Fairfax, VA-FVCBankcorp, Inc. (OTCQX:FVCB) (the “Company”) reported unaudited consolidated earnings of $2.1 million for the second quarter of 2017, or $0.24 diluted earnings per share, an increase of $331 thousand, or 18.5%, compared with the 2016 second quarter net income of $1.8 million, or $0.21 diluted earnings per share. The Company reported return on average equity of 10.05% and return on average assets of 0.91% for the quarter.
Net income was $4.4 million and $3.6 million for the first half of 2017 and 2016, respectively, an increase of $895 thousand or 25.2%. Diluted earnings per share increased to $0.50 from $0.42 for the six-months ended June 30, 2017 and 2016, respectively. The increased earnings is primarily attributable to the growth in loans and deposits, both increasing at a five-year compound annual growth rate in excess of 26%. Net income for the first half of 2017 includes insurance proceeds totaling $443 thousand from a claim on the BOLI policies.
“We see significant opportunity resulting from bank consolidation in our market,” stated David W. Pijor, Chairman and CEO. “We have seized this unique window of opportunity by hiring top talent. We are well-positioned and eager to welcome new customers to join our community bank and benefit from our high-touch and personalized customer service approach.”
Total assets increased to $970.9 million, compared with $796.8 million as of June 30, 2017 and 2016, respectively, an increase of 21.9%. Loans receivable totaled $798.5 million as of June 30, 2017, compared with $664.1 million as of June 30, 2016, a year over year increase of $134.4 million, or 20.2%. For the second quarter of 2017, loans receivable increased $27.8 million, representing 14.4% on an annualized basis.
Total deposits increased to $856.4 million as of June 30, 2017, compared with $675.4 million as of June 30, 2016, an increase of $181.1 million, or 26.8%. Deposits increased $43.0 million, compared with the quarter ended March 31, 2017, an annualized growth rate of 22.1%. Noninterest-bearing deposits totaled $172.6 million at June 30, 2017, comprising 20.2% of total deposits. Wholesale deposits totaled $94.1 million, or 11.0% of total deposits at June 30, 2017. The Company continues to focus on its relationship banking strategy to grow loan and deposits.
Net interest income totaled $7.9 million, an increase of $1.3 million, or 19.5%, for the quarter ended June 30, 2017, compared with the quarter ended June 30, 2016. The Company’s net interest margin was 3.46% and 3.57% for the quarters ended June 30, 2017, and 2016, respectively, the decline primarily attributable to the subordinated debt issued in June 2016. On a linked quarter basis, the margin increased to 3.46% from 3.42%.
Noninterest income excluding gains on securities totaled $335 thousand and $295 thousand for the quarters ended June 30, 2017 and 2016, respectively. While the Company has enhanced its fee income opportunities to sell ancillary services designed to serve our clients’ financial needs, the Bank remains a low-cost alternative to deposit customers, while providing a full suite of competitive cash management products.
Noninterest expenses increased $1.5 million, or 18.0%, for the first half of 2017 compared with the first half of 2016. Salary and compensation related expenses increased $881 thousand, or 17.7%, primarily due to new hires, including branch personnel for the Ashburn branch, which opened in October 2016. In addition, the Company hired top talent as a result of opportunities in the market from recent M&A activity to both fill vacant positions and to expand the Company’s customer outreach and support the Company’s growth. New hires included loan officers and deposit gatherers, credit underwriting and loan administration, BSA and information technology personnel. The efficiency ratio improved to 58.91% from 59.97%, for the quarters ended June 30, 2017 and 2016, respectively.
Asset quality remains firm as nonperforming loans and loans ninety days or more past due totaled only $2.9 million, or 0.30% of total assets. Troubled debt restructurings totaled $4.7 million and are performing as agreed with no impairments. The Company had net charge-offs of $71 thousand during the quarter, while the allowance for loan losses increased to 0.88% of the total loans reflecting refinements to the loan loss allocation as the loan portfolio grows.
Tangible book value per share improved to $10.38 from $9.55 as of June 30, 2017 and 2016, respectively. The Company maintains all regulatory capital ratios in excess of “well-capitalized” under the Basel III guidelines.
About FVCBankcorp, Inc.
FVCbank commenced operations in November 2007 and is the wholly-owned subsidiary of FVCBankcorp, Inc. FVCbank is a $969.8 million Virginia chartered community bank serving small and mid-sized businesses and personal banking customers in the Washington D.C. Metropolitan and Northern Virginia area. Locally owned and managed, it is based in Fairfax, Virginia, and has five additional full-service offices in Arlington, Ashburn, Manassas, Reston and Springfield, Virginia.
For more information on the Company’s 2017 second quarter 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.