FVCBankcorp, Inc. (NASDAQ: FVCB) (the “Company”) today reported
its financial results for the third quarter of 2023.
Third Quarter Selected Financial Highlights
- Stellar Credit Quality. Nonperforming loans totaled $1.5
million at September 30, 2023, or 0.07% of total assets, and were
comprised solely of residential mortgage loans. Net recoveries of
$7 thousand were recorded during the third quarter of 2023. Loans
on the Company’s watchlist decreased to $3.0 million during the
quarter ended September 30, 2023, a decrease of 70% from the prior
quarter end and 79% from December 31, 2022.
- Continued Core Deposit Growth and Reduced Reliance on
Wholesale Funds. Wholesale funds at September 30, 2023
decreased $130.8 million during the third quarter as the Company
managed a reduction in its reliance on wholesale deposits. Core
deposits increased $38.7 million, or 2%, to $1.71 billion, at
September 30, 2023 from $1.67 billion at June 30, 2023.
Noninterest-bearing deposits decreased $9.9 million during the
third quarter of 2023, but increased to 21.4% of total deposits as
the Company decreased its wholesale deposits.
- Low Uninsured Deposit Metrics Compared to Total
Deposits. As of September 30, 2023, estimated uninsured
deposits improved to 31.8% of total deposits from 39.7% at December
31, 2022, when excluding collateralized deposits. The Company has
sufficient capital and liquidity resources to satisfy these
obligations.
- Diverse Sources of Available Liquidity. At September 30,
2023, the Company’s liquidity position, which includes cash
totaling $97.0 million, unencumbered investment securities of $92.5
million, and available unsecured and secured borrowing capacity
totaling $802.5 million, was significantly in excess of its
estimated uninsured deposits (excluding collateralized deposits)
totaling $635.1 million, or 31.8% of total deposits. The Company
has access to the Federal Reserve’s Bank Term Funding Program
(“BTFP”) but has not drawn on the facility during 2023.
- Strong Well Capitalized Balance Sheet. All of FVCbank’s
(the “Bank”) regulatory capital components and ratios are well in
excess of thresholds required to be considered "well capitalized"
with total risk based capital to risk-weighted assets of 13.93% at
September 30, 2023. The tangible common equity ("TCE") to total
assets ("TA") ratio for the Bank increased to 9.40% at September
30, 2023, from 9.22% at June 30, 2023. The Bank’s investment
securities are classified as available-for-sale, and therefore the
decrease in market value of these securities is fully reflected in
the TCE/TA ratio.
Net income for the third quarter of 2023 was $4.0 million, or
$0.22 diluted earnings per share, compared to $7.0 million, or
$0.38 diluted earnings per share, for the quarterly period ended
September 30, 2022. For the nine months ended September 30, 2023,
the Company reported net income of $8.9 million, or $0.49 diluted
earnings per share, compared to net income of $20.1 million, or
$1.09 diluted earnings per share for the nine months ended
September 30, 2022.
On December 15, 2022, the Company announced that the Board of
Directors approved a five-for-four split of the Company’s common
stock in the form of a 25% stock dividend for shareholders of
record on January 9, 2023, payable on January 31, 2023. Earnings
per share and all other per share information reflected herein have
been adjusted for the five-for-four split of the Company’s common
stock for comparative purposes.
Management Comments
David W. Pijor, Esq., Chairman and Chief Executive Officer of
the Company, said:
“The current interest rate environment continues to be
challenging as bank funding costs outpace the improved yield of our
earning assets. We were pleased with continued growth in our core
deposit base as we added new customers and deepened existing
customer relationships. While we continue to lend in our
marketplace, we are maintaining a disciplined approach on pricing
and deposit requirements as well as actively managing our existing
loan portfolio resulting in a reduction in total loans for the
quarter.
While our credit quality has historically been solid, it further
improved for the second consecutive quarter as nonperforming loans
were 0.07% to total assets, all of which were residential real
estate secured. We continue to lend to well-established and
relationship-driven borrowers, supporting our proven track record
of low historical credit losses.
We remain committed to deliver banking services that improve our
customers’ digital experience. We are enhancing efforts to increase
the presence of our brand in the markets we serve. This is made
possible by our extraordinary team of bankers who demonstrate
dedication and commitment to our strategic objectives every
day.”
Statement of Condition
Total assets were $2.31 billion at September 30, 2023 and $2.34
billion at December 31, 2022, a decrease of $38.9 million, or 2%.
Total assets increased $100.5 million, or 5%, compared to $2.20
billion at September 30, 2022.
Loans receivable, net of deferred fees, were $1.85 billion at
September 30, 2023 and $1.84 billion at December 31, 2022, an
increase of $9.1 million, or 0.5%. Compared to September 30, 2022,
loans receivable, net of deferred fees, increased $135.0 million,
or 8%, from $1.71 billion, year-over-year. During the third quarter
of 2023, new commercial loan originations totaled $19.3 million
with a weighted average rate of 8.01% and repayments of commercial
loans and lines of credit totaled $49.2 million with a weighted
average rate of 7.58%. The Company’s warehouse line with Atlantic
Coast Mortgage, LLC (“ACM”) decreased $31.8 million and total loans
decreased $54.3 million during the third quarter of 2023.
Investment securities were $216.4 million at September 30, 2023,
$278.3 million at December 31, 2022, and $282.5 million at
September 30, 2022. Investment securities decreased $15.1 million
during the quarter ended September 30, 2023, primarily as a result
of principal paydowns of $6.0 million, and a $9.0 million increase
in the portfolio's unrealized losses. For the year-to-date period
ended September 30, 2023, the investment securities portfolio
decreased $61.9 million, a result of the sale of $40.3 million of
available-for-sale securities in February 2023, principal paydowns
of $17.1 million, and an increase in the portfolio's unrealized
losses of $4.4 million. The decrease in the market value of the
investment securities portfolio was driven by the increasing rate
environment that began in 2022 and not a result of credit
impairment at September 30, 2023.
Total deposits were $2.00 billion at September 30, 2023, $1.83
billion at December 31, 2022, and $1.89 billion at September 30,
2022. Total deposits increased $165.8 million, or 9%, year-to-date,
and increased $106.7 million, or 6%, year-over-year.
Noninterest-bearing deposits were $427.0 million at September 30,
2023, or 21.4% of total deposits. At September 30, 2023, core
deposits, which exclude wholesale deposits, increased $131.3
million from December 31, 2022, or 8%, and increased $38.7 million,
or 2%, from June 30, 2023. As a member of the IntraFi Network, the
Bank offers products to its customers who seek to maximize FDIC
insurance protection (“reciprocal deposits”). At September 30,
2023, December 31, 2022, and September 30, 2022, reciprocal
deposits totaled $312.4 million, $117.6 million, and $167.9
million, respectively, and are considered part of the Company’s
core deposit base. Time deposits (which exclude wholesale deposits)
increased $121.3 million, or 47%, to $381.8 million at September
30, 2023 from December 31, 2022, and were 22% of core deposits at
September 30, 2023, representing new and existing customer deposits
as customers were looking to fix interest rates on their deposit
balances.
The Company has had consistent core deposit inflows over the
last several quarters, including the current quarter, with new
non-time deposit accounts totaling $200 million (which includes
$7.6 million in new noninterest-bearing deposits) with a weighted
average rate of 4.18% compared to $205 million for the second
quarter of 2023 with a weighted average rate of 4.13%.
Escrow-related deposits increased $21.6 million from June 30, 2023
to September 30, 2023. Deposits from municipalities increased $1.9
million during the third quarter of 2023, which are collateralized
by a portion of the Company’s investment securities portfolio. The
Company maintains a growing deposit pipeline headed into the fourth
quarter of 2023.
Total wholesale funding (which includes wholesale deposits and
advances from the Federal Home Loan Bank of Atlanta (“FHLB”))
decreased $80.8 million during the third quarter of 2023. Wholesale
funding, which totaled $332.5 million at September 30, 2023,
carries a weighted average rate of 3.62% including $250 million in
pay-fixed/receive-floating interest rate swaps at an average rate
of 3.25%. Wholesale deposits decreased $130.8 million to $282.5
million during the third quarter of 2023 and FHLB advances
increased $50.0 million from June 30, 2023. These FHLB advances
have a weighted average rate of 2.98% as they are hedged with a
portion of the above mentioned pay-fixed/receive-floating interest
rate swaps.
Shareholders’ equity at September 30, 2023 was $211.2 million,
an increase of $8.9 million, or 4%, from December 31, 2022 and an
increase of $16.6 million, or 9%, from the year-ago quarter.
Year-to-date 2023 earnings contributed $8.9 million to the increase
in shareholders’ equity. As a result of the Company’s adoption of
Accounting Standards Update 2016-13 (“CECL”) on January 1, 2023,
retained earnings decreased $2.8 million. In addition, during the
first six months of 2023, the Company repurchased 115,750 of its
common shares at an average price of $12.51 (including commissions)
in accordance with its approved share repurchase program, reducing
shareholders’ equity $1.4 million during 2023. Accumulated other
comprehensive loss decreased $1.7 million, which was related to the
improvement in other comprehensive income associated with the
Company’s cash flow hedges.
Book value per share at September 30, 2023, December 31, 2022,
and September 30, 2022 was $11.87, $11.58, and $11.13,
respectively. Tangible book value per share (a non-GAAP financial
measure which is defined in the tables below) at September 30,
2023, December 31, 2022, and September 30, 2022 was $11.44, $11.14,
and $10.68, respectively. Tangible book value per share, excluding
accumulated other comprehensive loss (a non-GAAP financial measure
which is defined in the tables below), at September 30, 2023,
December 31, 2022, and September 30, 2022 was $13.39, $13.23 and
$12.94, respectively.
The Bank is well-capitalized at September 30, 2023, with total
risk-based capital of 13.93%, common equity tier 1 risk-based
capital of 12.92%, and tier 1 leverage ratio of 10.62%.
Asset Quality
The Company adopted CECL on January 1, 2023 in accordance with
the required implementation date, and recorded the impact of the
adoption to retained earnings, net of deferred income taxes, as
required by the accounting standard. Note that prior to the
adoption of CECL, the Company utilized an incurred loss model to
derive its best estimate of the allowance for credit losses.
Reserves for credit losses increased $3.7 million and consisted of
increases to the allowance for credit losses on loans as well as
the Company's reserve for unfunded commitments (referred to in
combination herein as “ACL”). For the most recent quarter and
year-to-date 2023, subsequent to the aforementioned adoption, the
Company released provisioning for credit losses totaling $729
thousand and increased provisions $132 thousand, respectively,
compared to a provision of $365 thousand for the three months ended
September 30, 2022 and a provision of $1.9 million for the nine
months ended September 30, 2022. Of the reserves that were released
during the third quarter of 2023, $600 thousand came from the
allowance for credit losses and $129 thousand from the reserve for
unfunded commitments. The ACL to total loans, net of fees, was
1.06% at September 30, 2023, compared to 0.87% at December 31,
2022, 0.89% at September 30, 2022, and 1.03% at January 1, 2023,
the day of CECL adoption.
The release of reserves during the third quarter of 2023 was
mainly due to the decrease in total loans, which decreased $54.3
million during the third quarter of 2023.
The Company has maintained disciplined credit guidelines during
the current rising interest rate environment. The Company
proactively monitors the impact of rising interest rates on its
adjustable loans as the industry navigates through this economic
cycle of increased inflation and higher interest rates. Credit
quality metrics improved during the third quarter of 2023 as
nonperforming loans and loans 90 days or more past due at September
30, 2023 totaled $1.5 million, or 0.07% of total assets, compared
to $4.5 million, or 0.19%, of total assets at December 31, 2022.
There were six nonperforming loans at September 30, 2023, all of
which were residential real estate secured. The Company had no
other real estate owned.
The Company recorded net recoveries of $7 thousand during the
third quarter of 2023. The ACL (which includes the reserve for
unfunded commitments) at September 30, 2023 and December 31, 2022,
was $19.5 million and $16.0 million, respectively. ACL coverage to
nonperforming loans increased to 1293% at September 30, 2023,
compared to 357% at December 31, 2022 as a result of the Company’s
improved credit quality and adoption of CECL.
Commercial real estate and construction loans totaled $1.25
billion, or 68% of total loans, net of fees, at September 30, 2023.
The commercial real estate portfolio, including construction loans,
is diversified by asset type and geographic concentration. The
Company manages this portion of the portfolio in a disciplined
manner, and has comprehensive policies to monitor, measure and
mitigate its loan concentrations within this portfolio segment,
including rigorous credit approval, monitoring and administrative
practices. Included in commercial real estate are loans secured by
office buildings totaling $95.7 million, or 5% of total loans, and
retail shopping centers totaling $267.3 million, or 14% of total
loans, at September 30, 2023. Multi-family commercial properties
totaled $179.0 million, or 10% of total loans, at September 30,
2023. The following table provides further stratification of these
and additional asset classes at September 30, 2023 (dollars in
thousands).
Owner Occupied Commercial Real Estate Non-Owner Occupied
Commercial Real Estate Construction
Asset Class
Average Loan-to-Value
(1)
Number of Total Loans
Bank Owned Principal (2)
Average Loan-to-Value
(1)
Number of Total Loans
Bank Owned Principal (2) Top 3 Geographic
Concentration
Number of Total Loans
Bank Owned Principal (2) Total Bank Owned Principal
(2)
% of Total Loans
Office, Class A
70%
6
$
7,580
48%
4
$
3,804
Counties of Fairfax and Loudoun, Virginia and Montgomery County,
Maryland
1
$
2,836
$
14,220
Office, Class B
47%
35
13,906
47%
31
61,660
-
-
75,566
Office, Class C
49%
6
3,149
41%
8
1,974
1
788
5,911
Subtotal
47
$
24,635
43
$
67,438
2
$
3,624
$
95,697
5%
Retail- Neighorhood/Community Shop
-
$
-
44%
31
$
84,997
Prince George's County, Maryland, Fairfax County, Virginia and
Washington, D.C.
2
$
10,250
$
95,247
Retail- Restaurant
58%
9
8,248
45%
17
30,733
-
-
38,981
Retail- Single Tenant
60%
5
2,018
40%
22
37,313
-
-
39,331
Retail- Anchored,Other
71%
1
2,060
52%
11
39,041
1
2,315
43,416
Retail- Grocery-anchored
0
-
45%
8
49,688
1
625
50,313
Subtotal
15
$
12,326
89
$
241,772
4
$
13,190
$
267,288
14%
Multi-family, Class A (Market)
-
$
-
27%
1
$
-
Washington, D.C., Baltimore City, Maryland and Arlington County,
Virginia
1
$
729
$
729
Multi-family, Class B (Market)
-
-
63%
21
78,669
-
-
78,669
Multi-family, Class C (Market)
-
-
57%
57
72,086
2
6,800
78,886
Multi-Family-Affordable Housing
-
-
53%
10
16,605
1
4,096
20,701
Subtotal
-
$
-
89
$
167,360
4
$
11,625
$
178,985
10%
Industrial
52%
44
$
71,761
52%
38
$
133,809
Prince William County, Virginia, Fairfax County, Virginia and
Howard County, Maryland
$
-
$
205,570
Warehouse
52%
14
18,914
30%
11
11,589
-
30,503
Flex
50%
15
16,170
54%
14
56,531
2
-
72,701
Subtotal
73
$
106,845
63
$
201,929
2
$
-
308,774
17%
Hotels
-
$
-
44%
9
$
52,956
1
$
6,410
59,366
3%
Mixed Use
46%
11
$
6,804
61%
36
$
62,095
1
$
6,824
$
75,723
4%
Other (including net deferred costs)
$
62,199
$
91,367
$
112,886
$
266,452
14%
Total commercial real estate
and construction loans, net of fees, at September 30, 2023
$
212,809
$
884,917
$
154,559
$
1,252,285
68%
(1) Loan-to-value is determined
at origination date against current bank-owned principal.
(2) Bank-owned principal is not
adjusted for deferred fees and costs.
(3) Minimum debt service coverage
policy is 1.30x for Owner Occupied and 1.25x for Non-Owner Occupied
at origination.
The loans shown in the above table exhibit strong credit
quality, reflecting no delinquencies and no classified loans at
September 30, 2023. During its assessment of the allowance for
credit losses, the Company addressed the credit risks associated
with these portfolio segments and believes that as a result of its
conservative underwriting discipline at loan origination and its
ongoing loan monitoring procedures, the Company has appropriately
reserved for possible credit concerns in the event of a downturn in
economic activity.
Minority Investment in Mortgage Banking Operation
In August 2021, the Company acquired a membership interest in
Atlantic Coast Mortgage ("ACM") for $20.4 million, or 0.88% of
total assets, to diversify its loan portfolio while providing
competitive residential mortgage products to its customers and to
generate additional revenue. The Company’s investment in ACM is
reflected as a nonconsolidated minority investment, and as such,
the Company’s income generated from the investment is included in
non-interest income. For the third quarter of 2023, the Company
reported pre-tax loss of $650 thousand compared to a pre-tax loss
of $160 thousand for the quarter ended September 30, 2022 related
to its investment in ACM. Origination volume for the year continues
to outpace their peers. ACM management is continuing to evaluate
and look for opportunities to further reduce spend and increase
revenue where possible.
Income Statement
Net income for the three months ended September 30, 2023 was
$4.0 million, a decrease of $3.0 million, compared to $7.0 million
for the same period of 2022. On a linked quarter basis, net income
decreased $194 thousand, from $4.2 million for the quarter ended
June 30, 2023. Net income for the third quarter of 2023 includes
the Company’s portion of losses from its membership interest in
ACM, which was $650 thousand, compared to a loss of $160 thousand
for the quarter ended September 30, 2022.
Interest income on loans increased $5.9 million, or 30%, for the
three months ended September 30, 2023, compared to the same period
of 2022. Compared to the linked quarter, interest income on loans
increased $257 thousand, or 1%, for the three months ended
September 30, 2023. Loan interest income for the three months ended
June 30, 2023 included recovered loan interest of $338 thousand
from an impaired loan. The increase in interest income for the
three months ended September 30, 2023, compared to the year ago
quarter was primarily related to an increase in loan yields, which
increased 76 basis points, and the volume of average loans, which
increased $201.3 million. On a linked quarter basis, the increase
in interest income is due to the increased yield on average loans
receivable by 5 basis points to 5.40%.
Interest expense on deposits increased $10.9 million for the
three months ended September 30, 2023, compared to the same period
of 2022, and increased $1.8 million compared to the three months
ended June 30, 2023, reflecting the impact of the unprecedented
rapid rate increases over the last 15 months. In addition, as a
preemptive defensive measure during March 2023, management
increased liquidity through additional wholesale funding given the
uncertainty surrounding the isolated bank failures. A portion of
this additional wholesale funding has begun to mature and because
of the Company’s liquidity position, this funding was not replaced.
The cost of core deposits, which includes non-interest bearing
deposits and excludes wholesale deposits, increased 41 basis points
to 2.48% for the third quarter of 2023 as compared to 2.07% for the
linked quarter ended June 30, 2023 and increased 185 basis points
as compared to 0.63% for the quarter ended September 30, 2022. The
cost of deposits for the third quarter of 2023 was 2.74% compared
to 2.40% for the second quarter of 2023, an increase of 34 basis
points, and an increase of 210 basis points from 0.64% for the
year-ago third quarter.
Net interest income totaled $13.3 million for the quarter ended
September 30, 2023, a decrease of $1.1 million, or 7%, compared to
the second quarter of 2023, and a decrease of $4.2 million, or 24%,
compared to the year ago quarter. Compared to the year ago quarter
ended September 30, 2022, the decrease in net interest income for
the third quarter of 2023 is primarily due to an increase in
funding costs, which have increased precipitously as a result of
Federal Reserve monetary policy coupled with the need to meet
intense competition from market area banks, brokerages and the U.S.
Treasury.
The Company's net interest margin decreased to 2.39% for the
quarter ended September 30, 2023 compared 2.60% for the linked
quarter ended June 30, 2023 and decreased from 3.38% for the year
ago quarter ended September 30, 2022. Net interest margin excluding
recovered loan interest previously charged-off, prepayment
penalties, and late charges for the three months ended September
30, 2023 and June 30, 2023 was 2.39% and 2.48%, respectively. The
Company continues to consider possible balance sheet strategies to
improve net interest margin in future periods.
Net interest income for the nine months ended September 30, 2023
and 2022 was $41.7 million and $49.4 million, respectively, a
decrease of $7.6 million, or 15%, year-over-year. Interest income
increased $22.6 million, or 39%, to $80.0 million for the nine
months ended September 30, 2023 as compared to $57.3 million for
the comparable 2022 period. Interest expense totaled $38.2 million
for the nine months ended September 30, 2023, an increase of $30.3
million, compared to $8.0 million for the nine months ended
September 30, 2022. The Company’s net interest margin for the nine
months ended September 30, 2023 was 2.53% compared to 3.27% for the
year-ago nine month period of 2022.
The Company’s cycle-to-date deposit beta (calculated comparing
the change in deposit interest rates from March 31, 2022 to
September 30, 2023 including noninterest-bearing deposits and
excluding wholesale deposits) is approximately 40% over the past
cycle since the Federal Reserve began increasing short-term
interest rates.
Below is a table illustrating the Company’s quarterly loan and
deposit betas from the second quarter of 2022 through the third
quarter of 2023.
Loan & Deposit Betas (vs. Fed Funds
Effective)
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
Cycle-to-Date (1) Fed Funds Effective (average)
0.77
%
2.19
%
3.65
%
4.52
%
4.99
%
5.26
%
Deposit Costs Interest
Bearing Deposits - excluding wholesale
0.59
%
0.88
%
1.65
%
2.39
%
2.88
%
3.32
%
Wholesale Deposits
-0.03
%
0.88
%
2.38
%
3.56
%
3.89
%
3.86
%
Total Deposits
0.41
%
0.64
%
1.29
%
1.97
%
2.40
%
2.74
%
Total Deposits - excluding wholesale
0.42
%
0.63
%
1.20
%
1.71
%
2.07
%
2.48
%
Quarterly Beta Interest
Bearing Deposits
-3
%
20
%
53
%
86
%
104
%
163
%
53
%
Wholesale Deposits
-82
%
64
%
103
%
137
%
70
%
-11
%
65
%
Total Deposits
-2
%
16
%
44
%
79
%
91
%
126
%
45
%
Total Deposits - excluding wholesale
2
%
15
%
39
%
59
%
76
%
152
%
40
%
Loan Yields Loans
(excluding net accretion)
4.15
%
4.41
%
4.75
%
4.91
%
5.15
%
5.27
%
As reported
4.36
%
4.64
%
4.91
%
5.11
%
5.35
%
5.40
%
Quarterly Beta Loans
(excluding net accretion)
25
%
18
%
23
%
18
%
51
%
46
%
25
%
(1) Cycle-to-date reflects changes since first
quarter of 2022 and incorporates the increases in the average Fed
Funds effective rate.
The following table shows the repricing schedule for the
Company’s current loan portfolio. At September 30, 2023,
approximately $509 million, or 28%, of the Company’s loan portfolio
is expected to reprice over the next twelve months, 42% will
reprice within the next three years, and 68% will reprice within
the next five years.
Loan Repricing Schedule at
September 30, 2023
Dollars in thousands
3 Months or Less
3-12 Months 1-3 Years 3-5
Years Over 5 Years
Total Total Consumer Real
Estate (1)
$
49,429
$
27,689
$
63,341
$
56,598
$
166,536
$
363,593
Current rate
7.82
%
4.84
%
4.30
%
4.49
%
4.80
%
5.08
%
Total Commercial (2)
341,308
90,576
208,465
416,853
425,822
1,483,024
Current rate
7.88
%
4.67
%
4.10
%
4.97
%
4.35
%
5.32
%
Total Loans
390,737
118,265
271,806
473,451
592,358
1,846,617
Current rate
7.87
%
4.71
%
4.14
%
4.92
%
4.48
%
5.27
%
Cumulative Repricing - 5 years
$
509,001
$
780,807
$
1,254,259
Cumulative Repricing as a Percentage of Total Loans
28
%
42
%
68
%
(1)Repricing includes principal scheduled repayments for
residential mortgage loans. (2)Repricing based on next interest
rate reprice date and does not include loan amortization for
regular payments.
Noninterest income reported for the quarter ended September 30,
2023 was $225 thousand compared to $891 thousand for the linked
quarter ended June 30, 2023 and $575 thousand for the quarter ended
September 30, 2022. The loss associated with the Company’s
investment in ACM was $650 thousand for the three months ended
September 30, 2023, compared to income of $20 thousand for the
linked quarter ended June 30, 2023 and a loss of $160 thousand for
the year ago quarter ended September 30, 2022.
Fee income from loans was $107 thousand for the quarter ended
September 30, 2023, compared to $32 thousand for the third quarter
of 2022, an increase of $75 thousand, primarily related to loan
extension fees recorded during the third quarter of 2023. Service
charges on deposit accounts and other fee income totaled $395
thousand for the third quarter of 2023, an increase of $44 thousand
from the year ago quarter. Income from bank-owned life insurance
(“BOLI”) increased $21 thousand to $373 thousand for the three
months ended September 30, 2023, compared to $352 thousand for the
same period of 2022.
For the year-to-date period ended September 30, 2023, the
Company recorded noninterest income as a loss of $3.5 million,
which was primarily associated with its securities sales
transaction executed during the first quarter of 2023, compared to
noninterest income of $2.8 million for the comparable period of
2022. During the first quarter of 2023, the Company recorded a loss
of $4.6 million related to its sale of available-for-sale
investment securities as part of the Company's balance sheet
repositioning strategy. The loss associated with the Company’s
investment in ACM was $1.4 million for the nine months ended
September 30, 2023, compared to income of $754 thousand for the
nine months ended September 30, 2022.
Noninterest expense totaled $9.0 million for the quarter ended
September 30, 2023 compared to $8.6 million for the same
three-month period of 2022, an increase of $449 thousand, or 5%. On
a linked quarter basis, noninterest expense decreased $155
thousand, or 2%, from $9.2 million for the quarter ended June 30,
2023, reflecting careful expense management including process
improvement through increased use of technology. Salaries and
benefits expense was $5.3 million, $5.1 million, and $5.2 million,
for the quarters ended September 30, 2023, June 30, 2023, and
September 30, 2022, respectively. The increase in salaries and
benefits expense for the third quarter of 2023 compared to the
linked quarter of June 30, 2023, is primarily related to accruals
for incentive compensation. Salaries deferred for loan originations
(ASC 310-20) decreased $38 thousand, which also contributed to the
third quarter 2023 increase in salaries and benefits expense.
Compared to the year-ago quarter, the increase in salaries and
benefits expense was primarily related to a decrease in salaries
deferred related to loan origination activity totaling $211
thousand.
Internet banking and software expense increased $228 thousand to
$660 thousand for the third quarter of 2023 compared to the quarter
ended September 30, 2022, primarily as a result of the
implementation of enhanced customer software solutions. Other
operating expenses totaled $1.2 million for each of the third
quarters of 2023 and 2022. The Company continues to identify and
assess opportunities to reduce operating expenses including
analysis of its branch and office locations.
For the nine months ended September 30, 2023 and 2022,
noninterest expense was $27.3 million and $25.3 million,
respectively, an increase of $2.0 million, or 8%, primarily as a
result of the aforementioned increases in salaries and benefits
expenses, internet banking and software expense, and state
franchise taxes.
The efficiency ratio for core bank operating earnings, excluding
2022 merger-related expenses and 2023 losses on the sale of
available-for-sale investment securities, for the quarters ended
September 30, 2023, June 30, 2023, and September 30, 2022, was
66.7%, 60.2%, and 47.5%, respectively. For the nine months ended
September 30, 2023 and 2022, the efficiency ratio for core bank
operating earnings was 63.7% and 48.1%, respectively. A
reconciliation of the aforementioned efficiency ratio, a non-GAAP
financial measure, can be found in the tables below.
The Company recorded a provision for income taxes of $1.2
million for the three months ended September 30, 2023, compared to
a provision for income taxes of $2.1 million for the same period in
2022. The effective tax rate for each of the three months ended
September 30, 2023 and September 30, 2022 was 22.9%. For the nine
months ended September 30, 2023 and 2022, provision for income tax
expense was $1.9 million and $5.0 million, respectively.
About FVCBankcorp, Inc.
FVCBankcorp, Inc. is the holding company for FVCbank, a
wholly-owned subsidiary that commenced operations in November 2007.
FVCbank is a $2.31 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 about the Company, please visit the
Investor Relations page of FVCBankcorp, Inc.’s website,
www.fvcbank.com.
Cautionary Note 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: general business and economic conditions nationally or in the
markets that the Company serves could adversely affect, among other
things, real estate valuations, unemployment levels, inflation
levels, the ability of businesses to remain viable, consumer and
business confidence, and consumer or business spending, which could
lead to decreases in demand for loans, deposits, and other
financial services that the Company provides and increases in loan
delinquencies and defaults; the risk of changes in interest rates
on levels, composition and costs of deposits, loan demand, and the
values and liquidity of loan collateral, securities, and interest
sensitive assets and liabilities; changes in the Company's
liquidity requirements could be adversely affected by changes in
its assets and liabilities; changes in the assumptions underlying
the establishment of reserves for possible credit losses; changes
in market conditions, specifically declines in the commercial and
residential real estate market, volatility and disruption of the
capital and credit markets, and soundness of other financial
institutions we do business with; the effects of, and changes in,
trade, monetary and fiscal policies and laws, including interest
rate policies of the Board of Governors of the Federal Reserve
System, inflation, interest rate, market and monetary fluctuations;
risks inherent in making loans such as repayment risks and
fluctuating collateral values; the Company's investment securities
portfolio is subject to credit risk, market risk, and liquidity
risk as well as changes in the estimates used to value the
securities in the portfolio; declines in the Company's common stock
price or the occurrence of what management would deem to be a
triggering event that could, under certain circumstances, cause us
to record a noncash impairment charge to earnings in future
periods; geopolitical conditions, including acts or threats of
terrorism, or actions taken by the United States or other
governments in response to acts or threats of terrorism and/or
military conflicts, which could impact business and economic
conditions in the United States and abroad; the occurrence of
significant natural disasters, including severe weather conditions,
floods, health related issues or emergencies, including the
COVID-19 pandemic, and other catastrophic events; our management of
risks inherent in our real estate loan portfolio, and the risk of a
prolonged downturn in the real estate market, which could impair
the value of our collateral and our ability to sell collateral upon
any foreclosure; changes in consumer spending and savings habits;
technological and social media changes; changing bank regulatory
conditions, policies or programs, whether arising as new
legislation or regulatory initiatives, that could lead to
restrictions on activities of banks generally, or our subsidiary
bank in particular, more restrictive regulatory capital
requirements, increased costs, including deposit insurance
premiums, regulation or prohibition of certain income producing
activities or changes in the secondary market for loans and other
products; the impact of changes in financial services policies,
laws and regulations, including laws, regulations and policies
concerning taxes, banking, securities and insurance, and the
application thereof by regulatory bodies; the impact of changes in
laws, regulations and policies affecting the real estate industry;
the effect of changes in accounting policies and practices, as may
be adopted from time to time by bank regulatory agencies, the U.S.
Securities and Exchange Commission, the Public Company Accounting
Oversight Board, the Financial Accounting Standards Board or other
accounting standards setting bodies; the timely development of
competitive new products and services and the acceptance of these
products and services by new and existing customers; the
willingness of users to substitute competitors’ products and
services for our products and services; the effect of acquisitions
we may make, including, without limitation, the failure to achieve
the expected revenue growth and/or expense savings from such
acquisitions; changes in the level of our nonperforming assets and
charge-offs; our involvement, from time to time, in legal
proceedings and examination and remedial actions by regulators;
potential exposure to fraud, negligence, computer theft and
cyber-crime; and the risk factors and other cautionary language
included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2022 and in other periodic and current reports
filed with the U.S. 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) At or For the Three Months Ended
At or For the Nine Months Ended At or For the Three
Months Ended 9/30/2023 9/30/2022 9/30/2023
9/30/2022 6/30/2023 12/31/2022 Selected
Balances Total assets
$
2,305,472
$
2,204,984
$
2,344,372
$
2,344,322
Total investment securities
224,155
291,540
236,377
293,945
Total loans, net of deferred fees
1,849,513
1,714,473
1,903,814
1,840,434
Allowance for credit losses on loans
(18,849
)
(15,313
)
(19,442
)
(16,040
)
Total deposits
1,995,971
1,889,284
2,088,042
1,830,162
Subordinated debt
19,606
19,551
19,592
19,565
Other borrowings
50,000
75,000
- -
265,000
Reserve for unfunded commitments
673
- -
801
- -
Total stockholders’ equity
211,246
194,635
211,051
202,382
Summary Results of Operations Interest income
$
27,427
$
21,091
$
79,964
$
57,340
$
27,203
$
23,341
Interest expense
14,092
3,565
38,227
7,976
12,815
7,462
Net interest income
13,335
17,526
41,737
49,364
14,388
15,879
Provision for (reversal of) credit losses
(729
)
365
132
1,900
618
729
Net interest income after provision for (reversal of) credit losses
14,064
17,161
41,605
47,464
13,770
15,150
Noninterest income - loan fees, service charges and other
502
383
1,445
1,246
508
421
Noninterest income - bank owned life insurance
373
352
1,067
844
362
356
Noninterest income (loss) - minority membership interest
(650
)
(160
)
(1,431
)
754
20
(787
)
Noninterest income - loss on sale of available-for-sale investment
securities
- -
- -
(4,592
)
- -
- -
- -
Noninterest expense
9,048
8,599
27,261
25,258
9,203
9,202
Income before taxes
5,241
9,137
10,833
25,050
5,458
5,938
Income tax expense
1,202
2,094
1,941
4,970
1,225
1,035
Net income
4,039
7,043
8,892
20,080
4,233
4,903
Per Share Data Net income, basic (5)
$
0.23
$
0.40
$
0.50
$
1.15
$
0.24
$
0.28
Net income, diluted (5)
$
0.22
$
0.38
$
0.49
$
1.09
$
0.23
$
0.27
Book value (5)
$
11.87
$
11.13
$
11.87
$
11.58
Tangible book value (1)(5)
$
11.44
$
10.68
$
11.44
$
11.14
Tangible book value, excluding accumulated other comprehensive
losses (1)(5)
$
13.39
$
12.94
$
13.17
$
13.23
Shares outstanding
17,802,173
13,991,881
17,783,305
17,475,668
Selected Ratios Net interest margin (2)
2.39
%
3.38
%
2.53
%
3.27
%
2.60
%
2.96
%
Return on average assets (2)
0.70
%
1.32
%
0.52
%
1.28
%
0.73
%
0.89
%
Return on average equity (2)
7.57
%
13.87
%
5.68
%
13.14
%
8.17
%
9.87
%
Efficiency (3)
66.73
%
47.51
%
71.32
%
48.38
%
60.23
%
57.99
%
Loans, net of deferred fees to total deposits
92.66
%
90.75
%
91.18
%
100.56
%
Noninterest-bearing deposits to total deposits
21.39
%
27.19
%
20.93
%
23.95
%
Reconciliation of Net Income (GAAP) to Commercial Bank Operating
Earnings (Non-GAAP)(4) GAAP net income reported above
$
4,039
$
7,043
$
8,892
$
20,080
$
4,233
$
4,903
Add: Merger and acquisition expense
- -
- -
- -
125
- -
- -
Add: Loss on sale of available-for-sale investment securities
- -
- -
4,592
- -
- -
- -
Subtract: provision for income taxes associated with non-GAAP
adjustments
- -
- -
(1,010
)
(28
)
- -
- -
Net Income, core bank operating earnings (non-GAAP)
$
4,039
$
7,043
$
12,474
$
20,177
$
4,233
$
4,903
Earnings per share - basic (non-GAAP core bank operating
earnings)(5)
$
0.23
$
0.40
$
0.70
$
1.16
$
0.24
$
0.28
Earnings per share - diluted (non-GAAP core bank operating
earnings)(5)
$
0.22
$
0.38
$
0.69
$
1.09
$
0.23
$
0.27
Return on average assets (non-GAAP core bank operating earnings)
0.70
%
1.32
%
0.73
%
1.28
%
0.73
%
0.89
%
Return on average equity (non-GAAP core bank operating earnings)
7.57
%
13.87
%
7.97
%
13.20
%
8.17
%
9.87
%
Efficiency ratio (non-GAAP core bank operating earnings) (3)
66.73
%
47.51
%
63.67
%
48.14
%
60.23
%
57.99
%
Capital Ratios - Bank Tangible common equity (to tangible
assets)
9.40
%
9.10
%
9.22
%
8.86
%
Total risk-based capital (to risk weighted assets)
13.93
%
13.55
%
13.28
%
13.28
%
Common equity tier 1 capital (to risk weighted assets)
12.92
%
12.73
%
12.26
%
12.45
%
Tier 1 leverage (to average assets)
10.62
%
11.12
%
10.41
%
10.75
%
Asset Quality Nonperforming loans and loans 90+ past due
$
1,510
$
3,666
$
1,443
$
4,493
Nonperforming loans and loans 90+ past due to total assets
0.07
%
0.17
%
0.06
%
0.19
%
Nonperforming assets to total assets
0.07
%
0.17
%
0.06
%
0.19
%
Allowance for credit losses to loans
1.06
%
0.89
%
1.06
%
0.87
%
Allowance for credit losses to nonperforming loans
1,292.85
%
417.70
%
1,402.87
%
357.00
%
Net charge-offs (recoveries)
$
(7
)
$
9
$
326
$
416
$
356
$
2
Net charge-offs (recoveries) to average loans (2)
(0.00
)
%
0.00
%
0.02
%
0.04
%
0.08
%
0.00
%
Selected Average Balances Total assets
$
2,302,870
$
2,141,957
$
2,293,565
$
2,099,002
$
2,309,251
$
2,202,407
Total earning assets
2,214,923
2,057,742
2,207,797
2,016,992
2,223,581
2,126,032
Total loans, net of deferred fees
1,868,819
1,667,521
1,856,008
1,575,038
1,867,813
1,745,226
Total deposits
2,033,941
1,814,514
1,941,387
1,806,745
2,002,047
1,811,098
Other Data Noninterest-bearing deposits
$
427,036
$
513,711
$
436,972
$
438,269
Interest-bearing checking, savings and money market
904,639
1,071,768
872,508
883,480
Time deposits
381,770
228,805
365,242
260,421
Wholesale deposits
282,526
75,000
413,320
247,992
(1) Non-GAAP Reconciliation At or For the Three
Months Ended, At or For the Three Months Ended, (Dollars
in thousands, except per share data)
9/30/2023
9/30/2022 6/30/2023 12/31/2022 Total
stockholders’ equity
$
211,246
$
194,635
$
211,051
$
202,382
Less: goodwill and intangibles, net
(7,632
)
(7,849
)
(7,682
)
(7,790
)
Tangible Common Equity
$
203,614
$
186,786
$
203,369
$
194,592
Less: Accumulated Other Comprehensive Income (Loss) ("AOCI")
(34,834
)
(39,580
)
(30,762
)
(36,568
)
Tangible Common Equity excluding AOCI
$
238,448
$
226,366
$
234,131
$
231,160
Book value per common share (5)
$
11.87
$
11.13
$
11.87
$
11.58
Less: intangible book value per common share (5)
(0.43
)
(0.45
)
(0.43
)
0.44
Tangible book value per common share (5)
$
11.44
$
10.68
$
11.44
$
11.14
Add: AOCI (loss) per common share (5)
(1.95
)
(2.26
)
(1.73
)
(2.09
)
Tangible book value per common share, excluding AOCI (5)
$
13.39
$
12.94
$
13.17
$
13.23
(2) Annualized. (3) Efficiency ratio is calculated as
noninterest expense divided by the sum of net interest income and
noninterest income. (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 consolidated statements of income, balance sheets or
statements of cash flows. (5) Amounts above reflect the effect of a
25% stock dividend declared on December 15, 2022 for shareholders
of record on January 9, 2023, paid on January 31, 2023.
FVCBankcorp, Inc. Summary Consolidated Statements of
Condition (Dollars in thousands) (Unaudited)
% Change % Change Current
From 9/30/2023 6/30/2023 Quarter
12/31/2022 9/30/2022 Year Ago Cash and
due from banks $
7,560
$
8,281
-8.7
%
$
7,253
$
11,820
-36.0
%
Interest-bearing deposits at other financial institutions
89,440
66,723
34.0
%
74,300
56,522
58.2
%
Investment securities
216,410
231,468
-6.5
%
278,333
282,479
-23.4
%
Restricted stock, at cost
7,745
4,909
57.8
%
15,612
9,061
-14.5
%
Loans, net of fees: Commercial real estate
1,097,726
1,111,249
-1.2
%
1,097,302
1,027,562
6.8
%
Commercial and industrial
215,764
223,406
-3.4
%
214,873
181,298
19.0
%
Commercial construction
154,559
158,713
-2.6
%
147,272
150,729
2.5
%
Consumer real estate
367,345
365,122
0.6
%
330,635
297,990
23.3
%
Warehouse facilities
7,887
39,700
-80.1
%
42,699
47,804
-83.5
%
Consumer nonresidential
6,232
5,624
10.8
%
7,653
9,090
-31.4
%
Total loans, net of fees
1,849,513
1,903,814
-2.9
%
1,840,434
1,714,473
7.9
%
Allowance for credit losses on loans
(18,849
)
(19,442
)
-3.1
%
(16,040
)
(15,313
)
23.1
%
Loans, net
1,830,664
1,884,372
-2.9
%
1,824,394
1,699,160
7.7
%
Premises and equipment, net
1,047
1,103
-5.0
%
1,220
1,290
-18.8
%
Goodwill and intangibles, net
7,632
7,682
-0.7
%
7,790
7,849
-2.8
%
Bank owned life insurance (BOLI)
56,438
56,066
0.7
%
55,371
55,016
2.6
%
Other assets
88,536
83,768
5.7
%
80,049
81,787
8.3
%
Total Assets $
2,305,472
$
2,344,372
-1.7
%
$
2,344,322
$
2,204,984
4.6
%
Deposits: Noninterest-bearing $
427,036
$
436,972
-2.3
%
$
438,269
$
513,711
-16.9
%
Interest checking
651,064
626,748
3.9
%
578,340
710,599
-8.4
%
Savings and money market
253,575
245,760
3.2
%
305,140
361,169
-29.8
%
Time deposits
381,770
365,242
4.5
%
260,421
228,805
66.9
%
Wholesale deposits
282,526
413,320
-31.6
%
247,992
75,000
276.7
%
Total deposits
1,995,971
2,088,042
-4.4
%
1,830,162
1,889,284
5.6
%
Other borrowed funds
50,000
- -
100.0
%
265,000
75,000
-33.3
%
Subordinated notes, net of issuance costs
19,606
19,592
0.1
%
19,565
19,551
0.3
%
Reserve for unfunded commitments
673
801
-16.0
%
- -
- -
100.0
%
Other liabilities
27,976
24,886
12.4
%
27,213
26,514
5.5
%
Stockholders’ equity
211,246
211,051
0.1
%
202,382
194,635
8.5
%
Total Liabilities & Stockholders' Equity $
2,305,472
$
2,344,372
-1.7
%
$
2,344,322
$
2,204,984
4.6
%
FVCBankcorp, Inc. Summary Consolidated
Income Statements (Dollars in thousands, except per share
data) (Unaudited) For the Three Months
Ended % Change % Change Current
From 9/30/2023 6/30/2023 Quarter
9/30/2022 Year Ago Net interest income $
13,335
$
14,388
-7.3
%
$
17,526
-23.9
%
Provision for (reversal of) credit losses
(729
)
618
218.0
%
365
-299.8
%
Net interest income after provision for (reversal of) credit losses
14,064
13,770
2.1
%
17,161
-18.0
%
Noninterest income: Fees on loans
107
169
-37.0
%
32
233.0
%
Service charges on deposit accounts
284
232
22.7
%
241
18.0
%
BOLI income
373
362
2.9
%
352
5.9
%
Income (Loss) from minority membership interest
(650
)
20
-3,350.0
%
(160
)
306.3
%
Other fee income
111
108
3.4
%
110
1.2
%
Total noninterest income
225
891
-74.8
%
575
-60.9
%
Noninterest expense: Salaries and employee benefits
5,267
5,092
3.4
%
5,202
1.2
%
Occupancy expense
547
610
-10.3
%
417
31.2
%
Internet banking and software expense
660
583
13.3
%
432
52.8
%
Data processing and network administration
601
611
-1.7
%
595
0.9
%
State franchise taxes
584
584
0.0
%
509
14.8
%
Professional fees
213
247
-13.9
%
235
-9.5
%
Other operating expense
1,176
1,476
-20.4
%
1,209
-2.8
%
Total noninterest expense
9,048
9,203
-1.7
%
8,599
5.2
%
Net income before income taxes
5,241
5,458
-4.0
%
9,137
-42.6
%
Income tax expense (benefit)
1,202
1,225
-1.9
%
2,094
-42.6
%
Net Income $
4,039
$
4,233
-4.6
%
$
7,043
-42.6
%
Earnings per share - basic (1) $
0.23
$
0.24
-5.1
%
$
0.40
-43.7
%
Earnings per share - diluted (1) $
0.22
$
0.23
-5.7
%
$
0.38
-42.0
%
Weighted-average common shares outstanding - basic (1)
17,800,108
17,710,535
17,484,740
Weighted-average common shares outstanding - diluted (1)
18,274,432
18,058,612
18,465,124
Reconciliation of Net Income
(GAAP) to Pre-Tax Pre-Provision Income (Non-GAAP): GAAP
net income reported above $
4,039
$
4,233
$
7,043
Add: Provision for credit losses
(729
)
618
365
Add: Loss on sale of investment securities
- -
- -
- -
(Subtract) Add: Income tax (benefit) expense
1,202
1,225
2,094
Pre-tax pre-provision income $
4,512
$
6,076
$
9,502
Earnings per share - basic (non-GAAP pre-tax pre-provision)(1) $
0.25
$
0.34
$
0.54
Earnings per share - diluted (non-GAAP pre-tax pre-provision)(1) $
0.25
$
0.34
$
0.51
Return on average assets (non-GAAP pre-tax pre-provision)
0.78
%
1.05
%
1.77
%
Return on average equity (non-GAAP pre-tax pre-provision)
8.45
%
11.72
%
18.71
%
(1) Amounts above reflect the effect of a 25% stock dividend
declared on December 15, 2022 for shareholders of record on January
9, 2023, paid on January 31, 2023.
FVCBankcorp, Inc.
Summary Consolidated Income Statements (Dollars in
thousands, except per share data) (Unaudited)
For the Nine Months Ended % Change From
9/30/2023 9/30/2022 Year Ago Net
interest income $
41,737
$
49,364
-15.4
%
Provision for credit losses
132
1,900
-93.1
%
Net interest income after provision for loan losses
41,605
47,464
-12.3
%
Noninterest income: Fees on loans
352
159
121.7
%
Service charges on deposit accounts
731
706
3.6
%
BOLI income
1,067
844
26.4
%
Income (Loss) from minority membership interest
(1,431
)
754
-289.8
%
Loss on sale of available-for-sale investment securities
(4,592
)
- -
100.0
%
Other fee income
362
381
-5.0
%
Total noninterest income
(3,511
)
2,844
-223.5
%
Noninterest expense: Salaries and employee benefits
15,374
15,094
1.9
%
Occupancy expense
1,785
1,570
13.7
%
Internet banking and software expense
1,804
1,231
46.6
%
Data processing and network administration
1,834
1,688
8.6
%
State franchise taxes
1,753
1,527
14.8
%
Professional fees
644
884
-27.1
%
Merger and acquisition expense
- -
125
-100.0
%
Other operating expense
4,067
3,139
29.6
%
Total noninterest expense
27,261
25,258
7.9
%
Net income before income taxes
10,833
25,050
-56.8
%
Income tax expense
1,941
4,970
-61.0
%
Net Income $
8,892
$
20,080
-55.7
%
Earnings per share - basic $
0.50
$
1.15
-56.4
%
Earnings per share - diluted $
0.49
$
1.09
-55.1
%
Weighted-average common shares outstanding - basic
17,696,101
17,412,893
Weighted-average common shares outstanding - diluted
18,209,830
18,481,572
Reconciliation of Net Income (GAAP)
to Commercial Bank Operating Earnings (Non-GAAP): GAAP
net income reported above $
8,892
$
20,080
Add: Merger and acquisition expense
- -
125
Add: Loss on sale of available-for-sale investment securities
4,592
- -
Subtract: provision for income taxes associated with non-GAAP
adjustments
(1,010
)
(28
)
Net Income, Operating earnings (non-GAAP) $
12,474
$
20,177
Earnings per share - basic (non-GAAP core bank operating
earnings)(1) $
0.70
$
1.16
Earnings per share - diluted (non-GAAP core bank operating
earnings)(1) $
0.69
$
1.09
Return on average assets (non-GAAP core bank operating
earnings)
0.73
%
1.28
%
Return on average equity (non-GAAP core bank operating earnings)
7.97
%
13.20
%
Efficiency ratio (non-GAAP core bank operating earnings)
63.67
%
48.14
%
Reconciliation of Net Income
(GAAP) to Pre-Tax Pre-Provision Income (Non-GAAP): GAAP
net income reported above $
8,892
$
20,080
Add: Provision for credit losses
132
1,900
Add: Loss on sale of investment securities
4,592
- -
Add: Income tax expense
1,941
4,970
Pre-tax pre-provision income $
15,557
$
26,950
Earnings per share - basic (non-GAAP pre-tax pre-provision)(1) $
0.88
$
1.55
Earnings per share - diluted (non-GAAP pre-tax pre-provision)(1) $
0.85
$
1.46
Return on average assets (non-GAAP operating earnings)
0.90
%
1.71
%
Return on average equity (non-GAAP operating earnings)
9.93
%
17.64
%
(1) Amounts above reflect the effect of a 25% stock dividend
declared on December 15, 2022 for shareholders of record on January
9, 2023, paid on January 31, 2023.
FVCBankcorp,
Inc. Average Statements of Condition and Yields on Earning
Assets and Interest-Bearing Liabilities (Dollars in
thousands) (Unaudited) For the Three
Months Ended 9/30/2023 6/30/2023 9/30/2022
Average Interest Average Average
Interest Average Average Interest
Average Balance Income/Expense Yield
Balance Income/Expense Yield Balance
Income/Expense Yield Interest-earning assets:
Loans receivable, net of fees (1) Commercial real estate $
1,106,429
$
13,586
4.91
%
$
1,119,042
$
13,542
4.84
%
$
1,003,052
$
11,195
4.46
%
Commercial and industrial
218,815
4,071
7.44
%
197,130
3,736
7.58
%
184,863
2,521
5.45
%
Commercial construction
154,569
2,780
7.19
%
156,471
2,814
7.19
%
156,429
2,163
5.53
%
Consumer real estate
363,713
4,359
4.79
%
360,161
4,241
4.71
%
272,849
2,879
4.22
%
Warehouse facilities
19,944
331
6.65
%
28,910
510
7.06
%
40,873
407
3.99
%
Consumer nonresidential
5,349
116
8.67
%
6,099
143
9.36
%
9,455
179
7.57
%
Total loans
1,868,819
25,243
5.40
%
1,867,813
24,986
5.35
%
1,667,521
19,344
4.64
%
Investment securities (2)(3)
281,382
1,309
1.86
%
288,987
1,375
1.90
%
349,407
1,578
1.81
%
Interest-bearing deposits at other financial institutions
64,722
876
5.37
%
66,781
844
5.07
%
40,814
171
1.66
%
Total interest-earning assets
2,214,923
27,428
4.95
%
2,223,581
27,205
4.89
%
2,057,742
21,093
4.10
%
Non-interest earning assets: Cash and due from banks
6,721
6,930
4,958
Premises and equipment, net
1,083
1,152
1,344
Accrued interest and other assets
99,576
96,656
92,985
Allowance for loan losses
(19,432
)
(19,068
)
(15,072
)
Total Assets $
2,302,870
$
2,309,251
$
2,141,957
Interest-bearing liabilities: Interest checking $
641,746
$
5,134
3.17
%
$
531,440
$
3,546
2.68
%
$
737,907
$
1,320
0.71
%
Savings and money market
240,504
1,544
2.55
%
245,306
1,288
2.11
%
314,105
727
0.92
%
Time deposits
359,217
3,550
3.92
%
393,877
3,563
3.63
%
213,845
752
1.41
%
Wholesale deposits
366,667
3,571
3.86
%
377,126
3,615
3.84
%
41,957
93
0.88
%
Total interest-bearing deposits
1,608,134
13,799
3.40
%
1,547,749
12,012
3.11
%
1,307,814
2,892
0.88
%
Other borrowed funds
9,141
35
1.53
%
57,176
546
3.83
%
81,902
415
2.01
%
Subordinated notes, net of issuance costs
19,597
258
5.21
%
19,583
258
5.27
%
19,542
258
5.23
%
Total interest-bearing liabilities
1,636,872
14,092
3.42
%
1,624,508
12,816
3.16
%
1,409,258
3,565
1.01
%
Noninterest-bearing liabilities: Noninterest-bearing
deposits
425,807
454,299
506,700
Other liabilities
26,681
23,145
22,910
Stockholders’ equity
213,510
207,299
203,089
Total Liabilities and Stockholders' Equity $
2,302,870
$
2,309,251
$
2,141,957
Net Interest Margin
13,336
2.39
%
14,389
2.60
%
17,528
3.38
%
(1) Non-accrual loans are included in average
balances. (2) The average yields for investment securities are
reported on a fully taxable-equivalent basis at a rate of 22% for
the three months ended September 30, 2023 and June 30, 2023 and 21%
for the three months ended September 30, 2022. The taxable
equivalent adjustment to interest income was $1 for the three
months ended September 30, 2023. For the three months ended June
30, 2023, and September 30, 2022 was the taxable equivalent
adjustment to interest income was $2 for each aforementioned
period. (3) The average balances for investment securities includes
restricted stock.
FVCBankcorp, Inc. Average
Statements of Condition and Yields on Earning Assets and
Interest-Bearing Liabilities (Dollars in thousands)
(Unaudited) For the Nine Months Ended
9/30/2023 9/30/2022 Average Interest
Average Average Interest Average
Balance Income/Expense Yield Balance
Income/Expense Yield Interest-earning assets:
Loans receivable, net of fees (1) Commercial real estate $
1,107,935
$
39,807
4.79
%
$
952,824
$
30,856
4.32
%
Commercial and industrial
206,447
11,254
7.27
%
178,672
6,704
5.00
%
Commercial construction
154,862
8,233
7.09
%
170,483
6,379
4.99
%
Consumer real estate
356,430
12,648
4.73
%
214,996
6,566
4.07
%
Warehouse facilities
24,272
1,265
6.95
%
48,690
1,167
3.20
%
Consumer nonresidential
6,062
418
9.20
%
9,373
522
7.43
%
Total loans
1,856,008
73,625
5.29
%
1,575,038
52,194
4.42
%
Investment securities (2)(3)
299,078
4,321
1.93
%
354,778
4,737
1.78
%
Interest-bearing deposits at other financial institutions
52,711
2,022
5.13
%
87,176
417
0.64
%
Total interest-earning assets
2,207,797
79,968
4.83
%
2,016,992
57,348
3.79
%
Non-interest earning assets: Cash and due from banks
6,159
6,811
Premises and equipment, net
1,147
1,452
Accrued interest and other assets
96,986
88,096
Allowance for loan losses
(18,523
)
(14,349
)
Total Assets $
2,293,565
$
2,099,002
Interest-bearing liabilities: Interest checking $
564,765
$
11,595
2.74
%
$
743,193
$
3,323
0.60
%
Savings and money market
259,308
4,307
2.22
%
319,871
1,522
0.64
%
Time deposits
351,762
9,292
3.53
%
192,099
1,640
1.14
%
Wholesale deposits
332,217
9,398
3.78
%
37,344
134
0.48
%
Total interest-bearing deposits
1,508,052
34,592
3.07
%
1,292,507
6,619
0.68
%
Other borrowed funds
98,378
2,862
3.89
%
44,982
584
1.73
%
Subordinated notes, net of issuance costs
19,583
773
5.27
%
19,529
773
5.29
%
Total interest-bearing liabilities
1,626,013
38,227
3.14
%
1,357,018
7,976
0.78
%
Noninterest-bearing liabilities: Noninterest-bearing
deposits
433,335
514,238
Other liabilities
25,413
23,990
Stockholders’ equity
208,804
203,756
Total Liabilities and Stockholders' Equity $
2,293,565
$
2,099,002
Net Interest Margin
41,741
2.53
%
49,372
3.27
%
(1) Non-accrual loans are included in average
balances. (2) The average yields for investment securities are
reported on a fully taxable-equivalent basis at a rate of 22% for
the nine months ended September 30, 2023 and 21% for the nine
months ended September 30, 2022. The taxable equivalent adjustment
to interest income was $4 and $8 for the nine months ended
September 30, 2023 and 2022, respectively. (3) The average balances
for investment securities includes restricted stock.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024147971/en/
David W. Pijor, Esq., Chairman and Chief Executive Officer
Phone: (703) 436-3802 Email: dpijor@fvcbank.com
Patricia A. Ferrick, President Phone: (703) 436-3822 Email:
pferrick@fvcbank.com
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