American River Bankshares is the parent company of American River Bank a community bank with offices in Sacramento and Placer Counties that operates a family of financial service providers including North Coast Bank in Sonoma County and first source capital a lease financing company in Sacramento. The Banks accept checking and savings deposits offer money market deposit accounts and certificates of deposit make secured and unsecured commercial and residential loans and other installment and term loans and offer other customary banking services. American River Bankshares has a market cap of $51.3 million; its shares were traded at around $8.8405 with a P/E ratio of 11.8 and P/S ratio of 1.5. The dividend yield of American River Bankshares stocks is 6.5%. American River Bankshares had an annual average earning growth of 14.2% over the past 5 years. Highlight of Business Operations: Liquidity management refers to the Companys ability to provide funds on an ongoing basis to meet fluctuations in deposit levels as well as the credit needs and requirements of its clients. Both assets and liabilities contribute to the Companys liquidity position. Federal funds lines, borrowing arrangements with the FHLB, payments at maturity of short-term investments and securities, and loan repayments contribute to liquidity, along with deposit increases, while loan funding and deposit withdrawals decrease liquidity. The Company assesses the likelihood of projected funding requirements by reviewing historical funding patterns, current and forecasted economic conditions and individual client funding needs. Commitments to fund loans and outstanding letters of credit at June 30, 2009 and December 31, 2008 were approximately $67,713,000 and $4,427,000 and $76,937,000 and $3,798,000, respectively. Such loan commitments relate primarily to revolving lines of credit, other commercial loans and to real estate construction loans. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
The Companys sources of liquidity consist of cash and due from correspondent banks, overnight funds sold to correspondent banks, unpledged marketable investments and loans held for sale and/or pledged for secured borrowings. At June 30, 2009, consolidated liquid assets totaled $33.0 million or 6.0% of total assets compared to $41.3 million or 7.3% of total assets on December 31, 2008. In addition to liquid assets, the Company maintains short-term lines of credit in the amount of $52,000,000 with correspondent banks. At June 30, 2009, the Company had $52,000,000 available under these credit lines. Additionally, the Bank is a member of the FHLB. At June 30, 2009, the Bank could have arranged for up to $105,020,000 in secured borrowings from the FHLB. These borrowings are secured by pledged mortgage loans and investment securities. At June 30, 2009, the Company had advances, borrowings and commitments (including letters of credit) outstanding of $37,750,000, leaving $67,270,000 available under these FHLB secured borrowing arrangements. American River Bank also has a secured borrowing arrangement with the Federal Reserve Bank. The borrowing can be secured by pledging selected loans and investment securities. At June 30, 2009, the collateral value at the Federal Reserve Bank was $10,312,000. The Bank also has informal agreements with various other banks to sell participations in loans, if necessary. The Company serves primarily a business and professional customer base and, as such, its deposit base is susceptible to economic fluctuations. Accordingly, management strives to maintain a balanced position of liquid assets and borrowing capacity to offset the potential runoff of these volatile and/or cyclical deposits.
The Companys exposure to credit loss in the event of nonperformance by the other party for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Company applies the same credit policies to commitments and letters of credit as it does for loans included on the consolidated balance sheet. As of June 30, 2009 and December 31, 2008, commitments to extend credit and standby letters of credit were the only financial instruments with off-balance sheet risk. The Company has not entered into any contracts for financial derivative instruments such as futures, swaps, options or similar instruments. Loan commitments and standby letters of credit were $72,140,000 and $80,735,000 at March 31, 2009 and December 31, 2008, respectively. As a percentage of net loans and leases these off-balance sheet items represent 18.1% and 19.6%, respectively.
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