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FVCBankcorp, Inc. Announces Record Earnings; Successful Integration of Colombo Bank

FAIRFAX, Va.--(BUSINESS WIRE)--

FVCBankcorp, Inc. ( FVCB ) (the “Company”) today reported fourth quarter 2018 net income of $1.4 million, or $0.10 diluted earnings per share, compared to $1.0 million, or $0.08 diluted earnings per share, for the quarterly period ended December 31, 2017. For the year ended December 31, 2018, net income was $10.9 million, or $0.85 per diluted share, compared to $7.7 million, or $0.67 per diluted share, for 2017.

On October 12, 2018, the Company completed its acquisition of Colombo Bank (“Colombo”), and incurred merger-related expenses of $2.7 million and $3.3 million, respectively, for the three and twelve months ended December 31, 2018, respectively. In addition, the Company sold $10.9 million in securities available-for-sale at a loss of $462 thousand and a book yield of approximately 1.50%, and reinvested those proceeds into higher yielding securities at approximately 3.20%. Excluding merger-related expenses and loss on sales of securities available-for-sale, net of tax, earnings for the three and twelve months ended December 31, 2018 were $3.9 million and $13.9 million, respectively. Excluding the effect of $2.0 million in write-downs of deferred tax assets due to enactment of the Tax Cut and Jobs Act (“TCJA”) and $704 thousand in gain on foreclosure of other real estate owned (“OREO”), net of tax, during the fourth quarter of 2017, earnings for the three and twelve months ended December 31, 2017 were $2.3 million and $9.0 million, respectively.

Diluted earnings per share excluding the above adjustments for the three and twelve months ended December 31, 2018 was $0.26 and $1.08, respectively, compared with $0.19 and $0.78, respectively, for the three and twelve months ended December 31, 2017. The Company believes the reporting of non-GAAP earnings to exclude merger-related expenses, losses on sales of securities, gain on foreclosure of OREO, and the tax impacts from the TCJA, are more reflective of the Company’s operating performance and future performance (“Operating Earnings”). On a GAAP basis, return on average assets was 0.42% and return on average equity was 3.65% for the fourth quarter of 2018. For the comparable December 31, 2017 period, return on average assets was 0.40% and return on average equity was 4.06%. On an Operating Earnings basis, return on average assets and return on average equity for the three months ended December 31, 2018 was 1.16% and 10.07%, respectively. On an Operating Earnings basis, return on average assets and return on average equity for the year ended December 31, 2018 was 1.20% and 11.87%, respectively.

Selected Highlights

  • Strategic Bank Acquisition. On October 12, 2018, the Company completed its acquisition of Colombo and completed the systems conversions process. Quarterly income and expenses include the former Colombo operations since the October 12, 2018 combination.
  • Record Operating Earnings. Operating Earnings increased $1.6 million, or 69%, to $3.9 million for the fourth quarter of 2018 as compared to the same 2017 period. For the year ended December 31, 2018, Operating Earnings increased $4.9 million, or 54%, compared to 2017.
  • Improved Tangible Book Value. Tangible book value per share at December 31, 2018 was $10.93, a 21% increase from $9.03 at December 31, 2017.
  • Continued Loan Growth. Total loans, net of deferred fees, totaled $1.14 billion at December 31, 2018, an increase of $248.1 million, or 28%, from December 31, 2017. Excluding loans acquired from Colombo Bank, net loans increased $115.8, or 13%. Excluding acquired loans, average loan growth year-to-date 2018 was $134.8 million, or 17% of average loans receivable for 2018, enhancing the Company’s loan yield by 30 basis points for the year.
  • Sound Asset Quality. Asset quality remains strong with nonperforming loans and loans past due 90 days or more as a percentage of total assets being 0.28% at December 31, 2018, compared to 0.07% at December 31, 2017. Nonperforming loans and loans past due 90 days or more totaled $3.9 million at December 31, 2018, of which $870,000 were related to the acquisition.
  • Strong Core Deposit Growth. Total deposits increased $234.3 million, or 25%, from December 31, 2017 to December 31, 2018. Total deposits, excluding acquired deposits and wholesale deposits, increased $127.1 million year-over-year, or 16%.
  • Improved Efficiency Ratio. Efficiency ratio for the three months ended December 31, 2018 was 75.7%, and excluding merger-related expenses and losses on securities, the efficiency ratio improved to 54.3% for the quarter and 55.1% for 2018 year.

“Fourth quarter 2018 was another milestone for our Company as we closed our acquisition of Colombo Bank and completed the systems integration within a five month period of time. As our physical footprint has expanded into Maryland and the District of Colombia, we are attracting new clients and expanding existing relationships, introducing them to our products and technology, which augments the customer experience. Additionally, during the fourth quarter following our over-subscribed IPO, we were added to the Russell 2000® Index, which will enhance our trading liquidity and investor visibility. We are thrilled with the opportunities we see for our Company as we enter 2019,” stated David W. Pijor, Chairman and CEO.

Acquisition of Colombo Bank

On October 12, 2018, the Company completed its previously announced acquisition of Colombo. In connection with the transaction, 763,051 shares of the Company’s common stock were issued to Colombo’s shareholders, along with $18.3 million in cash. The Company added $199.5 million of total assets to its balance sheet, including $142.6 million of loans, net of negative $3.0 million of fair value adjustments, and $138.3 million of deposits, including a negative $327 thousand fair value adjustment to the CD portfolio. Additionally, the Company recorded $6.9 million of goodwill and $2.0 million of core deposit intangibles. During the year, the Company incurred legal and accounting costs, contract termination expenses, system conversion and integration expenses, plus employee retention and severance payments related to the acquisition. As of December 31, 2018, all merger-related expenses have been recognized and the Company has implemented cost savings in excess of the 35% anticipated for the merger.

Balance Sheet

Total assets increased to $1.35 billion compared to $1.05 billion as of December 31, 2018 and 2017, respectively, an increase of $298.7 million, or 28%. Loans receivable, net of deferred fees, totaled $1.14 billion as of December 31, 2018, compared to $888.7 million as of December 31, 2017, a year-over-year increase of $248.1 million, or 28%. Excluding the loans acquired from Colombo, loans grew $115.8 million, or 13% year-over-year, and average loans grew $134.8 million, or 17%. Excluding the loans acquired from Colombo, loans increased $25.7 for the quarter, or 12% on an annualized basis, and average loans grew $26.2 million, or 11% on an annualized basis. Mr. Pijor added, “We consider average loan growth a better measure of the loan portfolio growth, as it directly correlates with interest income growth. This becomes increasingly important as the bank’s portfolio reflects higher levels of C&I lending, including government contract lending, in which balances outstanding can fluctuate at period ends.”

During the quarter, loan originations totaled approximately $95 million, of which $36 million funded during the quarter. Construction loans and C&I loan closings represented a larger portion of originations during the quarter ended December 31, 2018; consequently a large amount of loan commitments were not funded by year end. Further, during the quarter, the Company experienced large payoffs outside of the expected loan repayments and curtailments, totaling an additional $22 million, which resulted in lower than expected net loan growth for the quarter.

Investment securities increased $7.6 million to $125.3 million at December 31, 2018, compared to $117.7 million at December 31, 2017. During the fourth quarter of 2018, the Company sold $24.4 million in investment securities, including $13.5 million that were acquired from Colombo, repositioning its securities portfolio to replace lower yielding securities with market rate securities to improve future incremental income.

Total deposits increased to $1.16 billion as of December 31, 2018 compared to $928.2 million as of December 31, 2017, an increase of $234.3 million, or 25%. Total deposits, excluding acquired deposits and wholesale deposits, increased $127.1 million year-over-year, or 16%. Core deposits, which represent total deposits less wholesale deposits, increased $265.4 million or 33% year-over-year. Wholesale deposits totaled $84.4 million, or 7% of total deposits at December 31, 2018, a decrease of $31.1 million from December 31, 2017. Noninterest-bearing deposits increased 33% to $233.3 million at December 31, 2018, or 20% of total deposits, compared to $175.4 million at December 31, 2017. Excluding deposits recorded at acquisition, noninterest bearing deposits increased 18% year-over-year, or $38.8 million.

The Company has expanded its core deposit growth through the acquisition of Colombo and five additional branches in Maryland and the District of Columbia. The Company continues its relationship-driven business strategy through enhanced cash management products and a team based approach to building and maintaining customer relationships.

Income Statement

Net interest income totaled $11.8 million, an increase of $3.4 million, or 40%, for the quarter ended December 31, 2018, compared to the year ago quarter. The Company’s net interest margin was 3.59% and 3.43% for the quarters ended December 31, 2018 and 2017, respectively. On a linked quarter basis, net interest income increased $1.9 million, or 20%, and the margin increased 5 basis points from 3.54% for the three months ended September 30, 2018, a result of increases in yields on earning assets and strong growth in core deposit mix offset by an increase in the cost of funds. The contribution of the assets and liabilities from Colombo added approximately $1.3 million to net interest income and 0.02% to the margin for the fourth quarter.

Cost of deposits for the fourth quarter of 2018 was 1.16%, compared to 0.87% for the fourth quarter of 2017, a 33% year-over-year increase, reflecting the Company’s continued management of its funding costs in a year where the Federal Reserve hiked its benchmark short-term interest rate a total of 100 basis points. Loan yields for the fourth quarter of 2018 were 5.22% compared to 4.63% for the year ago quarter.

Noninterest income totaled $166 thousand and $1.5 million for the quarters ended December 31, 2018 and 2017, respectively. Noninterest income excluding loss on sales of securities and gain on other real estate owned was $628 thousand and $397 thousand for the respective quarters, an increase of 58%. Fee income from fees on loans, service charges on deposits, and other fee income was $519 thousand, an increase of 106% for the quarter ended December 31, 2018 compared to 2017. Included in loan income are fees from interest rate swaps totaling $229 thousand for the fourth quarter of 2018. In addition, the Colombo transaction added approximately $31 thousand to non-interest income for the fourth quarter of 2018. Losses on sales of securities available-for-sale totaled $462,000 during the fourth quarter of 2018 as a result of the aforementioned reinvestment strategy. During the fourth quarter of 2017, the Company recorded $1.1 million related to a gain on other real estate owned.

Noninterest expense totaled $9.4 million for the quarter ended December 31, 2018, compared to $4.9 million for the same three-month period of 2017. Approximately $800 thousand of the increase in noninterest expense from the year ago quarter is attributable to expenses associated with Colombo’s former operations, in addition to merger-related expenses of $2.7 million for the three months ended December 31, 2018. During the year, the Company strategically hired business development officers and back office staff to support the Company’s growth plans, and retained several employees from Colombo, including lending and branch personnel. As a result, salary and compensation related expenses increased $1.1 million, or 40%, for the quarter ended December 31, 2018, compared to the same three-month period of 2017. Occupancy and equipment expense increased $195 thousand year-over-year primarily as a result of the branch locations acquired from Colombo. 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 December 31, 2018 compared to the same three-month period of 2017 is primarily growth related. On a linked quarter basis, noninterest expense excluding non-recurring merger-related expenses and the noninterest expenses associated with the addition of Colombo, increased 5% from the three months ended September 30, 2018. The efficiency ratio for the quarter ended December 31, 2018 was 75.7%, or 54.3% excluding merger-related expenses and securities losses, a decrease from 55.9% from the year ago quarter.

Asset Quality

Asset quality remains strong as nonperforming loans and loans ninety days or more past due totaled $3.9 million, or 0.28% of total assets, of which $870 thousand related to acquired loans. Performing troubled debt restructurings (“TDR”) decreased to $203,000 at December 31, 2018, compared to $1.7 million at December 31, 2017. Nonperforming assets (including TDRs and other real estate owned) to total assets was 0.61% and 0.58% at December 31, 2018 and 2017, respectively. The allowance for loan losses to total loans was 0.81% at December 31, 2018, a decrease from 0.88% at September 30, 2018. This ratio decrease was primarily the result of the addition of $142.6 million of acquired loans. The allowance for loan losses on the Company’s legacy portfolio was 0.92% of loan outstanding at December 31, 2018. The increase in the legacy allowance was primarily attributable to modest charge-offs and specific reserves added to the allowance during the quarter.

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 $1.35 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 Baltimore, Washington D.C., metropolitan areas. Locally owned and managed, FVCbank is based in Fairfax, Virginia, and has 11 full-service offices in Arlington, Ashburn, Fairfax, Manassas, Reston and Springfield, Virginia, Washington D.C., and Baltimore, Bethesda, Rockville and Silver Spring, Maryland.

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, statements of goals, intentions, and expectations as to future trends, plans, events or results of the Company’s operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. These forward-looking statements are based on current beliefs that involve significant risks, uncertainties, and assumptions. Factors that could cause the Company’s actual results to differ materially from those indicated in these forward-looking statements, include, but are not limited to, the risk factors previously disclosed in the “Risk Factors” section included in the Company’s prospectus filed with the Securities and Exchange Commission on September 17, 2018 pursuant to Rule 424(b)(4) under the Securities Act of 1933. 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)
For the Three Months Ended December 31, For the Years Ended December 31,
(Unaudited) (Unaudited)
2018 2017 2018 2017
Selected Balances
Total assets $ 1,351,961 $ 1,053,224
Total investment securities 130,597 121,150
Total loans, net of deferred fees 1,136,743 888,677
Allowance for loan losses (9,159 ) (7,725 )
Total deposits 1,162,440 928,163
Subordinated debt 24,407 24,327
Other borrowings - - - -
Total stockholders’ equity 158,721 98,283
Summary Results of Operations
Interest income $ 15,640 $ 10,801 $ 51,924 $ 40,302
Interest expense 3,823 2,350 12,110 8,195
Net interest income 11,817 8,451 39,814 32,107
Provision for loan losses 930 435 1,920 1,200
Net interest income after provision for loan losses 10,887 8,016 37,894 30,907
Noninterest income - loan fees, service charges and other 519 252 1,685 881
Noninterest income - bank owned life insurance 109 115 438 855
Noninterest income - gain (loss) on securities sold (462 ) 30 (462 ) 164
Noninterest income - gains on foreclosure of
other real estate owned - - 1,075 - - 1,075
Noninterest expense 9,419 4,925 26,448 19,346
Income before taxes 1,634 4,563 13,107 14,536
Income tax expense 224 3,558 2,238 6,846
Net income 1,410 1,005 10,869 7,690
Per Share Data (2)
Net income, basic $ 0.10 $ 0.09 $ 0.93 $ 0.74
Net income, diluted $ 0.10 $ 0.08 $ 0.85 $ 0.67
Book value $ 11.57 $ 9.04
Tangible Book value $ 10.93 $ 9.03
Shares outstanding 13,712,615 10,868,984
Selected Ratios
Net interest margin (3) 3.59 % 3.43 % 3.51 % 3.43 %
Return on average assets (3) 0.42 % 0.40 % 0.94 % 0.80 %
Return on average equity (3) 3.65 % 4.06 % 9.29 % 8.63 %
Efficiency (1) 75.69 % 55.85 % 63.07 % 57.16 %
Loans, net of deferred fees, to total deposits 97.79 % 95.75 %
Noninterest-bearing deposits to total deposits 20.07 % 18.90 %
Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP) (4)
Net income (from above) $ 1,410 $ 1,005 $ 10,869 $ 7,690
Add: Merger and acquisition expense 2,668 - - 3,339 - -
Add: Loss on sales of securities available-for-sale 462 - - 462 - -
Less: provision for income taxes associated with merger and acquisition expense (649 ) - - (788 ) - -
Add: TCJA revaluation of net deferred tax assets - - 2,003 - - 2,003
Less: Gain on foreclosure of other real estate owned - - (1,075 ) - - (1,075 )
Add: provision for income taxes associated with gain on foreclosure of other real estate owned - - 371 - - 371
Net income, as adjusted $ 3,891 $ 2,304 $ 13,882 $ 8,989
Net income, diluted, on an operating basis $ 0.26 $ 0.19 $ 1.08 $ 0.78
Return on average assets (non-GAAP operating earnings) 1.16 % 0.91 % 1.20 % 0.94 %
Return on average equity (non-GAAP operating earnings) 10.07 % 9.30 % 11.87 % 10.09 %
Efficiency ratio (non-GAAP operating earnings) 54.25 % 53.40 % 55.10 % 56.89 %
Capital Ratios - Bank
Tangible common equity (to tangible assets) 11.16 % 9.33 %
Total capital (to risk weighted assets) 14.16 % 12.83 %
Common equity tier 1 capital (to risk weighted assets) 13.43 % 12.05 %
Tier 1 capital (to risk weighted assets) 13.43 % 12.05 %
Tier 1 leverage (to average assets) 12.64 % 11.79 %
Asset Quality
Nonperforming loans and loans 90+ past due $ 3,852 $ 789
Performing troubled debt restructurings (TDRs) 203 1,671
Other real estate owned 4,224 3,866
Nonperforming loans and loans 90+ past due to total assets (excl. TDRs) 0.28 % 0.07 %
Nonperforming assets to total assets 0.60 % 0.44 %
Nonperforming assets (including TDRs) to total assets 0.61 % 0.58 %
Allowance for loan losses to loans 0.81 % 0.87 %
Allowance for loan losses to nonperforming loans 237.77 % 979.09 %
Net charge-offs (recovery) $ 347 $ (19 ) $ 84 $ (73 )
Net charge-offs (recovery) to average loans (3) 0.13 % (0.01 ) % 0.01 % (0.01 ) %
Selected Average Balances
Total assets $ 1,341,991 $ 1,013,070 $ 1,159,249 $ 955,892
Total earning assets 1,305,573 986,648 1,134,797 936,356
Total loans, net of deferred fees 1,101,539 851,123 971,883 805,186
Total deposits 1,141,500 878,481 1,006,470 823,825
Other Data
Noninterest-bearing deposits $ 233,318 $ 175,446
Interest-bearing checking, savings and money market 533,732 379,101
Time deposits 310,985 258,127
Wholesale deposits 84,405 115,489

(1)

Efficiency ratio is calculated as noninterest expense divided by the sum of net interest income and noninterest income, excluding gains (losses) on sales of investment securities and other real estate owned.

(2)

All per share data calculations have been retroactively adjusted for the five-for-four stock split declared September 2017.

(3)

Annualized.

(4)

Some of the financial measures discussed throughout the press release are "non-GAAP financial measures." In accordance with SEC rules, the Company classifies a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP in our statements of income, balance sheets or statements of cash flows.

FVCBankcorp, Inc.
Summary Consolidated Statements of Condition
(Dollars in thousands)
(Unaudited)
% Change % Change
Current From
12/31/2018 9/30/2018 Quarter 12/31/2017 Year Ago
Cash and due from banks $ 9,435 $ 8,939 5.5 % $ 7,428 27.0 %
Interest-bearing deposits at other
financial institutions 34,060 46,396 -26.6 % 15,139 125.0 %
Investment securities 125,298 113,131 10.8 % 117,712 6.4 %
Restricted stock, at cost 5,299 3,800 39.4 % 3,438 54.1 %
Loans, net of fees:
Commercial real estate 682,203 592,083 15.2 % 526,065 29.7 %
Commercial and industrial 137,080 108,331 26.5 % 98,150 39.7 %
Commercial construction 152,526 144,140 5.8 % 123,444 23.6 %
Consumer residential 132,280 107,207 23.4 % 108,786 21.6 %
Consumer nonresidential 32,654 26,543 23.0 % 32,232 1.3 %
Total loans, net of fees 1,136,743 978,304 16.2 % 888,677 27.9 %
Allowance for loan losses (9,159) (8,576) 6.8 % (7,725) 18.6 %
Loans, net 1,127,584 969,728 16.3 % 880,952 28.0 %
Premises and equipment, net 2,271 1,420 59.9 % 1,236 83.7 %
Bank owned life insurance (BOLI) 16,406 16,297 0.7 % 15,969 2.7 %
Other real estate owned 4,224 3,866 9.3 % 3,866 9.3 %
Other assets 27,384 11,860 130.9 % 7,484 265.9 %
Total Assets $ 1,351,961 $ 1,175,437 15.0 % $ 1,053,224 28.4 %
Deposits:
Noninterest-bearing $ 233,318 $ 211,808 10.2 % $ 175,446 33.0 %
Interest-bearing checking 312,446 276,197 13.1 % 185,528 68.4 %
Savings and money market 221,286 209,122 5.8 % 193,573 14.3 %
Time deposits 310,985 246,272 26.3 % 258,127 20.5 %
Wholesale deposits 84,405 50,587 66.9 % 115,489 -26.9 %
Total deposits 1,162,440 993,986 16.9 % 928,163 25.2 %
Other borrowed funds - - 15,000 -100.0 % - - 0.0 %
Subordinated notes, net of
issuance costs 24,407 24,387 0.1 % 24,327 0.3 %
Other liabilities 6,393 3,288 94.4 % 2,451 160.8 %
Stockholders’ equity 158,721 138,776 14.4 % 98,283 61.5 %
Total Liabilities & Stockholders’ Equity $ 1,351,961 $ 1,175,437 15.0 % $ 1,053,224 28.4 %
FVCBankcorp, Inc.
Summary Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended
% Change % Change
Current From
12/31/2018 9/30/2018 Quarter 12/31/2017 Year Ago
Net interest income $ 11,817 $ 9,878 19.6 % $ 8,451 39.8 %
Provision for loan losses 930 351 165.0 % 435 113.8 %
Net interest income after provision for loan losses 10,887 9,527 14.3 % 8,016 35.8 %
Noninterest income:
Fees on Loans 249 411 -39.4 % 29 758.6 %
Service charges on deposit accounts 184 158 16.5 % 145 26.9 %
Gain (loss) on sales of securities available-for-sale (462) - - -100.0 % 30 -1,640.0 %
Gains on other real estate owned - - - - 0.0 % 1,075 -100.0 %
BOLI income 109 110 -0.9 % 115 -5.2 %
Other fee income 86 69 24.6 % 78 10.3 %
Total noninterest income 166 748 -77.8 % 1,472 -88.7 %
Noninterest expense:
Salaries and employee benefits 4,008 3,491 14.8 % 2,861 40.1 %
Occupancy and equipment expense 781 591 32.1 % 586 33.3 %
Data processing and network administration 347 321 8.1 % 285 21.8 %
State franchise taxes 296 296 0.0 % 252 17.5 %
Professional fees 214 147 45.6 % 161 32.9 %
Merger and acquisition expense 2,668 274 873.7 % - - 100.0 %
Other operating expense 1,105 828 33.5 % 780 41.7 %
Total non-interest expense 9,419 5,948 58.4 % 4,925 91.2 %
Net income before income taxes 1,634 4,327 -62.2 % 4,563 -64.2 %
Income tax expense 224 942 -76.2 % 3,558 -93.7 %
Net Income $ 1,410 $ 3,385 -58.3 % $ 1,005 40.3 %
Earnings per share - basic $ 0.10 $ 0.30 -66.7 % $ 0.09 11.1 %
Earnings per share - diluted $ 0.10 $ 0.27 -63.0 % $ 0.08 25.0 %
Weighted-average common shares outstanding - basic 13,575,616 11,324,965 19.9 % 10,866,639 24.9 %
Weighted-average common shares outstanding - diluted 14,700,167 12,470,384 17.9 % 12,095,023 21.5 %

Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP):

GAAP net income reported above $ 1,410 $ 3,385 $ 1,005
Add: Merger and acquisition expense above 2,668 274 - -
Add: Loss on sales of securities available-for-sale 462 - - - -
Less: provision for income taxes associated with merger and acquisition expense and loss on securities sales (649) (24) - -
Add: TCJA revaluation of net deferred tax assets - - - - 2,003
Less: Gain on foreclosure of other real estate owned - - - - (1,075)
Add: provision for income taxes associated with gain on foreclosure of other real estate owned - - - - 371
NET INCOME, excluding above non-GAAP items $ 3,891 $ 3,635 $ 2,304
Earnings per share - basic (excluding merger and acquisition charges) $ 0.29 $ 0.32 $ 0.21
Earnings per share - diluted (excluding merger and acquisition charges) $ 0.26 $ 0.29 $ 0.19
Return on average assets (non-GAAP operating earnings) 1.16% 1.27% 0.91%
Return on average equity (non-GAAP operating earnings) 10.07% 13.13% 9.30%
Efficiency ratio (non-GAAP operating earnings) 54.25% 53.40% 55.66%
FVCBankcorp, Inc.
Summary Consolidated Income Statements
(In thousands, except per share data)
(Unaudited)
For the Years Ended
% Change
From
12/31/2018 12/31/2017 Year Ago
Net interest income $ 39,814 $ 32,107 24.0 %
Provision for loan losses 1,920 1,200 60.0 %
Net interest income after provision for loan losses 37,894 30,907 22.6 %
Noninterest income:
Fees on Loans 722 76 850.0 %
Service charges on deposit accounts 635 546 16.3 %
Gain (loss) on sale of securities available-for-sale (462) 164 -381.7 %
Gains on other real estate owned - - 1,075 -100.0 %
BOLI income 438 855 -48.8 %
Other fee income 328 259 26.6 %
Total noninterest income 1,661 2,975 -44.2 %
Noninterest expense:
Salaries and employee benefits 14,008 11,659 20.1 %
Occupancy and equipment expense 2,524 2,259 11.7 %
Data processing and network administration 1,233 1,017 21.2 %
State franchise taxes 1,184 1,041 13.7 %
Professional fees 649 513 26.5 %
Merger and acquisition expense 3,339 - - 100.0 %
Other operating expense 3,511 2,857 22.9 %
Total non-interest expense 26,448 19,346 36.7 %
Net income before income taxes 13,107 14,536 -9.8 %
Income tax expense 2,238 6,846 -67.3 %
Net income $ 10,869 $ 7,690 41.3 %
Earnings per share - basic $ 0.93 $ 0.74 25.7 %
Earnings per share - diluted $ 0.85 $ 0.67 26.9 %
Weighted-average common shares outstanding - basic 11,714,668 10,434,709 12.3 %
Weighted-average common shares outstanding - diluted 12,821,757 11,545,408 11.1 %

Reconciliation of Net Income (GAAP) to Operating Earnings (Non-GAAP):

GAAP net income reported above $ 10,869 $ 7,690
Add: Merger and acquisition expense above 3,339 - -
Add: Loss on sales of securities available-for-sale 462 - -
Less: provision for income taxes associated with merger and acquisition expense and loss on securities sales (788) - -
Add: TCJA revaluation of net deferred tax assets - - 2,003
Less: Gain on foreclosure of other real estate owned - - (1,075)
Add: provision for income taxes associated with gain on foreclosure of other real estate owned - - 371
NET INCOME, excluding above non-GAAP items $ 13,882 $ 8,989
Earnings per share - basic (excluding merger and acquisition charges) $ 1.18 $ 0.86
Earnings per share - diluted (excluding merger and acquisition charges) $ 1.08 $ 0.78
Return on average assets (non-GAAP operating earnings) 1.20% 0.94%
Return on average equity (non-GAAP operating earnings) 11.87% 10.09%
Efficiency ratio (non-GAAP operating earnings) 55.10% 56.89%
FVCBankcorp, Inc.
Average Statements of Condition and Yields on Earning Assets and Interest-Bearing Liabilities
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
12/31/2018 9/30/2018 12/31/2017
Average Average Average Average Average Average
Balance Yield Balance Yield Balance Yield
Interest-earning assets:
Loans receivable, net of fees (1)
Commercial real estate $ 668,609 4.91 % $ 575,738 4.72 % $ 518,345 4.59 %
Commercial and industrial 127,520 5.86 % 110,241 5.81 % 89,031 5.14 %
Commercial construction 148,745 5.81 % 140,213 5.39 % 111,555 5.07 %
Consumer residential 130,222 5.09 % 106,922 4.72 % 108,204 4.00 %
Consumer nonresidential 26,443 7.23 % 26,878 6.50 % 23,988 4.47 %
Total loans 1,101,539 5.22 % 959,992 4.99 % 851,123 4.63 %
Investment securities (2)(3) 136,099 2.69 % 120,174 2.45 % 122,231 2.28 %
Interest-bearing deposits at
other financial institutions 67,935 2.08 % 35,988 1.82 % 13,294 1.23 %
Total interest-earning assets 1,305,573 4.79 % 1,116,154 4.62 % 986,648 4.18 %
Non-interest earning assets:
Cash and due from banks 3,459 2,386 7,315
Premises and equipment, net 2,172 1,416 1,228
Accrued interest and other
assets 39,404 31,107 25,282
Allowance for loan losses (8,617) (8,421) (7,403)
Total Assets $ 1,341,991 $ 1,142,642 $ 1,013,070
Interest-bearing liabilities:
Interest checking $ 259,202 1.32 % $ 251,299 1.10 % $ 193,896 0.86 %
Savings and money market 303,375 1.18 % 190,176 1.18 % 179,495 0.85 %
Time deposits 302,838 1.89 % 249,508 1.62 % 238,331 1.42 %
Wholesale deposits 33,557 1.79 % 65,354 1.84 % 82,094 1.29 %
Total interest-bearing deposits 898,972 1.47 % 756,337 1.36 % 693,816 1.11 %
Other borrowed funds 15,693 2.35 % 2,799 2.25 % 9,287 1.59 %
Subordinated notes, net of
issuance costs 24,394 6.42 % 24,374 6.43 % 24,314 6.45 %
Total interest-bearing liabilities 939,059 1.62 % 783,510 1.52 % 727,417 1.29 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits 242,528 245,742 184,665
Other liabilities 5,883 2,662 1,904
Stockholders’ equity 154,521 110,728 99,084
Total Liabilities and Stockholders' Equity $ 1,341,991 $ 1,142,642 $ 1,013,070
Net Interest Margin (2) 3.59 % 3.54 % 3.43 %

(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 23% for 2018 and 34.5% for 2017.

(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 Years Ended
12/31/2018 12/31/2017
Average Average Average Average
Balance Yield Balance Yield
Interest-earning assets:
Loans receivable, net of fees (1)
Commercial real estate $ 587,060 4.72 % $ 499,776 4.65 %
Commercial and industrial 109,475 5.64 % 91,361 4.94 %
Commercial construction 133,691 5.36 % 89,156 4.93 %
Consumer residential 113,643 4.68 % 105,715 4.27 %
Consumer nonresidential 28,014 6.58 % 19,178 4.33 %
Total loans 971,883 4.96 % 805,186 4.66 %
Investment securities (2)(3) 128,721 2.44 % 117,770 2.30 %
Interest-bearing deposits at
other financial institutions 34,193 1.75 % 13,400 0.68 %
Total interest-earning assets 1,134,797 4.58 % 936,356 4.31 %
Non-interest earning assets:
Cash and due from banks 2,683 1,924
Premises and equipment, net 1,555 1,367
Accrued interest and other
assets 28,480 23,232
Allowance for loan losses (8,266) (6,987)
Total Assets $ 1,159,249 $ 955,892
Interest-bearing liabilities:
Interest checking $ 182,532 1.18 % $ 204,422 0.81 %
Savings and money market 258,462 1.04 % 162,127 0.72 %
Time deposits 265,038 1.61 % 210,093 1.32 %
Wholesale deposits 77,466 1.63 % 75,534 1.07 %
Total interest-bearing deposits 783,498 1.32 % 652,176 0.98 %
Other borrowed funds 8,366 2.11 % 16,564 1.19 %
Subordinated notes, net of
issuance costs 24,364 6.48 % 24,285 6.51 %
Total interest-bearing liabilities 816,228 1.48 % 693,025 1.18 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits 222,972 171,649
Other liabilities 3,057 2,162
Stockholders’ equity 116,992 89,056
Total Liabilities and Stockholders' Equity $ 1,159,249 $ 955,892
Net Interest Margin (2) 3.51 % 3.43 %

(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 23% for 2018 and 34.5% for 2017.

(3)

The average balances for investment securities includes restricted stock.

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