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.