August 3, 2023

Boutique Commercial Bank Resilience Tied to Customer Health and Responsible Management

River City Bank's Steve Fleming chatting with a businessman

By Steve Fleming, President and CEO of River City Bank


When four banks failed earlier this year, including three based in California, Sacramento business owners understandably had concerns about the viability of their banks. They needn’t have worried.

The banking industry is essentially a reflection of the community it serves, and the financial condition of any one bank is the product of its local economy as well as its chosen customer base. Fundamentally, the health of this relationship depends on how well bank management understands its community, knows its clients, and maintains a clear-eyed view into the risks of the future.

After more than 40 years in banking, it’s clear to me that the foundation of good banking is solid in this community. What we witnessed earlier this year was idiosyncratic events, including excessive customer concentrations in the venture capital, cryptocurrency, and technology sectors, which led to the four bank failures. Frankly, the other major contributing factor to the demise of the four banks was poor interest rate risk management.

But these are not systemic challenges. Most of the 4,500 U.S. banks, including my own, River City Bank, were respectful of the Federal Reserve’s clear guidance that it intended to raise interest rates sharply in 2022 and 2023. We understood that interest rates were going to rise, and we took prudent steps to manage what was coming. As a result, River City Bank and the majority of America’s insured commercial banks have proven to be resilient.

Still, we recognize there is uncertainty in the economy, as we heard at River City Bank’s 2023 Business Outlook event earlier this year. Thankfully, though, “we are not seeing the forces that would create a recession,” explained Jerry Nickelsburg, Adjunct Full Professor of Economics at UCLA Anderson School of Management. He said the underlying economy is strong, with a strong job market, low unemployment, and high capital investments. Of course, there is always uncertainty with the future – no one has a crystal ball that allows for consistently accurate predictions. Who knew there would be a global pandemic in 2020?

River City Bank’s Approach and the Safety of Deposits

With any regional bank, there is a symbiotic relationship between its strength and profitability and the health of local businesses. If a bank’s customers are doing well, a bank will typically do well – and vice versa.

One important way River City Bank ensures it can perform well in an uncertain environment is by choosing well-capitalized, well-run companies as clients. For 50 years, we’ve been dedicated to our local communities and have gotten to know our clients both professionally and personally. We know that good customers can withstand downturns, and thanks to our conservative loan underwriting, our customer base is strong and doing well. Ultimately, this allows River City Bank to seize opportunities when they arise, no matter the economic climate.

We also know that the more deposits a bank has, the more loans it can make to benefit the local economy. With a keen focus on exceptional customer service, along with paying very attractive yields, we’ve seen our deposit base increase more than $3.4 billion since 2007. Over the past three years alone, deposits grew at a compounded rate of 17 percent, while our total loan portfolio rose more than 19 percent to reach $3.2 billion.

River City Bank's Steve Fleming chatting with a businessman

We also offer CDARS®, which provides access to millions in FDIC insurance on funds placed in CDs. Depositors receive one monthly statement from River City Bank simplifying paperwork, with a single rate for each maturity.

What Comes Next

As we now look ahead through the rest of this year and into the next, we see the economy isn’t behaving in the typical ways we’ve experienced. Several external factors, such as the influx of COVID fiscal stimulus, the Fed’s tightening monetary policies, the labor shortage, and the Russian invasion of Ukraine, have made it hard to predict what will happen next.

What we do know, however, is that River City Bank is well positioned to meet today’s challenges, whether they arise from local trends or global events. And we are committed to ensuring that this remains true both now and in the future. Thanks to our flexible, innovative, and responsive approach, we are confident that on behalf of our customers, we are fully prepared for tomorrow’s banking environment and the needs of the communities in which we’re proud to do business.

At River City Bank, we provide products and services that are custom-tailored to your business needs. To learn more about our flexible deposit products, or to discuss other services from River City Bank, please visit us here or contact one of our relationship managers at (916) 567-2899.

Company Information

With assets of over $4.3 billion, River City Bank is the largest, independent, and locally owned and managed bank in the Sacramento region. With a 50-year track record of success, 8 branches, an office in San Francisco, and a presence in Southern California, the bank is rated as one of the strongest in the country.

Since September ’08, Steve Fleming has been President & Chief Executive Officer of River City Bank, the largest and most profitable bank based in Sacramento. With over 40 years of banking experience, immediately before joining River City Bank, he was the Founder and CEO of Presidio Bank in San Francisco. Steve also worked for over 20 years at Bank of America in a variety of progressively more senior roles, including as Head of Credit Administration for its Europe, Middle East, and Africa division.

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