MetroCity Bankshares (NASDAQ: MCBS) reported $22.1 million in net income, or $0.76 per diluted share, for the second quarter of 2026. That is a 31.5% increase over the $16.8 million it earned in the second quarter of 2025. Strip out the First IC Corporation acquisition completed in the fourth quarter of 2025, and the year-over-year story disappears: the quarter-over-quarter comparison shows net income down $183,000 from $22.3 million in the first quarter of 2026, and diluted EPS sliding one cent.
The First IC lift, quantified
The company's own 8-K attributes the year-over-year earnings jump entirely to First IC. The acquisition added $847.8 million in average loan balances and drove a $16.4 million increase in interest income compared to the second quarter of 2025. Interest expense rose $4.5 million over the same period, and noninterest expenses climbed $5.8 million. The six-month picture tells the same story: net interest income is up $25.8 million year-over-year, noninterest expenses are up $13.5 million, and net income for the first half of 2026 reached $44.4 million against $33.1 million for the same period in 2025.
Net interest margin held, with a caveat
The net interest margin came in at 4.11% for the quarter, up three basis points from 4.08% in the first quarter of 2026 and up 34 basis points from 3.77% a year ago. The yield on average interest-earning assets rose six basis points to 6.57%. The cost of average interest-bearing liabilities rose faster, up 11 basis points to 3.36%. There is also the matter of the interest rate derivatives. MetroCity carries $750 million in cash flow hedges on deposit accounts indexed to the Federal Funds Rate (3.63% as of June 30, 2026), with a weighted average pay rate of 3.12%. The credit to interest expense from those hedges was $1.5 million in the second quarter of 2026, down from $2.9 million in the first quarter and $4.2 million in the second quarter of 2025. That shrinking tailwind is what the margin headline obscures.
The counterargument: efficiency remains tight
The case for MCBS rests on operational discipline. The efficiency ratio was 40.08% in the second quarter, improving from 42.16% in the first quarter of 2026. The operating efficiency ratio, a non-GAAP figure, came in at 39.54%. Return on average assets held at 1.96%, matching the first quarter and above the 1.87% posted a year ago. Noninterest expenses fell $1.5 million sequentially. Those are real numbers, and a sub-40 operating efficiency ratio at a bank this size is not easy to dismiss.
On balance
The year-over-year comparisons will continue to flatter MCBS until the First IC anniversary rolls past. The line to watch is organic momentum: average earning assets shrank $123.1 million from the first quarter, average loans fell $42.5 million, and average deposits fell $125.7 million. The risk is that the acquisition-built balance sheet is deflating faster than the bank can replace it. The benefit from interest rate derivatives in the second quarter was $1.5 million, the smallest in at least three quarters.