SACRAMENTO, CA — River City Bank (the Bank) reported net income of $11.7 million, or $7.92 per diluted share, for the quarter ending September 30, 2021, which compares favorably to the $8.3 million, or $5.70 per diluted share, for the same period in 2020.  Net income was $34.7 million or $23.51 per diluted share for the nine months ending September 30, 2021, which compares favorably to the $21.8 million or $14.86 per diluted share for the nine months ending September 30, 2020. Significant items impacting quarterly net income for September 30, 2021 and 2020, include the following:

• Higher loan balances – Average loans outstandings were $233 million higher than the prior year quarter, thereby increasing net interest income.
• The provision for loan losses for the current quarter of $2.0 million was less than the $3.35 million for the prior year quarter.
• The Bank recorded an elevated level of $1.9 million prepayment premium income for the current quarter on commercial real estate loans that paid off prior to their maturity dates compared to only $764,000 for the prior year quarter.
• Mark-to-market gains (“MTM”) of $740,000 and $365,000 on interest rate swaps were recorded for the quarters ending September 30, 2021 and 2020, respectively. The Bank entered into these swap agreements to hedge the interest rate risk associated with its ongoing origination of medium-term fixed rate commercial real estate loans.
• Deferred loan fee income associated with Paycheck Protection Program (PPP) loans was slightly lower in the current quarter with $1.4 million and $1.7 million for the quarters ending September 30, 2021 and 2020, respectively.

Receiving an investment grade long term credit rating from S&P Global was an important milestone for the Bank this quarter as it reflects their assessment of our operational efficiency, strong loan quality,  solid earnings capacity, and management stability,” said Shawn Devlin, chairman of the board of River City Bank.  “We are now one of the only banks in the nation with less than five billion dollars in total assets to have secured an investment grade rating from S&P.”

“We are very pleased with the $296 million of loan growth during the first nine-months of the year after excluding the $183 million reduction in PPP loans,” said Steve Fleming, president and chief executive officer of River City Bank.  “With vaccine distribution having ramped up and the California economy showing signs of improvement, we are optimistic about the near-term outlook for the Bank. We do, however, remain cautious about the impact to the office segment of commercial real estate due to the potential reduction in demand as employers provide work-from-home opportunities. Nevertheless, our asset quality remains strong with virtually no delinquencies or non-performing loans.”

“Operational efficiency remains a core competency for the Bank, as evidenced by our 30 percent efficiency ratio after excluding the swap MTM gain for the nine-months ending September 30, 2021,” said Anker Christensen, chief financial officer of River City Bank. “Though our year-to-date total non-interest expense increased over the prior year period, our focus on managing expenses continues to be evident by our continued low efficiency ratio.”

Shareholders’ equity for River City Bank on September 30, 2021 increased $31 million to $301 million, when compared to the $270 million as of December 31, 2020. The increase was driven by current year retained earnings, slightly offset by a $3.1 million decrease in accumulated other comprehensive income as the increase in short and medium-term interest rates resulted in unrealized losses in our 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 8.6% as of September 30, 2021.