River City Bank Reports Net Income of $19.6 Million for the Second Quarter of 2026 and a Quarterly Cash Dividend
SACRAMENTO, Calif., July 22, 2026--( BUSINESS WIRE )--River City Bank ("the Bank") reported net income of $19.6 million or $1.37 per share for the quarter ended June 30, 2026, which compares to $15.4 million, or $1.05 per share, for the same period in 2025. Net income was $37.6 million or $2.60 per share for the six months ended June 30, 2026, which compares to $27.7 million, or $1.89 per share, for the six months ended June 30, 2025. The Bank's earnings for the quarter ended June 30, 2026 resulted in a 13.92% return on average equity and a 1.28% return on average assets. The Bank's book value per share rose to $40.58 as of June 30, 2026 from $35.61 per share as of June 30, 2025, an increase of 14%.
Second Quarter Highlights
Performance and operating highlights for the Bank for the periods noted below included the following:
For the Three Months Ended
June 30, 2026
March 31, 2026
June 30, 2025
($ in thousands, except per share data)
Return on average assets ("ROAA")
1.28
%
1.22
%
1.16
%
Return on average equity ("ROAE")
13.92
%
13.07
%
12.22
%
Efficiency ratio
29.44
%
32.10
%
33.50
%
Core pre-credit provision, pre-tax income (1)
$
25,433
$
24,599
$
25,673
Net income
$
19,616
$
17,946
$
15,411
Earnings per share
$
1.37
$
1.24
$
1.05
Book value per share
$
40.58
$
39.37
$
35.61
Weighted average shares outstanding
14,341,273
14,517,560
14,647,651
Common shares outstanding at end of period
13,994,875
14,323,381
14,322,040
(1) See the section entitled "Non-GAAP Reconciliation" for a reconciliation of this non-GAAP financial measure.
"The Bank continues to perform at a high level, as reflected in the metrics of growth in book value per share, return on average equity, return on average assets, and operating efficiency," said Steve Fleming, President and Chief Executive Officer. "The Bank delivered strong operating results in the second quarter of 2026, as evidenced by the earnings per share of $1.37 and continued compounding of book value per share. In addition, credit quality remains pristine as we have not suffered any material losses on loans originated since the current management team took over in 2008. Maintaining our best-in-class operating efficiency and credit culture are integral to our business model."
"Operational efficiency remains a core competency for the Bank, as evidenced by our second quarter 2026 efficiency ratio of 29%," said Brian Killeen, Chief Financial Officer of River City Bank. "We view this operational efficiency as a competitive advantage, contributing to sustained profitability and growth in shareholder value. In addition, the Bank continues to maintain high levels of liquidity with $1.4 billion of cash and investments combined with $2.2 billion in available borrowing capacity as of June 30, 2026. The Bank's high quality, short duration investment securities portfolio continues to perform well with a very low unrealized loss position of 0.8% as of June 30, 2026."
Financial Highlights
Financial highlights as of and during the three and six months ended June 30, 2026 compared to the same periods in the prior year included the following:
-
Interest-earning asset growth – Total loans increased by $64 million during the quarter ended June 30, 2026. Average loans outstanding for the quarter ended June 30, 2026 increased by $326 million (7.5% growth) compared to the prior-year quarter, and for the first half of 2026 increased by $312 million (7.3% growth) compared to the same period in 2025. Average cash balances and investment securities increased $440 million for the second quarter in 2026 and $409 million for the first half of 2026, compared to the respective prior year periods. This growth in interest-earning assets led to interest income growth for both periods.
-
Deposit growth – The Bank continues to see strong deposit growth. Average deposits for the second quarter of 2026 increased by $731 million (15.5% growth) compared to the same period in the prior year and by $702 million (15.0% growth) for the first half of 2026 compared to the same period in 2025, supporting the Bank's loan and interest-earning asset growth.
-
Share repurchases – During the quarter ended June 30, 2026, the Bank repurchased $13 million of common stock with an average share price of $41.03, slightly above book value, which should be a significant long-term advantage for the Bank's shareholders and demonstrates the Bank's commitment to shareholder value.
-
The Bank recognized a $3.2 million increase to noninterest income during the second quarter of 2026 compared to a $4.0 million reduction in noninterest income in the second quarter of the prior year related to undesignated interest rate swaps that have yet to be designated into a hedging relationship. The Bank regularly enters interest rate swaps to mitigate interest rate risk and all swaps are entered into for this purpose (regardless of accounting treatment). Approximately 17% of the Bank's interest rate swaps are undesignated as of June 30, 2026, and until these interest rate swaps are designated as a hedge to specific assets or liabilities, the mark-to-market ("MTM") fluctuations (positive and negative) will flow through the income statement. Given the hedging purpose of the swaps, Bank management does not view the MTM gains and losses, which are recognized for accounting purposes as economic gains and losses.
-
As of June 30, 2026, the Bank had zero non-performing loans, virtually no delinquent loans (0.03% of total loans), no loans more than 90 days past due and still accruing interest, and the Bank's Allowance for Credit Losses for Loans ("ACL") was 2.30% of total loans. The Bank recorded a $1.5 million provision for credit losses (loans and unfunded commitments) for the three months ended June 30, 2026 and $3.0 million for the six months ended June 30, 2026.
-
The Bank's efficiency ratio continued to be exceptionally low by industry standards at 29.4% and 33.5% for the three months ended June 30, 2026 and June 30, 2025, reflecting a highly productive team of employees and sustained cost discipline which is consistent with the Bank's commitment to being a low-cost producer.
-
Net interest margin ("NIM") – The Bank's NIM was 2.34% and 2.59% for the three months ended June 30, 2026 and June 30, 2025. This is due to a 38 basis point decrease in the yield on average earning assets while the cost of funds only decreased by 16 basis points during the same period.
Summary Results
Three months ended June 30, 2026, as compared to three months ended June 30, 2025
For the Three Months Ended
Variance
June 30,
2026
June 30,
2025
$
%
($ in thousands, except per share data)
Interest income
$
73,544
$
69,327
$
4,217
6.1
%
Interest expense
38,007
34,988
3,019
8.6
%
Net interest income
35,537
34,339
1,198
3.5
%
Provision for credit losses
1,518
—
1,518
100.0
%
Net interest income after provision for credit losses
34,019
34,339
(320)
(0.9
)%
Net changes in the fair value of derivatives
3,178
(4,009
)
7,187
NM
Noninterest income
1,833
2,247
(414
)
(18.4
)%
Noninterest expense
11,937
10,913
1,024
9.4
%
Income before taxes
27,093
21,664
5,429
25.1
%
Provision for income taxes
7,477
6,253
1,224
19.6
%
Net income
$
19,616
$
15,411
$
4,205
27.3
%
Earnings per share
$
1.37
$
1.05
$
0.32
30.5
%
ROAA
1.28
%
1.16
%
0.12
%
10.3
%
ROAE
13.92
%
12.22
%
1.70
%
13.9
%
Efficiency ratio
29.44
%
33.50
%
(4.06
)%
(12.1
)%
The Bank's net income was $19.6 million for the three months ended June 30, 2026, as compared to $15.4 million for the three months ended June 30, 2025. The primary items of note are as follows:
-
Interest income increased by $4.2 million, primarily due to an increase in average balances of loans, investment securities and cash balances.
-
Interest expense increased by $3.0 million due to significant growth in the average balance of interest-bearing deposits, partially offset by a 31 basis point decrease in the cost of interest-bearing deposits as compared to the same quarter in the prior year.
-
The MTM adjustment associated with interest rate swaps yet to be designated into a hedge relationship increased by $7.2 million to a $3.2 million MTM gain compared to $4.0 million MTM loss in the same quarter of the prior year.
-
Noninterest expense increased by $1.0 million over the prior year quarter, primarily due to increases in compensation expenses as the Bank continues to build out its team to support its growth. In addition, during the second quarter of 2026, the Bank donated $215,000 of Visa Class A shares to the Kelly Foundation, one of the largest charitable foundations based in Sacramento. These shares were received as part of a tender offer which Visa completed in May 2026.
Three months ended June 30, 2026, as compared to three months ended March 31, 2026
For the Three Months Ended
Variance
June 30,
2026
March 31,
2026
$
%
($ in thousands, except per share data)
Interest income
$
73,544
$
71,961
$
1,583
2.2
%
Interest expense
38,007
36,946
1,061
2.9
%
Net interest income
35,537
35,015
522
1.5
%
Provision for credit losses
1,518
1,512
6
0.4
%
Net interest income after provision for credit losses
34,019
33,503
516
1.5
%
Net changes in the fair value of derivatives
3,178
1,729
1,449
83.8
%
Noninterest income
1,833
2,028
(195
)
(9.6
)%
Noninterest expense
11,937
12,444
(507
)
(4.1
)%
Income before taxes
27,093
24,816
2,277
9.2
%
Provision for income taxes
7,477
6,870
607
8.8
%
Net income
$
19,616
$
17,946
$
1,670
9.3
%
Earnings per share
$
1.37
$
1.24
0.13
10.5
%
ROAA
1.28
%
1.22
%
0.06
%
4.9
%
ROAE
13.92
%
13.07
%
0.85
%
6.5
%
Efficiency ratio
29.44
%
32.10
%
(2.66
)%
(8.3
)%
The Bank's net income was $19.6 million for the three months ended June 30, 2026, as compared to $17.9 million for the three months ended March 31, 2026. The primary items of note are as follows:
-
Interest income increased by $1.6 million, primarily due to a $50 million increase in average balances of loans and an $87 million increase in average balances of cash and investment securities.
-
Interest expense increased by $1.1 million due to $122 million growth in average deposit balances, as compared to the prior quarter, slightly offset by a 7 basis point decrease in the cost of interest-bearing deposits.
-
Noninterest expense decreased by $507,000, primarily reflecting a decline in compensation expense compared to the prior quarter.
Six months ended June 30, 2026, as compared to six months ended June 30, 2025
For the Six Months Ended
Variance
June 30,
2026
June 30,
2025
$
%
($ in thousands, except per share data)
Interest income
$
145,506
$
136,548
$
8,958
6.6
%
Interest expense
74,954
69,823
5,131
7.3
%
Net interest income
70,552
66,725
3,827
5.7
%
Provision for (reversal of) credit losses
3,030
(124
)
3,154
NM
Net interest income after provision for (reversal of) credit losses
67,522
66,849
673
1.0
%
Net changes in the fair value of derivatives
4,907
(10,445
)
15,352
NM
Noninterest income
3,861
4,526
(665
)
(14.7
)%
Noninterest expense
24,381
21,922
2,459
11.2
%
Income before taxes
51,909
39,008
12,901
33.1
%
Provision for income taxes
14,347
11,291
3,056
27.1
%
Net income
$
37,562
$
27,717
$
9,845
35.5
%
Earnings per share
$
2.60
$
1.89
$
0.71
37.6
%
ROAA
1.25
%
1.05
%
0.20
%
19.0
%
ROAE
13.50
%
11.19
%
2.31
%
20.6
%
Efficiency ratio
30.74
%
36.05
%
(5.31
)%
(14.7
)%
The Bank's net income was $37.6 million for the six months ended June 30, 2026, as compared to $27.7 million for the six months ended June 30, 2025. The primary items of note are as follows:
-
Interest income increased by $9.0 million, primarily due to a $313 million increase in average balances of loans and a $409 million increase in average cash balances and investment securities.
-
Interest expense increased by $5.1 million due to significant growth in the average balance of deposits, partially offset by a 17 basis point decrease in the cost of funds between the two periods.
-
The MTM adjustment associated with interest rate swaps yet to be designated into a hedge relationship increased by $15.4 million to a $4.9 million MTM gain compared to $10.4 million MTM loss in the same period of the prior year.
-
Noninterest expense increased by $2.5 million over the prior year period, primarily due to a $1.2 million increase in compensation expense as the Bank continues to build out its team to support growth. The increase also reflects higher operating expenses associated with the Bank's strategic initiatives.
Balance Sheet Summary
Year over Year Balance Sheet Change
As of June 30,
Variance
2026
2025
$
%
($ in thousands)
Total assets
$
6,042,514
$
5,322,651
$
719,863
13.5
%
Total loans
4,678,130
4,351,223
326,907
7.5
%
Total investments
1,003,538
707,827
295,711
41.8
%
Total deposits
5,374,670
4,521,132
853,538
18.9
%
Total shareholders' equity
567,881
...
