FVCBankcorp, Inc. Announces First Quarter 2025 Earnings; Fifth Consecutive Quarter of Improved Profitability and Margin

FVCBankcorp, Inc. (NASDAQ:FVCB) (the "Company") today reported its financial results for the first quarter of 2025.

First Quarter Selected Financial Highlights

• Net Income Increased 5% Compared to the Prior Quarter. Net income totaled $5.2 million, or $0.28 diluted earnings per share, for the quarter ended March 31, 2025, compared to net income of $4.9 million, or $0.26 diluted earnings per share, for the quarter ended December 31, 2024. Return on average assets for the quarter ended March 31, 2025 was 0.94%, an increase from 0.90% for the quarter ended December 31, 2024.
• Net Interest Margin Up 15% and Net Interest Income Improved 18%, Compared to the Year Ago Quarter. For the quarter ended March 31, 2025, net interest margin improved 6 basis points to 2.83% from 2.77% for the three months ended December 31, 2024, the fifth consecutive quarter of margin improvement, and increased 36 basis points, or 15%, compared to 2.47% for the first quarter of 2024. Net interest income increased $2.3 million, or 18%, to $15.1 million for the first quarter of 2025, compared to $12.8 million for the year ago quarter ended March 31, 2024.
• Strong Credit Quality. Loans past due 30 days or more totaled $1.3 million at March 31, 2025, a decrease of $7.2 million, or 84%, from $8.4 million at December 31, 2024. Past due loans at March 31, 2025 were primarily consumer real estate secured. Nonperforming loans at March 31, 2025 decreased to $10.7 million, or 16%, from $12.8 million at December 31, 2024. Nonperforming loans to total assets decreased to 0.48% at March 31, 2025 from 0.58% at December 31, 2024. The Company recorded net recoveries of $139 thousand, or 0.03% to average loans, for the quarter ended March 31, 2025.
• Sound, Well Capitalized Balance Sheet. All of FVCbank's (the "Bank") regulatory capital components and ratios were in excess of thresholds required to be considered "well capitalized", with total risk-based capital to risk-weighted assets of 15.07% at March 31, 2025, compared to 14.73% at December 31, 2024. The tangible common equity ("TCE") to tangible assets ("TA") ratio for the Bank increased to 10.98% at March 31, 2025, from 10.87% at December 31, 2024. The Bank's investment securities are classified as available-for-sale, and therefore the unrealized losses on these securities are fully reflected in the TCE/TA ratio.

For the three months ended March 31, 2025, the Company recorded net income of $5.2 million, or $0.28 diluted earnings per share, compared to net income of $1.3 million, or $0.07 diluted earnings per share, for the quarter ended March 31, 2024. During the first quarter of 2024, the provision for income taxes included $2.4 million related to the loss of the tax favored status of prior appreciation and related tax penalties associated with the Company's surrendered $48.0 million in bank-owned life insurance ("BOLI") policies.

Commercial bank operating earnings (non-GAAP) exclude the above noted tax provision recorded for the BOLI surrender during 2024. Excluding this nonrecurring item, commercial bank operating earnings for the quarters ended March 31, 2025 and 2024 were $5.2 million and $3.7 million, respectively, an increase of $1.4 million, or 39%. Diluted commercial bank operating earnings per share (non-GAAP) for the three months ended March 31, 2025 and 2024 were $0.28 and $0.20, respectively.

The Company considers commercial bank operating earnings a useful comparative financial measure of the Company's operating performance over multiple periods. Commercial bank operating earnings are 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 measure in accordance with GAAP can be found in the tables below.

Management Comments

David W. Pijor, Esq., Chairman and Chief Executive Officer of the Company, said:

"For the quarter ended March 31, 2025, our annualized return on average assets increased to 0.94%, as our operating earnings increased 39% compared to the year ago quarter, demonstrating our ability to drive improved earnings, net interest margin, and efficiency, while we focus on expanding our customer base. We are committed to serving our customers and the businesses in our communities with relationship banking, including loans, deposits, and exceptional treasury management products and services, customizable for any industry. We are positioned to be opportunistic with our team's expertise, responsiveness, commitment, and use of technology."

Statement of Condition

Total assets were $2.24 billion at March 31, 2025 and $2.20 billion at December 31, 2024, an increase of $41.8 million.

Loans receivable, net of deferred fees, were $1.88 billion at March 31, 2025 and $1.87 billion at December 31, 2024, an increase of $11.9 million, or 3% on an annualized basis. During the first quarter of 2025, loan originations totaled $15.2 million with a weighted average rate of 8.13%, and were primarily comprised of commercial and industrial loans. Loan renewals totaled $78.7 million and had a weighted average rate of 7.83%. Loans that paid off during the first quarter of 2025 totaled $38.3 million and had a weighted average rate of 6.13%, and were primarily comprised of commercial real estate and construction loans. At March 31, 2025, the warehouse lending facility with Atlantic Coast Mortgage, LLC ("ACM") increased $21.8 million to $44.2 million, with a weighted average yield of 6.35% for the quarter ended March 31, 2025.

Investment securities were $159.0 million at March 31, 2025 and $156.7 million at December 31, 2024. During the quarter ended March 31, 2025, investment securities increased $2.2 million, due primarily to a decrease in the portfolio's unrealized losses totaling $4.6 million offset by principal repayments totaling $3.2 million.

Total deposits were $1.91 billion at March 31, 2025 and $1.87 billion at December 31, 2024, an increase of $36.0 million, or 8% on an annualized basis. Noninterest-bearing deposits were $367.1 million at March 31, 2025, or 19.3% of total deposits, and increased $1.5 million during the first quarter of 2025. As a member of the IntraFi Network, the Bank offers products to its customers who seek to maximize FDIC insurance protection ("reciprocal deposits"). At March 31, 2025 and December 31, 2024, reciprocal deposits, which are mostly comprised of interest checking and savings accounts, totaled $328.8 million and $269.7 million, respectively, and are considered part of the Company's core deposit base. Time deposits increased $26.8 million to $274.9 million during the first quarter of 2025. The Company continues to have consistent core deposit inflows at lower interest rates.

At March 31, 2025, wholesale funding totaled $299.9 million and had a weighted average rate of 3.44% (including $250 million in pay-fixed/receive-floating interest rate swaps at an average rate of 3.25%). Wholesale funding at March 31, 2025 includes wholesale deposits totaling $249.9 million and other borrowed funds totaling $50.0 million. For the quarter ended March 31, 2025, the cost of wholesale funding was 3.54% compared to a cost of 3.57% for the quarter ended December 31, 2024.

Shareholders' equity at March 31, 2025 was $242.3 million, an increase of $7.0 million, or 3%, from December 31, 2024. Earnings for the quarter ended March 31, 2025 contributed $5.2 million to the increase in shareholders' equity. Common stock issued during 2025 for stock options exercised contributed $429 thousand to shareholders' equity. Accumulated other comprehensive loss decreased $1.4 million for the three months ended March 31, 2025, and was primarily related to the change in the Company's other comprehensive income associated with its available-for-sale investment securities portfolio at March 31, 2025.

Tangible book value per share (a non-GAAP financial measure which is defined in the tables below) at March 31, 2025 and December 31, 2024 was $12.75 and $12.52, respectively. Tangible book value per share, excluding accumulated other comprehensive loss (a non-GAAP financial measure which is defined in the tables below), at March 31, 2025 and December 31, 2024 was $13.94 and $13.80, respectively.

The Bank was well-capitalized at March 31, 2025, with total risk-based capital ratio of 15.07%, common equity tier 1 risk-based capital ratio of 14.07%, and tier 1 leverage ratio of 11.92%.

During the quarter ended March 31, 2025, the Company announced the extension of its share repurchase program that was initiated in 2020. Under the repurchase program, the Company may repurchase up to 1,300,000 shares of its common stock, or approximately 7% of its outstanding shares of common stock at December 31, 2024. The repurchase program will expire on March 31, 2026, subject to earlier termination of the program by the Company's Board of Directors.

Asset Quality

For the three months ended March 31, 2025, the Company recorded a provision for credit losses totaling $200 thousand, compared to none for the three months ended March 31, 2024. At March 31, 2025 and December 31, 2024, the allowance for credit losses ("ACL") was $18.4 million and $18.1 million, respectively. The ACL to total loans, net of fees, was 0.98% at March 31, 2025, compared to 0.97% at December 31, 2024. The increase in the ACL was primarily attributable to the updated economic forecast used for the quantitative portion of the ACL calculation for the quarter ended March 31, 2025. The reserve for unfunded commitments and the ACL on loans combined at March 31, 2025 was 1.01% of total loans, net of fees. The Company recorded net recoveries of $139 thousand, or (0.03)% to average loans, for the three months ended March 31, 2025.

Nonperforming loans at March 31, 2025 totaled $10.7 million, or 0.48% of total assets, compared to $12.8 million, or 0.58% of total assets, at December 31, 2024. The decrease in nonperforming loans at March 31, 2025 is primarily due to a decrease in loans past due over 90 days at March 31, 2025. Total watchlist loans increased slightly to $15.4 million, or 6%, from $14.5 million at December 31, 2024. The Company had no other real estate owned at March 31, 2025 and December 31, 2024.

At March 31, 2025, commercial real estate loans totaled $1.01 billion, or 54% of total loans, net of fees, and construction loans totaled $165.7 million, or 9% of total loans, net of fees. Included in commercial real estate loans are loans secured by office properties totaling $121.9 million, or 6% of total loans, which are primarily located in the Virginia and Maryland suburbs of the Company's market area, with $2.3 million, or 0.12% of total loans, located in Washington, D.C. Loans secured by retail properties totaled $244.9 million, or 13% of total loans, at March 31, 2025. Loans secured by multi-family properties totaled $158.9 million, or 8% of total loans, at March 31, 2025. The commercial real estate portfolio, including construction loans, is diversified by asset type and geographic concentration. The Company manages the portfolio in a disciplined manner, and has comprehensive policies to monitor, measure, and mitigate its loan concentrations within this portfolio segment, including rigorous credit approval, monitoring and administrative practices. The following table provides further stratification of these and additional classes of real estate loans at March 31, 2025 (dollars in thousands).

The loans shown in the above table exhibit strong credit quality, with one nonaccrual at March 31, 2025 totaling $10.2 million, which has a specific reserve totaling $462 thousand. During its assessment of the allowance for credit losses, the Company addressed the credit risks associated with these portfolio segments and believes that as a result of its conservative underwriting discipline at loan origination and its ongoing loan monitoring procedures, the Company has appropriately reserved for possible credit concerns in the event of a downturn in economic activity.

Minority Investment in Mortgage Banking Operation

For the quarter ended March 31, 2025, the Company recorded income of $141 thousand compared to a loss of $226 thousand for the quarter ended March 31, 2024, related to its investment in ACM. The Company's investment in ACM is reflected as a nonconsolidated minority investment, and as such, the Company's income generated from the investment is included in non-interest income.

Income Statement

The Company recorded net income of $5.2 million for the three months ended March 31, 2025 compared to net income of $1.3 million for the three months ended March 31, 2024, an increase of $3.8 million. Compared to the linked quarter, net income for the three months ended March 31, 2025 increased $265 thousand, or 5%, from $4.9 million for the three months ended December 31, 2024.

"Management continues to execute its growth strategy to increase loans incrementally with improved margin and core deposits, while leveraging technological investments to enhance the customer experience and improve efficiencies," said Patricia A. Ferrick, President of the Company.

Net interest income increased $2.3 million, or 18%, to $15.1 million for the quarter ended March 31, 2025, compared to $12.8 million for the same period of 2024, and increased $139 thousand, or 1%, compared to the linked quarter ended December 31, 2024. Compared to the year ago quarter ended March 31, 2024, the increase in net interest income for the first quarter of 2025 was primarily due to an increase in loan interest income as the loan portfolio reprices in this higher interest rate environment. Compared to the linked quarter, net interest income for the three months ended March 31, 2025 increased primarily as a result of a decrease in interest expense.

The Company's net interest margin increased 36 basis points to 2.83% for the quarter ended March 31, 2025 compared to 2.47% for the quarter ended March 31, 2024, and increased 6 basis points from 2.77% for the linked quarter ended December 31, 2024. The increase in net interest margin is a result of continued improvement in the cost of funding sources as the Company decreases interest rates on its various deposit products proportionately with any decrease in its yield on earning assets. Cost of funds decreased to 2.83% for the quarter ended March 31, 2025, a decrease from 2.97% for the quarter ended December 31, 2024, and a decrease from 2.95% for the year ago quarter ended March 31, 2024.

Compared to the year ago quarter, interest income increased $1.7 million, or 6%, to $28.6 million, for the first quarter of 2025 compared to the quarter ended March 31, 2024. Loan interest income increased $1.2 million, or 5%, to $26.6 million for the three months ended March 31, 2025, compared to $25.3 million for the three months ended March 31, 2024, as average loan yields increased during this same comparable period. The Company has actively managed its maturing commercial real estate loan portfolio and further diversified its loan mix toward commercial & industrial loans. Loan yields increased 19 basis points to 5.69% for the three months ended March 31, 2025 compared to 5.50% for the same period of 2024. The yield on earning assets increased 16 basis points to 5.31% for the three months ended March 31, 2025 compared to 5.15% for the same period of 2024. Compared to the linked quarter, the yield on earnings assets decreased 16 basis points from 5.47% for the quarter ended December 31, 2024, a result of the decrease in short-term interest rates from the fourth quarter of 2024.

Within twelve months of March 31, 2025, $88.8 million in fixed rate commercial loans with a weighted average rate of 5.40% and $21.9 million in variable rate commercial loans with a weighted average rate of 4.17% are expected to reprice. Within the following 24-36 months, $247.1 million in fixed rate commercial loans with a weighted average rate of 4.65% and an additional $114.9 million in variable rate commercial loans with a weighted average rate of 4.80% are scheduled to reprice, representing 24% of the current commercial loan portfolio. In the near term, the Company's efforts to attain appropriate yields on new originations and the repricing of the commercial loan portfolio are expected to provide continued improvement in loan yields.

Interest expense decreased $530 thousand, or 4%, to $13.5 million, for the quarter ended March 31, 2025, compared to $14.0 million for the quarter ended March 31, 2024. On a linked quarter basis, interest expense decreased $862 thousand, or 6%, compared to the quarter ended December 31, 2024. Interest expense on deposits decreased $251 thousand to $12.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, reflecting the decrease in short-term interest rates during the fourth quarter of 2024. On a linked quarter basis, interest expense on deposits decreased $779 thousand, or 6%, from $13.6 million for the quarter ended December 31, 2024. The cost of deposits (which includes noninterest-bearing deposits) for the first quarter ended March 31, 2025 was 2.78%, a decrease of 19 basis points from the previous quarter end, which demonstrates the Company's ability to grow its customer base while reducing deposit costs.

Interest expense on other borrowed funds for the quarter ended March 31, 2025 decreased $769 thousand, or 62%, to $468 thousand from $1.2 million, for the quarter ended March 31, 2024. Compared to the linked quarter ended December 31, 2024, interest expense on other borrowed funds decreased $73 thousand, or 13%, for the first quarter of 2025. The cost of interest-bearing liabilities for the first quarter of 2025 was 3.46% compared to 3.64% for the fourth quarter of 2024, a decrease of 18 basis points, and compared to a decrease of 22 basis points from 3.68% for the year ago quarter, demonstrating the Company's ability to reprice funding costs downward simultaneously with federal funds rate decisions during 2024.

Noninterest income for the three months ended March 31, 2025 totaled $671 thousand compared to income of $395 thousand for the three months ended December 31, 2024, and $452 thousand for the three months ended December 31, 2024.

Fee income from loans was $77 thousand for the quarter ended March 31, 2025, compared to $49 thousand for the first quarter of 2024. Service charges on deposit accounts totaled $270 thousand for the first quarter of 2025, compared to $261 thousand for the year ago quarter. Income from BOLI decreased $120 thousand to $70 thousand for the three months ended March 31, 2025, compared to $190 thousand for the same period of 2024, a direct result of the Company's surrender of BOLI policies in the first quarter of 2024. Income from its minority interest in ACM increased $367 thousand to $141 thousand for the three months ended March 31, 2025, compared to a loss of $226 thousand for the same period of 2024, and a loss of $49 thousand for the linked quarter ended December 31, 2024.

Noninterest expense totaled $9.1 million for the quarter ended March 31, 2025, an increase of $508 thousand, or 6%, compared to $8.6 million for the year ago quarter ended March 31, 2024. On a linked quarter basis, noninterest expense increased $131 thousand, or 1%, from $9.0 million for the three months ended December 31, 2024, primarily due to an increase in salaries and benefits expense during the first quarter of 2025. Compared to the year ago quarter, salaries and benefits expense increased $252 thousand, or 6%, for the three months ended March 31, 2025. The increases in salaries and benefits expense is primarily a result of payroll taxes and other incentive accruals during the first quarter of 2025.

Internet banking and software expense increased $131 thousand to $825 thousand for the first quarter of 2025 compared to the year ago quarter ended March 31, 2024, primarily as a result of the implementation of enhanced customer software solutions at the end of 2023. Other operating expenses totaled $1.5 million for first quarter of 2025 compared to $1.4 million for the year ago quarter ended March 31, 2024, an increase of $128 thousand, which was primarily a result of an increase in loan workout expenses during the first quarter of 2025. The Company continues to identify and assess opportunities to reduce operating expenses.

The efficiency ratio for commercial bank operating earnings (non-GAAP) for the quarters ended March 31, 2025, December 31, 2024, and March 31, 2024, was 58.1%, 58.6%, and 65.4%, respectively. A reconciliation of the aforementioned efficiency ratio, a non-GAAP financial measure, can be found in the tables below.

The Company recorded a provision for income taxes of $1.2 million and $3.2 million for the three months ended March 31, 2025 and 2024, respectively. The 2024 period included an additional $2.4 million which was associated with the Company's surrender of BOLI policies in the first quarter of 2024.

About FVCBankcorp, Inc.

FVCBankcorp, Inc. is the holding company for FVCbank, a wholly-owned subsidiary that commenced operations in November 2007. FVCbank is a $2.24 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 8 full-service offices in Arlington, Fairfax, Manassas, Reston and Springfield, Virginia, Washington, D.C., and Baltimore, and Bethesda, Maryland.

For more information about the Company, please visit the Investor Relations page of FVCBankcorp, Inc.'s website, www.fvcbank.com.

Cautionary Note About Forward-Looking Statements

This press release may contain statements relating to future events or future results of the Company that are considered "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as "may," "could," "should," "will," "would," "believe," "anticipate," "estimate," "expect," "aim," "intend," "plan," or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements. The following factors, among others, could cause our financial performance to differ materially from that expressed in such forward-looking statements: general business and economic conditions, including higher inflation and its impacts, nationally or in the markets that we serve could adversely affect, among other things, real estate valuations, unemployment levels, the ability of businesses to remain viable, consumer and business confidence, and consumer or business spending, which could lead to decreases in demand for loans, deposits, and other financial services that we provide and increases in loan delinquencies and defaults; the concentration of our business in and around the Washington, D.C. metropolitan area and the effects of changes in the economic, political, and environmental conditions on this market, including potential reductions in spending by the U.S. government and related reductions in the federal workforce; the impact of the interest rate environment on our business, financial condition and results of operation, and its impact on the composition and costs of deposits, loan demand, and the values and liquidity of loan collateral, securities, and interest sensitive assets and liabilities; changes in our liquidity requirements could be adversely affected by changes in our assets and liabilities; changes in the assumptions underlying the establishment of reserves for possible credit losses and the possibility that future credit losses may be higher than currently expected; the management of risks inherent in our real estate loan portfolio, and the risk of a prolonged downturn in the real estate market, which could impair the value of loan collateral and the ability to sell collateral upon any foreclosure; changes in market conditions, specifically declines in the commercial and residential real estate market, volatility and disruption of the capital and credit markets, and soundness of other financial institutions that we do business with; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rate, market and monetary fluctuations; our investment securities portfolio is subject to credit risk, market risk, and liquidity risk as well as changes in the estimates used to value the securities in the portfolio; declines in our common stock price or the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to record a noncash impairment charge to earnings in future periods; potential exposure to fraud, negligence, computer theft and cyber-crime, and our ability to maintain the security of our data processing and information technology systems; the impact of changes in bank regulatory conditions, including laws, regulations and policies concerning capital requirements, deposit insurance premiums, taxes, securities, and the application thereof by regulatory bodies; the effect of changes in accounting policies and practices, as may be adopted from time to time by bank regulatory agencies, the Securities and Exchange Commission (the "SEC"), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setting bodies; competitive pressures among financial services companies, including the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; the effect of acquisitions and partnerships we may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions; our involvement, from time to time, in legal proceedings and examination and remedial actions by regulators; geopolitical conditions, including trade restrictions and tariffs, and acts or threats of terrorism, or actions taken by the United States or other governments in response to trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the United States and abroad; and the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues or emergencies, and other catastrophic events. The foregoing factors should not be considered exhaustive and should be read together with other cautionary statements that are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, including those discussed in the section entitled "Risk Factors," and in the Company's other periodic and current reports filed with the SEC. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this press release. Therefore, the Company cautions you not to place undue reliance on our forward-looking information and statements. We will not update the forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict their occurrence or how they will affect the Company's operations, financial condition or results of operations.