American Riviera Bank Helps Local Businesses Obtain a Slice of Federal Stimulus

Sometimes it takes a global pandemic to highlight the crucial role that community banks play in rescuing local businesses from the economic nightmare that comes with a year-long statewide shutdown. For American Riviera Bank (ARB), which opened in 2006 thanks to about 400 local shareholders who put up roughly $25 million in start-up cash, the COVID-19 plague provided an opportunity to give back to the community that has helped it become one of the most successful local banks in California.

“We started with our first branch in downtown Santa Barbara,” said Jeff DeVine, ARB’s president and CEO. “The economy was cranking and real estate was flying high.” But just two years later, under the weight of America’s over-leveraged real estate market, the economy crashed. Unlike other small banks that had been around longer, ARB had yet to cash in on what then seemed like a lucrative mortgage financing sector.

“American Riviera Bank was fortunate to have a lot more capital than other banks, and we rode through that time feeling comfortable because we had a strong capital cushion,” he recalled. ARB waited until 2012, before opening a mortgage department. 

The following year, the bank opened its Montecito branch and four years after that, merged with the Bank of Santa Barbara, which increased its assets to more than $400 million. “We were a bit of an underdog at first,” said DeVine. “But we received a lot of support from the community. We went from having $400 million in assets in 2016 to $971 million in assets today.”

So when COVID-19 hit Santa Barbara, ARB, which had invested in online technology, was quick to find ways to help its customers weather the economic fallout. “It takes a while to open up an account, DeVine explained. “You have to have addresses, driver’s licenses, and dates of birth, or if you’re a company, articles of incorporation. We realized this was an opportunity for us to leverage those digital channels. Our customers started filling out information online and giving us that information, as well as using DocuSign, which saved a lot of time.”

While most of ARB’s mortgage business involves adjustable rate mortgages, jumbo loans, and construction loans, COVID allowed the bank to boost its efforts on behalf of clients who needed help applying for the Small Business Administration’s Paycheck Protection Program (PPP) in order to stay afloat during the past year.

“When we did the first round of PPP, it was pretty chaotic,” DeVine said. “We had to build the infrastructure to handle this massive volume of loans that was going to come in.” Typically, ARB would handle between 50 and 100 new and existing loans each month. All of a sudden, we were doing 600 loans for a total of $120 million in the course of about six weeks, and we ended up with a total of 12,000 jobs in San Luis Obispo and Santa Barbara counties who were covered by these loans, which made us feel really good. If we actually helped save 12,000 local jobs or anything close to that, we are really happy.”

One of those customers is Angela Zungri, owner of Santa Barbara’s Walter Claudio Salon, which first opened in 1992 and at its peak employed 35 people in a 4,300 square foot space on West Figueroa Street. “Now there are ten of us,” Zungri told the Journal. “Everything changed because of COVID. The extra layers of protocol have changed how we do business and we will never go back. I had a staff of five just for training purposes, but now the stylists do everything including checking out the customers. It’s never going to be the same.”

After being closed for three months, Zungri was able to reopen her salon in June 2020 but had to close a month later, and then shut down again during the Christmas holidays. “People were desperate to pay their bills,” said Zungri. “We had to shut our front door and regulate the number of people that come in our building. We could have no more than twelve people inside, including four or five stylists, at any given time.”

According to Zungri, the only thing keeping her business alive was support from the SBA’s paycheck protection program, and she credits American Riviera Bank with helping her obtain paycheck relief. “Without their help, it would have been a nightmare,” she said, adding that while she was able to retain 75 percent of her staff after the first shutdown, many more employees subsequently left California.

“The comparison between having a small community bank like American Riviera Bank or Montecito Bank and some huge national bank is that they are very responsible and can help you get loan forgiveness. I had someone at ARB who held my hand through the whole thing, which was very complicated, and I didn’t have to hire anyone to do that.”

Another way American Riviera Bank has helped keep Montecito and Santa Barbara’s businesses intact is through the federal government’s Shuttered Venue Grant (SVG) grant program, which provides 45 percent revenue relief for movie theaters and other stages dependent on annual ticket sales. The stimulus package includes cash to help local movie theaters and live venues obtain lost revenue. 

“Movie theaters and live music venues that are completely struggling have had revenue declines of 90 to 99 percent,” said DeVine, adding that his bank’s customers are able to apply for up to a 45 percent reimbursement of lost revenue. “So if customers had a 45 percent decline in revenue, they can’t get all that back” explained DeVine.

Both Metropolitan Theatres, which operates downtown Santa Barbara’s Arlington Theatre, and the historic Lobero Theatre, have obtained SVG assistance from American Riviera Bank. “We haven’t had a live performance since the end of February or March of last year,” said Don McGreevy, controller of the Lobero Theatre Foundation.

Unlike with the first round of PPP last year, this time, in 2021, businesses have the choice of applying for either a loan or a grant. “With this second round of stimulus, you can’t apply for both,” McGreevy said. “Both go directly through the SBA. We are a nonprofit, so we have fund raising, but despite a major loss in revenue, and having to furlough most of our staff, this will help us until we can open again.”