FVCBankcorp, Inc. (NASDAQ:FVCB) (the “Company”) today reported
third quarter 2020 net income of $3.9 million, or $0.28 diluted
earnings per share, compared to $4.1 million, or $0.28 diluted
earnings per share, for the quarter ended September 30, 2019. Net
revenues, which includes net interest income plus noninterest
income, for the three months ended September 30, 2020 were $14.4
million, an increase of $1.6 million, from $12.8 million for the
year ago quarter ended September 30, 2019. For the nine months
ended September 30, 2020, the Company reported net income of $10.5
million, or $0.74 diluted earnings per share, compared to $12.1
million or $0.82 diluted earnings per share, for the same period of
2019. The decrease in net income was primarily attributable to an
increase in loan loss provisioning of $3.3 million year-over-year.
Net revenues for the nine months ended September 30, 2020 were
$40.7 million, an increase of $2.5 million, from $38.2 million for
the nine months ended September 30, 2019.
The Company believes the reporting of earnings to exclude branch
closing impairment charges, gains on sales of securities, and
merger and acquisition expenses are more reflective of the
Company’s operating performance (“Operating Earnings”). Operating
Earnings is not a measurement that is in accordance with generally
accepted accounting principles in the United States (“GAAP”).
Operating Earnings for the three months ended September 30, 2020
were $3.8 million, or $0.28 diluted earnings per share, compared to
$4.1 million, or $0.28 diluted earnings per share for the three
months ended September 30, 2019. Operating Earnings for the nine
months ended September 30, 2020 were $10.9 million, or $0.77
diluted earnings per share, compared to $12.2 million, or $0.82
diluted earnings per share for the nine months ended September 30,
2019. A reconciliation of Operating Earnings can be found in the
tables below.
Both the three and nine month periods ended September 30, 2020
have been impacted by elevated provision for loan losses expense.
In addition, during the second quarter of 2020, the Company
announced the closure of two branch locations which resulted in
one-time branch closure costs of $676 thousand ($534 thousand after
tax). The Company anticipates realizing the benefits of annualized
cost savings of approximately $350 thousand related to occupancy
expense beginning with the fourth quarter of 2020. Other annual
savings of approximately $250 thousand include salaries and
benefits expense as the employees for each of these locations have
filled current vacant positions within the Company, reducing the
need to hire additional personnel.
Third Quarter Selected Highlights
- Increased Pre-Tax Pre-Provision Income. For the three
months ended September 30, 2020 and 2019, pre-tax pre-provision
income (which also excludes branch closure costs and gains on sales
of securities) was $6.6 million and $5.4 million, respectively, an
increase of $1.2 million or 21.6%. On a linked quarter basis,
pre-tax pre-provision income was $6.1 million for the three months
ended June 30, 2020. Pre-tax pre-provision return on average assets
for the three months ended September 30, 2020 and 2019 was 1.50%
and 1.46%, respectively. For the nine months ended September 30,
2020 and 2019, pre-tax pre-provision income was $18.2 million and
$16.6 million, respectively, an increase of $1.6 million. A
reconciliation of pre-tax pre-provision, a non-GAAP financial
measure, can be found in the tables below.
- Strong Core Deposit Growth. Core deposits, which
excludes wholesale deposits, increased $233.6 million to $1.42
billion at September 30, 2020, an increase of 19.7%, from December
31, 2019. Noninterest-bearing deposits represent 30.4% of core
deposits at September 30, 2020.
- Improved Net Interest Margin. Net interest margin
increased 14 basis points to 3.30% for the quarter ended September
30, 2020 compared to 3.16% for the quarter ended June 30, 2020.
Excluding the impact of Paycheck Protection Program (“PPP”) loans,
credit mark accretion, and excess liquidity during the third
quarter of 2020, net interest margin for the three months ended
September 30, 2020 would have been 3.36%. Cost of deposits, which
include noninterest-bearing deposits, for the third quarter of 2020
was 0.73%, compared to 1.42% for the third quarter of 2019, a
decrease of 69 basis points, or 48.6%.
- Significant Decrease in Payment Deferred Loans. At
October 20, 2020, approximately 2.6% of the total loan portfolio,
or $39.5 million, continue under COVID-19 deferrals. Approximately
$20.4 million of current deferrals are in their second 90-day
payment deferral period, of which approximately 76.7% are making
interest-only payments. This compares to modified loans of $360.2
million, or 24.4% of the total loan portfolio, reported at June 30,
2020.
- Reduced Levels of Past Due and Nonperforming loans.
Loans past due 90 days or more and still accruing totaled $311
thousand at September 30, 2020, compared to $1.4 million at June
30, 2020. Nonperforming loans and loans past due 90 days or more
and still accruing were $8.0 million, or 0.45% of total assets, at
September 30, 2020, compared to $10.7 million, or 0.70% of total
assets at December 31, 2019, and $8.5 million, or 0.48% of total
assets, at June 30, 2020.
- Improved Efficiency Ratio. Efficiency ratio for the
three months ended September 30, 2020 was 53.9%, an improvement
from 57.7% for the year ago quarter ended September 30, 2020.
“We are extremely pleased with our third quarter results,
particularly the improvement in our net interest margin, which was
a result of our efforts to reduce deposit costs by almost 40%
year-over-year. We are cautiously optimistic with the results of
our loan payment deferral program as we see just over 5% of loans
request a second 90-day deferral period; and 77% of those loans are
making interest-only payments. We will continue to work with our
customers to assist them through this pandemic and help them
navigate the economic impact that they are experiencing,” stated
David W. Pijor, Chairman and CEO.
COVID-19 Pandemic Impact to Loan Portfolio
As a result of the COVID-19 pandemic, the Company implemented
loan payment deferral programs to allow customers who were required
to close or reduce business operations to defer loan principal and
interest payments primarily for 90 days. During the second quarter
of 2020, the Company modified 277 loans for a total outstanding
principal balance of $360.2 million, or 24.4% of the total loan
portfolio. At October 20, 2020, remaining payment deferred loans
totaled $39.5 million, or 2.6% of the total loan portfolio,
comprising 26 loans. For those commercial real estate loans with
approved payment deferrals, these loans are collateralized and well
secured. The table below shows the number of loans still deferring
payments and their respective outstanding loan balances by asset
class.
COVID Payment Deferrals By Asset Class Asset Class
Total Loans Modified
Loans Expected to Resume
Payments in 2020
Loans Under Further Analysis
and Review
Total Loans
# of Loans
($ in thousands) # of Loans ($ in thousands)
# of Loans ($ in thousands) # of Loans ($
in thousands) Commercial Real Estate - Retail
3
$ 12,200
1
$ 3,149
2
$ 9,051
108
$ 200,161
Commercial Real Estate - Mixed Use
3
9,893
1
2,127
2
7,766
53
85,669
Specialty Use-Hotel/Lodging/Motel 0
-
-
-
-
-
11
59,116
Commercial Real Estate - Office
3
11,404
3
11,404
-
-
112
115,148
Multi-Family First Lien
1
1,411
-
-
1
1,411
81
103,551
Commercial Real Estate - Industrial 0
-
-
-
-
-
70
98,553
Commercial Real Estate - Special Use/Church
1
1,492
1
1,492
-
-
25
47,464
Special Purpose 0
-
-
-
-
-
23
30,735
Other Loan Categories
15
3,147
8
1,301
7
1,846
2,812
757,237
At October 20, 2020
26
$ 39,547
14
$ 19,473
12
$ 20,074
3,295
$ 1,497,634
At September 30, 2020
57
$ 118,711
At June 30, 2020
277
$ 360,177
Previously modified hotel loans totaling $45.9 million have all
resumed contractual loan payments with the exception of one loan
totaling $9.7 million, which has moved to the watchlist. The
Company is working with the borrower to determine the best course
of action. Loans expected to resume payments above are based on
conversations with the borrowers and analysis of their financial
condition. Loans under further analysis and review are being
closely monitored by the Company to determine if further
modifications are warranted and to review all options available to
the Company.
The Company is closely and proactively monitoring the effects of
the pandemic on its loan and deposit customers and is focused on
assessing risks within the loan portfolio and working with
customers to minimize losses. The Company considers pandemic
impacted loans to include commercial real estate loans to hotels,
churches, and certain retail and special purpose asset classes.
During its assessment of the allowance for loan losses, the Company
addressed the credit risks associated with these pandemic impacted
segments and those loan customers that have requested payment
deferrals.
The Company believes that as a result of its conservative
underwriting discipline at loan origination coupled with the active
dialogue the Company has had with its borrowers, the Company has
the ability and necessary flexibility to assist its customers
through this pandemic.
Balance Sheet
Total assets increased to $1.79 billion at September 30, 2020
compared to $1.54 billion at December 31, 2019, an increase of
$256.9 million, or 16.7%. Year-over-year, total assets increased
$229.0 million, or 14.6% from $1.57 billion at September 30,
2019.
Loans receivable, net of deferred fees, totaled $1.50 billion at
September 30, 2020, compared to $1.27 billion at December 31, 2019,
an increase of $227.1 million, or 17.9%, and compared to $1.24
billion at September 30, 2019, a year-over-year increase of $254.2
million, or 20.5%. PPP loans originated and funded, net of fees,
totaled $170.3 million during the quarter assisting both existing
and new clients. During the third quarter of 2020, loan
originations, excluding PPP loans, totaled approximately $64.0
million, of which $32.0 million funded during the quarter. For the
year-to-date 2020, net loan growth, excluding PPP loans, is $45.6
million, or 3.6%.
Investment securities decreased $30.4 million to $111.2 million
at September 30, 2020, compared to $141.6 million at December 31,
2019. The Company sold $3.0 million in mortgage-backed securities
available-for-sale, recording gains of $44 thousand during the
third quarter of 2020. These securities were sold as they had
larger premiums susceptible to prepayment risk, decreasing future
interest income. Year-over-year, investment securities decreased
$25.3 million, or 18.6%, from $136.5 million at September 30,
2019.
Total deposits increased to $1.51 billion at September 30, 2020
compared to $1.29 billion at December 31, 2019, an increase of
$228.6 million, or 17.8%. Year-over-year, total deposits increased
$196.6 million, or 14.9%, from $1.32 billion at September 30, 2019.
Core deposits, which represent total deposits less wholesale
deposits, increased $233.6 million, or 19.7%, to $1.42 billion at
September 30, 2020 compared to $1.19 billion at December 31, 2019,
and increased $174.6 million, or 14.0% from $1.24 billion at
September 30, 2019. The increase in core deposits reflects new
customer relationships as well as growth in existing customer
accounts and, to a lesser extent, deposits remaining from PPP
funds. Wholesale deposits totaled $95.0 million, or 6.3% of total
deposits at September 30, 2020, a decrease of $5.0 million from
December 31, 2019. Noninterest-bearing deposits increased $125.1
million, or 40.9%, to $431.3 million at September 30, 2020 from
$306.2 million at December 31, 2019, and represented 28.5% of total
deposits, or 30.4% of core deposits, at September 30, 2020.
The capital ratios at the Company’s bank subsidiary, FVCbank,
remain well-capitalized at September 30, 2020 with a leverage ratio
of 11.02%.
Income Statement
Net income for the three months ended September 30, 2020 was
$3.9 million, compared to $4.1 million for the same period of 2019,
and $2.9 million for the quarter ended June 30, 2020. For the nine
months ended September 30, 2020, net income was $10.5 million,
compared to $12.1 million for the same period of 2019. Both the
three and nine months’ periods of 2020 were impacted by increased
provision for loan losses.
Net interest income totaled $13.6 million, an increase of $1.5
million, or 12.4%, for the quarter ended September 30, 2020,
compared to the year ago quarter, and increased by $900 thousand,
or 7.1%, compared to the second quarter of 2020, a result of
significant decreases in the cost of deposits. Interest expense on
deposits decreased $1.7 million for the three months ended
September 30, 2020 compared to the same period of 2019, and
decreased $470 thousand compared to the three months ended June 30,
2020. The impact to interest income from the accretion of loan
marks on acquired loans was $469 thousand and $43 thousand for the
three months ended September 30, 2020 and 2019, respectively. The
increase in income related to loan mark accretion was a result of
improved cash flows for an acquired loan during the three months
ended September 30, 2020. In addition, net interest income for the
three months ended September 30, 2020 benefited from PPP loan
origination, which contributed $981 thousand to interest income.
Remaining net deferred fees related to PPP originations total $3.6
million and are being recognized in interest income over the
remaining lives of the PPP loans, or sooner upon PPP loan
forgiveness or payment. For the nine months ended September 30,
2020 and 2019, net interest income was $38.5 million and $36.2
million, respectively, an increase of $2.3 million,
year-over-year.
The Company’s net interest margin for the three months ended
September 30, 2020 was 3.30%, compared to 3.41% for the year ago
quarter ended September 30, 2019, a decrease of 11 basis points,
impacted by the decreases in the targeted fed funds rate of 225
basis points since August 2019. On a linked quarter basis, net
interest margin increased 14 basis points from 3.16% for the three
months ended June 30, 2020. Excluding the impact of PPP loans (a
decrease of 11 basis points), credit mark accretion (an increase of
9 basis points), and excess liquidity (a decrease of 6 basis
points) during the third quarter of 2020, net interest margin for
the three months ended September 30, 2020 would have been 3.36%.
The average yield for the loan portfolio for the third quarter of
2020 was 4.56% (excluding PPP loans) compared to 5.13% for the year
ago quarter, and 4.77% for the quarter ended June 30, 2020. Cost of
interest-bearing deposits for the third quarter of 2020 was 1.01%,
compared to 1.82% for the third quarter of 2019, a decrease of 81
basis points, or 44.5%, primarily as a result of the Company having
aggressively decreased its deposit rates during the second and
third quarters in order to offset the repricing of the variable
rate loan portfolio.
Noninterest income totaled $770 thousand and $680 thousand for
the quarters ended September 30, 2020 and 2019, respectively. Fee
income from loans was $35 thousand for the quarter ended September
30, 2020, compared to $101 thousand for the same period of 2019.
Service charges on deposit accounts and other fee income totaled
$411 thousand for the third quarter of 2020, compared to $378
thousand from the year ago quarter. Income from bank-owned life
insurance increased $82 thousand to $280 thousand for the three
months ended September 30, 2020, compared to $198 thousand for the
same period of 2019, primarily as a result of purchasing additional
policies during 2019. Noninterest income for the year-to-date
period ended September 30, 2020 was $2.2 million, compared to $2.0
million for the 2019 year-to-date period, an increase of $195
thousand, or 10.0%, which was primarily driven by an increase in
service charges on deposit accounts and other fee income, and
income from bank-owned life insurance, and offset by fair value
losses on loans held for sale of $451 thousand recorded during the
first quarter of 2020 before these loans were transferred to the
held for investment portfolio.
Noninterest expense totaled $7.7 million for the quarter ended
September 30, 2020, compared to $7.4 million for the same
three-month period of 2019, an increase of $383 thousand, or 5.2%,
which is in line with the Company’s targeted expense growth for
2020. The increase in noninterest expense compared to the year ago
quarter was primarily related to an increase in data processing and
network administration expense of $124 thousand, which is related
to planned network infrastructure upgrades for 2020, an increase of
$154 thousand for loan related expenses, and an increase in
professional fees of $73 thousand. The Company has invested in
technology in its efforts to reduce certain expenses where
possible. Noninterest expense for the third quarter of 2020
increased $424 thousand, or 5.8%, when compared to noninterest
expense of $7.3 million (excluding branch closure costs of $676
thousand) recorded during the second quarter of 2020. Increases in
noninterest expense during the third quarter of 2020 as compared to
the second quarter of 2020 were isolated to salaries and benefits
expense with an increase of $362 thousand. During the third quarter
of 2020, salaries and benefits expense increased as a result of an
increase in incentive accruals by $220 thousand, and a decrease in
deferred salaries expense for loan originations of $146 thousand,
which were elevated during the second quarter as a result of
deferred loan salaries recorded for PPP loan originations. For the
nine months ended September 30, 2020 and 2019, noninterest expense,
excluding branch closure charges, was $22.3 million and $21.5
million, respectively, an increase of $734 thousand, or 3.4%.
The efficiency ratio for the quarter ended September 30, 2020
was 53.9%, a decrease from 57.7% for the year ago quarter and a
decrease from 54.7% for the three months ended June 30, 2020
(excluding branch closure costs). The efficiency ratios for the
nine months ended September 30, 2020 and 2019, excluding branch
closure costs and merger expense from 2019, were 54.2% and 56.1%,
respectively.
The Company recorded a provision for income taxes of $1.0
million for the three months ended September 30, 2020, compared to
$1.1 million for the same period of 2019. The effective tax rates
for the three months ended September 30, 2020 and 2019 were 21.2%
and 20.9%, respectively. The effective tax rates for the 2020 and
2019 periods presented are less than the Company’s combined federal
and state statutory rate of 21.5% primarily because of discrete tax
benefits recorded as a result of exercises of nonqualified stock
options.
Asset Quality
The Company recorded a provision for loan losses of $1.7 million
for the three months ended September 30, 2020, compared to $235
thousand for the year ago quarter. The increase in the provision
for loan losses for the three months ended September 30, 2020 is
primarily related to growth in the loan portfolio and increases in
qualitative factors related to the economic uncertainties caused by
the COVID-19 pandemic, including an increase in adversely rated
credits. The Company is not required to implement the provisions of
the current expected credit losses (“CECL”) accounting standard
until January 1, 2023, and is continuing to account for the
allowance for loans losses under the incurred loss model. Provision
for loan losses for the nine months ended September 30, 2020 and
2019 were $4.5 million and $1.3 million, respectively.
The allowance for loan losses to total loans, excluding PPP
loans, was 1.10% at September 30, 2020, compared to 0.81% at
December 31, 2019. The effective reserve coverage, which includes
both the allowance for loan losses and the remaining unaccreted
fair value discount on acquired loans, to total loans, excluding
PPP loans, was 1.26% at September 30, 2020. Net charge-offs of $38
thousand recorded during the third quarter of 2020 were primarily
related to purchased consumer unsecured loans.
Nonperforming loans and loans 90 days or more past due at
September 30, 2020 totaled $8.0 million, or 0.45% of total assets.
This compares to $10.7 million in nonperforming loans and loans 90
days or more past due at December 31, 2019, or 0.70% of total
assets. All of the Company’s nonperforming loans are secured and
have specific reserves totaling $456 thousand, representing the
expected losses associated with those loans. The Company has one
troubled debt restructuring at September 30, 2020 totaling $98
thousand which is a consumer residential loan. Nonperforming assets
(including other real estate owned) to total assets was 0.66% at
September 30, 2020 compared to 0.95% for December 31, 2019.
Completion of $20 Million Subordinated Notes Offering
On October 13, 2020, the Company announced the completion of its
private placement of $20 million of its 4.875% Fixed to Floating
Subordinated Notes due 2030 (the “Notes”) to certain qualified
institutional buyers and accredited investors. The Notes have a
maturity date of October 15, 2030 and carry a fixed rate of
interest of 4.875% for the first five years. Thereafter, the Notes
will pay interest at 3-month SOFR plus 471 basis points, resetting
quarterly. The Notes include a right of prepayment without penalty
on or after October 15, 2025. The Notes have been structured to
qualify as Tier 2 capital for regulatory purposes. The Company
plans to use the proceeds from the placement of the Notes for
general corporate purposes, to include supporting capital ratios at
the Company’s subsidiary, FVCbank, and potential repayment of a
portion of the $25.0 million outstanding subordinated debt callable
June 30, 2021.
About FVCBankcorp, Inc.
FVCBankcorp, Inc. is the holding company for FVCbank, a
wholly-owned subsidiary that commenced operations in November 2007.
FVCbank is a $1.79 billion asset-sized Virginia-chartered community
bank serving the banking needs of commercial businesses, nonprofit
organizations, professional service entities, their owners and
employees located in the greater Baltimore and Washington D.C.,
metropolitan areas. FVCbank is based in Fairfax, Virginia, and has
9 full-service offices in Arlington, Fairfax, Manassas, Reston and
Springfield, Virginia, Washington D.C., and Baltimore, Bethesda,
and Rockville, Maryland.
For more information on the Company’s selected financial
information, please visit the Investor Relations page of
FVCBankcorp, Inc.’s website, www.fvcbank.com.
Caution about Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements include, but are not limited, statements of
goals, intentions, and expectations as to future trends, plans,
events or results of the Company’s operations and policies and
regarding general economic conditions. In some cases,
forward-looking statements can be identified by use of words such
as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,”
“estimates,” “potential,” “continue,” “should,” and similar words
or phrases. These statements are based upon current and anticipated
economic conditions, nationally and in the Company’s market,
interest rates and interest rate policy, competitive factors, and
other conditions which by their nature, are not susceptible to
accurate forecast and are subject to significant uncertainty.
Because of these uncertainties and the assumptions on which this
discussion and the forward-looking statements are based, actual
future operations and results in the future may differ materially
from those indicated herein. These forward-looking statements are
based on current beliefs that involve significant risks,
uncertainties, and assumptions. Factors that could cause the
Company’s actual results to differ materially from those indicated
in these forward-looking statements, include, but are not limited
to, the risk factors and other cautionary language included in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2019 and in other periodic and current reports filed with the
Securities and Exchange Commission. Because of these uncertainties
and the assumptions on which the forward-looking statements are
based, actual operations and results in the future may differ
materially from those indicated herein. Readers are cautioned
against placing undue reliance on any such forward-looking
statements. The Company’s past results are not necessarily
indicative of future performance.
FVCBankcorp, Inc. Selected Financial Data (Dollars
in thousands, except share data and per share data)
(Unaudited) For the Three Months Ended September
30, For the Nine Months Ended September 30, For the
Three Months Ended
2020
2019
2020
2019
6/30/2020 12/31/2019 Selected Balances Total
assets
$
1,794,172
$
1,565,196
$
1,781,149
$
1,537,295
Total investment securities
117,746
142,549
128,690
147,606
Loans held for sale
- -
- -
-
11,198
Total loans, net of deferred fees
1,497,634
1,243,405
1,478,120
1,270,526
Allowance for loan losses
(14,556
)
(10,068
)
(12,894
)
(10,231
)
Total deposits
1,514,348
1,317,720
1,519,036
1,285,722
Subordinated debt
24,547
24,467
24,527
24,487
Other borrowings
40,000
15,000
25,000
25,000
Total stockholders’ equity
184,490
175,069
180,652
179,078
Summary Results of Operations Interest income
$
16,761
$
17,006
$
49,974
$
49,957
$
16,281
$
16,777
Interest expense
3,166
4,914
11,473
13,729
3,586
4,941
Net interest income
13,595
12,092
38,501
36,228
12,695
11,836
Provision for loan losses
1,700
235
4,516
1,255
1,750
465
Net interest income after provision for loan losses
11,895
11,857
33,985
34,973
10,945
11,371
Noninterest income - loan fees, service charges and other
446
479
1,616
1,539
405
485
Noninterest income - bank owned life insurance
280
198
845
414
282
249
Noninterest income - gain (loss) on sales of securities
available-for-sale
44
3
141
3
-
- -
Noninterest income - gain (loss) on loans held for sale
- -
- -
(451
)
- -
-
(145
)
Noninterest expense
7,746
7,363
22,953
21,543
7,998
7,334
Income before taxes
4,919
5,174
13,183
15,386
3,634
4,626
Income tax expense
1,045
1,081
2,696
3,282
754
902
Net income
3,874
4,093
10,487
12,104
2,880
3,724
Per Share Data Net income, basic
$
0.29
$
0.30
$
0.77
$
0.88
$
0.21
$
0.27
Net income, diluted
$
0.28
$
0.28
$
0.74
$
0.82
$
0.21
$
0.25
Book value
$
13.69
$
12.62
$
13.42
$
12.88
Tangible book value (1)
$
13.06
$
12.03
$
12.79
$
12.26
Shares outstanding
13,478,115
13,874,776
13,459,317
13,902,067
Selected Ratios Net interest margin (2)
3.30
%
3.41
%
3.27
%
3.55
%
3.16
%
3.28
%
Return on average assets (2)
0.89
%
1.10
%
0.84
%
1.13
%
0.67
%
0.98
%
Return on average equity (2)
8.44
%
9.46
%
7.72
%
9.65
%
6.41
%
8.39
%
Efficiency (3)
53.92
%
57.66
%
56.46
%
56.42
%
59.77
%
59.03
%
Loans, net of deferred fees to total deposits
98.90
%
94.36
%
97.31
%
98.82
%
Noninterest-bearing deposits to total deposits
28.48
%
22.37
%
29.13
%
23.82
%
Reconciliation of Net Income (GAAP) to Operating Earnings
(Non-GAAP) (4) Net income (from above)
$
3,874
$
4,093
$
10,487
$
12,104
$
2,880
$
3,724
Add: Merger and acquisition expense
- -
51
- -
133
- -
- -
Add: Impairment on branch closures
-
- -
676
- -
676
- -
Subtract: Gains on sales of securities available-for-sale
(44
)
(3
)
(141
)
(3
)
-
- -
Less: provision for income taxes associated with non-GAAP
adjustments
9
(12
)
(112
)
(30
)
(142
)
- -
Net income, as adjusted
$
3,839
$
4,129
$
10,910
$
12,204
$
3,414
$
3,724
Net income, diluted, on an operating basis
$
0.28
$
0.28
$
0.77
$
0.82
$
0.25
$
0.25
Return on average assets (non-GAAP operating earnings)
0.88
%
1.11
%
0.87
%
1.14
%
0.79
%
0.98
%
Return on average equity (non-GAAP operating earnings)
8.37
%
9.55
%
8.03
%
9.73
%
7.60
%
8.64
%
Efficiency ratio (non-GAAP operating earnings) (3)
53.92
%
57.26
%
54.80
%
56.07
%
54.72
%
58.35
%
Capital Ratios - Bank Tangible common equity (to tangible
assets)
9.86
%
10.72
%
9.71
%
11.15
%
Tier 1 leverage (to average assets)
11.02
%
12.11
%
11.05
%
12.15
%
Asset Quality Nonperforming loans and loans 90+ past due
$
8,005
$
10,444
$
8,493
$
10,725
Performing troubled debt restructurings (TDRs)
98
- -
99
- -
Other real estate owned
3,866
3,866
3,866
3,866
Nonperforming loans and loans 90+ past due to total assets (excl.
TDRs)
0.45
%
0.67
%
0.48
%
0.70
%
Nonperforming assets to total assets
0.66
%
0.91
%
0.69
%
0.95
%
Nonperforming assets (including TDRs) to total assets
0.67
%
0.91
%
0.70
%
0.95
%
Allowance for loan losses to loans
0.97
%
0.81
%
0.87
%
0.81
%
Allowance for loan losses to nonperforming loans
181.84
%
96.40
%
151.82
%
95.39
%
Net charge-offs
$
38
$
163
$
191
$
345
$
82
$
303
Net charge-offs to average loans (2)
0.01
%
0.05
%
0.02
%
0.04
%
0.02
%
0.10
%
Selected Average Balances Total assets
$
1,749,005
$
1,483,430
$
1,674,132
$
1,428,082
$
1,721,612
$
1,514,124
Total earning assets
1,642,025
1,406,485
1,572,038
1,366,456
1,615,125
1,430,397
Total loans, net of deferred fees
1,484,853
1,241,360
1,393,301
1,196,126
1,415,383
1,234,183
Total deposits
1,481,899
1,243,490
1,407,747
1,207,258
1,459,834
1,270,821
Other Data Noninterest-bearing deposits
$
431,322
$
294,825
$
442,443
$
306,235
Interest-bearing checking, savings and money market
686,592
622,818
655,959
525,138
Time deposits
301,431
327,098
320,628
354,362
Wholesale deposits
95,003
72,979
100,006
99,987
(1) Non-GAAP
Reconciliation For the Period Ended September 30,
(Dollars in thousands, except per share data)
2020
2019
Total stockholders’ equity
$
184,490
$
175,069
Less: goodwill and intangibles, net
(8,440
)
(8,119
)
Tangible Common Equity
$
176,050
$
166,950
Book value per common share
$
13.69
$
12.62
Less: intangible book value per common share
(0.63
)
(0.59
)
Tangible book value per common share
$
13.06
$
12.03
(2) Annualized. (3) Efficiency ratio is calculated as noninterest
expense divided by the sum of net interest income and noninterest
income. On a non-GAAP operating basis, the Company excludes gains
(losses) on sales of investment securities. (4) Some of the
financial measures discussed throughout the press release are
"non-GAAP financial measures." In accordance with SEC rules, the
Company classifies a financial measure as being a non-GAAP
financial measure if that financial measure excludes or includes
amounts, or is subject to adjustments that have the effect of
excluding or including amounts, that are included or excluded, as
the case may be, in the most directly comparable measure calculated
and presented in accordance with GAAP in our statements of income,
balance sheets or statements of cash flows.
FVCBankcorp,
Inc. Summary Consolidated Statements of Condition
(Dollars in thousands) (Unaudited) %
Change % Change Current From
9/30/2020 6/30/2020 Quarter 12/31/2019
9/30/2019 Year Ago Cash and due from banks $
22,121
$
25,613
-13.6
%
$
14,916
$
19,424
13.9
%
Interest-bearing deposits at other financial institutions
73,774
64,989
13.5
%
18,226
92,986
-20.7
%
Investment securities
111,183
122,082
-8.9
%
141,589
136,532
-18.6
%
Restricted stock, at cost
6,563
6,608
-0.7
%
6,017
6,017
9.1
%
Loans held for sale, at fair value
- -
- -
0.0
%
11,198
- -
0.0
%
Loans, net of fees: Commercial real estate
805,946
779,036
3.5
%
747,993
683,813
17.9
%
Commercial and industrial
111,736
105,957
5.5
%
114,924
124,666
-10.4
%
Paycheck protection program
170,338
169,425
0.5
%
- -
- -
100.0
%
Commercial construction
214,740
227,746
-5.7
%
214,949
214,816
0.0
%
Consumer real estate
177,730
177,366
0.2
%
181,369
194,979
-8.8
%
Consumer nonresidential
17,144
18,590
-7.8
%
11,291
25,131
-31.8
%
Total loans, net of fees
1,497,634
1,478,120
1.3
%
1,270,526
1,243,405
20.4
%
Allowance for loan losses
(14,556
)
(12,894
)
12.9
%
(10,231
)
(10,068
)
44.6
%
Loans, net
1,483,078
1,465,226
1.2
%
1,260,295
1,233,337
20.2
%
Premises and equipment, net
1,747
1,818
-3.9
%
2,084
2,029
-13.9
%
Goodwill and intangibles, net
8,440
8,525
-1.0
%
8,689
8,119
4.0
%
Bank owned life insurance (BOLI)
37,913
37,633
0.7
%
37,069
26,820
41.4
%
Other real estate owned
3,866
3,866
0.0
%
3,866
3,866
0.0
%
Other assets
45,487
44,789
1.6
%
33,346
36,066
26.1
%
Total Assets $
1,794,172
$
1,781,149
0.7
%
$
1,537,295
$
1,565,196
14.6
%
Deposits: Noninterest-bearing $
431,322
$
442,443
-2.5
%
$
306,235
$
294,825
46.3
%
Interest-bearing checking
388,531
387,683
0.2
%
302,755
349,574
11.1
%
Savings and money market
298,061
268,276
11.1
%
222,383
273,244
9.1
%
Time deposits
301,431
320,628
-6.0
%
354,362
327,098
-7.8
%
Wholesale deposits
95,003
100,006
-5.0
%
99,987
72,979
30.2
%
Total deposits
1,514,348
1,519,036
-0.3
%
1,285,722
1,317,720
14.9
%
Other borrowed funds
40,000
25,000
60.0
%
25,000
15,000
166.7
%
Subordinated notes, net of issuance costs
24,547
24,527
0.1
%
24,487
24,467
0.3
%
Other liabilities
30,787
31,934
-3.6
%
23,008
32,940
-6.5
%
Stockholders’ equity
184,490
180,652
2.1
%
179,078
175,069
5.4
%
Total Liabilities & Stockholders' Equity $
1,794,172
$
1,781,149
0.7
%
$
1,537,295
$
1,565,196
14.6
%
FVCBankcorp, Inc. Summary Consolidated Income
Statements (In thousands, except per share data)
(Unaudited) For the Three Months Ended
% Change % Change Current From
9/30/2020 6/30/2020 Quarter 9/30/2019
Year Ago Net interest income $
13,595
$
12,695
7.1
%
$
12,092
12.4
%
Provision for loan losses
1,700
1,750
-2.9
%
235
623.4
%
Net interest income after provision for loan losses
11,895
10,945
8.7
%
11,857
0.3
%
Noninterest income: Fees on loans
35
46
-23.9
%
101
-65.3
%
Service charges on deposit accounts
275
223
23.3
%
240
14.6
%
Gain on sale of securities available-for-sale
44
- -
0.0
%
3
1,366.7
%
BOLI income
280
282
-0.7
%
198
41.4
%
Other fee income
136
136
0.0
%
138
-1.4
%
Total noninterest income
770
687
12.1
%
680
13.2
%
Noninterest expense: Salaries and employee benefits
4,344
3,982
9.1
%
4,349
-0.1
%
Occupancy and equipment expense
811
859
-5.6
%
882
-8.0
%
Data processing and network administration
538
494
8.9
%
414
30.0
%
State franchise taxes
466
466
0.0
%
424
9.9
%
Professional fees
303
207
46.4
%
230
31.7
%
Merger and acquisition expense
- -
- -
0.0
%
51
-100.0
%
Impairment on branch closures
- -
676
-100.0
%
- -
0.0
%
Other operating expense
1,284
1,314
-2.3
%
1,013
26.8
%
Total noninterest expense
7,746
7,998
-3.2
%
7,363
5.2
%
Net income before income taxes
4,919
3,634
35.4
%
5,174
-4.9
%
Income tax expense
1,045
754
38.6
%
1,081
-3.3
%
Net Income $
3,874
$
2,880
34.5
%
$
4,093
-5.4
%
Earnings per share - basic $
0.29
$
0.21
34.3
%
$
0.30
-2.6
%
Earnings per share - diluted $
0.28
$
0.21
34.8
%
$
0.28
1.3
%
Weighted-average common shares outstanding - basic
13,476,639
13,455,053
13,862,239
Weighted-average common shares outstanding - diluted
13,891,474
13,924,239
14,867,421
Reconciliation of Net Income (GAAP)
to Operating Earnings (Non-GAAP): GAAP net income
reported above $
3,874
$
2,880
$
4,093
Add: Merger and acquisition expense
- -
- -
51
Add: Impairment loss
- -
676
- -
Subtract: Gain on sales of securities available-for-sale
(44
)
- -
- -
Subtract: provision for income taxes associated with non-GAAP
adjustments
9
(142
)
(12
)
Net Income, Operating earnings (non-GAAP) $
3,839
$
3,414
$
4,132
Earnings per share - basic (non-GAAP operating earnings) $
0.28
$
0.25
$
0.30
Earnings per share - diluted (non-GAAP operating earnings) $
0.28
$
0.25
$
0.28
Return on average assets (non-GAAP operating earnings)
0.88
%
0.79
%
1.11
%
Return on average equity (non-GAAP operating earnings)
8.37
%
7.60
%
9.55
%
Efficiency ratio (non-GAAP operating earnings)
53.92
%
54.72
%
57.26
%
Reconciliation of Net Income (GAAP)
to Pre-Tax Pre-Provision Income (Non-GAAP): GAAP net
income reported above $
3,874
$
2,880
$
4,093
Add: Provision for loan losses
1,700
1,750
235
Add: Impairment losses
- -
676
- -
Subtract: Gain on sales of securities available-for-sale
(44
)
- -
- -
Add: Income tax expense
1,045
754
1,081
Pre-tax pre-provision income $
6,575
$
6,060
$
5,409
Earnings per share - basic (non-GAAP operating earnings) $
0.49
$
0.45
$
0.39
Earnings per share - diluted (non-GAAP operating earnings) $
0.47
$
0.44
$
0.36
Return on average assets (non-GAAP operating earnings)
1.50
%
1.41
%
1.46
%
Return on average equity (non-GAAP operating earnings)
14.33
%
13.49
%
12.50
%
FVCBankcorp, Inc. Summary Consolidated Income
Statements (In thousands, except per share data)
(Unaudited) For the Nine Months Ended
% Change From 9/30/2020 9/30/2019
Year Ago Net interest income $
38,501
$
36,228
6.3
%
Provision for loan losses
4,516
1,255
259.8
%
Net interest income after provision for loan losses
33,985
34,973
-2.8
%
Noninterest income: Fees on loans
477
501
-4.8
%
Service charges on deposit accounts
738
651
13.4
%
Gain on sale of securities available-for-sale
141
3
4,600.0
%
Loss on loans held for sale
(451
)
- -
100.0
%
BOLI income
845
414
104.1
%
Other fee income
401
387
3.6
%
Total noninterest income
2,151
1,956
10.0
%
Noninterest expense: Salaries and employee benefits
12,354
12,533
-1.4
%
Occupancy and equipment expense
2,525
2,582
-2.2
%
Data processing and network administration
1,466
1,196
22.6
%
State franchise taxes
1,398
1,272
9.9
%
Professional fees
734
634
15.8
%
Merger and acquisition expense
- -
133
-100.0
%
Impairment on branch closures
676
- -
100.0
%
Other operating expense
3,800
3,193
19.0
%
Total noninterest expense
22,953
21,543
6.5
%
Net income before income taxes
13,183
15,386
-14.3
%
Income tax expense
2,696
3,282
-17.9
%
Net Income $
10,487
$
12,104
-13.4
%
Earnings per share - basic $
0.77
$
0.88
-11.9
%
Earnings per share - diluted $
0.74
$
0.82
-9.2
%
Weighted-average common shares outstanding - basic
13,561,153
13,796,394
Weighted-average common shares outstanding - diluted
14,137,053
14,821,612
Reconciliation of Net Income (GAAP)
to Operating Earnings (Non-GAAP): GAAP net income
reported above $
10,487
$
12,104
Add: Merger and acquisition expense
- -
133
Add: Impairment loss
676
- -
Subtract: Gain on sales of securities available-for-sale
(141
)
(3
)
Subtract: provision for income taxes associated with non-GAAP
adjustments
(112
)
(30
)
Net Income, Operating earnings (non-GAAP) $
10,910
$
12,204
Earnings per share - basic (non-GAAP operating earnings) $
0.80
$
0.88
Earnings per share - diluted (non-GAAP operating earnings) $
0.77
$
0.82
Return on average assets (non-GAAP operating earnings)
0.87
%
1.14
%
Return on average equity (non-GAAP operating earnings)
8.03
%
9.73
%
Efficiency ratio (non-GAAP operating earnings)
54.80
%
56.07
%
Reconciliation of Net Income (GAAP)
to Pre-Tax Pre-Provision Income (Non-GAAP): GAAP net
income reported above $
10,487
$
12,104
Add: Provision for loan losses
4,516
1,255
Add: Impairment losses
676
- -
Subtract: Gain on sales of securities available-for-sale
(141
)
(3
)
Add: Income tax expense
2,696
3,282
Pre-tax pre-provision income $
18,234
$
16,638
Earnings per share - basic (non-GAAP operating earnings) $
1.34
$
1.21
Earnings per share - diluted (non-GAAP operating earnings) $
1.29
$
1.12
Return on average assets (non-GAAP operating earnings)
1.45
%
1.55
%
Return on average equity (non-GAAP operating earnings)
13.42
%
13.27
%
FVCBankcorp, Inc. Average Statements of Condition and
Yields on Earning Assets and Interest-Bearing Liabilities
(Dollars in thousands) (Unaudited)
For the Three Months Ended 9/30/2020 6/30/2020
9/30/2019 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 $
784,990
$
9,005
4.59
%
$
770,326
$
8,355
4.34
%
$
698,287
$
8,366
4.79
%
Commercial and industrial
107,716
1,356
5.04
%
103,226
1,287
4.99
%
129,174
1,893
5.86
%
Paycheck protection program
170,071
981
2.31
%
121,843
801
2.63
%
- -
- -
0.0
%
Commercial construction
225,711
2,421
4.29
%
222,685
2,588
4.65
%
194,327
2,784
5.73
%
Consumer real estate
178,531
1,850
4.15
%
177,783
2,023
4.55
%
195,423
2,429
4.97
%
Consumer nonresidential
17,834
345
7.72
%
19,520
360
7.37
%
24,149
443
7.34
%
Total loans
1,484,853
15,958
4.30
%
1,415,383
15,414
4.36
%
1,241,360
15,915
5.13
%
Investment securities (2)(3)
119,846
793
2.65
%
128,797
852
2.65
%
137,153
928
2.71
%
Loans held for sale, at fair value
- -
- -
0.0
%
- -
- -
0.0
%
- -
- -
0.0
%
Interest-bearing deposits at other financial institutions
37,326
16
0.17
%
70,945
21
0.12
%
27,972
169
2.40
%
Total interest-earning assets
1,642,025
16,767
4.08
%
1,615,125
16,287
4.03
%
1,406,485
17,012
4.84
%
Non-interest earning assets: Cash and due from banks
18,769
19,645
10,221
Premises and equipment, net
1,816
2,050
2,073
Accrued interest and other assets
99,512
96,362
74,685
Allowance for loan losses
(13,117
)
(11,570
)
(10,034
)
Total Assets $
1,749,005
$
1,721,612
$
1,483,430
Interest-bearing liabilities: Interest checking $
379,218
$
659
0.69
%
$
341,081
$
597
0.70
%
$
324,658
$
1,196
1.46
%
Savings and money market
284,665
386
0.54
%
263,588
435
0.66
%
255,046
908
1.41
%
Time deposits
311,615
1,458
1.86
%
321,775
1,724
2.15
%
318,056
1,903
2.37
%
Wholesale deposits
83,044
187
0.90
%
132,072
369
1.13
%
67,376
416
2.45
%
Total interest-bearing deposits
1,058,542
2,690
1.01
%
1,058,516
3,125
1.19
%
965,136
4,423
1.82
%
Other borrowed funds
27,400
81
1.17
%
25,000
66
1.06
%
18,814
96
2.04
%
Subordinated notes, net of issuance costs
24,534
395
6.40
%
24,514
395
6.48
%
24,454
395
6.41
%
Total interest-bearing liabilities
1,110,476
3,166
1.13
%
1,108,030
3,586
1.30
%
1,008,404
4,914
1.93
%
Noninterest-bearing liabilities: Noninterest-bearing
deposits
423,357
401,318
278,354
Other liabilities
31,673
32,585
23,523
Stockholders’ equity
183,499
179,679
173,149
Total Liabilities and Stockholders' Equity $
1,749,005
$
1,721,612
$
1,483,430
Net Interest Margin
13,601
3.30
%
12,701
3.16
%
12,098
3.41
%
(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 21% . (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 9/30/2020 9/30/2019
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 $
770,820
$
26,387
4.56
%
$
650,381
$
23,359
4.79
%
Commercial and industrial
107,045
4,214
5.25
%
133,083
6,182
6.19
%
Paycheck protection program
97,570
1,782
2.44
%
- -
- -
0.0
%
Commercial construction
222,844
7,810
4.67
%
184,175
7,896
5.72
%
Consumer real estate
180,103
5,995
4.44
%
201,171
7,616
5.05
%
Consumer nonresidential
14,919
833
7.44
%
27,316
1,548
7.56
%
Total loans
1,393,301
47,021
4.50
%
1,196,126
46,601
5.19
%
Investment securities (2)(3)
130,682
2,616
2.67
%
141,747
2,889
2.72
%
Loans held for sale, at fair value
4,583
236
6.86
%
- -
- -
0.0
%
Interest-bearing deposits at other financial institutions
43,472
119
0.36
%
28,583
485
2.27
%
Total interest-earning assets
1,572,038
49,992
4.24
%
1,366,456
49,975
4.88
%
Non-interest earning assets: Cash and due from banks
17,287
7,891
Premises and equipment, net
1,935
2,172
Accrued interest and other assets
94,534
61,160
Allowance for loan losses
(11,662
)
(9,597
)
Total Assets $
1,674,132
$
1,428,082
Interest-bearing liabilities: Interest checking $
331,600
$
2,137
0.86
%
$
307,372
3,096
1.35
%
Savings and money market
258,678
1,456
0.75
%
255,437
2,825
1.48
%
Time deposits
329,003
5,262
2.14
%
308,500
5,012
2.17
%
Wholesale deposits
111,948
1,172
1.40
%
76,713
1,422
2.48
%
Total interest-bearing deposits
1,031,229
10,027
1.30
%
948,022
12,355
1.74
%
Other borrowed funds
30,502
261
1.14
%
10,991
189
2.31
%
Subordinated notes, net of issuance costs
24,514
1,185
6.46
%
24,434
1,185
6.48
%
Total interest-bearing liabilities
1,086,245
11,473
1.41
%
983,447
13,729
1.87
%
Noninterest-bearing liabilities: Noninterest-bearing
deposits
376,518
259,236
Other liabilities
30,249
18,202
Stockholders’ equity
181,120
167,197
Total Liabilities and Stockholders' Equity $
1,674,132
$
1,428,082
Net Interest Margin
38,519
3.27
%
36,246
3.55
%
(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 21%. (3) The average balances
for investment securities includes restricted stock.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201022005794/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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