Page 10 – River City Bank

September 22, 2020

River City Bank adds former Heritage Bank of Commerce SVP Michael McComish to its expanding San Francisco-based team

Bay Area banker to focus on commercial real estate, professional service firms and non-profit organizations as SVP, Relationship Manager

SACRAMENTO, CA – River City Bank continues to add new talent to its San Francisco-based team and announces the addition of Michael McComish as Senior Vice President, Relationship Manager. McComish will be responsible for developing new business within the San Francisco Bay Area, with a focus on commercial real estate, professional service firms, non-profit organizations and private banking. He brings more than 27 years of experience in private and commercial banking, having most recently managed accounts as Senior Vice President, Relationship Manager at Heritage Bank of Commerce.

“The San Francisco business community is dynamic, robust and constantly evolving,” said Steve Fleming, President and CEO of River City Bank. “To aid in our continued expansion throughout the Bay Area, we are pleased to welcome Michael to our team, where he will play a crucial role in solidifying new relationships with businesses and leaders in a variety of industries.”

“Bay Area business leaders are eager to find a banking partner that brings a healthy combination of ambition, agility and sheer capacity to the table,” said Michael McComish, Senior Vice President and Relationship Manager at River City Bank. “I’m excited to introduce them to River City Bank, which brings all of that and more to each relationship and opportunity.”

As SVP, Relationship Manager with Heritage Bank of Commerce, McComish managed a loan portfolio of more than $120 million and a deposit portfolio of more than $100 million. He came into his role at Heritage Bank of Commerce while aiding its acquisition of Presidio Bank, where he had spent more than a decade working with executives and all departments within the bank to develop its deposit and loan portfolios. Since joining Heritage Bank in October 2019, McComish has overseen the growth of its loan portfolio by more than $18 million. Heritage Bank’s acquisition of Presidio Bank was finalized in 2019.

McComish graduated with a Bachelor of Science degree in Social Science from California Polytechnic State University. He currently serves as President of the Society of California Pioneers, where he has also served as a board member since early 2005.

September 22, 2020

Kelly Foundation announces Habitat for Humanity of Greater Sacramento as 2021 Major Gift Award winner

$100,000 grant to support new Cornerstone community in South Sacramento

SACRAMENTO, CA – The Kelly Foundation has announced Habitat for Humanity of Greater Sacramento as the recipient of its 2021 Major Gift Award. The $100,000 grant will be used to support the first phase of construction for Cornerstone Development in South Sacramento. Cornerstone Development is a collaboration between Habitat and Mutual Housing California and will feature 18 single-family homes positioned as equity-building home ownership opportunities for low-income families, along with 108 affordable rental apartment units for low-income individuals, including some who were formerly unhoused.

“Habitat for Humanity of Greater Sacramento is respected throughout the community for providing families with home ownership opportunities that may be otherwise out of reach,” said Shawn Kelly Devlin, President of the Kelly Foundation and Chairman of the Board of River City Bank. “The Kelly Foundation is excited to partner on this ambitious project, which will benefit dozens of deserving people over the course of the next several years.”

“The Kelly Foundation Major Gift award represents a huge leap forward for the Cornerstone Development project,” said Laine Himmelmann, Chief Development Officer of Habitat for Humanity of Greater Sacramento. “Our team was excited to the point of tears when we learned that the Kelly Foundation had decided to contribute $100,000 to the project because most home sponsorships fall within the $5,000-$10,000 range.”

During the next three years, Habitat for Humanity of Greater Sacramento plans to engage more than six thousand volunteers in the multi-phase construction effort. The team is looking to raise at least $300,000 for the first phase of construction for Cornerstone Development, which includes three homes that are projected to be move-in ready by early 2023. The Kelly Foundation grant constitutes one-third of that amount.

The Kelly Foundation supports health and human services, education, culture, environment and civic improvement through its funding. For the fiscal year ending on September 30, 2022, the Foundation will provide approximately $1.5 million in grants to organizations that support the Sacramento and North Bay Area regions. Since merging with the RCB Foundation in 2009, the Kelly Foundation, of which River City Bank remains a major contributor, focuses on giving back to the greater Sacramento region through charitable donations.

For more information about the Kelly Foundation, please visit KellyFoundationSacramento.org.

Cornerstone Development Details

Cornerstone Development, was just named “2021 Affordable Housing Development of the Year” by the Sacramento Housing Alliance. It is also the largest single development in 36 years for Habitat for Humanity of Greater Sacramento. Groundbreaking is scheduled for February 2022, with the first phase of construction set to begin in June 2022. The seven-acre project site is located near the intersection of 46^th Street and Lang Avenue and is planned to house approximately 400 people once construction is completed. The development will be fully electric, and each of the 18 single-family Habitat homes will include solar panels on the roof and be EV-ready for charging electric vehicles.

To learn more about Habitat for Humanity of Greater Sacramento, including opportunities for volunteer participation, visit HabitatGreaterSac.org.

Click image to view a 2:51 video rendering of Cornerstone Development:

About the Kelly Foundation

The Kelly Broadcasting Company’s KCRA-TV (Sacramento-Stockton-Modest, CA) went on the air on Sept. 5, 1955, and the owners of the Kelly Broadcasting Company established the Kelly Foundation in December 1988 as a formal vehicle for structuring charitable contributions. The Kelly family sold KCRA-TV in 1999 and have continued the Kelly Foundation ever since. In 2009, the River City Bank Foundation merged with the Kelly Foundation, and some executives of the Bank currently serve on the Foundation’s Board. Jon S. Kelly founded River City Bank and continues to support the Bank. His daughter, Shawn Kelly Devlin, currently serves as President and Chairman of the Board. The Kelly Foundation is an expression of the importance the Kelly family places on being a good neighbor and citizen in regions where they do business. For more information on the Kelly Foundation, please visit KellyFoundationSacramento.org or call (916) 978-4892.

September 15, 2020

River City Bank expands CRE lending to Texas and several Western states with hire of Curtis Brunton

Former Bay Area banker to focus on commercial real estate as SVP, Business Development Officer based in Austin

SACRAMENTO, CA – River City Bank announces the addition of Curtis Brunton as Senior Vice President, Business Development Officer. Brunton, who is based in Austin, TX, will be responsible for developing new business, with a focus on originating commercial real estate (CRE) loans throughout Texas and specific states in the western U.S. He brings more than 22 years of experience in loan origination and new business development, having most recently opened the San Francisco office for Morgan Stanley’s commercial mortgage-backed securities (CMBS) group in 2017.

Curtis Brunton CRE Business Development

“Our team at River City Bank has experienced tremendous success in recent years,” said Dan Franklin, Director of Commercial Real Estate for River City Bank. “Now that we have begun to expand into new markets in Texas and other western states, we are excited to welcome a proven performer like Curtis to our team. We look forward to his business development efforts in growing markets such as Austin, which will serve as his home base.”

“River City Bank has a track record of success in the California market, particularly when it comes to commercial real estate lending,” said Curtis Brunton, SVP, Business Development Officer at River City Bank. “I am excited to extend those practices into new markets in Texas and other states in the West.”

As a CRE loan originator with Morgan Stanley based in San Francisco, Brunton focused on commercial lending throughout the western United States through mortgage banking clients and direct borrowers. Before opening that office with Morgan Stanley in 2017, he spent a total of 15 years with PGIM Real Estate Finance and 2 years as a Managing Director at Redwood Trust.

Brunton graduated with a Bachelor of Science degree in Finance from University of Arizona.

September 4, 2020

River City Bank President and CEO Steve Fleming named one of Sacramento’s Most Admired CEOs

This inaugural, peer-nominated award recognizes CEOs from the Sacramento region who have made a positive impact both within their respective businesses and the community as a whole. Steve Fleming is one of 25 recipients of the 2020 Most Admired CEOs award from Sacramento Business Journal.

Sacramento, CA – Steve Fleming, President and CEO of River City Bank, has been named one of Sacramento’s top leaders as a member of the inaugural class of Most Admired CEOs from the Sacramento Business Journal. The first annual event recognizes Sacramento CEOs who have made a positive impact through their dedication and leadership both within their business and in the local community as a whole. Recipients of this award were nominated for the distinction by their peers in the Sacramento business community.

“Since stepping in as President and CEO of River City Bank in 2008, Steve has evolved the way we do business and enhanced our community-focused initiatives throughout the Sacramento region while also expanding our footprint into promising nearby markets,” said Shawn Devlin, chairman of the board at River City Bank. “His leadership has made the difference between success and failure for many of our community’s important businesses, particularly during the difficult times we’ve faced due to the COVID-19 pandemic. I am pleased to congratulate Steve for this first-of-its-kind distinction, on behalf of the board of directors and the entire River City Bank team.”

In addition to driving strategy and execution at River City Bank, Fleming serves as a leader in various philanthropic and economic organizations, and he spearheads community-focused initiatives throughout the Sacramento region. He is President of the board for the Capital Region Family Business Center, President of the Sacramento chapter of Lambda Alpha International, and a member of the Sacramento Host Committee. He is also on the Board of Directors of the Kelly Foundation and the Greater Sacramento Area Economic Council.

Fleming has more than 35 years of banking experience, including more than 20 years with Bank of America in Sacramento and London, England. Immediately prior to joining River City Bank, he was the Founder and CEO of Presidio Bank in San Francisco. He was also the President and CEO of National Bank of the Redwoods in Santa Rosa. Under Fleming’s leadership, River City Bank has quadrupled in size from $800 million to $3.2 billion in total assets.

August 25, 2020

In Memoriam – Jon Kelly

Sacramento business icon Jon Kelly, the former owner of KCRA 3 and founder of Sacramento-based River City Bank, died July 25th, 2020. Jon, a longtime Sacramento resident before relocating to Southern California, was 84 years old.

Jon started at Channel 3, joining his older brother, Robert, in 1958. Two years later, Ewing “Gene” Kelly, their father, died of a heart attack and Jon Kelly, at the age of 24, became station manager. The brothers founded the Kelly Broadcasting Co. with their mother, Nina, a short time later.

After buying the stations outright from their partners — the Hansen family, who owned Crystal Cream and Butter Co. — the Kellys owned and operated the NBC-affiliated station for more than three decades, setting a bar higher than any of their competitors by producing public-affairs programming, daytime and evening news and lifestyle magazines years before others followed suit.

Channel 3’s longtime slogan — “Where the News Comes First” — was backed up by huge investments in its news operation. It fielded (and still does) more reporters and photographers, broadcast more hours of news and employed more news gathering equipment than any other station in the market.

The Kellys kept Channel 3 on the cutting edge, becoming the first in the market to use color film and Doppler radar; creating the first hour-long newscast and locally-produced morning show; creating “De Colores,” a public-affairs program focused on the Latino community; and sending LiveCopter 3 up into the skies above the capital beginning in 1987.

By the 1990s, before the station’s sale to Hearst in 1998, Channel 3 was leading competitors, and KCRA made national news several times, such as when President Bill Clinton decided to hold a statewide town hall meeting and chose to do it at KCRA.

Channel 3 has been a training ground for generations of TV reporters and anchors who went on to distinguished careers beyond Sacramento. Joan Lunden, the former veteran anchor of ABC’s “Good Morning America,” hosted Channel 3’s noon news in the 1970s. Miguel Almaguer and Kathy Park, now with NBC, are also a KCRA alumni, as is Gary Gerould, the voice of the Kings. The list goes on and on.

Kelly Broadcasting also operated KQCA-TV, owned AM and FM radio stations in Sacramento and owned and operated KCPQ-TV, the Fox affiliate in Seattle.

Other Business Ventures

Jon Kelly was the key player in the formation years ago of the Sacramento Area Trade and Commerce Organization, which was instrumental in attracting such industrial heavyweights as Intel, NEC and Hewlett-Packard to the region.

He also donated the land on which public television’s KVIE, Channel 6, now sits in South Natomas, and also found success as a real estate developer. One of his signature projects was the 12-story, LEED-certified Gateway Tower building at 2020 W. El Camino Ave.

Jon founded River City Bank to serve the capital region, growing the business-focused institution to 10 area branches and a presence in the Bay Area and Southern California before retiring from the chairman’s post in 2009. The Kellys still own a majority interest in the bank, which began in 1973 with about $2 million in capital. Today, the bank has assets of nearly $3.2 billion, making it the largest locally-owned bank in the capital region.

Jon was also an active producer in the television syndication business, remained in broadcasting through his investment in the SummitMedia group, owning 50 radio stations throughout the country, according to his family.

Jon Kelly was born July 23, 1936, in Berkeley, before the family moved to Sacramento where Gene Kelly became an ad salesman for The Bee before starting his own advertising agency in 1938. In 1945, they started their radio station. Jon Kelly attended the Lawrenceville School in New Jersey and the University of California, Berkeley.

After the sale of KCRA, Jon and his wife, Sarah, moved to their farm in Rancho Santa Fe in San Diego County. There, they continued their interest in thoroughbred horse racing and breeding, which led them to field horses in the Kentucky Derby and other prestigious races.

In addition to wife Sarah, Jon Kelly is survived by his sister, Suzanne, along with his children Gregory, Shawn, Marilyn, Mary Margaret and Melanie; and 13 grandchildren.

July 23, 2020

River City Bank reports a quarterly cash dividend on common shares

SACRAMENTO, CA — Steve Fleming, president and chief executive officer of River City Bank (the Bank), announced that the Bank’s board of directors has approved, in connection with the Bank’s recently reported net income of $6.1 million or $4.20 diluted earnings per share for the quarter ending June 30, 2020, a cash dividend of $0.30 per common share to shareholders of record as of August 4, 2020, and payable on August 18, 2020.

July 22, 2020

River City Bank reports net income of $6.1 million for the second quarter and $13.4 million year to date

SACRAMENTO, CA — River City Bank (the Bank) reported net income of $6.1 million, or $4.20 per diluted share, for the quarter ending June 30, 2020, which compares to the $6.5 million, or $4.44 per diluted share, for the same period in 2019. Net income was $13.4 million or $9.16 per diluted share for the six months ending June 30, 2020, which compares to the $12.4 million or $8.51 per diluted share for the six months ending June 30, 2019.

The improved net income for the six months versus the prior year period was driven by a $7 million or 23% increase to net interest income from higher loan balances. Average loan outstandings, including Paycheck Protection Program (PPP) loans were $461 million higher than the prior year period, thereby increasing loan interest and fee income. PPP loans originated in the second quarter totaled $283 million as of June 30, 2020. Partially, offsetting the higher level of loan interest and fee income were the following:

Provision for loan losses of $5.5 million or $3.5 million higher than the prior year period. Approximately $4.3 million of this provision can be attributed to the exceptional loan growth (over $200 million, excluding the PPP loans which are guaranteed by the US Government’s Small Business Administration), with the remaining $1.2 million primarily due to some Covid-19 caused deterioration in loan quality.
Mark to market on the interest rate swaps resulting in a loss of $1.5 million for the six months ending June 30, 2020 compared to zero for the prior year period. The Bank entered into these swap agreements to hedge the interest rate risk associated with its ongoing origination of medium-term fixed rate loans. Because certain of the Bank’s interest rate swaps were not designed to receive hedge accounting treatment, these swaps must be carried on the balance sheet at fair market value with any changes in value recorded in the income statement.

“Until an effective vaccine is developed and widely distributed amongst the population, we believe that the California economy will be seriously stressed; we are very pleased to be entering this period with solid asset quality metrics”, said Steve Fleming, president and chief executive officer of River City Bank. “Through our disciplined and financially conservative loan underwriting and diligent management of the portfolio, we have reported no non-performing loans over the past three consecutive quarters. Perhaps even more importantly is the minimal number of loan modifications that we have had to make as a result of the COVID-19 pandemic.” The COVID-19 related loan modifications through June 30, 2020 consisted of the following:

Consumer: One residential mortgage loan with an outstanding balance of only $6,278 had its P&I payments deferred to October 2020.
C&I: One loan with an outstanding balance of $1.3 million had its P&I payments deferred to July 15, 2020.
CRE: Seven loans with an aggregate outstanding balance of $24 million have been making interest only payments for three months.

“In addition to the exceptional loan growth noted above, we also experienced outstanding deposit growth of $542 million or 25% during the first half of 2020”, said Steve Fleming. “It should be noted that some of this deposit growth is temporary in nature due to an extension in the tax filing due date from April 15 to July 15 and the recent funding of the PPP loans into deposit accounts at the Bank. Nevertheless, we are very pleased with the trust placed in us by our deposit customers, which has allowed us to continue our robust lending into the communities we serve. Though our branches remain open to provide services to our customers, given the health risks associated with COVID-19, we are continuing to protect our staff through minimizing the number of customers that can enter a branch at one time and are following California’s guidelines for wearing masks and social distancing.”

“Operational efficiency remains a core competency for the Bank, as evidenced by our 36 percent efficiency ratio for the six months ending June 30, 2020” said Anker Christensen, chief financial officer of River City Bank. “Though our total non-interest expense has increased over the prior year period, our focus on managing expenses continues to be evident by our continued low efficiency ratio.”

Shareholders’ equity for River City Bank on June 30, 2020, increased $16.5 million to $253 million, when compared to the $237 million as of December 31, 2019. The increase was driven by current year retained earnings and a $3.5 million increase in accumulated other comprehensive income as the decline in short and medium term interest rates resulted in increased unrealized gains in our Investment securities portfolio. The Bank’s capital ratio remains well above the regulatory definition for being Well Capitalized with a Tier 1 Leverage Ratio of 8.7% as of June 30, 2020.

June 8, 2020

President’s Message

Head shot of Steve Fleming River City Bank President

Suffice to say, the COVID-19 pandemic has impacted our lives in 2020 in ways that most of us could never have imagined. Many segments of the business world have literally been shut down now for several months. While the economy has started to reopen, it is clear that many businesses will not return to pre-COVID revenue levels for quite a while, if ever. Consumer behavior reflects a great deal of anxiety about the health risks associated with COVID-19, and folks are going to be reluctant to fly in airplanes, stay in hotels, eat in restaurants, and visit shops until they feel safer. There are a few bright spots, though, as demand has soared for home improvement items, recreational vehicles, pool supplies, cleaning supplies, and groceries, amongst others.

Having started my banking career in 1980, this economic downturn will mark the 6^th recession I’ve experienced. We are always faced with unknown questions at the time the economy turns down about the depth and length of the recessions. However, what makes the current fact set particularly unique and difficult to forecast is that the trigger is a public health crisis. As a consequence, we have a double dose of uncertainty – i.e. will a relaxation of the shelter-in-place restrictions result in a resurgence of the virus, how long will we go without a vaccine, will the virus slow its spread in the hot summer weather and then rage again in the fall? It is impossible to project the outlook for the economy without first addressing the above questions about the Coronavirus. If we define risk by the uncertainty of the outcome, we are in a period of great risk.

Relationships in business matter, and during times of stress and uncertainty, they matter the most. For us at River City Bank, that recently meant taking care of our customers’ applications for funding under the Paycheck Protection Program (“PPP”). I’m extremely proud of my colleagues’ performance since Congress announced the PPP on March 27. Thus far, we have processed almost $300 million in loans for 700 borrowers; all RCB applicants received their funding.

None of us knows for sure what the future will bring. As people who own and operate businesses, our job is to focus on the things that we can control and manage the risks, as best we can, around the unknown. Please let me or your relationship manager know if we can help you navigate through this challenging period.

April 24, 2020

River City Bank reports an increase to the quarterly cash dividend on common shares

SACRAMENTO, CA — Steve Fleming, President and CEO of River City Bank (the Bank), announced that the Bank’s board of directors has approved, in connection with the Bank’s recently reported net income of $7.3 million, or $4.96 diluted earnings per share, for the quarter ending March 31, 2020, a cash dividend of $0.30 per common share to shareholders of record as of May 5, 2020, and payable on May 19, 2020.

April 23, 2020

River City Bank reports 2020 first quarter net income of $7.3 million

SACRAMENTO, CA — River City Bank (the Bank) reported net income of $7.3 million, or $4.96 per diluted share, for the quarter ending March 31, 2020, which compares favorably to the $5.9 million, or $4.07 per diluted share, for the same period in 2019. The improved net income versus the prior year quarter was driven by:

Higher loan balances – Average loan outstandings were $333 million higher than the prior year quarter, thereby increasing net interest income.
Non-core income of $657,000 during the current quarter related to prepayment penalty and deferred loan fee income on loans that paid off prior to their maturity compared to only $3,000 in the prior year quarter.
Increased loan income of $428,000 associated with hedge accounting entries related to our interest rate swap contracts compared to only $26,000 in the prior year quarter.
Partially offsetting the benefits to net income was a $500,000 increase in the provision for loan losses versus the prior year.

“We experienced exceptional deposit growth of $133 million, or 6.2 percent, during the first quarter of 2020,” said Steve Fleming, President and CEO of River City Bank. “We are very pleased with the trust placed in us by our deposit customers, which has allowed us to continue our robust lending into the communities we serve. These are unprecedented times and we are thankful that we can play a vital role through providing Paycheck Protection Program Loans (PPP Loans) to our existing customers as well as some new customers. As of April 20, 2020, we have funded $251 million of these PPP Loans. Our staff has performed at an exceptionally high level to ensure our customers received the resources they needed for their businesses in a timely fashion. Additionally, given the health risks associated with Covid-19, we are protecting our staff through minimizing the number of customers that can enter a branch at one time and through the use of acrylic barriers on our teller-line. Lastly, for those working in our corporate and back offices, we have been able to allow 80-90 percent of those staff to work from home.”

“These will be trying times for our economy and we are very pleased to be entering this period with solid asset quality metrics,” Fleming said. “Through our disciplined underwriting and consistency of monitoring the portfolio, we reported no non-performing loans for the two consecutive quarters ending March 31, 2020, and December 31, 2019.”

After excluding the prepayment penalty, accelerated deferred loan fee income and hedge accounting entries noted above, the Bank’s net interest margin decreased slightly from 2.66 percent to 2.64 percent for the quarters ending March 31, 2019 and 2020, respectively.

“Operational efficiency remains a core competency for the Bank, as evidenced by our 39 percent efficiency ratio for the quarter ending March 31, 2020,” said Anker Christensen, Chief Financial Officer of River City Bank. “Though our total non-interest expense has increased over the prior year quarter, our focus on managing expenses continues to be evident by our continued low efficiency ratio.”

Shareholders’ equity for River City Bank on March 31, 2020, increased $10.4 million to $247 million, when compared to the $237 million as of December 31, 2019. The increase was driven by increased retained earnings and a $3.2 million increase in accumulated other comprehensive income as the decline in short- and medium-term interest rates resulted in increased unrealized gains in our investment securities portfolio. The Bank’s capital ratio remains well above the regulatory definitions for being Well Capitalized, with a Tier 1 Leverage ratio of 9.5 percent as of March 31, 2020.