(OTC Markets: ARBV) 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.
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 or achievements of ARB, BSB or the combined bank to be materially different from any expected future results, performance, or 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, or 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. 2
Community Benefits of the Combination ARB BSB Combined Footprint Downtown Santa Barbara Montecito Goleta Product Offerings Mortgage Department SBA Department Mobile Banking/Mobile Deposit Commitment to Local Markets Opened Dec 2005 Opened July 2006 Support of Local Non-Profits Opened Montecito Opened Goleta History of and Vision for Growth April 2013 Dec 2012 (estimated) Increased Lending Limits $10.4 million $7.4 million $4.2 million Secured $ 6.2 million $4.4 million $2.5 million Unsecured Dedicated Downtown Parking 3
Merger Highlights 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 • Transaction Utilization of ARB’s excess capital, while still retaining adequate capital for growth • Rationale 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 • Higher lending limit provides increased opportunities with existing customers and access to new customers • Revenue More client facing and business development staff to originate new business • Enhancement Mortgage and SBA departments under one roof -- complete product offerings to all customers • Opportunity for significant operational efficiencies and cost synergies • Cost Savings Consolidation of downtown Santa Barbara locations • Efficiency of scale related to vendors, systems, auditors, insurance and regulatory expenses • BSB shareholders are expected to receive 1,586,000 shares of ARB common stock (OTC Markets: ARBV) as • Transaction consideration; based on the closing price of $9.70 a share on July 14, 2015 the deal is valued at $15.4 million Details 62% ARB ownership and 38% BSB ownership of combined bank, net of ARB unvested restricted shares • 4
Overview of the Combined Bank 1Q15 Combined: Assets: $410 million ARB (2 branches) Loans: $290 million BSB (2 branches) 0.05 mile apart Deposits: $350 million 2014 2013 2012 2011 2010 Financial Overview (3/31/2015) ($000) ARB BSB Deposits Deposits Deposits Deposits Deposits Total Assets $ 230,318 $ 181,481 # Company City ($000) ($000) ($000) ($000) ($000) Gross Loans $ 165,920 $ 126,782 Total Deposits $ 200,377 $ 149,974 1 ARB Santa Barbara 165,549 140,726 125,451 106,717 103,138 Core Deposit (%) 92.2 88.0 Growth Rate 17.6% 12.2% 17.6% 3.5% Noninterest-Bearing Demand Deposits $ 56,530 $ 58,369 2 ARB Montecito 14,876 4,143 - - - Common Equity $ 27,454 $ 14,694 Growth Rate 259.1% Non-Performing Assets/Total Assets (%) 0.21 0.21 Total 180,425 144,869 125,451 106,717 103,138 Loan Loss Reserve/Gross Loans (%) 1.27 1.39 Loans/Deposits (%) 82.8 84.5 Net Income (LTM) $ 1,726 $ 64 2014 2013 2012 2011 2010 Deposits Deposits Deposits Deposits Deposits Return on Average Assets (LTM) (%) 0.79 0.04 # Company City ($000) ($000) ($000) ($000) ($000) Return on Average Equity (LTM) (%) 6.54 0.39 Net Interest Margin (LTM) (%) 4.19 4.48 1 BSB Santa Barbara 119,593 129,958 94,310 86,995 79,718 Efficiency Ratio (LTM) (%) 72.5 97.8 Growth Rate (8.0%) 37.8% 8.4% 9.1% 2 BSB Goleta 17,733 7,144 - - - Year Established 2006 2005 Growth Rate 148.2% # of Employees (FTE) 32 45 # of Branches 2 2 Total 137,326 137,102 94,310 86,995 79,718 Note: FDIC S.O.D. data as of 6/30/2014 of each year. 5 Source: SNL Financial per call report data as of 3/31/2015.
Enhanced Deposit Market Share The combined company becomes the fourth largest community bank based in Santa Barbara County and second largest based in the City of Santa Barbara Santa Barbara County City of Santa Barbara Branches Deposits Branches Deposits Rank Institution (#) ($mm) (%) Rank Institution (#) ($mm) (%) 18 $ 1,991 19.4 % 4 $ 1,098 21.7 % 1 Union Bank 1 Wells Fargo 2 Wells Fargo 12 1,851 18.0 2 Union Bank 7 1,022 20.2 3 14 1,180 11.5 3 3 649 12.8 Rabobank Bank of America 8 1,174 11.4 4 401 7.9 4 Bank of America 4 JPMorgan Chase 5 Montecito Bancorp 7 936 9.1 5 Montecito Bancorp 2 340 6.7 6 13 809 7.9 6 3 286 5.7 JPMorgan Chase Rabobank 3 396 3.9 7 Heritage Oaks Bancorp (7) Pro Forma Company 2 285 5.6 8 Community West Bancshares 4 362 3.5 7 First Republic 1 237 4.7 4 318 3.1 8 2 210 4.1 (9) Pro Forma Company Bank of the West 1 237 2.3 1 199 3.9 9 First Republic 9 Heritage Oaks Bancorp 10 Bank of the West 2 210 2.0 10 1 166 3.3 American Riviera Bank 11 2 201 2.0 1 120 2.4 Northern Trust 11 Bank of Santa Barbara 1 101 2.0 12 American Riviera Bank 2 180 1.8 12 Citigroup 13 Community Bank of Santa Maria 3 172 1.7 13 Northern Trust 1 71 1.4 14 4 147 1.4 14 1 69 1.4 PacWest Bancorp First Banks Inc. 1 43 0.9 15 Bank of Santa Barbara 2 137 1.3 15 Community West Bancshares Total (1 – 21) 105 $ 10,404 100.0 % Total (1 – 19) 38 $ 5,060 100.0 % 6 Source: SNL Financial per FDIC S.O.D data as of 6/30/2014.
Diversified Portfolio 7 Source: SNL Financial per call report data as of 3/31/2015.
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