AMRB - American River Bankshares

[Rabbitisrich]

I just saw this name on MFP Investor's recent 13f-hr. It looks like a potential name for a financials basket.

 

They are still struggling with their commercial real estate portfolio, but they have bulked up their balance sheet to weather future losses. Non-performing assets to net loans stands at 7.6%, but net loans is 48% of earnings assets. Loans are 58% of deposits. 29% of deposits don't bear interest. They reported a 2Q12 efficiency ratio of 72%. Non-interest revenues are not large.

 

The bank is based in Sacramento, which experienced huge overinvestment in certain commercial real estate segments. Office vacancy stood at 23.5% in an April-June survey. You wouldn't want to make this a large position unless you know the area well. Management seems committed to moving the portfolio towards securities despite a 2%-4% difference in yield. This looks like a case of scarred management trying to figure out what to do with a bulked up balance sheet in a difficult geography during a low rate environment. Given that you are mostly paying for positioning, rather than current profits, I would like to purchase at a lower multiple to book.

 

				Table Ten: Capital Ratios
Capital to Risk-Adjusted Assets			At June 30, 2012				At December 31, 2011				Minimum Regulatory Capital Requirements
Leverage ratio		12.8%				13.1%				4.00%
Tier 1 Risk-Based Capital		21.7%				21.5%				4.00%
Total Risk-Based Capital		23.0%				22.8%				8.00%

 

[PlanMaestro]

Good pick.

 

* Tons of capital

* High historic ROA (PTPP/Assets around 2.5%).

* ROE suffers because of their very conservative leverage.

 

Almost bought in 4-5s but for AIG / BAC.

 

Rabbitisrich, what other small banks are tempting you?