October 18, 2023

River City Bank Reports Net Income of $16.3 Million for the Third Quarter of 2023, $43.6 Million Year to Date and a Quarterly Cash Dividend

SACRAMENTO, CA —River City Bank (the Bank) reported net income of $16.3 million, or $10.94 per diluted share, for the quarter ending September 30, 2023, which compares favorably to the $11 million, or $7.43 per diluted share, for the same period in 2022.  Net income was $43.6 million or $29.22 per diluted share for the nine months ending September 30, 2023, which compares favorably to the $36.3 million or $24.51 per diluted share for the nine months ending September 30, 2022.  The Bank’s earnings for the first nine months ending September 30, 2023 represented a healthy 15.4% return on equity capital and 1.34% return on assets.

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

  • Higher loan balances – Average loan outstandings were $513 million higher than the prior year quarter, thereby increasing net interest income.
  • Increased net interest margin (NIM) – For the current quarter, NIM has increased to 2.87% from 2.72% in the prior year quarter.  Year-to-date NIM has increased to 2.86% from 2.59% in the prior year through nine months.  The Bank has seen a benefit in NIM as market rates have increased over these timeframes.
  • The provision for credit losses for the current quarter of $4.6 million was higher than the $3.7 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.  For the nine months ending September 30, 2023, the provision for credit losses was $12.6 million – notwithstanding an absence of actual loan losses during that period.
  • The Bank recognized $2.4 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 and expanding 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 significantly from $3.4 billion as of December 31, 2022 to $4.2 billion as of September 30, 2023; as such, the Bank’s liquidity remains healthy.  At the same time, our asset quality remains strong with a very short effective duration (average of 1.1 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 (3%) 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 29 percent efficiency ratio, after excluding the interest rate swap mark-to-market gain of $7.7 million, for the nine month period ending September 30, 2023.”

Shareholders’ equity for River City Bank on September 30, 2023 increased $52 million to $405 million, when compared to the $353 million as of December 31, 2022. The increase was primarily driven by current year retained earnings, as well as a $10.2 million improvement in the Bank’s accumulated other comprehensive income position. River City Bank is one of a small percentage of banks in the United States which can claim a positive accumulated other comprehensive income. The Bank’s capital ratios remain well above the regulatory definition for being Well Capitalized, with a Tier 1 Leverage Ratio of 8.6% as of September 30, 2023.

Additionally, Mr. Fleming announced that the Bank’s board of directors has approved a cash dividend of $0.35 per common share to shareholders of record as of October 31, 2023, and payable on November 14, 2023.

July 19, 2023

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.

April 19, 2023

River City Bank Reports 2023 First Quarter Net Income of $12.9 Million

SACRAMENTO, CA —River City Bank (the Bank) reported net income of $12.9 million, or $8.64 per diluted share, for the quarter ending March 31, 2023, which compares to the $16.5 million, or $11.10 per diluted share, for the same period in 2022. The prior year quarter net income benefitted by several non-recurring revenue sources, as follows:

  • $7.0 million in mark-to-market gains on interest rate swaps for the quarter ending March 31, 2022 compared to none in the current As of March 31, 2023, all of the Bank’s interest rate swap contracts are being accounted for as hedges.
  • $6.9 million gain on sale derived from a true-up related to earn-out provisions from the sale of an investment in the prior year quarter.
  • $443,000 deferred loan fees earned on Paycheck Protection Program (PPP) loans for which the outstanding loan balances were forgiven by the Small Business Administration in the prior year quarter compared to virtually none in the current quarter.

Partially mitigating the above was the reduced provision for loan losses of $1.5 million for the current year quarter compared to $6.4 million in the prior year quarter.

The Bank’s earnings for the quarter ending March 31, 2023 represented a healthy 14% return on equity capital and 1.29% return on assets.

“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 anxiety that was caused by the failure of several banks in the first quarter, our total deposits of over $3.4 billion are essentially unchanged from December 31, 2022; as such, the Bank’s liquidity remains healthy. At the same time, our asset quality remains strong with a 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 and industrial properties, as well as expanding our geographic footprint to other western states outside of California. We will remain diligent with our monitoring of potential impacts to 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 minimal unrealized losses included in accumulated other comprehensive loss within shareholders’ equity and there are no investment securities categorized as held-to maturity,” said Anker Christensen, chief financial officer of River City Bank. “Operational efficiency remains a core competency for the Bank, as evidenced by our 32 percent efficiency ratio for the quarter ending March 31, 2023.”

Shareholders’ equity for River City Bank on March 31, 2023 increased $13.5 million to $366.5 million, when compared to the $353 million as of December 31, 2022. The increase was driven by current year retained earnings as the Bank distributes only a small portion of its net income. The Bank’s equity continues to be minimally impacted by the $4.4 million accumulated other comprehensive loss as of March 31, 2023. The Bank’s capital ratio remains well above the regulatory definition for being Well Capitalized with a Tier 1 Leverage Ratio of 9.3% as of March 31, 2023.