October 18, 2018

River City Bank reports net income of $5.9 million in third quarter of 2018

Expansion efforts continue with new loan production office in downtown San Francisco

SACRAMENTO, CA — October 18, 2018 — River City Bank (the Bank) reported net income of $5.9 million, or $4.06 per diluted share, for the quarter ending September 30, 2018, which compares to the $4.6 million, or $3.20 per diluted share, for the same period in 2017. The improved net income versus the prior year quarter was largely related to the Bank’s growth and lower Federal tax rate due to the tax reform legislation passed in December 2017. Net income was $17.2 million, or $11.82 per diluted share, for the nine months ending September 30, 2018, which compares to the $15.3 million, or $10.55 per diluted share, for the nine months ending September 30, 2017. Included in the year-to-date September 30, 2017 earnings was a $3.4 million pre-tax gain on sale of an Other Real Estate Owned property.

“We are excited to be opening a loan production office in downtown San Francisco in the fourth quarter of 2018,” said Steve Fleming, President and CEO of River City Bank. “The new office and the recent launch of our Clean Energy Division will provide us with new and additional opportunities to serve the thriving Bay Area marketplace.”

The Bank’s net interest margin declined from 2.84 percent to 2.72 percent for the nine months ending September 30, 2017 and 2018, respectively. The reduced net interest margin is a function of the Federal Reserve having increased short term interest rates and the flattening of the yield curve. Consequently, the Bank’s net interest margin compresses as the cost of deposits and other borrowings rise faster than the yield on its earning assets. If the Federal Reserve continues to raise rates as anticipated, management expects the Bank’s margins to further compress in the short term.

“Operational efficiency remains a core competency for the Bank, as evidenced by our 42 percent and 40 percent efficiency ratios for the quarters ending September 30, 2018 and 2017, respectively,” said Anker Christensen, Chief Financial Officer of River City Bank. “Managing expenses continues to be a priority for the management team.”

Shareholders’ equity for River City Bank on September 30, 2018 increased $16 million to $201 million, when compared to the $185 million as of December 31, 2017. The increase was driven by 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 11.8 percent, 9.6 percent and 13.1 percent, respectively, as of September 30, 2018.

About River City Bank

Named one of Sacramento Business Journal’s “50 Fastest Growing Companies” for each of the past six years, River City Bank is a leading boutique commercial bank throughout California with assets of over $4.9 billion. River City Bank offers a comprehensive suite of banking services, including loans, deposits, and cash management tools to the business, consumer, and commercial real estate sectors. With tailored, concierge-like level of service River City Bank redefines the banking experience and every touch point that surrounds it. River City Bank is the largest, independent, locally-owned and managed bank in the Sacramento region with an office in the San Francisco Bay Area and a presence in Southern California. For additional information, please visit www.rivercitybank.com or call (916) 567-2600. Member FDIC. Equal Housing Lender.

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