American River Bankshares (AMRB)

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American River Bankshares (AMRB)

Q3 2008 Earnings Call

October 16, 2008 4:30 pm ET


David Taber - CEO

Mitch Derenzo - EVP and CFO


Jeff Rulis - D.A. Davidson

Don Worthington - Howe Barnes Hoefer & Arnett, Inc.

Tim O'Brien - Sandler O'Neill & Partners

Martha Birna

Sanford Cozlyn

Mark Anderson - Axial Capital Management



Good afternoon. My name is Britney, and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer session. (Operator Instructions).

Thank you. Mr. Taber, you may begin your conference.

David Taber

Thank you, Britney. Good afternoon, everyone. I am David Taber, the CEO of American River Bankshares. Welcome to the American River Bankshares conference call to discuss our results for the third quarter of 2008. Mitch Derenzo, Executive Vice President and Chief Financial Officer and a key member of our executive management team for the past sixteen years, will now discuss those results that were included in our press release disseminated earlier this morning. Mitch?

Mitch Derenzo

Thank you, David. Of course thanks to all of you for taking the time to listen in on our call this afternoon. Before we get started, I need to reference our forward-looking statement, which lists the risks and uncertainties involved in our business. The full disclosure can be found in our annual report which is located on our website at or you can take a look at our 10-K for 2007 that was filed with the SEC in March of this year.

Now, with that out of the way, I will highlight some of the key areas from our press release we issued this morning. I am going to try to provide some additional details to what you have already read and analyzed and then I am going to turn it back over to David, he will have additional comments, and then we'll have a Q&A after that.

Today American River Bankshares reported its 99th consecutive profitable quarter, with earnings per share of $0.35 a share. That compares to $0.36 reported in the second quarter of this year, and $0.37 for the third quarter of last year. Just as a reminder, we did declare a 5% stock dividend during the fourth quarter, so all per share and stock related figures have been adjusted accordingly.

Net income for the third quarter of this year was $1.951 million that compares to $1.981 million during the second quarter of this year and $2.152 million in the third quarter of 2007. Comparing the first nine months of 2008 to the first nine months 2007, earnings per share were down 4.6% from $1.08 per share to $1.03 per share, while net income was down 9.3% from $6.3 million to $5.7 million.

For the third quarter 2008 the return on average assets was 1.32, the return on average equity was 12.51, the return on average tangible equity was 17.43%, and the efficiency ratio was 49.76%. This compares to the third quarter numbers for last year, ROA 1.50, ROAE 13.99, ROATE 19.68, and the efficiency ratio just over 50 at 50.02.

The 2008 year-to-date figures are return on average assets 1.33, return on average equity, 12.63, return on average tangible equity, 17.7, and the efficiency ratio of 50.2. The year-to-date 2007 numbers return on average assets 1.47, return on average equity 13.97, return on average tangible equity 19.75, and efficiency ratio was 49.86.

Net interest margin this quarter was 5.14%. That compares to 4.99% for the second quarter of this year and 5.17 for the third quarter of 2007. Net interest income for the third quarter of 2008 increased to $6.7 million that compares to $6.4 million in the second quarter of this year, and that was identical to the third quarter of last year as well at $6.7 million.

Net interest income for the first nine months of this year was $19.5 million, down slightly from the $19.8 million for the first nine months of last year. Interest income for the third quarter of 2008 was $8.6 million, that's up from $8.3 million in the second quarter of this year but down from the $9.5 million recorded in the third quarter of 2007.

The average yield on earning assets declined from 7.29% in the third quarter last year to 6.54% for the third quarter of this year. The decline in the yield on earning assets can be attributed to the overall lower interest rate environment.

Unlike the last few quarters when the margin was negatively impacted by an increase in the level of non-accrual loans, this quarter actually benefited from the collection of interest on some of those loans classified as non-accrual.

The interest payment collected on non-performing loans and interest collected on those loans returned to accrual status, more than offset the negative effect of the new loans added to non-performing and the opportunity costs of carrying loans on non-performing status during the quarter.

The positive effect to interest income on loans was approximately $84,000 or roughly eight basis points for the third quarter of this year. This compares to a negative impact in the second quarter of this year of $268,000 and in the first quarter of this year that number was $339,000.

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