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.
