2009, the allowance for loan and lease losses was $7,758,000
(1.91% of total loans and leases) compared with $6,111,000 (1.50% of total
loans and leases) at June 30, 2008, $5,918,000 (1.41% of total loans and
leases) at December 31, 2008, and $5,839.000 (1.40% of total loans and
leases) at March 31, 2009. The provision for loan and lease losses was
$3,800,000 for the second quarter of 2009, compared to $190,000 for the
second quarter of 2008 and for the six months ended June 30, 2009, the
provision was $5,029,000 compared to $527,000 for the six months ended June
30, 2008. Net chargeoffs for the second quarter of 2009 were $1,881,000
compared to $96,000 for the second quarter of 2008 and for the six months
ended June 30, 2009, net chargeoffs were $3,189,000 compared to $299,000
for the six months ended June 20, 2008. Non-performing loans and leases as
of June 30, 2009 were $20,946,000 or 5.16% of total loans and leases
compared to $14,265,000 or 3.49% one year ago and $6,241,000 or 1.49% as of
December 31, 2008. Loans and leases past due 30 to 89 days decreased to
$8,251,000 at June 30, 2009 from $10,135,000 at June 30, 2008 but increased
from $7,812,000 at December 31, 2008 and $6,226,000 at March 31, 2009.
Non-performing assets were $24,293,000 at June 30, 2009 compared to
$14,625,000 at June 30, 2008, $8,399,000 at December 31, 2008, and
$10,919,000 at March 31, 2009. Non-performing assets to total assets as of
June 30, 2009 were 4.40% compared to 2.46% one year ago, 1.49% as of
December 31, 2008, and 1.96% as of March 31, 2009. Non-performing assets
consist of the following as of June 30, 2009.
Non-performing assets Balance
------------
Non-performing loans that are current to terms* (six loans or
leases) $ 7,040,000
Non-performing loans paid off subsequent to quarter end (one
loan) 294,000
Non-performing loans that are past due (26 loans or leases) 13,563,000
Loans past due 90 or more days and still accruing (two leases) 49,000
Other real estate owned (net) (twelve properties) 3,347,000
------------
$ 24,293,000
* 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. After the chargeoffs recorded through
June 30, 2009, specific reserves of $1,862,000 were held on the
non-performing loans considered to be impaired.
