Raymond James Starts River City Bank (RCBC) at Outperform

Raymond James analyst David Feaster initiates coverage on River City Bank (NASDAQ: RCBC) with a Outperform rating and a price target of $56.00.

The analyst comments "We are initiating coverage of River City Bank (RCBC) with an Outperform rating and $56 price target. RCBC operates a differentiated commercial banking model generating outsized loan and NII growth while prioritizing strong borrowers with conservative underwriting, resulting in pristine credit performance. Industry-leading operating efficiency is the linchpin of the model, likely remaining in the low-30% realm going forward, enabling it to compete on loan/ deposit pricing while still generating attractive profitability despite a lower-than-peer NIM. While competitive pressures have weighed on growth and NIM, we expect loan growth to reaccelerate as recent geographic expansion and hiring initiatives gain traction, supporting solid NII growth. RCBC is a proven TBV compounder, and we project ~10% annual TBV growth, supported by a ~1.15% ROAA and ~11.5% ROATCE in 2027E, with the quality of those returns enhanced by exceptional credit performance. Importantly, RCBC does not need to return to a double-digit growth rate for the low-risk NII growth thesis to work, as excess capital generation supports increased capital return potential, which is not in our model and provides potential upside to estimates and a catalyst. We believe its outsized and low-risk NII growth profile, combined with potential capital return, leads to a re-rating in shares over time, where its ~1-turn P/E discount to peers should narrow as it executes on its initiatives, creating an attractive risk/reward."

For an analyst ratings summary and ratings history on River City Bank click here. For more ratings news on River City Bank click here.

Shares of River City Bank closed at $50.87 yesterday.

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