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FVCBankcorp, Inc. Announces Third Quarter 2020 Earnings

Company Release - 10/22/2020 4:00 PM ET

FAIRFAX, Va.--(BUSINESS WIRE)-- FVCBankcorp, Inc. (NASDAQ:FVCB) (the “Company”) today reported third quarter 2020 net income of $3.9 million, or $0.28 diluted earnings per share, compared to $4.1 million, or $0.28 diluted earnings per share, for the quarter ended September 30, 2019. Net revenues, which includes net interest income plus noninterest income, for the three months ended September 30, 2020 were $14.4 million, an increase of $1.6 million, from $12.8 million for the year ago quarter ended September 30, 2019. For the nine months ended September 30, 2020, the Company reported net income of $10.5 million, or $0.74 diluted earnings per share, compared to $12.1 million or $0.82 diluted earnings per share, for the same period of 2019. The decrease in net income was primarily attributable to an increase in loan loss provisioning of $3.3 million year-over-year. Net revenues for the nine months ended September 30, 2020 were $40.7 million, an increase of $2.5 million, from $38.2 million for the nine months ended September 30, 2019.

The Company believes the reporting of earnings to exclude branch closing impairment charges, gains on sales of securities, and merger and acquisition expenses are more reflective of the Company’s operating performance (“Operating Earnings”). Operating Earnings is not a measurement that is in accordance with generally accepted accounting principles in the United States (“GAAP”). Operating Earnings for the three months ended September 30, 2020 were $3.8 million, or $0.28 diluted earnings per share, compared to $4.1 million, or $0.28 diluted earnings per share for the three months ended September 30, 2019. Operating Earnings for the nine months ended September 30, 2020 were $10.9 million, or $0.77 diluted earnings per share, compared to $12.2 million, or $0.82 diluted earnings per share for the nine months ended September 30, 2019. A reconciliation of Operating Earnings can be found in the tables below.

Both the three and nine month periods ended September 30, 2020 have been impacted by elevated provision for loan losses expense. In addition, during the second quarter of 2020, the Company announced the closure of two branch locations which resulted in one-time branch closure costs of $676 thousand ($534 thousand after tax). The Company anticipates realizing the benefits of annualized cost savings of approximately $350 thousand related to occupancy expense beginning with the fourth quarter of 2020. Other annual savings of approximately $250 thousand include salaries and benefits expense as the employees for each of these locations have filled current vacant positions within the Company, reducing the need to hire additional personnel.

Third Quarter Selected Highlights

  • Increased Pre-Tax Pre-Provision Income. For the three months ended September 30, 2020 and 2019, pre-tax pre-provision income (which also excludes branch closure costs and gains on sales of securities) was $6.6 million and $5.4 million, respectively, an increase of $1.2 million or 21.6%. On a linked quarter basis, pre-tax pre-provision income was $6.1 million for the three months ended June 30, 2020. Pre-tax pre-provision return on average assets for the three months ended September 30, 2020 and 2019 was 1.50% and 1.46%, respectively. For the nine months ended September 30, 2020 and 2019, pre-tax pre-provision income was $18.2 million and $16.6 million, respectively, an increase of $1.6 million. A reconciliation of pre-tax pre-provision, a non-GAAP financial measure, can be found in the tables below.
  • Strong Core Deposit Growth. Core deposits, which excludes wholesale deposits, increased $233.6 million to $1.42 billion at September 30, 2020, an increase of 19.7%, from December 31, 2019. Noninterest-bearing deposits represent 30.4% of core deposits at September 30, 2020.
  • Improved Net Interest Margin. Net interest margin increased 14 basis points to 3.30% for the quarter ended September 30, 2020 compared to 3.16% for the quarter ended June 30, 2020. Excluding the impact of Paycheck Protection Program (“PPP”) loans, credit mark accretion, and excess liquidity during the third quarter of 2020, net interest margin for the three months ended September 30, 2020 would have been 3.36%. Cost of deposits, which include noninterest-bearing deposits, for the third quarter of 2020 was 0.73%, compared to 1.42% for the third quarter of 2019, a decrease of 69 basis points, or 48.6%.
  • Significant Decrease in Payment Deferred Loans. At October 20, 2020, approximately 2.6% of the total loan portfolio, or $39.5 million, continue under COVID-19 deferrals. Approximately $20.4 million of current deferrals are in their second 90-day payment deferral period, of which approximately 76.7% are making interest-only payments. This compares to modified loans of $360.2 million, or 24.4% of the total loan portfolio, reported at June 30, 2020.
  • Reduced Levels of Past Due and Nonperforming loans. Loans past due 90 days or more and still accruing totaled $311 thousand at September 30, 2020, compared to $1.4 million at June 30, 2020. Nonperforming loans and loans past due 90 days or more and still accruing were $8.0 million, or 0.45% of total assets, at September 30, 2020, compared to $10.7 million, or 0.70% of total assets at December 31, 2019, and $8.5 million, or 0.48% of total assets, at June 30, 2020.
  • Improved Efficiency Ratio. Efficiency ratio for the three months ended September 30, 2020 was 53.9%, an improvement from 57.7% for the year ago quarter ended September 30, 2020.

“We are extremely pleased with our third quarter results, particularly the improvement in our net interest margin, which was a result of our efforts to reduce deposit costs by almost 40% year-over-year. We are cautiously optimistic with the results of our loan payment deferral program as we see just over 5% of loans request a second 90-day deferral period; and 77% of those loans are making interest-only payments. We will continue to work with our customers to assist them through this pandemic and help them navigate the economic impact that they are experiencing,” stated David W. Pijor, Chairman and CEO.

COVID-19 Pandemic Impact to Loan Portfolio

As a result of the COVID-19 pandemic, the Company implemented loan payment deferral programs to allow customers who were required to close or reduce business operations to defer loan principal and interest payments primarily for 90 days. During the second quarter of 2020, the Company modified 277 loans for a total outstanding principal balance of $360.2 million, or 24.4% of the total loan portfolio. At October 20, 2020, remaining payment deferred loans totaled $39.5 million, or 2.6% of the total loan portfolio, comprising 26 loans. For those commercial real estate loans with approved payment deferrals, these loans are collateralized and well secured. The table below shows the number of loans still deferring payments and their respective outstanding loan balances by asset class.

COVID Payment Deferrals By Asset Class
Asset Class

Total Loans Modified

Loans Expected to Resume
Payments in 2020

Loans Under Further
Analysis and Review

Total Loans

# of Loans

($ in thousands)# of Loans($ in thousands)# of Loans($ in thousands)# of Loans($ in thousands)
Commercial Real Estate - Retail

3

$ 12,200

1

$ 3,149

2

$ 9,051

108

$ 200,161

Commercial Real Estate - Mixed Use

3

9,893

1

2,127

2

7,766

53

85,669

Specialty Use-Hotel/Lodging/Motel0

-

-

-

-

-

11

59,116

Commercial Real Estate - Office

3

11,404

3

11,404

-

-

112

115,148

Multi-Family First Lien

1

1,411

-

-

1

1,411

81

103,551

Commercial Real Estate - Industrial0

-

-

-

-

-

70

98,553

Commercial Real Estate - Special Use/Church

1

1,492

1

1,492

-

-

25

47,464

Special Purpose0

-

-

-

-

-

23

30,735

Other Loan Categories

15

3,147

8

1,301

7

1,846

2,812

757,237

 

 
At October 20, 2020

26

$ 39,547

14

$ 19,473

12

$ 20,074

3,295

$ 1,497,634

At September 30, 2020

57

$ 118,711

At June 30, 2020

277

$ 360,177

Previously modified hotel loans totaling $45.9 million have all resumed contractual loan payments with the exception of one loan totaling $9.7 million, which has moved to the watchlist. The Company is working with the borrower to determine the best course of action. Loans expected to resume payments above are based on conversations with the borrowers and analysis of their financial condition. Loans under further analysis and review are being closely monitored by the Company to determine if further modifications are warranted and to review all options available to the Company.

The Company is closely and proactively monitoring the effects of the pandemic on its loan and deposit customers and is focused on assessing risks within the loan portfolio and working with customers to minimize losses. The Company considers pandemic impacted loans to include commercial real estate loans to hotels, churches, and certain retail and special purpose asset classes. During its assessment of the allowance for loan losses, the Company addressed the credit risks associated with these pandemic impacted segments and those loan customers that have requested payment deferrals.

The Company believes that as a result of its conservative underwriting discipline at loan origination coupled with the active dialogue the Company has had with its borrowers, the Company has the ability and necessary flexibility to assist its customers through this pandemic.

Balance Sheet

Total assets increased to $1.79 billion at September 30, 2020 compared to $1.54 billion at December 31, 2019, an increase of $256.9 million, or 16.7%. Year-over-year, total assets increased $229.0 million, or 14.6% from $1.57 billion at September 30, 2019.

Loans receivable, net of deferred fees, totaled $1.50 billion at September 30, 2020, compared to $1.27 billion at December 31, 2019, an increase of $227.1 million, or 17.9%, and compared to $1.24 billion at September 30, 2019, a year-over-year increase of $254.2 million, or 20.5%. PPP loans originated and funded, net of fees, totaled $170.3 million during the quarter assisting both existing and new clients. During the third quarter of 2020, loan originations, excluding PPP loans, totaled approximately $64.0 million, of which $32.0 million funded during the quarter. For the year-to-date 2020, net loan growth, excluding PPP loans, is $45.6 million, or 3.6%.

Investment securities decreased $30.4 million to $111.2 million at September 30, 2020, compared to $141.6 million at December 31, 2019. The Company sold $3.0 million in mortgage-backed securities available-for-sale, recording gains of $44 thousand during the third quarter of 2020. These securities were sold as they had larger premiums susceptible to prepayment risk, decreasing future interest income. Year-over-year, investment securities decreased $25.3 million, or 18.6%, from $136.5 million at September 30, 2019.

Total deposits increased to $1.51 billion at September 30, 2020 compared to $1.29 billion at December 31, 2019, an increase of $228.6 million, or 17.8%. Year-over-year, total deposits increased $196.6 million, or 14.9%, from $1.32 billion at September 30, 2019. Core deposits, which represent total deposits less wholesale deposits, increased $233.6 million, or 19.7%, to $1.42 billion at September 30, 2020 compared to $1.19 billion at December 31, 2019, and increased $174.6 million, or 14.0% from $1.24 billion at September 30, 2019. The increase in core deposits reflects new customer relationships as well as growth in existing customer accounts and, to a lesser extent, deposits remaining from PPP funds. Wholesale deposits totaled $95.0 million, or 6.3% of total deposits at September 30, 2020, a decrease of $5.0 million from December 31, 2019. Noninterest-bearing deposits increased $125.1 million, or 40.9%, to $431.3 million at September 30, 2020 from $306.2 million at December 31, 2019, and represented 28.5% of total deposits, or 30.4% of core deposits, at September 30, 2020.

The capital ratios at the Company’s bank subsidiary, FVCbank, remain well-capitalized at September 30, 2020 with a leverage ratio of 11.02%.

Income Statement

Net income for the three months ended September 30, 2020 was $3.9 million, compared to $4.1 million for the same period of 2019, and $2.9 million for the quarter ended June 30, 2020. For the nine months ended September 30, 2020, net income was $10.5 million, compared to $12.1 million for the same period of 2019. Both the three and nine months’ periods of 2020 were impacted by increased provision for loan losses.

Net interest income totaled $13.6 million, an increase of $1.5 million, or 12.4%, for the quarter ended September 30, 2020, compared to the year ago quarter, and increased by $900 thousand, or 7.1%, compared to the second quarter of 2020, a result of significant decreases in the cost of deposits. Interest expense on deposits decreased $1.7 million for the three months ended September 30, 2020 compared to the same period of 2019, and decreased $470 thousand compared to the three months ended June 30, 2020. The impact to interest income from the accretion of loan marks on acquired loans was $469 thousand and $43 thousand for the three months ended September 30, 2020 and 2019, respectively. The increase in income related to loan mark accretion was a result of improved cash flows for an acquired loan during the three months ended September 30, 2020. In addition, net interest income for the three months ended September 30, 2020 benefited from PPP loan origination, which contributed $981 thousand to interest income. Remaining net deferred fees related to PPP originations total $3.6 million and are being recognized in interest income over the remaining lives of the PPP loans, or sooner upon PPP loan forgiveness or payment. For the nine months ended September 30, 2020 and 2019, net interest income was $38.5 million and $36.2 million, respectively, an increase of $2.3 million, year-over-year.

The Company’s net interest margin for the three months ended September 30, 2020 was 3.30%, compared to 3.41% for the year ago quarter ended September 30, 2019, a decrease of 11 basis points, impacted by the decreases in the targeted fed funds rate of 225 basis points since August 2019. On a linked quarter basis, net interest margin increased 14 basis points from 3.16% for the three months ended June 30, 2020. Excluding the impact of PPP loans (a decrease of 11 basis points), credit mark accretion (an increase of 9 basis points), and excess liquidity (a decrease of 6 basis points) during the third quarter of 2020, net interest margin for the three months ended September 30, 2020 would have been 3.36%. The average yield for the loan portfolio for the third quarter of 2020 was 4.56% (excluding PPP loans) compared to 5.13% for the year ago quarter, and 4.77% for the quarter ended June 30, 2020. Cost of interest-bearing deposits for the third quarter of 2020 was 1.01%, compared to 1.82% for the third quarter of 2019, a decrease of 81 basis points, or 44.5%, primarily as a result of the Company having aggressively decreased its deposit rates during the second and third quarters in order to offset the repricing of the variable rate loan portfolio.

Noninterest income totaled $770 thousand and $680 thousand for the quarters ended September 30, 2020 and 2019, respectively. Fee income from loans was $35 thousand for the quarter ended September 30, 2020, compared to $101 thousand for the same period of 2019. Service charges on deposit accounts and other fee income totaled $411 thousand for the third quarter of 2020, compared to $378 thousand from the year ago quarter. Income from bank-owned life insurance increased $82 thousand to $280 thousand for the three months ended September 30, 2020, compared to $198 thousand for the same period of 2019, primarily as a result of purchasing additional policies during 2019. Noninterest income for the year-to-date period ended September 30, 2020 was $2.2 million, compared to $2.0 million for the 2019 year-to-date period, an increase of $195 thousand, or 10.0%, which was primarily driven by an increase in service charges on deposit accounts and other fee income, and income from bank-owned life insurance, and offset by fair value losses on loans held for sale of $451 thousand recorded during the first quarter of 2020 before these loans were transferred to the held for investment portfolio.

Noninterest expense totaled $7.7 million for the quarter ended September 30, 2020, compared to $7.4 million for the same three-month period of 2019, an increase of $383 thousand, or 5.2%, which is in line with the Company’s targeted expense growth for 2020. The increase in noninterest expense compared to the year ago quarter was primarily related to an increase in data processing and network administration expense of $124 thousand, which is related to planned network infrastructure upgrades for 2020, an increase of $154 thousand for loan related expenses, and an increase in professional fees of $73 thousand. The Company has invested in technology in its efforts to reduce certain expenses where possible. Noninterest expense for the third quarter of 2020 increased $424 thousand, or 5.8%, when compared to noninterest expense of $7.3 million (excluding branch closure costs of $676 thousand) recorded during the second quarter of 2020. Increases in noninterest expense during the third quarter of 2020 as compared to the second quarter of 2020 were isolated to salaries and benefits expense with an increase of $362 thousand. During the third quarter of 2020, salaries and benefits expense increased as a result of an increase in incentive accruals by $220 thousand, and a decrease in deferred salaries expense for loan originations of $146 thousand, which were elevated during the second quarter as a result of deferred loan salaries recorded for PPP loan originations. For the nine months ended September 30, 2020 and 2019, noninterest expense, excluding branch closure charges, was $22.3 million and $21.5 million, respectively, an increase of $734 thousand, or 3.4%.

The efficiency ratio for the quarter ended September 30, 2020 was 53.9%, a decrease from 57.7% for the year ago quarter and a decrease from 54.7% for the three months ended June 30, 2020 (excluding branch closure costs). The efficiency ratios for the nine months ended September 30, 2020 and 2019, excluding branch closure costs and merger expense from 2019, were 54.2% and 56.1%, respectively.

The Company recorded a provision for income taxes of $1.0 million for the three months ended September 30, 2020, compared to $1.1 million for the same period of 2019. The effective tax rates for the three months ended September 30, 2020 and 2019 were 21.2% and 20.9%, respectively. The effective tax rates for the 2020 and 2019 periods presented are less than the Company’s combined federal and state statutory rate of 21.5% primarily because of discrete tax benefits recorded as a result of exercises of nonqualified stock options.

Asset Quality

The Company recorded a provision for loan losses of $1.7 million for the three months ended September 30, 2020, compared to $235 thousand for the year ago quarter. The increase in the provision for loan losses for the three months ended September 30, 2020 is primarily related to growth in the loan portfolio and increases in qualitative factors related to the economic uncertainties caused by the COVID-19 pandemic, including an increase in adversely rated credits. The Company is not required to implement the provisions of the current expected credit losses (“CECL”) accounting standard until January 1, 2023, and is continuing to account for the allowance for loans losses under the incurred loss model. Provision for loan losses for the nine months ended September 30, 2020 and 2019 were $4.5 million and $1.3 million, respectively.

The allowance for loan losses to total loans, excluding PPP loans, was 1.10% at September 30, 2020, compared to 0.81% at December 31, 2019. The effective reserve coverage, which includes both the allowance for loan losses and the remaining unaccreted fair value discount on acquired loans, to total loans, excluding PPP loans, was 1.26% at September 30, 2020. Net charge-offs of $38 thousand recorded during the third quarter of 2020 were primarily related to purchased consumer unsecured loans.

Nonperforming loans and loans 90 days or more past due at September 30, 2020 totaled $8.0 million, or 0.45% of total assets. This compares to $10.7 million in nonperforming loans and loans 90 days or more past due at December 31, 2019, or 0.70% of total assets. All of the Company’s nonperforming loans are secured and have specific reserves totaling $456 thousand, representing the expected losses associated with those loans. The Company has one troubled debt restructuring at September 30, 2020 totaling $98 thousand which is a consumer residential loan. Nonperforming assets (including other real estate owned) to total assets was 0.66% at September 30, 2020 compared to 0.95% for December 31, 2019.

Completion of $20 Million Subordinated Notes Offering

On October 13, 2020, the Company announced the completion of its private placement of $20 million of its 4.875% Fixed to Floating Subordinated Notes due 2030 (the “Notes”) to certain qualified institutional buyers and accredited investors. The Notes have a maturity date of October 15, 2030 and carry a fixed rate of interest of 4.875% for the first five years. Thereafter, the Notes will pay interest at 3-month SOFR plus 471 basis points, resetting quarterly. The Notes include a right of prepayment without penalty on or after October 15, 2025. The Notes have been structured to qualify as Tier 2 capital for regulatory purposes. The Company plans to use the proceeds from the placement of the Notes for general corporate purposes, to include supporting capital ratios at the Company’s subsidiary, FVCbank, and potential repayment of a portion of the $25.0 million outstanding subordinated debt callable June 30, 2021.

About FVCBankcorp, Inc.

FVCBankcorp, Inc. is the holding company for FVCbank, a wholly-owned subsidiary that commenced operations in November 2007. FVCbank is a $1.79 billion asset-sized Virginia-chartered community bank serving the banking needs of commercial businesses, nonprofit organizations, professional service entities, their owners and employees located in the greater Baltimore and Washington D.C., metropolitan areas. FVCbank is based in Fairfax, Virginia, and has 9 full-service offices in Arlington, Fairfax, Manassas, Reston and Springfield, Virginia, Washington D.C., and Baltimore, Bethesda, and Rockville, Maryland.

For more information on the Company’s selected financial information, please visit the Investor Relations page of FVCBankcorp, Inc.’s website, www.fvcbank.com.

Caution about Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited, statements of goals, intentions, and expectations as to future trends, plans, events or results of the Company’s operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. These forward-looking statements are based on current beliefs that involve significant risks, uncertainties, and assumptions. Factors that could cause the Company’s actual results to differ materially from those indicated in these forward-looking statements, include, but are not limited to, the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and in other periodic and current reports filed with the Securities and Exchange Commission. Because of these uncertainties and the assumptions on which the forward-looking statements are based, actual operations and results in the future may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on any such forward-looking statements.The Company’s past results are not necessarily indicative of future performance.

FVCBankcorp, Inc.
Selected Financial Data
(Dollars in thousands, except share data and per share data)
(Unaudited)
 
For the Three Months Ended September 30,For the Nine Months Ended September 30,For the Three Months Ended

2020

2019

2020

2019

6/30/202012/31/2019
Selected Balances
Total assets

$

1,794,172

 

$

1,565,196

 

$

1,781,149

 

$

1,537,295

 

Total investment securities

 

117,746

 

 

142,549

 

 

128,690

 

 

147,606

 

Loans held for sale

 

- -

 

 

- -

 

 

-

 

 

11,198

 

Total loans, net of deferred fees

 

1,497,634

 

 

1,243,405

 

 

1,478,120

 

 

1,270,526

 

Allowance for loan losses

 

(14,556

)

 

(10,068

)

 

(12,894

)

 

(10,231

)

Total deposits

 

1,514,348

 

 

1,317,720

 

 

1,519,036

 

 

1,285,722

 

Subordinated debt

 

24,547

 

 

24,467

 

 

24,527

 

 

24,487

 

Other borrowings

 

40,000

 

 

15,000

 

 

25,000

 

 

25,000

 

Total stockholders’ equity

 

184,490

 

 

175,069

 

 

180,652

 

 

179,078

 

Summary Results of Operations
Interest income

$

16,761

 

$

17,006

 

$

49,974

 

$

49,957

 

$

16,281

 

$

16,777

 

Interest expense

 

3,166

 

 

4,914

 

 

11,473

 

 

13,729

 

 

3,586

 

 

4,941

 

Net interest income

 

13,595

 

 

12,092

 

 

38,501

 

 

36,228

 

 

12,695

 

 

11,836

 

Provision for loan losses

 

1,700

 

 

235

 

 

4,516

 

 

1,255

 

 

1,750

 

 

465

 

Net interest income after provision for loan losses

 

11,895

 

 

11,857

 

 

33,985

 

 

34,973

 

 

10,945

 

 

11,371

 

Noninterest income - loan fees, service charges and other

 

446

 

 

479

 

 

1,616

 

 

1,539

 

 

405

 

 

485

 

Noninterest income - bank owned life insurance

 

280

 

 

198

 

 

845

 

 

414

 

 

282

 

 

249

 

Noninterest income - gain (loss) on sales of securities available-for-sale

 

44

 

 

3

 

 

141

 

 

3

 

 

-

 

 

- -

 

Noninterest income - gain (loss) on loans held for sale

 

- -

 

 

- -

 

 

(451

)

 

- -

 

 

-

 

 

(145

)

Noninterest expense

 

7,746

 

 

7,363

 

 

22,953

 

 

21,543

 

 

7,998

 

 

7,334

 

Income before taxes

 

4,919

 

 

5,174

 

 

13,183

 

 

15,386

 

 

3,634

 

 

4,626

 

Income tax expense

 

1,045

 

 

1,081

 

 

2,696

 

 

3,282

 

 

754

 

 

902

 

Net income

 

3,874

 

 

4,093

 

 

10,487

 

 

12,104

 

 

2,880

 

 

3,724

 

Per Share Data
Net income, basic

$

0.29

 

$

0.30

 

$

0.77

 

$

0.88

 

$

0.21

 

$

0.27

 

Net income, diluted

$

0.28

 

$

0.28

 

$

0.74

 

$

0.82

 

$

0.21

 

$

0.25

 

Book value

$

13.69

 

$

12.62

 

$

13.42

 

$

12.88

 

Tangible book value (1)

$

13.06

 

$

12.03

 

$

12.79

 

$

12.26

 

Shares outstanding

 

13,478,115

 

 

13,874,776

 

 

13,459,317

 

 

13,902,067

 

Selected Ratios
Net interest margin (2)

 

3.30

%

 

3.41

%

 

3.27

%

 

3.55

%

 

3.16

%

 

3.28

%

Return on average assets (2)

 

0.89

%

 

1.10

%

 

0.84

%

 

1.13

%

 

0.67

%

 

0.98

%

Return on average equity (2)

 

8.44

%

 

9.46

%

 

7.72

%

 

9.65

%

 

6.41

%

 

8.39

%

Efficiency (3)

 

53.92

%

 

57.66

%

 

56.46

%

 

56.42

%

 

59.77

%

 

59.03

%

Loans, net of deferred fees to total deposits

 

98.90

%

 

94.36

%

 

97.31

%

 

98.82

%

Noninterest-bearing deposits to total deposits

 

28.48

%

 

22.37

%

 

29.13

%

 

23.82

%

Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP) (4)
Net income (from above)

$

3,874

 

$

4,093

 

$

10,487

 

$

12,104

 

$

2,880

 

$

3,724

 

Add: Merger and acquisition expense

 

- -

 

 

51

 

 

- -

 

 

133

 

 

- -

 

 

- -

 

Add: Impairment on branch closures

 

-

 

 

- -

 

 

676

 

 

- -

 

 

676

 

 

- -

 

Subtract: Gains on sales of securities available-for-sale

 

(44

)

 

(3

)

 

(141

)

 

(3

)

 

-

 

 

- -

 

Less: provision for income taxes associated with non-GAAP adjustments

 

9

 

 

(12

)

 

(112

)

 

(30

)

 

(142

)

 

- -

 

Net income, as adjusted

$

3,839

 

$

4,129

 

$

10,910

 

$

12,204

 

$

3,414

 

$

3,724

 

Net income, diluted, on an operating basis

$

0.28

 

$

0.28

 

$

0.77

 

$

0.82

 

$

0.25

 

$

0.25

 

Return on average assets (non-GAAP operating earnings)

 

0.88

%

 

1.11

%

 

0.87

%

 

1.14

%

 

0.79

%

 

0.98

%

Return on average equity (non-GAAP operating earnings)

 

8.37

%

 

9.55

%

 

8.03

%

 

9.73

%

 

7.60

%

 

8.64

%

Efficiency ratio (non-GAAP operating earnings) (3)

 

53.92

%

 

57.26

%

 

54.80

%

 

56.07

%

 

54.72

%

 

58.35

%

Capital Ratios - Bank
Tangible common equity (to tangible assets)

 

9.86

%

 

10.72

%

 

9.71

%

 

11.15

%

Tier 1 leverage (to average assets)

 

11.02

%

 

12.11

%

 

11.05

%

 

12.15

%

Asset Quality
Nonperforming loans and loans 90+ past due

$

8,005

 

$

10,444

 

$

8,493

 

$

10,725

 

Performing troubled debt restructurings (TDRs)

 

98

 

 

- -

 

 

99

 

 

- -

 

Other real estate owned

 

3,866

 

 

3,866

 

 

3,866

 

 

3,866

 

Nonperforming loans and loans 90+ past due to total assets (excl. TDRs)

 

0.45

%

 

0.67

%

 

0.48

%

 

0.70

%

Nonperforming assets to total assets

 

0.66

%

 

0.91

%

 

0.69

%

 

0.95

%

Nonperforming assets (including TDRs) to total assets

 

0.67

%

 

0.91

%

 

0.70

%

 

0.95

%

Allowance for loan losses to loans

 

0.97

%

 

0.81

%

 

0.87

%

 

0.81

%

Allowance for loan losses to nonperforming loans

 

181.84

%

 

96.40

%

 

151.82

%

 

95.39

%

Net charge-offs

$

38

 

$

163

 

$

191

 

$

345

 

$

82

 

$

303

 

Net charge-offs to average loans (2)

 

0.01

%

 

0.05

%

 

0.02

%

 

0.04

%

 

0.02

%

 

0.10

%

Selected Average Balances
Total assets

$

1,749,005

 

$

1,483,430

 

$

1,674,132

 

$

1,428,082

 

$

1,721,612

 

$

1,514,124

 

Total earning assets

 

1,642,025

 

 

1,406,485

 

 

1,572,038

 

 

1,366,456

 

 

1,615,125

 

 

1,430,397

 

Total loans, net of deferred fees

 

1,484,853

 

 

1,241,360

 

 

1,393,301

 

 

1,196,126

 

 

1,415,383

 

 

1,234,183

 

Total deposits

 

1,481,899

 

 

1,243,490

 

 

1,407,747

 

 

1,207,258

 

 

1,459,834

 

 

1,270,821

 

Other Data
Noninterest-bearing deposits

$

431,322

 

$

294,825

 

$

442,443

 

$

306,235

 

Interest-bearing checking, savings and money market

 

686,592

 

 

622,818

 

 

655,959

 

 

525,138

 

Time deposits

 

301,431

 

 

327,098

 

 

320,628

 

 

354,362

 

Wholesale deposits

 

95,003

 

 

72,979

 

 

100,006

 

 

99,987

 

 
(1) Non-GAAP Reconciliation For the Period Ended September 30,
(Dollars in thousands, except per share data)

2020

2019

 
Total stockholders’ equity

$

184,490

 

$

175,069

 

Less: goodwill and intangibles, net

 

(8,440

)

 

(8,119

)

Tangible Common Equity

$

176,050

 

$

166,950

 

 
Book value per common share

$

13.69

 

$

12.62

 

Less: intangible book value per common share

 

(0.63

)

 

(0.59

)

Tangible book value per common share

$

13.06

 

$

12.03

 

(2)Annualized.
(3)Efficiency ratio is calculated as noninterest expense divided by the sum of net interest income and noninterest income. On a non-GAAP operating basis, the Company excludes gains (losses) on sales of investment securities.
(4)Some of the financial measures discussed throughout the press release are "non-GAAP financial measures." In accordance with SEC rules, the Company classifies a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP in our statements of income, balance sheets or statements of cash flows.
FVCBankcorp, Inc.
Summary Consolidated Statements of Condition
(Dollars in thousands)
(Unaudited)
 
 
% Change% Change
CurrentFrom
9/30/20206/30/2020Quarter12/31/20199/30/2019Year Ago
 
Cash and due from banks$

22,121

 

$

25,613

 

-13.6

%

$

14,916

 

$

19,424

 

13.9

%

Interest-bearing deposits at other financial institutions

73,774

 

64,989

 

13.5

%

18,226

 

92,986

 

-20.7

%

Investment securities

111,183

 

122,082

 

-8.9

%

141,589

 

136,532

 

-18.6

%

Restricted stock, at cost

6,563

 

6,608

 

-0.7

%

6,017

 

6,017

 

9.1

%

Loans held for sale, at fair value

- -

 

- -

 

0.0

%

11,198

 

- -

 

0.0

%

Loans, net of fees:
Commercial real estate

805,946

 

779,036

 

3.5

%

747,993

 

683,813

 

17.9

%

Commercial and industrial

111,736

 

105,957

 

5.5

%

114,924

 

124,666

 

-10.4

%

Paycheck protection program

170,338

 

169,425

 

0.5

%

- -

 

- -

 

100.0

%

Commercial construction

214,740

 

227,746

 

-5.7

%

214,949

 

214,816

 

0.0

%

Consumer real estate

177,730

 

177,366

 

0.2

%

181,369

 

194,979

 

-8.8

%

Consumer nonresidential

17,144

 

18,590

 

-7.8

%

11,291

 

25,131

 

-31.8

%

Total loans, net of fees

1,497,634

 

1,478,120

 

1.3

%

1,270,526

 

1,243,405

 

20.4

%

Allowance for loan losses

(14,556

)

(12,894

)

12.9

%

(10,231

)

(10,068

)

44.6

%

Loans, net

1,483,078

 

1,465,226

 

1.2

%

1,260,295

 

1,233,337

 

20.2

%

 
Premises and equipment, net

1,747

 

1,818

 

-3.9

%

2,084

 

2,029

 

-13.9

%

Goodwill and intangibles, net

8,440

 

8,525

 

-1.0

%

8,689

 

8,119

 

4.0

%

Bank owned life insurance (BOLI)

37,913

 

37,633

 

0.7

%

37,069

 

26,820

 

41.4

%

Other real estate owned

3,866

 

3,866

 

0.0

%

3,866

 

3,866

 

0.0

%

Other assets

45,487

 

44,789

 

1.6

%

33,346

 

36,066

 

26.1

%

 
Total Assets$

1,794,172

 

$

1,781,149

 

0.7

%

$

1,537,295

 

$

1,565,196

 

14.6

%

 
Deposits:
Noninterest-bearing$

431,322

 

$

442,443

 

-2.5

%

$

306,235

 

$

294,825

 

46.3

%

Interest-bearing checking

388,531

 

387,683

 

0.2

%

302,755

 

349,574

 

11.1

%

Savings and money market

298,061

 

268,276

 

11.1

%

222,383

 

273,244

 

9.1

%

Time deposits

301,431

 

320,628

 

-6.0

%

354,362

 

327,098

 

-7.8

%

Wholesale deposits

95,003

 

100,006

 

-5.0

%

99,987

 

72,979

 

30.2

%

Total deposits

1,514,348

 

1,519,036

 

-0.3

%

1,285,722

 

1,317,720

 

14.9

%

 
Other borrowed funds

40,000

 

25,000

 

60.0

%

25,000

 

15,000

 

166.7

%

Subordinated notes, net of issuance costs

24,547

 

24,527

 

0.1

%

24,487

 

24,467

 

0.3

%

Other liabilities

30,787

 

31,934

 

-3.6

%

23,008

 

32,940

 

-6.5

%

 
Stockholders’ equity

184,490

 

180,652

 

2.1

%

179,078

 

175,069

 

5.4

%

 
Total Liabilities & Stockholders' Equity$

1,794,172

 

$

1,781,149

 

0.7

%

$

1,537,295

 

$

1,565,196

 

14.6

%

FVCBankcorp, Inc.
Summary Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)
 
 
For the Three Months Ended
% Change% Change
CurrentFrom
9/30/20206/30/2020Quarter9/30/2019Year Ago
 
Net interest income$

13,595

 

$

12,695

 

7.1

%

$

12,092

 

12.4

%

Provision for loan losses

1,700

 

1,750

 

-2.9

%

235

 

623.4

%

Net interest income after provision for loan losses

11,895

 

10,945

 

8.7

%

11,857

 

0.3

%

 
Noninterest income:
Fees on loans

35

 

46

 

-23.9

%

101

 

-65.3

%

Service charges on deposit accounts

275

 

223

 

23.3

%

240

 

14.6

%

Gain on sale of securities available-for-sale

44

 

- -

 

0.0

%

3

 

1,366.7

%

BOLI income

280

 

282

 

-0.7

%

198

 

41.4

%

Other fee income

136

 

136

 

0.0

%

138

 

-1.4

%

Total noninterest income

770

 

687

 

12.1

%

680

 

13.2

%

 
Noninterest expense:
Salaries and employee benefits

4,344

 

3,982

 

9.1

%

4,349

 

-0.1

%

Occupancy and equipment expense

811

 

859

 

-5.6

%

882

 

-8.0

%

Data processing and network administration

538

 

494

 

8.9

%

414

 

30.0

%

State franchise taxes

466

 

466

 

0.0

%

424

 

9.9

%

Professional fees

303

 

207

 

46.4

%

230

 

31.7

%

Merger and acquisition expense

- -

 

- -

 

0.0

%

51

 

-100.0

%

Impairment on branch closures

- -

 

676

 

-100.0

%

- -

 

0.0

%

Other operating expense

1,284

 

1,314

 

-2.3

%

1,013

 

26.8

%

Total noninterest expense

7,746

 

7,998

 

-3.2

%

7,363

 

5.2

%

Net income before income taxes

4,919

 

3,634

 

35.4

%

5,174

 

-4.9

%

Income tax expense

1,045

 

754

 

38.6

%

1,081

 

-3.3

%

Net Income$

3,874

 

$

2,880

 

34.5

%

$

4,093

 

-5.4

%

 
Earnings per share - basic$

0.29

 

$

0.21

 

34.3

%

$

0.30

 

-2.6

%

Earnings per share - diluted$

0.28