Letter to our Shareholders
To our shareholders, customers, and friends,
You will find the 2023 Consolidated Financial Statements for River Valley Community Bancorp and its wholly owned subsidiary, River Valley Community Bank (collectively referred to as the “Company”) HERE. Along with this report, we are providing additional context for you regarding the Company’s continued growth and development.
2023 reflected a continuation of a challenging period for the banking industry. Between January and July of last year, the Federal Reserve’s Open Market Committee increased Fed Funds rates four additional times, adding one full percentage point which brought the overnight Fed Funds rate to 5.25-5.50%. For reference, these rates stood at virtually zero when the Fed embarked on their tightening cycle in March of 2022. This steep increase in short-term rates over such a short period exposed questionable risk management practices that led to the failure of three large regional banks in 2023. In addition, the higher short-term rates put bank deposits squarely in competition with products offered by non-bank financial institutions and US government debt securities causing deposit flows out of the industry. This also drove increased deposit costs for the industry.
Our bank was not immune from these influences as we saw our deposit costs in 2023 increase to $5.4 million from $1.0 million in 2022. Despite this sharp increase in our funding costs, the bank still achieved net income after tax for the year of $5.9 million. Further, the strong financial foundation we have created allowed us to continue investing in our geographic coverage area with the opening of our Loan Production Office in Roseville during the second quarter of 2023. We anticipate this new office to be profitable in 2024.
The Bank’s strong liquidity and capital position enabled us to lend when other banks were tapping the brakes. In 2023, we increased our loan portfolio by $37 million or 14.4%, which put us in the 78th percentile for loan growth when compared to our UBPR (Uniform Bank Performance Report) peer group of nearly 1,300 banks. Our credit portfolio is performing well, and our liquidity provides a strong footing to continue supporting the lending needs of the communities we serve in 2024.
For 2024, we expect that higher deposit costs will continue to present earnings headwinds for our Bank but believe this impact will moderate as interest rates stabilize. We also anticipate that our loans and securities will continue to re-price at higher market rate levels, allowing us to achieve increased margins and earnings as we transition out of 2024 with potential tailwinds. We believe there is considerable room to grow in the markets served by our established four full-service branches. In addition, our offices in the Reno and Roseville markets reflect significant growth opportunities for the Bank.
It's hard to believe that in June, we will be celebrating our 18th anniversary. We should all be proud of the exceptional institution we have built and the strong reputation we have established in our markets. We continue our focus on delivering highly valued, relationship based and community focused banking services, which positions us uniquely in our markets. Looking forward, we see continued success for our bank, and we remain committed to our customers, employees, and shareholders.
Thank you for your continued interest in and support of River Valley Community Bank!
Sincerely,
John M. Jelavich, President & Chief Executive Officer
Stephen F Danna, Chairman of the Board
Forward Looking Statements: This document may contain comments and information that constitute forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such statements. Forward-looking statements speak only as to the date they are made. The Bank does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.