FVCBankcorp, Inc. (NASDAQ:FVCB) (the “Company”) today reported
second quarter 2020 net income of $2.9 million, or $0.21 diluted
earnings per share, compared to $4.1 million, or $0.28 diluted
earnings per share, for the quarter ended June 30, 2019, the
decrease in net income primarily a result of increased provision
for loan losses totaling $1.8 million recorded during the second
quarter of 2020 and one-time branch closure costs of $676 thousand.
Net revenues, which includes net interest income plus noninterest
income, for the three months ended June 30, 2020 were $13.4
million, an increase of $472 thousand, from $12.9 million for the
year ago quarter ended June 30, 2019. For the six months ended June
30, 2020, the Company reported net income of $6.6 million, or $0.46
diluted earnings per share, compared to $8.0 million or $0.54
diluted earnings per share, for the same period of 2019, the
decrease in net income attributable to an increase in loan loss
provisioning of $2.8 million year-over-year and $676 thousand in
one-time branch closure costs. Net revenues for the six months
ended June 30, 2020 were $26.3 million, an increase of $875
thousand, from $25.4 million for the six months ended June 30,
2019.
Certain non-operating items impacted the financial results for
the quarter and year to date periods reported above. During the
second quarter of 2020, the Company decided to close two branch
office locations. Because of the COVID-19 pandemic, more clients
have transitioned to the Company’s electronic banking products,
reducing the need to have physical branch locations to serve its
customers. The operating leases and leasehold improvements written
off as a result of closing these locations totaled $676 thousand
pre-tax ($534 thousand after tax). As the branches will not close
until early fourth quarter 2020, the Company does not anticipate
cost savings until that time. Annual cost savings for the closure
of these locations related to occupancy expense is expected to be
approximately $350 thousand. Other savings of approximately $250
thousand include salaries and benefits expense as the employees for
each of these locations will be filling current vacant positions
within the Company, reducing the need to hire additional personnel.
The Company is proactively working with those customers impacted by
these branch closures to minimize their business interruption.
The Company believes the reporting of non-generally accepted
accounting principles (“non-GAAP”) 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 for the three months ended June 30, 2020 were $3.4
million, or $0.25 diluted earnings per share, compared to $4.1
million, or $0.28 diluted earnings per share for the three months
ended June 30, 2019. Operating Earnings for the six months ended
June 30, 2020 were $7.1 million, or $0.50 diluted earnings per
share, compared to $8.1 million, or $0.55 diluted earnings per
share for the six months ended June 30, 2019. As mentioned
previously, both the three and six month periods ended June 30,
2020 have been impacted by elevated provision for loan losses
expense.
Second Quarter Selected Highlights
- Increased Pre-Tax Pre-Provision Income. For the three
months ended June 30, 2020 and 2019, pre-tax pre-provision income
was $6.1 million and $5.6 million, respectively, an increase of
$426 thousand or 7.6%. On a linked quarter basis, pre-tax
pre-provision income was $5.6 million for the three months ended
March 31, 2020. Pre-tax pre-provision return on average assets for
the three months ended June 30, 2020 and 2019 were 1.41% and 1.56%,
respectively. For the six months ended June 30, 2020 and 2019,
pre-tax pre-provision income were $11.7 million and $11.2 million,
respectively, an increase of $429 thousand. A reconciliation of
pre-tax pre-provision, a non-GAAP financial measure, can be found
in the tables below.
- Reduced Levels of Past Due and Nonperforming loans.
Loans past due 30 days or more totaled $3.3 million at June 30,
2020, of which $1.4 million are over 90 days past due. Past due
loans at June 30, 2020 reflect a decrease of $11.4 million from
$14.7 million at December 31, 2019 and a decrease of $13.1 million
from $16.3 million at March 31, 2020. Nonperforming loans and loans
past due 90 days or more and still accruing were $8.5 million, or
0.48% of total assets, at June 30, 2020, compared to $10.7 million,
or 0.70% of total assets at December 31, 2019, and $8.9 million, or
0.56% of total assets, at March 31, 2020.
- Responsiveness to Customers During COVID-19 Pandemic.
Initially, total loans with payment deferrals comprising
approximately 24.4% of the total loan portfolio, or $360.2 million,
were made as a result of the Company’s goal to help customers with
COVID-19 related financial issues. At July 20, 2020, approximately
18.5% of the total loan portfolio, or $273.6 million, continue
under COVID-19 deferrals. For 90-day payment deferrals that have
matured to date, approximately 9% have been approved for a second
90-day payment deferral. In addition, the Company originated 755
loans totaling $169.4 million in the U.S. Small Business
Administration’s (“SBA”) Paycheck Protection Program (“PPP”) net of
deferred fees and costs during the second quarter of 2020. Of the
755 PPP loans originated, 226 loans were originated to new
customers of the Company’s subsidiary bank, FVCBank, and represent
future deposit and loan growth opportunities. The Company has net
deferred fees of $4.6 million related to PPP loans which are being
recognized in interest income over the remaining lives of the PPP
loans, or sooner, upon PPP loan forgiveness or repayment.
- Strong Core Deposit Growth. Core deposits, which
excludes wholesale deposits, increased $233.3 million, to $1.42
billion at June 30, 2020, an increase of 19.7%, from December 31,
2019. Noninterest-bearing deposits represent 31.2% of the core
deposit base at June 30, 2020.
- Increased Net Interest Income. Net interest income
increased $324 thousand to $12.7 million for the second quarter of
2020, compared to $12.4 million for the same 2019 period. Compared
to the first quarter of 2020, net interest income increased $484
thousand. Net interest margin decreased 43 basis points to 3.16%
for the quarter ended June 30, 2020 compared to 3.59% for the
quarter ended June 30, 2019. Excluding the impact of PPP loans,
which was 4 basis points, and excluding excess liquidity, which was
11 basis points, during the second quarter of 2020, net interest
margin for the three months ended June 30, 2020 would have been
3.31%.
- Increased Provision for Loan Losses. As a result of the
current economic conditions related to COVID-19, the Company
recorded a provision for loan losses of $1.8 million during the
second quarter of 2020, compared to $1.1 million at March 31, 2020,
increasing the allowance for loan losses to total loans, excluding
PPP loans, 11 basis points to 0.99% at June 30, 2020. Compared to
the year ago quarter, provision for loan losses increased $1.2
million. The Company increased reserves for loans identified as
pandemic impacted and payment deferred loans and separately and
appropriately reserved for possible future losses on the overall
portfolio that may be incurred based on qualitative economic
data.
- Well-Capitalized Bank. The capital ratios at FVCbank
remain at a well-capitalized level at June 30, 2020 with a leverage
ratio of 11.05%.
- Improved Efficiency Ratio. Efficiency ratio, excluding
the one-time branch closure charges mentioned above and gains on
sales of securities recorded during the first quarter of 2020, for
the three months ended June 30, 2020 was 54.7%, an improvement from
56.3% for the quarter ended March 31, 2020.
“Our focus this past quarter has been to help our existing and
new customers’ businesses persist during the COVID-19 pandemic
while managing our credit risk exposure. We were flexible with
customers with our initial loan payment deferral programs. We are
seeing customers resume contractual payments and believe this will
continue as businesses open up and government stimulus such as PPP
provides support to their businesses. We believe we have
appropriately reserved for potential losses in our loan portfolio
and have a capital position that will continue to support the Bank
as we weather this storm. I want to thank our employees who have
worked under some of the most difficult circumstances, helping our
customers through such unprecedented times and assisting new
customers in our community who needed bank support,” 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 July 20, 2020, loans modified reduced to 218 loans
for a total outstanding principal balance of $273.6 million, or
18.5% of the total loan portfolio. For those commercial real estate
loans with approved payment deferrals, these loans are
collateralized and well secured. The table below shows the number
of loans modified and not modified and their respective outstanding
loan balances by asset class, excluding PPP loans.
COVID Payment Deferral By
Asset Class Asset Class
Number of
Loans
Total Loans Modified
($ in thousands)
Number of Loans Not
Modified
Outstanding Balance of
Loans Not Modified
($ in thousands)
Commercial Real Estate - Retail
31
$
88,109
80
$
114,874
Commercial Real Estate - Mixed Use
21
47,730
31
38,309
Specialty Use-Hotel/Lodging/Motel
6
45,945
5
12,044
Commercial Real Estate - Office
14
35,654
100
80,393
Multi-Family First Lien
11
32,541
69
75,019
Commercial Real Estate - Industrial
10
22,338
53
73,998
Commercial Real Estate - Special Use/Church
6
12,026
19
34,705
Special Purpose
10
11,718
13
18,341
Other Loan Categories
168
64,116
2,148
497,973
At June 30, 2020
277
$
360,177
2,518
$
945,656
At July 20, 2020
218
$
273,631
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 loans 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 $1.78 billion at June 30, 2020
compared to $1.54 billion at December 31, 2019, an increase of
$243.9 million, or 15.9%. Year-over-year, total assets increased
$296.5 million, or 20.0% from $1.48 billion at June 30, 2019.
Loans receivable, net of deferred fees, totaled $1.48 billion at
June 30, 2020, compared to $1.27 billion at December 31, 2019, an
increase of $207.6 million, or 16.3%, and compared to $1.23 billion
at June 30, 2019, a year-over-year increase of $243.7 million, or
19.7%. PPP loans originated and funded, net of fees, totaled $169.4
million during the quarter assisting both existing and new clients.
During the second quarter of 2020, loan originations, excluding PPP
loans, totaled approximately $82.5 million, of which $46.7 million
funded during the quarter. While commercial & industrial loans
decreased $9.0 million during the first six months of 2020, PPP
loans to this segment totaled approximately $93.3 million. On April
1, 2020, the Company reclassified its consumer unsecured loans held
for sale portfolio to held for investment at the lower of cost or
market as the market for these types of loans receded due to
current economic conditions. This portfolio totaled $8.8 million at
June 30, 2020, compared to $11.2 million at December 31, 2019.
Investment securities decreased $19.5 million to $122.1 million
at June 30, 2020, compared to $141.6 million at December 31, 2019.
The Company sold $10.1 million in mortgage-backed securities
available-for-sale, recording gains of $97 thousand during the
first quarter of 2020. Year-over-year, investment securities
decreased $14.2 million, or 10.4%, from $136.2 million at June 30,
2019.
Total deposits increased to $1.52 billion at June 30, 2020
compared to $1.29 billion at December 31, 2019, an increase of
$233.3 million, or 18.2%. Year-over-year, total deposits increased
$249.7 million, or 19.7%, from $1.27 billion at June 30, 2019. Core
deposits, which represent total deposits less wholesale deposits,
increased $233.3 million, or 19.7%, to $1.42 billion at June 30,
2020 compared to $1.19 billion at December 31, 2019, and increased
$231.9 million, or 19.5% from $1.19 billion at June 30, 2019. The
increase in core deposits reflects a combination of deposits from
remaining PPP funds and new customer relationships as well as
growth in existing customer accounts. Wholesale deposits totaled
$100.0 million, or 6.6% of total deposits at June 30, 2020, a
decrease of $24.5 million from March 31, 2020. Noninterest-bearing
deposits increased $136.2 million, or 44.5%, to $442.4 million at
June 30, 2020 from $306.2 million at December 31, 2019, and
represented 29.1% of total deposits, or 31.2% of core deposits, at
June 30, 2020.
Income Statement
Net income for the three months ended June 30, 2020 was $2.8
million, compared to $4.1 million for the same period of 2019, and
$3.7 million for the quarter ended March 31, 2020. For the six
months ended June 30, 2020, net income was $6.6 million, compared
to $8.0 million for the same period of 2019. Both the three and six
months’ periods of 2020 were impacted by increased provision for
loan losses and the aforementioned branch closing impairment
charges.
Net interest income totaled $12.7 million, an increase of $324
thousand, for the quarter ended June 30, 2020, compared to the year
ago quarter, and increased by $484 thousand, or 4%, compared to the
first quarter of 2020, a result of significant decreases in the
cost of deposits. Interest expense on deposits decreased $1.0
million for the three months ended June 30, 2020 compared to the
same period of 2019, and decreased $1.0 million compared to the
three months ended March 31, 2020. The impact to interest income
from the accretion of loan marks on acquired loans was $126
thousand and $352 thousand for the three months ended June 30, 2020
and 2019, respectively. In addition, net interest income for the
three months ended June 30, 2020 benefited from PPP loan
origination, which contributed $801 thousand to interest income.
For the six months ended June 30, 2020 and 2019, net interest
income was $24.9 million and $24.1 million, respectively, an
increase of $771 thousand.
The Company’s net interest margin decreased 43 basis points to
3.16% for the quarter ended June 30, 2020 compared to 3.59% for the
quarter ended June 30, 2019, impacted by the decreases in the
targeted fed funds rate of 225 basis points over the past 12
months. On a linked quarter basis, net interest margin decreased 21
basis points from 3.37% for the three months ended March 31, 2020.
The average yield for the loan portfolio for the second quarter of
2020 was 4.52% (excluding PPP loans) compared to 5.24% for the year
ago quarter, and 4.88% for the quarter ended March 31, 2020. The
Company’s variable rate portfolio makes up approximately 49% of the
total portfolio, and of those variable rate loans that have rate
floors, substantially all have hit their rate floors. Cost of
deposits, which include noninterest-bearing deposits, for the
second quarter of 2020 was 0.87%, compared to 1.36% for the second
quarter of 2019, a decrease of 49 basis points, primarily as a
result of the Company having aggressively decreased its deposit
rates during the second quarter in order to offset the repricing of
the variable rate loan portfolio.
Noninterest income totaled $687 thousand and $539 thousand for
the quarters ended June 30, 2020 and 2019, respectively. Fee income
from loans was $46 thousand, for the quarter ended June 30, 2020
compared to $53 thousand for the same period of 2019. Service
charges on deposit accounts and other fee income totaled $223
thousand for the second quarter of 2020, compared to $229 thousand
from the year ago quarter. Income from bank-owned life insurance
increased $172 thousand to $282 thousand for the three months ended
June 30, 2020 compared to $110 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
June 30, 2020 was $1.4 million, compared to $1.3 million for the
2019 year-to-date period, an increase of $104 thousand, or 8%,
which was primarily driven by an increase in income from bank-owned
life insurance.
Noninterest expense totaled $8.0 million for the quarter ended
June 30, 2020, compared to $7.3 million for the same three-month
period of 2019. Excluding the impairment charge on branch closings,
noninterest expense for the three months ended June 30, 2020 would
have been $7.3 million. On a linked quarter basis, noninterest
expense, excluding impairment charges, increased $113 thousand from
the three months ended March 31, 2020. This increase was primarily
related to planned upgrades in the Company’s network
infrastructure. For the six months ended June 30, 2020 and 2019,
noninterest expense, excluding impairment charges, was $14.5
million and $14.2 million, respectively. The Company continues its
efforts to maintain or reduce certain expenses where possible.
The efficiency ratio, excluding impairment charges, for the
quarter ended June 30, 2020 was 54.7%, a decrease from 56.2% for
the year ago quarter and a decrease from 56.3% for the three months
ended March 31, 2020. The efficiency ratios for the six months
ended June 30, 2020 and 2019, excluding impairment charges were
54.4% and 55.5%, respectively.
The Company recorded a provision for income taxes of $754
thousand for the three months ended June 30, 2020, compared to $1.0
million for the same period of 2019. The effective tax rates for
the three months ended June 30, 2020 and 2019 were 20.8% and 20.4%,
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.
For the six months ended June 30, 2020 and 2019, provision for
income taxes was $1.7 million and $2.2 million, respectively.
Asset Quality
The Company recorded a provision for loan losses of $1.8 million
for the three months ended June 30, 2020, compared to $505 thousand
for the year ago quarter. The increase in the provision for loan
losses for the three months ended June 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. The Company is not required to implement the
provisions of the current expected credit losses 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 six months ended June 30, 2020
and 2019 were $2.8 million and $1.0 million, respectively.
The allowance for loan losses to total loans, excluding PPP
loans, was 0.99% at June 30, 2020, compared to 0.81% at December
31, 2019. The allowance for loan losses to total loans on the
Company’s originated loan portfolio, excluding PPP loans and
excluding acquired loans, was 1.05% at June 30, 2020. Net
charge-offs recorded during the second quarter of 2020 were
primarily related to overdrawn consumer accounts.
Nonperforming loans and loans 90 days or more past due at June
30, 2020 totaled $8.5 million, or 0.48% 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 $364 thousand, representing the expected
losses associated with those loans. The Company has one troubled
debt restructuring at June 30, 2020 totaling $99 thousand which is
a consumer residential loan. Nonperforming assets (including other
real estate owned) to total assets was 0.69% at June 30, 2020
compared to 0.95% for December 31, 2019.
About FVCBankcorp, Inc.
FVCBankcorp, Inc. is the holding company for FVCbank, a
wholly-owned subsidiary that commenced operations in November 2007.
FVCbank is a $1.78 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
11 full-service offices in Arlington, Ashburn, Fairfax, Manassas,
Reston and Springfield, Virginia, Washington D.C., and Baltimore,
Bethesda, Rockville and Silver Spring, 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
June 30,
For the Six Months Ended June
30,
For the Three Months
Ended
2020
2019
2020
2019
3/31/2020
12/31/2019
Selected Balances Total assets
$
1,781,149
$
1,484,600
$
1,602,611
$
1,537,295
Total investment securities
128,690
141,611
133,586
147,606
Loans held for sale
- -
- -
9,640
11,198
Total loans, net of deferred fees
1,478,120
1,234,372
1,282,142
1,270,526
Allowance for loan losses
(12,894)
(9,996)
(11,226)
(10,231)
Total deposits
1,519,036
1,269,374
1,344,044
1,285,722
Subordinated debt
24,527
24,447
24,507
24,487
Other borrowings
25,000
- -
25,000
25,000
Total stockholders’ equity
180,652
170,163
177,688
179,078
Summary Results of Operations Interest income
$
16,281
$
16,990
$
33,212
$
32,950
$
16,931
$
16,777
Interest expense
3,586
4,619
8,306
8,815
4,720
4,941
Net interest income
12,695
12,371
24,906
24,135
12,211
11,836
Provision for loan losses
1,750
505
2,816
1,020
1,066
465
Net interest income after provision for loan losses
10,945
11,866
22,090
23,115
11,145
11,371
Noninterest income - loan fees, service charges and other
405
429
1,170
1,062
764
485
Noninterest income - bank owned life insurance
282
110
565
215
283
249
Noninterest income - gain (loss) on sales of securities
available-for-sale
- -
- -
97
- -
97
- -
Noninterest income - gain (loss) on loans held for sale
- -
- -
(451)
- -
(451)
(145)
Noninterest expense
7,998
7,276
15,207
14,180
7,209
7,334
Income before taxes
3,634
5,129
8,167
10,212
4,629
4,626
Income tax expense
754
1,044
1,651
2,201
896
902
Net income
2,880
4,085
6,516
8,011
3,733
3,724
Per Share Data Net income, basic
$
0.21
$
0.30
$
0.49
$
0.58
$
0.27
$
0.27
Net income, diluted
$
0.21
$
0.28
$
0.46
$
0.54
$
0.26
$
0.25
Book value
$
13.42
$
12.30
$
13.21
$
12.88
Tangible book value (1)
$
12.79
$
11.70
$
12.57
$
12.26
Shares outstanding
13,459,317
13,839,772
13,451,678
13,902,067
Selected Ratios Net interest margin (2)
3.16
%
3.59
%
3.26
%
3.62
%
3.37
%
3.28
%
Return on average assets (2)
0.67
%
1.13
%
0.80
%
1.14
%
0.96
%
0.98
%
Return on average equity (2)
6.41
%
9.78
%
7.24
%
9.76
%
8.29
%
8.39
%
Efficiency (3)
59.77
%
56.36
%
58.06
%
55.80
%
55.87
%
59.03
%
Loans, net of deferred fees to total deposits
97.31
%
97.24
%
95.39
%
98.82
%
Noninterest-bearing deposits to total deposits
29.13
%
21.33
%
21.41
%
23.82
%
Reconciliation of Net Income (GAAP) to Operating Earnings
(Non-GAAP) (4) Net income (from above)
$
2,880
$
4,085
$
6,516
$
8,011
$
3,733
$
3,724
Add: Merger and acquisition expense
- -
16
- -
83
- -
- -
Add: Impairment on branch closures
676
- -
676
- -
- -
- -
Subtract: Gains on sales of securities available-for-sale
- -
- -
(97)
- -
(97)
- -
Less: provision for income taxes associated with non-GAAP
adjustments
(142)
(4)
(122)
(19)
20
- -
Net income, as adjusted
$
3,414
$
4,097
$
6,973
$
8,075
$
3,656
$
3,724
Net income, diluted, on an operating basis
$
0.25
$
0.28
$
0.50
$
0.55
$
0.25
$
0.25
Return on average assets (non-GAAP operating earnings)
0.79
%
1.13
%
0.86
%
1.15
%
0.94
%
0.98
%
Return on average equity (non-GAAP operating earnings)
7.60
%
9.81
%
7.86
%
9.84
%
8.12
%
8.64
%
Efficiency ratio (non-GAAP operating earnings) (3)
54.72
%
56.24
%
54.35
%
55.47
%
56.29
%
58.35
%
Capital Ratios - Bank Tangible common equity (to tangible
assets)
9.71
%
10.97
%
10.61
%
11.15
%
Tier 1 leverage (to average assets)
11.05
%
12.10
%
12.06
%
12.15
%
Asset Quality Nonperforming loans and loans 90+ past due
$
8,493
$
9,989
$
8,896
$
10,725
Performing troubled debt restructurings (TDRs)
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)
0.48
%
0.67
%
0.56
%
0.70
%
Nonperforming assets to total assets
0.69
%
0.93
%
0.80
%
0.95
%
Nonperforming assets (including TDRs) to total assets
0.70
%
0.93
%
0.80
%
0.95
%
Allowance for loan losses to loans
0.87
%
0.81
%
0.88
%
0.81
%
Allowance for loan losses to nonperforming loans
151.82
%
100.07
%
126.19
%
95.39
%
Net charge-offs
$
82
$
20
$
153
$
182
$
71
$
303
Net charge-offs to average loans (2)
0.02
%
0.01
%
0.02
%
0.03
%
0.02
%
0.10
%
Selected Average Balances Total assets
$
1,721,612
$
1,444,588
$
1,636,284
$
1,399,949
$
1,550,958
$
1,514,124
Total earning assets
1,615,125
1,384,516
1,536,659
1,346,110
1,458,308
1,430,397
Total loans, net of deferred fees
1,415,383
1,207,933
1,347,021
1,173,134
1,281,969
1,234,183
Total deposits
1,459,834
1,228,595
1,370,263
1,188,841
1,280,693
1,270,821
Other Data Noninterest-bearing deposits
$
442,443
$
270,711
$
287,801
$
306,235
Interest-bearing checking, savings and money market
655,959
596,701
581,005
525,138
Time deposits
320,628
319,740
350,712
354,362
Wholesale deposits
100,006
82,222
124,526
99,987
(1) Non-GAAP
Reconciliation
For the Period Ended June
30,
(Dollars in thousands, except per share data)
2020
2019
Total stockholders’ equity
$
180,652
$
170,163
Less: goodwill and intangibles, net
(8,525)
(8,223)
Tangible Common Equity
$
172,127
$
161,940
Book value per common share
$
13.42
$
12.30
Less: intangible book value per common share
(0.63)
(0.60)
Tangible book value per common share
$
12.79
$
11.70
(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
Current
From
6/30/2020
3/31/2020
Quarter
12/31/2019
6/30/2019
Year Ago
Cash and due from banks $
25,613
$
23,158
10.6
%
$
14,916
$
15,201
68.5
%
Interest-bearing deposits at other financial institutions
64,989
62,402
4.1
%
18,226
29,149
123.0
%
Investment securities
122,082
126,978
-3.9
%
141,589
136,232
-10.4
%
Restricted stock, at cost
6,608
6,608
0.0
%
6,017
5,379
22.8
%
Loans held for sale, at fair value
- -
9,640
-100.0
%
11,198
- -
0.0
%
Loans, net of fees: Commercial real estate
779,036
763,767
2.0
%
747,993
662,173
17.6
%
Commercial and industrial
105,957
106,302
-0.3
%
114,924
134,466
-21.2
%
Paycheck protection program
169,425
- -
100.0
%
- -
- -
100.0
%
Commercial construction
227,746
220,798
3.1
%
214,949
217,105
4.9
%
Consumer real estate
177,366
180,977
-2.0
%
181,369
196,114
-9.6
%
Consumer nonresidential
18,590
10,298
80.5
%
11,291
24,514
-24.2
%
Total loans, net of fees
1,478,120
1,282,142
15.3
%
1,270,526
1,234,372
19.7
%
Allowance for loan losses
(12,894
)
(11,226
)
14.9
%
(10,231
)
(9,996
)
29.0
%
Loans, net
1,465,226
1,270,916
15.3
%
1,260,295
1,224,376
19.7
%
Premises and equipment, net
1,818
2,090
-13.0
%
2,084
2,049
-11.3
%
Goodwill and intangibles, net
8,525
8,612
-1.0
%
8,689
8,223
3.7
%
Bank owned life insurance (BOLI)
37,633
37,352
0.8
%
37,069
26,621
41.4
%
Other real estate owned
3,866
3,866
0.0
%
3,866
3,866
0.0
%
Other assets
44,789
50,989
-12.2
%
33,346
33,504
33.7
%
Total Assets $
1,781,149
$
1,602,611
11.1
%
$
1,537,295
$
1,484,600
20.0
%
Deposits: Noninterest-bearing $
442,443
$
287,801
53.7
%
$
306,235
$
270,711
63.4
%
Interest-bearing checking
387,683
309,458
25.3
%
302,755
301,319
28.7
%
Savings and money market
268,276
271,547
-1.2
%
222,383
295,382
-9.2
%
Time deposits
320,628
350,712
-8.6
%
354,362
319,740
0.3
%
Wholesale deposits
100,006
124,526
-19.7
%
99,987
82,222
21.6
%
Total deposits
1,519,036
1,344,044
13.0
%
1,285,722
1,269,374
19.7
%
Other borrowed funds
25,000
25,000
0.0
%
25,000
- -
100.0
%
Subordinated notes, net of issuance costs
24,527
24,507
0.1
%
24,487
24,447
0.3
%
Other liabilities
31,934
31,372
1.8
%
23,008
20,616
54.9
%
Stockholders’ equity
180,652
177,688
1.7
%
179,078
170,163
6.2
%
Total Liabilities & Stockholders' Equity $
1,781,149
$
1,602,611
11.1
%
$
1,537,295
$
1,484,600
20.0
%
FVCBankcorp, Inc. Summary Consolidated Income
Statements (In thousands, except per share data)
(Unaudited) For the Three Months Ended
% Change % Change Current From
6/30/2020 3/31/2020 Quarter 6/30/2019
Year Ago Net interest income $
12,695
$
12,211
4.0
%
$
12,371
2.6
%
Provision for loan losses
1,750
1,066
64.2
%
505
246.5
%
Net interest income after provision for loan losses
10,945
11,145
-1.8
%
11,866
-7.8
%
Noninterest income: Fees on loans
46
396
-88.4
%
53
-13.2
%
Service charges on deposit accounts
223
239
-6.7
%
229
-2.6
%
Gain on sale of securities available-for-sale
- -
97
-100.0
%
- -
0.0
%
Loss on loans held for sale
- -
(451
)
-100.0
%
- -
0.0
%
BOLI income
282
283
-0.4
%
110
156.4
%
Other fee income
136
129
5.4
%
147
-7.5
%
Total noninterest income
687
693
-0.9
%
539
27.5
%
Noninterest expense: Salaries and employee benefits
3,982
4,028
-1.1
%
4,245
-6.2
%
Occupancy and equipment expense
859
855
0.5
%
873
-1.6
%
Data processing and network administration
494
434
13.8
%
343
44.0
%
State franchise taxes
466
466
0.0
%
426
9.4
%
Professional fees
207
225
-8.0
%
274
-24.5
%
Merger and acquisition expense
- -
- -
0.0
%
16
-100.0
%
Impairment on branch closures
676
- -
100.0
%
- -
100.0
%
Other operating expense
1,314
1,201
9.4
%
1,099
19.6
%
Total noninterest expense
7,998
7,209
10.9
%
7,276
9.9
%
Net income before income taxes
3,634
4,629
-21.5
%
5,129
-29.1
%
Income tax expense
754
896
-15.8
%
1,044
-27.8
%
Net Income $
2,880
$
3,733
-22.9
%
$
4,085
-29.5
%
Earnings per share - basic $
0.21
$
0.27
-21.1
%
$
0.30
-27.7
%
Earnings per share - diluted $
0.21
$
0.26
-19.1
%
$
0.28
-25.0
%
Weighted-average common shares outstanding - basic
13,455,053
13,751,768
13,802,712
Weighted-average common shares outstanding - diluted
13,924,239
14,595,447
14,817,462
Reconciliation of Net Income (GAAP) to Operating Earnings
(Non-GAAP):
GAAP net income reported above $
2,880
$
3,733
$
4,085
Add: Merger and acquisition expense
- -
- -
16
Add: Impairment loss
676
- -
- -
Subtract: Gain on sales of securities available-for-sale
- -
(97
)
- -
Subtract: provision for income taxes associated with non-GAAP
adjustments
(142
)
20
(4
)
Net Income, excluding above merger and acquisition charges $
3,414
$
3,656
$
4,097
Earnings per share - basic (excluding Non-GAAP items) $
0.25
$
0.27
$
0.30
Earnings per share - diluted (excluding Non-GAAP items) $
0.25
$
0.25
$
0.28
Return on average assets (non-GAAP operating earnings)
0.79
%
0.94
%
1.13
%
Return on average equity (non-GAAP operating earnings)
7.60
%
8.12
%
9.81
%
Efficiency ratio (non-GAAP operating earnings)
54.72
%
56.29
%
56.24
%
Reconciliation of Net Income (GAAP)
to Pre-Tax Pre-Provision Income (Non-GAAP): GAAP net
income reported above $
2,880
$
3,733
$
4,085
Add: Provision for loan losses
1,750
1,066
505
Add: Impairment losses
676
- -
- -
Subtract: Gain on sales of securities available-for-sale
- -
(97
)
- -
Add: Income tax expense
754
896
1,044
Pre-tax pre-provision income $
6,060
$
5,598
$
5,634
Earnings per share - basic (excluding Non-GAAP items) $
0.45
$
0.41
$
0.41
Earnings per share - diluted (excluding Non-GAAP items) $
0.44
$
0.38
$
0.38
Return on average assets (non-GAAP operating earnings)
1.41
%
1.44
%
1.56
%
Return on average equity (non-GAAP operating earnings)
13.49
%
12.43
%
13.49
%
FVCBankcorp, Inc. Summary Consolidated Income
Statements (In thousands, except per share data)
(Unaudited)
For the Six Months
Ended
% Change
From
6/30/2020
6/30/2019
Year Ago
Net interest income $
24,906
$
24,135
3.2
%
Provision for loan losses
2,816
1,020
176.1
%
Net interest income after provision for loan losses
22,090
23,115
-4.4
%
Noninterest income: Fees on loans
442
400
10.5
%
Service charges on deposit accounts
463
411
12.7
%
Gain on sale of securities available-for-sale
97
- -
100.0
%
Loss on loans held for sale
(451
)
- -
100.0
%
BOLI income
565
215
162.8
%
Other fee income
265
251
5.6
%
Total noninterest income
1,381
1,277
8.1
%
Noninterest expense: Salaries and employee benefits
8,010
8,183
-2.1
%
Occupancy and equipment expense
1,715
1,700
0.9
%
Data processing and network administration
928
782
18.7
%
State franchise taxes
932
848
9.9
%
Professional fees
432
404
6.9
%
Merger and acquisition expense
- -
83
-100.0
%
Impairment on branch closures
676
- -
100.0
%
Other operating expense
2,514
2,180
15.3
%
Total noninterest expense
15,207
14,180
7.2
%
Net income before income taxes
8,264
10,212
-19.1
%
Income tax expense
1,651
2,201
-25.0
%
Net Income $
6,613
$
8,011
-17.5
%
Earnings per share - basic $
0.49
$
0.58
-16.3
%
Earnings per share - diluted $
0.46
$
0.54
-14.3
%
Weighted-average common shares outstanding - basic
13,603,411
13,763,472
Weighted-average common shares outstanding - diluted
14,259,843
14,798,708
Reconciliation of Net Income (GAAP)
to Operating Earnings (Non-GAAP): GAAP net income
reported above $
6,613
$
8,011
Add: Merger and acquisition expense
- -
83
Add: Impairment loss
676
- -
Subtract: Gain on sales of securities available-for-sale
(97
)
- -
Subtract: provision for income taxes associated with non-GAAP
adjustments
(122
)
(19
)
Net Income, excluding above merger and acquisition charges $
7,070
$
8,075
Earnings per share - basic (excluding merger and acquisition
charges) $
0.52
$
0.59
Earnings per share - diluted (excluding merger and acquisition
charges) $
0.50
$
0.55
Return on average assets (non-GAAP operating earnings)
0.86
%
1.15
%
Return on average equity (non-GAAP operating earnings)
7.86
%
9.84
%
Efficiency ratio (non-GAAP operating earnings)
54.35
%
55.47
%
Reconciliation of Net Income (GAAP)
to Pre-Tax Pre-Provision Income (Non-GAAP): GAAP net
income reported above $
6,613
$
8,011
Add: Provision for loan losses
2,816
1,020
Add: Impairment losses
676
- -
Subtract: Gain on sales of securities available-for-sale
(97
)
- -
Add: Income tax expense
1,651
2,201
Pre-tax pre-provision income $
11,659
$
11,232
Earnings per share - basic (excluding Non-GAAP items) $
0.86
$
0.82
Earnings per share - diluted (excluding Non-GAAP items) $
0.82
$
0.76
Return on average assets (non-GAAP operating earnings)
1.43
%
1.60
%
Return on average equity (non-GAAP operating earnings)
12.96
%
13.68
%
FVCBankcorp, Inc. Average Statements of Condition and
Yields on Earning Assets and Interest-Bearing Liabilities
(Dollars in thousands) (Unaudited)
For the Three Months Ended 6/30/2020 3/31/2020
6/30/2019 Average Average Average
Average Average Average Balance
Yield Balance Yield Balance
Yield Interest-earning assets: Loans receivable, net
of fees (1) Commercial real estate (2) $
844,774
4.37
%
$
832,545
4.77
%
$
717,248
4.86
%
Commercial and industrial
103,226
4.99
%
110,186
5.70
%
135,335
6.07
%
Paycheck protection program
121,843
2.63
%
- -
0.0
%
- -
0.0
%
Commercial construction
222,685
4.65
%
220,104
5.09
%
198,927
5.71
%
Consumer real estate
103,335
4.47
%
108,454
4.53
%
129,605
5.25
%
Consumer nonresidential
19,520
7.37
%
10,680
4.81
%
26,818
7.70
%
Total loans
1,415,383
4.36
%
1,281,969
4.88
%
1,207,933
5.24
%
Investment securities (3)(4)
128,797
2.65
%
143,634
2.70
%
144,056
2.73
%
Loans held for sale, at fair value
- -
0.0
%
10,492
8.99
%
- -
0.0
%
Interest-bearing deposits at other financial institutions
70,945
0.12
%
22,213
1.48
%
32,527
2.39
%
Total interest-earning assets
1,615,125
4.03
%
1,458,308
4.65
%
1,384,516
4.91
%
Non-interest earning assets: Cash and due from banks
19,645
13,431
7,597
Premises and equipment, net
2,050
1,941
2,152
Accrued interest and other assets
96,362
87,560
60,016
Allowance for loan losses
(11,570
)
(10,282
)
(9,693
)
Total Assets $
1,721,612
$
1,550,958
$
1,444,588
Interest-bearing liabilities: Interest checking $
341,081
0.70
%
$
273,976
1.29
%
$
301,132
1.28
%
Savings and money market
263,588
0.66
%
227,497
1.12
%
275,129
1.54
%
Time deposits
321,775
2.15
%
353,809
2.35
%
299,551
2.17
%
Wholesale deposits
132,072
1.23
%
121,047
1.92
%
88,064
2.52
%
Total interest-bearing deposits
1,058,516
1.20
%
976,329
1.72
%
963,876
1.74
%
Other borrowed funds
25,000
0.50
%
39,141
1.53
%
4,754
2.65
%
Subordinated notes, net of issuance costs
24,514
6.48
%
24,494
6.49
%
24,434
6.48
%
Total interest-bearing liabilities
1,108,030
1.30
%
1,039,964
1.83
%
993,064
1.87
%
Noninterest-bearing liabilities: Noninterest-bearing
deposits
401,318
304,364
264,719
Other liabilities
32,585
26,476
19,776
Stockholders’ equity
179,679
180,154
167,029
Total Liabilities and Stockholders' Equity $
1,721,612
$
1,550,958
$
1,444,588
Net Interest Margin
3.16
%
3.37
%
3.59
%
(1)
Non-accrual loans are included in average balances.
(2)
Includes loans for residential 1-4 trust investment purposes
totaling $75.0 million, $75.3 million and $71.2 million at June 30,
2020, March 31, 2020 and June 30, 2019, respectively. These loans
are reported as Consumer Real Estate on the summary balance sheet.
(3)
The average yields for investment securities are reported on a
fully taxable-equivalent basis at a rate of 21% .
(4)
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 Six Months Ended 6/30/2020 6/30/2019
Average Average Average Average
Balance Yield Balance Yield
Interest-earning assets: Loans receivable, net of fees (1)
Commercial real estate (2) $
838,660
4.57
%
$
698,363
4.79
%
Commercial and industrial
106,705
5.36
%
135,070
6.35
%
Paycheck protection program
60,921
2.63
%
- -
0.0
%
Commercial construction
221,395
4.87
%
179,014
5.71
%
Consumer real estate
105,895
4.50
%
131,760
5.25
%
Consumer nonresidential
13,445
7.26
%
28,927
7.64
%
Total loans
1,347,021
4.61
%
1,173,134
5.23
%
Investment securities (3)(4)
136,160
2.68
%
144,082
2.72
%
Loans held for sale, at fair value
6,899
6.84
%
- -
0.0
%
Interest-bearing deposits at other financial institutions
46,579
0.44
%
28,894
2.20
%
Total interest-earning assets
1,536,659
4.32
%
1,346,110
4.90
%
Non-interest earning assets: Cash and due from banks
16,537
6,707
Premises and equipment, net
1,996
2,223
Accrued interest and other assets
92,018
54,284
Allowance for loan losses
(10,926
)
(9,375
)
Total Assets $
1,636,284
$
1,399,949
Interest-bearing liabilities: Interest checking $
307,528
0.97
%
$
298,585
1.28
%
Savings and money market
245,542
0.88
%
255,636
1.51
%
Time deposits
337,792
2.27
%
303,643
2.07
%
Wholesale deposits
126,560
1.57
%
81,459
2.49
%
Total interest-bearing deposits
1,017,422
1.45
%
939,323
1.70
%
Other borrowed funds
32,071
1.14
%
7,015
2.67
%
Subordinated notes, net of issuance costs
24,504
6.48
%
24,424
6.52
%
Total interest-bearing liabilities
1,073,997
1.56
%
970,762
1.83
%
Noninterest-bearing liabilities: Noninterest-bearing
deposits
352,841
249,518
Other liabilities
29,529
15,498
Stockholders’ equity
179,917
164,171
Total Liabilities and Stockholders' Equity $
1,636,284
$
1,399,949
Net Interest Margin
3.26
%
3.62
%
(1)
Non-accrual loans are included in average balances.
(2)
Includes loans for residential 1-4 trust investment purposes
totaling $75.0 million and $71.2 million at June 30, 2020 and June
30, 2019, respectively. These loans are reported as Consumer Real
Estate on the summary balance sheet.
(3)
The average yields for investment securities are reported on a
fully taxable-equivalent basis at a rate of 21%.
(4)
The average balances for investment securities includes restricted
stock.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200723005845/en/
David W. Pijor, 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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