River City Bank Reports Net Income of $14.4 Million for the Second Quarter of 2023 and $27.3 Million Year to Date

SACRAMENTO, CA -River City Bank (the Bank) reported net income of $14.4 million, or $9.65 per diluted share, for the quarter ending June 30, 2023, which compares favorably to the $8.9 million, or $5.98 per diluted share, for the same period in 2022. Net income was $27.3 million or $18.28 per diluted share for the six months ending June 30, 2023, which compares favorably to the $25.3 million or $17.08 per diluted share for the six months ending June 30, 2022. The Bank’s earnings for the first six months ending June 30, 2023 represented a
healthy 14.8% return on equity capital and 1.35% return on assets.

Significant items impacting quarterly net income for June 30, 2023 and 2022 include the following:

• Higher loan balances – Average loan outstandings were $470 million higher than the prior year quarter, thereby increasing net interest income.
• The provision for credit losses on loans for the current quarter of $6.5 million was significantly higher than the $1.3 million for the prior year quarter. The increase in the provision for credit losses in 2023 reflects the growth in the Bank’s loans this year and concern for continued deterioration in the office segment of the Bank’s commercial real estate portfolio.
• During the prior year quarter, the Bank had recognized a $3.9 million loss on the sale of $34 million of available for sale corporate bonds. The Bank had no investment sales during the current quarter.
• The Bank recognized $5.3 million in mark-to-market gains on interest rate swaps for the current quarter compared to none in the prior year quarter. These swaps were recently entered into for the purpose of hedging the medium term fixed rate loans in the Bank’s loan portfolio, as part of the Bank’s standard interest rate risk management program.

“With the Bank’s founding in 1973, we are celebrating 50 years of consistent and reliable service to our customers in 2023 and we are thankful for the goodwill that we have built with our loyal customer base,” said Steve Fleming, president and chief executive officer. “Notwithstanding the turmoil in the banking industry that was caused by the failure of several banks in the first half of this year, our total deposits have grown from $3.4 billion as of December 31, 2022 to $3.6 billion as of June 30, 2023; as such, the Bank’s liquidity remains healthy. At the same time, our asset quality remains strong with a very short duration (average of 1.7 years) bond portfolio and virtually no
delinquencies or non-performing loans. We believe we can continue to grow our commercial real estate loan portfolio as we focus on loans secured by multi-family, retail, and industrial properties, as well as expanding our geographic footprint to other western states outside of California. On the other hand, we continue to see deterioration in the office segment of our commercial real estate loan portfolio from the reduction in demand as employers continue to provide work from home opportunities for their employees.”

“The Bank’s high quality investment securities portfolio continues to perform well with relatively small unrealized losses included in accumulated other comprehensive loss within shareholders’ equity and there are no investment securities categorized as held-to maturity,” said Brian Killeen, interim chief financial officer of River City Bank. “Operational efficiency remains a core competency for the Bank, as evidenced by our 30 percent efficiency ratio,after excluding the interest rate swap mark-to-market gain of $5.3 million, for the six month period ending June 30, 2023.”

Shareholders’ equity for River City Bank on June 30, 2023 increased $31 million to $384 million, when compared to the $353 million as of December 31, 2022. The increase was driven by current year retained earnings, as well as a $4.7 million reduction in the Bank’s accumulated other comprehensive loss. The Bank’s equity continues to be minimally impacted by a slight $477 thousand accumulated other comprehensive loss position as of June 30, 2023. The Bank’s capital ratios remain well above the regulatory definition for being Well Capitalized with a Tier 1 Leverage Ratio of 9.3% as of June 30, 2023.

About River City Bank

As a leading boutique commercial bank with assets over $5 billion, River City Bank is the largest, independent, locally owned and managed bank in the Sacramento region, with an office in San Francisco and a presence in Southern California. River City Bank offers a comprehensive suite of banking services with a tailored, concierge-like level of service, to redefine the banking experience. Please visit www.rivercitybank.com or call (916) 567-2600. Member FDIC. Equal Housing Lender.