SOURCE: American River Bankshares

American River Bankshares

October 22, 2009 09:15 ET

American River Bankshares Reports Third Quarter 2009 Financial Results

SACRAMENTO, CA--(Marketwire - October 22, 2009) - 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. "We've been successful in focusing our front line employees on providing excellent client service and as a result, it has given them the confidence to continue to bring in new relationships."

Noninterest-bearing deposits decreased $1,813,000 (1.5%) to $118,418,000 as of September 30, 2009 from $120,231,000 as of September 30, 2008, decreased $725,000 (0.6%) from $119,143,000 as of December 31, 2008 and increased $3,382,000 (2.9%) from $115,036,000 as of June 30, 2009. Interest-bearing deposits increased $30,825,000 (9.8%) to $346,499,000 as of September 30, 2009 from $315,674,000 as of September 30, 2008 and increased $28,581,000 (9.0%) from $317,918,000 as of December 31, 2008 and increased $11,926,000 (3.6%) from $334,573,000 as of June 30, 2009. Other borrowings, which include both short- and long-term borrowings, decreased $39,373,000 (53.7%) to $34,000,000 as of September 30, 2009 from $73,373,000 as of September 30, 2008, decreased $23,231,000 (40.6%) from $57,231,000 at December 31, 2008, and decreased $2,000,000 (5.6%) from $36,000,000 as of June 30, 2009.

Noninterest Income and Expense

Noninterest income for the third quarter of 2009 increased $151,000 (33.9%) to $597,000 from $446,000 for the third quarter of 2008 and for the nine months ended September 30, 2009 increased $86,000 (5.1%) to $1,756,000 from $1,670,000 for the nine months ended September 30 2008. The increase during the third quarter of 2009 compared to 2008 was primarily related to gains on security sales. During the third quarter of 2009, the Company sold most of its municipal bonds where the municipality was insured by insurance companies that were no longer rated investment grade. The Company reinvested the proceeds into GNMA securities. During the third quarter of 2009, the Company recorded gains on investment sales of $93,000 while, in comparison, the Company recognized a $233,000 impairment loss on its FNMA preferred stock during the third quarter of 2008. In addition, during the third quarter of 2009, the Company experienced an increase in service charges on deposit accounts ($78,000 or 40.8%) compared to the third quarter of 2008. During the same period the Company recorded decreases from fees on residential lending ($72,000 compared to zero) and lower income from bank owned life insurance ($40,000 or 38.8%).

Noninterest expense for the third quarter of 2009 increased $574,000 (15.5%) to $4,268,000 from $3,694,000 for the third quarter of 2008 and for the nine months ended September 30, 2009 increased $1,143,000 (10.4%) to $12,108,000 from $10,965,000 for the nine months ended September 30, 2008. Much of this increase is related to an increase in costs associated with the Company's OREO. The total OREO expense for the three months ended September 30, 2009 was $760,000 compared to zero for the same period in 2008. In addition, FDIC insurance increased by $130,000 from $36,000 for the three months ended September 30, 2008 to $166,000 in 2009. These cost increases were partially offset by reductions in salaries and benefits. Total salaries and benefits decreased in the third quarter of 2009 by $317,000 (15.1%) from the third quarter of 2008. Most of this decrease resulted from a reduction in the number of full-time equivalent employees and a reduction in the Company's performance based incentive accrual. The total OREO expense for the nine months ended September 30, 2009 was $1,318,000 compared to zero for the same period in 2008. In addition, FDIC insurance increased by $512,000 from $63,000 for the nine months ended September 30, 2008 to $575,000 in 2009. Total salaries and benefits decreased in 2009 by $712,000 (11.5%) from 2008.

The fully taxable equivalent efficiency ratio for the third quarter of 2009 increased to 63.71% from 49.76% for the third quarter of 2008 and for the nine months ended September 30, 2009 increased to 58.72% from 50.20% for the nine months ended September 30, 2008.

Income Taxes

Income taxes for the third quarter of 2009 decreased $753,000 (63.7%) to $429,000 from $1,182,000 for the third quarter of 2008 and for the nine months ended September 30, 2009, income taxes decreased $3,034,000 (85.9%) from $3,531,000 to $497,000. The effective tax rate for the quarter ended September 30, 2009 was 34.2%, a decrease from 38.0% during the third quarter of 2008 and for the nine months ended September 30, 2009 was 26.1%, down from the 38.1% during the first nine months of 2008. The lower effective tax rate in 2009 results from the Company realizing the benefits of tax free income related to such items as municipal bonds and bank owned life insurance against an overall lower amount of taxable income.

Capital

Total shareholders' equity at September 30, 2009 was $63,886,000, up $2,292,000 (3.7%) from $61,594,000 at September 30, 2008, up $439,000 (0.7%) from $63,447,000 at December 31, 2008, and up $1,610,000 (2.6%) from $62,276,000 at June 30, 2009. The Company's subsidiary, American River Bank, remains above the well-capitalized regulatory guidelines. At September 30, 2009, American River Bank's leverage ratio was 8.55%, the Tier 1 risk based ratio was 11.15% and the Total Risk Based Capital ratio was 12.41%. These ratios were all up from one year ago. At September 30, 2008, American River Bank's leverage ratio was 7.98%, the Tier 1 risk based ratio was 9.83% and the Total Risk Based Capital ratio was 11.08%.

Performance Metrics

Performance measures for the third quarter of 2009 (annualized): the Return on Average Assets (ROAA) was 0.59%, Return on Average Equity (ROAE) was 5.22% and Return on Average Tangible Equity (ROATE) was 7.17% compared to the ROAA of 1.32%, ROAE of 12.51% and ROATE of 17.43%, during the third quarter of 2008. For the nine months ended September 30, 2009, the Company had a ROAA of 0.33%, ROAE of 2.96% and ROATE of 4.05% compared to a ROAA of 1.33%, ROAE of 12.63% and ROATE of 17.70% for the nine months ended September 30, 2008.

Earnings Conference Call

The third quarter earnings conference call will be held Thursday, October 22, 2009 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). David T. Taber, President and CEO, and Mitchell A. Derenzo, Executive Vice President and Chief Financial Officer, both of American River Bankshares, will lead a live forty-five minute presentation and answer questions. Shareholders, analysts and other interested parties are invited to join the call by dialing (877) 584-2599 and entering the Conference ID # 36117681. A recording of the call will be available twenty-four hours after the call's completion on http://amrb.podbean.com.

About American River Bankshares

American River Bankshares (NASDAQ: AMRB) is the parent company of American River Bank ("ARB"), a community business bank serving Sacramento, CA that operates a family of financial services providers, including North Coast Bank [a division of "ARB"] in Sonoma County and Bank of Amador [a division of "ARB"] in Amador County. For more information, please call 916-851-0123 or visit www.amrb.com; www.americanriverbank.com; www.northcoastbank.com; or www.bankofamador.com.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Actual results may differ materially from the results in these forward-looking statements. Factors that might cause such a difference include, among other matters, changes in interest rates, economic conditions, governmental regulation and legislation, credit quality, and competition affecting the Company's businesses generally; the risk of natural disasters and future catastrophic events including terrorist related incidents; and other factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2008, and in subsequent reports filed on Form 10-Q and Form 8-K. The Company does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.


AMERICAN RIVER BANKSHARES
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

                                  SEPTEMBER 30   DECEMBER 31   SEPTEMBER 30
                                     2009           2008           2008

            ASSETS
Cash and due from banks         $  54,304,000  $ 15,170,000  $  17,258,000
Federal funds sold                          -             -              -
Interest-bearing deposits
 in banks                                   -     4,248,000      4,941,000
Investment securities              84,270,000    91,621,000     94,499,000
Loans and leases:
  Real estate                     289,856,000   300,934,000    301,726,000
  Commercial                       79,332,000    90,625,000    100,888,000
  Lease financing                   4,161,000     4,475,000      3,775,000
  Other                            22,181,000    22,811,000     21,245,000
  Deferred loan and lease
   originations fees, net            (642,000)     (571,000)      (540,000)
  Allowance for loan and
   lease losses                    (7,572,000)   (5,918,000)    (6,183,000)
                                -------------  ------------  -------------
  TOTAL LOANS AND LEASES,
   NET                            387,316,000   412,356,000    420,911,000
                                -------------  ------------  -------------
Bank premises and equipment         2,168,000     2,115,000      2,028,000
Goodwill and intangible
 assets                            17,029,000    17,228,000     17,299,000
Other real estate owned             3,484,000     2,158,000        716,000
Accrued interest receivable
 and other assets                  17,566,000    18,261,000     19,016,000
                                -------------  ------------  -------------
                                $ 566,137,000  $563,157,000  $ 576,668,000
                                =============  ============  =============

 LIABILITIES & SHAREHOLDERS'
          EQUITY
Noninterest-bearing
 deposits                       $ 118,418,000  $119,143,000  $ 120,231,000
Interest checking                  45,084,000    45,581,000     46,460,000
Money market                      126,627,000   105,919,000    112,080,000
Savings                            34,404,000    33,438,000     36,519,000
Time deposits                     140,384,000   132,980,000    120,615,000
                                -------------  ------------  -------------
  TOTAL DEPOSITS                  464,917,000   437,061,000    435,905,000
                                -------------  ------------  -------------
Short-term borrowings              17,000,000    43,231,000     56,873,000
Long-term borrowings               17,000,000    14,000,000     16,500,000
Accrued interest payable and
 other liabilities                  3,334,000     5,418,000      5,796,000
                                -------------  ------------  -------------
  TOTAL LIABILITIES               502,251,000   499,710,000    515,074,000
  TOTAL SHAREHOLDERS'
   EQUITY                          63,886,000    63,447,000     61,594,000
                                -------------  ------------  -------------
                                $ 566,137,000  $563,157,000  $ 576,668,000
                                =============  ============  =============

RATIOS:
Nonperforming loans and leases
 to total loans and leases              4.56%         1.49%          1.97%
Net chargeoffs to average
 loans and leases
 (annualized)                           1.43%         0.42%          0.20%
Allowance for loan and lease
 loss to total loans and
 leases                                 1.92%         1.41%          1.45%

AMERICAN RIVER BANK CAPITAL
 RATIOS:
Leverage Ratio                          8.55%         8.40%          7.98%
Tier 1 Risk-Based Capital
 Ratio                                 11.15%        10.35%          9.83%
Total Risk-Based Capital
 Ratio                                 12.41%        11.60%         11.08%


AMERICAN RIVER BANKSHARES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

             THIRD        THIRD             FOR THE NINE MONTHS
            QUARTER      QUARTER     %       ENDED SEPTEMBER 30,       %
              2009        2008     CHANGE     2009        2008      CHANGE
           ----------  ----------  ------  ----------- -----------  ------
INTEREST
 INCOME    $7,163,000  $8,604,000  (16.7%) $22,235,000 $25,434,000  (12.6%)
INTEREST
 EXPENSE    1,235,000   1,862,000  (33.7%)   3,950,000   5,955,000  (33.7%)
           ----------  ----------  -----   ----------- -----------  -----
NET
 INTEREST
 INCOME     5,928,000   6,742,000  (12.1%)  18,285,000  19,479,000   (6.1%)

TOTAL
 NON-
 INTEREST
 INCOME       597,000     446,000   33.9%    1,756,000   1,670,000    5.1%
PROVISION
 FOR LOAN
 AND LEASE
 LOSSES     1,001,000     381,000  162.7%    6,030,000     908,000  564.1%
TOTAL
 NON-
 INTEREST
 EXPENSE    4,268,000   3,694,000   15.5%   12,108,000  10,965,000   10.4%
           ----------  ----------  -----   ----------- -----------  -----
INCOME
 BEFORE
 PROVISION
 FOR
 INCOME
 TAXES      1,256,000   3,113,000  (59.7%)   1,903,000   9,276,000  (79.5%)
PROVISION
 FOR
 INCOME
 TAXES        429,000   1,182,000  (63.7%)     497,000   3,531,000  (85.9%)
           ----------  ----------  -----   ----------- -----------  -----
NET
 INCOME    $  827,000  $1,931,000  (57.2%) $ 1,406,000 $ 5,745,000  (75.5%)
           ----------  ----------  -----   ----------- -----------  -----

BASIC
 EARNINGS
 PER
 SHARE     $     0.14  $     0.33  (57.6%) $      0.24 $      0.99  (75.8%)
DILUTED
 EARNINGS
 PER
 SHARE     $     0.14  $     0.33  (57.6%) $      0.24        0.98  (75.5%)

AVERAGE
 DILUTED
 SHARES
 OUTSTA-
 NDING      5,859,536   5,808,514            5,847,955   5,836,430

NET
 INTEREST
 MARGIN
 AS A
 PERCENTAGE
 OF
 AVERAGE
 EARNING
 ASSETS          4.91%       5.14%                4.96%       5.02%

OPERATING
 RATIOS
 (ANNUALIZED):
Return on
 average
 assets          0.59%       1.32%                0.33%       1.33%
Return on
 average
 equity          5.22%      12.51%                2.96%      12.63%
Return on
 average
 tangible
 equity          7.17%      17.43%                4.05%      17.70%
Efficiency
 ratio
 (fully
 taxable
 equiva-
 lent)          63.71%      49.76%               58.72%      50.20%

Share and earnings per share data have been adjusted for a 5% stock
dividend in 2008



AMERICAN RIVER BANKSHARES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
Trailing Four Quarters

                      THIRD          SECOND         FIRST        FOURTH
                     QUARTER        QUARTER        QUARTER       QUARTER
                       2009           2009          2009           2008
                   -----------    -----------    -----------   -----------
INTEREST
 INCOME            $ 7,163,000    $ 7,321,000    $ 7,751,000   $ 8,119,000
INTEREST
 EXPENSE             1,235,000      1,303,000      1,412,000     1,673,000
                   -----------    -----------    -----------   -----------

NET INTEREST
 INCOME              5,928,000      6,018,000      6,339,000     6,446,000
TOTAL
 NONINTEREST
 INCOME                597,000        649,000        510,000       498,000
PROVISION FOR
 LOAN AND
 LEASE LOSSES        1,001,000      3,800,000      1,229,000       835,000
TOTAL
 NONINTEREST
 EXPENSE             4,268,000      4,239,000      3,601,000     3,236,000
                   -----------    -----------    -----------   -----------

INCOME BEFORE
 PROVISION FOR
 (BENEFIT FROM)
 INCOME TAXES        1,256,000     (1,372,000)     2,019,000     2,873,000
PROVISION FOR
 (BENEFIT FROM)
 INCOME TAXES          429,000       (668,000)       736,000     1,047,000
                   -----------    -----------    -----------   -----------
NET INCOME
 (LOSS)            $   827,000    $  (704,000)   $ 1,283,000   $ 1,826,000
                   ===========    ===========    ===========   ===========

BASIC
 EARNINGS (LOSS)
 PER SHARE         $      0.14    $     (0.12)   $      0.22   $      0.32
DILUTED
 EARNINGS (LOSS)
 PER SHARE         $      0.14    $     (0.12)   $      0.22   $      0.32

AVERAGE DILUTED
 SHARES
 OUTSTANDING         5,859,536      5,797,533      5,824,407     5,794,733
SHARES
 OUTSTANDING-END
 OF PERIOD           5,797,533      5,797,533      5,797,533     5,792,283

NET INTEREST
 MARGIN AS A
 PERCENTAGE OF
 AVERAGE
 EARNING
 ASSETS                  4.91%          4.87%          5.08%         5.04%

OPERATING RATIOS
 (ANNUALIZED):
Return on
 average
 assets                  0.59%         (0.50%)         0.90%         1.28%
Return on
 average
 equity                  5.22%         (4.41%)         8.15%        11.71%
Return on
 average
 tangible
 equity                  7.17%         (6.01%)        11.16%        16.23%
Efficiency ratio
 (fully tax
 equivalent)            63.17%         61.81%         50.97%        45.03%

Share and earnings per share data have been adjusted for a 5% stock
dividend in 2008


AMERICAN RIVER BANKSHARES
ANALYSIS OF NET INTEREST MARGIN ON EARNING ASSETS
(Taxable Equivalent Basis)

THREE MONTHS
   ENDED
 SEPTEMBER
    30,                       2009                            2008
                 AVG                   AVG       AVG                   AVG
               BALANCE     INTEREST   YIELD    BALANCE     INTEREST   YIELD
  ASSETS
Loans and
 leases     $399,739,000  $6,302,000  6.25% $414,492,000  $7,283,000  6.99%
Taxable
 investment
 securities   62,845,000     635,000  4.01%   81,101,000     984,000  4.83%
Tax-exempt
 investment
 securities   21,494,000     291,000  5.37%   28,101,000     371,000  5.25%
Corporate
 stock            32,000           -     -       169,000       5,000 11.77%
Federal
 funds sold            -           -     -       177,000       1,000  2.25%
Interest-
 bearing
 deposits
 in banks        570,000       6,000  4.18%    4,941,000      52,000  4.19%
            ------------  ----------        ------------  ----------
  TOTAL
   EARNING
   ASSETS   $484,680,000  $7,234,000  5.92% $528,981,000  $8,696,000  6.54%
            ------------  ----------        ------------  ----------
Cash & due
 from banks   41,026,000                      19,224,000
Other
 assets       41,763,000                      39,822,000
Allowance
 for loan
 & lease
 losses       (8,019,000)                     (6,176,000)
            ------------                    ------------
            $559,450,000                    $581,851,000
            ============                    ============
LIABILITIES
     &
   SHARE-
  HOLDERS'
   EQUITY
Interest
 checking
 and money
 market     $164,654,000   $ 366,000  0.88% $162,985,000  $  454,000  1.11%
Savings       35,879,000      64,000  0.71%   37,798,000      95,000  1.00%
Time
 deposits    138,836,000     567,000  1.62%  123,554,000     866,000  2.79%
Other
 borrowings   35,543,000     238,000  2.66%   64,423,000     447,000  2.76%
            ------------  ----------        ------------  ----------
  TOTAL
   INTEREST
   BEARING
   LIABILIT-
   IES      $374,912,000  $1,235,000  1.31% $388,760,000  $1,862,000  1.91%
            ------------  ----------        ------------  ----------
Noninterest
 bearing
 demand
 deposits    117,594,000                     125,905,000
Other
 liabilities   4,125,000                       5,770,000
            ------------                    ------------
  TOTAL
   LIABILIT-
   IES       496,631,000                     520,435,000
  SHARE-
   HOLDERS'
   EQUITY     62,819,000                      61,416,000
            ------------                    ------------
            $559,450,000                    $581,851,000
            ============  ==========  ===== ============  ========== =====
NET INTEREST
 INCOME &
 MARGIN                   $5,999,000  4.91%               $6,834,000  5.14%
                          ==========  =====               ========== =====


AMERICAN RIVER BANKSHARES
ANALYSIS OF NET INTEREST MARGIN ON EARNING ASSETS
(Taxable Equivalent Basis)

   NINE
  MONTHS
  ENDED
SEPTEMBER
   30,                     2009                            2008
               AVG                    AVG       AVG                   AVG
             BALANCE     INTEREST    YIELD    BALANCE     INTEREST   YIELD
  ASSETS
Loans and
 leases   $409,425,000  $19,384,000  6.33% $407,723,000  $21,472,000  7.03%
Taxable
 invest-
 ment
 securit-
 ies        63,679,000    2,046,000  4.30%   84,148,000    2,946,000  4.68%
Tax-exempt
 invest-
 ment
 securit-
 ies        24,468,000      981,000  5.36%   27,463,000    1,074,000  5.22%
Corporate
 stock          29,000        6,000 27.66%      216,000       22,000 13.61%
Federal
 funds
 sold           14,000            -     -       541,000        9,000  2.22%
Interest-
 bearing
 deposits
 in banks    2,144,000       59,000  3.68%    4,942,000      176,000  4.76%
          ------------  -----------        ------------  -----------
  TOTAL
  EARNING
  ASSETS  $499,759,000  $22,476,000  6.01% $525,033,000  $25,699,000  6.54%
          ------------  -----------        ------------  -----------
Cash & due
 from
 banks      33,611,000                       19,106,000
Other
 assets     41,948,000                       39,136,000
Allowance
 for loan
 & lease
 losses     (6,669,000)                      (6,055,000)
          ------------                     ------------
          $568,649,000                     $577,220,000
          ============                     ============
 LIABILIT-
   IES
    &
  SHARE-
 HOLDERS'
  EQUITY
Interest
 checking
 and money
 market   $156,950,000  $ 1,007,000  0.86% $166,744,000  $ 1,522,000  1.22%
Savings     33,907,000      172,000  0.68%   36,671,000      245,000  0.89%
Time
 deposits  137,464,000    1,897,000  1.85%  121,475,000    2,855,000  3.14%
Other
 borrow-
 ings       55,646,000      874,000  2.10%   57,747,000    1,333,000  3.09%
          ------------  -----------        ------------  -----------
 TOTAL
 INTEREST
 BEARING
 LIABILIT-
 IES      $383,967,000  $ 3,950,000  1.38% $382,637,000  $ 5,955,000  2.08%
          ------------  -----------        ------------  -----------
Non-
interest
 bearing
 demand
 deposits  115,769,000                      127,601,000
Other
 liabilit-
 ies         5,338,000                        6,211,000
          ------------                     ------------
 TOTAL
 LIABILIT-
 IES       505,074,000                      516,449,000
 SHARE-
 HOLDERS'
 EQUITY     63,575,000                       60,771,000
          ------------                     ------------
          $568,649,000                     $577,220,000
          ============  =========== =====  ============  =========== =====
NET
 INTEREST
 INCOME &
 MARGIN                 $18,526,000  4.96%               $19,744,000  5.02%
                        =========== =====                =========== =====

Contact Information

  • Investor Contact:
    Mitchell A. Derenzo
    Chief Financial Officer
    American River Bankshares
    916-231-6723

    Media Contact:
    Diana Walery
    Corporate Communications
    American River Bankshares
    916-231-6717