Tag: Loan Growth

July 20, 2022

River City Bank Reports Net Income of $8.9 Million for the Second Quarter of 2022 and $25.3 Million Year to Date

SACRAMENTO, CA — River City Bank (the Bank) reported net income of $8.9 million, or $5.98 per diluted share, for the quarter ending June 30, 2022, which compares favorably to the $7.3 million, or $4.97 per diluted share, for the same period in 2021.  Net income was $25.3 million or $17.08 per diluted share for the six months ending June 30, 2022, which compares favorably to the $23.0 million or $15.59 per diluted share for the six months ending June 30, 2021. Significant items impacting quarterly net income for June 30, 2022 and 2021 include the following:

  • Higher loan balances – Average loan outstandings were $353 million higher than the prior year quarter, thereby increasing net interest income.
  • The provision for loan losses for the current quarter of $1.25 million was less than the $2.5 million for the prior year quarter.
  • During the current quarter, the Bank recognized a gain of $728,000 on the sale of an office building that was no longer in use.
  • The Bank recorded an elevated level of prepayment premium income on commercial real estate loans that paid off prior to their maturity dates of $1.3 million for the quarter ending June 30, 2021 compared to only $877,000 for the current quarter.
  • The Bank recognized a mark to market loss on interest rate swap contracts of $3 million during the second quarter of 2021.
  • Deferred loan fee income associated with Paycheck Protection Program (PPP) loans was lower in the current quarter with $253,000 and $1.4 million for the quarters ending June 30, 2022 and 2021, respectively.
  • The Bank recognized a $3.9 million loss in the current quarter on the sale of $34 million of available for sale corporate bonds yielding only 0.95% and reinvested the proceeds in 1-year U.S. Treasuries yielding 2.87%.

“After a slow-start in the first quarter, we are pleased with the $239 million of loan growth during the first half of the year (after excluding the $30 million reduction in PPP loans),” said Steve Fleming, president and chief executive officer of River City Bank.  “Our asset quality remains strong with virtually no delinquencies or non-performing loans, however, we remain cautious about the impact to the office segment of commercial real estate due to the reduction in demand as employers provide work-from-home opportunities.”

“Operational efficiency remains a core competency for the Bank, as evidenced by our 27 percent efficiency ratio after excluding the interest rate swap mark-to-market gain of $7 million for the six month period ending June 30, 2022” said Anker Christensen, chief financial officer of River City Bank.

“Our focus on managing expenses continues to be evident by our continued low efficiency ratio and our total non-interest expense remains relatively unchanged from the prior period.”

Shareholders’ equity for River City Bank on June 30, 2022 increased $19 million to $327 million, when compared to the $308 million as of December 31, 2021. The increase was driven by current year retained earnings, partially offset by a $6.5 million decrease in accumulated other comprehensive income as the increase in short and medium-term interest rates resulted in unrealized losses in the Bank’s investment securities portfolio. The Bank’s capital ratio remains well above the regulatory definition for being Well Capitalized with a Tier 1 Leverage Ratio of 9.1% as of June 30, 2022.

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.

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.