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.