Mortgage meltdown hits American River Bank

SACRAMENTO
April 17, 2008 9:39am

American River Bankshares (NASDAQ: AMRB) of Sacramento, parent company of American River Bank, says its net income in the first quarter dropped 12.1 percent from year-ago levels to $1,833,000 from $2,086,000 during the first quarter of 2007.

Diluted earnings per share, adjusted for a 5 percent stock dividend distributed in December 2007, for the first quarter of 2008 were 33 cents, a 5.7 percent decrease from 35 cents recorded in the first quarter of 2007.

“Clearly, first quarter earnings were negatively impacted by the $4 million increase from year end in our non-performing loans to nearly $12 million,” says David Taber, president and CEO. “We have a seasoned credit administration team in place that is managing our non-performing loans by establishing appropriate reserves and being proactive towards resolution of these credits.”

The bank’s net interest margin in Q1 was 4.94 percent compared to 5.04 percent for the first quarter of 2007. The average yield on earning assets declined from 7.26 percent in the first quarter of 2007 to 6.66 percent for the first quarter of 2008.

Much of the decline in yields can be attributed to the overall lower interest rate environment, in response to Federal Reserve Board decreases in the Federal funds and discount rates, the bank says.

“Aside from additional work needed on our non-performing loans, we continue to gain momentum with our strategic plan,” says Mr. Taber. “Business loans and loans to finance facilities for business purposes are all up from year end.”