Company Website: https://rivercitybank.com/
SACRAMENTO, Calif. -- (Business Wire)

River City Bank (Nasdaq: RCBC) ("the Bank") reported net income of $30.6 million or $2.16 per share for the quarter ended September 30, 2026, which compares to $19.7 million, or $1.36 per share, for the same period in 2025. Net income was $68.2 million or $4.75 per share for the nine months ended September 30, 2026, which compares to $47.4 million, or $3.24 per share, for the nine months ended September 30, 2025. The Bank’s earnings for the quarter ended September 30, 2026 resulted in a 21.06% return on average equity and a 1.92% return on average assets. The Bank’s book value per share rose 14% to $42.32 as of September 30, 2026 from $37.04 per share as of September 30, 2025.

In August 2026, the Bank successfully completed its initial public offering (“IPO”) and its shares began trading on the Nasdaq Capital Market under the RCBC ticker symbol. The secondary offering consisted solely of existing shares held by two of the Bank's long-time shareholders associated with the family of the Bank's founder, Jon Kelly, and no new shares were issued by the Bank. The IPO was a major milestone in the Bank's history, increased the Bank's visibility within the public capital markets, and provided liquidity for shareholders, while establishing a publicly traded market value for its common stock.

Third Quarter Highlights

Performance and operating highlights for the Bank for the periods noted below included the following:

• Net income increased to $30.6 million, or $2.16 per share, for the third quarter of 2026, as compared to $19.6 million, or $1.37 per share, for the preceding quarter and $19.7 million, or $1.36 per share, for the same period in the prior year. This significant increase in the current quarter was primarily due to a $17.1 million mark-to-market (“MTM”) gain related to certain interest rate swaps. The MTM gain was due to the increase in U.S. Treasury rates during the third quarter of 2026. Management believes that core PTPP income⁽¹⁾, which also removes the MTM gains and losses is a better metric to evaluate the Bank's core earnings. Core PTPP income increased 15% to $29.3 million for the third quarter of 2026 as compared to $25.4 million for the trailing quarter and increased 3% from $28.4 million for the same quarter in the prior year.
• Average loans increased by $108 million (2% growth) compared to the trailing quarter and by $363 million (8% growth) compared to the same period in the prior year, reflecting continued organic loan growth.
• Average deposits for the third quarter of 2026 increased by $158 million (3% growth) compared to the trailing quarter and by $766 million (16% growth) compared to the same period in the prior year, supporting the Bank’s loan growth and liquidity position.
• As of September 30, 2026, the Bank had zero non-performing loans, virtually no delinquent loans (0.00% of total loans), no loans more than 90 days past due and still accruing interest, no other real estate owned (“OREO”), and the Bank’s Allowance for Credit Losses for Loans (“ACL”) was 2.30% of total loans. Due to the loan growth, the Bank recorded a $3.7 million provision for credit losses (loans and unfunded commitments) for the three months ended September 30, 2026, compared to $1.5 million provision in the trailing quarter and a $644,000 reversal of provision for the same period in the prior year. The ACL to total loans ratio was unchanged at September 30, 2026 from the prior quarter end at 2.30%.
• The Bank continued to maintain an exceptional efficiency ratio by industry standards at 19.4% for the third quarter of 2026, compared to 29.4% in both the trailing quarter and the third quarter of 2025. Even excluding the $17.1 million MTM gain on undesignated interest rate swaps, the Bank's adjusted efficiency ratio⁽¹⁾ was 27.7% compared to 31.9% in the trailing quarter and 28.2% for the same period in the prior year.
• Net interest margin (“NIM”) – The Bank’s NIM was 2.39% and 2.34% for the three months ended September 30, 2026 and June 30, 2026. The modest increase in the current quarter was due to slightly higher yields on interest-earning assets because of the increase in U.S. Treasury rates and a 0.03% reduction in cost of funds.

“This quarter was quite exceptional in the Bank’s 53-year history due to our IPO and listing on the Nasdaq. We believe that becoming a public company will enable us to further enhance shareholder value, which has always been management's and the Board's “North Star”. The Bank also delivered solid core operating results in the third quarter of 2026, as evidenced by the operating metrics and continued compounding of book value per share,” said Steve Fleming, President and Chief Executive Officer. “In addition, the Bank grew loans by 3.7% over the prior quarter-end and credit quality remains pristine as we have not suffered any material losses on loans originated since the current management team took over in 2008.”

Mr. Fleming also noted, “The Bank recognized a $17.1 million MTM gain related to its undesignated interest rate swaps. The Bank systematically enters interest rate swaps to mitigate interest rate risk and all swaps are entered into for economic and risk management purposes (regardless of accounting treatment). Approximately 16% of the Bank’s interest rate swaps are undesignated as of September 30, 2026, and until these interest rate swaps are designated as a hedge to specific assets or liabilities, the 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 to be indicative of the Bank's core operating performance. As such, for the purposes of disclosure in this earnings release, the Bank has shown several important metrics which remove this non-core component of net income such as earnings per share, return on average equity, return on average asset, and operating efficiency.

Brian Killeen, Chief Financial Officer said, “The Bank continues to perform at a high level, as reflected in the following key metrics: return on average equity, return on average assets, and operating efficiency. We view operational efficiency as a competitive advantage, contributing to sustained profitability and growth in shareholder value. Despite the increase in U.S. Treasury rates during the current quarter, the Bank’s high quality, short duration investment securities portfolio continued to perform well with a relatively low unrealized loss position of 1.5% as of September 30, 2026.”

Summary Results

Three months ended September 30, 2026, as compared to three months ended September 30, 2025

The Bank’s net income was $30.6 million for the three months ended September 30, 2026, as compared to $19.7 million for the three months ended September 30, 2025. The primary items of note are as follows:

• Interest income increased by $5.3 million as average interest-earning assets increased by $853 million, due to the Bank's strong deposit growth.
• Interest expense increased by $4.5 million due to $785 million growth in the average balance of interest-bearing deposits, partially offset by a 0.23% decrease in the cost of interest-bearing deposits as compared to the same quarter in the prior year.
• Provision for credit losses increased by $4.4 million due to loan growth and adjustments associated with qualitative factors in the ACL calculation.
• The MTM adjustment associated with interest rate swaps yet to be designated into a hedge relationship increased by $18.7 million to a $17.1 million MTM gain compared to $1.6 million MTM loss in the same quarter of the prior year. This was caused by the significant increase in U.S. Treasury rates during the current quarter.
• Noninterest income, excluding net changes in the fair value of derivatives, remained relatively stable compared to the prior year quarter. During the third quarter of 2026, the Bank recognized a $553,000 gain related to sale of Visa shares received through Visa’s B Shares tender offer, which was largely offset by lower net amounts received on undesignated derivatives, as the average Secured Overnight Financing Rate (“SOFR”) declined period over period.

Three months ended September 30, 2026, as compared to three months ended June 30, 2026

The Bank’s net income was $30.6 million for the three months ended September 30, 2026, as compared to $19.6 million for the three months ended June 30, 2026. The primary items of note are as follows:

• Interest income increased by $3.5 million, primarily due to a $108 million increase in average balances of loans and a $93 million increase in average balances of cash and investment securities.
• Interest expense increased by $1.2 million due to $76 million growth in average interest-bearing liabilities balances, as compared to the prior quarter.
• Provision for credit losses increased by $2.2 million reflecting increased loan origination during the current quarter.
• Noninterest expense decreased by $734,000, primarily reflecting lower stock compensation expense and a decline in professional service expenses following the completion of the Bank's IPO in August 2026 as compared to the prior quarter.

Nine months ended September 30, 2026, as compared to nine months ended September 30, 2025

The Bank’s net income was $68.2 million for the nine months ended September 30, 2026, as compared to $47.4 million for the nine months ended September 30, 2025. The primary items of note are as follows:

• Interest income increased by $14.3 million, primarily due to a $329 million increase in average balances of loans and a $436 million increase in average cash balances and investment securities, which was caused by the strong growth in average deposits.
• Interest expense increased by $9.7 million due to $730 million of growth in the average balance of interest-bearing liabilities, partially offset by a 0.14% 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 $34.1 million to a $22.1 million MTM gain compared to $12.0 million MTM loss in the same period of the prior year. This fluctuation was due to changes in the U.S. Treasury rate environment over the two periods.
• Noninterest expense increased by $2.5 million over the prior year period, primarily due to a $1.3 million increase in personnel expense as the Bank continues to build out its team to support growth. The increase also reflects higher professional service costs associated with the Bank’s recently completed IPO.

Balance Sheet Summary

Year over Year Balance Sheet Change

Loans outstanding increased by $412 million or 9.3% as of September 30, 2026 compared to September 30, 2025. The growth was primarily in Commercial Real Estate loans that grew $385 million from September 30, 2025.

Deposit balances increased by $753 million from September 30, 2025 to September 30, 2026, due primarily to significant growth in Commercial and Clean Energy client relationships.

Shareholders’ equity increased $63 million to $591 million as of September 30, 2026 when compared to $528 million as of September 30, 2025. The increase was driven primarily by growth in retained earnings, as the Bank continues to maintain a relatively low dividend payout ratio, albeit partly mitigated by $15.5 million in share repurchases over the period.

Trailing Quarter Balance Sheet Change

Total loans increased by $172 million during the quarter ended September 30, 2026. Loan originations totaled approximately $238 million for the quarter ended September 30, 2026.

Deposit balances increased by $239 million during the quarter ended September 30, 2026, reflecting continued growth in deposit levels within the Bank's existing client base. As of September 30, 2026, the Bank had no wholesale funding.

Shareholders’ equity increased $23 million to $591 million as of September 30, 2026 when compared to $568 million as of June 30, 2026. The increase was driven primarily by the current quarter net income, less $1.6 million of share repurchases during the quarter ended September 30, 2026. The Bank’s capital ratios remain healthy and well above the regulatory definition for being Well Capitalized with a Tier 1 Leverage Ratio of 9.39% and a Total Risk-Based Capital Ratio of 14.61% as of September 30, 2026.

Asset Quality Ratios

As of September 30, 2026, the Bank had no OREO or non-performing loans and there were no charge-offs during the quarter. The Bank’s allowance for credit losses was $112 million as of September 30, 2026, as compared to $104 million as of December 31, 2025.

Provision for Income Taxes

The Bank’s effective tax rate was 28.0% and 28.7% for the nine months ended September 30, 2026 and 2025, respectively. 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

The Bank’s board of directors has approved a cash dividend of $0.05 per common share to shareholders of record as of November 3, 2026, and payable on November 17, 2026.

ABOUT RIVER CITY BANK:

With more than five decades of operating history, River City Bank has built a reputation for relationship-focused service, disciplined growth, and specialized expertise across commercial banking, commercial real estate, clean energy, public sector banking, and other key industries. River City Bank is the largest independent bank in the Sacramento region, with an office in San Francisco and a focus on the Western United States. The Bank remains committed to delivering concierge banking solutions and exceptional client service. Please visit http://www.rivercitybank.com. 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,” “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

Net Interest Income and Net Interest Margin

Balance Sheet Data

Capital Ratios

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 non-GAAP financial measures. Management has presented these non-GAAP financial measures in this press release because management believes that they provide useful and comparative information to assess trends in the Bank's core operations. However, the non-GAAP financial measures are supplemental and are 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 measures, see the table below:

Core Pre-Tax, Pre-Provision Income

This figure is defined as net interest income, plus noninterest income, less the change in the fair value of derivatives, less noninterest 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 noninterest 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 is shown before 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.