American Riviera Bank Decides Not to Seek Bailout Money

  
    
  
  
    
      American Riviera Bank (OTCBB: ARBV) today announced that its Board of 
      Directors has decided it would not be in the best interests of the 
      Company or its shareholders to apply for aid from the U.S. Treasury 
      under its new capital assistance program. This conclusion was reached 
      based on the Company's strong capital position relative to reasonably 
      foreseeable needs, as well as the financial management restrictions that 
      would accompany this governmental capital infusion.
    
    
      American Riviera Bank had a total risk-based capital ratio of 21% at 
      September 30, 2008, significantly greater than the 10% level required to 
      be classified as "well-capitalized," the highest rating possible under 
      FDIC and Federal Reserve Board guidelines.
    
    
      It appears that American Riviera Bank would qualify for a capital 
      injection of close to $2.8 million from the Treasury, and with such 
      funds included, our total risk-based capital ratio would have been 25% 
      at September 30, 2008. In our opinion, this represents a level of 
      capital that would typically be deemed excessive and inefficient unless 
      immediately leveraged for loan growth, utilized to absorb loan losses, 
      or earmarked for a potential acquisition. David Duarte, American Riviera 
      Bank’s Chief Operating Officer, remarked, "At this time our balance 
      sheet provides adequate capacity for projected loan growth and we have 
      no delinquent loans, no non-accrual loans and no loan charge-offs. 
      Further, our strategic plan does not currently anticipate acquisitions 
      in the short-term. Although the depth and duration of this economic 
      recession cannot be predicted, we have projected our capital position 
      under varying scenarios and are confident that the Company will remain 
      well-capitalized even under severe conditions."
    
    
      In addition to raising the Bank’s capital ratios to inflated levels, the 
      acceptance of capital from the Treasury places restrictions on the 
      Company's ability to declare dividends and repurchase stock should we 
      choose to do so in the future. Furthermore, the Treasury's capital 
      purchase would be in the form of senior preferred stock that carries a 
      mandatory dividend payment of 5% (close to 8% on a pre-tax equivalent 
      basis), increasing to 9% (close to 14% pre-tax equivalent) after five 
      years. The Treasury would also receive warrants to purchase common stock 
      at the current market price equal to 15% of the preferred investment, 
      which would be dilutive to existing common shareholders. The Treasury 
      also would have the right to sell its ownership position in the Bank to 
      a third party at any time for any reason. This program has been 
      described as "cheap capital" if needed, but in reality equates to 
      expensive debt if it cannot be quickly utilized.
    
    
      Company Profile
    
    
      American Riviera Bank is a full service community bank focused on 
      serving the lending and deposit needs of businesses and consumers in our 
      community. At September 30, 2008, total deposits were $70.2 million, 
      total loans were $79.8 million and total assets were $96.3 million. The 
      Bank was founded in 2006 by over 400 local shareholders and has one 
      branch located at 1033 Anacapa Street in downtown Santa Barbara.
    
    
      Statements concerning future performance, developments or events 
      concerning expectations for growth and market forecasts, and any other 
      guidance on future periods, constitute forward looking statements that 
      are subject to a number of risks and uncertainties. Actual results may 
      differ materially from stated expectations. Specific factors include, 
      but are not limited to, effects of interest rate changes, ability to 
      control costs and expenses, impact of consolidation in the banking 
      industry, financial policies of the US government, and general economic 
      conditions.