For Immediate Release — July 19, 2018
Fairfax, VA-FVCBankcorp Inc. (OTCQX:FVCB) (the “Company”) today reported second quarter 2018 earnings increased 45% from a year ago to $3.1 million, or $0.26 diluted earnings per share, compared to $2.1 million, or $0.19 diluted earnings per share, for the quarterly period ended June 30, 2017. For the six months ended June 30, 2018, earnings were $6.1 million, or $0.50 per diluted share, compared to $4.5 million, or $0.40 per diluted share, for the comparable six month period of 2017. Quarterly results include expenses of $397,000 which are associated with the Company’s upcoming acquisition of Colombo Bank. Excluding these merger-related expenses, operating income for the three and six months ended June 30, 2018 was $3.4 million and $6.4 million, respectively. Diluted earnings per share excluding merger expenses for the three and six months ended June 30, 2018 was $0.28 and $0.53, respectively. Results for June 30, 2018 reflect the new lower federal statutory tax rate.
Return on average assets was 1.13% and return on average equity was 12.00% for the second quarter of 2018. For the comparable June 30, 2017 period, return on average assets was 0.91% and return on average equity was 10.05%. Excluding merger-related expenses, return on average assets and return on average equity for the three months ended June 30, 2018 was 1.24% and 13.23%, respectively. For the six months ended June 30, 2018, return on average assets and return on average equity each excluding merger-related expenses was 1.19% and 12.64%, respectively.
Selected Highlights
- Total loans, net of deferred fees, increased $157 million, or 20%, from June 30, 2017 to June 30, 2018. Asset quality remains strong with nonperforming loans and loans past due 90 days or more as a percentage of total assets being 0.08% at June 30, 2018, compared to 0.30% at June 30, 2017
- Total deposits increased $152 million, or 18%, from June 30, 2017 to June 30, 2018. This growth was primarily driven by an increase in noninterest-bearing deposits of $112 million year-over-year
- Tangible book value per share at June 30, 2018 was $9.38, a 13% increase from $8.31 at June 30, 2017
- Net income, before taxes and merger-related expenses, increased 24% year-over-year
- Efficiency ratio for the three months ended June 30, 2018 was 59.9%, and excluding merger-related expenses, was 55.8%
“The second quarter of 2018 reflects the best overall performance of the Company since we opened our doors almost 11 years ago. Our strong performance is attributable to the team we have assembled and their continuous efforts to bring in new customers as well as providing continued excellent service to our longstanding customers,” stated David W. Pijor, Chairman and CEO.
Balance Sheet
Total assets increased to $1.14 billion compared to $970.9 million as of June 30, 2018 and 2017, respectively, an increase of $169 million, or 17%. Loans receivable, net of deferred fees, totaled $955.6 million as of June 30, 2018, compared to $798.5 million as of June 30, 2017, a year-over-year increase of $157 million, or 20%. For the second quarter of 2018, loans receivable, net of deferred fees, increased $34 million, or 15% on an annualized basis.
Total deposits increased to $1.01 billion as of June 30, 2018 compared to $856.4 million as of June 30, 2017, an increase of $152 million, or 18%. Noninterest-bearing deposits increased 65% to $284.5 million at June 30, 2018, or 28% of total deposits, compared to $172.6 million at June 30, 2017. Core deposits, which include total deposits less wholesale deposits, increased $169 million or 22% year-over-year. Wholesale deposits totaled $77.3 million, or 8% of total deposits at June 30, 2018, a decrease of $38 million from December 31, 2017 and a decrease of $27 million from March 31, 2018. The Company’s increase in deposits is a result of several promotions in addition to continued growth in core deposits.
Income Statement
Net interest income totaled $9.4 million, an increase of $1.5 million, or 19%, for the quarter ended June 30, 2018, compared to the year ago quarter. The Company’s net interest margin was 3.50% and 3.47% for the quarters ended June 30, 2018 and 2017, respectively. On a linked quarter basis, the margin increased 11 basis points from 3.39% for the three months ended March 31, 2018, a result of increases in yields on earning assets and growth in noninterest-bearing deposits offset by modest increases in the cost of deposits.
Noninterest income totaled $363 thousand and $358 thousand for the quarters ended June 30, 2018 and 2017, respectively. Fee income from fees on loans, service charges on deposits, and other fee income was $255 thousand, an increase of 14% for the quarter ended June 30, 2018 compared to 2017. This increase in fee income is primarily due to initiatives the Company began during 2017 to enhance fee income through ancillary services designed to assist its clients’ financial needs.
Noninterest expense totaled $5.8 million for the quarter ended June 30, 2018, compared to $4.8 million for the same three-month period of 2017. On a linked quarter basis, noninterest expense excluding merger-related expenses increased 3% from the three months ended March 31, 2018. The increase in noninterest expense is primarily attributable to the Company strategically hiring business development officers and back office staff during 2017 to support the Company’s growth plans. As a result, salary and compensation related expenses increased $317 thousand, or 11%, for the quarter ended June 30, 2018, compared to the same three-month period of 2017. In addition, the Company recorded merger-related expenses of $397 thousand for the three months ended June 30, 2018 which contributed to the increase in noninterest expense for the quarter. Professional fees increased slightly year-over-year as a result of implementation costs related to regulatory compliance over the Company’s internal control environment. Increases in data processing and network administration, franchise taxes and other operating expenses for the quarter ended June 30, 2018 compared to the same three-month period of 2017 is primarily growth related. The efficiency ratio for the quarter ended June 30, 2018 was 59.9%, an increase from 58.9% from the year ago quarter, or 55.8% excluding merger-related expenses.
Asset Quality
Asset quality remains strong as nonperforming loans and loans ninety days or more past due totaled $938 thousand, or 0.08% of total assets. Troubled debt restructurings (“TDR”) decreased to $1.6 million at June 30, 2018, compared to $4.7 million at June 30, 2017. Nonperforming assets (including TDRs and other real estate owned) to total assets was 0.56% and 0.78% at June 30, 2018 and 2017, respectively. The allowance for loan losses to total loans was 0.87% at June 30, 2018, reflecting the Company’s continued low level of problem loans and stable economic environment.
About FVCBANKCORP INC.
Celebrating 10 years of sound financial performance and continued growth, FVCbank commenced operations in November 2007 and is the wholly-owned subsidiary of FVCBankcorp Inc. FVCbank is a $1.14 billion Virginia-chartered community bank serving the banking needs of commercial businesses, nonprofit organizations, professional service entities, their owners and employees located in the greater Washington, D.C., metropolitan and Northern Virginia area. Locally owned and managed, it is based in Fairfax, Virginia, and has six full-service offices in Arlington, Ashburn, Fairfax, Manassas, Reston and Springfield, Virginia. Visit www.fvcbank.com for more information.
For more information on the Company’s 2018 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, to statements about the Company’s plans, objectives, estimates, intentions and expectations as to future trends, plans, events or results of the Company’s operations and policies and regarding general economic conditions. These forward-looking statements are based on current beliefs that involve significant risks, uncertainties, and assumptions. 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.
