CREATING SANTA BARBARAS BANK A combination to create the second - - PowerPoint PPT Presentation

CREATING SANTA BARBARA’S BANK

A combination to create the second largest community bank based in the City of Santa Barbara. Serving the banking needs of the community with an expanded branch footprint, increased lending capacity and broader product offerings.

(OTC Markets: ARBV)

Cautionary Note: Forward-Looking Statements

This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding American Riviera Bank (ARB), The Bank of Santa Barbara (BSB) and the combined bank after the close of the proposed transaction. All statements other than statements of historical fact are forward-looking statements. These forward- looking statements involve known and unknown risks, uncertainties and other factors which may cause BSB) the performance

• r achievements of ARB, BSB or the combined bank to be materially different from any expected future results, performance,
• r achievements. Forward-looking statements speak only as of the date they are made and none of ARB, BSB or the

combined bank assumes any duty to update forward looking statements. Such forward-looking statements include, but are not limited to, statements about the benefits of the business combination transaction involving ARB and BSB, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: (i) the possibility that the merger does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all; (ii) changes in ARB’s stock price before closing, including as a result of the financial performance of ARB prior to closing,

• r more generally due to broader stock market movements, and the performance of financial companies and peer group

companies; (iii) the risk that the benefits from the transaction may not be fully realized or may take longer to realize than expected, including as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which ARB and BSB operate and the combined bank will operate; (iv) the ability to promptly and effectively integrate the businesses of ARB and BSB; (v) the reaction to the transaction of the companies’ customers, employees and counterparties; (vi) expected or unexpected merger-related expenses and diversion of management time on merger-related issues; and (vii) lower than expected revenues, credit quality deterioration or a reduction in real estate values or a reduction in net earnings. Annualized, pro forma, projected and estimated numbers and percentages are used for illustrative purposes only, are not forecasts and may not reflect actual results. In connection with the proposed merger of ARB and BSB, ARB and BSB will be providing investors and security holders with a joint proxy statement. Before making any voting or investment decision with respect to the merger, investors and security holders of ARB and BSB are urged to carefully read the joint proxy statement, as well as any amendments or supplements thereto, because these documents will contain important information about the proposed transaction. Investors and security holders will be able to obtain the joint proxy statement free of charge from ARB by writing to ARB at 1033 Anacapa Street, Santa Barbara, CA 93101 or by writing to BSB at 12 E. Figueroa Street, Santa Barbara, CA 93101.

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Community Benefits of the Combination

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Footprint Downtown Santa Barbara Montecito Goleta        Product Offerings Mortgage Department SBA Department Mobile Banking/Mobile Deposit       Commitment to Local Markets  Support of Local Non-Profits    History of and Vision for Growth  Increased Lending Limits Secured Unsecured

$7.4 million $4.4 million $4.2 million $2.5 million

(estimated)

$10.4 million $ 6.2 million

Dedicated Downtown Parking  

ARB BSB Combined

Opened July 2006 Opened Dec 2005 Opened Montecito April 2013 Opened Goleta Dec 2012

• The second largest community bank based in the City of Santa Barbara
• #4 deposit market share among community banks in Santa Barbara County and within reach of #2 and #3
• Larger size/ scale to compete with bigger “regional” community banks in our county and adjacent counties
• Complete Santa Barbara footprint from Goleta to Montecito
• Utilization of ARB’s excess capital, while still retaining adequate capital for growth
• Eliminate BSB’s possible need to raise capital in the near term and thereby avoid BSB shareholder dilution
• Expected to be accretive to earnings in 2016 and beyond
• Create significant scarcity value for a bank with $400 million in assets in Santa Barbara

Merger Highlights

Transaction Rationale Revenue Enhancement Cost Savings

• Opportunity for significant operational efficiencies and cost synergies
• Consolidation of downtown Santa Barbara locations
• Efficiency of scale related to vendors, systems, auditors, insurance and regulatory expenses
• Higher lending limit provides increased opportunities with existing customers and access to new customers
• More client facing and business development staff to originate new business
• Mortgage and SBA departments under one roof -- complete product offerings to all customers

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Transaction Details

• BSB shareholders are expected to receive 1,586,000 shares of ARB common stock (OTC Markets: ARBV) as

consideration; based on the closing price of $9.70 a share on July 14, 2015 the deal is valued at $15.4 million

• 62% ARB ownership and 38% BSB ownership of combined bank, net of ARB unvested restricted shares

Overview of the Combined Bank

ARB (2 branches) BSB (2 branches)

Financial Overview (3/31/2015) ($000) ARB BSB Total Assets 230,318 $ 181,481 $ Gross Loans 165,920 $ 126,782 $ Total Deposits 200,377 $ 149,974 $ Core Deposit (%) 92.2 88.0 Noninterest-Bearing Demand Deposits 56,530 $ 58,369 $ Common Equity 27,454 $ 14,694 $ Non-Performing Assets/Total Assets (%) 0.21 0.21 Loan Loss Reserve/Gross Loans (%) 1.27 1.39 Loans/Deposits (%) 82.8 84.5 Net Income (LTM) 1,726 $ 64 $ Return on Average Assets (LTM) (%) 0.79 0.04 Return on Average Equity (LTM) (%) 6.54 0.39 Net Interest Margin (LTM) (%) 4.19 4.48 Efficiency Ratio (LTM) (%) 72.5 97.8 Year Established 2006 2005 # of Employees (FTE) 32 45 # of Branches 2 2

# Company City 2014 Deposits ($000) 2013 Deposits ($000) 2012 Deposits ($000) 2011 Deposits ($000) 2010 Deposits ($000) 1 ARB Santa Barbara 165,549 140,726 125,451 106,717 103,138 Growth Rate 17.6% 12.2% 17.6% 3.5% 2 ARB Montecito 14,876 4,143

• Growth Rate

259.1% Total 180,425 144,869 125,451 106,717 103,138 # Company City 2014 Deposits ($000) 2013 Deposits ($000) 2012 Deposits ($000) 2011 Deposits ($000) 2010 Deposits ($000) 1 BSB Santa Barbara 119,593 129,958 94,310 86,995 79,718 Growth Rate (8.0%) 37.8% 8.4% 9.1% 2 BSB Goleta 17,733 7,144

• Growth Rate

148.2% Total 137,326 137,102 94,310 86,995 79,718

0.05 mile apart 1Q15 Combined: Assets: $410 million Loans: $290 million Deposits: $350 million 5

Note: FDIC S.O.D. data as of 6/30/2014 of each year. Source: SNL Financial per call report data as of 3/31/2015.

Enhanced Deposit Market Share

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The combined company becomes the fourth largest community bank based in Santa Barbara County and second largest based in the City of Santa Barbara

Source: SNL Financial per FDIC S.O.D data as of 6/30/2014.

City of Santa Barbara

Branches Deposits Rank Institution (#) ($mm) 1 Wells Fargo 4 1,098 $ 21.7 % 2 Union Bank 7 1,022 20.2 3 Bank of America 3 649 12.8 4 JPMorgan Chase 4 401 7.9 5 Montecito Bancorp 2 340 6.7 6 Rabobank 3 286 5.7 (7) Pro Forma Company 2 285 5.6 7 First Republic 1 237 4.7 8 Bank of the West 2 210 4.1 9 Heritage Oaks Bancorp 1 199 3.9 10 American Riviera Bank 1 166 3.3 11 Bank of Santa Barbara 1 120 2.4 12 Citigroup 1 101 2.0 13 Northern Trust 1 71 1.4 14 First Banks Inc. 1 69 1.4 15 Community West Bancshares 1 43 0.9 Total (1 – 19) 38 5,060 $ 100.0 % (%)

Santa Barbara County

Branches Deposits Rank Institution (#) ($mm) 1 Union Bank 18 1,991 $ 19.4 % 2 Wells Fargo 12 1,851 18.0 3 Rabobank 14 1,180 11.5 4 Bank of America 8 1,174 11.4 5 Montecito Bancorp 7 936 9.1 6 JPMorgan Chase 13 809 7.9 7 Heritage Oaks Bancorp 3 396 3.9 8 Community West Bancshares 4 362 3.5 (9) Pro Forma Company 4 318 3.1 9 First Republic 1 237 2.3 10 Bank of the West 2 210 2.0 11 Northern Trust 2 201 2.0 12 American Riviera Bank 2 180 1.8 13 Community Bank of Santa Maria 3 172 1.7 14 PacWest Bancorp 4 147 1.4 15 Bank of Santa Barbara 2 137 1.3 Total (1 – 21) 105 10,404 $ 100.0 % (%)

Diversified Portfolio

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Source: SNL Financial per call report data as of 3/31/2015.

History of Growth

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ARB and BSB share complementary growth models and look to continue growing in and serving the Santa Barbara community

Gross Loans ($mm) Total Deposits ($mm)

ARB: 7-year CAGR = 14% BSB: 7-year CAGR = 13% ARB: 7-year CAGR = 19% BSB: 7-year CAGR = 15%

Source: SNL Financial per call report data as of 3/31/2015.

Looking Forward

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Name:

• Expect a near term announcement of the name which best

embodies our strategic vision Headquarters:

• Downtown Santa Barbara
• Additional branches remain in Montecito and Goleta

Management:

• President & CEO: Jeff DeVine
• Executive Vice President & COO: Joanne Funari

Board of Directors:

• 12 Directors consisting of:
• All eight of the current ARB Directors
• Four of the current BSB Directors
• Lawrence Koppelman, current ARB Board Chair, will continue to serve as the Board

Chair of the pro forma bank

Timing:

• Transaction expected to close in the 4th Quarter of 2015

The Leadership Team

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Jeff DeVine President & CEO Ken Jacobsen EVP & Chief Credit Officer Michelle Martinich EVP & Chief Financial Officer Laurie Leighty EVP & Chief Administrative Officer Joanne Funari EVP & Chief Operating Officer