SOURCE: American River Bankshares

American River Bankshares

October 21, 2010 09:15 ET

American River Bankshares Reports Third Quarter 2010 Financial Results

SACRAMENTO, CA--(Marketwire - October 21, 2010) - American River Bankshares (NASDAQ: AMRB) today reported net income of $39,000 or fully diluted earnings per share of break-even ($0.00) for the third quarter of 2010, compared to net income of $827,000 or $0.14 per diluted share for the third quarter of 2009. For the nine months ended September 30, 2010, net income was $399,000 or $0.04 per diluted share, compared to $1,406,000 or $0.24 per diluted share for the nine months ended September 30, 2009.

"The American River Bankshares team continues to do the hard work necessary to move our Company forward," said David Taber, President and CEO of American River Bankshares. "Our priorities are to improve our asset quality and expand our market share. Both of these priorities are being tirelessly focused upon by a very strong team of banking professionals."

Net Interest Margin

The Company's net interest margin was 4.41% for the third quarter of 2010, compared to 4.91% for the third quarter of 2009. For the nine months ended September 30, 2010, the net interest margin was 4.55%, compared to 4.96% for the nine months ended September 30, 2009.

Net interest income for the third quarter of 2010 decreased $422,000 (7.12%) to $5,506,000 from $5,928,000 for the third quarter of 2009. For the nine months ended September 30, 2010, net interest income decreased $1,425,000 (7.79%) to $16,860,000 from $18,285,000 for the nine months ended September 30, 2009. Interest income for the third quarter of 2010 decreased $819,000 (11.43%) to $6,344,000 from $7,163,000 for the third quarter of 2009. For nine months ended September 30, 2010, interest income decreased $2,704,000 (12.16%) to $19,531,000 from $22,235,000 for the nine months ended September 30, 2009. Interest expense for the third quarter of 2010 decreased $397,000 (32.15%) to $838,000 from $1,235,000 for the third quarter of 2009. For the nine months ended September 30, 2010, interest expense decreased $1,279,000 (32.38%) to $2,671,000 from $3,950,000 for the nine months ended September 30, 2009.

The average yield on earning assets declined from 5.92% in the third quarter of 2009 to 5.08% for the third quarter of 2010 and declined from 6.01% for the nine months ended September 30, 2009 to 5.27% for the nine months ended September 30, 2010. Much of the decline in yields can be attributed to the overall lower interest rate environment, forgone interest on nonaccrual loans, and lower average loans replaced with higher average investment securities. During the third quarter of 2010, foregone interest income on nonaccrual loans was approximately $528,000, compared to foregone interest of $373,000 during the third quarter of 2009. The foregone interest of $528,000 had a 42 basis point negative impact on the yield on earning assets.

The average balance of earning assets increased 3.12% from $484,680,000 in the third quarter of 2009 to $499,787,000 in the third quarter of 2010 and increased .04% from $499,759,000 for the nine months ended September 30, 2009 to $499,966,000 for the nine months ended September 30, 2010. The increase in average earning assets in a comparison of quarter-to-quarter activity as well as the slight increase for year to date 2010 over 2009 was related to a decrease in loan balances offset by a larger increase in investment securities. As loan balances decreased, the proceeds were used to purchase lower yielding investment securities. The resultant change in the mix of the assets was the cause of the decrease in the net interest margin mentioned above.

When compared to the third quarter of 2009, average loan balances were down $43,399,000 (10.86%) to $356,340,000 for the third quarter of 2010 and when compared to the first nine months of 2009, average loan balances were down $42,824,000 (10.46%) to $366,601,000 for the nine months ended September 30, 2010. Although the Company has continued to produce loans in 2010 the production of loans has been less than loan payoffs. Average investment securities were up $59,076,000 (70.02%) to $143,447,000 for the third quarter of 2010 and up $45,189,000 (51.25%) to $133,365,000 for the nine months ended September 30, 2010.

The Company experienced an increase in average deposits of $10,779,000 (2.36%) from $456,963,000 during the third quarter of 2009 to $467,742,000 during the third quarter of 2010 and increased $23,601,000 (5.31%) from $444,090,000 for the nine months ended September 30, 2009 to $467,691,000 for the nine months ended September 30, 2010. The increase in deposit balances has enabled the Company to reduce the amount of borrowings as well as purchase investments. Average borrowings dropped from $55,646,000 for the nine months ended September 30, 2009 to $21,623,000 for the nine months ended September 30, 2010.

Overall, the yield on loans during the third quarter of 2010 was 6.08% compared to 6.25% for the third quarter of 2009. The yield on loans was 6.16% for the nine months ended September 30, 2010 compared to 6.33% for the nine months ended September 30, 2009. The decline in yield on loans is reflective of the declining rate environment and the higher amount of foregone interest. The interest foregone for the nine month period ending September 30, 2010 was $1,240,000 with an impact on the margin of 33 BPs compared to $904,000 for the nine month period ending September 30, 2009.

The average cost of funds decreased 39 basis points from 1.31% in the third quarter of 2009 to 0.92% for the third quarter of 2010 and decreased 41 basis points from 1.38% for the nine months ended September 30, 2009 to .97% for the nine months ended September 30, 2010. The average balance of interest bearing liabilities decreased $12,673,000 (3.38%) from $374,912,000 in the third quarter of 2009 to $362,239,000 in the third quarter of 2010 and decreased $16,384,000 (4.27%) from $383,967,000 for the nine months ended September 30, 2009 to $367,583,000 for the nine months ended September 30, 2010. This change in the deposit mix contributed to the decrease in the cost of funds. Specifically, in comparing the third quarter of 2010 to the third quarter of 2009, noninterest bearing deposits increased $11,603,000 (9.99%) while time deposits decreased $20,544,000 (14.80%). For the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009, noninterest bearing deposits increased $9,708,000 (8.48%) while time deposits decreased $13,744,000 (10.0%).

Loan Growth and Asset Quality

Net loans outstanding as of September 30, 2010 decreased $42,320,000 (10.93%) to $344,996,000 from $387,316,000 as of September 30, 2009 and decreased $31,326,000 (8.32%) from December 31, 2009. Real estate loans outstanding decreased $22,156,000 (7.64%) to $267,700,000 as of September 30, 2010 from $289,856,000 as of September 30, 2009 and decreased $18,865,000 (6.58%) from December 31, 2009. Commercial loans decreased $18,154,000 (22.88%) to $61,178,000 as of September 30, 2010 from $79,332,000 as of September 30, 2009 and decreased $11,443,000 (15.76%) from December 31, 2009. Loan payoffs have outpaced the originations of new loans.

The loan portfolio at September 30, 2010 included: real estate loans of $267,700,000 (76% of the portfolio), commercial loans of $61,178,000 (17% of the portfolio) and other loans, which consist mainly of leases and consumer loans of $23,993,000 (7% of the portfolio). The real estate loan portfolio at September 30, 2010 includes: owner-occupied commercial real estate loans of $118,839,000 (45% of the real estate portfolio), investor commercial real estate of $97,381,000 (36% of the real estate portfolio), construction and land development of $16,903,000 (6% of the real estate portfolio) and other, which consists of residential and multi-family real estate of $34,577,000 (13% of the real estate portfolio).

At September 30, 2010, the allowance for loan and lease losses was $7,447,000 (2.11% of total loans and leases) compared with $7,441,000 (2.06% of total loans and leases) at June 30, 2010, $7,572,000 (1.92% of total loans and leases) at September 30, 2009 and $7,909,000 (2.06% of total loans and leases) at December 31, 2009. The provision for loan and lease losses was $2,025,000 for the third quarter of 2010 compared to $1,001,000 for the third quarter of 2009. For the nine months ended September 30, 2010, the provision was $5,677,000 compared to $6,030,000 for the nine months ended September 30, 2009. Net chargeoffs for the third quarter of 2010 were $2,019,000 compared to $1,187,000 for the third quarter of 2009. For the nine months ended September 30, 2010, net chargeoffs were $6,139,000 compared to $4,376,000 for the nine months ended September 30, 2009.

Non-performing loans and leases as of September 30, 2010 were $24,902,000 or 7.07% of total loans and leases compared to $19,259,000 or 5.34% at June 30, 2010, $20,964,000 or 5.46% at December 31, 2009 and $18,023,000 or 4.56% one year ago. Loans and leases past due 30 to 89 days were $4,713,000 at September 30, 2010 compared to $3,241,000 at June 30, 2010, $5,971,000 at December 31, 2009 and $11,084,000 at September 30, 2009.

Non-performing assets were $27,969,000 at September 30, 2010, up $6,462,000 when compared to $21,507,000 at September 30, 2009 and up $4,497,000 when compared to $23,472,000 at December 31, 2009. Non-performing assets to total assets as of September 30, 2010 were 4.81% compared to 3.80% one year ago and 3.95% as of December 31, 2009. Non-performing assets consist of the following as of September 30, 2010, December 31, 2009 and September 30, 2009:

Non-performing assets             September 30, December 31,  September 30,
                                      2010          2009          2009
                                  ------------- ------------- -------------
Non-performing loans that are
 current to terms* (9 loans or
 leases at September 30, 2010, 12
 loans or leases at December 31,
 2009 and 5 loans or leases at
 September 30, 2009)              $   4,504,000 $   2,133,000 $   2,413,000
                                  ------------- ------------- -------------
Non-performing loans that are
 past due (46 loans or leases at
 September 30, 2010, 40 loans or
 leases at December 31, 2009 and
 29 loans or leases at September
 30, 2009)                           20,398,000    18,831,000    15,610,000
                                  ------------- ------------- -------------
Other real estate owned (net)
 (13 properties at September 30,
 2010 and December 31, 2009 and
 15 properties at September 30,
 2009)                                3,067,000     2,508,000     3,484,000
                                  ------------- ------------- -------------

                                  ------------- ------------- -------------
                                  $  27,969,000 $  23,472,000 $  21,507,000
                                  ------------- ------------- -------------


* loans that are current (less than 30 days past due) pursuant to original or modified terms

The Company evaluates these non-performing loans for impairment and assigns specific reserves when necessary. At September 30, 2010, specific reserves of $252,000 were held on the non-performing loans, compared to $1,421,000 on December 31, 2009. In addition, there were 19 loans and leases totaling $9,154,000 that are included in the $24,902,000 of non-performing loans and leases, that have been modified and considered troubled debt restructures. There were 13 non-performing loans or leases totaling $3,133,000, which are reported as troubled debt restructures as of December 31, 2009. All of the loans and leases considered troubled debt restructures are considered impaired and have been evaluated according to the Company's best practices, which follows the guidance established by Generally Accepted Accounting Principles and Regulatory requirements.

Other Real Estate Owned

At September 30, 2010, the Company had 13 other real estate owned ("OREO") properties totaling $3,067,000. This compares to 17 properties totaling a net $3,219,000 at June 30, 2010, 15 properties totaling a net $3,484,000 at September 30, 2009 and 13 totaling $2,508,000 at December 31, 2009. During the third quarter of 2010, the Company sold 7 properties for a net gain of $4,000 and added three properties with adjusted loan balances totaling $730,000. The Company periodically obtains property valuations to determine whether the recorded book value is considered fair value. The Company considers fair value to be fair market value less the expected cost of sale. During the third quarter of 2010, this valuation process resulted in the Company reducing the book value of two properties by $120,000.

Deposits and Borrowed Funds

Total deposits as of September 30, 2010 increased $4,882,000 (1.05%) to $469,799,000 from $464,917,000 as of September 30, 2009, and increased $44,000 (.01%) from $469,755,000 as of December 31, 2009. Core deposits as of September 30, 2010 increased $29,467,000 (9.08%) to $354,000,000 from $324,533,000 as of September 30, 2009 and increased $17,670,000 (5.25%) from $336,330,000 as of December 31, 2009. The Company considers all non time deposits as core deposits.

Noninterest-bearing deposits increased $10,357,000 (8.75%) to $128,775,000 as of September 30, 2010 from $118,418,000 as of September 30, 2009 and increased $10,447,000 (8.83%) from $118,328,000 as of December 31, 2009. Interest-bearing deposits decreased $5,475,000 (1.58%) to $341,024,000 as of September 30, 2010 from $346,499,000 as of September 30, 2009 decreased $10,403,000 (2.96%) from $351,427,000 as of December 31, 2009. Other borrowings, which include both short- and long-term borrowings, decreased $17,000,000 (50.00%) to $17,000,000 as of September 30, 2010 from $34,000,000 as of September 30, 2009 and decreased $14,500,000 (46.03%) from $31,500,000 at December 31, 2009. The decrease in borrowings was due to a decision by the Company to effectively utilize its increases in deposits to pay down borrowings.

Noninterest Income and Expense

Noninterest income for the third quarter of 2010 decreased $156,000 (26.13%) to $441,000 from $597,000 for the third quarter of 2009 and for the nine months ended September 30, 2009, decreased $394,000 (22.44%) to $1,362,000 from $1,756,000 for the nine months ended September 30, 2009. Much of this decrease relates to sales of investment securities. For the third quarter of 2010, the Company recorded a gain on sale of $1,000 compared to a gain on sale of $93,000 for the third quarter of 2009. For the nine months ended September 30, 2010, sales of investment securities resulted in a net loss of $4,000 compared to a gain of $252,000 in the first nine months of 2009. In addition, during the first nine months ended September 30, 2010, the Company experienced a decline in service charge income of $96,000 or 12.57% due to a decrease in insufficient funds fee income.

Noninterest expense for the third quarter of 2010 decreased $296,000 (6.94%) to $3,972,000 from $4,268,000 for the third quarter of 2009 and for the nine months ended September 30, 2010, increased $104,000 (.86%) to $12,212,000 from $12,108,000 for the nine months ended September 30, 2009. Much of the fluctuation in noninterest expense reflects costs associated with the Company's OREO, legal fees, and increased costs of FDIC insurance. In the third quarter of 2010, OREO related expense decreased $621,000 from the third quarter of 2009. This decrease was partially offset by an increase in FDIC insurance of $217,000 from the third quarter of 2009. For the nine months ended September 30, 2010, the total OREO-related expense was $743,000 compared to $1,318,000 for the same period in 2009, a decrease of $575,000 or 43.63%. This decrease was offset by legal fees, associated with loan collections, which increased by $206,000 from $125,000 for the nine months ended September 30, 2009 to $331,000 in expense for the nine months ended September 30, 2010, and FDIC insurance which was $1,061,000 for the nine months ended September 30, 2010 up $486,000 (84.50%) from $575,000 for the nine months ended September 30, 2009.

The fully taxable equivalent efficiency ratio for the third quarter of 2010 increased to 65.19% from 63.71% for the third quarter of 2009 and for the nine months ended September 30, 2010 increased to 65.44% from 58.72% for the nine months ended September 30, 2009.

Income Taxes

The Company recorded an income tax benefit for the quarter ended September 30, 2010 of $89,000, compared to a provision of $429,000 for September 30, 2009. For the nine months ended September 30, 2010, the benefit for income taxes was $66,000, compared to a provision of $497,000 for the nine months ended September 30, 2009. The tax benefit in 2010 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, 2010 was $89,994,000, up $2,649,000 (3.03%) from $87,345,000 at December 31, 2009. The increase was primarily driven by the unrealized gain booked from the Company's available-for-sale securities. The Company's subsidiary, American River Bank, exceeds all regulatory requirements including being above the well-capitalized regulatory guidelines. At September 30, 2010, American River Bank's Leverage ratio was 11.81%, the Tier 1 Risk Based ratio was 17.78% and the Total Risk Based Capital ratio was 19.04%. At September 30, 2009, American River Bank's Leverage ratio was 8.55%, Tier 1 Risk Based ratio was 11.15% and the Total Risk Based Capital ratio was 12.41%.

At September 30, 2010, American River Bankshares' Leverage ratio was 12.60%, the Tier 1 Risk Based ratio was 18.95% and the Total Risk Based Capital ratio was 20.21%. At September 30, 2009, American River Bankshares' leverage ratio was 8.49%, the Tier 1 Risk Based ratio was 11.06% and the Total Risk Based Capital ratio was 12.31%.

Performance Metrics

Performance measures for the third quarter of 2010 (annualized): the Return on Average Assets (ROAA) was 0.03%, Return on Average Equity (ROAE) was 0.17% and Return on Average Tangible Equity (ROATE) was 0.21% compared to the ROAA of .59%, ROAE of 5.22% and ROATE of 7.17%, during the third quarter of 2009. For the nine months ended September 30, 2010, the Company had a ROAA of 0.09%, ROAE of 0.60% and ROATE of .74% compared to a ROAA of 0.33%, ROAE of 2.96% and ROATE of 4.05% for the nine months ended September 30, 2009.

Earnings Conference Call

The third quarter earnings conference call will be held Thursday, October 21, 2010 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 (800) 679-2939. No conference ID number required. 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, 2009, 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)
(Dollars in thousands)

                               September 30,  December 31,   September 30,
            ASSETS                 2010           2009           2009
                               -------------  -------------  -------------
Cash and due from banks        $      51,458  $      58,493  $      54,304
Federal funds sold                         -              -              -
Interest-bearing deposits in
 banks                                     -              -              -
Investment securities                142,642        112,935         84,270
Loans & leases:
     Real estate                     267,700        286,565        289,856
     Commercial                       61,178         72,621         79,332
     Lease financing                   2,986          3,920          4,161
     Other                            21,007         21,725         22,181
     Deferred loan and lease
      origination fees, net             (428)          (600)          (642)
     Allowance for loan and
      lease losses                    (7,447)        (7,909)        (7,572)
                               -------------  -------------  -------------
Loans and leases, net                344,996        376,322        387,316
                               -------------  -------------  -------------
Bank premises and equipment            1,991          2,094          2,168
Goodwill and intangible assets        16,782         16,965         17,029
Other real estate owned, net           3,067          2,508          3,484
Accrued interest receivable
 and other assets                     20,000         25,101         17,566
                               =============  =============  =============
                               $     580,936  $     594,418  $     566,137
                               =============  =============  =============


         LIABILITIES &
     SHAREHOLDERS' EQUITY
Noninterest-bearing deposits   $     128,775  $     118,328  $     118,418
Interest checking                     46,895         50,154         45,084
Money market                         134,930        131,614        126,627
Savings                               43,400         36,234         34,404
Time deposits                        115,799        133,425        140,384
                               -------------  -------------  -------------
   Total deposits                    469,799        469,755        464,917
                               -------------  -------------  -------------
Short-term borrowings                  7,000         14,500         17,000
Long-term borrowings                  10,000         17,000         17,000
Accrued interest and other
 liabilities                           4,143          5,818          3,334
                               -------------  -------------  -------------
   Total liabilities                 490,942        507,073        502,251
   Total shareholders' equity         89,994         87,345         63,886
                               =============  =============  =============
                               $     580,936  $     594,418  $     566,137
                               =============  =============  =============

Ratios:
Nonperforming loans and leases
 to total loans and leases              7.07%          5.46%          4.56%
Net chargeoffs to average
 loans and leases (YTD)                 2.24%          1.62%          1.43%
Allowance for loan and lease
 loss to total loans and
 leases                                 2.11%          2.06%          1.92%

American River Bank Capital
 Ratios:
Leverage Ratio                         11.81%         11.65%          8.55%
Tier 1 Risk-Based Capital
 Ratio                                 17.78%         16.04%         11.15%
Total Risk-Based Capital Ratio         19.04%         17.30%         12.41%

American River Bankshares
 Capital Ratios:
Leverage Ratio                         12.60%         12.45%          8.49%
Tier 1 Risk-Based Capital
 Ratio                                 18.95%         17.13%         11.06%
Total Risk-Based Capital Ratio         20.21%         18.39%         12.31%





                        American River Bankshares
        Condensed Consolidated Statement of Operations (Unaudited)
(Dollars in thousands, except share and per share data)

              Third      Third              For the Nine Months
             Quarter    Quarter       %     Ended September 30,       %
              2010       2009      Change     2010       2009      Change
            ---------  ---------  -------   ---------  ---------  -------
Interest
 income     $   6,344  $   7,163   (11.43)% $  19,531  $  22,235   (12.16)%
Interest
 expense          838      1,235   (32.15)%     2,671      3,950   (32.38)%
            ---------  ---------            ---------  ---------
Net
 interest
 income         5,506      5,928    (7.12)%    16,860     18,285    (7.79)%
Provision
 for loan
 and lease
 loss           2,025      1,001   102.30 %     5,677      6,030    (5.85)%
Total
 noninterest
 income           441        597   (26.13)%     1,362      1,756   (22.44)%
Total
 noninterest
 expense        3,972      4,268    (6.94)%    12,212     12,108     0.86 %
            ---------  ---------            ---------  ---------
(Loss)
 income
 before
 provision
 for income
 taxes            (50)     1,256  (103.98)%       333      1,903   (82.50)%
(Benefit
 from)
 provision
 for income
 taxes            (89)       429  (120.75)%       (66)       497  (113.28)%
            =========  =========            =========  =========
Net income  $      39  $     827   104.72 % $     399  $   1,406   (71.62)%
            =========  =========            =========  =========

Basic
 earnings
 per share  $    0.00  $    0.14  (100.00)% $    0.04  $    0.24   (83.33)%
Diluted
 earnings
 per share  $    0.00  $    0.14  (100.00)% $    0.04  $    0.24   (83.33)%
Averarge
 diluted
 shares
 outstand-
 ing        9,868,506  5,859,536            9,853,275  5,847,955
Net
 interest
 margin as
 a
 percentage
 of
 average
 earning
 assets          4.41%      4.91%                4.55%      4.96%

            ---------  ---------  -------   ---------  ---------  -------
Operating
 Ratios:
  Return on
   average
   assets        0.03%      0.59%                0.09%      0.33%
  Return on
   average
   equity        0.17%      5.22%                0.60%      2.96%
  Return on
   average
   tangible
   equity        0.21%      7.17%                0.74%      4.05%
  Efficiency
   ratio
   (fully
   taxable
   equival-
   ent)         65.19%     63.71%               65.44%     58.72%
            ---------  ---------  -------   ---------  ---------  -------







                        American River Bankshares
          Condensed Consolidated Statement of Income (Unaudited)
                          Trailing Four Quarters
(Dollars in thousands, except share and per share data)

                                  Third      Second     First      Fourth
                                 Quarter    Quarter    Quarter    Quarter
                                  2010       2010       2010       2009
                                ---------  ---------  ---------  ---------
Interest income                 $   6,344  $   6,473  $   6,714  $   6,887
Interest expense                      838        891        942      1,140
                                ---------  ---------  ---------  ---------
Net interest income                 5,506      5,582      5,772      5,747
Provision for loan and lease
 loss                               2,025      2,011      1,641      2,500
Total noninterest income              441        460        461        513
Total noninterest expense           3,972      4,055      4,185      3,703
                                ---------  ---------  ---------  ---------
(Loss) income before provision
 for income taxes                     (50)       (24)       407         57
(Benefit from) provision for
 income taxes                         (89)       (78)       101       (123)
                                =========  =========  =========  =========
Net income                      $      39  $      54  $     306  $     180
                                =========  =========  =========  =========

Basic earnings per share        $    0.00  $    0.01  $    0.03  $    0.03
Diluted earnings per share      $    0.00  $    0.01  $    0.03  $    0.03
Net interest margin as a
 percentage of average
 earning assets                      4.41%      4.52%      4.73%      4.74%
Averarge diluted shares
 outstanding                    9,868,506  9,845,533  9,845,533  6,725,359
Shares outstanding-end of
 period                         9,874,887  9,845,533  9,845,533  9,845,533

                                ---------  ---------  ---------  ---------
Operating Ratios (annualized):
  Return on average assets           0.03%      0.04%      0.21%      0.12%
  Return on average equity           0.17%      2.40%      1.41%      1.03%
  Return on average tangible
   equity                            0.21%      0.30%      1.74%      1.37%
  Efficiency ratio (fully
   taxable equivalent)              65.19%     65.53%     65.56%     57.58%
                                ---------  ---------  ---------  ---------





                        American River Bankshares
            Analysis of Net Interest Margin on Earning Assets
                        (Taxable Equivalent Basis)
(Dollars in thousands, except share and per share data)

Three months
 ended
 September 30,              2010                          2009
                ----------------------------  ----------------------------
                  Avg                  Avg      Avg                  Avg
    ASSETS      Balance   Interest    Yield   Balance   Interest    Yield
Loans and
 leases         $356,340  $   5,465     6.08% $399,739  $   6,302     6.25%
Taxable
 investment
 securities      127,788        722     2.24%   62,845        635     4.01%
Tax-exempt
 investment
 securities       15,640        209     5.30%   21,494        291     5.37%
Corporate stock       19          -        -        32          -        -
Federal funds
 sold                  -          -        -         -          -        -
Interest-bearing
 deposits in
 banks                 -          -        -       570      6,000     4.18%
                --------  ---------           --------  ---------
  Total earning
   assets        499,787      6,396     5.08%  484,680      7,234     5.92%
                --------  ---------           --------  ---------
Cash & due from
 banks            48,021                        41,026
Other assets      42,215                        41,763
Allowance for
 loan & lease
 losses           (8,065)                       (8,019)
                ========                      ========
                $581,958                      $559,450
                ========                      ========

 LIABILITIES &
 SHAREHOLDERS'
    EQUITY
Interest
 checking and
 money market   $182,165  $     330     0.72% $164,654  $     366     0.88%
Savings           42,146         55     0.52%   35,879         64     0.71%
Time deposits    118,292        333     1.12%  138,836        567     1.62%
Other
 borrowings       19,636        120     2.42%   35,543        238     2.66%
                --------  ---------           --------  ---------
    Total
     interest
     bearing
     liabilities 362,239        838     0.92%  374,912      1,235     1.31%
                --------  ---------           --------  ---------
Noninterest
 bearing demand
 deposits        125,139                       117,594
Other
 liabilities       4,591                         4,125
                --------                      --------
    Total
     liabilities 491,969                       496,631
    Shareholders'
     equity       89,989                        62,819
                ========                      ========
                $581,958                      $559,450
                ========  ========= ========  ========  ========= ========
Net interest
 income &
 margin                   $   5,558     4.41%           $   5,999     4.91%
                          ========= ========            ========= ========




Nine months
 ended
 September 30,              2010                          2009
                ----------------------------  ----------------------------
                  Avg                  Avg                Avg        Avg
    ASSETS      Balance   Interest    Yield   Balance   Interest    Yield
Loans and
 leases         $366,601  $  16,883     6.16% $409,425  $  19,384     6.33%
Taxable
 investment
 securities      117,409      2,160     2.46%   63,679      2,046     4.30%
Tax-exempt
 investment
 securities       15,933        649     5.45%   24,468        981     5.36%
Corporate stock       23          -        -        29          6    27.66%
Federal funds
 sold                  -          -        -        14          -        -
Interest-bearing
 deposits in
 banks                 -          -        -     2,144         59     3.68%
                --------  ---------           --------  ---------
  Total earning
   assets        499,966     19,692     5.27%  499,759     22,476     6.01%
                --------  ---------           --------  ---------
Cash & due from
 banks            48,271                        33,611
Other assets      43,718                        41,948
Allowance for
 loan & lease
 losses           (8,360)                       (6,669)
                ========                      ========
                $583,595                      $568,649
                ========                      ========

 LIABILITIES &
 SHAREHOLDERS'
    EQUITY
Interest
 checking and
 money market   $181,890  $   1,023     0.75% $156,950  $   1,007     0.86%
Savings           40,350        170     0.56%   33,907        172     0.68%
Time deposits    123,720      1,084     1.17%  137,464      1,897     1.85%
Other
 borrowings       21,623        394     2.44%   55,646        874     2.10%
                --------  ---------           --------  ---------
    Total
     interest
     bearing
     liabilities 367,583      2,671     0.97%  383,967      3,950     1.38%
                --------  ---------           --------  ---------
Noninterest
 bearing demand
 deposits        121,731                       115,769
Other
 liabilities       5,280                         5,338
                --------                      --------
    Total
     liabilities 494,594                       505,074
    Shareholders'
     equity       89,001                        63,575
                ========                      ========
                $583,595                      $568,649
                ========  ========= ========  ========  ========= ========
Net interest
 income &
 margin                   $  17,021     4.55%           $  18,526     4.96%
                          ========= ========            ========= ========

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