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River City Bank Reports Net Income Of $17.9 Million for the First Quarter of 2026 and Assets in Excess of $6 Billion
River City Bank Reports Net Income Of $17.9 Million for the First Quarter of 2026 and Assets in Excess of $6
About this update from River City Bank
River City Bank (“the Bank”) reported net income of $17.9 million or $1.24 per share for the quarter ended March 31, 2026, which compares to $12.3 million, or $0.84 per share, for the same period in 2025. The Bank’s earnings for the quarter ended March 31, 2026 resulted in a 13.07% return on average equity and a 1.22% return on average assets. The Bank’s book value per share rose to $39.37 as of March 31, 2026 from $34.50 per share as of March 31, 2025, an increase of 14%. First Quarter Highlights Performance and operating highlights for the Bank for the periods noted below included the following: For the Three Months Ended March 31, 2026 December 31, 2025 March 31, 2025 ($ in thousands, except per share data) Return on Average Assets ("ROAA") 1.22 % 1.45 % 0.94 % Return on Average Equity ("ROAE") 13.07 % 15.50 % 10.12 % Efficiency Ratio 32.10 % 26.64 % 39.00 % Core pre-credit provision, pre-tax income (1) $ 24,599 $ 29,511 $ 23,655 Net income $ 17,946 $ 21,014 $ 12,306 Earnings per share $ 1.24 $ 1.45 $ 0.84 Book Value per share $ 39.37 $ 38.43 $ 34.50 Weighted average shares outstanding 14,517,560 14,507,246 14,667,206 Shares outstanding at end of period 14,323,381 14,272,790 14,433,640 (1) See the section entitled “Non-GAAP Reconciliation” for a reconciliation of this non-GAAP financial measure. “The Bank delivered strong operating results in the first quarter of 2026, as evidenced by the earnings per share of $1.24 and continued compounding of book value per share. Also, due to strong deposit growth of $238 million (or 4.6%) for the first quarter of 2026, the Bank crossed over the $6.0 billion in assets threshold for the first time in the Bank’s history. These results demonstrate the appreciation our customers have for the more than 50 years of consistently exceptional service the Bank continues to deliver,” said Steve Fleming, president and chief executive officer. “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. 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.” “Operational efficiency remains a core competency for the Bank, as evidenced by our first quarter 2026 efficiency ratio of 32%,” said Brian Killeen, chief financial officer of River City Bank. “We view this operational efficiency as a competitive advantage that we have sustained for many years. In addition, the Bank continues to maintain high levels of liquidity with $1.4 billion of cash and investments combined with $2.1 billion in available borrowing capacity as of March 31, 2026. The Bank’s high quality investment securities portfolio continues to perform well with a very low unrealized loss position of 0.8% as of March 31, 2026.” Financial Highlights Financial highlights as of and during the three months ended March 31, 2026 compared to the same period in the prior year included the following: Interest-earning asset growth – Average loans outstanding for the quarter ended March 31, 2026 were $299 million higher than the prior year quarter. On the other hand, loans outstanding as of March 31, 2026 were down $14 million from December 31, 2025. Average cash balance and investment securities were $378 million higher than the prior year quarter. Deposit growth – Average deposits were $672 million higher in the first quarter of 2026 compared to the same period a year earlier, supporting the Bank’s loan and cash balance growth. The Bank recognized a $1.7 million increase to non-interest income during the first quarter of 2026 compared to a $6.4 million reduction in non-interest income in the first 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 15% of the Bank’s interest rate swaps are undesignated as of March 31, 2026, and until these interest rate swaps are designated as a hedge to specific assets or liabilities, the mark-to-market fluctuations (positive and negative) will flow through the income statement. The Bank recorded a $1.5 million provision for credit losses for the first quarter of 2026 compared to a $124,000 reversal of provision for the same period in 2025. As of March 31, 2026, the Bank had zero non-performing loans, virtually no delinquent loans (0.02% 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 2.29% of total loans. The Bank's efficiency ratio continued to be low by industry standards at 32% for the three months ended March 31, 2026 and 39% for the three months ended March 31, 2025, reflecting consistent cost discipline which is consistent with the Bank's commitment to being a low-cost producer. Net interest margin ("NIM") – The Bank’s NIM decreased by 11 basis points to 2.38% compared to 2.49% in the prior year quarter. This was driven by a 0.26% decrease in the yield on average earning assets while the cost of funds only decreased by 0.17% during the same period. Summary Results Three months ended March 31, 2026, as compared to three months ended March 31, 2025 For the Three Months Ended Variance March 31, 2026 March 31, 2025 $ % ($ in thousands, except per share data) Interest income $ 71,961 $ 67,221 $ 4,740 7.1 % Interest expense 36,946 34,835 2,111 6.1 % Net interest income 35,015 32,386 2,629 8.1 % Provision for (reversal of) credit losses 1,512 (124 ) 1,636 NM Net interest income after provision for (reversal of) credit losses $ 33,503 $ 32,510 993 3.1 % Net changes in the fair value of derivatives 1,729 (6,435 ) 8,164 NM Noninterest income 2,028 2,278 (250 ) (11.0 )% Noninterest expense 12,444 11,009 1,435 13.0 % Income before taxes 24,816 17,344 7,472 43.1 % Provision for income taxes 6,870 5,038 1,832 36.4 % Net income $ 17,946 $ 12,306 $ 5,640 45.8 % Earnings per share $ 1.24 $ 0.84 $ 0.40 47.6 % Return on average assets ("ROAA") 1.22 % 0.94 % 0.28 % 29.5 % Return on average equity ("ROAE") 13.07 % 10.12 % 2.95 % 29.1 % Efficiency ratio 32.10 % 39.00 % (6.90 )% (17.7 )% The Bank’s net income was $17.9 million for the three months ended March 31, 2026, as compared to $12.3 million for the three months ended March 31, 2025. The primary items of note are as follows: Interest income increased by $4.7 million, primarily due to an increase in average balances of loans and cash held at the Federal Reserve Bank ("FRB"). Interest expense increased by $2.1 million due to significant growth in the average balance of interest-bearing deposits, partially offset by 0.30% decrease in the cost of interest-bearing deposits as compared to the same quarter in the prior year. The mark-to-market ("MTM") adjustment associated with interest rate swaps yet to be designated into a hedge relationship increased by $8.2 million to a $1.7 million MTM gain compared to $6.4 million MTM loss in the prior year quarter. Non-interest expense increased by $1.4 million over the prior year quarter, primarily due to an $830,000 increase in compensation expenses as the Bank continues to build out its team to support its growth. Three months ended March 31, 2026, as compared to three months ended December 31, 2025 For the Three Months Ended Variance March 31, 2026 December 31, 2025 $ % ($ in thousands, except per share data) Interest income $ 71,961 $ 74,635 $ (2,674 ) (3.6 )% Interest expense 36,946 35,951 995 2.8 % Net interest income 35,015 38,684 (3,669 ) (9.5 )% Provision for credit losses 1,512 2,753 (1,241 ) (45.1 )% Net interest income after provision for credit losses 33,503 35,931 (2,428 ) (6.8 )% Net changes in the fair value of derivatives 1,729 1,858 (129 ) (6.9 )% Noninterest income 2,028 2,220 (192 ) (8.6 )% Noninterest expense 12,444 11,393 1,051 9.2 % Income before taxes 24,816 28,616 (3,800 ) (13.3 )% Provision for income taxes 6,870 7,602 (732 ) (9.6 )% Net income $ 17,946 $ 21,014 $ (3,068 ) (14.6 )% Earnings per share $ 1.24 $ 1.45 (0.21 ) (14.5 )% Return on average assets ("ROAA") 1.22 % 0.94 % 0.28 % 29.4 % Return on average equity ("ROAE") 13.07 % 10.12 % 2.95 % 29.1 % Efficiency ratio 32.10 % 26.64 % 5.46 % 20.5 % The Bank’s net income was $17.9 million for the three months ended March 31, 2026, as compared to $21.0 million for the three months ended December 31, 2025. The primary items of note are as follows: Interest income decreased by $2.7 million, primarily due to a $718,000 reduction in loan prepayment premiums and a $1.9 million decrease in loan fair value hedge income. Interest expense increased by $995,000 due to growth in interest bearing deposit balances, as compared to the prior quarter, and cost of funds remaining relatively flat over the two quarters. The provision for credit losses decreased by $1.2 million, reflecting slight decreases in average loan balances and some improvement in credit quality in the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. Non-interest expense increased by $1.1 million, primarily due to increased salaries, incentive compensation and payroll taxes, as compared to the prior quarter. Balance Sheet Summary Year over Year Balance Sheet Change As of March 31, Variance 2026 2025 $ % ($ in thousands) Total assets $ 6,047,747 $ 5,287,018 $ 760,729 14.4 % Total loans 4,614,166 4,304,100 310,066 7.2 % Total investments 735,971 689,961 46,010 6.7 % Total deposits 5,386,542 4,668,611 717,931 15.4 % Total shareholder's equity 563,858 497,903 65,955 13.2 % Loans outstanding increased by $310 million or 7.2% as of March 31, 2026 compared to March 31, 2025. The growth was primarily in Commercial Real Estate loans that grew $315 million or 8.1% from March 31, 2025. Deposit balances increased by $718 million or 15.4% from March 31, 2025 to March 31, 2026, due primarily to significant growth in Commercial and Clean Energy client relationships. Shareholders’ equity increased $66 million, or 13.2% to $564 million as of March 31, 2026 when compared to $498 million as of March 31, 2025. The increase was driven primarily by growth in retained earnings, as the Bank continues to maintain a relatively low dividend payout ratio. Trailing Quarter Balance Sheet Change As of Variance March 31, 2026 December 31, 2025 $ % ($ in thousands) Total assets $ 6,047,747 $ 5,801,890 $ 245,857 4.2 % Total loans 4,614,166 4,628,103 (13,937 ) (0.3 )% Total investments 735,971 690,533 45,438 6.6 % Total deposits 5,386,542 5,148,329 238,213 4.6 % Total shareholder's equity 563,858 548,491 15,367 2.8 % Total loans decreased slightly by $14 million or 0.3% during the quarter ended March 31, 2026. During the current quarter, Commercial Real Estate loans increased by $56 million while Commercial loans and Agriculture loans decreased by $38 million and $26 million respectively. Loan originations totaled approximately $91 million for the quarter ended March 31, 2026. Deposit balances increased by $238 million or 4.6% during the quarter ended March 31, 2026, as the Bank continued to see strong growth from its existing deposit clients. As of March 31, 2026, the Bank had no wholesale funding. Shareholders’ equity increased $15 million, or 2.8% to $564 million as of March 31, 2026 when compared to $549 million as of December 31, 2025. The increase was driven primarily by the current year retained earnings, less cash dividends paid. The Bank’s capital ratios remain healthy and well above the regulatory definition for being Well Capitalized with a Tier 1 Leverage Ratio of 9.4% and a Total Risk-Based Capital Ratio of 14.4% as of March 31, 2026. Asset Quality Ratios March 31, December 31, September 30, June 30, March 31, 2026 2025 2025 2025 2025 ACL/Total loans 2.29 % 2.24 % 2.27 % 2.33 % 2.36 % Delinquent loans/Total loans 0.02 % 0.02 % 0.00 % 0.00 % 0.01 % Non-performing loans/Total loans 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % YTD net charge-off ratio 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % At March 31, 2026, the Bank had no other real estate owned or non-performing loans and there were no charge-offs during the quarter. The Bank’s allowance for credit losses was $105 million, as compared to $104 million at December 31, 2025. Provision for Income Taxes The Bank’s effective tax rate was 27.7% for the quarter ended March 31, 2026, as compared to 26.6% for the quarter ended December 31, 2025, and 29.1% for the quarter ended March 31, 2025. Differences between the Bank’s effective tax rate and applicable federal and state (primarily California) blended statutory rate of approximately 29.4% are primarily due to the proportion of excess benefit from restricted share instruments vesting, the benefits of tax credits, and changes in the Bank’s apportionment of taxable income in certain states. Dividend Announcement Mr. Fleming announced that the Bank’s board of directors has approved a cash dividend of $0.05 per common share to shareholders of record as of May 5, 2026, and payable on May 19, 2026. ABOUT RIVER CITY BANK: As a leading boutique commercial bank with assets over $6.0 billion, River City Bank is the largest, independent, locally owned and managed bank in the Sacramento region, with an office in San Francisco and a focus on the Western United States. River City Bank offers a comprehensive suite of banking services with a tailored, concierge-like level of service, to redefine the banking experience. Please visit http://www.rivercitybank.com or call (916) 567-2600. Member FDIC. Equal Housing Lender. FORWARD-LOOKING STATEMENTS The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on us. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. The financial results reported in this document are preliminary and unaudited. Condensed Financial Data (Unaudited) Income Statement Data For the Three Months Ended March 31, 2026 December 31, 2025 March 31, 2025 ($ in thousands) Interest income $ 71,961 $ 74,635 $ 67,221 Interest expense 36,946 35,951 34,835 Net interest income 35,015 38,684 32,386 Provision for (reversal of) credit losses 1,512 2,753 (124 ) Net interest income after provision for (reversal of) credit losses 33,503 35,931 32,510 Service charges on deposit accounts 207 196 208 Check card revenue 157 168 179 Net payments received on undesignated derivatives 935 1,237 1,321 Net changes in the fair value of derivatives 1,729 1,858 (6,435 ) Real estate lease income 162 68 64 FHLB dividends 760 331 330 Net gain on sales/calls of securities 1 43 — Other noninterest income (194 ) 177 176 Total noninterest income 3,757 4,078 (4,157 ) Salaries and employee benefits 8,258 7,208 7,428 Occupancy and equipment 638 617 594 Data processing 921 951 873 Federal deposit insurance 675 600 650 Other noninterest expense 1,952 2,017 1,464 Total noninterest expense 12,444 11,393 11,009 Income before taxes 24,816 28,616 17,344 Provision for income taxes 6,870 7,602 5,038 Net income $ 17,946 $ 21,014 $ 12,306 Net Interest Income and Net Interest Margin Three Months Ended Three Months Ended Three Months Ended March 31, 2026 December 31, 2025 March 31, 2025 Average Balance Interest & Fees Yield/ Rate Average Balance Interest & Fees Yield/ Rate Average Balance Interest & Fees Yield/ Rate Interest-earning assets (tax-equivalent basis, $ in thousands) Interest-earning deposits in banks $ 670,552 $ 6,017 3.64 % $ 509,113 $ 4,968 3.87 % $ 289,866 $ 3,000 4.20 % Investment securities 691,581 6,608 3.88 % 691,071 6,783 3.89 % 694,683 7,313 4.27 % Loans 4,593,636 59,342 5.24 % 4,542,725 62,888 5.49 % 4,294,291 56,915 5.38 % Total interest-earning assets 5,955,769 71,967 4.90 % 5,742,909 74,639 5.16 % 5,278,840 67,228 5.16 % Total noninterest-earning assets 21,964 18,084 24,169 Total average assets $ 5,977,733 $ 5,760,993 5,303,009 Interest-bearing liabilities Interest-bearing transaction accounts 2,321,935 19,351 3.38 % 2,066,962 18,177 3.49 % 1,819,720 16,391 3.65 % Money market accounts 1,330,101 10,776 3.29 % 1,143,502 9,580 3.32 % 988,444 8,216 3.37 % Savings deposits 88,718 107 0.49 % 92,014 116 0.50 % 99,996 126 0.51 % Time deposits 692,286 6,563 3.84 % 789,875 7,955 4.00 % 846,485 9,286 4.45 % Interest-bearing deposits 4,433,040 36,797 3.37 % 4,092,353 35,828 3.47 % 3,754,645 34,019 3.67 % Borrowings 278 3 4.38 % 289 3 4.12 % 556 6 4.38 % Other interest-bearing liabilities 61,020 146 0.97 % 56,445 114 0.80 % 120,158 811 2.74 % Total interest-bearing liabilities $ 4,494,338 $ 36,946 3.33 % $ 4,149,087 $ 35,945 3.44 % $ 3,875,359 $ 34,836 3.65 % Noninterest-bearing liabilities Noninterest-bearing deposits 902,202 1,048,563 908,600 Other noninterest-bearing liabilities 24,253 25,573 25,857 Total noninterest-bearing liabilities 926,455 1,074,136 934,457 Total average liabilities 5,420,793 5,223,223 4,809,816 Shareholders' equity 556,940 537,770 493,193 Total liabilities and shareholders' equity $ 5,977,733 $ 5,760,993 $ 5,303,009 Net interest income $ 35,021 $ 38,694 $ 32,392 QTD NIM 2.38 % 2.67 % 2.49 % Cost of funds 5,396,540 36,946 2.78 % 5,197,650 35,945 2.74 % 4,783,959 34,836 2.95 % Cost of deposits 5,335,242 36,797 2.80 % 5,140,916 35,828 2.76 % 4,663,245 34,019 2.96 % Balance Sheet Data Assets March 31, 2026 December 31, 2025 March 31, 2025 ($ in thousands) Cash and due from financial institutions $ 689,524 $ 477,471 $ 279,283 Investment securities 735,971 690,533 689,961 Loans by type: Commercial real estate - owner occupied 161,440 161,543 165,856 Commercial real estate - non-owner occupied 4,038,861 3,982,797 3,719,301 Construction and land development 19,952 25,760 14,200 Residential real estate 192,232 192,840 195,486 Commercial and industrial 145,990 183,590 170,322 Consumer 8,786 8,242 8,701 Agricultural 46,905 73,331 30,234 Total gross loans 4,614,166 4,628,103 4,304,100 Less: Net deferred loan fees & hedged loan MTM (56,687 ) (48,449 ) (76,568 ) Less: Allowance for credit losses (105,471 ) (103,799 ) (101,381 ) Net loans 4,452,008 4,475,855 4,126,151 Accrued interest receivable 25,106 23,208 24,912 Premise and equipment, net 10,632 10,717 10,502 Deferred tax assets, net 27,907 26,966 24,892 Swap MTM accumulated adjustment 68,849 59,282 92,732 Other assets 37,750 37,858 38,585 Total assets $ 6,047,747 $ 5,801,890 $ 5,287,018 Liabilities and shareholders' equity Deposits: Noninterest-bearing demand deposits $ 845,209 $ 932,804 $ 882,668 Money market accounts 1,449,930 1,177,273 958,330 Interest-bearing transaction accounts 2,379,298 2,185,987 1,865,450 Savings deposits 86,611 89,915 99,726 Time deposits 625,494 762,350 862,437 Total deposits 5,386,542 5,148,329 4,668,611 Accrued interest payable 3,885 5,152 5,062 Other borrowings — 25,000 — Cash collateral - From derivative counterparties 72,500 59,090 95,030 Other liabilities 20,962 15,828 20,412 Total liabilities 5,483,889 5,253,399 4,789,115 Shareholders' equity 563,858 548,491 497,903 Total liabilities and shareholders' equity $ 6,047,747 $ 5,801,890 $ 5,287,018 Capital Ratios March 31, December 31, September 30, June 30, March 31, 2026 2025 2025 2025 2025 Tier 1 leverage ratio 9.35 % 9.40 % 9.54 % 9.42 % 9.27 % Common equity 1 capital ratio 13.14 % 12.75 % 12.58 % 12.45 % 12.35 % Tier 1 risk-based capital ratio 13.14 % 12.75 % 12.58 % 12.45 % 12.35 % Total risk-based capital ratio 14.41 % 14.02 % 13.85 % 13.71 % 13.62 % Non-GAAP Reconciliation In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains a non-GAAP financial measure. Management has presented this non-GAAP financial measure in this press release because it believes that it provides useful and comparative information to assess trends in the Bank's core operations. However, the non-GAAP financial measure is supplemental and is not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of the non-GAAP financial measure, see the table below: Core Pre-Credit Provision, Pre-Tax Income This figure is defined as net interest income, plus non-interest income, less the change in fair value of derivatives, less non-interest expense. The purpose of this non-GAAP financial measure is to remove the market volatility that can be included in the change in the fair value of derivatives that do not have fair value hedge accounting treatment (undesignated), which is a component of non-interest income. We hedge our interest rate risk through interest rate derivatives and a portion of the gain/loss on derivatives is reflected in our income statement. In addition, this measure removes the provision for credit losses and income tax expense. We believe that this non-GAAP financial measure provides a clearer picture of our operational earnings. For the Three Months Ended March 31, 2026 December 31, 2025 March 31, 2025 ($ in thousands) Net interest income $ 35,015 $ 38,684 $ 32,386 Non-interest income 3,757 4,078 (4,157 ) Non-core item: Less change in the fair value of undesignated derivatives 1,729 1,858 (6,435 ) Core non-interest income 2,028 2,220 2,278 Less non-interest expense 12,444 11,393 11,009 Core pre-credit provision, pre-tax income $ 24,599 $ 29,511 $ 23,655 View source version on businesswire.com: https://www.businesswire.com/news/home/20260422456226/en/