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Edited Transcript of AMRB earnings conference call or presentation 18-Jul-19 8:30pm GMT

Q2 2019 American River Bankshares Earnings Call

Roncho Cordova Jul 23, 2019 (Thomson StreetEvents) -- Edited Transcript of American River Bankshares earnings conference call or presentation Thursday, July 18, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David E Ritchie

American River Bankshares - President, CEO & Director

* Mitchell A. Derenzo

American River Bankshares - Executive VP & CFO

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Conference Call Participants

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* Donald Allen Worthington

Raymond James & Associates, Inc., Research Division - Research Analyst

* Timothy O'Brien

Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research

* Timothy Norton Coffey

Janney Montgomery Scott LLC, Research Division - Director of Banks and Thrifts

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Presentation

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Operator [1]

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Welcome to the second quarter 2019 earnings conference call. My name is Erin, and I'll 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 David Ritchie. David, you may begin.

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David E Ritchie, American River Bankshares - President, CEO & Director [2]

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Good afternoon. This is Dave Ritchie, President and CEO of American River Bankshares, the parent company for American River Bank, headquartered in Rancho Cordova, California. This is the second quarter update. Please be aware that 2 press releases went out at the market open today; our earnings release which details our quarterly results, and a cash dividend that will be payable next month.

As always, we did include some economic data in our press release. In general, positive trends continue in our markets in California and the nation as a whole.

Now I'm going to turn it over to Mitch Derenzo, our Chief Financial Officer, and he will give you a in-depth financial report.

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [3]

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Thanks, Dave. Thanks to all of you for listening in on the call today as well.

Before we get started, as you know, I need to remind everyone of our safe harbor disclosures. Certain matters discussed in this presentation may constitute forward-looking statements for the purposes of the federal securities laws and may involve risks and uncertainties. Actual results may differ materially from the results in these forward-looking statements.

Factors that might cause such a difference are discussed in the company's annual report on Form 10-K for the year ended December 31, 2018, and in subsequent reports filed on Form 10-Q and 8-K. The company does not undertake any obligation to publicly update or revise any of these forward-looking statements, which would include information or future events, except as required by law. The links to our annual report and our 10 -- 2018 Form 10-K are located in our website, americanriverbank.com.

As with the prior conference calls, I'm going to highlight some of the key areas that were in our press release this morning. I'll try to provide some additional details and analysis, and then will turn it back over to Dave for some comments and then we'll open up the line for some questions.

This morning, American River Bankshares reported net income for the second quarter 2019 of $1.3 million, that's about $7,000 higher than the $1.3 million during the second quarter of 2018.

Earnings per share were $0.22 in both the second quarter of this year and the second quarter of last year. ROA and ROE for the first quarter, I'm sorry, for this prior quarter were 74 basis points at 6.53%, respectively, compared to 75 basis points at 7.09%, respectively, 1 year ago.

From a results basis, the second quarter 2019 net income was $7,000 higher than the second quarter 2018. The pretax pre-provision was $229,000 higher in 2019 versus 2018, that's a 13.7% increase.

As I discussed on the call last quarter, we didn't start adding the additional relationship managers and Chief Credit Officer until the second quarter [2019], so better comparison would be to how we fared versus the 2 most recent quarters.

Net income has increased from $1.125 million in the fourth quarter 2018 to $1.146 million in the first quarter of this year and now the $1.276 million. So the second quarter 2019 net income is up 11.3% over the first quarter of 2019 -- 2019's net income. Earnings per share has increased from $0.19 in the fourth quarter last year to $0.20 in the first quarter of this year to now the $0.22 per share in the second quarter of 2019.

While those increases are not too worth to getting excited over, we do believe we're heading in the right direction. So we continue to shift asset from investments in the higher-yielding loans and that has had a nice impact on our net interest income, which has increased from $5.1 million in the second quarter of last year to $5.6 million in the second quarter of this year.

And then year-to-date, the net interest income has increased from $9.9 million in 2018 to $1.1 million (sic) [$11.2 million] in 2019. On the year-to-date pretax pre-provision net income was up to $3.6 million this year versus $3.4 million last year, that's about a 5% increase.

As I mentioned the shift from divestments to loan, loans were up $67.9 million or 23.4% from 1 year ago. And now they are up $39 million, actually almost $40 million from -- for the year, about 12.5% growth rate. This has helped with the daily interest income, which increased from $60,000 -- $60,130 in the fourth quarter of last year to $61,655 in the first quarter of this year to now $61,846 in the second quarter of this year. The loan growth -- because of the loan growth, we've also been required to add to the provision. We added $180,000 in each of the last 2 quarters compared to 0 in the first 2 quarters of 2018.

Some comments on the balance sheet. As I mentioned the loans, they did increase $22.4 million in the second quarter, and now they've increased $39.9 million from December 31, 2018, as the new fundings have exceeded the payoffs. Again, that's a 12.5% growth in the first half of this year.

In the second quarter of this year, we did fund $42.6 million in new loans. That's up from $30.5 million in the first quarter of this year. This marks the fifth consecutive quarter of $30 million-plus in loan fundings. The trailing over those 5 quarters totaled $177 million in new loan fundings.

Total unused commitments at the end of the quarter were $33 million. About $11 million of those were commercial, so those have the ability to revolve and most of the -- rest of that $33 million is real estate related and should fund over the next year or so. Payoffs continue to be manageable with just under $13 million for the second quarter, up slightly from the $10 million that we had payoff in the first quarter of this year.

The good news is we're retaining the loans, I guess, the negative would be that the prepayment penalties are down. We collected just $35,000 in prepayment penalties in the second quarter of this year that compares to $232,000 from the second quarter of last year. On a year-to-date basis, we've collected $128,000 in prepayment penalties in 2019 that compares to $356,000 in 2018.

I would say that our 2019 earnings were more indicative of the progress we're making when compared to 2018 as 2018 did include those noncore-type prepayment penalties.

On credit quality, really not much to discuss here. We did upgrade those 2 small nonaccrual loans, as they continued to make payments as we didn't have any nonaccrual loans at June 30, 2019 nor did we have any loans past due greater than 30 days at the end of the quarter. Some positive signs on the credit quality.

We did add $180,000 in provisions for the -- during the quarter, that's really due to the loan growth. The ALLL to loans was 1.31% at June 30. We had about $4,000 in loan recoveries for the quarter, no loan losses and then year-to-date, we have about $9,000 in recoveries.

We continue to have the one OREO property for $957,000.

The loan growth during the quarter was pretty well diversified. The largest increase was in real estate with about $14 million in growth, that's 4.9%. Commercial loans were up $5.5 million or 18.5%. We did see some growth in consumer that's going to show up in the other loan line item on the balance sheet. Growth in real estate was primarily in CRA -- CRE and was up $11.6 million or 5.9%. Construction was up $1.2 million or 13.2% and residential was up $3.4 million or 13.1%.

On the construction, that growth was primarily in commercial. During the quarter, residential construction paid down about $1 million, and commercial construction increased by $2.2 million. On the consumer, which is in the other loan category that I mentioned, that grew by $4.6 million to $20.4 million. That consumer growth is in our specialty auto portfolio. During the quarter, we did 60 new loans averaging about $93,000 that compared to 70 of those loans during the first quarter of this year about $84,000 average balance, and then in the fourth quarter, we booked 70 of those loans, average balance was about $85,000.

The average loan rate on the $42.6 million in the quarter was 5.19%. We also renewed $13.4 million of the existing loans during the second quarter, and those rates averaged 5.91%.

Classified equity ratio, actually did decrease, it was 1.7% at the end of March. Now it's down to 1.6%, with the classified assets being the $957,000 in OREO and then we have one $138,000 commercial real estate loan.

In the investment portfolio, no changes there really. That continues to be comprised with a well-structured cash flow and mortgage products and a few high credit quality municipal bonds. Relatively short, again, the average life of the entire portfolio was under 4% -- I'm sorry, under 4 years. And the effective duration in the entire portfolio, again, that's under 3 years, and our price change and rates up is under 10% -- rates up to 300, it's under 10%.

On the liability side, deposits ended the quarter at $581 million, that's up about $8.7 million from the March 31 balance. And about the same as it was 1 year ago at $581 million.

We are seeing some good increases in the noninterest-bearing. Those are still 37% of the outstanding deposits, but rate pressures are impacting the money market accounts. But I think those are holding up pretty well because we actually did see an increase in our money markets, about $3.3 million or 2.5% during the quarter. Noninterest balances -- those increased, those were up $1 million for the quarter. Interest checking increased $4.6 million or 7%, really not much change in savings and CD balances.

I talked a little bit about rate pressure in our last quarterly call, that continues. The impact, I guess, would be on the interest expense. So the second quarter, the average cost of funds was 67 basis points compared to 60 basis points in the first quarter of this year, and then it's up from 39 basis points in the second quarter of last year.

And really, the reason for that is the more competitive rate environment. We've also had some usage of the higher cost FHLB borrowings on an overnight basis. The competitive reference really is focused on the money markets accounts, that saw the costs increased from 18 basis points in the first quarter of this year to 24 basis points in the second quarter of this year.

The rest of it, really savings and CDs, those were actually about the same. So the first quarter and the second quarter those were 4 basis points for savings and 1.8% on the CDs. I mentioned the overnight borrowings. Those did increase $3.4 million during the quarter, and the average paid -- rate paid on those was increased from 1.95% in the first quarter this year to 2.17% in the second quarter.

Once those deposits did pick up back in the second quarter, we were able to reduce the overnight borrowings down to 0, so that $15.5 million of borrowing on the balance sheet at quarter-end, those were our term borrowings.

Capital levels remained strong. Of course, the earnings helped increase the leverage ratio that increased from 9.1% at the end of March to 9.3% at the end of June.

Total risk-based capital, though that actually decreased from 17% at March 31 down to 16.7% at June 30, really the switch there is from the -- as we move the assets from the lower risk-weighted investment securities to the higher risk-weighted loans that's going to decrease that ratio.

You may have seen the press release that went out this morning, Dave mentioned it as well, on the increased cash dividend that will be paid out next month.

On the income statement, not much change here, really. The noninterest income was pretty close. It was $421,000 this quarter versus $411,000 in the first quarter of this year and then $380,000 in the second quarter of last year. And that change really is the fluctuation in gain on sale of securities; $29,000 in second quarter of this year, $36,000 in the first quarter of this year and then $10,000 in the second quarter of last year.

I would point out though that we did see a slight increase in the service charges and deposit accounts. Those were $116,000 in the second quarter of last year, but was increased slightly in the first quarter of this year to $121,000 and then up to $139,000 in the second quarter for this year.

On the expense side, we saw a decrease overall. In the second quarter of this year, we're $4.148 million, that's down from $4.260 million in the first quarter of this year and also down from $4.329 million in the fourth quarter of 2018, but obviously up from the second quarter last year, as we -- I mentioned earlier, much of the salary and benefits from the new loan production team as well as other new salary increases over the past 12 months have increased that dollar amount.

But I said the salary and benefit expenses stabilized and have been consistent the past 2 quarters. Our largest change in the -- from quarter-to-quarter, the second quarter of this year versus the first quarter of this year was in the other expenses. That includes quite a bit of line items, but it did decrease from $1.028 million in the first quarter of this year to $960,000 in the second quarter, much of that decrease relates to lower business development of promotional costs. Those dropped $30,000 quarter-to-quarter. We remain out in the markets to strengthen our brand and develop new relationships. We have a year behind our belt now and it allowed us to more precisely focus our spend on our target market.

Couple of comments here on the taxes. The provision increased from $403,000 in the second quarter of last year to $445,000 in the second quarter of this year. Pretax income actually increased during that time from $1.672 million to $1.721 million, but the effective tax rate kind of jumps out at me here. It was 25.9% in the second quarter of this year versus 24.1% in the second quarter last year. Really that higher rate results from a lower-level of tax exempt municipal bonds and the timing of option exercises investing in restricted stock under accounting standards, ASU 2016-09. I went over this last quarter, but we received tax credits when nonqualified stock options are exercised as well as when restricted stock bests when the market price is higher and when the restricted stock is awarded. Actually, the reverse is true as well on the restricted stock if the market price is lower than the award date we don't receive credit, we actually get hit with a higher tax expense, and that did happen in the second quarter of 2019, as we had a $14,000 expense compared to a $43,000 tax benefit in the second quarter last year, so call it a $57,000 swing. So accounting rules are getting us.

Thank you. Now I'm going to turn it back over to Dave for some additional comments.

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David E Ritchie, American River Bankshares - President, CEO & Director [4]

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Thanks, Mitch. So we continue -- I was just going to say, we're continuing to stay committed to our plan. Management is working really hard to execute with a mindset of growing the bank and delivering consistent results. I feel we are truly growing into the company that we wish to become.

Just to reiterate a couple of things, for the second quarter, as Mitch said, we closed $42 million of new loan commitments. And we also renewed $13 million of existing loans for a total of $55 million. This marks the fifth quarter in a row that we've booked over $30 million in new loan commitments. Since the plan really got kicked off, which was this time last year, the total loans -- total new loans were $150 million in the last 12 months and $27 million worth of renewals. I'm going to give you some perspective, 6/30/2018, our outstanding loan balances were at $302 million, and we closed the books 6/30/19 at $363 million. Year-to-date, with the renewals and new business we put on, $89 million in new loan commitments and $268 million in new loan fees. It should be noted as well, I think this is a credit to the team that now that we've got 12 months under our belt and back in the loan business, we're starting to see some repeat business from existing clients, which is truly a credit to the process here. As far as the payoffs go, I think, they're kind of normalized a bit. We run -- our amortization is about $3 million a quarter. And so the difference between the $13 million this quarter is, I think, the loans are -- should be expected to pay off. We still have some nonrelationship purchase loans on the book, but it's relatively small in relation to the portfolio.

Pretax, pre-provision, net interest income, efficiency ratio, those all seem to be starting to go in the right direction. As Mitch said, the deposits are somewhat flat, but I think, I just want to give you a perspective of that. That was based -- it was down for a little while. It was one major account that decided to move on. But in the last 6 months, the bank's opened up 602 new demand deposit accounts. The opening deposits on those accounts were a little over $17 million, and the close of the business 6/30, those same accounts had 20 -- little over $28 million in those accounts. So an increase of almost 64% in a 6-month period of time. So we certainly are doing something right on tracking deposits.

The retail team, this always is a really good retention option for us. We completed 700 financial reviews with our top clients. I mean, it's really important to the bank to stay ahead of the curve. It's very competitive out there. But this is a really great way for us to retain our top clients. I was going to let you know that we are in the implementation phase of -- with Q2 for our online banking platform. We do feel it's an excellent new platform for our existing -- for all of our clients. We do expect that to go live in the fourth quarter.

So the takeaways for me this quarter, we remain committed to our plan that we started with. From our Chairman, our Board of Directors and our Executive team, we are all fully engaged. I feel we're starting to generate some core earnings. We're not generating the one -- we still will generate some onetime charges or onetime fees from prepayments, but in my opinion, that was something of the past and that's not a sustainable growth campaign. The loan portfolio is at a level now where, I think, the payoffs will have less impact. And business development and pipeline remains strong, which is a tribute to the entire American River Bank team.

So Erin, now you can open up the lines for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question comes from Charles O'Brien.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [2]

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Just a follow-up question, $42.6 million, was that new commitments or was that funded -- new funded loans?

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [3]

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New commitments.

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David E Ritchie, American River Bankshares - President, CEO & Director [4]

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New commitments.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [5]

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And what was the actual dollar amount of new funded? How much of that was drawn, I guess?

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [6]

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Well, it -- I mean, we're adding new commitments on funded commitments from last quarter. So I think what you need to do is really look at the change in the quarter of -- it was at...

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David E Ritchie, American River Bankshares - President, CEO & Director [7]

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$37 million.

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [8]

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$37 million-or-so.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [9]

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$37 million of that funded immediately at the time of the time...

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [10]

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The commitments -- the unfunded commitments were about the same as they were last year. I think, they increased by $1 million over last year. I think there was $33 million at the -- I'm sorry, there were $33 million at the end of this quarter versus $32 million at the end of the second quarter. So pretty close.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [11]

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So new fund -- new loans -- documents signed and approved and everything so the loan is made. Those total commitments were $42.6 million. How much of that received funding at the time that the close took place, like $37 million?

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [12]

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Yes.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [13]

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Okay. Got it. And then you said, renewals were $13 million and payoffs were -- sorry, Mitch, I was scribbling, but how much...

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [14]

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Payoffs were $13 million.

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David E Ritchie, American River Bankshares - President, CEO & Director [15]

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$13 million.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [16]

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$13 million. Got it. So you guys are -- obviously, this was a nice quarter for loan growth. Did -- how -- what's the pipeline? What kind of shape is the pipeline in after such a good quarter? How are we -- how are you shaped up for second half of the year?

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David E Ritchie, American River Bankshares - President, CEO & Director [17]

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The pipeline remains strong. I can tell you business development does not seem to be a problem for us. And some of it is, as I said, there's a lot of repeat business we're getting already, which is really a good sign for us. So -- yes, I remain strong. I mean, like I said, we're trying to stay consistent with what we've been showing you. That's kind of the -- that's kind of where we were at, and we're trying to go forward on that basis and put on the right stuff. And there is a lot of granularity there too. I mean, we're not doing -- there's a lot of loans that are getting done, which is like what I really want. I mean, there's a lot of -- between $2 million and $5 million is kind of our number, and there's not a lot of elephant -- we're not out elephant hunting. So I think there were a total of 16 new commercial banking loans that were booked. Is that right?

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [18]

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Of that $42 million, it was 90 -- some of those were in the auto, I think, 60 of those, so 30. So you take off the auto, the new auto was $6 million. So you're looking at $37 million and there is 60 loans. I'm sorry 30 loans.

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David E Ritchie, American River Bankshares - President, CEO & Director [19]

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Yes. So there's a lot of granularity, Tim. And that's what we want.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [20]

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Got it. And again, Mitch, I think you gave the weighted average rate on funded loans, is that -- was that the...

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [21]

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Yes. The transposition person's probably here, but 519 on the new and 591 on the renewed.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [22]

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And I guess, relative to say fourth quarter last year, now we've got 2 quarters under our belt as far as pricing trends on new loan production. Can you give some color on that in terms of -- and how the market and how fierce the competition is in the market today versus half a year ago?

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David E Ritchie, American River Bankshares - President, CEO & Director [23]

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I think -- I mean, there's always competition, obviously. I think we're doing pretty well there. I think -- don't forget, we've kind of hit the ground in a little bit of a surprise for some people that were back like this. But I think we're getting the pricing that we think is appropriate and based on the credit and the relationship. And so I think we're in a pretty good shape there. I don't feel like we're buying the business or anything like that at all.

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [24]

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With the relationship-type banking, Tim, we're going to get a little bit higher yields on our loans and buying loans and dealing with brokers.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [25]

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But you have to make market adjustments. As the market moved, has it gotten tougher, has competition tightened up in your space with the business commercial or what have you, commercial real estate business you're pursuing? Or is it about the same as it was 6 months ago? What's the landscape like?

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David E Ritchie, American River Bankshares - President, CEO & Director [26]

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I think it's about the same, Tim. I mean, I think that -- you always have fluctuations in your pricing of your loans and part of that -- part of the equation is the credit of the borrower. Some of the stronger credits, they're obviously going to get probably a little bit of a premium on pricing and stuff that's down the middle, is pretty market-driven, if you ask me.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [27]

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And then last question, a lot of guys have been talking about the impact or potential impact of a 25 basis point rate cut. And saying, hey, we expect the hit to our margin -- initial hit to our margin perhaps out of the gate first quarter, what have you, to be X basis points first full quarter, 5 to 8 basis points or whatever. Have you guys looked at that yourself? And can you characterize directionally what a 25 basis point cut might do to your margin?

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [28]

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Yes. Tim, we do. Most of our loans, real estate loans, they're fixed or they have floors. So if they are adjustable, they have floors. We don't have -- unfortunately, we don't have a huge C&I floating-type portfolio. We'd like for that, but in the rates down world, we're protected by the type of the loans that we do have. And then we could see some actual benefit in the -- on the deposit side.

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Operator [29]

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And the next question comes from Tim Coffey with Janney.

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Timothy Norton Coffey, Janney Montgomery Scott LLC, Research Division - Director of Banks and Thrifts [30]

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Mitch, I mean, still a lot of banks in the west didn't see kind of that moderation of deposit costs this last quarter like, I think, we were all expecting. But do you think that we'll see that at American River in the second half of this year, given the potential for another rate hike -- I'm sorry, rate cut?

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [31]

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Yes, yes. When I started writing the script, I indicated -- I was -- my first draft was, we haven't seen a lot of pressure. I talked to our retail -- Head of Retail, and there's still some banks out there filling some silly ads. But I think, overall, there's been less pressure on -- I've had less calls on people wanting to negotiate rate. So I think it is moderating. It's more of that -- people hear rates are going to drop. So they have -- their expectations are lower, which is a positive on the deposit side.

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Timothy Norton Coffey, Janney Montgomery Scott LLC, Research Division - Director of Banks and Thrifts [32]

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Okay. And then the -- Dave, at the end of the prepared comments, you were talking about the, I guess, the online banking platform. And I'm wondering, is that already in your expense run rate? Or will this be additional as we get closer to launch?

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [33]

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Primarily yes because we're paying for a service, and we're switching from one service to another. And so there's not a significant cost either way.

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David E Ritchie, American River Bankshares - President, CEO & Director [34]

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Either way. Yes.

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Timothy Norton Coffey, Janney Montgomery Scott LLC, Research Division - Director of Banks and Thrifts [35]

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Okay. Now this is -- this online application that you're going to be launching. Is it kind of the client on-boarding or -- for loans? Or is it deposits or...

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [36]

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Online banking.

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David E Ritchie, American River Bankshares - President, CEO & Director [37]

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Online banking. Pretty much online banking.

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Timothy Norton Coffey, Janney Montgomery Scott LLC, Research Division - Director of Banks and Thrifts [38]

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Okay. Okay. That's helpful. And then Dave, where are you on staffing? Do you feel like you've got the right boots on the ground? I mean, you made a number of hires last year, and I'm wondering do you feel kind of good with where you're at right now. Or could you see more people coming on?

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David E Ritchie, American River Bankshares - President, CEO & Director [39]

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Yes. Yes, I do. They are set up in teams of 4 which we've talked about in the past, and -- the teams are all pretty productive. And frankly, I think, doing better than I thought. We're still a little slow in Sonoma, but I'm -- that's starting to come around. And we've had a couple of defections, some performance issues I would say, and so they've moved on. And the only thing we're really doing is just replacing, Tim. Haven't really had any big additions, and I don't foresee that in the next 6 months. I think we're in pretty good shape.

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Operator [40]

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And your next question comes from Don Worthington with Raymond James.

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Donald Allen Worthington, Raymond James & Associates, Inc., Research Division - Research Analyst [41]

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So on capital deployment, I mean, you mentioned the dividend. Are repurchases part of the capital plan at some point?

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [42]

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Yes. I've been saying all along that we wanted to see how the growth of the balance sheet takes fruition as well as the impact of CECL. Looks like we can cross that CECL one off the list for a couple of years. As you probably saw, yesterday, the FASB deferred the implementation date on that. So we're evaluating that. So I'm going to cross that one off. So it's still -- the Board wants to monitor the growth in the balance sheet. I think the Board supports a buyback, and we will continue to talk about that.

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Donald Allen Worthington, Raymond James & Associates, Inc., Research Division - Research Analyst [43]

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Okay. Great. And then anything new on the one piece of OREO?

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David E Ritchie, American River Bankshares - President, CEO & Director [44]

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No. We're -- it's being marketed. It's just a property that we need to market. We need to clean it up a little bit, I think, and we're doing our best there, and we just changed brokers. And we're going to give it a new look and see where that goes.

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Operator [45]

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And there are no more questions at this time. I would like to turn the call back over to Mr. Ritchie.

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David E Ritchie, American River Bankshares - President, CEO & Director [46]

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Thank you very much. We appreciate it, and we'll look forward to talking to you next quarter. All right.

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Mitchell A. Derenzo, American River Bankshares - Executive VP & CFO [47]

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Thanks.

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David E Ritchie, American River Bankshares - President, CEO & Director [48]

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Thank you.

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Operator [49]

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Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.