FVCBankcorp, Inc. Announces Third Quarter 2021 Earnings; Record Quarterly and Year-to-Date Operating Earnings for 2021

Rhea-AI Summary

FVCBankcorp, Inc. (NASDAQ: FVCB) reported a net income of $4.7 million for Q3 2021, marking a 21% increase from Q3 2020. Year-to-date net income is $15.4 million, a 47% increase year-over-year. Operating earnings rose 51% year-over-year in Q3, totaling $5.8 million. The company experienced 10% loan growth and strong credit quality metrics, with nonperforming loans down to 0.18% of total assets. Deposits grew 13% year-over-year, while net interest income increased to $14.5 million. The merger with Blue Ridge Bankshares is under regulatory review, anticipated to close in mid-2022.

Positive

• Net income increased by 21% to $4.7 million for Q3 2021.
• Year-to-date net income rose 47% to $15.4 million.
• Operating earnings increased 51% in Q3 to $5.8 million.
• Loans receivable grew by 10% year-over-year to $1.41 billion.
• Deposits increased by 13% year-over-year to $1.71 billion.
• Nonperforming loans decreased to 0.18% of total assets.

Negative

• Merger-related expenses of $1.1 million impacted net income.
• Net interest margin decreased to 2.97%, down from 3.30% a year ago.
• Regulatory concerns regarding the merger with Blue Ridge Bank affect timing.

FAIRFAX, Va.--(BUSINESS WIRE)-- FVCBankcorp, Inc. (NASDAQ: FVCB) (the “Company”) today reported third quarter 2021 net income of $4.7 million, or $0.32 diluted earnings per share, compared to $3.9 million, or $0.28 diluted earnings per share, for the quarterly period ended September 30, 2020, an increase of 21%. For the nine months ended September 30, 2021, the Company reported net income of $15.4 million, or $1.06 diluted earnings per share, compared to $10.5 million or $0.74 diluted earnings per share, for the same period of 2020, a year-over-year increase of $4.9 million, or 47%. Net income for the three and nine months ended September 30, 2021 include merger-related expenses of $1.1 million which are associated with the Company’s previously announced proposed merger (the “merger”) with Blue Ridge Bankshares, Inc. (NYSEAM:BRBS) (“Blue Ridge”), and $380 thousand of accelerated recognition of debt issuance costs related to its 2016 subordinated debt issuance, which was redeemed at the Company’s option on September 30, 2021.

Operating earnings, which exclude merger-related expenses and accelerated debt issuance costs, net of tax, for the three months ended September 30, 2021 and 2020 were $5.8 million and $3.9 million, respectively, an increase of $1.9 million, or 51%. Diluted earnings per share excluding merger-related expenses and accelerated debt issuance costs, net of tax, for the three months ended September 30, 2021 and 2020 were $0.40 and $0.28, respectively. On a linked quarter basis, operating earnings increased $684 thousand, or 13%, for the three months ended September 30, 2021 as compared to the operating earnings of June 30, 2021. Operating earnings return on average assets for the three months ended September 30, 2021 and 2020 was 1.14% and 0.89%, respectively. Operating earnings return on average equity for the three months ended September 30, 2021 and 2020 was 11.46% and 8.44%, respectively. The Company believes that operating earnings is a financial measure that is more reflective of the Company’s operating performance than net income. Operating earnings 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 measures in accordance with GAAP can be found in the tables below.

For the nine months ended September 30, 2021 and 2020, operating earnings (which excludes merger-related expenses and accelerated debt issuance costs during 2021, and branch closure costs recorded during 2020) was $16.6 million and $11.0 million, respectively, an increase of $5.6 million, or 50%. Diluted earnings per share on an operating earnings basis for the nine months ended September 30, 2021 and 2020 were $1.14 and $0.78, respectively. Operating earnings annualized return on average assets for the nine months ended September 30, 2021 and 2020 was 1.13% and 0.88%, respectively. Operating earnings annualized return on average equity for the nine months ended September 30, 2021 and 2020 was 11.13% and 8.11%, respectively.

Annualized return on average assets was 0.91% and annualized return on average equity was 9.18% for the third quarter of 2021. For the comparable quarterly September 30, 2020 period, annualized return on average assets was 0.89% and annualized return on average equity was 8.44%. For the year-to-date September 30, 2021 period, annualized return on average assets was 1.05% and annualized return on average equity was 10.35% compared to annualized return on average assets of 0.84% and annualized return on average equity of 7.72% for the nine months ended September 30, 2020.

On August 31, 2021, the Company announced its wholly-owned subsidiary, FVCbank (the “Bank”) had acquired a membership interest in Atlantic Coast Mortgage, LLC (“ACM”) for $20.4 million. As a result of this investment, the Bank has obtained a 28.7% ownership interest in ACM. The Bank began providing a warehouse lending facility to ACM during the second quarter of 2021, which includes a construction-to-permanent financing line, and has developed portfolio mortgage products to diversify its held for investment loan portfolio. At September 30, 2021, the warehouse facility totaled $41.8 million, portfolio loans totaled $9.8 million, and noninterest income attributable to the Bank’s investment in ACM totaled $364 thousand (and $ in other fee income?).

On July 14, 2021, the Company announced the signing of a definitive merger agreement with Blue Ridge, pursuant to which the companies will combine in an all-stock merger of equals, subject to customary closing conditions including shareholder and regulatory approvals. In connection with the merger, the Bank will be merged with and into Blue Ridge Bank, National Association (“Blue Ridge Bank”), the wholly-owned commercial banking subsidiary of Blue Ridge, with Blue Ridge Bank as the surviving bank. The Company has learned that the Office of the Comptroller of the Currency (the “OCC”) identified certain regulatory concerns with Blue Ridge Bank that could impact the application process and timing of the merger. Blue Ridge Bank has already commenced an initiative intended to fully address the OCC’s concerns. The Company anticipates the merger will close in the second or third quarter of 2022.

Third Quarter Selected Highlights

• Continued Loan Growth. Loans receivable, net of deferred fees and excluding loans made under the U.S. Small Business Administration’s Paycheck Protection Program (“PPP”), totaled $1.41 billion at September 30, 2021, compared to $1.31 billion at December 31, 2020, an increase of $97.7 million, or 10%, annualized. During the third quarter of 2021, when excluding PPP loans and ACM’s warehouse lending facility, loans receivable, net of deferred fees, increased $52.3 million, or 16% annualized.
• Strong Credit Quality Metrics. During the third quarter of 2021, past due loans 30 days or more decreased to $652 thousand from $2.2 million at June 30, 2021, a decrease of $1.6 million, or 71%. No commercial loans were past due at September 30, 2021. Nonperforming loans and loans past due 90 days or more and still accruing decreased to 0.18% of total assets at September 30, 2021, compared to 0.31% at December 31, 2020, and decreased $1.4 million, or 28%, from June 30, 2021. Further, as of the date of this press release, the Bank sold its other real estate owned totaling $3.9 million at September 30, 2021, with no loss incurred.
• Strong Core Deposit Growth. Deposits increased 13% year over year, of which noninterest-bearing deposits increased 27%. During the quarter ended September 30, 2021, noninterest-bearing deposits increased $48.0 million, or 10%, to $548.7 million, representing 32% of total deposits at September 30, 2021.
• Increased Net Interest Income. Net interest income increased $884 thousand to $14.5 million for the third quarter of 2021, compared to $13.6 million for the same 2020 period. Net interest margin was 2.97% for the quarter ended September 30, 2021, compared to 3.30% for the year ago quarter of 2020 and 3.07% for the second quarter of 2021, as increased excess liquidity continued to impact net interest margin for the third quarter of 2021. The previously mentioned accelerated recognition of debt issuance costs decreased net interest income for the third quarter of 2021 by $380 thousand and decreased net interest margin by 8 basis points.

“We see strong economic growth in our markets as exemplified by our robust loan pipeline. During the third quarter of 2021, we originated over $220 million in new loans, more than twice what we originated during the second quarter of 2021. Achieving this growth, all while our teams are working with their counterparts at Blue Ridge to make progress on a successful merger integration, is a testament to the customer-centric team we have created over the past 14 years of FVCbank’s history,” stated David W. Pijor, Chairman and CEO.

Balance Sheet
Total assets were $2.00 billion at September 30, 2021, $1.82 billion at December 31, 2020, and $1.79 billion at September 30, 2020. Total asset growth year-to-date 2021 was $176.4 million, or 13% annualized. For the year-over-year period, total assets increased $203.7 million, or 11%. During the quarter ended September 30, 2021, total assets increased $22.7 million, or 5% annualized.

Loans receivable, net of deferred fees were $1.47 billion at each of September 30, 2021 and December 31, 2020, and $1.50 billion at September 30, 2020. Excluding PPP loans, loans receivable, net of deferred fees totaled $1.41 billion at September 30, 2021, $1.31 billion at December 31, 2020, and $1.33 billion at September 30, 2020. Loans receivable, net of deferred fees and excluding PPP loans, increased $97.7 million, or 10% annualized, for the year-to-date 2021 period, and increased $83.5 million, or 6% annualized, year-over-year. For the quarter, loans receivable, net of deferred fees and excluding PPP loans increased $36.0 million, or 10% annualized. During the second quarter of 2021, the Company began originating loans under a warehouse lending facility to ACM, which contributed $58.0 million to second quarter 2021 loan growth. At September 30, 2021, this warehouse facility decreased to $41.8 million due to the timing of repayments having occurred late in the quarter. During the third quarter of 2021, loans receivable, net of fees and excluding PPP loans and the warehouse lending facility, increased $52.3 million, or 16% annualized. Loans originated during the third quarter of 2021 totaled $200.0 million, of which $119.8 million were funded.

PPP loans, net of fees, totaled $58.2 million at September 30, 2021, a decrease from $99.5 million at June 30, 2021, and a decrease from $153.0 million at December 31, 2020. Loans forgiven during the third quarter of 2021 totaled $41.2 million, and totaled $94.7 million for year-to-date 2021. Net deferred fees associated with PPP loans totaled $1.4 million at September 30, 2021.

Investment securities were $270.2 million at September 30, 2021, $126.4 million at December 31, 2020, and $111.2 million at September 30, 2020. Investment securities increased $69.5 million during the three months ended September 30, 2021, and increased $143.8 million year-to-date. The Company has been investing in fixed income securities funded through its increase in deposits and PPP forgiveness to deploy excess liquidity while improving net interest margin.

Total deposits were $1.71 billion at September 30, 2021, $1.53 billion at December 31, 2020, and $1.51 billion at September 30, 2020. Total deposits increased $177.0 million, or 15% annualized, year-to-date, and increased $195.2 million, or 13% annualized, year-over-year. For the quarter, total deposits increased $29.3 million, or 7% annualized. Noninterest-bearing deposits were $548.7 million at September 30, 2021, an increase of $48.0 million, or 38% annualized, for the quarter ended September 30, 2021, and increased $149.6 million, or 50% annualized, year-to-date. Wholesale deposits continue to be at historic lows totaling $35.0 million, or 2% of total deposits, at September 30, 2021, a decrease of $15.0 million from December 31, 2020.

The Company’s bank subsidiary, FVCbank, remains well-capitalized at September 30, 2021 with a community bank leverage ratio of 10.67%.

Income Statement
Net income for the three months ended September 30, 2021 was $4.7 million, an increase of $808 thousand, or 21%, compared to $3.9 million for the same period of 2020. Operating income, a non-GAAP measure that excludes merger-related expenses of $1.1 million and accelerated debt issuance costs of $380 thousand for the redemption of the 2016 subordinated debt, net of tax, for the three months ended September 30, 2021 was $5.8 million, an increase of $1.9 million, or 51%, when compared to the same period of 2020. A reconciliation of GAAP to non-GAAP financial measures can be found in the tables below. For the nine months ended September 30, 2021, net income was $15.4 million, an increase of $4.9 million, or 47%, compared to $10.5 million for the same period of 2020. Both the three and nine months’ periods of 2020 were impacted by increased provision for loan losses and the nine month period of 2020 was impacted by the impairment on branch closures totaling $676 thousand.

Net interest income totaled $14.5 million, an increase of $884 thousand, or 7%, for the quarter ended September 30, 2021, compared to the year ago quarter, and increased by $293 thousand, or 2%, compared to the second quarter of 2021. Net interest income for the three months ended September 30, 2021 was impacted by the one-time recognition of accelerated debt issuance costs totaling $380 thousand as a result of the Company’s redemption of its 2016 subordinated debt on September 30, 2021. Interest expense on deposits decreased $842 thousand for the three months ended September 30, 2021 compared to the same period of 2020. The decrease in deposit costs were a result of continued targeted rate reductions and the repricing of the Company’s time deposits to lower interest rates upon renewal. Interest income includes loan mark accretion on acquired loans totaling $62 thousand, $146 thousand, and $469 thousand for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

Net interest income for the three months ended September 30, 2021 benefited from PPP loan income, which contributed $1.2 million to interest income, of which $712 thousand was related to recognition of net deferred fees on forgiven loans. This compares to interest income from PPP loans of $1.5 million for the second quarter of 2021, which included recognition of net deferred fees of $811 thousand on forgiven loans. Remaining net deferred fees related to PPP loan originations totaled $1.4 million at September 30, 2021 and are being recognized in interest income over the remaining lives of the PPP loans, or sooner upon PPP loan forgiveness or repayment.

For the nine months ended September 30, 2021 and 2020, net interest income was $42.7 million and $38.5 million, respectively, an increase of $4.2 million, or 11%, year-over-year. Net interest income was impacted by the aforementioned accelerated debt issuance costs of $380 thousand for the nine months ended September 30, 2021. Interest expense on deposits decreased $4.3 million for the nine months ended September 30, 2021 compared to the same period of 2020. Interest income includes loan mark accretion on acquired loans totaling $341 thousand and $758 thousand for the nine months ended September 30, 2021 and September 30, 2020, respectively. PPP loan income contributed $4.5 million to interest income, of which $2.4 million was related to recognition of net deferred fees on forgiven loans for the nine months ended September 30, 2021. This compares to interest income from PPP loans of $1.8 million for the nine months ended September 30, 2020.

The Company’s net interest margin decreased 33 basis points to 2.97% for the quarter ended September 30, 2021, compared to 3.30% for the quarter ended September 30, 2020. On a linked quarter basis, net interest margin decreased 10 basis points from 3.07% for the three months ended June 30, 2021. The accelerated debt issuance costs recorded during the third quarter of 2021 decreased net interest margin by 8 basis points. Excess liquidity continues to compress net interest margin, decreasing margin by 26 basis points during the third quarter of 2021. Despite the growth in both the Company’s loan and investment securities portfolios to deploy excess liquidity, the Company’s continued strong deposit growth and level of PPP loan forgiveness continues to offset this asset growth.

The average yield on total loans for the third quarter of 2021 was 4.42%, compared to 4.36% for the linked quarter ended June 30, 2021, and 4.30% for the year ago quarter. Net deferred fees recognized from PPP loan forgiveness has contributed to the average yield of the loan portfolio, as the yield on PPP loans increased to 6.08% for the third quarter of 2021, compared to 2.31% for the year ago quarter ended September 30, 2020.

Cost of interest-bearing deposits for the third quarter of 2021 was 0.61%, compared to 1.01% for the third quarter of 2020, a decrease of 40 basis points, or 40%, primarily as a result of the Company having aggressively decreased its deposit rates during 2020 to offset the repricing of its variable rate loan portfolio. The cost of deposits, which includes noninterest-bearing deposits, decreased 3 basis points to 0.42% for the third quarter of 2021 as compared to 0.45% for the second quarter of 2021, and decreased 31 basis points from 0.73% for the year ago quarter of 2020.

Noninterest income totaled $1.1 million and $770 thousand for the quarters ended September 30, 2021 and 2020, respectively. The increase in noninterest income is primarily attributable to the Bank’s income associated with its investment in ACM, recording $364 thousand during the third quarter of 2021. Fee income from loans was $26 thousand, a decrease of $9 thousand, for the quarter ended September 30, 2021, compared to the third quarter of 2020. Service charges on deposit accounts and other fee income totaled $422 thousand for the third quarter of 2021, an increase of $11 thousand, from the year ago quarter. Income from bank-owned life insurance decreased $31 thousand to $249 thousand for the three months ended September 30, 2021 compared to $280 thousand for the same period of 2020. Noninterest income for the year-to-date period ended September 30, 2021 was $2.5 million, compared to $2.2 million for the 2020 year-to-date period, an increase of $386 thousand, or 18%, which was primarily driven by the aforementioned income associated with the Bank’s membership interest in ACM.

Noninterest expense totaled $9.4 million for the quarter ended September 30, 2021, compared to $7.7 million for the same three-month period of 2020, an increase of $1.7 million, or 22%. On a linked quarter basis, noninterest expense was $8.2 million for the quarter ended June 30, 2021, an increase of $1.2 million, or 15%. The increase in noninterest expense compared to the year ago and linked quarters was primarily related to merger-related expenses of $1.1 million recorded during the third quarter of 2021. In addition, salaries and benefits expense increased $373 thousand and $259 thousand compared to the year ago and linked quarters, respectively, which are primarily related to additions to business development staff earlier in the year and associated accruals for incentive compensation during the third quarter of 2021. Legal expenses related to loan workouts (which is included in other operating expense on the income statement) increased $138 thousand during the third quarter of 2021 when compared to the year ago quarter.

For the nine months ended September 30, 2021 and 2020, noninterest expense, was $25.5 million and $23.0 million, respectively, an increase of $2.6 million, or 11%, primarily as a result of the aforementioned merger-related expenses and additions to business development staffing and associated increases in incentive accruals.

The efficiency ratio, excluding merger-related expenses and the accelerated subordinated debt issuance costs, for the quarter ended September 30, 2021 was 52.3%, a decrease from 53.9% for the quarter ended September 30, 2020. The efficiency ratios for the nine months ended September 30, 2021 and 2020, excluding merger-related costs and accelerated subordinated debt issuance costs recorded during 2021, and branch closure costs recorded during 2020 were 53.5% and 54.8%, respectively. A reconciliation of GAAP to non-GAAP financial measures can be found in the tables below.

The Company recorded a provision for income taxes of $1.4 million for the three months ended September 30, 2021, compared to $1.0 million for the same period of 2020. The effective tax rates for the three months ended September 30, 2021 and 2020 were 23.4% and 21.2%, respectively. The effective tax rate for the third quarter of 2021 is greater than the Company’s combined federal and state statutory rate of 22.5% primarily because of nondeductible merger-related expenses recognized during the quarter. For the nine months ended September 30, 2021 and 2020, provision for income taxes was $4.3 million and $2.7 million, respectively.

Asset Quality
The Company recorded no provision for loan losses for the three months and nine months ended September 30, 2021, compared to $1.7 million for the year ago quarter and $4.5 million for the nine months ended September 30, 2020. The Company is not required to implement the provisions of the current expected credit losses accounting standard until January 1, 2023, and is continuing to account for the allowance for loans losses under the incurred loss model. The decrease in the provision for loan losses for the three months ended September 30, 2021 is primarily related to the improvement in certain credit quality metrics during the third quarter of 2021; specifically, a reduction in the Company’s past due loans and specific reserves for certain watchlist loans which improved in credit quality during the quarter. In addition, the Company completed reviews of its COVID-impacted portfolio segments and reduced certain qualitative factors as a result of the improved performance of these portfolio segments.

The allowance for loan losses to total loans, excluding PPP loans, was 1.02% at September 30, 2021, compared to 1.14% at December 31, 2020. 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 1.08% at September 30, 2021 compared to 1.27% at December 31, 2020. The decrease in this effective reserve coverage was a result of the payoff of one acquired loan with a credit mark of over $500 thousand during the third quarter of 2021. Net recoveries of $4 thousand were recorded during the third quarter of 2021.

Nonperforming loans and loans 90 days or more past due at September 30, 2021 totaled $3.6 million, or 0.18% of total assets. This compares to $5.6 million in nonperforming loans and loans 90 days or more past due at December 31, 2020, or 0.31% of total assets. All of the Company’s nonperforming loans are secured and have specific reserves totaling $993 thousand, representing the expected losses associated with those loans. The Company has one troubled debt restructuring at September 30, 2021 totaling $94 thousand, which is a consumer residential loan. Nonperforming assets (including the Bank’s other real estate owned property sold in October) to total assets was 0.38% at September 30, 2021 compared to 0.52% at December 31, 2020.

About FVCBankcorp, Inc.
FVCBankcorp, Inc. is the holding company for FVCbank, a wholly-owned subsidiary that commenced operations in November 2007. FVCbank is a $2.00 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 ability to close the merger on the expected terms and schedule; difficulties, delays and unforeseen costs in completing the merger and in integrating the Company’s and Blue Ridge’s businesses; the ability to realize cost savings and other benefits of the merger; business disruption during the pendency of or following the merger, 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, 2020 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)
		At or For the Three Months Ended,								At or For the Nine Months Ended,								At or For the Three Months Ended
		9/30/2021				9/30/2020				9/30/2021				9/30/2020				6/30/2021				12/31/2020
Selected Balances
Total assets		$	1,997,902			$	1,794,172											$	1,975,251			$	1,821,481
Total investment securities			276,579				117,746												207,044				132,978
Total loans, net of deferred fees			1,469,086				1,497,634												1,474,278				1,466,083
Allowance for loan losses			(14,363	)			(14,556	)											(14,359	)			(14,958	)
Total deposits			1,709,498				1,514,348												1,680,209				1,532,493
Subordinated debt			19,551				24,547												44,146				44,085
Other borrowings			25,000				40,000												25,000				25,000
Total stockholders’ equity			204,194				184,490												200,687				189,500
Summary Results of Operations
Interest income		$	17,386			$	16,761			$	50,940			$	49,974			$	16,776			$	17,129
Interest expense			2,907				3,166				8,232				11,473				2,590				3,010
Net interest income			14,479				13,595				42,708				38,501				14,186				14,119
Provision for loan losses			- -				1,700				-				4,516				-				500
Net interest income after provision for loan losses			14,479				11,895				42,708				33,985				14,186				13,619
Noninterest income - loan fees, service charges and other			448				446				1,427				1,616				435				476
Noninterest income - bank owned life insurance			249				280				746				845				250				264
Noninterest income - minority membership interest			364				- -				364			- -					- -				- -
Noninterest income - gain on sales of securities available-for-sale			- -				44				- -				141				- -				- -
Noninterest income - loss on loans held for sale			- -				- -				- -				(451	)			- -				- -
Noninterest expense			9,426				7,746				25,535				22,953				8,228				7,885
Income before taxes			6,114				4,919				19,710				13,183				6,643				6,474
Income tax expense			1,432				1,045				4,294				2,696				1,478				1,460
Net income			4,682				3,874				15,416				10,487				5,165				5,014
Per Share Data
Net income, basic		$	0.34			$	0.29			$	1.13			$	0.77			$	0.38			$	0.37
Net income, diluted		$	0.32			$	0.28			$	1.06			$	0.74			$	0.36			$	0.36
Book value		$	14.92			$	13.69											$	14.70			$	14.03
Tangible book value (1)		$	14.33			$	13.06											$	14.10			$	13.41
Shares outstanding			13,686,752				13,478,115												13,647,600				13,510,760
Selected Ratios
Net interest margin (2)			2.97		%		3.30		%		3.08		%		3.27		%		3.07		%		3.28		%
Return on average assets (2)			0.91		%		0.89		%		1.05		%		0.84		%		1.06		%		1.11		%
Return on average equity (2)			9.18		%		8.44		%		10.35		%		7.72		%		10.41		%		10.68		%
Efficiency (3)			60.66		%		53.92		%		56.44		%		56.46		%		55.33		%		53.07		%
Loans, net of deferred fees to total deposits			85.94		%		98.90		%										87.74		%		95.67		%
Noninterest-bearing deposits to total deposits			32.09		%		28.48		%										29.80		%		26.04		%
Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP) (4)
Net income (from above)		$	4,682			$	3,874			$	15,416			$	10,487			$	5,165			$	5,014
Add: Merger and acquisition expense			1,107				- -				1,107				- -				- -				- -
Add: Impairment on branch closures			- -				- -				- -				676				- -				- -
Add: Accelerated debt issuance costs			380				- -				380				- -				- -				- -
Less: provision for income taxes associated with non-GAAP adjustments			(320	)			- -				(320	)			(142	)			- -				- -
Net income, as adjusted		$	5,849			$	3,874			$	16,583			$	11,021			$	5,165			$	5,014
Net income, diluted, on an operating basis		$	0.40			$	0.28			$	1.14			$	0.78			$	0.36			$	0.36
Return on average assets (non-GAAP operating earnings)			1.14		%		0.89		%		1.13		%		0.88		%		1.06		%		1.11		%
Return on average equity (non-GAAP operating earnings)			11.46		%		8.44		%		11.13		%		8.11		%		10.41		%		10.68		%
Efficiency ratio (non-GAAP operating earnings) (3)			53.14		%		53.92		%		53.86		%		54.80		%		55.33		%		53.07		%
Capital Ratios - Bank
Tangible common equity (to tangible assets)			9.85		%		9.86		%										9.79		%		9.99		%
Tier 1 leverage (to average assets)			10.67		%		11.02		%										11.48		%		11.65		%
Asset Quality
Nonperforming loans and loans 90+ past due		$	3,638			$	8,005											$	4,069			$	5,621
Performing troubled debt restructurings (TDRs)			94				98												95				97
Other real estate owned			3,866				3,866												3,866				3,866
Nonperforming loans and loans 90+ past due to total assets (excl. TDRs)			0.18		%		0.45		%										0.21		%		0.31		%
Nonperforming assets to total assets			0.38		%		0.66		%										0.40		%		0.52		%
Nonperforming assets (including TDRs) to total assets			0.38		%		0.67		%										0.41		%		0.53		%
Allowance for loan losses to loans			0.98		%		0.97		%										0.97		%		1.02		%
Allowance for loan losses to nonperforming loans			394.80		%		181.84		%										352.89		%		266.11		%
Net (recoveries) charge-offs		$	(4	)		$	38			$	594			$	191			$	62			$	98
Net charge-offs to average loans (2)			(0.00	)	%		0.01		%		0.05		%		0.02		%		0.02		%		0.03		%
Selected Average Balances
Total assets		$	2,048,531			$	1,749,005			$	1,954,997			$	1,674,132			$	1,947,983			$	1,812,298
Total earning assets			1,935,083				1,642,025				1,852,410				1,572,038				1,852,126				1,710,345
Total loans, net of deferred fees			1,466,155				1,484,853				1,455,705				1,393,301				1,444,543				1,485,121
Total deposits			1,748,994				1,481,899				1,659,835				1,407,747				1,654,016				1,527,313
Other Data
Noninterest-bearing deposits		$	548,662			$	431,322											$	500,655			$	399,062
Interest-bearing checking, savings and money market			910,198				686,592												901,124				820,378
Time deposits			215,638				301,431												243,430				263,053
Wholesale deposits			35,000				95,003												35,000				50,000
(1) Non-GAAP Reconciliation		At September 30,
(Dollars in thousands, except per share data)			2021				2020
Total stockholders’ equity		$	204,194			$	184,490
Less: goodwill and intangibles, net			(8,124	)			(8,440	)
Tangible Common Equity		$	196,070			$	176,050
Book value per common share		$	14.92			$	13.69
Less: intangible book value per common share			(0.59	)			(0.63	)
Tangible book value per common share		$	14.33			$	13.06

(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.

FVCBankcorp, Inc.
Summary Consolidated Statements of Condition
(Dollars in thousands)
(Unaudited)
								% Change								% Change
								Current								From
		9/30/2021			6/30/2021			Quarter		12/31/2020			9/30/2020			Year Ago
Cash and due from banks		$	30,382		$	24,856		22.2	%	$	20,835		$	22,121		37.3	%
Interest-bearing deposits at
other financial institutions			122,487			190,553		-35.7	%		120,228			73,774		66.0	%
Investment securities			270,207			200,672		34.7	%		126,415			111,183		143.0	%
Restricted stock, at cost			6,372			6,372		0.0	%		6,563			6,563		-2.9	%
Loans, net of fees:
Commercial real estate			868,324			829,683		4.7	%		788,218			805,946		7.7	%
Commercial and industrial			161,961			140,611		15.2	%		119,200			111,736		44.9	%
Paycheck protection program			58,248			99,455		-41.4	%		152,978			170,338		-65.8	%
Commercial construction			205,750			207,790		-1.0	%		221,523			214,740		-4.2	%
Consumer real estate			166,721			184,560		-9.7	%		168,531			177,730		-6.2	%
Consumer nonresidential			8,082			12,179		-33.6	%		15,633			17,144		-52.9	%
Total loans, net of fees			1,469,086			1,474,278		-0.4	%		1,466,083			1,497,634		-1.9	%
Allowance for loan losses			(14,363)			(14,359)		0.0	%		(14,958)			(14,556)		-1.3	%
Loans, net			1,454,723			1,459,919		-0.4	%		1,451,125			1,483,078		-1.9	%
Premises and equipment, net			1,655			1,527		8.4	%		1,654			1,747		-5.3	%
Goodwill and intangibles, net			8,124			8,199		-0.9	%		8,357			8,440		-3.7	%
Bank owned life insurance (BOLI)			38,924			38,675		0.6	%		38,178			37,913		2.7	%
Other real estate owned			3,866			3,866		0.0	%		3,866			3,866		0.0	%
Other assets			61,162			40,612		50.6	%		44,260			45,487		34.5	%
Total Assets		$	1,997,902		$	1,975,251		1.1	%	$	1,821,481		$	1,794,172		11.4	%
Deposits:
Noninterest-bearing		$	548,662		$	500,655		9.6	%	$	399,062		$	431,322		27.2	%
Interest-bearing checking			588,650			610,823		-3.6	%		537,834			388,531		51.5	%
Savings and money market			321,548			290,301		10.8	%		282,544			298,061		7.9	%
Time deposits			215,638			243,430		-11.4	%		263,053			301,431		-28.5	%
Wholesale deposits			35,000			35,000		0.0	%		50,000			95,003		-63.2	%
Total deposits			1,709,498			1,680,209		1.7	%		1,532,493			1,514,348		12.9	%
Other borrowed funds			25,000			25,000		0.0	%		25,000			40,000		-37.5	%
Subordinated notes, net of
issuance costs			19,551			44,146		-55.7	%		44,085			24,547		-20.4	%
Other liabilities			39,659			25,209		57.3	%		30,403			30,787		28.8	%
Stockholders’ equity			204,194			200,687		1.7	%		189,500			184,490		10.7	%
Total Liabilities & Stockholders'
Equity		$	1,997,902		$	1,975,251		1.1	%	$	1,821,481		$	1,794,172		11.4	%

FVCBankcorp, Inc.
Summary Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)
		For the Three Months Ended
								% Change						% Change
								Current						From
		9/30/2021			6/30/2021			Quarter			9/30/2020			Year Ago
Net interest income		$	14,479		$	14,186		2.1	%		$	13,595		6.5	%
Provision for loan losses			- -			- -		0.0	%			1,700		-100.0	%
Net interest income after provision for loan losses			14,479			14,186		2.1	%			11,895		21.7	%
Noninterest income:
Fees on loans			26			27		-3.7	%			35		-25.7	%
Service charges on deposit accounts			278			247		12.6	%			275		1.1	%
Gain on sale of securities available-for-sale			- -			- -		0.0	%			44		-100.0	%
BOLI income			249			250		-0.4	%			280		-11.1	%
Income from minority membership interest			364			- -		100.0	%			- -		100.0	%
Other fee income			144			161		-10.6	%			136		5.9	%
Total noninterest income			1,061			685		54.9	%			770		37.8	%
Noninterest expense:
Salaries and employee benefits			4,717			4,458		5.8	%			4,344		8.6	%
Occupancy and equipment expense			810			820		-1.2	%			811		-0.1	%
Data processing and network administration			520			551		-5.6	%			538		-3.3	%
State franchise taxes			496			487		1.8	%			466		6.4	%
Professional fees			356			503		-29.2	%			303		17.5	%
Merger and acquisition expense			1,107			- -		100.0	%			- -		100.0	%
Other operating expense			1,420			1,409		0.8	%			1,284		10.6	%
Total noninterest expense			9,426			8,228		14.6	%			7,746		21.7	%
Net income before income taxes			6,114			6,643		-8.0	%			4,919		24.3	%
Income tax expense			1,432			1,478		-3.1	%			1,045		37.0	%
Net Income		$	4,682		$	5,165		-9.4	%		$	3,874		20.9	%
Earnings per share - basic		$	0.34		$	0.38		-9.6	%		$	0.29		19.0	%
Earnings per share - diluted		$	0.32		$	0.36		-9.9	%		$	0.28		14.9	%
Weighted-average common shares outstanding - basic			13,682,727			13,647,193						13,476,639
Weighted-average common shares outstanding - diluted			14,611,735			14,517,154						13,891,474
Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP):
GAAP net income reported above		$	4,682		$	5,165					$	3,874
Add: Merger and acquisition expense			1,107			- -						- -
Add: Accelerated debt issuance costs			380			- -						- -
Subtract: provision for income taxes associated with non-GAAP adjustments			(320)			- -						-
Net Income, Operating earnings (non-GAAP)		$	5,849		$	5,165					$	3,874
Earnings per share - basic (non-GAAP operating earnings)		$	0.43		$	0.38					$	0.29
Earnings per share - diluted (non-GAAP operating earnings)		$	0.40		$	0.36					$	0.28
Return on average assets (non-GAAP operating earnings)			1.14%			1.06%						0.89%
Return on average equity (non-GAAP operating earnings)			11.46%			10.41%						8.44%
Efficiency ratio (non-GAAP operating earnings)			53.14%			55.33%						53.92%
Reconciliation of Net Income (GAAP) to Pre-Tax Pre-Provision Income (Non-GAAP):
GAAP net income reported above		$	4,682		$	5,165					$	3,874
Add: Provision for loan losses			- -			- -						1,700
Add: Merger and acquisition expense			1,107			- -						- -
Add: Accelerated debt issuance costs			380			- -						- -
Add: Income tax expense			1,432			1,478						1,045
Pre-tax pre-provision income		$	7,601		$	6,643					$	6,619
Earnings per share - basic (non-GAAP pre-tax pre-provision)		$	0.56		$	0.49					$	0.49
Earnings per share - diluted (non-GAAP pre-tax pre-provision)		$	0.52		$	0.46					$	0.48
Return on average assets (non-GAAP operating earnings)			1.48%			1.36%						1.51%
Return on average equity (non-GAAP operating earnings)			14.90%			13.39%						14.43%

FVCBankcorp, Inc.
Summary Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)
		For the Nine Months Ended
								% Change
								From
		9/30/2021			9/30/2020			Year Ago
Net interest income		$	42,708		$	38,501		10.9	%
Provision for loan losses			- -			4,516		-100.0	%
Net interest income after provision for loan losses			42,708			33,985		25.7	%
Noninterest income:
Fees on loans			74			477		-84.5	%
Service charges on deposit accounts			768			738		4.1	%
Gain on sale of securities available-for-sale			- -			141		-100.0	%
Loss on loans held for sale			- -			(451)		-100.0	%
BOLI income			746			845		-11.7	%
Income from minority membership interest			364			- -		100.0	%
Other fee income			585			401		45.9	%
Total noninterest income			2,537			2,151		17.9	%
Noninterest expense:
Salaries and employee benefits			13,723			12,354		11.1	%
Occupancy and equipment expense			2,437			2,525		-3.5	%
Data processing and network administration			1,633			1,466		11.4	%
State franchise taxes			1,487			1,398		6.4	%
Professional fees			1,213			734		65.3	%
Merger and acquisition expense			1,107			- -		100.0	%
Impairment on branch closures			- -			676		-100.0	%
Other operating expense			3,935			3,800		3.6	%
Total noninterest expense			25,535			22,953		11.2	%
Net income before income taxes			19,710			13,183		49.5	%
Income tax expense			4,294			2,696		59.3	%
Net Income		$	15,416		$	10,487		47.0	%
Earnings per share - basic		$	1.13		$	0.77		46.2	%
Earnings per share - diluted		$	1.06		$	0.74		42.8	%
Weighted-average common shares outstanding - basic			13,636,066			13,561,153
Weighted-average common shares outstanding - diluted			14,555,113			14,137,053
Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP):
GAAP net income reported above		$	15,416		$	10,487
Add: Merger and acquisition expense			1,107			- -
Add: Impairment loss			- -			676
Add: Accelerated debt issuance costs			380			- -
Subtract: provision for income taxes associated with non-GAAP adjustments			(320)			(142)
Net Income, Operating earnings (non-GAAP)		$	16,583		$	11,021
Earnings per share - basic (non-GAAP operating earnings)		$	1.22		$	0.81
Earnings per share - diluted (non-GAAP operating earnings)		$	1.14		$	0.78
Return on average assets (non-GAAP operating earnings)			1.13%			0.88%
Return on average equity (non-GAAP operating earnings)			11.13%			8.11%
Efficiency ratio (non-GAAP operating earnings)			53.86%			54.80%
Reconciliation of Net Income (GAAP) to Pre-Tax Pre-Provision Income (Non-GAAP):
GAAP net income reported above		$	15,416		$	10,487
Add: Merger and acquisition expense			1,107			- -
Add: Provision for loan losses			- -			4,516
Add: Impairment losses			- -			676
Add: Accelerated debt issuance costs			380			- -
Add: Income tax expense			4,294			2,696
Pre-tax pre-provision income		$	21,197		$	18,375
Earnings per share - basic (non-GAAP pre-tax pre-provision)		$	1.55		$	1.35
Earnings per share - diluted (non-GAAP pre-tax pre-provision)		$	1.46		$	1.30
Return on average assets (non-GAAP operating earnings)			1.45%			1.46%
Return on average equity (non-GAAP operating earnings)			14.23%			13.53%

FVCBankcorp, Inc.
Average Statements of Condition and Yields on Earning Assets and Interest-Bearing Liabilities
(Dollars in thousands)
(Unaudited)
		For the Three Months Ended
		9/30/2021									6/30/2021								9/30/2020
		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		$	858,179		$	8,902		4.15	%		$	796,220	$	8,616		4.33	%		$	784,990	$	9,005		4.59	%
Commercial and industrial			141,665			1,617		4.56	%			120,021		1,421		4.74	%			107,716		1,356		5.04	%
Paycheck protection program			79,225			1,205		6.08	%			138,550		1,474		4.26	%			170,071		981		2.31	%
Commercial construction			211,656			2,641		4.99	%			212,004		2,382		4.49	%			225,711		2,421		4.29	%
Consumer real estate			163,901			1,642		4.01	%			164,938		1,633		3.96	%			178,531		1,850		4.15	%
Consumer nonresidential			11,529			210		7.29	%			12,810		225		7.04	%			17,834		345		7.72	%
Total loans			1,466,155			16,217		4.42	%			1,444,543		15,751		4.36	%			1,484,853		15,958		4.30	%
Investment securities (2)(3)			225,519			1,082		1.92	%			178,875		956		2.14	%			119,846		793		2.65	%
Interest-bearing deposits at
other financial institutions			243,409			89		0.15	%			228,708		71		0.12	%			37,326		16		0.17	%
Total interest-earning assets			1,935,083			17,388		3.59	%			1,852,126		16,778		3.62	%			1,642,025		16,767		4.08	%
Non-interest earning assets:
Cash and due from banks			24,325									15,954								18,769
Premises and equipment, net			1,544									1,525								1,816
Accrued interest and other
assets			101,963									92,805								99,512
Allowance for loan losses			(14,384)									(14,427)								(13,117)
Total Assets		$	2,048,531								$	1,947,983							$	1,749,005
Interest-bearing liabilities:
Interest checking		$	616,422		$	845		0.54	%		$	565,074	$	742		0.53	%		$	379,218	$	659		0.69	%
Savings and money market			308,092			344		0.44	%			297,003		351		0.47	%			284,665		386		0.54	%
Time deposits			233,539			618		1.05	%			238,113		722		1.22	%			311,615		1,458		1.86	%
Wholesale deposits			35,000			41		0.46	%			35,000		39		0.45	%			83,044		187		0.90	%
Total interest-bearing deposits			1,193,053			1,848		0.61	%			1,135,190		1,854		0.66	%			1,058,542		2,690		1.01	%
Other borrowed funds			25,000			89		1.41	%			25,000		85		1.36	%			27,400		81		1.17	%
Subordinated notes, net of
issuance costs			43,889			970		8.77	%			44,127		651		5.92	%			24,534		395		6.40	%
Total interest-bearing liabilities			1,261,942			2,907		0.92	%			1,204,317		2,590		0.86	%			1,110,476		3,166		1.13	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits			555,941									518,826								423,357
Other liabilities			26,581									26,374								31,673
Stockholders’ equity			204,067									198,466								183,499
Total Liabilities and Stockholders' Equity		$	2,048,531								$	1,947,983							$	1,749,005
Net Interest Margin						14,481		2.97	%					14,188		3.07	%					13,601		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 21%. The taxable equivalent adjustment to interest income for the three months ended September 30, 2021 and 2020 is $2 and $6, respectively.

For the three months ended June 30, 2021, the taxable equivalent adjustment to interest income is $2.

(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
		9/30/2021							9/30/2020
		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		$	812,623	$	25,913		4.25	%	$	770,820	$	26,387		4.56	%
Commercial and industrial			124,460		4,382		4.69	%		107,045		4,214		5.25	%
Paycheck protection program			126,310		4,511		4.76	%		97,570		1,782		2.44	%
Commercial construction			214,798		7,449		4.62	%		222,844		7,810		4.67	%
Consumer real estate			164,678		4,950		4.01	%		180,103		5,995		4.44	%
Consumer nonresidential			12,836		694		7.21	%		14,919		833		7.44	%
Total loans			1,455,705		47,899		4.39	%		1,393,301		47,021		4.50	%
Investment securities (2)(3)			178,148		2,846		2.13	%		130,682		2,616		2.67	%
Loans held for sale, at fair value			- -		- -		- -	%		4,583		236		6.86	%
Interest-bearing deposits at
other financial institutions			218,557		205		0.13	%		43,472		119		0.36	%
Total interest-earning assets			1,852,410		50,950		3.67	%		1,572,038		49,992		4.24	%
Non-interest earning assets:
Cash and due from banks			18,575							17,287
Premises and equipment, net			1,559							1,935
Accrued interest and other
assets			97,020							94,534
Allowance for loan losses			(14,567)							(11,662)
Total Assets		$	1,954,997						$	1,674,132
Interest-bearing liabilities:
Interest checking		$	568,742	$	2,304		0.54	%	$	331,600	$	2,137		0.86	%
Savings and money market			294,730		1,019		0.46	%		258,678		1,456		0.75	%
Time deposits			239,332		2,257		1.26	%		329,003		5,262		2.14	%
Wholesale deposits			38,553		123		0.43	%		111,948		1,172		1.40	%
Total interest-bearing deposits			1,141,357		5,703		0.67	%		1,031,229		10,027		1.30	%
Other borrowed funds			25,000		257		1.37	%		30,502		261		1.14	%
Subordinated notes, net of
issuance costs			44,037		2,272		6.90	%		24,514		1,185		6.46	%
Total interest-bearing liabilities			1,210,394		8,232		0.91	%		1,086,245		11,473		1.41	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits			518,478							376,518
Other liabilities			27,516							30,249
Stockholders’ equity			198,609							181,120
Total Liabilities and Stockholders' Equity		$	1,954,997						$	1,674,132
Net Interest Margin					42,718		3.08	%				38,519		3.27	%

(1) Non-accrual loans are included in average balances.

(2) The average yields for investment securities are reported on a fully taxable-equivalent basis at a rate of 21%. The taxable equivalent adjustment to interest income was $10 and $17 for the nine months ended September 30, 2021 and 2020, respectively.

(3) The average balances for investment securities includes restricted stock.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211104006319/en/

David W. Pijor, Esq., Chairman and Chief Executive Officer

Phone: (703) 436-3802

Email: dpijor@fvcbank.com

Patricia A. Ferrick, President

Phone: (703) 436-3822

Email: pferrick@fvcbank.com

Source: FVCBankcorp, Inc.

FAQ

What was FVCB's net income for Q3 2021?

FVCB reported a net income of $4.7 million for Q3 2021.

How much did FVCB's year-to-date net income increase?

FVCB's year-to-date net income increased by 47% to $15.4 million.

What was the loan growth percentage for FVCB?

FVCB experienced a loan growth of 10% year-over-year.

What are the details of FVCB's merger with Blue Ridge Bankshares?

FVCB's merger with Blue Ridge Bankshares, announced in July 2021, is expected to close in mid-2022, pending regulatory approval.

What was the impact of merger-related expenses on FVCB's income?

Merger-related expenses of $1.1 million were deducted from FVCB's net income.