River City Bank Reports Net Income of $16.3 Million for the Third Quarter of 2023, $43.6 Million Year to Date and a Quarterly Cash Dividend

SACRAMENTO, CA / ACCESSWIRE / October 18, 2023 / River City Bank (the Bank) (OTC Pink:RCBC) reported net income of $16.3 million, or $10.94 per diluted share, for the quarter ending September 30, 2023, which compares favorably to the $11 million, or $7.43 per diluted share, for the same period in 2022. Net income was $43.6 million, or $29.22 per diluted share, for the nine months ending September 30, 2023, which compares favorably to the $36.3 million, or $24.51 per diluted share, for the nine months ending September 30, 2022. The Bank's earnings for the first nine months ending September 30, 2023, represented a healthy 15.4% return on equity capital and 1.34% return on assets.

Significant items impacting quarterly net income for September 30, 2023 and 2022 include the following:

• Higher loan balances - Average loan outstandings were $513 million higher than the prior year quarter, thereby increasing net interest income.
• Increased net interest margin (NIM) - For the current quarter, NIM has increased to 2.87% from 2.72% in the prior year quarter. Year-to-date NIM has increased to 2.86% from 2.59% in the prior year through nine months. The Bank has seen a benefit in NIM as market rates have increased over these timeframes.
• The provision for credit losses for the current quarter of $4.6 million was higher than the $3.7 million for the prior year quarter. The increase in the provision for credit losses in 2023 reflects the growth in the Bank's loans this year and concern for continued deterioration in the office segment of the Bank's commercial real estate portfolio. For the nine months ending September 30, 2023, the provision for credit losses was $12.6 million - notwithstanding an absence of actual loan losses during that period.
• The Bank recognized $2.4 million in mark-to-market gains on interest rate swaps for the current quarter compared to none in the prior year quarter. These swaps were recently entered into for the purpose of hedging the medium term fixed rate loans in the Bank's loan portfolio, as part of the Bank's standard interest rate risk management program.

"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 and expanding customer base," said Steve Fleming, president and chief executive officer. "Notwithstanding the turmoil in the banking industry that was caused by the failure of several banks in the first half of this year, our total deposits have grown significantly from $3.4 billion as of December 31, 2022, to $4.2 billion as of September 30, 2023; as such, the Bank's liquidity remains healthy. At the same time, our asset quality remains strong with a very short effective duration (average of 1.1 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, retail, and industrial properties, as well as expanding our geographic footprint to other western states outside of California. On the other hand, we continue to see deterioration in 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."