SACRAMENTO, CA, Oct. 22, 2009 (Marketwire) --
SACRAMENTO, CA -- (Marketwire) -- 10/22/09 -- American River Bankshares (NASDAQ: AMRB) today reported net income of $827,000 or $0.14 per diluted share for the third quarter of 2009, compared to $1,931,000 or $0.33 per diluted share for the third quarter of 2008. For the nine months ended September 30, 2009, net income was $1,406,000 or $0.24 per diluted share, compared to $5,745,000 or $0.98 per diluted share for the nine months ended September 30, 2008. The per-share operating results have been adjusted for a 5% stock dividend distributed in December 2008.
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.
