AMRB - Earnings call transcript Q3 2018 | American River Bancshares

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Operator

Welcome to the Third Quarter 2018 Earnings Conference Call. My name is Adrienne, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session. [Operator Instructions]. is conference this note being recorded. Please turn now the call Ritchie. David to over I’ll may Ritchie, begin. David you

Dave Ritchie

Adrienne. afternoon. parent you, of River Thank Good American and Ritchie, Bank. River CEO President Bankshares, the company American This for is Dave

are and is California, our Rancho this update. headquartered and quarter We in Cordova, sitting third

we anniversary the my you a planned good bank. results this had share joining with And growth have I feel are approaching of good anticipated, since we pretty We think thing. it little which some to relates as that first year I some and the you'll find than for a earlier to is that is growth

a be high scores always scores on we very As shareholder focused today. had to for a our have satisfaction, continually are on value. a continues which have priority, also we're client That's to those which to company, us. continuing and focus priority And continue we we

on So to an I last two my next after went it you a releases where some turn plan that – will be noted hours, detailed should the provide But press out are earnings over how dividend it XX to release we're kind a and cash I in and plan tracking month. of Mitch. we and that update more payable

financial And turn I Derenzo, it in-depth will for so an review. that, our with over to CFO, Mitch

Mitch Derenzo

Dave. you, Thank

thanks course, of listening on all to Of today. call you the for

these statements. difference annual on discussed the cause our materially this federal a in remind to the revise XX-Q the for any of to on results Actual does XX-K for or as presentation that and purposes reports in statements need information safe publicly any Links forward-looking uncertainties. discussed not of or future on laws undertake and obligation disclosures. Factors forward-looking constitute may except annual December the include are involve I X-K. started, risks Form report differ securities year XX, may ended company everyone Form get such Form we statements, from may our and in Form might forward-looking Certain that are company's americanriverbank.com. harbor report update Before events, matters law. and in filed XXXX, of these results located by our subsequent website, required XX-K the which would to our The

were As for highlight conference third and million $X.X for $X.X press Bankshares with and in quarter per This the of share the going then basis out reported last XX for the back key during release of million. this third analysis quarter quarter, comments from we'll I'm year. income $X.XX then of Earnings net That XXXX the per the That in third the share ROA River ROE past of points some it going morning, and this and the of that some went calls, provide compares $X.XX American additional year. to quarter for to I'm last third year. of morning, to to to some compares quarter try additional turn to open Dave areas the up detail and over the third questions. some for in million the X.X% the we in a ago. X.XX% to compared of XXXX and year that's lending and Net and compared XX $X.XX ROE that's in I'll compares On XXXX. respectively, were about net in $X.X to that outstanding million ROA quarter was our asset XXXX and year of XX from one basis X.XX%, one replaces X.XX%, while That XX nine-month $XX.X points and $X.X during the year-to-date in experienced first a runoff X.XX%, ago. loans the basis, upgraded basis respectively, we talk side periods, bit to the essentially points first. a income million points up the balance half in share team. little Earnings increase. basis the $X.XX sheet respectively, increased XXXX year per lines XXXX.

from year. balance the $XX.X the beginning at New of the loans are up now million

recall, in a the $XX we're visible more we reaching the third to did outlined The million. markets third in the was commitments year second both the loan That mentioned loan and that this that of new quarter this about serve. growth new CRE. experienced result was and our senior-level This CRE you quarter to If our loan grew quarter Dave secured owner upgrade lending lenders those earlier in million. of with growth I $XX.X year in top staff, We XXXX, growth plan investor $XX in be million. during is the by CRE. commitments direct

In from $XX,XXX. the $X.X between We we about was addition, new It by Average on about new classic funding about was here loans. of booked that loans that by third through XX We collector $X.X other during in just during increase a consumer million. ag cars. of was were quarter came which balance these loans selected of the and equipment recently was in was split relationship and ag growth began million, bit a relationship We loans quarter. had specializes established. lender over the million that rest under real estate. agriculture. grew The the The most ag $X and third

during loan quarter the commitments million X.XX%. of the new rate $XX average Our on was

existing to months loan That which penalties. were those during bit Loan those On We down in compared $XXX,XXX of did X.XX%. the during also quarter year-to-date a couple first collect were XXXX. the The about quite on the and okay. early, averaged the $XXX,XXX But prepayment off zero paid quarter, on nine loans renewed the prepayments $X.X we rates $XX,XXX during basis, year. a prepayment penalties third of is that quarter. million XXXX, in compares a last to were

additional information, On it with workout some that to it gathering resolve a After became shared potential we a on a a If recall, sell write-downs [ph]. with was we the here. our the that our did XXXX, discussed specific $X,XXX,XXX had going net credit be three to loan, discussed reserve for We good quality, news our past part. the us clear decision the made exposure long-term credit quarters. our and national the over We participant we was on XX, loan. We loan options bank. June at to $XX,XXX

$X,XXX XXXX, As have a result longer wrote XX% quarter, the balance, and $XXX,XXX specific of one property, nonaccrual quarter; about represented commercial during loan quarter; reserve balances $XX,XXX. receive with estate two The $XXX,XXX actually made totals $X,XXX off that's that's up a pleased have That we're quarter during also relationship nonaccrual one a loans real commercial also XX, loan. down did it and down this loan, nonaccrual $XX,XXX, have that list nonaccrual our the the list $XX,XXX loans, due any so September is we in $X,XXX the positive. to of quarter. that's remaining to we are down September during of: at the resolved. and sales not this sale, We we this equity proceeds have We no another that's on loans, did loans any the which add

of And one the did had $XXX,XXX, recoveries charge-off recoveries quarter, $XXX,XXX are was allowance credit. our we to the lease of were $XX,XXX. such That first loan quarter to in XXXX. add and shared the charge-offs Year-to-date, The compares end national at we for and that addition Obviously, during one to quarter, X.XX%, the relates are and $XX,XXX to $X,XXX. loans to losses that's the year allowance the provisions X.XX%. charge-offs ago. of For third

due were our loans six due on had loans. past nonaccrual the excluding that $X.X past also million. over totaled list days, obviously, We XX Those

loans the and just recent appraisal, the classified total nonaccrual matured X.X%, OREO, Classified did totaling we end OREO, the are were We of loans believe stated. $XXX,XXX. been have million. property, still equity are note the loans renewed. being and properly is of renewed these and of being $X.X process the was $X.X have with loans two still assets the current. of a of value did just All combined loans since in in $XXX,XXX in at have that largest and September we nonaccrual $XXX,XXX million one I ratio

mortgage On totaled $XXX.X September XX, million at changes $XXX.X portfolio, XXXX. portfolio municipal million continues bonds. comprised quality really XX, structured to credit both here, the and to high cash December be the XXXX, At products investment no compared flow significant of some

We of of short. investment portfolio Fed rates the is The the portfolio X.X XX% The relatively $XX entire funds the quality. U.S. in is is And million years. quarter. the also at at quite change in duration agencies And U.S. effective also of have About the X.X government-sponsored is is XX.X%. about up low life average XXX the or price end high government years. of the credit portfolio so agencies, portfolio

a the unrealized September gain impact rates, had market unrealized all know, $X.X $X.XX decrease the XXXX, book book – own. the an unrealized whereas gain by XXXX, tangible XX, per value per to share. tangible in bonds tend XX, to actually we value September that’s cause to September $X about had million, on share. with continue at value unrealized also gain of book on unrealized an negative and gain $X.XX in an while tangible – a has And we this the to about the September year at At a As going reduced the increase loss one XX, At per XX, million unrealized of was share, we unrealized ago. compared that gain experience we loss, you

So call fluctuation. it an $X.XX per share

million time at $XX.X Savings area, just also or December Despite year, from increase million XXXX. the did September. the $XXX.X $XX.X That’s which during X.X%. increased increase from deposits XX/XX/XXXX of at $XXX increased million million. about increased under the to On to that Much the XX, money from the year-to-date for at we side, million liability growth, same September experience slight $XX of in a $XXX.X million end decrease. that end a have million at was of $XXX.X the to XXXX, frame market

XXXX. of total our first dropped non-CD to basis only cost or our XX Despite deposits, deposits. points points increased During about nine balances, deposits Obviously, during XX CD of those the of points. which much FHLB Obviously, from basis XXXX. the XX of to of first basis in in the months nine the the points of the about to this for third That’s points up increase basis months year increase, that year has and Overall quarter, last higher is our end total months higher funds is of XX in of course, first cost, core And the – basis we up for related of nine of the nine rates. of into environment, first much $X.X from result XX% quarter higher a deposits. were XX the rolling the CD of market balances expense. borrowings XX% months that over cost of being reason refer balance million. first which, focused is At noninterest-bearing the higher quarter, increase obviously rate the both are this – from to

our points in X That’s the of the XXXX Excluding deposits XXXX. CD, year-to-date basis up basis cost points. X was from in

a the That is for risk-based related in quarter. because to of relatively XX%, core-type So of and XXXX, of in rate, on date cash leverage of capital in The in X% for $X.XX the the million. interest did total third And stock. our the still year to negative program. comprehensive repurchase In month, $XXX,XXX, XX.X%. remained of XXXX market expense net its strong. and pointed company funds XX% third third and other paid quarter much a ago. dividends quarter the now levels The the which and it’s to the common positive year a remains deposits. income was AOCI the for Capital about repurchased couple decrease $XXX,XXX next the date per rising the income a accumulated low respectively, of Also ratio that we any a quarter, laid out, of quarter year announced this Equity the last out third ago, not of XX.X% and be both I exceeding company has repurchase one and was target year, the cost the income company decrease did record quick share. $XXX,XXX $X.X A at year. compares the the one pay highlights Noninterest on the statement. of

of nine in this noninterest first the by which for months to first of from months year, XXXX nine sales $XX,XXX nine $XXX,XXX, sales. of months related from expense of For $XXX,XXX the was investment first decreased decreased XXXX. to Gains securities just the

side, On increase. we see some the expense did

benefits. year last from $XXX,XXX this quarter and was of to $X last increase third third to $X.X increased quarter up third quarter $XXX,XXX year. the year. we’re the in primary quarter, the salaries For million from year million quarter The That third in of this area the the

year, hire reason This, we increases, for and reported this salary the primary relationship six some As did promotion support notable with loan earlier additional the that’s XXXX. managers staff year-over-year. increase in staff, along really

nine XXXX. expense to first year of that benefits. Again, increased noninterest $XX.X million in million months the For and from related expense last million is to higher $XX.X of $X.X salary most XXXX,

We to also and our higher experienced those the our both cost are expense compared as XXXX to markets periods, in in business efforts promotional in line item development focusing other XXXX, to we increases brand. more increased relate strengthen in

XXXX. that million in additional in to XX.X% that, efficiency in impact tax to to The tax you. couple benefit The were in points out will the that compared rate XXXX. the a comments. of XXXX. decreased over lower side, million rate. basis quote on we year lower, last to some Thank basis pretax We XX.X% federal turn $X by from ratio point $X.X fully decreased income taxes year-to-date to lower taxable The for basis. margin tax from effective at from the on XX million was basis $X.X XXXX decreased million equivalent rate our it a year $X.X I On the continue reduced a Dave ratios and back last tax I’ll And points. does we

Dave Ritchie

first in quarters, goal did the is real kind of in I of – was done integrated of a our Thanks, focused plan year is to and a right caveat last single were proactive of use The of return everyone’s goal. kind where today. in recall, hear get couple as And bank the this okay. strategic one we the Well, to we the moving time in direction think that of it’s beginning thing top where performer the like do came ultimate are I with the plan. we we up Mitch. I’ve group. and how we into Yes, with company peer The you

was I it well – think the And but And it I was yes, so plan that to think done. it point. was was a simple

profitable grow, And grow profitably, pursue at what what we some areas to look the where had from areas history on – take and was do – loan we’ve of were the the move we a wanted lot relationships the things were the – – and relationships, had – versus pursue of a how key more a away to – we grow the growth that. broker-driven side was to

was in were. staffing to bank serve, our be people things which is the And in that growth what what think of the today. we’re ongoing the more we we of of We of did put to kind experience the as world figure visible to produce out needed then starting need and we part to right area an needs one I markets and the talked assess that So last had we the place. to actually kind today needed its And actual about. we

the were that kind And talked we so areas about. of those big

a so tactical really the million we the production, And when loan to I alone, $X.X areas, relationship new of I guess at at relationships assess had from in good growth. I which mean, would first is quarter, the of some quarter, you When In we it’s the standpoint, a XX loans. interesting number. say hit third look look I those

we did the and $XX second million. The quarter fourth $XX million, was quarter,

some are the of panning out. been internal have and of the restructuring So think hirings I – some and ��

to continue refine we think those. I

we at like policies at and sure policies, we current credit be things to which we And make want and market. to on We’re to to continue be look done. that, to want – needed speed overall, looking currently we have

story. branch – with And the focus to client is relationship the our very say think I the managers, – numbers the we because numbers serious And the the off the the company in client a the mean, And around it’s we’ve highest managers concierge, we off I to charts. clients. existing this we would clients and that the remarkable a And from really service on charts. use, but are keep great offer numbers word the satisfaction I satisfaction want past. here. the made. the the branches to market, story. it’s take also mean, I focused I to quite our existing – satisfaction the our a speed we are honestly, lacked really wanted And really it’s

to three from – perspective, So quarter four XX have I – three quarter of a that plan. kind

moving in I we’re direction. think right the

I And the right plan by maybe we’re our of direction. moving so. think ahead or probably a we’re quarter in

building. working lot integration is of relationship calling. pipeline of management The teams the is the management branch very teams well, joint and a Our

I think managers great all And have the other assigned which been is carry the relationships. company. is thing each they somewhat XX new that’s relationships, that’s to – very something – the relationship

for where us been because we that’s table good quarters maybe time had So the haven’t to at a had we in and we’ve and have few really payoffs. have payoffs we’ve

So the and stay we’re of trying get be know to that relationships ahead better. – to

staffing skin job before, well doing we’re I’ve you all managers, good. that’s told in the I tenure, years. a perspective, their so is They’re the markets. average the this From XX They probably mean, relationship thrilled. game. in They’ve great got get And a and it.

we’re working for with think leadership in leaders. – the highest perspective, program changes we’re a a working someone Obviously, the development levels leadership company. senior doing at on our I from we’re we had and

us many, against and many where how maybe is as study to good leadership benchmark teams leadership team. – results worldwide team. high-performing lacking a we’re be we’re The a goal doing on give where us perspective and Our some will this we’re of

we’re other It’s real. And visible our other in on the letting we’re being that. a people markets, we’re was So pretty thing there, just working know competitor, obvious. out being for

a done we’ve lot lot of that. marketing good efforts. a We’ve of job done think I a PR, of

think the in third quarter our I I events did we in alone. had the – – people XX in think, attend, three markets we

So we’re being getting relevant. there out and we’re

We’re also measuring that.

We’re presence areas move that the just and in – position the positives and positive to the measuring see in well. things we right as quarterly doing our immediate numbers up those competitive continually are way and to monthly, a in our

some as we included – questions, before But for to kind of started economic our release. feel that for press momentum earlier, couple quarters. plan in created of we have are XXXX last So last you the update. thing we’re And my that’s always, the we in we build data up the initiating we’ve

if Adrienne, for open terrific. questions, you’d that, up like with So it will be to that

Operator

Sandler from Thank you. [Operator question from Instructions] O’Neill. First ahead. Tim O’Brien go comes Please

Your line open. is

Tim O’Brien

Good guys. afternoon

Mitch Derenzo

Hey, Tim. you? are How

Tim O’Brien

Fine, that questions. go you can were you those one numbers Were couple time? thanks. loans, what penalty prepayments there of quarter? Hey, over third the in captured the on fee Mitch, – more

Mitch Derenzo

third basis, compared year. in third at to zero year. $XX,XXX $XXX,XXX $XXX,XXX That we’re to On last had quarter. compares a the last We in year-to-date quarter the

Tim O’Brien

quarter And was last right? $XXX,XXX,

Mitch Derenzo

right. That sounds about

Tim O’Brien

what the commitments, – million that rate, loans, And on for on average was $XX then new in the the yield? yield

Mitch Derenzo

quarter, The we then X.XX%. And million, million new $X.X at X.XX%. loans this $XX renewed

Tim O’Brien

X.XX%?

Mitch Derenzo

Yes.

Tim O’Brien

those commitments, guys but is correct? commitments, that a dumb commitments are funded not And $XX this booked, total the you million, question, the

Mitch Derenzo

of total of but those but those small funded. majority Their funded, this the commitments, most were constructions, a quarter of are couple

Tim O’Brien

was net new or quarter? or out dollars, payoffs, renewed fundings, just out what this the guess the any fundings, dollars, this was what quarter? new I renewed So, Ex

Mitch Derenzo

quarter. we grew in mean, million the I $XX

Tim O'Brien

So, in paydowns? did guys how much in have you payoffs

Mitch Derenzo

that now. have right I with don’t number me

Tim O'Brien

Okay. That’s Then… okay.

Mitch Derenzo

it than lower significantly quarter. last was definitely was It

Tim O'Brien

And quarter. securities spike that in or… on in there was anything onetime-ish yield there a taxable this then Is

Mitch Derenzo

rate in quarters. – was That's A of a to at it. putting interest higher couple market higher increase everything last going we're

Tim O'Brien

taxable have call have those call of of features. None the None features, correct? securities

Mitch Derenzo

Yes.

some new – call. some no have parts. and But guys We to there. from Those it in have call gains those are we call futures they're were… going There's

Tim O'Brien

so… Okay,

Mitch Derenzo

on though. any sale There securities that of We did. weren't put those we gain in

Tim O'Brien

So, what income those bolstered that on securities? interest

Mitch Derenzo

matured paid securities the lot a older and as we paydowns. down, of Well, have

Tim O'Brien

just portfolio? Okay, churn the in

Mitch Derenzo

than in the that we did helps. quarter. Yes, as some impacted the invested And higher so that are balances we the up the – yes. in sell at things more second And well, rates average quarter so third

Tim O'Brien

that other gave the where going cost you that’s I is be is the number that quarter, in reflective that in color community? the appreciate the to I the couple That now of, guess, the quarters, on terms of that's of is $XXX,XXX end up past cost we, something income. running stood ongoing the of Is non-interest visibility the where of that number at that of…

Mitch Derenzo

maybe have Dave do this We're events. Basically determine year. the look way out big we at in marketplace of allocate mentioned. attending what in jumped didn't as year end I maybe what not We're of to more that, those we've the and out is done back we some don't. and we a Where the out dollars worked lot whether a – events, sponsoring or work, what

So next kind using it's probably the that's of for an ongoing run hard it close. to you're if but fairly quarter, rate, say it's

Tim O'Brien

sure all to then you development you achieve guys and strategic and goals, perhaps. are restructuring the I'm in Long-term ROE it, that ROA one goals you strategy, of shareholders? would and this gain traction some discussions and with go the had like there really around deliver efforts term, other that that, have efforts long And success long-term – – real once hiring and have the question. to with guys Is last

Mitch Derenzo

we we right know or Tim, ROA, to high don't before, on those because as double-digit as I said are one-plus be numbers be going ROE moving the well. that's want now to performer. Whether

better, are does going to improve. those numbers industry the As

the top to we going chasing continue that, – chase we're again. to want up, So XX% so but those, those move we're always in to numbers we're in that be

Tim O'Brien

Thank of All couple these as left questions you done. I were much. Hopefully, very right.

Operator

Associates, [Raymond Inc.] is Worthington And next question Please James Instructions]. [Operator ahead. go the for Don &

Don Worthington

managers? questions. are more you. complete? done the of Thanks, Or are much A Tim. you Or Okay, is staffing pretty couple relationship thank there? any you looking One, hiring at

Mitch Derenzo

mean, I there I out out guess got complete. We've But who's make that you and an at say said exception. would somebody the wanted I integrated. looking you're think nine it's I we to now, pretty have are there we might managers. teams relationship right much great getting always Yes. –

We have them.

I for good right now. I think now, think So we're

Don Worthington

went XX%. related then Is for type the just tax Okay, tax impact all And just about up rate? maybe quarter, right. to that linked Mitch, you. from things exempt to Thank the XX% tax rate that

Mitch Derenzo

Yes.

We in tax have been exempt We a lot you things did – the look decrease muni putting at the balances, over a last if year. portfolio. there's of our sell

it's outgrowing So really – the from as the the income benefit it's goes up, items. nontaxable

Don Worthington

Okay, then from a general kind borrowers question. of all on impacts in any Have your Northern any fires you right. just And of had California? the

Mitch Derenzo

Last in lost clients of homes. in – County, their our business did We owners were were disclosed some had the nearly lost loans we But that our XX-Qs. we most who kind in homes, of we had impacted year, area. that Sonoma – – their

loans, but their yes, their do didn’t we on have business, It they any So lost residential collateral. it – didn’t two impacted have might focus so lose them.

Don Worthington

you. Thank Great. right. all Okay,

Operator

further And we conference. ladies have Thank Thank you, no today's disconnect. you now This participating, you for concludes questions. may and and gentlemen.

American River Bancshares (AMRB) 19 Oct 182018 Q3 Earnings call transcript