FVCBankcorp(FVCB) - 2025 Q2 - Quarterly Results

Executive Summary FVCBankcorp's Q2 2025 showed strong earnings growth, robust financial health, and strategic operational enhancements Second Quarter Selected Financial Highlights FVCBankcorp's Q2 2025 marked its sixth consecutive quarter of improved earnings, with significant financial growth, strong credit quality, and enhanced shareholder returns | Metric | Q2 2025 | Q1 2025 | YoY Change (Q2 2024) | | :-------------------------------- | :------ | :------ | :------------------- | | Net Income | $5.7 million | $5.2 million | +36% ($1.5 million) | | Diluted EPS | $0.31 | $0.28 | +$0.08 | | Return on Average Assets | 1.02% | 0.94% | +0.25% (from 0.77%) | | Net Interest Margin | 2.90% | 2.83% | +0.31% (from 2.59%) | | Net Interest Income | $15.8 million | - | +15% ($2.1 million) | - Loans past due 30 days or more decreased by $5.7 million (67%) to $2.8 million at June 30, 2025, compared to December 31, 2024; nonperforming loans decreased by 18% to $10.5 million, and nonperforming loans to total assets decreased to 0.46% from 0.58%[3] - The Bank maintained a 'well capitalized' status with a total risk-based capital to risk-weighted assets ratio of 15.28% and a tangible common equity to tangible assets ratio of 11.16% at June 30, 2025[3] - The Company repurchased 415,000 shares of common stock for $4.6 million during Q2 2025 and initiated a quarterly cash dividend of $0.06 per share, payable on August 18, 2025[3][4] Management Comments Management cited strong earnings, return on assets, and a new dividend, crediting strategic initiatives, disciplined lending, and operational improvements - CEO David W. Pijor highlighted the achievement of a 1.02% annualized return on average assets and the sixth consecutive quarter of earnings growth, driven by strategic initiatives and disciplined lending, with the initiation of a quarterly cash dividend underscoring financial strength[10] - President Patricia A. Ferrick noted that deepening customer relationships through personalized service and technology solutions, including an upgraded online banking platform and process automation, led to a 9% improvement in the efficiency ratio, reaching 56.2% for Q2 2025[10] Financial Performance This section details the Company's net income, EPS, and non-GAAP operating earnings, showcasing significant growth and improved core performance Net Income and Earnings Per Share Net income and diluted EPS significantly increased for Q2 and 6M 2025, driven by operational gains and a derivative unwinding, with 2024 impacted by a BOLI tax charge | Metric | Q2 2025 | Q2 2024 | YoY Change | 6M 2025 | 6M 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | :------ | :------ | :--------- | | Net Income | $5.7 million | $4.2 million | +36% | $10.8 million | $5.5 million | +97% | | Diluted EPS | $0.31 | $0.23 | +$0.08 | $0.59 | $0.30 | +$0.29 | - During Q2 2025, the Company recorded a $154 thousand gain from unwinding $15 million of pay-fixed/receive floating interest rate swaps; the 2024 six-month period included a $2.4 million non-recurring tax provisioning increase due to the surrender of bank-owned life insurance (BOLI)[5][6] Non-GAAP Commercial Bank Operating Earnings Excluding non-recurring items, commercial bank operating earnings and diluted EPS showed strong year-over-year growth, reflecting improved core operational performance | Metric (Non-GAAP) | Q2 2025 | Q2 2024 | YoY Change | 6M 2025 | 6M 2024 | YoY Change | | :------------------------------------ | :------ | :------ | :--------- | :------ | :------ | :--------- | | Commercial Bank Operating Earnings | $5.5 million | $4.2 million | +34% | $10.7 million | $7.9 million | +36% | | Diluted Commercial Bank Operating EPS | $0.30 | $0.23 | +$0.07 | $0.58 | $0.43 | +$0.15 | | Adjusted Return on Average Assets | 1.00% | 0.77% | +0.23% | 0.97% | 0.73% | +0.24% | - Commercial bank operating earnings are a non-GAAP measure used for comparative analysis of the Company's operating performance, with reconciliations provided in the financial tables[9] Statement of Condition This section overviews the Company's balance sheet, detailing changes in assets, liabilities, and shareholders' equity, and highlighting capital adequacy Assets Total assets slightly increased from year-end 2024 but decreased year-over-year, with stable loans and a modest rise in investment securities | Metric | June 30, 2025 | Dec 31, 2024 | YoY Change (June 30, 2024) | | :-------------------------- | :------------ | :----------- | :------------------------- | | Total Assets | $2.24 billion | $2.20 billion | -$61.9 million (-2.7%) | | Loans Receivable, net | $1.87 billion | $1.87 billion | -$19.9 million (-1.1%) | | Investment Securities | $157.1 million | $156.7 million | -$5.3 million (-3.3%) | - During Q2 2025, loan originations totaled $29.2 million (weighted average rate of 7.66%), primarily commercial and industrial loans; loan renewals were $37.9 million (7.72%), and payoffs were $38.5 million (6.01%), mainly commercial real estate and construction loans[12] - The warehouse lending facility increased by $8.4 million to $52.5 million at June 30, 2025, with a weighted average yield of 6.39% for the quarter[12] Liabilities and Shareholders' Equity Total deposits remained stable with core deposit growth, wholesale deposits decreased, and shareholders' equity increased, maintaining the Bank's well-capitalized status | Metric | June 30, 2025 | Dec 31, 2024 | YoY Change (June 30, 2024) | | :-------------------------- | :------------ | :----------- | :------------------------- | | Total Deposits | $1.90 billion | $1.87 billion | -$68.7 million (-3.5%) | | Shareholders' Equity | $243.2 million | $235.4 million | +$16.7 million (+7.4%) | | Tangible Book Value Per Share | $13.08 | $12.52 | +$1.04 (+8.6%) | | Total Risk-Based Capital Ratio | 15.28% | 14.73% | +1.15% | | Tier 1 Leverage Ratio | 11.97% | 11.74% | +0.66% | - Core deposits, excluding wholesale deposits, increased by $47.8 million (6% annualized) for the six months ended June 30, 2025; reciprocal deposits, part of core deposits, grew to $320.7 million from $269.7 million[14] - Wholesale funding decreased by $15.0 million (5%) to $284.9 million at June 30, 2025, with the cost of wholesale funding decreasing to 3.46% from 3.54% in the prior quarter[15] - Shareholders' equity increased by $7.8 million, primarily due to $10.8 million in earnings, partially offset by $4.6 million in share repurchases[16] Asset Quality This section analyzes credit loss provision, allowance, nonperforming loans, and loan portfolio composition, demonstrating strong credit quality Credit Loss Provision and Allowance Q2 2025 saw a lower provision for credit losses, stable allowance, and net charge-offs primarily from an isolated commercial loan | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Provision for Credit Losses | $105 thousand | $206 thousand | $305 thousand | $206 thousand | | Allowance for Credit Losses (ACL) | $18.1 million | $19.2 million | $18.1 million | $19.2 million | | ACL to Total Loans, net of fees | 0.97% | 1.02% | 0.97% | 1.02% | | Net Charge-offs (Q2) | $517 thousand | -$5 thousand | - | - | | Net Charge-offs (6M) | $378 thousand | -$35 thousand | - | - | - Net charge-offs for Q2 2025 were 0.11% annualized to average loans, primarily from one commercial loan, which management states is not indicative of a systemic issue[19][20] Nonperforming Loans and Watchlist Nonperforming and watchlist loans significantly decreased at June 30, 2025, reflecting strong credit quality and effective asset management | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------- | :------------ | :----------- | :----- | | Nonperforming Loans | $10.5 million | $12.8 million | -$2.3 million | | Nonperforming Loans to Total Assets | 0.46% | 0.58% | -0.12% | | Total Watchlist Loans | $12.6 million | $14.5 million | -$1.9 million | | Other Real Estate Owned | $0 | $0 | No Change | - The decrease in nonperforming loans was driven by a $990 thousand decrease in nonaccrual loans and a $1.3 million decrease in loans past due over 90 days[21] Loan Portfolio Composition The loan portfolio is diversified, with commercial real estate and construction loans as largest segments, managed with disciplined underwriting and strong credit quality | Loan Type | Amount (June 30, 2025) | % of Total Loans, net of fees | | :------------------------------------ | :--------------------- | :---------------------------- | | Commercial Real Estate Loans | $981.5 million | 53% | | Construction Loans | $177.1 million | 9% | | Office Properties (within CRE) | $119.8 million | 6% | | Retail Properties (within CRE) | $236.9 million | 13% | | Multi-family Properties (within CRE) | $155.7 million | 8% | | Industrial Loans | $271.5 million | 14% | | Hotels | $62.2 million | 3% | | Mixed Use | $60.3 million | 3% | | Land | $38.0 million | 2% | | 1-4 Family Construction | $75.5 million | 4% | | Total Commercial Real Estate and Construction Loans | $1,158.6 million | 62% | - The commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration, with primary locations in the Virginia and Maryland suburbs of the Company's market area[22] - The Company employs comprehensive policies for monitoring, measuring, and mitigating loan concentrations within its commercial real estate portfolio, including rigorous credit approval and ongoing loan monitoring procedures[23][25] Minority Investment in Mortgage Banking Operation Income from the minority investment in ACM significantly increased for 6M 2025, driven by ACM's strategic growth and a 15% rise in loan originations | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Income from ACM Investment | $350 thousand | $350 thousand | $491 thousand | $123 thousand | | ACM Loan Originations (6M YoY Change) | - | - | +15% | - | - ACM's increased earnings are a direct result of its continued success in executing strategic growth and geographic diversification initiatives; as of June 30, 2025, ACM is licensed in 38 states, with four additional state license applications pending[26] - The income generated from the nonconsolidated minority investment in ACM is recorded as non-interest income[27] Income Statement Analysis This section details the Company's income statement, covering net income, net interest income, noninterest income, and expenses Net Income Overview Q2 2025 net income significantly increased year-over-year and quarter-over-quarter, reflecting strong financial performance | Metric | Q2 2025 | Q2 2024 | YoY Change | Q1 2025 | QoQ Change | | :--------- | :------ | :------ | :--------- | :------ | :--------- | | Net Income | $5.7 million | $4.2 million | +36% | $5.2 million | +10% | Net Interest Income and Margin Net interest income and margin continued their upward trend for the sixth consecutive quarter, driven by increased loan interest income and improved funding costs | Metric | Q2 2025 | Q2 2024 | YoY Change | Q1 2025 | QoQ Change | | :---------------- | :------ | :------ | :--------- | :------ | :--------- | | Net Interest Income | $15.8 million | $13.7 million | +15% | $15.1 million | +5% | | Net Interest Margin | 2.90% | 2.59% | +31 bps | 2.83% | +7 bps | | Cost of Funds | 2.79% | 3.00% | -21 bps | 2.83% | -4 bps | - The increase in net interest income and margin is primarily due to improved yields on earning assets, particularly the loan portfolio repricing to higher interest rates, coupled with a continued improvement in the cost of funding sources[29][30] Interest Income Interest income increased due to higher loan yields, with substantial commercial loan repricing expected to further enhance future yields | Metric | Q2 2025 | Q2 2024 | YoY Change | Q1 2025 | QoQ Change | | :-------------------- | :------ | :------ | :--------- | :------ | :--------- | | Total Interest Income | $29.4 million | $28.0 million | +5% | $28.6 million | +3% | | Loan Interest Income | $27.0 million | $26.5 million | +2% | - | - | | Loan Yields | 5.80% | 5.62% | +18 bps | 5.69% | +11 bps | | Yield on Earning Assets | 5.39% | 5.27% | +12 bps | 5.31% | +8 bps | - The Company anticipates continued increases in loan yields, with $81.3 million in fixed-rate commercial loans (4.74% weighted average rate) and $21.0 million in variable-rate commercial loans (4.00% weighted average rate) expected to reprice within 12 months[32] - An additional $268.0 million in fixed-rate commercial loans (4.83% weighted average rate) and $129.9 million in variable-rate commercial loans (4.95% weighted average rate) are scheduled to reprice within 24-36 months, representing 33% of the total commercial loan portfolio[32] - The Company has actively managed its maturing commercial real estate loan portfolio, diversifying its loan mix towards commercial & industrial loans[33] Interest Expense Interest expense decreased year-over-year due to reduced borrowed funds, while deposit interest expense slightly rose, reflecting effective funding cost management | Metric | Q2 2025 | Q2 2024 | YoY Change | Q1 2025 | QoQ Change | | :-------------------- | :------ | :------ | :--------- | :------ | :--------- | | Total Interest Expense | $13.7 million | $14.3 million | -4% | $13.5 million | +1% | | Interest Expense on Deposits | $13.0 million | $12.9 million | +$64 thousand | $12.8 million | +1% | | Cost of Deposits | 2.74% | 3.01% | -27 bps | 2.78% | -4 bps | - The decrease in total interest expense compared to the prior year was primarily attributable to a decrease in other borrowed funds[34] - For the six months ended June 30, 2025, net interest income increased by 16% to $30.8 million, and the net interest margin increased by 34 basis points to 2.87% compared to the same period in 2024[36] Noninterest Income Noninterest income significantly increased quarter-over-quarter, driven by a derivative termination gain and higher ACM income, showing substantial six-month growth | Metric | Q2 2025 | Q2 2024 | YoY Change | Q1 2025 | QoQ Change | | :------------------------------------ | :------ | :------ | :--------- | :------ | :--------- | | Total Noninterest Income | $1.0 million | $871 thousand | +15.7% | $671 thousand | +50.3% | | Income from Minority Interest in ACM | $350 thousand | $350 thousand | 0% | $141 thousand | +149.8% | | Gain on Termination of Derivatives | $154 thousand | $0 | N/A | $0 | N/A | | BOLI Income (6M) | $141 thousand | $256 thousand | -44.9% | - | - | - The increase in noninterest income for Q2 2025 was largely due to a $154 thousand gain from unwinding interest rate swaps[38] - For the six months ended June 30, 2025, noninterest income totaled $1.7 million, up from $1.3 million in the prior year, with income from ACM increasing significantly to $491 thousand from $123 thousand[39] Noninterest Expense and Efficiency Ratio Noninterest expense slightly increased due to higher salaries and software costs, but the efficiency ratio significantly improved, reflecting enhanced operational efficiency | Metric | Q2 2025 | Q2 2024 | YoY Change | Q1 2025 | QoQ Change | | :-------------------------------- | :------ | :------ | :--------- | :------ | :--------- | | Total Noninterest Expense | $9.4 million | $9.0 million | +5% | $9.1 million | +3% | | Salaries and Employee Benefits | $5.0 million | $4.7 million | +7% | $4.8 million | +5% | | Internet Banking and Software Expense | $864 thousand | $730 thousand | +18.4% | $825 thousand | +4.7% | | Efficiency Ratio | 56.2% | 61.9% | -5.7% | 58.1% | -1.9% | - The increase in salaries and benefits expense was primarily due to increased incentive accruals and the filling of vacant positions[40] - Internet banking and software expense increased due to the implementation of enhanced customer software solutions, while data processing and network administration expense decreased due to contract renewals[41] Income Tax Expense Income tax expense increased for Q2 2025 year-over-year but decreased for the six-month period due to a non-recurring 2024 BOLI surrender tax charge | Metric | Q2 2025 | Q2 2024 | YoY Change | 6M 2025 | 6M 2024 | YoY Change | | :---------------- | :------ | :------ | :--------- | :------ | :------ | :--------- | | Income Tax Expense | $1.6 million | $1.2 million | +27.9% | $2.8 million | $4.4 million | -36.6% | - The lower income tax expense for the six months ended June 30, 2025, compared to 2024, is primarily due to an additional $2.4 million tax provisioning in 2024 associated with the surrender of BOLI policies[44] Company Information & Disclosures This section overviews FVCBankcorp, Inc., its operations, and cautionary notes regarding forward-looking statements and associated risks About FVCBankcorp, Inc. FVCBankcorp, Inc. is the holding company for FVCbank, a $2.24 billion Virginia-chartered community bank serving commercial clients in the greater Baltimore and Washington, D.C. metropolitan areas - FVCBankcorp, Inc. is the holding company for FVCbank, a $2.24 billion asset-sized Virginia-chartered community bank[45] - The bank serves commercial businesses, non-profit organizations, professional service entities, their owners, and employees in the greater Baltimore and Washington, D.C. metropolitan areas[45] - FVCbank operates 8 full-service offices across Arlington, Fairfax, Manassas, Reston, Springfield (Virginia), Washington, D.C., Baltimore, and Bethesda (Maryland)[45] Cautionary Note About Forward-Looking Statements This section cautions that forward-looking statements are subject to various known and unknown risks, including economic, interest rate, credit, and regulatory factors - The press release contains forward-looking statements, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially[47] - Key risk factors include general business and economic conditions (e.g., inflation, real estate valuations, unemployment), concentration of business in the Washington, D.C. metropolitan area, interest rate environment, liquidity requirements, credit losses, real estate market downturns, market volatility, regulatory changes, and competitive pressures[47] - The Company cautions against undue reliance on forward-looking statements and states that they will not be updated to reflect actual results or changes in factors affecting them[48] Financial Tables This section provides detailed financial tables, including selected financial data, consolidated statements of condition, and income statements Selected Financial Data This table offers a comprehensive overview of FVCBankcorp, Inc.'s selected financial balances, operational results, per share data, and key ratios, including GAAP and non-GAAP reconciliations | Metric | June 30, 2025 | June 30, 2024 | March 31, 2025 | Dec 31, 2024 | | :------------------------------------ | :------------ | :------------ | :------------- | :----------- | | Total assets | $2,237,250 | $2,299,194 | $2,240,797 | $2,198,950 | | Net income | $5,667 | $4,155 | $5,165 | $4,900 | | Diluted EPS | $0.31 | $0.23 | $0.28 | $0.26 | | Net interest margin | 2.90 % | 2.59 % | 2.83 % | 2.77 % | | Return on average assets | 1.02 % | 0.77 % | 0.94 % | 0.90 % | | Efficiency ratio | 56.22 % | 61.86 % | 58.08 % | 58.58 % | | Nonperforming loans | $10,529 | $3,187 | $10,747 | $12,823 | | Tangible common equity (to tangible assets) | 11.16 % | 9.56 % | 10.98 % | 10.87 % | - The table includes reconciliations of GAAP net income to non-GAAP commercial bank operating earnings, adjusting for items like derivative gains and non-recurring tax provisions[51][52] Summary Consolidated Statements of Condition This table details the Company's assets, liabilities, and shareholders' equity at various quarter-end dates, highlighting changes from prior periods | Item | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :----------- | :------------ | | Total Assets | $2,237,250 | $2,240,797 | $2,198,950 | $2,299,194 | | Total Loans, net of fees | $1,869,098 | $1,882,133 | $1,870,235 | $1,886,929 | | Total Deposits | $1,903,472 | $1,906,621 | $1,870,605 | $1,968,752 | | Shareholders' Equity | $243,163 | $242,328 | $235,354 | $226,491 | - Commercial and industrial loans increased by 1.7% QoQ and 28.3% YoY, while commercial real estate loans decreased by 2.8% QoQ and 9.4% YoY[55] - Wholesale deposits decreased by 6.0% QoQ and YoY, reflecting strategic funding management[55] Summary Consolidated Statements of Income (Quarterly) This table presents a quarterly breakdown of the Company's income statement, including net interest income, noninterest income, noninterest expense, net income, and non-GAAP reconciliations | Item | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :------------ | | Net interest income | $15,759 | $15,052 | $13,671 | | Total noninterest income | $1,008 | $671 | $871 | | Total noninterest expense | $9,428 | $9,133 | $8,996 | | Net Income | $5,667 | $5,165 | $4,155 | | Diluted EPS | $0.31 | $0.28 | $0.23 | | Adjusted Net Income, commercial bank operating earnings (non-GAAP) | $5,548 | $5,165 | $4,155 | | Adjusted Pre-tax pre-provision income (non-GAAP) | $7,185 | $6,590 | $5,546 | - Income from minority membership interests increased by 149.8% QoQ to $351 thousand in Q2 2025[57] - Salaries and employee benefits increased by 5.3% QoQ and 7.4% YoY in Q2 2025[57] Summary Consolidated Statements of Income (Six Months) This table presents the Company's income statement for 6M 2025 and 2024, including GAAP and non-GAAP reconciliations, showing significant year-over-year growth | Item | 6M June 30, 2025 | 6M June 30, 2024 | % Change | | :------------------------------------ | :--------------- | :--------------- | :------- | | Net interest income | $30,811 | $26,462 | 16.4 % | | Total noninterest income | $1,679 | $1,266 | 32.6 % | | Total noninterest expense | $18,561 | $17,621 | 5.3 % | | Net Income | $10,832 | $5,495 | 97.1 % | | Diluted EPS | $0.59 | $0.30 | 96.7 % | | Adjusted Net Income, core bank operating earnings (non-GAAP) | $10,713 | $7,881 | - | | Adjusted Pre-tax pre-provision income (non-GAAP) | $13,775 | $10,107 | - | - Income from minority membership interests increased by 232.4% for the six months ended June 30, 2025, compared to the prior year[60] - Income tax expense decreased by 36.6% for the six-month period, primarily due to a non-recurring tax charge in 2024 related to BOLI surrender[60] Average Statements of Condition and Yields (Quarterly) This table details average balances, interest income/expense, and yields for interest-earning assets and liabilities for Q2 2025, Q1 2025, and Q2 2024, providing net interest margin insights | Item | Q2 2025 Average Balance | Q2 2025 Average Yield | Q1 2025 Average Balance | Q1 2025 Average Yield | Q2 2024 Average Balance | Q2 2024 Average Yield | | :------------------------------------ | :---------------------- | :-------------------- | :---------------------- | :-------------------- | :---------------------- | :-------------------- | | Total interest-earning assets | $2,182,180 | 5.39 % | $2,153,209 | 5.31 % | $2,123,431 | 5.27 % | | Total loans | $1,862,488 | 5.80 % | $1,866,593 | 5.69 % | $1,882,342 | 5.62 % | | Total interest-bearing deposits | $1,534,660 | 3.39 % | $1,513,885 | 3.43 % | $1,420,454 | 3.65 % | | Net Interest Margin | - | 2.90 % | - | 2.83 % | - | 2.59 % | - Commercial and industrial loan yields increased to 8.06% in Q2 2025 from 7.86% in Q1 2025 and 7.92% in Q2 2024[62] - The cost of interest-bearing deposits decreased to 3.39% in Q2 2025 from 3.43% in Q1 2025 and 3.65% in Q2 2024[62] Average Statements of Condition and Yields (Six Months) This table presents average balances, interest income/expense, and yields for interest-earning assets and liabilities for 6M 2025 and 2024, illustrating year-over-year pricing trends | Item | 6M June 30, 2025 Average Balance | 6M June 30, 2025 Average Yield | 6M June 30, 2024 Average Balance | 6M June 30, 2024 Average Yield | | :------------------------------------ | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Total interest-earning assets | $2,167,775 | 5.32 % | $2,103,435 | 5.21 % | | Total loans | $1,864,529 | 5.72 % | $1,861,614 | 5.56 % | | Total interest-bearing deposits | $1,524,331 | 3.41 % | $1,413,506 | 3.62 % | | Net Interest Margin | - | 2.87 % | - | 2.53 % | - The average yield on total loans increased to 5.72% for the six months ended June 30, 2025, from 5.56% in the prior year[63] - The average cost of total interest-bearing liabilities decreased to 3.44% for the six months ended June 30, 2025, from 3.71% in the prior year[63]