Page 20 – River City Bank

January 25, 2018

River City Bank reports record net income of $16.7 million for 2017

SACRAMENTO, CA — January 25, 2018 — River City Bank (the Bank) reported record net income of $16.7 million, or $11.52 per diluted share, for the year ending December 31, 2017, which was $1.8 million more than the $14.9 million, or $10.34 per diluted share, for the year ending December 31, 2016. The Bank’s earnings for the year would have been even higher, however, the Bank recorded a one-time, non-cash charge of $4.6 million, or $3.18 per diluted share, in the fourth quarter of 2017 related to the enactment of the Tax Cuts and Jobs Act. The charge is related to the re-measurement of the Bank’s deferred tax assets arising from a lower corporate tax rate. Consequently, the Bank’s net income declined to $1.4 million, or $0.98 per diluted share, for the three months ending December 31, 2017, which compares to the $4.7 million, or $3.27 per diluted share, reported for the same period in 2016. Total deposits increased $223 million, or 17 percent, in 2017.

“We are extremely pleased with our deposit growth for 2017, particularly the 28 percent growth in non-interest bearing demand deposits,” said Steve Fleming, President and CEO of River City Bank. “Though our loan growth in the second half of the year slowed as expected, our loan growth in 2017 was still an impressive $185 million, or 14 percent. The commercial real estate refinancing wave has reached its conclusion; consequently, we expect slower loan growth going forward.”

Loan growth over the three-year period of 2014-2017 was a compounded 25 percent. Nevertheless, this exceptional loan growth over the prior year period propelled net interest income $6.1 million higher for the year ended December 31, 2017, versus the same period in 2016. The superior loan growth has also mitigated the negative impact of the recent flattening of the interest rate yield curve. The Bank’s net interest margin declined from 3.01 percent to 2.83 percent for the years ending December 31, 2016 and 2017, respectively.

Loan growth has not come at the expense of credit quality. Asset quality is exceptional with the ratio of nonperforming loans and OREO to total gross loans declining from an already low 0.33 percent as of December 31, 2016, to 0.01 percent as of December 31, 2017.

Another factor affecting the performance for the three and twelve months ending December 31, 2017, pertains to the mark-to-market (MTM) of the Bank’s interest rate swap contracts (swaps). Due to the continued increase in medium-term interest rates during the three and twelve months ending December 31, 2017, the Bank recognized MTM gains of $600,000 and $765,000 during these periods, respectively. This compares to the $2.5 million and $649,000 MTM gain for the same periods in 2016. The Bank entered into these swaps to hedge the interest rate risk associated with its ongoing origination of medium-term fixed rate commercial real estate loans. Because these swaps were not designed to receive hedge accounting treatment, these swaps have to be carried on the balance sheet at their fair value with any changes in value recorded in the income statement.

“With the ongoing, historically low interest rate environment continuing to pressure our revenues, we have remained vigilant in managing our expenses,” said Anker Christensen, Chief Financial Officer of River City Bank. “The Bank’s efficiency ratio was 40 percent and 46 percent for the year ending December 31, 2017, and 2016, respectively. Our efficiency ratio was, however, flattered by a $3.4 million gain on sale of other real estate owned in the second quarter of 2017. Even after excluding the gain on sale, our efficiency ratio was a very low 42 percent for the year ending December 31, 2017.”

Shareholders’ equity for River City Bank on December 31, 2017, increased $14 million to $185 million when compared to the $171 million as of December 31, 2016. The increase was driven by retained earnings. The Bank’s capital ratios remain well above the regulatory definitions for being Well Capitalized. Common Equity Tier 1, Tier 1 Leverage and Total Risk-Based Capital Ratios were 11.8 percent, 9.3 percent and 13.0 percent, respectively, as of December 31, 2017. Additionally, on September 13, 2017 all of the Bank’s 220,168 shares of preferred stock, totaling $9.7 million, were converted into a total of 183,439 shares of common stock.

January 25, 2018

Meet Nick Capraro

Nick Capraro is the Banking Center Manager for both the Davis and Downtown branches of River City Bank. Nick is responsible for ensuring both branches run smoothly and the needs of all its customers are met. We caught him during his busy work day to sit down with us to discuss baseball, endurance running, and going the distance.

Hometown: San Jose, CA

First Job: I worked at Service Merchandise as a cashier and quickly learned how much I loved working with money.

First Car: 1977 Monte Carlo Favorite Quotes: “Life is 10% what happens to you and 90% how you react to it”

Favorite Movie: Shawshank Redemption

First site or app you check in the morning: I always check out the Strava running app to see how many miles my friends have run. It inspires me to get out and run.

Favorite city to visit: Bend, Oregon. It has beautiful mountains, trails, lakes, and is dog-friendly. Which talent would you most like to have? The athletic ability to play professional sports.

Which causes/nonprofits do you support? Alzheimer’s Association, Ovarian Cancer Education & Research Network, Inc.

What is your idea of perfect happiness? Perfect happiness for me is running trails. It’s a great stress reliever. I get to run near lakes and rivers while taking in awesome views and seeing wildlife up close.

What did you want to be when you were a child? I wanted to be a professional baseball player. I played baseball in high school, but injuries derailed any further thoughts of continuing to the next level.

What was the best piece of business advice you were given when you were starting out? (Or a piece of advice you’re glad you ignored?) Do it right the first time.

What do you consider your greatest achievement? Finishing a 100-mile race. The course started in Folsom, ran up to Auburn and Cool, and then finished back at Folsom. I’ve completed two 100-mile races so far and am trying to get into the 100 mile Western States Endurance Run. It starts in Squaw Valley and finishes in Auburn. It’s the most coveted endurance run for trail runners. After the race, my body was exhausted from being on my feet for 22 hours. Physically, I was not as sore as I thought I’d be and had no blisters on my feet. Mentally, I was drained, but very proud to have completed something not very many people have.

What do you like best about working at River City Bank? Working at the branch allows me the opportunity to build relationships with people in the community every day. I value those relationships and always look forward to establishing new ones.

January 19, 2018

Cybersecurity Tips

Cybersecurity best practices constitute an expansive list of things to do. While in-depth security measures need to be implemented and managed by experts, you don’t need to be a cybersecurity pro to employ smart online safety habits that can go a long way in guarding against online crime. Small and simple steps, like the ones listed below, are just as important in helping to protect your data.

Stop. Think. Connect.

Click with care. Cybercriminals love to use holiday shopping and travel scams to gain access to information and computer systems. Scammers try to lure you to copycat websites of well-known brands or retailers by advertising great deals on hot-ticket items on social media sites or through search engines. Their goal: to deliver malware to your computer, steal your credit card number, or “phish” for personal information.
Lock it up! Never leave a device unattended and be sure you have strong passwords.
Search for the “S.” Look for the “https” instead of “http” on the web address of the payment page before you enter a credit card number or other personal information. The “s” stands for a secure connection which reduces the chance of online scams.
Connect with Caution. Most public Wi-Fi networks are not secure, so think twice before shopping or banking while on public Wi-Fi. Disable automatic Wi-Fi and Bluetooth before leaving home.
Download Updates. Installing updates can add new security patches to your apps, operating systems, anti-virus software, and other important programs. Be sure to download updates only from the official app provider.

If you have any questions or concerns, please contact our Customer Service Department at (916) 567-2899 or (800) 564-7144 or visit your nearest branch.

December 5, 2017

Kelly Foundation awards $100,000 to American Red Cross for Wildfire Relief

Major Gift earmarked exclusively for communities devastated and recovering

SACRAMENTO, CA – December 5, 2017 – The Kelly Foundation, of which River City Bank is a major contributor, has awarded its 2018 Major Gift of $100,000 to the American Red Cross Gold Country Region. The money is to be used exclusively to help those devastated by the recent California wildfires which struck directly in the heart of the communities served by The Kelly Foundation and River City Bank. The funds will help the American Red Cross continue to respond and help victims recover from this unprecedented tragedy.

“The destruction from these fires was as heartbreaking as it was indiscriminate, affecting people of all ages and economic levels,” said Shawn Kelly Devlin, President of the Kelly Foundation and Chairman of the Board of River City Bank. “Yet an agency that was seemingly everywhere, helping, was the American Red Cross. Its ability to provide boots on the ground and make an immediate impact was admirable, and the urgency of the situation led us to award this donation swiftly in order to help our neighbors in need.”

Devlin was more than a donor; she and her husband, Dr. Patrick Devlin, lost their home and everything in it during the devastating Tubbs fire which caused over $1.2 billion in damage as it destroyed more than 5,000 structures and claimed dozens of lives. “We were our own first responders that night,” said Devlin. “But now we have the opportunity to help others, since it will take a long time for the community to recover.”

“The Kelly Foundation is a valued partner of the American Red Cross,” said Gary Strong, American Red Cross Gold Country Region CEO. “We appreciate the foundation’s generous support as we continue to provide services to those directly affected by the California wildfires.”

To put the size of the Kelly Foundation donation in perspective, this amount of funding allows the Red Cross to provide much-needed items like 500 days’ worth of food and shelter for a displaced family of three; or some 4,000 comfort kits (containing hygiene items such as deodorant, toothbrushes and toothpaste); or snacks and 8,000 hot meals; or 20,000 blankets.

The American Red Cross, working with community and government partners, has provided more than 27,900 overnight stays in emergency shelters and has served more than 196,300 meals in response to the California wildfires. It has distributed more than 145,700 emergency relief items such as masks, gloves, rakes, trash bags and comfort kits. It continues to provide casework in the form of counseling, housing support and aid with applying for assistance and insurance claims.

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.

About American Red Cross

The American Red Cross shelters, feeds and provides emotional support to victims of disasters; supplies about 40 percent of the nation’s blood; teaches skills that save lives; provides international humanitarian aid; and supports military members and their families. The Red Cross is a not-for-profit organization that depends on volunteers and the generosity of the American public to perform its mission. For more information, please visit RedCross.org or CruzRojaAmericana.org, or visit us on Twitter at @RedCross.

November 9, 2017

Newly Formed Region Finance Announces City of Elk Grove as First Partner

New trade association aims to leverage $1 billion of local funds for economic growth

Sacramento, CA – November 9, 2017 – Region Finance, a newly formed trade association, is aiming to advance regional economic growth by encouraging Sacramento region municipalities to invest $1 billion of its funds into local community banks in the six-county Sacramento region. The City of Elk Grove was the first partner announced by Region Finance for its Responsible Investments for a Stronger Economy (RISE) program following an initial commitment of up to $15 million. The locally based banks plan to support economic development, job creation, and business expansion in the region by reinvesting these funds, along with others that will be dedicated to RISE, in growing local businesses.

“Region Finance is focused on keeping money, accounts and financial decisions here in the Sacramento region, and we are excited that our customer, the City of Elk Grove, has agreed to become the first of many participants in the RISE program,” said Steve Fleming, President and CEO of River City Bank and Board Member of Region Finance. “This decision represents an important first step in promoting local government investment to generate economic self-sustainability in our Sacramento communities.”

“The City of Elk Grove is excited to be the first municipal partner in this new and innovative program,” said Darrell Doan, Economic Development Director for City of Elk Grove. “The goals of RISE, supporting local economies and the Sacramento region through business lending, are in perfect alignment with Elk Grove’s strategy of supporting our small businesses by providing them enhanced access to capital.”

As the newest trade association under the umbrella of the Sacramento Region Business Association, Region Finance launched just last week. The association will focus on advancing regional economic growth by improving and expanding access to capital for local businesses and residents while providing local jurisdictions and policy leaders in the region with a unified voice through its innovative RISE program. RISE will spur additional investment in local businesses by increasing the amount of funds held on deposit at qualifying banking institutions headquartered in the region, like River City Bank. At the same time, RISE will continue to ensure the safety, security and yields of municipal funds by modifying municipal financial policies.

To qualify for RISE, a bank must be an FDIC insured bank headquartered in the Sacramento region and must maintain a “5-Star Superior” rating with Bauer Financial and a “Superior” rating of 200 or higher with IDC Financial. Each qualifying institution is required to submit a semi-annual report to the City Manager, Treasurer, and Council detailing loans, investments, and charitable giving made to businesses, consumers, and organizations within the City, and the projected number of jobs created. The City will include an update on the status of the RISE strategy in its quarterly financial reports.

To learn more about the City of Elk Grove, visit ElkGroveCity.org.

About Region Finance

Region Finance is a new trade association of Region Business for community banks and related institutions focused on advancing regional economic growth by improving access to capital for businesses in the Sacramento region. Region Finance advocates for government entities and regional corporations to keep money local through the use of local community banks whose business leadership, staff and customers are all located in the Sacramento area. Its mission is to catalyze success for the local business community by keeping and expanding the capital available in local banks that allow for a larger investment into the region. For additional information, please visit RegionBusiness.org/Region-Finance.

October 19, 2017

River City Bank reaches a record $2 billion in total assets and reports net income of $4.6 million for the third quarter of 2017

SACRAMENTO, CA – October 17, 2017– River City Bank (the Bank), Sacramento’s premier business bank, reached a record-setting $2.0 billion in total asset size at the end of the third quarter of 2017. The Bank also reported net income of $4.6 million, or $3.20 per diluted share, for the three months ending September 30, 2017, which compares to $4.1 million, or $2.86 per diluted share, reported for the same period in 2016. Year-to-date net income was $15.3 million, or $10.55 per diluted share, for the nine months ending September 30, 2017, which compares to the $10.2 million, or $7.07 per diluted share, reported for the same period in 2016. The significant increase partially pertains to the sale of Other Real Estate Owned in the second quarter of 2017 which resulted in a pre-tax gain of $3.4 million.

“We’re pleased to have increased the size of our total assets to a record-setting two billion dollars, even as we prepare for slower loan growth as the commercial real estate refinancing cycle approaches its conclusion,” said Steve Fleming, President and CEO of River City Bank. “As expected, loan growth slowed in the third quarter after the commercial real estate market provided excellent opportunities for loan growth during the first half of 2017.”

Total gross loans increased $153 million, or 12 percent, from December 31, 2016, and $288 million, or 25 percent, from September 30, 2016. This loan growth over the prior year period propelled net interest income $5.0 million higher for the first nine months of 2017 versus the same period in 2016. The superior loan growth has also mitigated the negative impact of the recent flattening of the interest rate yield curve. The Bank’s net interest margin declined from 2.97 percent to 2.84 percent for the nine-month periods ending September 20, 2016 and 2017, respectively, after adjusting for a $596,000 non-recurring interest recovery from a non-accrual loan during the 2016 period.

Asset quality is exceptional, with the ratio of nonperforming loans and Other Real Estate Owned to total gross loans declining from an already low 0.44 percent as of September 30, 2016, to 0.06 percent as of September 30, 2017.

“With the ongoing historically low interest rate environment continuing to pressure our revenues, we have remained vigilant in managing our expenses, as indicated by our efficiency ratio,” stated Anker Christensen, Chief Financial Officer of River City Bank. “The Bank’s efficiency ratio was 40 percent for the nine months ending September 30, 2017, and 51 percent for the same period in 2016. Even after excluding the gain on sale of OREO, our efficiency ratio was a very low 44 percent for the first nine months in 2017.”

Shareholders’ equity for River City Bank on September 30, 2017, increased nearly $14 million to $185 million when compared to the $171 million as of December 31, 2016. The increase was driven by retained earnings. The Bank’s capital ratios remain well above the regulatory definitions for being Well Capitalized. Common Equity Tier 1, Tier 1 Leverage and Total Risked-Based Capital Ratios were 11.2 percent, 9.5 percent and 13.1 percent, respectively, as of September 30, 2017. Additionally, on September 13, 2017, all of the Bank’s 220,168 shares of preferred stock totaling $9.7 million were converted into a total of 183,439 shares of common stock.

October 4, 2017

River City Bank adds City of Davis to growing list of business banking clients

Selection team cites integrity and community investment as key decision factors

Sacramento, CA – October 4, 2017 – River City Bank, Sacramento’s premier business bank, announced the City of Davis as its newest business banking client. The City of Davis named River City Bank as its primary bank for an initial term of five years, during which it will be responsible for providing comprehensive banking services across multiple accounts. City representatives cited River City Bank’s experience in providing full-service banking to comparable public sector agencies, commitment to the community and honest business practices as key factors in the decision, which came to a vote before the Davis City Council in mid-July following a multi-month selection process.

“River City Bank has built its reputation on the strength of its client relationships for more than 40 years, and our team looks forward to servicing the City of Davis with the same unswerving commitment that we provide to every client,” said Steve Fleming, President and CEO of River City Bank. “We value our local communities, and we’re confident in our ability to maintain a shared vision that reinforces the financial vitality, stability, and integrity they value.”

“The City is happy to be doing business with River City Bank,” said Robb Davis, City of Davis Mayor. “Our goals when selecting a bank included partnering with a local bank that has strong community values, is capable of providing all services necessary for a governmental agency and is well trusted in the financial world. We look forward to a long relationship and have confidence that River City Bank will assist us in meeting our financial goals.”

Following the City Council’s unanimous decision to terminate its relationship with Wells Fargo in February, River City Bank rose to the top of the list of business banks competing for the opportunity to manage the city’s financial accounts. Davis said he and the council are confident in the bank’s commitment to providing exceptional service and its emphasis on building strong banking relationships. In addition, he cited the bank’s involvement in the local community through charitable events, donations and fundraising activities as a positive reflection of its commitment to success at every level.

The City of Davis has a population of more than 68,000 and is home to UC Davis, a nationally accredited university specializing in agriculture science and medical training. Nationally, the UC Davis School of Medicine is a top 20 school for primary care training and a top 50 school for medical research. The city also maintains a variety of recreational facilities, cultural amenities, safe neighborhoods and convenient service establishments with a strong focus on community involvement.

For more information about the City of Davis, visit CityofDavis.org.

July 27, 2017

River City Bank Reports Net Income of $6.4 Million for the Second Quarter and $10.6 Million Year to Date

SACRAMENTO, CA – July 26, 2017—River City Bank (the Bank) reported net income of $6.4 million, or $4.42 per diluted share, for the three-month period ending June 30, 2017, which compares to the $3.3 million, or $2.30 per diluted share, for the same period in 2016. Net income was $10.6 million, or $7.35 per diluted share, for the six months ending June 30, 2017, which compares to the $6.1 million, or $4.22 per diluted share, for the six months ending June 30, 2016.

The two largest factors affecting the relative performance of the two periods pertain to the sale of other real estate owned (OREO) properties and the mark-to-market (MTM) of the Bank’s interest rate swap contracts (swaps). In the second quarter of 2017, the Bank sold an office building in Clovis, California, which resulted in a pre-tax gain of $3.4 million. Similarly, in the second quarter of 2016, the Bank recorded a $464,000 pre-tax gain on sale of an OREO property located in Arvin, California. These two properties were acquired via foreclosure and relate to loans originated in 2004 and 2008, respectively. The Bank no longer has any OREO on its balance sheet.

The Bank reported the MTM on the swaps resulting in a loss of $187,000 and a gain of $83,000 for the three- and six- month periods ending June 30, 2017, respectively, compared to MTM losses of $686,000 and $2.35 million for the same periods in 2016. Medium term interest rates changed minimally since the prior year end, resulting in a modest MTM swap gain for the six months ending June 30, 2017. This compared favorably to the large MTM swap loss of $2.35 million in the prior year period due to the pronounced decline in medium-term interest rates between December 31, 2015, and June 30, 2016. The Bank entered these swap agreements to hedge the interest rate risk associated with its ongoing origination of medium-term fixed rate loans. Because these 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.

Total gross loans increased $139 million, or 11 percent, from December 31, 2016, and $312 million, or 28 percent, from the prior year quarter end. “The Bay Area and Southern California commercial real estate markets continued to provide excellent opportunities for loan growth during the first half of 2017,” stated Steve Fleming, president and chief executive officer of River City Bank. “However, we believe that this commercial real estate refinancing cycle is approaching its conclusion. As such, we expect a significant slowdown in our loan growth going forward.”

This loan growth propelled net interest income $3.6 million higher for the first six months of 2017 versus the same period in 2017. The net interest income growth would have exceeded $4 million had the prior year period not benefited from an interest recovery of $596,000 from a nonaccrual loan that was fully repaid. The superior loan growth has also been essential in mitigating the negative impact of the recent flattening of the interest rate yield curve. Our net interest margin declined from 2.96 percent to 2.86 percent for the six-month periods ending June 30, 2016 and 2017, respectively, after adjusting for the non-recurring interest recovery noted above.

Asset quality is exceptional with nonperforming loans and OREO to total gross loans declining from an already low 0.46 percent as of June 30, 2016, to 0.06 percent as of June 30, 2017.

“With the ongoing historically low interest rate environment continuing to pressure our revenues, we have remained vigilant in managing our expenses,” stated Anker Christensen, chief financial officer of River City Bank. “Our efficiency ratio was 39 percent and 54 percent for the six months ending June 30, 2017 and 2016, respectively. After excluding the gains on sale of OREO and the mark-to-market adjustments on the interest rate swap contracts for both periods, our efficiency ratio declined to a very low 44 percent from 48 percent for the six month periods ending June 30, 2017 and 2016, respectively.”

Shareholders’ equity for River City Bank on June 30, 2017, increased almost $10 million to $181 million when compared to the $171 million as of December 31, 2016. The increase was driven by retained earnings. The Bank’s capital ratios remain well above the regulatory definitions for being Well Capitalized. Common Equity Tier 1, Tier 1 Leverage and Total Risked-Based Capital Ratios were, 10.9 percent, 9.4 percent and 12.8 percent, respectively, as of June 30, 2017.

July 11, 2017

Silicon Valley Clean Energy: Redefining Energy

After decades of dominance by electricity monopolies, California is experiencing the emergence of Community Choice Aggregators (CCAs), a new type of electricity provider that provides cities and counties the opportunity to choose what kinds of energy to purchase for their needs. CCA is a state policy that enables local governments to aggregate electricity demand within their jurisdictions in order to procure alternative energy supplies while maintaining the existing electricity provider for transmission and distribution services. On April 3, 2017, Silicon Valley Clean Energy (SVCE) commemorated its first official day of operation, supplying 100% carbon-free electricity to its customers in Silicon Valley. River City Bank was in attendance that day to celebrate SVCE’s launch and our banking partnership. We circled back with CEO, Tom Habashi, to find out more about SVCE and the important role they play in reducing the region’s carbon emissions.

How many customers does SVCE serve?

SVCE currently serves 240,000 residents in the area. SVCE, is a Joint Powers Authority (“JPA”) comprised of 11 municipalities located within the County of Santa Clara, as well as the unincorporated areas of the County itself. They have elected to allow SVCE to provide electric generation service within their respective jurisdictions.

SVCE just launched in April and is now supplying parts of the Silicon Valley with 100% carbon-free electricity. Were there any challenges you faced as you were trying to bring the program to fruition?

We knew we had to make sure our policies were in place, contracts were sound, and that we had set up a good foundation rather than building on quicksand. We learned from our predecessors and knew we needed to be better than the incumbent utility already in place.

The one problem we didn’t anticipate was how difficult it was to find office space in the Silicon Valley. For a time, we had trouble finding enough space that made sense for the organization. Luckily we found a great space in Sunnyvale.

What types of renewable sources does SVCE utilize and does it all come from California?

SVCE offers residents and businesses two main electricity choices. The default choice is GreenStart, which is 100 percent carbon-free. Under the GreenStart option, 50 percent of electricity comes from renewables such as wind and solar, while the other 50 percent comes from large-scale hydropower that we receive from the Upper Northwest. Customers currently pay 1% less for this option compared to the incumbent utility’s base plan with lower renewable content.

The other choice is GreenPrime, which is sourced from 100% renewables and is also 100% carbon free. GreenPrime is generated from 100% renewable, carbon-free sources, primarily from solar and wind farms in California and on the western grid. Buying GreenPrime further expands generation from these new and competitive renewable energy sources. Customers can choose to upgrade to GreenPrime for about $3 to $5 more per month. Customers enroll in Silicon Valley Clean Energy through an “opt-out” system. This means customers within SVCE’s service area receive alerts in the mail about switching to the agency, and they’re automatically switched over unless they choose to opt out.

SVCE is working on a program where 100% of the carbon free energy comes exclusively from California.

Why do you think more residents are leaning towards renewable energy and are willing to spend more to have greener options?

For many CCA customers, it actually saves them money. For example, SVCE GreenStart customers will pay 1% less than the incumbent utility’s current rates. With the opt-out option, customers are automatically enrolled and do not need to do a thing if they want cleaner, greener electricity, at a better price. For consumers, the benefits of the CCA are a no-brainer. They can choose to increase the amount of clean energy they use, thereby helping to reduce greenhouse gases and to reach, and even exceed, state and national clean-energy goals. CCA customers have also benefited from rebates on energy efficiency upgrades.

On another level, more and more communities are coming together to be a part of a solution to ease carbon emissions. They realize that it affects all of us, our children, and grandchildren.

California is experiencing the emergence of CCAs. Do you see more and more communities moving towards clean energy?

More and more communities are demanding more renewable energy options. California’s push for cleaner energy has been driven by a desire to limit greenhouse gas emissions from fossil fuels, which are the primary driver of climate change. Locally-governed public agencies like SVCE allow participating communities to reinvest revenues to keep rates low, provide energy efficiency programs, and promote a cleaner energy infrastructure.

Because of the success of CCAs, more and more communities are aching to take the leap and have environmental and energy stewardship over their regions.

What advances have you seen in renewable energy?

Energy storage has been a hot topic in the last couple of years. It is needed to store solar energy at night or wind power on days when there is no breeze. Energy storage plays an important role in this balancing act and helps to create a more flexible and reliable grid system. There are a number of technology choices available, but the cost of energy storage is still a concern. Solar energy has recently dropped in price by ~40%, but the question remains if it would be more profitable to simply add more generating capacity rather than more storage capacity. California, where there is already strong public policy support for renewable energy, is the undisputed king of US energy storage. However, in other places around the country, there is the need to stimulate technological improvement in storage to encourage further growth.

There are many other banks out there. What made SVCE choose RCB?

River City Bank was there for us from day one. We’ve seen them help other CCAs get their financing, even when it was unchartered territory. River City Bank had the experience and understanding for what CCAs encounter at various stages of financing and banking needs. They put together an offer that made sense for us and we were compelled to work with a community based bank with similar values. Steve (Fleming) and Rosa (Cucicea) were able to come up with solutions for our issues, helping us get through all the roadblocks we encountered and enable us to get the funding and banking services needed to launch SVCE. River City Bank’s experience and knowledge in the renewable energy industry is second to none.

To find out more about SVCE, visit their website at ww.svcleanenergy.org.

April 19, 2017

River City Bank Reports 2017 First Quarter Net Income of $4.2 Million

SACRAMENTO, CA – Apr. 19, 2017—River City Bank (the Bank) reported net income of $4.2 million, or $2.93 per diluted share, for the quarter ending March 31, 2017, which compares to the $2.8 million, or $1.92 per diluted share, for the same period in 2016. The prior year quarter benefited from an interest recovery of $596,000 from a nonaccrual loan that was fully repaid; however, that benefit was more than fully offset by the $1.7 million mark-to-market (MTM) loss on the Bank’s interest rate swap contracts (swaps). The current quarter reflects a MTM swap gain of $270,000.

“Our exceptionally strong loan growth over the past two years continued into the first quarter of 2017 with a net increase of $88 million, or 6.9 percent in total gross loans, since the end of 2016,” said Steve Fleming, president and chief executive officer of River City Bank. “The loan growth reflects our continued expansion in all three of our geographic markets: Central Valley, Bay Area and Southern California. Still, we believe that this commercial real estate refinancing cycle is approaching its conclusion and, as such, we expect a significant slowdown in our loan growth going forward.”

The superior loan growth has been essential to the expansion of the Bank’s net interest income, which increased 17 percent, or nearly $2 million, compared to the prior year quarter after excluding the non-recurring interest recovery noted above. Additionally, the Bank’s net interest margin declined only slightly from 2.95 percent in the prior year quarter to 2.89 percent in the current quarter after adjusting for the non-recurring interest recovery in 2016. The Bank’s commitment to asset quality coupled with the benign credit environment are reflected in the steady decline from an already low 0.87 percent non-performing loans to total gross loans as of March 31, 2015 to 0.19 percent and 0.07 percent as of March 31, 2016 and 2017, respectively.

In addition to the loan growth, the other noteworthy movement on the Bank’s balance sheet was the $94 million growth in deposits in the first quarter of 2017.

Medium term interest rates changed minimally since the prior year end, resulting in a modest MTM swap gain in the current quarter. This compared favorably to the MTM swap loss of $1.7 million in the prior year quarter due to the pronounced decline in medium-term interest rates between December 31, 2015, and March 31, 2016. The Bank entered these swap agreements to hedge the interest rate risk associated with its ongoing origination of long-term fixed rate loans. Because these swaps were not designed to receive hedge accounting treatment, these swaps have to be carried on the balance sheet at their fair market value with any changes in value recorded in the income statement.

“Operational efficiency is a core competency for the Bank, as evidenced by our 43 percent efficiency ratio for the quarter ending March 31, 2017,” said Anker Christensen, chief financial officer of River City Bank. “Though managing expenses continues to be a priority for the management team, the continued improvement in our efficiency ratio for the current quarter has been primarily driven by revenue growth. Our current efficiency ratio represents a significant improvement from the 56 percent reported in the prior year quarter (49 percent after excluding the impact of the $1.7 million MTM swap loss).”

Shareholders’ equity for River City Bank on March 31, 2017, increased $3.8 million to $174.4 million, when compared to the $170.6 million as of December 31, 2016. The increase was driven through increased retained earnings. The Bank’s capital ratios remain well above the regulatory definitions for being Well Capitalized. Common Equity Tier 1, Tier 1 Leverage and Total Risk-based capital ratios were 10.9 percent, 9.4 percent and 12.8 percent, respectively, as of March 31, 2017.