FVCBankcorp Announces Extension of Share Repurchase Program
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Insights
The extension of FVCBankcorp, Inc.'s share repurchase program may signal a confident outlook by the company's management regarding its financial stability and future performance. By repurchasing up to 7% of its outstanding shares, the company is effectively reducing the number of shares available in the market, which can lead to an increase in earnings per share (EPS) and potentially enhance shareholder value. However, this strategy may also indicate that the company views its stock as undervalued or that it lacks more profitable reinvestment opportunities.
Investors should consider the impact of such buybacks on the company's capital structure. While a reduced share count can improve financial ratios, it also uses up cash reserves that could be allocated towards growth initiatives or debt reduction. Moreover, the discretionary nature of the program and its dependency on market conditions suggest that buybacks are not guaranteed and will be conducted opportunistically.
Share repurchase programs are often interpreted by the market as a positive signal, potentially leading to a favorable reaction in the stock's price. It's important to monitor the actual execution of the repurchase plan, as the quantity of shares bought back and the timing can provide insights into management's confidence in the company's valuation and market conditions. Additionally, the program's extension until 2025 offers a prolonged period during which the stock may be supported by these buyback activities.
However, investors should also be aware of the broader economic context. In a market where interest rates are rising, the opportunity cost of deploying cash for share repurchases could be higher. It's critical to analyze the company's financial health, including its cash flow generation capability and debt levels, to assess whether the share repurchase program is a prudent use of capital in the current economic environment.
The adherence to SEC Rule 10b-18 and the potential adoption of a Rule 10b5-1 trading plan are important legal considerations in the execution of the repurchase program. Rule 10b-18 provides a safe harbor for companies, allowing them to repurchase their own stock without being considered as manipulating the market, as long as certain conditions are met. The use of a 10b5-1 plan can also protect the company from accusations of insider trading, as it allows buybacks to occur according to a predetermined plan, even if the company possesses material non-public information.
Investors should recognize that while these regulations provide a framework for legal repurchases, they also impose limitations on the volume and timing of the transactions. This could affect the pace at which the repurchases are made and ultimately the program's impact on the market. The fact that shares will be cancelled and revert to authorized but unissued status is a standard procedure that reduces the share count without affecting the company's authorized capital structure.
During 2023, the Company repurchased 115,750 shares of its common stock during open trading window periods.
Repurchases may be made in open market purchases, block trades or in privately negotiated transactions. Repurchases, if any, under the program will be made at the discretion of management, and will depend upon market pricing and conditions, business, legal, accounting and other considerations. Open market purchases will be conducted in accordance with the limitation of Rule 10b-18 of the Securities and Exchange Commission (the “SEC”). Repurchases may be made pursuant to any trading plan that may be adopted in accordance with SEC Rule 10b5-1, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. Under applicable law, repurchased shares will be cancelled and revert to the status of authorized but unissued shares.
The repurchase program may be modified, suspended or terminated at any time without notice, in the Company’s discretion, based upon a number of factors, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, the need for capital in the Company’s operations and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to repurchase any shares.
About FVCBankcorp Inc.
FVCBankcorp, Inc. is the holding company for FVCbank, a wholly-owned subsidiary of FVCB which commenced operations in November 2007. FVCbank is a
For more information on the Company’s selected financial information, please visit the Investor Relations page of FVCBankcorp Inc.’s website, www.fvcbank.com.
Forward-looking Statements: This press release contains forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company 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. For details on factors that could affect these expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and in other periodic and current reports filed with the SEC. 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240321346726/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
Source: FVCBankcorp, Inc.
FAQ
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