Safe and Sound

American Riviera Bank

Santa Barbara, CA
4
Star Rating
Started in 2006, American Riviera Bank is an FDIC-insured bank based in Santa Barbara, CA. Regulatory filings show the bank having equity of $53.2 million on $496,038,000 in assets, as of June 30, 2017.

U.S. bank customers have $439.5 million on deposit at 3 offices in CA run by 67 full-time employees. With that footprint, the bank has amassed loans and leases worth $392.9 million, including real estate loans of $333.0 million.

Overall, Bankrate believes that, as of June 30, 2017, American Riviera Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank faired on the three important criteria Bankrate used to evaluate U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial resilience. It works as a buffer against losses and as protection for accountholders when a bank is struggling financially. When looking at safety and soundness, the more capital, the better.
American Riviera Bank received a score of 10 out of a possible 30 points on our test to measure the adequacy of a bank's capital, less than the national average of 13.38.

A bank's Tier 1 capital ratio is a commonly used measure of this buffer. American Riviera Bank's Tier 1 capital ratio was 11.17 percent, higher than the 6 percent level considered adequate by regulators, but under the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial difficulties.

Overall, American Riviera Bank held equity amounting to 10.73 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

A bank with lots of these types of assets may eventually have to use capital to absorb losses, cutting down on its cushion of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning interest for the bank, resulting in depressed earnings and potentially more risk of a future failure.

American Riviera Bank scored 40 out of a possible 40 points on Bankrate's asset quality test, beating out the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 0.08 percent of American Riviera Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." Comparing the how large that reserve is to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. American Riviera Bank's loan loss allowance was 1,231.08 percent of its total noncurrent loans, higher than the national average. All else being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, expanding its capital buffer, or use them to address problematic loans, potentially making the bank better prepared to withstand financial shocks. Obviously, banks that are losing money are less able to do those things.

On Bankrate's test of earnings, American Riviera Bank scored 16 out of a possible 30, lower than the national average of 16.52.

One widely used way to measure a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for American Riviera Bank was 8.14 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank recorded net income of $2.1 million on total equity of $53.2 million. The bank had an annualized return on average assets, or ROA, of 0.90 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.








WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.