American Riviera Bancorp Announces Results for the First Quarter of 2025

American Riviera Bancorp (“Company”) (OTCQX: ARBV), holding company of American Riviera Bank (“Bank”), announced today unaudited net income of $2.3 million ($0.40 per share) for the three months ended March 31, 2025, compared to $2.0 million ($0.35 per share) in the previous quarter, and $2.2 million ($0.37 per share) earned in the same reporting period in the previous year.

Total deposits were $1.13 billion at March 31, 2025, an increase of $85.5 million or 8.1% from March 31, 2024. At March 31, 2025, 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, “At March 31, 2025, the Bank’s balance sheet was completely funded by core deposits from loyal clients that appreciate our innovative banking products and personal service. Margins have improved from 2024, profitability is rising, and our shareholders have benefited from a double-digit increase in tangible book value per share in the last year. Our focus on supporting the communities we serve ensures enhanced shareholder return over time.”

First Quarter Highlights

• Total shareholders’ equity of $115.1 million at March 31, 2025, has increased $13.4 million or 13.2% from the same reporting period in the previous year.
• Tangible book value per share of $18.89 at March 31, 2025, has increased $2.27 or 13.7% from the same reporting period in the previous year.
• All Bank and Company capital ratios increased in the first quarter of 2025. The Bank’s regulatory capital ratios were all above “well-capitalized” standards. The Company’s tangible common equity ratio at March 31, 2025, was 8.58%, an increase from 7.61% at March 31, 2024.
• Total loans were $994.8 million at March 31, 2025, an increase of $4.8 million or 0.5% from the prior quarter-end, and an increase of $44.0 million or 4.6% from March 31, 2024. The Bank’s loan-to-deposit ratio at March 31, 2025, was 87.7%.
• Non-interest-bearing demand deposits were $445.5 million or 39.3% of total deposits at March 31, 2025. Total demand deposits were $562.0 million or 49.5% of total deposits at March 31, 2025.
• As a result of the continued favorable shift to core funding and the full quarter impact of deposit pricing changes made in the fourth quarter of 2024, total cost of funds decreased to 1.49% for the first quarter of 2025, compared to 1.63% in the prior quarter, and slightly better than 1.51% for the same quarter in the prior year.
• Net interest margin improved 29 basis points to 3.61% for the first quarter of 2025, compared to 3.32% in the prior quarter, and 3.34% for the same quarter in the prior year as a result of steady loan yield improvement and the recent decline in cost of funds.
• On-balance sheet liquidity continues to be substantial with $206.3 million of cash, due from banks, and available-for-sale (“AFS”) securities market value at March 31, 2025.
• Access to available sources of liquidity including fed funds lines of credit with correspondent banks, unused secured borrowing capacity with the Federal Home Loan Bank (“FHLB”), and unused secured borrowing capacity with the Federal Reserve totaled $453.7 million at March 31, 2025.
• At March 31, 2025, the Bank’s commercial real estate (“CRE”) portfolio is diverse, with only $82.7 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 January 2025, weighted average debt coverage ratios were between 1.69x and 4.11x 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 $4.8 million or 0.48% of total loans on non-accrual status, which are well supported by collateral, borrower assets, SBA guarantees, or specific reserves.

Earnings

For the first quarter of 2025, unaudited net income was $2.3 million, compared to $2.0 million reported in the fourth quarter of 2024, and $2.2 million reported in the first quarter of 2024. Unaudited net income pre-tax, pre-provision (non-GAAP) was $3.6 million in the first quarter of 2025, a notable increase from $3.3 million in the fourth quarter of 2024, and $3.0 million in the first quarter of 2024.

The Bank continues to grow interest and fees on loans sequentially over the last five quarters from $12.7 million in the first quarter of 2024 to $13.7 million in the first quarter of 2025, representing a $1.0 million or 8.1% increase.

Total interest expense has decreased from $4.8 million in the fourth quarter of 2024 to $4.2 million in the first quarter of 2025, a $0.6 million or 11.9% decrease. Total interest expense has notably declined over the last three quarters due to the favorable shift in funding mix and deposit rate reductions which followed the Federal Reserve’s actions in late 2024 to lower its target rate.

Net interest income pre-provision increased $0.5 million or 5.1% in the first quarter of 2025 compared to the fourth quarter of 2024 and increased $0.9 million or 9.0% compared to the first quarter of 2024.

Non-Interest Income and Expense

Total non-interest income was $0.8 million for the first quarter of 2025, the same as the prior quarter, and $0.9 million for the same quarter last year. The second quarter of 2024 non-interest income included a non-recurring $0.5 million pre-tax gain on the redemption of $1.5 million in subordinated debentures. Variances between the quarters can be attributed to SBA loan sale premiums, FHLB dividends, cash value life insurance income, mortgage broker fees, loan interest rate swap fees, and loan prepayment fees.

Total non-interest expense was $8.4 million for the first quarter of 2025, an increase from the $8.1 million reported for the prior quarter, and the $8.1 million reported for the same quarter of the prior year. The third and fourth quarters of 2024 benefited from reduced bonus accrual expense offset by non-recurring expenses related to check fraud. Conversely, the first quarter of 2025 benefited from partial check fraud recovery offset by normalized bonus accrual. Total non-interest expense for the first quarter of 2025 is up only $0.3 million or 3.8% versus the same quarter of the prior year due to our focus on cost control.

Loans and Asset Quality

Total loans were $994.8 million at March 31, 2025, an increase of $4.8 million or 0.5% from the prior quarter-end, and an increase of $44.0 million or 4.6% from March 31, 2024.

The Bank’s Allowance for Credit Losses (“ACL”) was $11.9 million at March 31, 2025, with a resulting coverage ratio of 1.19%, as compared to $11.6 million or 1.23% at March 31, 2024. As of March 31, 2025, non-accrual loans totaled $4.8 million, a $1.3 million decrease from the previous quarter-end, and a $4.2 million increase from the $0.6 million reported at March 31, 2024. The loans on non-accrual are well supported by collateral, borrower assets, SBA guarantees, or specific reserves.

Deposits & Borrowings

Total deposits were $1.13 billion at March 31, 2025, representing a $21.6 million or 1.9% increase from December 31, 2024, and an increase of $85.5 million or 8.1% from March 31, 2024. All deposit growth in the quarter was represented by core deposits, with no wholesale brokered funds at March 31, 2025.

Non-interest-bearing demand deposits totaled $445.5 million at March 31, 2025, an increase of $14.5 million or 3.4% from the prior quarter-end, and an increase of $29.9 million or 7.2% from March 31, 2024. Non-interest-bearing demand deposits represent 39.3% of total deposits at March 31, 2025, compared to 38.7% at the prior quarter-end, and 39.6% at March 31, 2024. Total demand deposits, including interest-bearing demand, represent 49.5% of total deposits at March 31, 2025, compared to 49.2% at the prior quarter-end, and 52.4% at March 31, 2024. Other interest-bearing deposits totaled $572.9 million at March 31, 2025, an increase of $7.6 million or 1.3% from the prior quarter-end, and an increase of $73.7 million or 14.8% from March 31, 2024.

The weighted average cost of deposits for the first quarter of 2025 decreased 19 basis points to 1.39%, compared to 1.58% for the previous quarter, and 1.09% for the same quarter last year. The decrease in the cost of deposits this quarter is related to the full quarter impact of reduced rates on interest-bearing demand, money market, and time deposits.

The Company’s total borrowings decreased to $26.5 million at March 31, 2025, from $41.5 million at December 31, 2024. At March 31, 2025, the Company had $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 first quarter of 2025 was 3.81%, resulting in $0.4 million in interest expense on borrowings, a slight increase compared to the $0.3 million of borrowing expense for the previous quarter, and notably lower than the $1.5 million incurred for the same quarter last year.

As a result of the continued favorable shift to core funding and the full quarter impact of deposit pricing changes made in the fourth quarter of 2024, total cost of funds decreased 14 basis points to 1.49% for the first quarter of 2025, compared to 1.63% in the prior quarter. The Company’s net interest margin improved 29 basis points to 3.61% for the first quarter of 2025, compared to 3.32% in the prior quarter as a result of steady loan yield improvement and the recent decline in cost of funds.

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 14.2% at March 31, 2025, compared to 13.7% at December 31, 2024. As of March 31, 2025, the Bank had available and unused, secured borrowing capacity with the FHLB of San Francisco of $273.0 million, and had available and unused, secured borrowing capacity with the Federal Reserve of $37.8 million. In addition, the Bank had $142.9 million of unused fed funds lines of credit with correspondent banks at March 31, 2025. Available contingent funding sources of $453.7 million remain robust.

Overall uninsured deposits, excluding public agency deposits that are collateralized, are conservatively estimated to be $397.6 million, or 35.6% of total deposit balances as of March 31, 2025. 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 Service (“CDARS”) products.

Shareholders’ Equity

Total shareholders’ equity was $115.1 million at March 31, 2025, a $3.7 million or 3.3% increase since December 31, 2024, and an increase of $13.4 million or 13.2% 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”), improved $1.6 million or 8.1% from $19.7 million at December 31, 2024, to $18.1 million at March 31, 2025. Additionally, negative AOCI has decreased $3.7 million or 17.0% from March 31, 2024 to March 31, 2025. The Bank fully expects to receive all principal when the investments mature. As of March 31, 2025, the Company had not repurchased any shares under the authorized share repurchase program. Subsequent to quarter-end, repurchases occurred covering 27,970 shares at a weighted average price of $18.13, leaving $4.5 million available for repurchase under the program.

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. The Bank maintains a “5 Star - Superior” rating from Bauer Financial and for fourteen consecutive years, has been recognized for strong financial performance by the Findley Reports. 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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