American River Bankshares Announces its 89th Consecutive Profitable Quarter

Sacramento, CA, April 20, 2006 – American River Bankshares (NASDAQ: AMRB) today reported net income for the first quarter of 2006 of $2,243,000, a 9.4% increase from $2,051,000 for the quarter ended March 31, 2005.  Diluted earnings per share increased 8.3% to $0.39 compared to $0.36 diluted earnings per share for the first quarter of 2005.

“Good yet below expectations is how I would sum up our first quarter of 2006,” said David Taber, President and CEO of American River Bankshares.  “Even though we had a record of 200 new loans booked during the quarter, we experienced modest loan growth, partially caused by poor weather halting new or unfinished construction projects.”  He continued, “We remain focused on growing along the lines of our strategic plan, concentrating on business banking, solidly underwritten real estate loans and smart deposit growth in a period of considerable rate competition.”

Net interest income for the first quarter of 2006 increased 7.6% to $6,792,000 from $6,315,000 for the first quarter of 2005 and interest income increased 18.8% to $9,117,000 from $7,674,000.  Interest expense for the first quarter of 2006 increased 71.1% to $2,325,000 from $1,359,000 for the first quarter of 2005, mainly related to rising short-term interest rates increasing deposit costs and a 36.8% increase in short-term borrowings to $40,029,000 from $29,258,000.

Noninterest income for the first quarter of 2006 increased 9.1% to $634,000 from $581,000 for the first quarter of 2005.  Noninterest expense increased 9.3% to $3,638,000 from $3,328,000 year over year.  Much of this increase is related to higher personnel costs, occupancy expense and professional fees.  The higher personnel costs relates to health care and market-condition salary adjustments, additional administrative staff to address the burden of more stringent compliance and regulatory issues, and in the three bank regions, business development and service personnel to help achieve strategic growth in business banking.  The higher occupancy expense relates to the Company’s new administration office lease and the higher professional fees relates to the Company’s decision to outsource its network management. 

Net loans for the first quarter of 2006 increased modestly by $18,670,000 (5.3%) to $372,754,000 from $354,084,000 for the first quarter of 2005.  Real estate loans increased only slightly (1.4%) to $267,388,000 as of March 31, 2006 from $263,796,000 as of March 31, 2005.  The bright spot continues to be business lending, where commercial purpose loans increased over 17% from one year.

Credit quality remains outstanding, with no net chargeoffs for the quarter ended March 31, 2006 and nonperforming loans and leases at 0.04% of total loans and leases.  The allowance for loan and lease losses increased to $5,767,000 in the first quarter of 2006 from $5,676,000 in the first quarter of 2005. The provision for loan and lease losses was $84,000 for the first quarter of 2006, a decrease from $217,000 for the first quarter of 2005. The reserve as a percentage of loans and leases was 1.52% at March 31, 2006, compared to 1.58% at March 31, 2005.  The reduced provision for loan and lease losses reflects management's assessment of credit risk for the loan and lease portfolio.

Performance measures in the first quarter of 2006: the Return on Average Assets (ROAA) was 1.49%, Return on Average Equity (ROAE) was 14.41%, Return on Average Tangible Equity (ROATE) was 20.20% and the efficiency ratio was 47.34%.  For quarter ended March 31, 2005, the Company has a ROAA of 1.43%, ROAE of 14.08%, ROATE of 20.40% and an efficiency ratio of 46.50%.

First Quarter Highlights

  • American River Bankshares continues a long history of enhancing shareholder value with its 89th consecutive profitable quarter.
  • American River Bankshares paid a quarterly cash dividend of 15 cents per share, continuing a tradition of commitment that includes thirty-three cash dividends since 1992. 
  • Net interest margin for the quarter ended March 31, 2006 was 5.12% compared to 4.96% for the quarter ended March 31, 2005 and 5.09% for the quarter ended December 31, 2005.
  • American River Bank’s five offices in the Greater Sacramento Area and Placer County increased total deposits 2.7% to $315,623,000 at March 31, 2006 from $307,187,000 at March 31, 2005.  Year over year, net loans increased 7.3% to $218,780,000 from $203,947,000. 
  • North Coast Bank, a division of American River Bank with three offices in Sonoma County, increased total deposits 13.9% to $66,836,000 at March 31, 2006 from $58,680,000 as of March 31, 2005.  Year over year, net loans decreased 5.2% to $67,487,000 from $71,177,000. 
  • Bank of Amador, a division of American River Bank with three offices in Amador County, increased total deposits 1.7% to $114,007,000 at March 31, 2006 from $112,086,000 at March 31, 2005.  Year over year, loans increased 9.5% to $86,487,000 from $79,005,000. 

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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

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties.  Actual results may differ materially from the results in these forward-looking statements.  Factors that might cause such a difference include, among other matters, changes in interest rates, economic conditions, governmental regulation and legislation, credit quality, and competition affecting the Company’s businesses generally; the risk of natural disasters and future catastrophic events including terrorist related incidents; and other factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, and in reports filed on Form 10-Q and Form 8-K.  The Company does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise.

Investor Contact:
Mitchell A. Derenzo
Chief Financial Officer
American River Bankshares
916-231-6723

Media Contact:
Diana Walery
Corporate Communications
American River Bankshares
916-231-6717

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