Tag: Earnings Report

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.

July 18, 2018

River City Bank reports 2018 second quarter net income of $5.7 million

SACRAMENTO, CA — July 18, 2018 — River City Bank (the Bank) reported net income of $5.7 million, or $3.94 per diluted share, for the quarter ending June 30, 2018, which compares to the $6.4 million, or $4.42 per diluted share, for the same period in 2017. The prior year quarter benefited from a $3.4 million pre-tax gain on sale of an Other Real Estate Owned property. Net income was $11.3 million or $7.76 per diluted share for the six months ending June 30, 2018, which compares to the $10.6 million or $7.35 per diluted share for the six months ending June 30, 2017.

“Although loan growth has slowed versus the prior three years, we are pleased to have exceeded $1.5 billion in loan outstandings as of June 30, 2018,” said Steve Fleming, President and Chief Executive Officer of River City Bank. “We are also very excited for the future of our recently launched Clean Energy Division. We have taken the lead in providing banking services for clean energy companies throughout California and look forward to a continued expansion of this practice.”

The Bank’s net interest margin declined from 2.86 percent to 2.73 percent for the quarters ending June 30, 2017 and 2018, respectively. The reduced net interest margin is a function of the Federal Reserve having pushed up short-term interest rates and the flattening of the yield curve. Consequently, our net interest margin compresses as the cost of deposits and other borrowings rise faster than the yield on our earning assets.

The Bank’s asset quality remains healthy with the ratio of nonperforming loans to total gross loans declining from an already low 0.06 percent as of June 30, 2017 to 0.01 percent as of June 30, 2018. With the economic recovery in its 9th year, we are at a point in the credit cycle when most banks are experiencing minimal loan losses.

“Operational efficiency remains a core competency for the Bank, as evidenced by our 42 percent and 39 percent efficiency ratios for the quarters ending June 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 June 30, 2018 increased $10 million to $195 million, when compared to the $185 million as of December 31, 2017. 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 12.0 percent, 9.7 percent and 13.2 percent, respectively, as of June 30, 2018.

April 19, 2018

River City Bank reports 2018 first quarter net income of $5.5 million

SACRAMENTO, CA — April 19, 2018 —  River City Bank (the Bank) reported net income of $5.5 million, or $3.82 per diluted share, for the quarter ending March 31, 2018, which compares favorably to the $4.2 million, or $2.93 per diluted share, for the same period in 2017. The improved net income versus the prior year quarter was driven by three factors: increased net interest income due to higher loan balances, reduced loan loss provisions due to slower loan growth in the quarter and lower federal tax rates due to the tax reform legislation passed in December 2017.

“Though, as we have been projecting, the pace of our loan growth has slowed significantly compared to the pace of growth over the last three years, the year over year growth in loans still contributed to the continued increase in our profitability,” said Steve Fleming, President and CEO of River City Bank.  “Our asset quality is exceptional with the ratio of nonperforming loans and OREO to total gross loans declining from an already low 0.29 percent as of March 31, 2017 to 0.01 percent as of March 31, 2018. Lastly, the Bank benefited from the decrease in the federal tax rate, which effectively added $912,000 to our bottom line through reduced tax expense.”

The loan growth has also been sufficient to mitigate the negative impact of the rise in short term interest rates and recent flattening of the interest rate yield curve. The Bank’s net interest margin declined from 2.89 percent to 2.75 percent for the quarters ending March 31, 2017 and 2018, respectively.

Effective January 1, 2018, the Bank adopted the new Derivative and Hedging accounting standard early. Through the adoption of the new standard, the Bank is able to account for its interest rate swap contracts using hedge accounting. Consequently, the Bank will no longer be subject to the significant valuation swings caused by the mark-to-market of its swap contracts as a gain or loss in non-interest income; rather, both the swaps and the loans being hedged are marked-to-market with the net difference recorded as an adjustment to loan interest income. The Bank recorded a nominal $75,000 reduction to loan interest income for the quarter ending March 31, 2018 as a result of the adoption of the new standard.

“Operational efficiency remains a core competency for the Bank, as evidenced by our 43 percent efficiency ratio for the quarters ending March 31, 2018 and 2017,” said Anker Christensen, chief financial officer of River City Bank. “Managing expenses continues to be a priority for the management team as it offsets the effect of our net interest margin compression.”

Shareholders’ equity for River City Bank on March 31, 2018, increased $4.4 million to $189.3 million when compared to the $184.9 million as of December 31, 2017. 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 11.9 percent, 9.5 percent and 13.2 percent, respectively, as of March 31, 2018.

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.

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.

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.

January 27, 2017

River City Bank Reports Record Net Income and Loan Growth for 2016

SACRAMENTO, CA, January 27, 2017—River City Bank reported net income of $4.7 million, or $3.27 per diluted share, for the three-month period ending December 31, 2016, which compares to the $4.0 million, or $2.77 per diluted share, for the same period in 2015. The Bank posted record net income of $14.9 million, or $10.34 per diluted share, for the year ending December 31, 2016, which was $2.4 million more than the $12.5 million, or $8.76 per diluted share, for the year ending December 31, 2015.

“In addition to record earnings for 2016, we also reported record loan growth of over $304 million,” stated Steve Fleming, president and chief executive officer of River City Bank. “Over the last two years, our team of highly talented bankers has expanded the Bank’s relationships with existing clients and added high-quality new clients to the Bank resulting in a 66 percent increase in gross loans since December 31, 2014. This expansion of market share stems from maintaining our strong market position and brand in the Sacramento area and our continued penetration into the Bay Area and Southern California commercial real estate markets.”

Asset quality continued to be a high priority for the Bank, with nonperforming loans to total gross loans declining from an already low 0.35 percent as of December 31, 2015, to 0.08 percent as of December 31, 2016. Other real estate owned (i.e. real estate obtained by the Bank via foreclosure) as of December 31, 2016, amounted to only $3 million. Notwithstanding the excellent asset quality, the Bank made loan loss provisions of almost $4 million in 2016 due to the above-noted loan growth.

Loan growth propelled net interest income $8.6 million higher for the year ending December 31, 2016, versus the same period in 2015. It should be noted that net interest income for 2016 benefited from $916,000 in interest recoveries from two nonaccrual loans which paid off during 2016. These interest recoveries, combined with the Bank’s superior loan growth, are the reason the Bank’s net interest margin increased from 2.97 percent to 3.01 percent for the years ending December 31, 2015, and December 31, 2016, respectively, despite the negative impact of the continued low level of interest rates.

In addition to the accelerated loan growth, another factor affecting the performance for the three- and twelve-month periods ending December 31, 2016 pertains to the mark-to-market (MTM) of the Bank’s interest rate swap contracts (swaps). Due to recent increases in medium-term interest rates during the three- and twelve-month periods ending December 31, 2016, the Bank incurred a MTM gain of $2.5 million and $649,000, respectively. This compares favorably to the $740,000 MTM gain and $338,000 MTM loss for the same periods in 2015. The Bank entered 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 must be carried on the balance sheet at fair market value with any changes in value recorded in the income statement. It should also be noted that the increase in interest rates in 2016 caused a mark-to-market decrease in the Bank’s securities fair value, resulting in a $707,000 decrease (net of taxes) from December 31, 2015, to December 31, 2016, in the Accumulated Other Comprehensive Income in the equity section of the Bank’s balance sheet.

“Our significant loan growth over the last two years has expanded our net interest income as noted above and, together with our continued vigilance in managing expenses, has led to a 46 percent efficiency ratio for 2016 compared to 52 percent for 2015,” stated Anker Christensen, chief financial officer of River City Bank. “Managing expenses continues to be a necessity in this historically low interest rate environment, which pressures our revenues.”

Shareholders’ equity for River City Bank on December 31, 2016, increased almost $13 million to $171 million, when compared to the $158 million as of December 31, 2015. The increase was driven by retained earnings and partially offset by the previously noted decrease in Accumulated Other Comprehensive Income. The Bank’s capital ratios remain well above the regulatory definitions for being Well Capitalized. Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based Capital Ratios were 9.8 percent, 11.3 percent, and 13.3 percent, respectively, as of December 31, 2016.

October 20, 2016

River City Bank Reports Net Income of $4.1MM For Q3 2016

SACRAMENTO, CA — October 20, 2016—River City Bank (the Bank) reported net income of $4.1 million, or $2.86 per diluted share, for the three months ending September 30, 2016, which compares to the $2.3 million, or $1.62 per diluted share, for the three months ending September 30, 2015. Net income was $10.2 million, or $7.07 per diluted share, for the nine months ending September 30, 2016, which was $1.6 million more than the $8.6 million, or $5.99 per diluted share, for the nine months ending September 30, 2015.

“Our team of highly talented bankers continues to expand the Bank’s relationships with existing clients and add high-quality new clients to the Bank,” stated Steve Fleming, president and chief executive officer of River City Bank. “While maintaining our strong market position and brand in the Sacramento area, the Bay Area and Southern California commercial real estate markets continue to provide excellent opportunities for loan growth.”

This expansion of market share manifested in an increase in total gross loans of $169 million, or 17 percent, and $246 million, or 27 percent, for the nine and twelve months ending September 30, 2016, to $1.1 billion as of September 30, 2016. Loan growth propelled net interest income $6.4 million higher for the first nine months of 2016 versus the same period in 2015. In addition, it should be noted that year-to-date net interest income included a $596,000 interest recovery from a nonaccrual loan which paid off during the first quarter of 2016. This superior loan growth has been essential to the Bank’s improved level of profitability as it has, largely, mitigated the negative impact of the continued decline in long-term interest rates. In fact, the Bank’s net interest margin remained unchanged at 2.97 percent for the nine-month periods ending September 30, 2016 and 2015, after adjusting for the non-recurring interest recovery noted above.

Asset quality continues to be a high priority for the Bank, with nonperforming loans to total gross loans declining from an already low 0.39 percent as of September 30, 2015 to 0.16 percent as of September 30, 2016. Other real estate owned (i.e. real estate obtained by the Bank via foreclosure) as of September 30, 2016 was only $3 million. In addition to the accelerated loan growth, the second-largest factor affecting the performance for the three and nine months ending September 30,

In addition to the accelerated loan growth, the second-largest factor affecting the performance for the three and nine months ending September 30, 2016 pertains to the mark to market (MTM) of the Bank’s interest rate swap contracts (swaps). Due to declines in long-term interest rates during the nine months ending September 30, 2016, the Bank incurred a MTM loss of $1.9 million, compared to a $1.1 million MTM loss for the same prior year period. As long-term interest rates partially rebounded in the third quarter of 2016, the Bank recorded a MTM gain on swaps of $480,000. In the prior year quarter, long-term rates declined, thus causing a $1.5 million MTM loss for the three months ending September 30, 2015.  The Bank entered these swaps to hedge the interest rate risk associated with its ongoing origination of long-term fixed rate commercial real estate loans. Because these swaps were not designed to receive hedge accounting treatment, they must be carried on the balance sheet at their fair market value with any changes in value recorded in the income statement. It should also be noted that the decline in interest rates caused a mark to market increase in the Bank’s securities fair value resulting in a $1.6 million increase (net of taxes) from December 31, 2015 to September 30, 2016 in the Accumulated Other Comprehensive Income in the equity section of the Bank’s balance sheet.

“Our efficiency ratio declined from 55 percent for the nine months ending September 30, 2015 to 51 percent for the same period in 2016, demonstrating our continued vigilance in managing our expenses,” stated Anker Christensen, chief financial officer of River City Bank. “Managing expenses is a necessity in this historically low interest rate environment which continues to pressure our revenues. After excluding the mark to market loss on the interest rate swap contracts, our efficiency ratio would have been less than 48 percent for the nine months ending September 30, 2016.”

Shareholders’ equity for River City Bank on September 30, 2016 increased almost $10.5 million to $168 million, when compared to the $158 million as of December 31, 2015. The increase was driven by retained earnings and the previously noted increase in Accumulated Other Comprehensive Income. The Bank’s capital ratios remain well above the regulatory definitions for being Well Capitalized. Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based Capital Ratios were 10.1 percent, 12.2 percent, and 14.2 percent, respectively, as of September 30, 2016.

February 1, 2016

River City Bank Reports Loan Growth of Almost 27 Percent in 2015 and Total Assets in Excess of $1.5 Billion

SACRAMENTO, CA — February 1, 2016—River City Bank (the Bank) reported net income of $3.97 million, or $2.77 per diluted share, for the three months ending December 31, 2015, which compares to the $3.63 million, or $2.54 per diluted share, for the three months ending December 31, 2014. The current quarter benefited from a $1.1 million gain on sale of an Other Real Estate Owned property. Net income was $12.5 million, or $8.76 per diluted share for the year ending December 31, 2015, which compares favorably to the $11.8 million, or $8.31 per diluted share for the year ending December 31, 2014. Total assets grew almost 19 percent during 2015, and total assets as of December 31, 2015 exceeded $1.5 billion.

Due to changes in interest rates, the Bank recorded a $740,000 mark to market gain and a $338,000 mark to market loss on interest rate swap contracts for the quarter and year ending December 31, 2015, respectively. This compares to $495,000 and $1.0 million mark to market losses on interest rate swap contracts for the quarter and year ending December 31, 2014, respectively. 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 are carried on the balance sheet at their fair market value with any changes in value recorded in the income statement.

“2015 was another year of excellent profitability and growth,” stated Steve Fleming, president and chief executive officer of River City Bank. “Each of the five years of 2011 through 2015 are in the top six most profitable years for the bank over its 43-year history. Loan growth has been vibrant over the last five years, averaging 13 percent per annum; however, 2015 was truly exceptional with nearly 27 percent loan growth in one year.”

Total gross loans increased $206 million, or 26.8 percent, in 2015 and $78 million, or 8.7 percent, from September 30, 2015. “Loan growth continues to be a key element of our profitability as it has mitigated the downward pressure on the Bank’s net interest margin and revenue caused by the extended low interest rate environment,” stated Fleming. “Most importantly, this growth in loans has been achieved without lowering our high credit underwriting standards, as evidenced by the significant decline in our already low non-performing loans to total loans ratio from 0.85 percent as of December 31, 2014 to 0.35 percent as of December 31, 2015. The continued strengthening of the quality of the Bank’s loan portfolio led to a $2.7 million negative loan loss provision in the fourth quarter of 2014; however, due to the substantial loan growth in 2015, the Bank recorded a $900,000 provision for loan losses in the fourth quarter of 2015.”

The net interest margin declined from 3.05 percent for the quarter ending December 31, 2014, to 2.97 percent for the same period in 2015. “Fixed income investment yields remain near historic lows, putting pressure on our margins as the reinvestment rate for our maturing investment securities is still well below their current yield,” stated Anker Christensen, chief financial officer of River City Bank. “With the continued pressure on our margins, we have remained vigilant about maximizing our operating efficiency. Our efficiency ratio for the years ending December 31, 2015 and 2014 was 51.76 percent and 57.97 percent, respectively.”

Shareholders’ equity for River City Bank on December 31, 2015 increased $9.8 million to $157.9 million, compared to $148.1 million as of December 31, 2014. 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 13.1 percent, 10.9 percent and 15.2 percent, respectively, as of December 31, 2015.