SACRAMENTO, CA — River City Bank (the Bank) reported earnings for the fourth quarter of 2021 of $9.81 million, or $6.63 per share, compared to $9.86 million, or $6.71 per share in the fourth quarter of 2020. The Bank also reported its 6th consecutive year of record net income with $44.5 million or $30.14 per diluted share, for the year ending December 31, 2021; this was $12.9 million more than the $31.6 million, or $21.58 per diluted share, for the year ending December 31, 2020. The improved net income versus the prior year was driven by:
- Higher loan balances – Average loans outstandings were $232 million higher than the prior year, thereby increasing net interest income.
- Deferred loan fee income associated with Paycheck Protection Program (PPP) loans for the current year was $1.9 million higher than the prior year.
- Interest expense declined $7.5 million as the Bank’s cost of funds declined from 0.74% in 2020 to 0.40% in 2021.
- The provision for loan losses for the current year was $1.9 million lower than the prior year.
- Mark-to-market gains (“MTM”) on interest rate swaps were $4.1 million higher than the prior year. 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.
- The Bank recognized a $3.4 million gain on the sale of an investment in the first quarter of 2021.
“In addition to six consecutive years of record net income, we are very pleased to report record net loan growth of $510 million for the year ending December 31, 2021, after excluding the $204 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 potential reduction in demand as employers provide work-from-home opportunities.”
“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 year ending December 31, 2021” said Anker Christensen, chief financial officer of River City Bank. “Though our total non-interest expense increased over the prior year, our focus on high productivity and managing expenses continues to be evident by our continued low efficiency ratio.”
Shareholders’ equity for River City Bank on December 31, 2021 increased $39 million to $308 million, when compared to the $269 million as of December 31, 2020. The increase was driven by current year retained earnings, slightly offset by a $5.4 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 8.4% as of December 31, 2021.
