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American Riviera Bancorp Announces Results for the Second Quarter of 2025

SANTA BARBARA, CA / / July 23, 2025 / American Riviera Bancorp ("Company") (OTCQX:ARBV), holding company of American Riviera Bank ("Bank"), announced today unaudited net income of $5.0 million ($0.86 per share) for the six months ended June 30, 2025, compared to $4.6 million ($0.80 per share) earned in the same reporting period in the previous year. Unaudited net income was $2.6 million ($0.46 per share) for the three months ended June 30, 2025, compared to $2.3 million ($0.40 per share) in the previous quarter, and $2.5 million ($0.42 per share) earned in the same reporting period in the previous year.

Total deposits were $1.13 billion at June 30, 2025, an increase of $63.5 million or 5.9% from June 30, 2024. At June 30, 2025, all deposits were "core deposits" from our clients, with no wholesale-funded certificates of deposit. Total loans were $1.02 billion at June 30, 2025, an increase of $56.6 million or 5.9% from June 30, 2024. Total loans grew $25.5 million or 2.6% in the second quarter of 2025.

Jeff DeVine, President and CEO of the Company and the Bank stated, "We achieved strong loan growth this quarter from new loans as well as advances on existing commitments. Our clients have helped us exceed a milestone of $1 billion in loans in our community. We also celebrate the one-year anniversary of our Atascadero branch which has successfully grown to over $30 million in core deposits."

Second Quarter Highlights

• Total shareholders' equity of $117.6 million at June 30, 2025, has increased $12.2 million or 11.6% from the same reporting period in the previous year.

• Tangible book value per share of $19.40 at June 30, 2025, has increased $2.14 or 12.4% from the same reporting period in the previous year.

• Pursuant to the approved share repurchase program, the Company acquired 30,616 shares of common stock at a weighted average cost of $18.22 in the second quarter of 2025, which was below tangible book value per share.

• Bank and Company capital ratios continued to increase in the second quarter of 2025. The Bank's regulatory capital ratios were all above "well-capitalized" standards. The Company's tangible common equity ratio at June 30, 2025, was 8.70%, an increase from 7.92% at June 30, 2024.

• Non-interest-bearing demand deposits were $447.5 million or 39.6% of total deposits at June 30, 2025. Total demand deposits were $582.1 million or 51.4% of total deposits at June 30, 2025.

• As a result of the continued favorable shift to core funding and the impact of deposit pricing changes made in the fourth quarter of 2024, cost of deposits and total cost of funds were stable from the first quarter of 2025 at 1.39% and 1.50%, respectively. Total cost of funds has improved by 20 basis points from the 1.70% reported for the same quarter in the prior year.

• Net interest margin improved 4 basis points to 3.65% for the second quarter of 2025, compared to 3.61% in the prior quarter, and 41 basis points from 3.24% for the same quarter in the prior year as a result of steady loan yield improvement and the decline in cost of funds.

• Consolidated return on average assets was 0.83%, return on average equity was 9.14% and efficiency ratio was 67.26% for the second quarter of 2025, with sequential improvement in all of these ratios over the past two quarters.

• On-balance sheet liquidity continues to be substantial with $190.2 million of cash, due from banks, and available-for-sale ("AFS") securities market value at June 30, 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 $445.2 million at June 30, 2025.

• At June 30, 2025, the Bank's commercial real estate ("CRE") portfolio is diverse, with only $81.4 million in the non-owner-occupied office category and weighted average loan-to-values of 30% to 52% 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 $8.4 million or 0.83% of total loans on non-accrual status, which are well supported by collateral, borrower assets, SBA guarantees, or specific reserves.

Second Quarter Earnings

For the second quarter of 2025, unaudited net income was $2.6 million, compared to $2.3 million reported in the first quarter of 2025, and $2.5 million reported in the second quarter of 2024. Unaudited net income pre-tax, pre-provision (non-GAAP) was $4.0 million in the second quarter of 2025, a notable increase from the $3.6 million reported in the first quarter of 2025, and $3.5 million reported in the second quarter of 2024.

The Bank continues to grow interest and fees on loans sequentially over the last five quarters from $13.0 million in the second quarter of 2024 to $14.2 million in the second quarter of 2025, representing a $1.2 million or 8.6% increase.

Total interest expense has decreased from $4.9 million in the second quarter of 2024 to $4.3 million in the second quarter of 2025, a $0.6 million or 12.1% decrease. Total interest expense has notably declined over the last year due to the favorable shift in funding mix, reduced borrowings 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 $0.3 million or 2.4% in the second quarter of 2025 compared to the first quarter of 2025, and increased $1.4 million or 13.5% compared to the second quarter of 2024.

Non-Interest Income and Expense

Total non-interest income was $0.9 million for the second quarter of 2025, compared to $0.8 million in the prior quarter, and $1.5 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, mortgage broker fees, loan interest rate swap fees, and loan prepayment fees.

Total non-interest expense was $8.3 million for the second quarter of 2025, a decrease from the $8.4 million reported for the prior quarter, and slight increase from the $8.1 million reported for the same quarter last year. The third and fourth quarters of 2024 benefitted from reduced bonus accrual expense offset by non-recurring expenses related to check fraud which were partially recovered in the first quarter of 2025. Variances between the quarters can be attributed to timing of expenses related to advertising, events, and legal costs.

Loans and Asset Quality
Total loans were $1,020.3 million at June 30, 2025, an increase of $25.5 million or 2.6% from the prior quarter-end, and an increase of $56.6 million or 5.9% from June 30, 2024.

The Bank's Allowance for Credit Losses ("ACL") was $12.5 million at June 30, 2025, with a resulting coverage ratio of 1.22%, as compared to $11.7 million or 1.21% at June 30, 2024. As of June 30, 2025, non-accrual loans totaled $8.4 million, a $3.6 million increase from the previous quarter-end, and a $7.8 million increase from the $0.6 million reported at June 30, 2024. The increase to non-accrual loans this quarter is attributed to two loans to related borrowers. The two loans are well secured by senior liens on real estate and the borrowers have indicated their intention to keep payments current in order to maintain their favorable interest rates and avoid foreclosure. All 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 June 30, 2025, unchanged from the prior quarter-end, and an increase of $63.5 million or 5.9% from June 30, 2024. Deposit growth year-over-year was represented by core deposits, with no wholesale brokered funds at June 30, 2025.

Non-interest-bearing demand deposits totaled $447.5 million at June 30, 2025, an increase of $2.0 million or 0.4% from the prior quarter-end, and an increase of $22.5 million or 5.3% from June 30, 2024. Non-interest-bearing demand deposits represent 39.6% of total deposits at June 30, 2025, compared to 39.3% at the prior quarter-end, and 39.8% at June 30, 2024.

Interest-bearing demand deposits totaled $134.5 million at June 30, 2025, an increase of $18.1 million or 15.6% from the prior quarter-end, and an increase of $24.2 million or 21.9% from June 30, 2024. Total demand deposits, including interest-bearing demand, represent 51.4% of total deposits at June 30, 2025, compared to 49.5% at the prior quarter-end, and 50.1% at June 30, 2024.

Other interest-bearing deposits totaled $549.4 million at June 30, 2025, a decrease of $23.5 million or 4.1% from the prior quarter-end, and an increase of $16.7 million or 3.1% from June 30, 2024.

The weighted average cost of deposits for the second quarter of 2025 remained at 1.39%, the same as the first quarter of 2025, and slightly higher compared to 1.35% for the same quarter of last year.

The Company's total borrowings increased to $38.5 million at June 30, 2025, from $26.5 million at March 31, 2025. At June 30, 2025, the Company had $10.0 million drawn on a correspondent bank line of credit at a rate of 3.85%, $16.5 million of subordinated notes outstanding at a rate of 3.75% and the remainder of $12.0 million in a short term FHLB advance with a rate of 4.64%. The weighted average cost on all borrowings for the second quarter of 2025 was 4.13%, resulting in $0.5 million in interest expense on borrowings, a slight increase compared to the $0.4 million of borrowing expense for the previous quarter, and notably lower than the $1.4 million incurred for the same quarter last year.

As a result of the continued favorable shift to core funding and the year-to-date impact of deposit pricing changes made in the fourth quarter of 2024, total cost of funds is stable at 1.50%, and 20 basis points better than the 1.70% reported in the same quarter of last year. The Company's net interest margin slightly improved 4 basis points to 3.65% for the second quarter of 2025, compared to 3.61% in the prior quarter, and improved a significant 41 basis points from the 3.24% reported for the same quarter of last year as a result of steady loan yield improvement and 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 14.8% at June 30, 2025, compared to 14.2% at March 31, 2025. As of June 30, 2025, the Bank had available and unused, secured borrowing capacity with the FHLB of San Francisco of $257.5 million, and had available and unused, secured borrowing capacity with the Federal Reserve of $44.8 million. In addition, the Bank had $142.9 million of unused fed funds lines of credit with correspondent banks at June 30, 2025. Available contingent funding sources of $445.2 million remain robust.

Overall uninsured deposits, excluding public agency deposits that are collateralized, are conservatively estimated to be $401.0 million, or 35.4% of total deposit balances as of June 30, 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 $117.6 million at June 30, 2025, a $2.5 million or 2.2% increase since March 31, 2025, and an increase of $12.2 million or 11.6% 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"), slightly improved $0.2 million or 1.1% from $18.1 million at March 31, 2025, to $17.9 million at June 30, 2025. Additionally, negative AOCI has decreased $3.0 million or 14.2% from June 30, 2024 to June 30, 2025. The Bank fully expects to receive all principal when the investments mature.

As of June 30, 2025, the Company had repurchased 30,616 shares of common stock at a weighted average cost of $18.22, leaving $4.4 million available for repurchase under the share repurchase 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.

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American Riviera Bank

805-965-5942
Michelle Martinich

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.