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FVCBankcorp, Inc. Announces Second Quarter 2023 Earnings; Strong Deposit and Liquidity Growth

FVCBankcorp, Inc. (NASDAQ: FVCB) (the “Company”) today reported its financial results for the second quarter of 2023.

Second Quarter Selected Financial Highlights

  • Strong Well Capitalized Balance Sheet. All of the Bank’s 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 13.28% at June 30, 2023. Tangible Common Equity ("TCE") to Total Assets ("TA") ratio for FVCbank (the “Bank”) increased to 9.22% at June 30, 2023, from 8.92% at March 31, 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.
  • Continued Core Deposit Growth. Total deposits increased $257.9 million, or 14%, to $2.09 billion at June 30, 2023 from $1.83 billion at December 31, 2022 and increased $160.9 million, or 8%, from June 30, 2022. Core deposits, which exclude wholesale deposits, increased $77.7 million during the quarter ended June 30, 2023, or 5%. Noninterest-bearing deposits increased $11.1 million during the second quarter of 2023.
  • Low Uninsured Deposit Metrics to Total Deposits. As of June 30, 2023, estimated uninsured deposits improved to 27.6% of total deposits from 39.7% at December 31, 2022 (and from 32.5% at March 31, 2023). The Company has sufficient capital and liquidity resources to satisfy these obligations.
  • Solid Credit Quality. Nonperforming loans to total assets decreased to 0.06% at June 30, 2023 from 0.19% at both December 31, 2022 and March 31, 2023, an improvement of 68%.
  • Diverse Sources of Available Liquidity. At June 30, 2023, the Company’s liquidity position, which includes cash totaling $75.0 million, unencumbered investment securities of $104.1 million, and available unsecured and secured borrowing capacity totaling $813.0 million, was significantly in excess of its estimated uninsured deposits totaling $577.1 million, or 172% of uninsured deposits. The Company has the ability to access the Federal Reserve’s new Bank Term Funding Program (“BTFP”) but did not access the BTFP facility during the first half of 2023.

Net income for the second quarter of 2023 was $4.2 million, or $0.23 diluted earnings per share, compared to $6.4 million, or $0.35 diluted earnings per share, for the quarterly period ended June 30, 2022. For the six months ended June 30, 2023, the Company reported net income of $4.9 million, or $0.27 diluted earnings per share, compared to net income of $13.0 million, or $0.71 diluted earnings per share for the six months ended June 30, 2022.

Pre-tax pre-provision income, which excludes the losses taken on securities sales recorded during the first quarter of 2023, for the three months ended June 30, 2023 and March 31, 2023 was $6.1 million and $5.0 million, respectively, an increase of $1.1 million, or 22%. Diluted pre-tax pre-provision income per share for the three months ended June 30, 2023 and March 31, 2023 was $0.34 and $0.27, respectively. The Company considers pre-tax pre-provision income a useful financial measure of the Company’s period-to-period operating performance than net income. Pre-tax pre-provision income is determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). A reconciliation of non-GAAP financial measures to their most comparable financial measure in accordance with GAAP can be found in the tables below.

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:

“During the second quarter, we continued to focus on our core strategic initiatives as we increase and expand upon our core customer base, as illustrated by an increase in non-wholesale deposits of nearly $78 million during the quarter. Loans increased 4% during the quarter as we continue to originate loans to relationship-based customers, which contributes to net interest margin expansion. We enhanced our lending products to include our “Lightening Lending” platform, a fast, convenient, and secure digital solution to help small businesses obtain funding to support their business needs.

We remain committed to a thoughtful, conservative, strategic approach to serving the needs of our customers and community, balanced by managing the risks we face, and by constantly adapting our technology to enhance our new and existing customer’s experience.”

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 0.87% 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 second quarter of 2023, the Company reported pre-tax income of $20 thousand compared to a pre-tax loss of $801 thousand for the quarter ended March 31, 2023 related to its investment in ACM. New ACM funded loan volume for the second quarter of 2023 totaled $575 million, an increase of 61% from the previous quarter, and outperformed the mortgage industry forecast by 22%.

Statement of Condition

Total assets were $2.34 billion at each of June 30, 2023 and December 31, 2022, and increased $38.5 million, or 2%, compared to $2.31 billion at June 30, 2022.

Loans receivable, net of deferred fees, were $1.90 billion at June 30, 2023 and $1.84 billion at December 31, 2022, an increase of $63.4 million, or 3%. Compared to June 30, 2022, loans receivable, net of deferred fees, increased $239.6 million, or 14%, from $1.66 billion, year-over-year. During the second quarter of 2023, new commercial loan originations totaled $89.7 million with a weighted average rate of 7.59% and repayments of loans and lines of credit totaled $41.5 million.

Investment securities were $231.5 million at June 30, 2023, $278.3 million at December 31, 2022, and $307.9 million at June 30, 2022. Investment securities decreased $8.2 million during the quarter ended June 30, 2023, primarily as a result of principal paydowns of $5.2 million, and a $3.1 million decrease in the portfolio's unrealized losses. For the six months ended June 30, 2023, the investment securities portfolio decreased $46.9 million, primarily as a result of the sale of $40.3 million of available-for-sale securities in February 2023 and principal paydowns of $11.1 million, offset by an improvement in the portfolio's unrealized losses of $4.6 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 June 30, 2023.

Total deposits were $2.09 billion at June 30, 2023, $1.83 billion at December 31, 2022, and $1.93 billion at June 30, 2022. Total deposits increased $257.9 million, or 14%, year-to-date, and increased $160.9 million, or 8%, year-over-year. Noninterest-bearing deposits were $437.0 million at June 30, 2023, or 21% of total deposits, and increased $11.1 million during the second quarter of 2023. At June 30, 2023, core deposits, which exclude wholesale deposits, increased $103.7 million from December 31, 2022, or 7%, and increased $77.7 million, or 5%, from the previous quarter end. As a member of the IntraFi Network, the Bank offers products to its customers who seek to maximize FDIC insurance protection (“reciprocal deposits”). At June 30, 2023, December 31, 2022, and June 30, 2022, reciprocal deposits totaled $212.0 million, $117.6 million, and $141.4 million, respectively, and are considered part of the Company’s core deposit base. Time deposits (which exclude wholesale deposits) increased $104.8 million, or 40%, to $365.2 million at June 30, 2023 from December 31, 2022, and were 22% of core deposits, representing new and existing customer deposits as customers were looking to fix interest rates on their deposit balances.

The Company has had consistent deposit inflows over the last several quarters, including the current quarter, with new demand deposit inflows totaling $205 million (which includes $12.3 million in new noninterest-bearing deposits) compared to $118 million for the first quarter of 2023. Escrow-related deposits increased $103.2 million from March 31, 2023 to June 30, 2023. Deposits from municipalities decreased $16.1 million during the second 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 third quarter of 2023.

Total wholesale funding (which includes wholesale deposits and FHLB advances) decreased $89.0 million during the second quarter of 2023. Wholesale deposits increased $100.0 million to $413.3 million during the second quarter of 2023 and increased $378.3 million from June 30, 2022. Wholesale deposits were used to pay off FHLB advances at maturity freeing up collateral for future use as needed. Wholesale deposits are partially fixed at a weighted average rate of 3.83% as the Company has executed $250 million in pay-fixed/receive-floating interest rate swaps to reduce these funding costs. Other borrowed funds decreased $189.0 million, or 100%, at June 30, 2023 from $189.0 million at March 31, 2023, and decreased $265.0 million, or 100%, compared to $265.0 million at December 31, 2022.

Shareholders’ equity at June 30, 2023 was $211.1 million, an increase of $8.7 million, or 4%, from December 31, 2022 and an increase of $13.5 million, or 7%, from the year-ago quarter. Year-to-date 2023 earnings contributed $4.9 million to the increase in shareholders’ equity. As a result of the Company’s CECL adoption on January 1, 2023, retained earnings decreased $2.8 million. In addition, 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 $5.8 million, which was related to the improvement in other comprehensive income associated with the Company’s cash flow hedges.

Book value per share at June 30, 2023, December 31, 2022, and June 30, 2022 was $11.87, $11.58, and $11.32, respectively. Tangible book value per share (a non-GAAP financial measure which is defined in the tables below) at June 30, 2023, December 31, 2022, and June 30, 2022 was $11.44, $11.14, and $10.86, respectively. Tangible book value per share, excluding accumulated other comprehensive loss (a non-GAAP financial measure which is defined in the tables below), at June 30, 2023, December 31, 2022, and June 30, 2022 was $13.17, $13.23 and $12.53, respectively.

The Bank remains well-capitalized at June 30, 2023, with total risk-based capital of 13.28%, common equity tier 1 risk-based capital of 12.26%, and tier 1 leverage ratio of 10.41%.

Asset Quality

The Company adopted Accounting Standards Update 2016-13 (“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 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 loan 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 recorded a provision for credit losses of $618 thousand and $860 thousand, respectively, compared to a provision of $1.2 million for the three months ended June 30, 2022 and a provision of $1.5 million for the six months ended June 30, 2022. The Company continues to lend to well-established and relationship-driven borrowers and has a proven track record of low historical credit losses.

The Company continues to maintain 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 second quarter of 2023 with a decrease in specific reserves to $42 thousand. Nonperforming loans and loans 90 days or more past due at June 30, 2023 totaled $1.4 million, or 0.06% of total assets, compared to $4.5 million, or 0.19%, of total assets at December 31, 2022. There were 3 nonperforming loans at June 30, 2023, all of which were residential real estate secured. The Company had no other real estate owned.

The Company recorded net charge-offs of $356 thousand during the second quarter of 2023, all related to the write-off of the unguaranteed portion of the principal balance of an SBA loan, the remaining principal of which has otherwise been recovered. The ACL (which includes the reserve for unfunded commitments) at June 30, 2023 and December 31, 2022, was $20.2 million and $16.0 million, respectively. ACL coverage to nonperforming loans increased to 1,403% at June 30, 2023, compared to 357% as of December 31, 2022 as a result of the Company’s improved credit quality and adoption of CECL.

The ACL to total loans, net of fees, was 1.06% at June 30, 2023, compared to 0.87% at December 31, 2022 and 0.90% at June 30, 2022. The Company does not record a reserve on ACM’s warehouse lines due to the repurchase agreement in place with ACM, and as such, the allowance for credit losses to total loans when excluding the warehouse lines was 1.09% at June 30, 2023.

Commercial real estate loans totaled $1.11 billion, or 58% of total loans, net of fees, at June 30, 2023, a decrease of 1% from December 31, 2022. 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 $98.9 million, or 5% of total loans, and retail shopping centers totaling $269.7 million, or 14% of total loans, at June 30, 2023. Multi-family commercial properties totaled $191.2 million, or 10% of total loans, at June 30, 2023. The following table provides further stratification of these asset classes as of June 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

$

7,601

 

48%

4

$

3,833

Counties of Fairfax and Loudoun, Virginia and Montgomery County, Maryland

1

$

2,836

 

$

14,270

 

Office, Class B

48%

38

 

16,237

 

48%

31

 

62,074

-

 

-

 

 

78,311

 

Office, Class C

44%

8

 

3,528

 

42%

8

 

1,989

1

 

797

 

 

6,314

 

Subtotal

 

52

$

27,366

 

 

43

$

67,896

2

$

3,633

 

$

98,895

5%

 

 

 

 

 

 

 

 

Retail- Neighorhood/Community Shop

 

-

$

-

 

43%

32

$

87,271

Prince George's County, Maryland, Fairfax County, Virginia and Washington, D.C.

2

$

9,563

 

$

96,834

 

Retail- Restaurant

58%

9

 

8,307

 

46%

17

 

30,971

-

 

-

 

 

39,278

 

Retail- Single Tenant

60%

5

 

2,033

 

42%

22

 

38,084

-

 

-

 

 

40,117

 

Retail- Anchored,Other

71%

1

 

2,073

 

53%

11

 

39,273

1

 

1,559

 

 

42,905

 

Retail- Grocery-anchored

0

 

-

 

46%

8

 

49,907

1

 

639

 

 

50,546

 

Subtotal

15

$

12,413

 

 

90

$

245,506

4

$

11,761

 

$

269,680

14%

 

 

 

 

 

 

 

Multi-family, Class A (Market)

-

$

-

 

0%

1

$

-

Washington, D.C., Baltimore City, Maryland and Arlington County, Virginia

1

$

733

 

$

733

 

Multi-family, Class B (Market)

-

 

-

 

63%

21

 

78,742

-

 

-

 

 

78,742

 

Multi-family, Class C (Market)

-

 

-

 

58%

58

 

75,288

2

 

5,581

 

 

80,869

 

Multi-Family-Affordable Housing

-

 

-

 

53%

20

 

26,742

1

 

4,116

 

 

30,858

 

Subtotal

-

$

-

 

100

$

180,772

4

$

10,430

 

$

191,202

10%

Information as of June 30, 2023    

$

559,777

29%

     
(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) Debt service coverage policy is 1.20x or greater required at origination date.

The loans shown in the above table exhibit strong credit quality and included no classified loans at June 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.

Income Statement

Net income for the three months ended June 30, 2023 was $4.2 million, a decrease of $2.2 million, compared to $6.4 million for the same period of 2022. On a linked quarter basis, net income increased $3.6 million, from $621 thousand for the quarter ended March 31, 2023. Net income for the quarter ended March 31, 2023 includes an after-tax loss totaling $3.6 million from the February sale of $40.3 million in available-for-sale investment securities which was part of a balance sheet repositioning. The proceeds from the securities sale were deployed in part to pay off high-cost short-term borrowings totaling $20 million from the FHLB and fund higher yielding newly originated commercial loans. Additionally, net income for the second quarter of 2023 includes the Company’s portion of income from its membership interest in ACM, which was $20 thousand, compared to a loss of $801 thousand for the quarter ended March 31, 2023.

Net interest income totaled $14.4 million for the quarter ended June 30, 2023, an increase of $374 thousand, or 3%, compared to the first quarter of 2023, and a decrease of $2.4 million, or 14%, compared to the year ago quarter. The increase in net interest income for the three months ended June 30, 2023 compared to the linked quarter ended March 31, 2023 includes recovered loan interest of $338 thousand from an impaired loan that has now been fully recovered. Compared to the year ago quarter ended June 30, 2022, the decrease in net interest income for the second 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.

Interest income on loans increased $7.7 million, or 45%, for the three months ended June 30, 2023, compared to the same period of 2022. Compared to the linked quarter, interest income on loans increased $1.6 million, or 7%, for the three months ended June 30, 2023. The increase in interest income for the three months ended June 30, 2023, compared to the year ago quarter was primarily related to an increase in both loan yields, which increased 99 basis points, and the volume of average loans, which increased $286.7 million. On a linked quarter basis, the increase in interest income is due to the increased yield on loans receivable by 24 basis points along with the increase in average loan volume of $36.8 million during the quarter.

Interest expense on deposits increased $10.1 million for the three months ended June 30, 2023, compared to the same period of 2022, and increased $3.2 million compared to the three months ended March 31, 2023, all a result of the unprecedented rapid rate increases over the last 15 months and the change in deposit mix to 20% wholesale deposits. As a preemptive defensive measure, management increased liquidity through additional wholesale funding given the uncertainty surrounding the isolated bank failures announced in March. The increase in wholesale deposits provided enhanced liquidity on the Company’s balance sheet while freeing up collateral from other funding sources such as the FHLB.

The Company's net interest margin remained at 2.60% for the quarter ended June 30, 2023 compared to the linked quarter ended March 31, 2023 and decreased from 3.30% for the year ago quarter ended June 30, 2022. The decrease in net interest margin from a year ago is primarily due to the rising rate environment and associated rapid increase to the cost of funds. The cost of core deposits, which includes non-interest bearing deposits and excludes wholesale deposits, increased 36 basis points to 2.07% for the second quarter of 2023 as compared to 1.71% for the linked quarter ended March 31, 2023 and increased 165 basis points as compared to 0.42% for the quarter ended June 30, 2022. The cost of interest-bearing deposits for the second quarter of 2023 was 3.11% compared to 2.61% for the first quarter of 2023, an increase of 50 basis points, and an increase of 254 basis points from 0.57% for the year-ago quarter.

The Company’s cumulative deposit beta (which is calculated comparing the change in deposit interest rates from March 31, 2022 to June 30, 2023 including noninterest-bearing deposits and excluding wholesale deposits) is approximately 33% over the past year as the Federal Reserve began increasing short-term interest rates. Based on the Company’s most recent asset/liability model, the Company’s interest rate sensitivity position was modestly liability sensitive, positioning the Company’s balance sheet for an improvement in net interest income when the Federal Reserve pivots to an accommodative monetary policy.

Net interest income for the six months ended June 30, 2023 and 2022 was $28.4 million and $31.8 million, respectively, a decrease of $3.4 million, or 11%, year-over-year. Interest income increased $16.3 million, or 45%, to $52.5 million for the six months ended June 30, 2023 as compared to $36.3 million for the comparable 2022 period. Interest expense totaled $24.1 million for the six months ended June 30, 2023, an increase of $19.7 million, compared to $4.4 million for the six months ended June 30, 2022. The Company’s net interest margin for the six months ended June 30, 2023 was 2.60% compared to 3.23% for the year-ago six month period of 2022.

Noninterest income reported for the quarter ended June 30, 2023 was $891 thousand compared to a loss of $4.6 million for the linked quarter ended March 31, 2023 and income of $645 thousand for the quarter ended June 30, 2022. Noninterest income associated with the Company’s investment in ACM was $20 thousand for the three months ended June 30, 2023. The noninterest loss recorded during the first quarter of 2023 is primarily attributable to the Company's 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 and the loss recorded associated with its investment in ACM, totaling $801 thousand during the first quarter of 2023.

Fee income from loans was $169 thousand for the quarter ended June 30, 2023, compared to $43 thousand for the second quarter of 2022, an increase of $126 thousand, primarily related to back-to-back loan swap transactions entered into during the second quarter of 2023. Service charges on deposit accounts and other fee income totaled $340 thousand for the second quarter of 2023, a decrease of $6 thousand from the year ago quarter. Income from bank-owned life insurance (“BOLI”) increased $108 thousand to $362 thousand for the three months ended June 30, 2023, compared to $254 thousand for the same period of 2022, as the Company purchased additional BOLI totaling $15 million during the second quarter of 2022.

For the year-to-date period ended June 30, 2023, the Company recorded noninterest income as a loss of $3.7 million, primarily associated with its securities sales transaction executed during the first quarter of 2023, compared to noninterest income of $2.3 million for the comparable period of 2022.

Noninterest expense totaled $9.2 million for the quarter ended June 30, 2023 compared to $8.2 million for the same three-month period of 2022, an increase of $987 thousand, or 12%. On a linked quarter basis, noninterest expense increased $193 thousand, or 2%, from $9.0 million for the quarter ended March 31, 2023. Salaries and benefits expense was $5.1 million, $5.0 million, and $4.9 million, for the second quarters ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. The increase in salaries and benefits expense for the second quarter of 2023 compared to the linked quarter of March 31, 2023, is primarily related to accruals for incentive compensation totaling $170 thousand, offset by a decrease in base salary expense and associated payroll taxes of $147 thousand. Salaries deferred for loan originations (ASC 310-20) decreased $74 thousand, which contributed to the second 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 business development staff expansion and market rate adjustments to employee compensation that has occurred over the previous twelve months.

Internet banking and software expense increased $167 thousand to $583 thousand for the second quarter of 2023 compared to the quarter ended June 30, 2022, primarily as a result of the implementation of enhanced customer software solutions. Other operating expenses for the second quarter of 2023 totaled $1.5 million compared to $986 thousand for the year-ago quarter, an increase of $489 thousand. This increase was a result of an increase in FDIC insurance expense totaling $177 thousand (a result of the FDIC increasing the assessment rate to replenish its deposit insurance fund) and an increase in marketing expense totaling $117 thousand related to lower cost deposit gathering and branding efforts. In addition, legal expenses related to loan workouts increased $100 thousand for the second quarter of 2023 when compared to the year ago quarter in a continued effort to mitigate credit risk and potential loss. The Company expects to recover these loan legal expenses later in 2023.

For the six months ended June 30, 2023 and 2022, noninterest expense was $18.2 million and $16.7 million, respectively, an increase of $1.6 million, or 9%, primarily as a result of the aforementioned increases in salaries and benefits expenses, occupancy and equipment expense, marketing, e-banking solutions, and loan legal expenses.

The efficiency ratio for core bank operating earnings, excluding 2022 merger-related expenses and losses on the sale of available-for-sale investment securities, for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022, was 60.2%, 61.0%, and 47.1%, respectively. For the six months ended June 30, 2023 and 2022, the efficiency ratio for core bank operating earnings was 62.3% and 48.6%, 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 June 30, 2023, compared to a provision for income taxes of $1.6 million for the same period in 2022. The effective tax rate for the three months ended June 30, 2023 and June 30, 2022 was 22.4% and 20.0%, respectively. For the six months ended June 30, 2023 and 2022, provision for income tax expense was $739 thousand and $2.9 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 $2.34 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; the strength of the United States economy in general and the strength of the local economies in which we conduct operations; 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 Six Months Ended At or For the Three Months Ended
6/30/2023 6/30/2022 6/30/2023 6/30/2022 3/31/2023 12/31/2022
Selected Balances
Total assets

$

2,344,372

 

$

2,305,905

 

$

2,348,995

 

$

2,344,322

 

Total investment securities

 

236,378

 

 

314,444

 

 

253,403

 

 

293,945

 

Total loans, net of deferred fees

 

1,903,814

 

 

1,664,232

 

 

1,828,123

 

 

1,840,434

 

Allowance for credit losses

 

(19,442

)

 

(14,957

)

 

(19,058

)

 

(16,040

)

Total deposits

 

2,088,042

 

 

1,927,177

 

 

1,910,386

 

 

1,830,162

 

Subordinated debt

 

19,592

 

 

19,537

 

 

19,579

 

 

19,565

 

Other borrowings

 

- -

 

 

140,000

 

 

189,000

 

 

265,000

 

Reserve for unfunded commitments

 

801

 

 

- -

 

 

922

 

 

- -

 

Total stockholders’ equity

 

211,051

 

 

197,599

 

 

204,156

 

 

202,382

 

Summary Results of Operations
Interest income

$

27,203

 

$

19,027

 

$

52,537

 

$

36,249

 

$

25,334

 

$

23,341

 

Interest expense

 

12,815

 

 

2,239

 

 

24,135

 

 

4,411

 

 

11,320

 

 

7,462

 

Net interest income

 

14,388

 

 

16,787

 

 

28,402

 

 

31,838

 

 

14,014

 

 

15,879

 

Provision for credit losses

 

618

 

 

1,185

 

 

860

 

 

1,535

 

 

242

 

 

729

 

Net interest income after provision for credit losses

 

13,770

 

 

15,602

 

 

27,542

 

 

30,303

 

 

13,772

 

 

15,150

 

Noninterest income - loan fees, service charges and other

 

508

 

 

389

 

 

942

 

 

863

 

 

434

 

 

421

 

Noninterest income - bank owned life insurance

 

362

 

 

254

 

 

694

 

 

492

 

 

332

 

 

356

 

Noninterest income (loss) - minority membership interest

 

20

 

 

2

 

 

(781

)

 

914

 

 

(801

)

 

(787

)

Noninterest income - loss on sale of available-for-sale investment securities

 

- -

 

 

- -

 

 

(4,592

)

 

-

 

 

(4,592

)

 

- -

 

Noninterest expense

 

9,203

 

 

8,216

 

 

18,213

 

 

16,657

 

 

9,010

 

 

9,202

 

Income before taxes

 

5,457

 

 

8,031

 

 

5,593

 

 

15,915

 

 

135

 

 

5,938

 

Income tax expense (benefit)

 

1,225

 

 

1,606

 

 

739

 

 

2,876

 

 

(486

)

 

1,035

 

Net income

 

4,232

 

 

6,425

 

 

4,854

 

 

13,039

 

 

621

 

 

4,903

 

Per Share Data
Net income, basic (5)

$

0.24

 

$

0.37

 

$

0.28

 

$

0.75

 

$

0.04

 

$

0.28

 

Net income, diluted (5)

$

0.23

 

$

0.35

 

$

0.27

 

$

0.71

 

$

0.03

 

$

0.27

 

Book value (5)

$

11.87

 

$

11.32

 

$

11.53

 

$

11.58

 

Tangible book value (1)(5)

$

11.44

 

$

10.86

 

$

11.09

 

$

11.14

 

Tangible book value, excluding accumulated other comprehensive losses (1)(5)

$

13.17

 

$

12.53

 

$

12.95

 

$

13.23

 

Shares outstanding

 

17,783,305

 

 

13,970,748

 

 

17,705,455

 

 

17,475,668

 

Selected Ratios
Net interest margin (2)

 

2.60

%

 

3.30

%

 

2.60

%

 

3.23

%

 

2.60

%

 

2.96

%

Return on average assets (2)

 

0.73

%

 

1.21

%

 

0.42

%

 

1.26

%

 

0.11

%

 

0.89

%

Return on average equity (2)

 

8.17

%

 

12.93

%

 

4.70

%

 

12.78

%

 

1.21

%

 

9.87

%

Efficiency (3)

 

60.23

%

 

47.13

%

 

73.84

%

 

48.84

%

 

95.98

%

 

57.99

%

Loans, net of deferred fees to total deposits

 

91.18

%

 

86.36

%

 

95.69

%

 

100.56

%

Noninterest-bearing deposits to total deposits

 

20.93

%

 

28.11

%

 

22.29

%

 

23.95

%

Reconciliation of Net Income (GAAP) to Commercial Bank Operating Earnings (Non-GAAP)(4)
GAAP net income reported above

$

4,232

 

$

6,425

 

$

4,854

 

$

13,039

 

$

621

 

$

4,903

 

Add: Merger and acquisition expense

 

- -

 

 

- -

 

 

- -

 

 

125

 

 

- -

 

 

- -

 

Add: Loss on sale of available-for-sale investment securities

 

- -

 

 

- -

 

 

4,592

 

 

- -

 

 

4,592

 

 

- -

 

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

 

- -

 

 

- -

 

 

(1,010

)

 

(28

)

 

(1,010

)

 

- -

 

Net Income, core bank operating earnings (non-GAAP)

$

4,232

 

$

6,425

 

$

8,436

 

$

13,136

 

$

4,203

 

$

4,903

 

Earnings per share - basic (non-GAAP core bank operating earnings)(5)

$

0.24

 

$

0.24

 

$

0.48

 

$

0.76

 

$

0.24

 

$

0.28

 

Earnings per share - diluted (non-GAAP core bank operating earnings)(5)

$

0.23

 

$

0.23

 

$

0.46

 

$

0.71

 

$

0.23

 

$

0.27

 

Return on average assets (non-GAAP core bank operating earnings)

 

0.73

%

 

1.21

%

 

0.74

%

 

1.26

%

 

0.85

%

 

0.89

%

Return on average equity (non-GAAP core bank operating earnings)

 

8.17

%

 

12.93

%

 

8.17

%

 

12.87

%

 

9.40

%

 

9.87

%

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

 

60.23

%

 

47.13

%

 

62.25

%

 

48.55

%

 

60.96

%

 

57.99

%

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

 

9.22

%

 

8.25

%

 

8.92

%

 

8.86

%

Total risk-based capital (to risk weighted assets)

 

13.28

%

 

12.71

%

 

13.48

%

 

13.28

%

Common equity tier 1 capital (to risk weighted assets)

 

12.26

%

 

11.93

%

 

12.48

%

 

12.45

%

Tier 1 leverage (to average assets)

 

10.41

%

 

10.89

%

 

10.38

%

 

10.75

%

Asset Quality
Nonperforming loans and loans 90+ past due

$

1,443

 

$

3,486

 

$

4,446

 

$

4,493

 

Nonperforming loans and loans 90+ past due to total assets

 

0.06

%

 

0.15

%

 

0.19

%

 

0.19

%

Nonperforming assets to total assets

 

0.06

%

 

0.15

%

 

0.19

%

 

0.19

%

Allowance for credit losses to loans

 

1.06

%

 

0.90

%

 

1.09

%

 

0.87

%

Allowance for credit losses to nonperforming loans

 

1,402.87

%

 

429.06

%

 

449.41

%

 

357.00

%

Net charge-offs (recoveries)

$

356

 

$

(8

)

$

333

 

$

407

 

$

(23

)

$

2

 

Net charge-offs (recoveries) to average loans (2)

 

0.08

%

 

0.00

%

 

0.04

%

 

0.05

%

 

(0.01

)%

 

-

%

Selected Average Balances
Total assets

$

2,309,251

 

$

2,115,813

 

$

2,288,835

 

$

2,077,132

 

$

2,268,193

 

$

2,202,407

 

Total earning assets

 

2,223,581

 

 

2,038,321

 

 

2,204,172

 

 

1,989,451

 

 

2,184,546

 

 

2,126,032

 

Total loans, net of deferred fees

 

1,867,813

 

 

1,581,131

 

 

1,849,493

 

 

1,528,030

 

 

1,830,970

 

 

1,745,226

 

Total deposits

 

2,002,047

 

 

1,847,104

 

 

1,894,343

 

 

1,802,797

 

 

1,785,442

 

 

1,811,098

 

Other Data
Noninterest-bearing deposits

$

436,972

 

$

541,815

 

$

425,838

 

$

438,269

 

Interest-bearing checking, savings and money market

 

872,508

 

 

1,166,930

 

 

806,934

 

 

883,480

 

Time deposits

 

365,242

 

 

183,432

 

 

364,265

 

 

260,421

 

Wholesale deposits

 

413,320

 

 

35,000

 

 

313,350

 

 

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) 6/30/2023 6/30/2022 3/31/2023 12/31/2022
 
Total stockholders’ equity

$

211,051

 

$

197,599

 

$

204,156

 

$

202,382

 

Less: goodwill and intangibles, net

 

(7,682

)

 

(7,914

)

 

(7,735

)

 

(7,790

)

Tangible Common Equity

$

203,368

 

$

189,685

 

$

196,421

 

$

194,592

 

Less: Accumulated Other Comprehensive Income (Loss) ("AOCI")

 

(30,762

)

 

(29,192

)

 

(32,863

)

 

(36,568

)

Tangible Common Equity excluding AOCI

$

234,130

 

$

218,877

 

$

229,284

 

$

231,160

 

 
Book value per common share (5)

$

11.87

 

$

11.32

 

$

11.53

 

$

11.58

 

Less: intangible book value per common share (5)

 

(0.43

)

 

(0.46

)

 

(0.44

)

 

0.44

 

Tangible book value per common share (5)

$

11.44

 

$

10.86

 

$

11.09

 

$

11.14

 

Add: AOCI (loss) per common share (5)

 

(1.73

)

 

(1.67

)

 

(1.86

)

 

(2.09

)

Tangible book value per common share, excluding AOCI (5)

$

13.17

 

$

12.53

 

$

12.95

 

$

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
6/30/2023 3/31/2023 Quarter 12/31/2022 6/30/2022 Year Ago
 
Cash and due from banks $

8,281

 

$

13,300

 

-37.7

%

$

7,253

 

$

11,730

 

-29.4

%

Interest-bearing deposits at other financial institutions

66,723

 

131,643

 

-49.3

%

74,300

 

196,187

 

-66.0

%

Investment securities

231,468

 

239,698

 

-3.4

%

278,333

 

307,882

 

-24.8

%

Restricted stock, at cost

4,909

 

13,705

 

-64.2

%

15,612

 

6,562

 

-25.2

%

Loans, net of fees:
Commercial real estate

1,111,249

 

1,096,633

 

1.3

%

1,097,302

 

981,744

 

13.2

%

Commercial and industrial

223,406

 

187,842

 

18.9

%

214,873

 

189,351

 

18.0

%

Commercial construction

158,713

 

156,026

 

1.7

%

147,272

 

161,393

 

-1.7

%

Consumer real estate

365,122

 

352,413

 

3.6

%

330,635

 

243,212

 

50.1

%

Warehouse facilities

39,700

 

29,045

 

36.7

%

42,699

 

78,693

 

-49.6

%

Consumer nonresidential

5,624

 

6,164

 

-8.8

%

7,653

 

9,839

 

-42.8

%

Total loans, net of fees

1,903,814

 

1,828,123

 

4.1

%

1,840,434

 

1,664,232

 

14.4

%

Allowance for credit losses

(19,442

)

(19,058

)

2.0

%

(16,040

)

(14,957

)

30.0

%

Loans, net

1,884,372

 

1,809,065

 

4.2

%

1,824,394

 

1,649,275

 

14.3

%

 
Premises and equipment, net

1,103

 

1,174

 

-6.1

%

1,220

 

1,334

 

-17.4

%

Goodwill and intangibles, net

7,682

 

7,735

 

-0.7

%

7,790

 

7,914

 

-2.9

%

Bank owned life insurance (BOLI)

56,066

 

55,704

 

0.7

%

55,371

 

54,663

 

2.6

%

Other assets

83,768

 

76,971

 

8.8

%

80,049

 

70,358

 

19.1

%

 
Total Assets $

2,344,372

 

$

2,348,995

 

-0.2

%

$

2,344,322

 

$

2,305,905

 

1.7

%

 
Deposits:
Noninterest-bearing $

436,972

 

$

425,838

 

2.6

%

$

438,269

 

$

541,815

 

-19.4

%

Interest checking

626,748

 

498,242

 

25.8

%

578,340

 

787,011

 

-20.4

%

Savings and money market

245,760

 

308,691

 

-20.4

%

305,140

 

379,919

 

-35.3

%

Time deposits

365,242

 

364,265

 

0.3

%

260,421

 

183,432

 

99.1

%

Wholesale deposits

413,320

 

313,350

 

31.9

%

247,992

 

35,000

 

1,080.9

%

Total deposits

2,088,042

 

1,910,386

 

9.3

%

1,830,162

 

1,927,177

 

8.3

%

 
Other borrowed funds

- -

 

189,000

 

-100.0

%

265,000

 

140,000

 

-100.0

%

Subordinated notes, net of issuance costs

19,592

 

19,579

 

0.1

%

19,565

 

19,537

 

0.3

%

Reserve for unfunded commitments

801

 

922

 

-13.1

%

- -

 

- -

 

100.0

%

Other liabilities

24,886

 

24,952

 

-0.3

%

27,213

 

21,592

 

15.3

%

 
Stockholders’ equity

211,051

 

204,156

 

3.4

%

202,382

 

197,599

 

6.8

%

 
Total Liabilities & Stockholders'
Equity $

2,344,372

 

$

2,348,995

 

-0.2

%

$

2,344,322

 

$

2,305,905

 

1.7

%

 
FVCBankcorp, Inc.
Summary Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)
 
 
For the Three Months Ended
% Change % Change
Current From
6/30/2023 3/31/2023 Quarter 6/30/2022 Year Ago
 
Net interest income $

14,388

 

$

14,014

 

2.7

%

$

16,787

 

-14.3

%

Provision for credit losses

618

 

242

 

-155.5

%

1,185

 

-47.8

%

Net interest income after provision for credit losses

13,770

 

13,772

 

0.0

%

15,602

 

-11.7

%

 
Noninterest income:
Fees on loans

169

 

77

 

120.2

%

43

 

293.3

%

Service charges on deposit accounts

232

 

215

 

7.7

%

230

 

0.7

%

BOLI income

362

 

332

 

9.0

%

254

 

42.6

%

(Loss) Income from minority membership interest

20

 

(801

)

-102.5

%

2

 

900.0

%

Loss on sale of available-for-sale investment securities

- -

 

(4,592

)

100.0

%

- -

 

0.0

%

Other fee income

108

 

142

 

-24.2

%

116

 

-7.2

%

Total noninterest income

891

 

(4,627

)

-119.2

%

645

 

38.1

%

 
Noninterest expense:
Salaries and employee benefits

5,092

 

5,015

 

1.5

%

4,914

 

3.6

%

Occupancy expense

610

 

627

 

-2.7

%

553

 

10.3

%

Internet banking and software expense

583

 

562

 

3.7

%

416

 

40.1

%

Data processing and network administration

611

 

622

 

-1.8

%

550

 

11.1

%

State franchise taxes

584

 

584

 

0.0

%

509

 

14.8

%

Professional fees

247

 

184

 

34.0

%

288

 

-14.2

%

Other operating expense

1,475

 

1,416

 

4.2

%

986

 

49.6

%

Total noninterest expense

9,203

 

9,010

 

2.1

%

8,216

 

12.0

%

Net income before income taxes

5,457

 

135

 

3,939.0

%

8,031

 

-32.0

%

Income tax expense (benefit)

1,225

 

(486

)

-351.9

%

1,606

 

-23.7

%

Net Income $

4,232

 

$

621

 

581.1

%

$

6,425

 

-34.1

%

 
Earnings per share - basic (1) $

0.24

 

$

0.04

 

576.0

%

$

0.37

 

-35.1

%

Earnings per share - diluted (1) $

0.23

 

$

0.03

 

590.1

%

$

0.35

 

-32.2

%

Weighted-average common shares outstanding - basic (1)

17,710,535

 

17,577,659

 

17,462,421

 

Weighted-average common shares outstanding - diluted (1)

18,058,612

 

18,296,448

 

18,587,155

 

 
 
Reconciliation of Net Income (GAAP) to Commercial Bank Operating Earnings (Non-GAAP):
GAAP net income reported above $

4,232

 

$

621

 

$

6,425

 

Add: Loss on sale of available-for-sale investment securities

- -

 

4,592

 

- -

 

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

- -

 

(1,010

)

- -

 

Net Income, Operating earnings (non-GAAP) $

4,232

 

$

4,203

 

$

6,425

 

Earnings per share - basic (non-GAAP core bank operating earnings)(1) $

0.24

 

$

0.24

 

$

0.37

 

Earnings per share - diluted (non-GAAP core bank operating earnings)(1) $

0.23

 

$

0.23

 

$

0.35

 

 
Return on average assets (non-GAAP core bank operating earnings)

0.73

%

0.85

%

1.21

%

Return on average equity (non-GAAP core bank operating earnings)

8.17

%

9.40

%

12.93

%

Efficiency ratio (non-GAAP core bank operating earnings)

60.23

%

60.96

%

47.13

%

 
Reconciliation of Net Income (GAAP) to Pre-Tax Pre-Provision Income (Non-GAAP):
GAAP net income reported above $

4,232

 

$

621

 

$

6,425

 

Add: Provision for credit losses

618

 

242

 

1,185

 

Add: Loss on sale of investment securities

- -

 

4,592

 

- -

 

(Subtract) Add: Income tax (benefit) expense

1,225

 

(486

)

1,606

 

Pre-tax pre-provision income $

6,076

 

$

4,969

 

$

9,216

 

Earnings per share - basic (non-GAAP pre-tax pre-provision)(1) $

0.34

 

$

0.28

 

$

0.53

 

Earnings per share - diluted (non-GAAP pre-tax pre-provision)(1) $

0.34

 

$

0.27

 

$

0.50

 

 
Return on average assets (non-GAAP pre-tax pre-provision)

1.05

%

0.88

%

1.74

%

Return on average equity (non-GAAP pre-tax pre-provision)

11.72

%

9.67

%

18.55

%

 
(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
(In thousands, except per share data)
(Unaudited)
 
 
For the Six Months Ended
% Change
From
6/30/2023 6/30/2022 Year Ago
 
Net interest income $

28,402

 

$

31,838

 

-10.8

%

Provision for loan losses

860

 

1,535

 

-44.0

%

Net interest income after provision for loan losses

27,542

 

30,303

 

-9.1

%

 
Noninterest income:
Fees on loans

246

 

127

 

93.6

%

Service charges on deposit accounts

447

 

464

 

-3.7

%

BOLI income

694

 

492

 

41.1

%

(Loss) Income from minority membership interest

(781

)

914

 

-185.4

%

Loss on sale of available-for-sale investment securities

(4,592

)

- -

 

100.0

%

Other fee income

250

 

272

 

-8.2

%

Total noninterest income

(3,736

)

2,269

 

-264.7

%

 
Noninterest expense:
Salaries and employee benefits

10,107

 

9,891

 

2.2

%

Occupancy expense

1,238

 

1,153

 

7.3

%

Internet banking and software expense

1,144

 

799

 

43.2

%

Data processing and network administration

1,233

 

1,092

 

12.9

%

State franchise taxes

1,169

 

1,018

 

14.8

%

Professional fees

431

 

649

 

-33.5

%

Merger and acquisition expense

- -

 

125

 

-100.0

%

Other operating expense

2,891

 

1,930

 

49.8

%

Total noninterest expense

18,213

 

16,657

 

9.3

%

Net income before income taxes

5,593

 

15,915

 

-64.9

%

Income tax expense

739

 

2,876

 

-74.3

%

Net Income $

4,854

 

$

13,039

 

-62.8

%

 
Earnings per share - basic $

0.28

 

$

0.75

 

-63.3

%

Earnings per share - diluted $

0.27

 

$

0.71

 

-62.1

%

Weighted-average common shares outstanding - basic

17,644,097

 

17,376,969

 

Weighted-average common shares outstanding - diluted

18,177,530

 

18,489,796

 

 
Reconciliation of Net Income (GAAP) to Commercial Bank Operating Earnings (Non-GAAP):
GAAP net income reported above $

4,854

 

$

13,039

 

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) $

8,436

 

$

13,136

 

Earnings per share - basic (non-GAAP core bank operating earnings)(1) $

0.48

 

$

0.76

 

Earnings per share - diluted (non-GAAP core bank operating earnings)(1) $

0.46

 

$

0.71

 

 
Return on average assets (non-GAAP core bank operating earnings)

0.74

%

1.26

%

Return on average equity (non-GAAP core bank operating earnings)

8.17

%

12.87

%

Efficiency ratio (non-GAAP core bank operating earnings)

62.25

%

48.55

%

 
 
Reconciliation of Net Income (GAAP) to Pre-Tax Pre-Provision Income (Non-GAAP):
GAAP net income reported above $

4,854

 

$

13,039

 

Add: Provision for loan losses

860

 

1,535

 

Add: Loss on sale of investment securities

4,592

 

- -

 

Add: Merger and acquisition expense

- -

 

125

 

Add: Income tax expense

739

 

2,876

 

Pre-tax pre-provision income $

11,045

 

$

17,575

 

Earnings per share - basic (non-GAAP pre-tax pre-provision)(1) $

0.63

 

$

1.01

 

Earnings per share - diluted (non-GAAP pre-tax pre-provision)(1) $

0.61

 

$

0.95

 

 
Return on average assets (non-GAAP operating earnings)

0.97

%

1.69

%

Return on average equity (non-GAAP operating earnings)

10.70

%

17.23

%

 
(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
6/30/2023 3/31/2023 6/30/2022
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 $

1,119,042

 

$

13,541

4.84

%

$

1,098,243

 

$

12,680

4.62

%

$

940,338

 

$

10,215

 

4.35

%

Commercial and industrial

197,130

 

3,735

7.58

%

203,223

 

3,445

6.78

%

183,928

 

2,255

 

4.90

%

Commercial construction

156,471

 

2,814

7.19

%

153,534

 

2,639

6.87

%

174,896

 

2,067

 

4.73

%

Consumer real estate

360,161

 

4,241

4.71

%

345,213

 

4,048

4.69

%

208,072

 

2,025

 

3.89

%

Warehouse facilities

28,910

 

510

7.06

%

24,005

 

424

7.06

%

64,570

 

505

 

3.13

%

Consumer nonresidential

6,099

 

143

9.36

%

6,752

 

160

9.45

%

9,327

 

176

 

7.53

%

Total loans

1,867,813

 

24,986

5.35

%

1,830,970

 

23,396

5.11

%

1,581,131

 

17,243

 

4.36

%

 
Investment securities (2)(3)

288,987

 

1,375

1.90

%

327,370

 

1,638

2.00

%

357,540

 

1,586

 

1.77

%

Interest-bearing deposits at
other financial institutions

66,781

 

844

5.07

%

26,206

 

302

4.68

%

99,650

 

200

 

0.81

%

Total interest-earning assets

2,223,581

 

27,205

4.89

%

2,184,546

 

25,336

4.64

%

2,038,321

 

19,029

 

3.73

%

 
Non-interest earning assets:
Cash and due from banks

6,930

 

4,805

 

4,716

 

Premises and equipment, net

1,152

 

1,208

 

1,452

 

Accrued interest and other
assets

96,656

 

94,678

 

85,433

 

Allowance for loan losses

(19,068

)

(17,044

)

(14,109

)

 
Total Assets $

2,309,251

 

$

2,268,193

 

$

2,115,813

 

0

 

1

 

-

 

 
Interest-bearing liabilities:
Interest checking $

531,440

 

$

3,546

2.68

%

$

519,770

 

$

2,915

2.27

%

$

794,757

 

$

1,007

 

0.51

%

Savings and money market

245,306

 

1,289

2.11

%

295,192

 

1,503

2.06

%

329,831

 

446

 

0.54

%

Time deposits

393,877

 

3,563

3.63

%

299,054

 

2,152

2.92

%

177,525

 

446

 

1.01

%

Wholesale deposits

377,126

 

3,615

3.84

%

251,593

 

2,211

3.56

%

35,000

 

(2

)

(0.03)

%

Total interest-bearing deposits

1,547,748

 

12,012

3.11

%

1,365,609

 

8,781

2.61

%

1,337,113

 

1,897

 

0.57

%

 
Other borrowed funds

57,176

 

546

3.83

%

231,257

 

2,281

4.01

%

27,418

 

84

 

1.23

%

Subordinated notes, net of
issuance costs

19,583

 

258

5.27

%

19,570

 

258

5.34

%

19,528

 

258

 

5.30

%

Total interest-bearing liabilities

1,624,508

 

12,815

3.16

%

1,616,436

 

11,320

2.84

%

1,384,059

 

2,239

 

0.65

%

 
Noninterest-bearing liabilities:
Noninterest-bearing deposits

454,299

 

419,833

 

509,991

 

Other liabilities

23,145

 

26,408

 

22,998

 

 
Stockholders’ equity

207,299

 

205,516

 

198,765

 

 
Total Liabilities and Stockholders' Equity $

2,309,251

 

$

2,268,193

 

$

2,115,813

 

 
Net Interest Margin

14,390

2.60

%

14,016

2.60

%

16,790

 

3.30

%

 
 
(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 June 30, 2023 and March 31, 2023 and 21% for the three months ended June 30, 2022. The taxable equivalent adjustment to interest income was $1 for the three months ended June 30, 2023. For the three months ended March 31, 2023, and June 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 Six Months Ended
6/30/2023 6/30/2022
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 $

1,108,700

 

$

26,221

4.73

%

$

927,294

 

$

19,643

4.24

%

Commercial and industrial

200,160

 

7,183

7.18

%

175,525

 

4,201

4.79

%

Commercial construction

155,010

 

5,453

7.04

%

177,627

 

4,216

4.75

%

Consumer real estate

352,728

 

8,289

4.71

%

185,589

 

3,687

3.97

%

Warehouse facilities

26,471

 

934

7.06

%

52,664

 

760

2.88

%

Consumer nonresidential

6,424

 

302

9.41

%

9,331

 

343

7.36

%

Total loans

1,849,493

 

48,382

5.23

%

1,528,030

 

32,850

4.30

%

 
Investment securities (2)(3)

308,072

 

3,012

1.96

%

357,508

 

3,159

1.77

%

Interest-bearing deposits at other financial institutions

46,606

 

1,146

4.96

%

103,913

 

245

0.48

%

Total interest-earning assets

2,204,172

 

52,540

4.77

%

1,989,451

 

36,254

3.64

%

 
Non-interest earning assets:
Cash and due from banks

5,874

 

7,753

 

Premises and equipment, net

1,180

 

1,507

 

Accrued interest and other assets

95,670

 

92,402

 

Allowance for loan losses

(18,061

)

(13,981

)

 
Total Assets $

2,288,835

 

$

2,077,132

 

 
Interest-bearing liabilities:
Interest checking $

525,637

 

$

6,461

2.48

%

$

745,880

 

$

2,004

0.54

%

Savings and money market

268,867

 

2,763

2.07

%

322,802

 

795

0.50

%

Time deposits

347,972

 

5,742

3.33

%

181,045

 

888

0.99

%

Wholesale deposits

314,706

 

5,827

3.73

%

35,000

 

40

0.23

%

Total interest-bearing deposits

1,457,182

 

20,793

2.88

%

1,284,727

 

3,727

0.59

%

 
Other borrowed funds

143,735

 

2,827

3.97

%

26,215

 

169

1.30

%

Subordinated notes, net of issuance costs

19,577

 

515

5.30

%

19,522

 

515

5.32

%

Total interest-bearing liabilities

1,620,494

 

24,135

3.00

%

1,330,464

 

4,411

0.67

%

 
Noninterest-bearing liabilities:
Noninterest-bearing deposits

437,161

 

518,070

 

Other liabilities

24,768

 

24,540

 

 
Stockholders’ equity

206,412

 

204,058

 

 
Total Liabilities and Stockholders' Equity $

2,288,835

 

$

2,077,132

 

 
Net Interest Margin

28,405

2.60

%

31,843

3.23

%

 
 
(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 six months ended June 30, 2023 and 21% for the six months ended June 30, 2022. The taxable equivalent adjustment to interest income was $3 and $5 for the six months ended June 30, 2023 and 2022, respectively.
(3) The average balances for investment securities includes restricted stock.
 

 

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