AMRB - Earnings call transcript Q4 2018 | American River Bancshares

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Operator

Hello, and welcome to the fourth quarter 2018 earnings teleconference. My name is Michelle, and I will be your operator for today's call. [Operator Instructions]. Please note that this conference is being recorded. I will now turn the call over to Mr. Ritchie. David begin. may you Sir,

David Ritchie

Cordova, afternoon, detailing and Ritchie, the This David went market that in joining company quarter at the update. out Please quarterly thanks and CEO and for note Rancho headquartered President Bank, Bankshares, press American us. This of is of fourth release is the River Good today. California. our American parent results opening River year-end

in-depth over it he to Mitch review Financial Chief results. and you turn Derenzo, will Officer, give I'll financial our of Now

Mitchell Derenzo

you, Dave. I Thank appreciate it.

Of course, of you today. the taking on for listen the thanks to all time to call

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

Earnings provide per million the to the comments, River for for XXXX. press this negative to net questions. share back lines some fourth American from a a conference will of share and the compared try highlight the of of open XXXX. the key fourth share morning, $X.XX some release then Dave per let $XXX,XXX over analysis, fourth details loss was that for our of fourth up it Bankshares me $X.XX then of net quarter per that the for past morning, income additional with of additional This compares quarter reported turn issued quarter for year some quarter we'll calls, $X.X try to As areas XXXX, to this to were in

that relates the expense quarter to driven XX%. to law As a reminder, asset fourth tax tax XXXX tax the by that that income was federal in toward loss of the income deferred adjustment reduced the tax rate

X.XX%, place the of change In respectively, of addition, leadership and X.XX, the in ago. scratch and ROA company sorry, basis compared -- and X.XX were the last negative ROE XX year was XXXX. to XX $XXX,XXX compared XX meaning, ROA quarter company's respectively, expenses one basis that recognized I'm the points last took XXXX the a respectively, fourth X.XXX, quarter quarter for the to and points that. ago. X.XX%, related year and year year to for also that respectively, -- quarter for one ROA

$X,XXX,XXX or last this four On income year. year we've net year-to-date reporting compares amounts the want that's to and share quarter $X.XX of the you basis, over reconciliation. core up to As of XXXX and that of in a if up see well in $X.X per that morning as million was Again, in tax as for share. XXXX per quarters adjusted reconciliation that press $XX,XXX. $X.XX slightly the reporting income or the per XXXX did release that the have That's XXXX to same reconciliation of refer On pretax a been section the actual, so of core same the we've to that $X.XX been figures income reminder, report fourth large million previous is our $X.X a did XXXX impact hit net this the on basis, XXXX, share the the we a release in press non-GAAP net well. as

our promote reliance lending A and our was balance to senior slightly, that our So retool indicated it sides thoughts broker intention This few that brand be we're loans. experienced -- that team the on on we in on again it company. plan year, relationship by communities hiring to to to that of discussing. managers but awareness the and grow more focus that both relationships building brokered going deposits call was sheet higher. the active Early we've XXXX, covered been less

second the right Just during half in nonrelationship we some decrease We but the place accounts XXXX type in of loans of did paid did the off. quarter. experience time to a first as the of end by lenders, find in team place those have -- the

second If during mention new we quarter. recap second call, added loans during second during quarter in had the added the that that I million $XX you recall, that commitments offsetted quarter, loan the we -- we the payoffs the did build and that

year. We half the lending to the our add and the new outstanding. second able But continued was in pay-offs of loans more increase that relationships team net

million, increased increase half the by XXXX, For of due that's XX.X% to X.X% second clip. annualized a $XX.X loans debt after

and is quality were externality deposit $XX.X work laid created and increase our the internally foundation has to I'm the deposits in excitement and by we the increase. X.X% to We growth. able million continue with been progress pleased relationship-driven that's our XXXX a the to for plan we've among we On in have side, focus XXXX, made employees do, have to still marketplace. our but on

the the $X.X year, year that balance first the and in were the during of half increase the million $X.X $XX.X net the the on Net in million million from increased fourth $XX.X loans X.X% the million a decrease half. the included comments Some of that's loans quarter, and beginning second sheet. up increase

were about third mentioned and commitments the reached in about I they recall, you fourth XXXX came If million $XX the they loan at million, in $XX in million. the quarter second quarter $XX quarter for new

from in commitments we fund new about The should XX expect funded be in construction-type to we to were XX commitments loan bit the the year, million. the million a quite $XXX XXXX have new months. That's yet to $XX.X of to XXXX. that next did relate projects up the $XX over and million For

In of million amortization, which addition, XX/XX/XX normal were XXXX. total million. talk principal business some in you paydowns. Total about at The million many $X.X would $XX $XX.X addition revolve were XXXX million, during to in should there's that's about to include I'll payoffs about commitments lines, which in unused in payoffs in XXXX. $XX

from I ago, refer were loans or as broker we of to but couple a payoffs Some those were years what nonrelationship-type from relationships, many of referrals purchased loans.

progress, isn't thing, particularly our see when loans a necessarily While paydowns prepayment do nonrelationship the slow bad we down penalties. moving

That commercial quarter penalties, received to actually talked the the of amount for the bringing loan funding million. relationship the the lender in from the the the We about fourth loans last average fourth $XX,XXX year million. grew primarily The by category established of relationship the loans new which and by For third We growth classic fourth balance full which in came in a $X.X other of is we XXXX, in XXXX and in a quarter consumer a quarter. year loans, collectors last $XX,XXX. did a we're of year about third The to which in And $XXX,XXX. the full then $X.X quarter. XXXX -- growth quarter $XXX,XXX I came in loans, with compares quarter about third grew primarily and XXXX. prepayment other $XXX,XXX the the for category, those that quarter, most by We began selected cars. that was in in specializes XX also that

another XX booked those the from fourth average For $XX,XXX. loans relationship, and we the was balance about quarter, on that

For of commitments X.X%. the the quarter, average the loan rate $XX the new million was -- new on

off total we've XXXX charge-off relationship basis for discussing one quarter. Those XX. had actually the as recoveries existing two with credit, real At the equity rates That That's in Charge-offs $XX.X in commercial -- charge current. $XXX,XXX. look, We $XX,XXX are with loan loan averaged in in XXXX, quarter also $X,XXX in shared -- fourth I $XXX,XXX been loans. -- in was also A million remaining loans the loans leaves another for totaling loss loans. the is paid $XX,XXX. resulting prior quality X X.XX%. line positive also off fourth had in actually did Those the $XX,XXX net are national XX, credit quarter we equity to mentioned. $XXX,XXX the new or news down loan just September -- commercial $XXX,XXX, we with points Those commercial That that the fourth one both renewed average loan to charge-offs side. company. on then our -- -- during the as left estate nonaccrual with had actually We of more September the were relationship That of to the the quarter. those related we in which and quarters

government zero the a are totaled third Really Our of the portfolio, in: increase the the portfolio in there. the up the have XX.X%. the a We entire equity so totaling the entire agencies, we we just $XXX,XXX municipal rate million, XX% allowance the from includes quarter nonaccrual years. up in it's primarily quarter effective year. cash $XX,XXX the were loans, fourth At We $XXX.X X.XX%, in X.XX% average ago. credit is if that a portfolio Classified mortgage is and was it change end flow deposits the million; -- did And U.S. growth well. the for Increases still and and fed a capacity OREO did savings, few funds. I a the And government year, U.S. up was checking, actually, interest price $XXX.X nonaccrual At perspective, about low year in $XX,XXX portfolio quite recall, we million, end ago. about year nice have mention had XXXX. end X.X of of $XX.X $XX.X at assets the that's we interest driven. rates bonds at end in life up have The million. up low X.X for had that market, well-structured And from of that as in The million compares as was ratio in X.X%. million. quarter that did and a combined same. $XXX,XXX the mentioned, property the a $XXX quarter, recurring. And so total of of the year high-quality that's total then of got million; $X.X sponsored and Liabilities. classified remains did I agencies of change about Investment is to of or X.X% in really loans $X just $XXX,XXX those XXX one in years low that million and one that very The very an duration risk about $X.X OREO allowance was had risk. with money then $XXX,XXX. of you the around products,

in this that really an Average million, from We XXXX. time higher a basis deposit in higher market in points cost deposits. -- XX% late is from in this in points long also established relates for points, that is bit, rolled to did the municipal of XXXX, in borrowings rate points at -- hasn't occurred funds of it's those to XXXX balances of that's increase relationship up the our basis deposits and we rates. been up time, totals. our XXXX, really our noninterest-bearing economy XX repriced as in The CDs so that we new higher for little $X.X had certificates by Again, is basis FHLB XX due the much represent one of XX basis a primarily XXXX. cost XX reason time Overall they've Again, and XX cost to to have due XXXX. the increase deposits

of cost points points, that was deposits up basis from X our XXXX XXXX. is CDs, in basis X in those Excluding although

strong, Our program, of did the $XX.XX. Average about have risk-based was repurchase complete X.X% price leverage XX.X%. of capital X,XXX. levels that stock capital those We XXXX remain ratio, total

and $XX.XX. shares XXX,XXX For price average we the year, acquire was the did

X% have that cash noninterest roughly announced be XXXX to dividends paid sales the investment might seen February. primarily versus also in You much on We $XX,XXX, in from last less decreased expense. had XXXX. Not that we've securities the week to

of an from quarter $XXX,XXX $X.X side, million we fourth have $X.X XXXX. in the there, expense quarter million to the increase the On increase in last year fourth of did

year. with along six few fourth hire last the relationship salary in quarter for XXXX. we salaries the so totaled that a XXXX, in talking accruals. step and the some in been support in quarter of year did $X.X for was million fourth incentive One thing compares we to year-over-year we've this out, that's area the additional fourth Really, the those quarter They As and that primary compensate managers added accruals increase $XXX,XXX the to the entire benefits the third increased the did about talking quarter earlier quarter the other to the sourced primary loans. point the in salary required was that expense. and We've that the from been a quarters, $XXX,XXX fourth we in we XXXX that to managers fourth increase higher-than-average that promotions additional quarter relationship fourth loan increases, those of growth loan the made the the

to million relates in million higher $XX or and full Again XX.X% in For benefits. last from of $XX.X year salaries most the the year up that to XXXX. XXXX, million we're of $X.X

increased periods market compared as more efforts for in XXXX focus development area XXXX, and The strengthen our costs to in our other both promotional business we that brand. higher to

our I and out was As to mentioned lenders. promote quality more earlier hire the about some plan and be company

So increases expenses related the of those we items. see to in both did

call from to effective in from was income benefit lower XXXX to tax Pretax rate year. last But the The was, same taxes. taxes were million as $X.X federal roughly the decreasing in XXXX tax it, We'll Lastly, lower continue million for $XX.X million. XXXX. $X.X rate.

taxable XX.X%. was adjust tax much to on XXXX, The ratios a after Of million in the at fully benefit -- impact course, quote XXXX asset, tax deferred lower a to back from that the though, basis and year-to-date Dave the was listening. of well $X.X for write-down has lower still to basis those you that we it XX.X% XX I going by efficiency of our it That's reduced the have. by points turn equivalent basis. margin it as you as Impacts a I'm couple thank about all points. on over ratio

David Ritchie

Thanks, everyone. Mitch. Hi,

done at had this So past we're we as and I stick But people the most will. the the thought of just you execution look things half plan, we've is I And in of I we are this markets serving, much we guess, the as relevant place in to in trying the important would the I become more the if been here, I've plan quarters, it. and for year think of -- and have us. to I year second a kind

the I'm they about half our to they RM we've I -- there. started the and the about months, teams deposits. When we've kind second which, think Mitch of on we -- think optimistic I pretty in I in started think, which the new think year. thought continue that's got that so I mean, really would of or than we've a of last I in loan X had -- increase And success, million some actually good. think, quarter, respects, some quarters, average talked earlier it is really had for them got that you commitments had million I three basically X about be, about And generating $XXX $XX

loan good -- we've portfolios a had with do -- $XX the had strategies were treadmill. not and a the work So surprised feel years. new like we approximately bank, million. of given that I'm previous $XX a brokers We been which feel did that. pay-offs to Honestly, and the purchase million I fundings on bit approximately I at of little about over

that's And so behind I much us. I feel of guess,

The rates other loans we is, piece of replacing that I say is are the for at better which would bank. those higher

swallow, are some but the standpoint. from tough direction that I in moving expected. pills it's Those more So be think to right to

little the half about, second well. we and got we did runway. construction-oriented We've in some have As as it loans, a Mitch talked

believe, a some at going each that I will unfunded continue into Mitch -- think I portfolio this us bit consumer help have commitments We will our year, some talked little month. about, levels will that

And loan both of those so with additional for outstanding have those. opportunities least we both opportunities some at of or

bit with about talked we I banks, else banking fostering something new that's important. some think little And a other is relationships

somewhat are a completed in right way, kind necessarily The scratch I and not it's important the These that markets, they're we ourselves think business need participate We months. in back, and of direct are well-priced yours, strategic, last the to been relationship but have you are and all we this participate, three think actually on did our which of scratch they in opportunities. we've And fortunate. extent one participations. to we them are in also other banks the we I opportunities, prospects in pretty XX our

for September, with years. we the the vice viable that we Mitch area, really The big is with credit that other said, say see been in that I'm our that president was area just really start person local really, those have, organization happy due we thing Recently, with off the to we this XX clean. in it's I hope in -- would we're beef is experience, nonaccrual And up paid hired company this to a all us. all with with and credit February. senior for as banking opportunities is for somebody administrator, largest market

I think all things. are those So good

I XXXX. we -- think go we into we're I again competitive are as feel

pipeline. We have strong are direction. the in a right very heading Things

to excellent continue I satisfaction think client scores. we have

know, production. loan as well grow you as we continue As deposits to

here. we we people. overall, believe high produce company to and the the is grow performing ongoing Integration line and the we again. to are reorganized in So results bank I management community hire a process the right -- becoming believe an teams

the Michelle, with lines would up I that, open So for questions.

Operator

[Operator Instructions]. [indiscernible].

Unidentified Analyst

[indiscernible]. is This

A clarification Mitch. for quick point two of Just questions.

second accruals? half $XXX,XXX in said You incentive

Mitchell Derenzo

Correct.

Unidentified Analyst

And say $X.X full million? amount you the was, year what did

Mitchell Derenzo

quarter million $XXX That's in fourth the alone.

Unidentified Analyst

gave? you Did you metric was what And million? other have alone. XQ the $X.X

Mitchell Derenzo

entire $X.X year. billion the for

projection so in year of most fourth caught the we as intentionally, in it did it, up the from the accrued So end. occurred backloaded of the RMs basically, -- for and -- but by that kind we year really to the not quarter later

Unidentified Analyst

difference that remain. of going going to going So that's right? comp, in forward? So I six I are RMs their meaningful additive have mean, accruals split -- be those you elements mean the incentive to figure to accrue have

Mitchell Derenzo

We hope so. more We production. hope increases, that number means

Unidentified Analyst

you And third or what don't half, did you I number give also second know? comp say? quarter incentive the Did

Mitchell Derenzo

I did not.

year-to-date the and a was in occurred quarter what I -- Fourth to was the that For communicate what lot that of quarter. trying fourth is

over figure for a you that year. So kind allocate to out full of to how

Unidentified Analyst

happen you do trends? color you then And or delinquency to on have can give

Mitchell Derenzo

then though -- pretty loans XX X I that's the to good. and even well. terms as said current -- Even I nonperforming are days,

So...

Unidentified Analyst

X XX days, all right.

Mitchell Derenzo

Credit quality right is pretty now. sound

it's think worth. I

Unidentified Analyst

then didn't there, have in FTE year-end I press but do And mean the it count? that it to you see release happen doesn't wasn't

Mitchell Derenzo

XXX.

Unidentified Analyst

And it much year? start of the what at How was the you... have

Mitchell Derenzo

XX.

Unidentified Analyst

the for got Obviously, that? Dave, one thoughts needs? of at your on February additional start starting are year? the in you And what forward, mentioned, you've that XX beyond going

David Ritchie

credit previous count Yes, net not just I and so in a just actually, I and a replacement. actually new. a our one, correct replacement a we've We the replacement. just mean, Tim, -- so brand that's RMs But that's on don't seven, administrator, is October, the that's lost done a everybody, is to for back -- new this administrator new

you're I make open So an really I business But shape. feel good always know, it's you in this for if -- you're of there about as I good, exception that in perhaps. the mean, good teams. out I business, think where we're is because always somebody kind --

to work of I to do, but they think I have -- There's them time staffed. for still we're think they're market. plenty

but come any Trying there something I anything don't to. replacing I last large year to I see existing at suppose, real don't big we out mean, see that hires if need so more I -- all. And

Unidentified Analyst

in loans? three amount loans. to also banks cumulative of those 'XX with kind and up partnering of have dollar bigger and of -- three some And dollar there you amount the happen Do you participation parts loans, getting out picking mentioned total outstanding

David Ritchie

Yes, outstanding is the commitment.

Unidentified Analyst

all? guess, take of kind -- I much know what of loans? what I you is construction Are more think how of do they, pick, the loans your don't first are they helpful?

David Ritchie

one that One, million loan particular, construction closed, outstanding on couple a there's educated of that's is guess. in and

was... one Another

Mitchell Derenzo

more. Maybe $X million $X or million committed

David Ritchie

small. one is $X.X deal another straight was million that it share participation, a loan, was small And local exactly. our is a a very Yes, was about and was it about

Unidentified Analyst

loan it... big Is the that? on total How is

David Ritchie

Total The It $X.X $X.X-ish loan million. like was... was million,

Unidentified Analyst

So these are smaller partners banks.

you're not bigger You're not working -- doing with banks?

Mitchell Derenzo

not a We're share... doing

David Ritchie

to there's million was big bank second locally. then out, it doing -- $XX especially, not we participated held million $X in It just sold a deal. million. a and to. our we're the actually yes, There No, share first was $X us but, was -- -- really and with quarter, so We then a hold and we for we large chunk commitment, participated a we on actually

them kind -- these honestly, territorially, participate strategically, we at you couple a of I of who some look told And we of with.

somebody take to a a people know This not through relationships piece ag of guys deal. comes it Some our kind of the lot just company if had in relationship, have other mean, past. in is hasn't chasing market all these of good we'll at that past ag. of our other I've I've I them, that either the a here the so But called part a it If the you of the done with a we one worked company right are just in relationships, look -- is, way couple pieces, but kind particular of business. has. we're with me,

of any might understand. as don't be out thing have we're other make which another to to better to follow have at We about to of if I and out it, understand for interesting focuses, down, times need the -- have banks market, we've and maybe if their an couple that well departments of ag capacity, talked but and are one us us to participate willing that full a certainly will, them of kind of a we relationships so couple to few as them ag a couple there's of if them helps opportunity actually -- help and there, at is hires it's you want opportunity a mistakes the these that it's

looked that of way So well. at I as kind it

Unidentified Analyst

Are mobile banks you days. more or relationships have Do it or are I now guess California-based? possibly geographic -- they It's that any, since throughout even is world put -- some and a they -- and are the for have with or bankers from two banks that integrated potentially country. these the these -- you relationships West, are can you've on there's California deals across

Mitchell Derenzo

they Yes, for in sure. are all deals California California

Unidentified Analyst

going And to to That's opportunity big field you're that. you? a probably stick enough for

Mitchell Derenzo

Yes, this to we just it. reached reached the is out is example, I was at us sort her, them that all of to said, they There so years. existing mean, of we opportunity like was for pricing since particular for we right, and the because worked a relationship here opportunity the banking to hence somebody you and us did there give may as right, multiple bank and a is deal it's the an right, had I good I a I we've been hired, believe, relationship case they preaching here. and need in out opportunity relationship really got one well

David Ritchie

think key we of the I well. is do market parts the we of know most the market, know we California market, and as know that Nevada,

fine with I Kentucky, markets some them, Minnesota the I'm comfortable with going are don't markets, so properties, -- in us, that people know have those we are we don't that, those. there, but than other We we Alabama, but to don't familiar know markets not

Operator

queue Worthington James. Raymond from the in Don comes The with next Instructions]. question [Operator

Donald Worthington

in much? if Mitch, the you And did how quarter? special dividend so, from where FHLB And you the report a that? get did

Mitchell Derenzo

the was $XX,XXX, quarter special believe. fourth the around In I dividend

David Ritchie

it a $XX,XXX. interest had income? And net

Mitchell Derenzo

Yes, it us income. recorded investment

Donald Worthington

okay. income, Investment

Are also commercial? and of then in mostly what are of single-family lending, Okay, you do construction terms the do these construction? or types

Mitchell Derenzo

of I mostly bit residential, say a commercial. would commercial, mostly but little

Donald Worthington

you then Okay, fires much at California your have had any of impacted or out of Northern are market? the your those by okay. And collateral pretty all

Mitchell Derenzo

No, we had...

David Ritchie

Santa I those a We were -- for loans that We there business are we it coupled in we that weren't amount damages. fire of residential they was in example, many amounts with in but don't any had while no. really impacted. are for and minimal there, are how our of and markets, area loans, the the loans no was really XX-Q the we reporting have loans dollar mean, dollars disclosed -- Rosa

our are their but we of they're -- lend their money businesses homes doing unfortunately, we those lost lend Some clients them fine. didn't on and lend businesses business and homes -- their

Operator

at further time. this We have queue no the questions in

for I'll over the Mr. Ritchie turn call remarks. final to So back

David Ritchie

you look very forward much. And appreciate really next Thank talking we'll to it. you I to quarter.

Mitchell Derenzo

all. you Thank

Operator

Ladies teleconference. this you and participating. gentlemen, Thank for today's concludes

You disconnect. now may

American River Bancshares (AMRB) 24 Jan 192018 Q4 Earnings call transcript