American Riviera Bancorp, Santa Barbara, CA (ARBV)
A Case of Not Working Very Hard
Earlier this year, Timyan Bank Alert named American Riviera Bancorp in its list of 11 Banks That Most OUGHT to Sell to a Credit Union in 2025. American Riviera is a mediocre performer, at best, and management appears to be under-achievers by nature. Neither the capital, nor the team behind ARBV are working very hard for investors.
American Riviera Bank Management has given no indication they’re open to selling to another bank under anything like real market conditions, but the very-new opportunity to be acquired by a credit union, instead, comes with bigger and better advantages this crew may find personally compelling.
I’m really hoping they do, because investors holding ARBV today are stuck earning 7% on equity when they could be getting a 40% payout or better in a credit union transaction.
Disclosure: As of this posting, I own shares of ARBV and may subsequently either dispose of them or purchase more.
Prospective Buyers
CVB and TriCo would likely present bids were American Riviera for sale, but Golden 1 is the largest credit union in California and would definitely pay more.
CVB Financial, Ontario, CA (CVBF)
TriCo Bancshares, Chico, CA (TCBK)
Golden 1 Credit Union, Sacramento, CA
Financial Snapshot
The Crew
Darren Caesar, Chairman
Jeffrey DeVine, President and CEO
Lawrence Koppelman, Director
Carrots for DeVine
Word on the street is that banks have expressed interest in acquiring American Riviera, and even offering the still-young Jeffrey DeVine an opportunity to advance his career and earning potential by stepping into the CEO role of the combined entity that would result, only to have Jeffrey shrug off the invitations, admitting he “Doesn’t Want to Work that Hard.”
I totally get that. Jeffrey’s in his 50’s, in 2023 alone he reported earning $1,122,269 in personal compensation. He’s making 20% per year more than higher performing bank CEOs like Dennis Woods of United Security Bancshares. He’s too young to retire, but if American Riviera is acquired by another bank, and Jefrrey stays on as CEO, he’s gonna have to manage an entity that’s at least twice the size, for presumably not that much more pay. And maybe he’s concerned about the new entity laying off the team he’s built and come to rely on over the years.
But here’s the cool thing for Jeffrey:
If a credit union buys American Riviera Bank, Jeffrey won’t have to work any harder than he has to work now, because credit union buyers will only expect him to keep running the operation he’s running today, while they keep doing what they’re doing.
If Jeffrey allows sale of ARBV to a credit union, moreover, he will make more in the transaction itself (along with every other investor), than he would from conventional bank M&A, because a credit union will pay $2 more per share to buy it. Given Jeffrey owns 119,849 shares of ARBV, he would make $240K more than he would selling to another bank. Add that to the 2x his salary his employment contract calls for him to receive as a bonus upon sale, the total likely $28 purchase price per share, and Jeffrey will have obtained a sweet $6.6 million cash to invest in something more profitable than ARBV before he’s even 60.
Plus, credit unions typically retain all the employees of banks they acquire, so Jeffrey can feel good that he’s done right by his people. That’s because unlike bank acquirers, credit unions are not in this game just to become more efficient at producing returns, they’re buying their way into the game from outside, and they need the whole kit and kaboodle.
Sources
Bank
Articles
Other
Confidential interviews with shareholders and analysts
Makes too much sense. 😮
The logic works for me. It probably does for PL and Endeavor also. Thanks for your educational post