American River Bankshares’ 3rd Quarter Net Income Increases 77%

Sacramento, CA, October 18, 2005 – American River Bankshares (NASDAQ: AMRB) today reported net income for the third quarter of 2005 of  $2,376,000, a 77.4% increase from $1,339,000 during the third quarter of 2004.  Diluted earnings per share increased 48.3% to $0.43 from $0.29 diluted earnings per share during the third quarter of 2004. 

Net income for the nine months ended September 30, 2005 rose 68.5% to $6,617,000 from $3,926,000 and diluted earnings per share increased 42.4% to $1.21 compared to $0.85 diluted earnings per share for the nine months ended September 30, 2004.  Also for the nine months ended September 30, 2005, net interest income increased 40.0% to $19,507,000 from $13,929,000 for the nine months ended September 30, 2004. 

“American River Bankshares continues to steadily grow assets, providing exceptional returns for our shareholders, which allowed us to increase our dividend for the past three consecutive quarters,” said David T. Taber, President and CEO of American River Bankshares. “We remain focused on building business through our core banking operations in the Greater Sacramento, Amador, Sonoma and South Placer markets.”

Net interest income for the third quarter of 2005 increased 38.7% to $6,753,000 from $4,869,000 in the same quarter last year.  The increase relates to an increase in average earning assets of $142,372,000, compared to an increase of $96,823,000 in interest-bearing liabilities.  Average noninterest-bearing deposits increased $42,346,000, which was invested mainly in interest bearing loans and investments.

Noninterest income for the third quarter of 2005 increased 34.7% to $594,000 from $441,000 recorded in the third quarter of 2004 due to increased business as a result of the Bank of Amador merger, specifically a 31.2% increase in service fees and a 207.1% increase in residential lending fees.  Noninterest expense increased 23.1% to $3,464,000 from $2,814,000, mainly related to increases in salaries and benefits and premises and equipment as a result of the three offices acquired from the Bank of Amador in the 4th quarter of 2004.  Noninterest income for the nine months ended September 30, 2005 decreased 7.0% to $1,759,000 from $1,892,000 and noninterest expense increased 13.0% to $10,195,000 from $9,026,000 for the nine months ended September 30, 2004. 

Net loans increased $5,789,000 (1.6%) over the nine months ended September 30, 2005 and 3.5% since June 30, 2005.  Total deposits increased $43,258,000 (9.1%) at September 30, 2005 to $518,655,000 from $475,387,000 at December 31, 2004.  Investment securities increased 10.1% to $175,539,000 from $159,402,000 at December 31, 2004.

Credit quality remains excellent, with nonperforming loans and leases at 0.05% of total loans and leases and annualized net chargeoffs for the first nine months of 2005 at 0.04% of average loans and leases, remaining below industry averages.  Additions to the allowance for loan and lease losses decreased from $695,000 in the first nine months of 2004 to $272,000 in 2005. The Company’s excellent credit quality allowed it to reduce the allocations.  The reserve as a percentage of loans and leases was 1.56% at September 30, 2005. 

Performance measures continue to be outstanding; in the third quarter of 2005, the Return on Average Assets (ROAA) was 1.54%, Return on Average Equity (ROAE) was 15.32%, Return on Average Tangible Equity (ROATE) was 21.74% and the efficiency ratio was 45.44%.  Over the nine months ended September 30, 2005, the Company has a ROAA of 1.49%, ROAE of 14.71%, ROATE of 21.11% and an efficiency ratio of 46.21%.

Highlights

  • American River Bankshares continues a long history of enhancing shareholder value with its 87th consecutive profitable quarter.
  • American River Bankshares increased its quarterly cash dividend 15% over the cash dividend paid in the prior quarter, continuing a tradition of commitment that includes thirty-one cash dividends since 1992. 
  • Net interest margin for the quarter ended September 30, 2005 was 4.92% compared to 4.78% for the quarter ended September 30, 2004.  Net interest margin for the nine months ended September 30, 2005 was 4.95% compared to 4.85% for the nine months ended September 30, 2004.
  • American River Bank’s five offices in the Greater Sacramento Area and Placer County increased deposits 14.3% to $343,676,000 at September 30, 2005 from $300,798,000 at December 31, 2004.  Loans increased 2.0% to $210,690,000 as of September 30, 2005 from $206,499,000 at December 31, 2004. 
  • North Coast Bank, a division of American River Bank with three offices in Sonoma County, experienced a decrease in deposits of 0.8% to $62,509,000 at September 30, 2005 from $62,988,000 as of December 31, 2004.  Loans increased marginally to $73,804,000 at September 30, 2005 from $73,670,000 as of December 31, 2004. 
  • Bank of Amador, a division of American River Bank with three offices in Amador County, experienced a decrease in deposits of 0.7% to $113,421,000 at September 30, 2005 from $114,255,000 at December 31, 2004.  Loans increased 2.1% to $79,452,000 at September 30, 2005 from $77,795,000 at December 31, 2004. 
  • The Healdsburg Office of North Coast Bank completed a $300,000 remodel.  The office was remodeled to reflect the relationship-orientated philosophy of the Bank, removing the traditional teller line in favor of a business environment with comfortable seating areas, sit-down client service desks and local artwork.
  • Amy J. Wheeler joined American River Bankshares as Vice President and Risk Manager.  Ms. Wheeler has 18 years of industry experience and is responsible for company-wide risk management, including internal controls and compliance with Sarbanes-Oxley regulations.  Ms. Wheeler is a Certified Regulatory Compliance Manager and a Certified Anti-Money Laundering Specialist.
  • Erik A. Lawson, CPA, joined American River Bankshares as Vice President and Controller.  Mr. Lawson has 11 years of industry experience and is responsible for overseeing the accounting department, as well as financial and regulatory reporting. 
  • Georgia Presnell, Secretary at the Point West Office of American River Bank, was selected as Outstanding Older Worker for the State of California by Experience Works, a non-profit organization that supports mature workers.  Georgia, who is 86 years old and works 40 hours a week, was selected for her leadership, mentoring and over 30 years of service to a variety of community projects, including the March of Dimes and Soroptimist International.

VIEW BALANCE SHEET


VIEW INCOME STATEMENT

About American River Bankshares

American River Bankshares is the parent company of American River Bank (“ARB”), a community business bank serving Sacramento, CA that operates a family of financial services providers, including North Coast Bank [a division of “ARB”] in Sonoma County and Bank of Amador [a division of “ARB”] in Amador County.  For more information, please call 916-565-6100 or visit www.amrb.com; www.americanriverbank.com; www.northcoastbank.com; or www.bankofamador.com.

Forward-Looking Statement

In addition to the historical information contained herein, this press release contains certain forward-looking statements. The reader of this press release should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Company’s actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, loan losses, expenses, changes in the interest environment including interest rates charged on loans, earned on securities investments and paid on deposits, competition effects, fee and other non interest income earned, general economic conditions, nationally, regionally, and in the operating market areas of the Company and its subsidiaries, changes in the regulatory environment, changes in business conditions and inflation, changes in securities markets, data processing problems, a decline in real estate values in the Company’s market area, the conduct of the war on terrorism, the threat of terrorism or the impact of potential military conflicts and the conduct of war on terrorism by the United States and its allies, as well as other factors. To gain a more complete understanding of the uncertainties and risks involved in the Company’s business, this press release should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2004, and subsequent quarterly reports on Form 10Q and current reports on Form 8-K.

Investor Contact:
Mitchell A. Derenzo
Chief Financial Officer
American River Bankshares
916-231-6123

Media Contact:
Diana Walery
Corporate Communications
American River Bankshares
916-231-6117

# # #