Connecting business
and the community
2015 Annual Report
1
Annual Report 2015 Building relationships
that build our community
FVCBankcorp, Inc. and Subsidiary
Consolidated Financial Report
Fairfax, Virginia | December 31, 2015
MARCH 10, 2016
Dear Shareholder:
I am delighted to update you on your Bank’s financial performance during 2015. We recently reported consolidated earnings of $5.4
million for 2015, or $0.80 diluted earnings per share, an increase of $1.3 million, or 31.1% compared with 2014 net income of $4.1 million,
or $0.63 diluted earnings per share. 2015 was a milestone year for FVCbank as our team achieved record loan growth and earnings in
one of the most vibrant markets in the country. We continue to win relationships and embrace our commitment to provide the best
quality and service to our customers. The record earnings for the year reflect our executed business plan to improve operating
efficiency as we increase our earning assets and grow into our infrastructure.
In October, we formed FVCBankcorp, Inc. (the Company), now the holding company of FVCbank. As a result, you were asked to
exchange your FVCbank stock for shares of FVCBankcorp, Inc. The Company remains “well-capitalized” under the new Basel III
guidelines adopted in 2015. The holding company was formed to allow for flexibility in raising capital in the future to optimize
shareholder value.
Total assets increased to $736.8 million compared with $604.8 million as of December 31, 2015 and 2014, respectively, an increase
of 21.8%. Loans receivable totaled $623.6 million as of December 31, 2015, compared with $509.9 million as of December 31, 2014,
an increase of $113.6 million, or 22.3%. During the fourth quarter of 2015, loans increased $61.2 million, representing annualized
growth in excess of 40%.
Total deposits increased $122.4 million, or 24.3% to $626.6 million as of December 31, 2015, compared with $504.2 million as of
December 31, 2014. Non-interest bearing deposits comprise 20.6% of total deposits and increased $24.0 million, or 22.8% for the
year. Wholesale deposits totaling $55.4 million, or 8.8% of total deposits, increased $11.0 million, while customer deposits increased
$111.4 million for the 2015 year. We continue to leverage our suite of cash management products and high-touch service to new and
existing customers as part of our relationship banking strategy.
Net interest income totaled $22.9 million, an increase of $3.7 million, or 19.3% for the year ended December 31, 2015, compared
with the prior year. The Company’s net interest margin was 3.69% and 3.63% for the years ended December 31, 2015, and 2014,
respectively. The improved net interest margin primarily results from growth in loans receivable year over year.
Non-interest income declined to $1.1 million from $1.2 million for the years ended December 31, 2015, and 2014, respectively, due
to the gain on the sale of an SBA loan totaling $196 thousand recognized in the 2014 fourth quarter. Management has implemented
new initiatives to enhance non-interest income, while maintaining our commitment to be a low fee bank for our customers.
We continue to attract high-performing experienced individuals as we grow prudently and soundly. Non-interest expenses increased
$1.4 million, or 10.4% for the 2015 year. Salary and compensation related expenses increased $977 thousand, or 12.5%, while other
operating expenses increased $408 thousand, or 7.4%, for the same period. The efficiency ratio improved to 61.5%, compared with
65.2%, for the years ended December 31, 2015, and 2014, respectively, reflecting the Company’s early investment in technology and
experienced bankers.
Asset quality remains strong. We reported non-performing assets and loans ninety days or more past due of $2.6 million, or 0.35%
of total assets, compared with $1.6 million, or 0.26%, as of December 31, 2015, and 2014, respectively. Management continues its
conservative credit culture through proactive monitoring and early identification of potential problem loans.
We plan to open a new branch location in Loudoun County in the first half of this year and look for other opportunities to expand our
footprint throughout the Washington D.C. Metropolitan area. We are excited about 2016 as we start the year with momentum, and
we are well positioned to consider opportunities in our market area to further enhance shareholder value.
We continue to be rewarded by our shareholders who have selected us as their banker. We are committed to providing personalized
customer service to each one of you. We welcome the opportunity to win your trust and your business.
Best Regards.
David W. Pijor
Chairman, President and Chief Executive Officer
David W. Pijor
Chairman
L. Burwell Gunn
Vice Chairman
DIRECTORS
Scott Laughlin
Sidney G. Simmonds
Tom L. Patterson
Daniel M. Testa
Devin Satz
Philip “Trey” R. Wills III
Lawrence W. Schwartz
EXECUTIVE OFFICERS
David W. Pijor
Chairman, President &
Chief Executive Officer
Patricia A. Ferrick
Executive Vice President &
Chief Financial Officer
B. Todd Dempsey
Executive Vice President &
Chief Operating Officer
Jack Novak
Executive Vice President &
Chief Marketing Officer
Bill Byers
Executive Vice President &
Chief Lending Officer
Michael G. Nassy
Executive Vice President &
Chief Credit Officer
REGIONAL LENDING OFFICERS
Alissa Curry Briggs
Senior Vice President
Regional Lending Executive
Michelle L. Buckles
Senior Vice President
Compliance
James D. Holter
Senior Vice President
Information Technology
Terry R. Frey
Senior Vice President
Loan Administration
Christopher O. Turley
Senior Vice President
Regional Lending Executive
Joshua F. Steele
Senior Vice President Lending
Brian R. Tower
Senior Vice President Lending
Huong K. Van
Senior Vice President Lending
Steffany R. Watson
Senior Vice President
Cash Management
James C. Elliot
Senior Vice President
Regional Lending Executive
Lance D. Nobles
Senior Vice President
Regional Lending Executive
OFFICERS
Alberta A. Gibson
Senior Vice President
Director of Human Resources
Michael Y. Huang
Senior Vice President Finance
Jacqueline S. Marbell-Edson
Senior Vice President
Loan Administration
Farideh Mullafiroze
Senior Vice President
Business Development
Todd E. Lattimer
Senior Vice President Lending
LOAN AND DEPOSIT GROWTH
INCREASING PROFITABILITY
SELECTED FINANCIAL DATA
For the year ended December 31 (unaudited) (dollars in thousands, except per share data)
Selected Balances
Total assets
Total deposits
Total loans
Other borrowings
Allowance for loan losses
Total shareholders’ equity
Summary Results of Operations
Interest income
Interest expense
Net interest income
Provision for loan losses
Net interest income after provision
for loan losses
Noninterest income
Noninterest expense
Income before taxes
Income tax expense (benefit)
Net income
Per Share Data*
Net income, basic
Net income, diluted
Book value
Tangible Book value
Shares outstanding
Significant Ratios
Net interest margin
Efficiency Ratio
Return on average assets
Return on average equity
Total capital (to risk weighted assets)
Common equity Tier 1 capital
(to risk weighted assets)
Tier 1 capital (to risk weighted assets)
Tier 1 (to average assets)
Asset Quality
Nonperforming assets and loans 90+
past due
Nonperforming assets and loans 90+
past due to total assets
Allowance for loan losses to loans
Allowance for loan losses to
nonperforming assets
Net (recovery) charge-offs
Net (recovery) charge-offs
to average loans
*Adjusted for 5-for-4 stock split in 2015
2015
2014
2013
2012
2011
$
736,807
$
604,756
$
506,717
$
422,761
$
261,037
626,640
623,559
35,650
(6,239)
72,752
504,220
509,938
32,500
(5,565)
66,815
429,990
411,040
14,500
(4,792)
60,903
378,702
331,428
2,500
(3,757)
39,143
223,369
213,361
2,500
(2,754)
33,785
$
26,557
$
22,473
$
18,491
$
15,095
$
3,665
22,892
1,073
21,819
1,161
14,701
8,279
2,860
5,419
3,288
19,185
886
18,299
1,313
13,316
6,296
2,162
4,133
2,960
15,531
803
14,728
1,025
12,228
3,525
1,297
2,228
2,515
12,580
1,227
11,353
1,098
10,168
2,283
805
1,478
$
$
$
$
0.84
0.80
11.21
11.19
$
$
$
$
0.64
0.63
10.30
10.27
$
$
$
$
0.39
0.38
9.41
9.38
$
$
$
$
0.35
0.34
8.82
8.78
$
$
$
$
12,169
2,293
9,875
649
9,226
469
8,253
1,442
(558)
2,000
0.57
0.56
8.26
8.26
6,490,420
6,488,123
6,470,915
4,435,995
4,090,476
3.69%
61.46%
0.85%
7.70%
12.20%
11.25%
11.25%
10.82%
3.63%
65.21%
0.76%
6.45%
13.62%
N/A
12.53%
10.96%
3.59%
74.78%
0.50%
4.21%
15.89%
N/A
14.71%
12.58%
4.09%
74.46%
0.47%
4.11%
12.29%
N/A
11.13%
9.16%
4.15%
79.76%
0.81%
7.51%
14.27%
N/A
13.14%
12.44%
$
2,559
$
1,601
$
2,988
$
4,623
$
5,902
0.35%
1.00%
0.26%
1.09%
0.59%
1.17%
1.09%
1.13%
2.26%
1.29%
243.81%
347.51%
160.37%
81.27%
46.67%
$
399
$
113
$
(231)
$
225
$
--
0.07%
0.03%
(0.06%)
0.07%
0.00%
FVCBankcorp, Inc. and Subsidiary
Consolidated Financial Report
Fairfax, Virginia | December 31, 2015
CONTENTS
Independent Auditor’s Report ................................................................................................ 1
Consolidated Financial Statements
Consolidated balance sheets .............................................................................................................. 2
Consolidated statements of income ................................................................................................. 3
Consolidated statements of comprehensive income .................................................................... 4
Consolidated statements of cash flows............................................................................................ 5
Consolidated statements of changes in stockholders’ equity .................................................... 6
Notes to consolidated financial statements .................................................................................... 7
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
FVCBankcorp, Inc.
Fairfax, Virginia
Certified Public Accountants
and Consultants
Report on the Financial Statements
We have audited the accompanying consolidated financial statements of FVCBankcorp, Inc. and its subsidiary, which comprise the
consolidated balance sheets as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive
income, changes in stockholders’ equity and cash flows for the years then ended and the related notes to the consolidated financial
statements, (collectively, financial statements).
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance
with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of
the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of FVCBankcorp,
Inc. and its subsidiary as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended
in accordance with accounting principles generally accepted in the United States of America.
Winchester, Virginia
March 10, 2016
1
FVCBankcorp, Inc. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets
December 31, 2015 and 2014
ASSETS
2015
2014
Cash and due from banks
Federal funds sold
Interest-bearing deposits at other financial institutions
Securities held-to-maturity (fair market value of $2,244,390 in 2015)
Securities available for sale, at fair market value
Restricted stock, at cost
Loans, net of allowance for loan losses of $6,238,606
for 2015 and $5,564,669 for 2014
Premises and equipment, net
Accrued interest receivable
Prepaid expenses
Deferred tax asset, net
Core deposit intangible
Bank owned life insurance (BOLI)
Other assets
$
5,257,136
$
5,066,808
--
23,442,934
2,246,992
65,547,520
4,048,000
13,895
10,915,209
--
62,697,398
3,887,250
617,320,037
504,372,951
1,511,900
1,908,487
648,459
3,684,617
139,400
10,524,789
527,148
1,744,607
1,576,142
738,804
3,210,400
159,800
10,199,352
173,226
LIABILITIES AND STOCKHOLDERS’ EQUITY
2015
2014
Total assets
$
$
736,807,419
$
$
604,755,842
Liabilities
Deposits:
Noninterest-bearing
Interest-bearing checking, savings and money market
Time deposits
FHLB advances
Accrued interest payable
Accrued expenses and other liabilities
Commitments and Contingent Liabilities
Stockholders’ Equity
Preferred stock:
$
129,078,409
$
105,126,136
285,622,930
211,938,452
200,354,779
198,739,453
Total deposits
$
626,639,791
$
504,220,368
35,650,000
32,500,000
132,743
1,633,195
153,062
1,067,479
Total liabilities
$
664,055,729
$
537,940,909
$0.01 par value, authorized 1,000,000 shares; no shares issued
and outstanding in 2015 and 2014
Common stock:
$0.01 and $5.00 par value, authorized 10,000,000 shares; 6,490,420 and
5,190,498 shares issued and outstanding in 2015 and 2014, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive (loss), net
See Notes to Consolidated Financial Statements.
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
$
$
--
--
64,904
25,952,490
62,343,894
10,956,822
(613,930)
72,751,690
736,807,419
$
$
$
$
35,728,331
5,537,751
(403,639)
66,814,933
604,755,842
2
Annual Report 2015 Consolidated Statements of Income
For the Years Ended December 31, 2015 and 2014
Interest and Dividend Income
Interest and fees on loans
Interest and dividends on securities held-to-maturity
Interest and dividends on securities available-for-sale
Dividends on restricted stock
Interest on deposits at other financial institutions
Interest on federal funds sold
Total interest and dividend income
Interest Expense
Interest on deposits
Interest on federal funds purchased
Interest on short-term debt
Interest on long-term debt
Net Interest Income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest Income
Service charges on deposit accounts
Gains on sale of securities available for sale
Gains on sale of loans
BOLI income
Other fee income
2015
2014
$
25,340,584
$
21,197,541
40,058
998,877
145,453
32,081
--
--
1,074,950
142,476
2,173
55,747
26,557,053
$
$
22,472,887
2015
2014
3,618,983
$
3,247,751
428
11,869
33,250
319
7,456
32,248
$
$
$
$
$
$
$
2015
2014
22,892,523
$
1,072,820
19,185,113
885,685
21,819,703
$
$
18,299,428
2015
2014
565,963
$
67,482
--
325,437
202,021
651,919
77,222
196,114
199,351
188,259
Total interest expense
$
3,664,530
$
3,287,774
Total noninterest income
$
$
1,160,903
$
$
1,312,865
3
FVCBankcorp, Inc. Noninterest Expenses
Salaries and employee benefits
Occupancy and equipment expense
Data processing and network administration
State franchise taxes
FDIC insurance
Audit, legal and consulting fees
Director fees
Marketing, business development and advertising
Postage, courier and telephone
Internet banking
Loan related expenses
Dues, memberships and publications
Printing and supplies
State assessments
Bank insurance
Bank charges
Core deposit intangible amortization
Other operating expenses
2015
2014
$
8,807,837
$
1,950,856
7,830,511
1,939,042
838,663
680,297
367,168
331,540
279,128
256,475
195,111
150,471
138,747
109,225
102,282
100,409
84,826
65,025
20,400
223,278
841,498
628,121
319,182
287,939
228,636
238,527
206,469
117,105
38,356
94,214
109,828
78,859
77,756
70,058
20,400
189,891
Total noninterest expenses
Net income before income tax expense
Income tax expense
Net income
Earnings per share, basic
Earnings per share, diluted
$
$
$
$
$
$
14,701,738
$
13,316,392
8,278,868
$
6,295,901
2,859,797
$
2,162,413
5,419,071
0.84
0.80
$
$
$
4,133,488
0.64
0.63
See Notes to Consolidated Financial Statements.
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2015 and 2014
Net Income
Other comprehensive income (loss):
Unrealized gain (loss) on securities available for sale,
net of tax $(85,388) and $609,242, respectively
Reclassification adjustment for gains realized in income,
net of tax $22,944 and $26,255, respectively
Total other comprehensive income (loss)
Total comprehensive income
See Notes to Consolidated Financial Statements.
2015
2014
5,419,071
$
4,133,488
(165,753)
1,182,647
(44,538)
(210,291)
5,208,780
$
$
(50,967)
1,131,680
5,265,168
$
$
$
4
Annual Report 2015 Consolidated Statements of Cash Flows
For the Years Ended December 31, 2015 and 2014
Cash Flows From Operating Activities
Reconciliation of net income to net cash provided by operating activities:
Net income
Depreciation
Provision for loan losses
Net amortization of premium of securities
Net amortization of deferreds and purchase premiums
Stock-based compensation expense
BOLI income
Realized gains on securities sales
Realized gains on loan sales
Deferred income tax (benefit)
Core deposits intangible amortization
Changes in assets and liabilities:
(Increase) in accrued interest receivable, prepaid expenses
and other assets
Increase (decrease) in accrued interest payable, accrued expenses
and other liabilities
Net cash provided by operating activities
Cash Flows From Investing Activities
Maturities of certificates of deposits purchased for investment
(Increase) decrease in interest-bearing deposits at other financial institutions
Purchases of securities held-to-maturity
Purchases of securities available for sale
Proceeds from sales of securities available for sale
Proceeds from maturities and calls of securities available for sale
Proceeds from prepayments of securities available for sale
Net (purchase) of restricted stock
Net (increase) in loans
Proceeds from recovery of charged off loans
Purchases of BOLI
(Purchases) of premises and equipment
2015
2014
$
5,419,071
$
4,133,488
563,579
1,072,820
199,397
170,136
705,000
(325,437)
(67,482)
--
(365,885)
20,400
535,251
885,685
142,717
471,834
481,000
(199,351)
(77,222)
(196,114)
(193,905)
20,400
$
$
(595,922)
(342,812)
545,397
(103,060)
7,341,074
$
5,557,911
1,000,000
$
(12,527,725)
(2,246,047)
(31,874,397)
19,513,845
913,043
7,145,904
(160,750)
750,000
13,769,596
--
(29,757,681)
15,663,566
3,419,655
5,766,326
(945,500)
(114,201,576)
(99,296,346)
11,534
--
(330,872)
10,000
(10,000,001)
(268,461)
Net cash (used in) investing activities
$
(132,757,041)
$
(100,888,846)
5
FVCBankcorp, Inc. Cash Flows From Financing Activities
Net increase in noninterest-bearing, interest-bearing checking, savings,
and money market deposits
Net increase in time deposits
(Decrease) in federal funds purchased
Increase in FHLB advances
Cash paid in lieu of fractional shares
Common stock issuance, net of offering costs
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental Disclosures of Cash Flow Information
Cash payments for interest
Cash payments for income taxes
Supplemental Disclosures of Noncash Investing Activity
Unrealized gains (losses) on securities available for sale
See Notes to Consolidated Financial Statements.
2015
2014
$
109,220,424
$
69,090,668
13,198,999
--
3,150,000
(3,348)
26,325
125,592,400
176,433
$
$
5,140,194
(3,000,000)
21,000,000
--
165,291
92,396,153
(2,934,782)
5,080,703
8,015,485
5,257,136
$
$
5,080,703
3,644,211
2,625,000
$
$
3,332,507
2,331,000
(318,623)
$
1,714,667
$
$
$
$
$
$
$
Consolidated Statements of Changes in Stockholders’ Equity
For the Years Ended December 31, 2015 and 2014
SHARES
COMMON
STOCK
ADDITIONAL
PAID-IN
CAPITAL
RETAINED
EARNINGS
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
TOTAL
Balance at December 31, 2013
$
5,176,732
$
25,883,660
$
35,150,870
$
1,404,263
$
(1,535,319)
$
60,903,474
Net income
Other comprehensive income
Common stock issuance
for options exercised
Stock-based compensation
expense, net of tax benefit
of $65,387
--
--
--
--
--
--
13,766
68,830
96,461
--
--
481,000
4,133,488
--
4,133,488
--
--
--
1,131,680
1,131,680
--
--
165,291
481,000
Balance at December 31, 2014
$
5,190,498
$
25,952,490
$
35,728,331
$
5,537,751
$
(403,639)
$
66,814,933
Net income
Other comprehensive loss
--
--
--
--
--
--
5-for-4 stock split
1,297,485
6,487,425
(6,490,773)
Common stock issuance
for options exercised
Par value change from
$5.00 to $0.01
Stock-based compensation
expense, net of tax benefit
of $90,526
2,437
12,185
14,140
--
--
(32,387,196)
32,387,196
--
705,000
5,419,071
--
--
--
--
--
--
(210,291)
--
--
--
--
5,419,071
(210,291)
(3,348)
26,325
--
705,000
Balance at December 31, 2015
$
6,490,420
$
64,904
$
62,343,894
$
10,956,822
$
(613,930)
$
72,751,690
See Notes to Consolidated Financial Statements.
6
Annual Report 2015 Notes to Consolidated Financial Statements
Note 1 Organization and Summary of Significant Accounting Policies
Organization
FVCBankcorp, Inc. (the “Company”), a Virginia corporation,
was formed in 2015 and is registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended.
The Company is headquartered in Fairfax, Virginia. The Company
conducts its business activities through the branch offices of its
wholly owned subsidiary bank, First Virginia Community Bank
(the “Bank”). The Company exists primarily for the purposes
of holding the stock of its subsidiary, the Bank.
Stock Split and Par Value
On March 23, 2015, the Company declared a five-for-four common
stock split. The earnings per share for the years ended December
31, 2015 and 2014 have been retroactively adjusted for this split as
if it occurred on January 1, 2014. On October 30, 2015, the Company
reduced the par value of its common stock from $5.00 per share to
$0.01 per share.
Cash and Cash Equivalents
The Bank was organized under the laws of the Commonwealth
For purposes of the statements of cash flows, cash and cash
of Virginia to engage in a general banking business serving the
equivalents include cash on hand, amounts due from banks and
community in and around Fairfax, Virginia. The Bank commenced
federal funds sold. Generally, federal funds are purchased and
regular operations on November 27, 2007, and is a member of
sold for one day periods.
the Federal Reserve System and the Federal Deposit Insurance
Corporation. It is subject to the regulations of the Federal
Securities
Reserve System and the State Corporation Commission of
Virginia. Consequently, it undergoes periodic examinations
by these regulatory authorities.
Principles of Consolidation
The consolidated financial statements include the accounts
of FVCBankcorp, Inc. and its wholly owned subsidiary. All
material intercompany balances and transactions have
been eliminated in consolidation.
Significant Accounting Policies
Debt securities that management has the positive intent and ability to
hold to maturity are classified as “held-to-maturity” and recorded at
amortized cost. Securities not classified as held-to-maturity, including
equity securities with readily determinable fair values, are classified
as “available-for-sale” and recorded at fair value, with unrealized
gains and losses excluded from earnings and reported in other
comprehensive income. Restricted stock, such as Federal Reserve
Bank stock, Federal Home Loan Bank (FHLB) stock and Community
Bankers’ Bank stock, is carried at cost, based on the redemption
provisions of these correspondent banks.
Purchase premiums and discounts are recognized in interest income
The accounting and reporting policies of the Company are in
using the interest method over the terms of the securities. Declines
accordance with accounting principles generally accepted in the
in the fair value of available-for-sale securities below their cost that
United States of America and conform to general practices within
are deemed to be other than temporary are reflected in earnings
the banking industry. The more significant of these policies are
as realized losses. In estimating other-than-temporary impairment
losses, management considers (1) the length of time and the extent
to which the fair value has been less than cost, (2) the financial
condition and near-term prospects of the issuer and (3) whether the
Company intends to sell the security, whether it is more likely than not
that the Company will be required to sell the security before recovery
of its amortized costs basis and whether the Company expects to
recover the security’s entire cost basis. Gains and losses on the sale
of securities are recorded on the trade date and are determined using
the specific identification method.
summarized below.
7
FVCBankcorp, Inc. Loans
Allowance for Loan Losses
The Company grants commercial real estate, commercial non-real
The allowance for loan losses is a valuation allowance for
estate and consumer loans to its customers. A substantial portion of
probable incurred credit losses. Loan losses are charged against
the loan portfolio includes commercial loans throughout the greater
the allowance when management believes the uncollectibility of
Washington, D.C. metropolitan area, initially focusing on the counties
a loan balance is confirmed. Subsequent recoveries, if any, are
of Arlington, Fairfax, Loudoun and Prince William, Virginia. The ability
credited to the allowance. Management estimates the allowance
of the Company’s debtors to honor their contracts is dependent upon
balance required using past loan loss experience, the nature and
the real estate and general economic conditions in this area.
volume of the portfolio, information about specific borrower
The recorded investment in loans that management has the intent and
ability to hold represents the customers unpaid principal balances,
net of partial charge-offs. Interest income is accrued on the unpaid
principal balance. Loan origination and commitment fees and certain
direct costs are deferred and the net amount is amortized as an
adjustment of the related loans’ yield. The Company is amortizing
these amounts over the loans’ contractual lives.
Past due status is monitored based on customers’ contractual
payment status for all loans. The accrual of interest on mortgage
and commercial loans is discontinued at the time the loan becomes
90 days delinquent unless the credit is well-secured and in process
of collection. Non-performing loans are placed either on nonaccrual
status pending further collection efforts or charged off if collection
of principal or interest is considered doubtful.
All interest accrued but not collected for loans that are placed on
nonaccrual or charged off is reversed against interest income. The
interest on loans in nonaccrual status is accounted for on the cost
recovery method, until qualifying for return to accrual. Loans are
returned to accrual status when all the principal and interest
amounts contractually due are brought current and future
payments are reasonably assured.
Troubled Debt Restructurings
situations and estimated collateral values, economic conditions,
and other factors. Allocations of the allowance may be made for
specific loans, but the entire allowance is available for any loan that,
in management’s judgment, should be charged off. Charge-offs of
loans are made by portfolio segment at the time that the collection
of the full principal, in management’s judgment, is doubtful. This
methodology for determining charge-offs is consistently applied
to each segment.
The allowance consists of specific, general and unallocated
reserves. Specific reserves relate to loans that are individually
classified as impaired. A loan is impaired when, based on current
information and events, it is probable that the Company will be
unable to collect all amounts due according to the contractual
terms of the loan agreement. Measurement of impairment is based
on the expected future cash flows of an impaired loan, which are to
be discounted at the loan’s effective interest rate, or measured by
reference to an observable market value, if one exists, or the fair
value of the collateral for a collateral-dependent loan. The Company
selects the measurement method on a loan-by-loan basis except
that collateral-dependent loans for which foreclosure is probable
are measured at the fair value of the collateral.
Larger balance, non-homogeneous loans are individually evaluated
for possible impairment. If a loan is impaired, a portion of the
allowance is allocated so that the loan is reported, net, at the present
In situations where, for economic or legal reasons related to a
value of estimated future cash flows using the loan’s existing rate
borrower’s financial condition, the Company may grant a concession
or at the fair value of collateral if repayment is expected solely from
to the borrower that it would not otherwise consider, the related loan
the collateral. Smaller balance, homogeneous loans are collectively
is classified as a troubled debt restructuring (TDR). The Company
evaluated for impairment.
strives to identify borrowers in financial difficulty early and work
with them to modify their loan to more affordable terms before their
loan reaches nonaccrual status. These modified terms may include
rate reductions, principal forgiveness, payment forbearance and
other actions intended to minimize the economic loss and to avoid
foreclosure or repossession of the collateral. In cases where borrowers
are granted new terms that provide for a reduction of either interest or
principal, the Company measures any impairment on the restructuring
as noted above for impaired loans.
The Company recognizes interest income on impaired loans based
on its existing methods of recognizing interest income on nonaccrual
loans. Loans, for which the terms have been modified resulting in
a concession, and for which the borrower is experiencing financial
difficulties, are considered troubled debt restructurings and
classified as impaired with measurement of impairment based on
expected future cash flows discounted using the loan’s effective rate
immediately prior to the restructuring.
8
Annual Report 2015 General reserves cover non-impaired loans and are based on peer
Foreclosed Properties
group historical loss rates for each portfolio segment, adjusted for
the effects of qualitative or environmental factors that are likely to
cause estimated credit losses as of the evaluation date to differ from
the portfolio segment’s historical loss experience. Qualitative factors
include consideration of the following: changes in lending policies and
procedures; changes in economic conditions; changes in the nature
and volume of the portfolio; changes in the experience, ability and
depth of lending management and other relevant staff; changes in
the volume and severity of past due, nonaccrual and other adversely
graded loans; changes in the loan review system; changes in the
value of the underlying collateral for collateral-dependent loans;
Assets acquired through, or in lieu of, loan foreclosure are held for
sale. At the time of acquisition, these properties are recorded at fair
value less estimated selling costs, with any write down charged to the
allowance for loan losses. Subsequent to foreclosure, valuations of the
assets are periodically performed by management. Adjustments are
made for subsequent decline in the fair market value of the assets less
selling costs. Revenue and expenses from operations and valuation
changes are included in net expenses from foreclosed assets. The
Company had no foreclosed assets during the years ended December
31, 2015 and 2014.
concentrations of credit and the effect of other external factors
The Company had no consumer mortgage loans secured by
such as competition and legal and regulatory requirements.
residential real estate properties for which formal foreclosure
The unallocated component of the allowance is maintained to
cover uncertainties that could affect management’s estimate of
losses inherent in the loan portfolio. The unallocated component
of the allowance reflects the margin of imprecision inherent in
the underlying assumptions used for estimating the specific
and general losses in the loan portfolio.
proceedings were in process as of December 31, 2015.
Bank Owned Life Insurance
The Company has purchased life insurance policies on certain key
employees. Bank owned life insurance is recorded at the amount
that can be realized under the insurance contract at the balance
date, which is the cash surrender value.
Portfolio segments identified by the Company include commercial
real estate, commercial and industrial, commercial construction,
Transfers of Financial Assets
consumer residential, consumer nonresidential and consumer
construction. Relevant risk characteristics for these portfolio
segments generally include debt service coverage, loan-to-value
ratios and financial performance on non-consumer loans and
credit scores, debt-to income, collateral type and loan-to-value
ratios for consumer loans. The Company uses the same segments
and classes for analyzing adequacy of general allowances.
Premises and Equipment
Transfers of financial assets are accounted for as sales, when control
over the assets has been surrendered. Control over transferred assets
is deemed surrendered when (1) the assets have been isolated from
the Company — put presumptively beyond reach of the transferor
and its creditors, even in bankruptcy or other receivership, (2) the
transferee obtains the right (free of conditions that constrain it from
taking advantage of that right) to pledge or exchange the transferred
assets, and (3) the Company does not maintain effective control over
the transferred assets through an agreement to repurchase them
Leasehold improvements, computer software, furniture, fixtures
before their maturity or the ability to unilaterally cause the holder
and equipment are stated at cost less accumulated depreciation.
to return specific assets.
Depreciation is computed using the straight-line method over the
assets’ estimated useful lives or life of lease. Estimated useful
Use of Estimates
lives are 10 years for leasehold improvements and 3 to 7 years
for computer software, furniture, fixtures and equipment.
Intangible Assets
In preparing consolidated financial statements in conformity
with accounting principles generally accepted in the United States
of America, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
The Company’s intangible assets were acquired in the acquisition
as of the date of the balance sheet and reported amounts of revenue
of 1st Commonwealth. ASC 350, Intangibles-Goodwill and Other
and expenses during the reporting period. Actual results could
(ASC 350), prescribes accounting for intangible assets subsequent
differ from those estimates. Material estimates that are particularly
to initial recognition. Acquired intangible assets (such as core deposit
susceptible to significant change in the near term relate to the
intangibles) are separately recognized if the benefit of the assets can
determination of the allowance for loan losses, the valuation of
be sold, transferred, licensed, rented, or exchanged, and amortized
deferred tax assets, and the fair value of financial instruments.
over their useful lives. Intangible assets related to acquisition
are amortized. The core deposit intangible asset, based on an
independent valuation, is being amortized over its estimated
life of 10 years.
9
FVCBankcorp, Inc.
Income Taxes
Stock Compensation Plans
Deferred taxes are provided on a liability method whereby deferred
Authoritative accounting guidance requires that the compensation
tax assets and liabilities are recognized for deductible temporary
cost relating to share-based payment transactions be recognized in
differences. Temporary differences are the differences between the
the financial statements. That cost is measured based on the fair
reported amounts of assets and liabilities and their tax basis. Deferred
value of the equity or liability instruments issued. The guidance covers
tax assets are reduced by a valuation allowance when, in the opinion
a wide range of share-based compensation arrangements including
of management, it is more likely than not that some portion or all of
stock options, restricted share plans, performance-based awards,
the deferred tax assets will not be realized. Deferred tax assets and
share appreciation rights, and employee share purchase plans. The
liabilities are adjusted for the effects of changes in tax laws and rates
guidance requires entities to measure the cost of employee services
on the date of enactment.
Deferred income tax expense results from changes in deferred
tax assets and liabilities between periods. Deferred tax assets are
recognized if it is more likely than not, based on the technical merits,
that the tax position will be realized or sustained upon examination.
The term more likely than not means a likelihood of more than 50
percent; the terms examined and upon examination also include
resolution of the related appeals or litigation processes, if any. A tax
position that meets the more-likely-than-not recognition threshold
is initially and subsequently measured as the largest amount of tax
benefit that has a greater than 50 percent likelihood of being realized
upon settlement with a taxing authority that has full knowledge of
recognized in exchange for stock options based on the grant-date
fair value of the award, and to recognize the cost over the period the
employee is required to provide services for the award. The Company
uses the Black-Scholes option-pricing model to meet the fair value
objective as outlined in the accounting literature.
Retirement Plan
Employee 401(k) expense is the amount of matching contributions
paid by the Company. 401(k) expense was $172,095 and $164,277
for the years ended December 31, 2015 and 2014, respectively.
Earnings Per Share
all relevant information. The determination of whether or not a tax
Basic earnings per share represent income available to common
position has met the more-likely-than-not recognition threshold
shareholders divided by the weighted-average number of common
considers the facts, circumstances, and information available at the
shares outstanding during the period. Diluted earnings per share
reporting date and is subject to management’s judgment. Deferred tax
reflect additional common shares that would have been outstanding
assets are reduced by a valuation allowance if, based on the weight of
if dilutive potential common shares had been issued, as well as any
evidence available, it is more likely than not that some portion or all of
adjustment to income that would result from the assumed issuance.
a deferred tax asset will not be realized.
Advertising Costs
The Company follows the policy of charging all of advertising
to expense as incurred.
Potential common shares that may be issued by the Company consist
solely of outstanding stock options, and are determined using the
treasury method.
Reclassifications
Comprehensive Income (Loss)
Comprehensive income consists of net income and other
comprehensive income. Other comprehensive income (loss) includes
unrealized gains (losses) on securities available-for-sale, which are
Certain prior year amounts have been reclassified to conform to the
current year’s method of presentation. None of these reclassifications
were significant.
Recent Accounting Pronouncements
also recognized as separate components of equity. Items reclassified
In June 2014, the FASB issued ASU No. 2014-12, “Compensation —
out of accumulated other comprehensive income (loss) to net income
Stock Compensation (Topic 718): Accounting for Share-Based
relate solely to realized gains (losses) on sales of securities available-
Payments When the Terms of an Award Provide That a Performance
for-sale and appear under the caption “Gains on sale of securities
Target Could Be Achieved after the Requisite Service Period.”
available-for-sales” in the Company’s statements of income
Fair Value of Financial Instruments
Fair values of financial instruments are estimated using relevant
market information and other assumptions, as more fully disclosed
in Note 14. Fair value estimates involve uncertainties and matters of
significant judgment. Changes in assumptions or in market conditions
could significantly affect the estimates.
10
Annual Report 2015 The new guidance applies to reporting entities that grant employees
per-share data applicable to the extraordinary item. The amendments
share-based payments in which the terms of the award allow a
in this ASU are effective for fiscal years, and interim periods within
performance target to be achieved after the requisite service period.
those fiscal years, beginning after December 15, 2015. A reporting
The amendments in the ASU require that a performance target that
entity may apply the amendments prospectively. A reporting entity
affects vesting and that could be achieved after the requisite service
also may apply the amendments retrospectively to all prior periods
period be treated as a performance condition. Existing guidance in
presented in the financial statements. Early adoption is permitted
“Compensation — Stock Compensation (Topic 718),” should be applied
provided that the guidance is applied from the beginning of the
to account for these types of awards. The amendments in this ASU
fiscal year of adoption. The Company does not expect the adoption
are effective for annual periods and interim periods within those
of ASU 2015-01 to have a material impact on its consolidated
annual periods beginning after December 15, 2015. Early adoption
financial statements.
is permitted and reporting entities may choose to apply the
amendments in the ASU either on a prospective or retrospective
basis. The Company does not expect the adoption of ASU 2014-12
to have a material impact on its consolidated financial statements.
In February 2015, the FASB issued ASU No. 2015-02, “Consolidation
(Topic 810): Amendments to the Consolidation Analysis.” The
amendments in this ASU are intended to improve targeted areas
of consolidation guidance for legal entities such as limited
In August 2014, the FASB issued ASU No. 2014-15, “Presentation
partnerships, limited liability corporations, and securitization
of Financial Statements — Going Concern (Subtopic 205-40):
structures (collateralized debt obligations, collateralized loan
Disclosure of Uncertainties about an Entity’s Ability to Continue as
obligations, and mortgage-backed security transactions). In addition
a Going Concern.” This update is intended to provide guidance about
to reducing the number of consolidation models from four to two, the
management’s responsibility to evaluate whether there is substantial
new standard simplifies the FASB Accounting Standards Codification™
doubt about an entity’s ability to continue as a going concern and to
and improves current GAAP by placing more emphasis on risk of
provide related footnote disclosures. Management is required under
loss when determining a controlling financial interest, reducing
the new guidance to evaluate whether there are conditions or events,
the frequency of the application of related-party guidance when
considered in the aggregate, that raise substantial doubt about the
determining a controlling financial interest in a variable interest entity
entity’s ability to continue as a going concern within one year after
(VIE), and changing consolidation conclusions for public and private
the date the financial statements are issued when preparing financial
companies in several industries that typically make use of limited
statements for each interim and annual reporting period. If conditions
partnerships or VIEs. The amendments in this ASU are effective for
or events are identified, the ASU specifies the process that must be
public business entities for fiscal years, and interim periods within
followed by management and also clarifies the timing and content
those fiscal years, beginning after December 15, 2015. Early adoption
of going concern footnote disclosures in order to reduce diversity
is permitted, including adoption in an interim period. ASU 2015-
in practice. The amendments in this ASU are effective for annual
02 may be applied retrospectively in previously issued financial
periods and interim periods within those annual periods beginning
statements for one or more years with a cumulative-effect adjustment
after December 15, 2016. Early adoption is permitted. The Company
to retained earnings as of the beginning of the first year restated. The
does not expect the adoption of ASU 2014-15 to have a material
Company does not expect the adoption of ASU 2015-02 to have a
impact on its consolidated financial statements.
material impact on its consolidated financial statements.
In January 2015, the FASB issued ASU No. 2015-01, “Income
In April 2015, the FASB issued ASU No. 2015-03, “Interest —
Statement — Extraordinary and Unusual Items (Subtopic 225-20):
Imputation of Interest (Subtopic 835-30): Simplifying the
Simplifying Income Statement Presentation by Eliminating the
Presentation of Debt Issuance Costs.” The amendments in this
Concept of Extraordinary Items.” The amendments in this ASU
ASU are intended to simplify the presentation of debt issuance
eliminate from U.S. GAAP the concept of extraordinary items.
costs. These amendments require that debt issuance costs related
Subtopic 225-20, Income Statement - Extraordinary and Unusual
to a recognized debt liability be presented in the balance sheet as
Items, required that an entity separately classify, present, and
a direct deduction from the carrying amount of that debt liability,
disclose extraordinary events and transactions. Presently, an event
consistent with debt discounts. The recognition and measurement
or transaction is presumed to be an ordinary and usual activity of the
guidance for debt issuance costs are not affected by the amendments
reporting entity unless evidence clearly supports its classification as
in this ASU. The amendments in this ASU are effective for public
an extraordinary item. If an event or transaction meets the criteria
business entities for financial statements issued for fiscal years
for extraordinary classification, an entity is required to segregate the
beginning after December 15, 2015, and interim periods within those
extraordinary item from the results of ordinary operations and show
fiscal years. Early adoption is permitted for financial statements
the item separately in the income statement, net of tax, after income
that have not been previously issued. The Company does not expect
from continuing operations. The entity also is required to disclose
the adoption of ASU 2015-03 to have a material impact on its
applicable income taxes and either present or disclose earnings-
consolidated financial statements.
11
FVCBankcorp, Inc. In April 2015, the FASB issued ASU No. 2015-05, “Intangibles —
1) Requires equity investments (except those accounted for under
Goodwill and Other — Internal-Use Software (Subtopic 350-
the equity method of accounting, or those that result in consolidation
40): Customer’s Accounting for Fees Paid in a Cloud Computing
of the investee) to be measured at fair value with changes in
Arrangement.” The amendments in this ASU provide guidance to
fair value recognized in net income. 2) Requires public business
customers about whether a cloud computing arrangement includes
entities to use the exit price notion when measuring the fair value
a software license. If a cloud computing arrangement includes a
of financial instruments for disclosure purposes. 3) Requires
software license, then the customer should account for the software
separate presentation of financial assets and financial liabilities by
license element of the arrangement consistent with the acquisition
measurement category and form of financial asset (i.e., securities
of other software licenses. If a cloud computing arrangement does
or loans and receivables). 4) Eliminates the requirement for
not include a software license, the customer should account for the
public business entities to disclose the method(s) and significant
arrangement as a service contract. The amendments do not change
assumptions used to estimate the fair value that is required to be
the accounting for a customer’s accounting for service contracts. As
disclosed for financial instruments measured at amortized cost.
a result of the amendments, all software licenses within the scope of
The amendments in this ASU are effective for public companies
Subtopic 350-40 will be accounted for consistent with other licenses
for fiscal years beginning after December 15, 2017, including interim
of intangible assets. The amendments in this ASU are effective for
periods within those fiscal years. The Company is currently assessing
public business entities for annual periods, including interim periods
the impact that ASU 2016-01 will have on its consolidated
within those annual periods, beginning after December 15, 2015. Early
financial statements.
adoption is permitted. An entity can elect to adopt the amendments
either: (1) prospectively to all arrangements entered into or materially
modified after the effective date; or (2) retrospectively. The Company
does not expect the adoption of ASU 2015-05 to have a material
impact on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-01, “Leases (Topic
842).” Among other things, in the amendments in ASU 2016-02,
lessees will be required to recognize the following for all leases (with
the exception of short-term leases) at the commencement date: (1)
A lease liability, which is a lessee‘s obligation to make lease payments
In August 2015, the FASB issued ASU No. 2015-14, “Revenue from
arising from a lease, measured on a discounted basis; and (2) A right-
Contracts with Customers (Topic 606): Deferral of Effective Date.”
of-use asset, which is an asset that represents the lessee’s right to
The amendments in ASU 2015-14 defer the effective date of ASU
use, or control the use of, a specified asset for the lease term. Under
2014-09 for all entities by one year. Public business entities, certain
the new guidance, lessor accounting is largely unchanged. Certain
not-for-profit entities, and certain employee benefit plans should
targeted improvements were made to align, where necessary, lessor
apply the guidance in ASU 2014-09 to annual reporting periods
accounting with the lessee accounting model and Topic 606, Revenue
beginning after December 15, 2017, including interim reporting
from Contracts with Customers. The amendments in this ASU are
periods within that reporting period. Earlier application is permitted
effective for fiscal years beginning after December 15, 2018, including
only as of annual reporting periods beginning after December 15,
interim periods within those fiscal years. Early application is permitted
2016, including interim reporting periods within that reporting
upon issuance. Lessees (for capital and operating leases) and lessors
period. All other entities should apply the guidance in ASU 2014-09
(for sales-type, direct financing, and operating leases) must apply a
to annual reporting periods beginning after December 15, 2018, and
modified retrospective transition approach for leases existing at, or
interim reporting periods within annual reporting periods beginning
entered into after, the beginning of the earliest comparative period
after December 15, 2019. All other entities may apply the guidance
presented in the financial statements. The modified retrospective
in ASU 2014-09 earlier as of an annual reporting period beginning
approach would not require any transition accounting for leases that
after December 15, 2016, including interim reporting periods within
expired before the earliest comparative period presented. Lessees
that reporting period. All other entities also may apply the guidance
and lessors may not apply a full retrospective transition approach.
in ASU 2014-09 earlier as of an annual reporting period beginning
The Company is currently assessing the impact that ASU 2016-02
after December 15, 2016, and interim reporting periods within annual
will have on its consolidated financial statements.
reporting periods beginning one year after the annual reporting
period in which the entity first applies the guidance in ASU
2014-09. The Company does not expect the adoption of ASU
2015-14 (or ASU 2014-09) to have a material impact on its
consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01, “Financial
Instruments — Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities.”
The amendments in ASU 2016-01, among other things:
12
Annual Report 2015 Note 2 Restrictions on Cash and Amounts due From Banks
The Company is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31, 2015 and 2014,
these reserve balances amounted to $0 and $0, respectively. There were no Federal Reserve balances at December 31, 2015 and 2014.
13
FVCBankcorp, Inc.
Note 3 Securities
Amortized cost and fair values of securities held-to-maturity and securities available-for-sale as of December 31, 2015 and 2014,
are as follows:
Held-to-maturity
Securities of state and local municipalities
tax exempt
Securities of U.S. government
and federal agencies
2015
AMORTIZED COST
GROSS UNREALIZED
GAINS
GROSS UNREALIZED
(LOSSES)
FAIR VALUE
$
263,141
$
4,048
$
--
$
267,189
1,983,851
69
(6,719)
1,977,201
Total Held-to-maturity Securities
$
2,246,992
$
4,117
$
(6,719)
$
2,244,390
Available-for-sale
Securities of U.S. government
and federal agencies
Securities of state and local municipalities
tax exempt
Securities of state and local
municipalities taxable
$
1,500,000
$
--
$
(16,062)
$
1,483,938
1,726,350
2,249
(234)
1,728,365
1,306,314
1,686
--
1,308,000
Corporate securities
2,000,000
--
(59,130)
1,940,870
Certificates of deposit
SBA pass-through securities
985,000
380,583
7,411
--
--
992,411
(9,439)
371,144
Mortgage-backed securities
37,403,209
17,760
(261,189)
37,159,780
Collateralized mortgage obligations
21,176,262
6,905
(620,155)
20,563,012
Total Available-for-sale Securities
$
66,477,718
$
36,011
$
(966,209)
$
65,547,520
Available-for-sale
Securities of U.S. government
and federal agencies
Securities of state and local
municipalities taxable
2014
AMORTIZED COST
GROSS UNREALIZED
GAINS
GROSS UNREALIZED
(LOSSES)
FAIR VALUE
$
4,239,131
$
346
$
(71,752)
$
4,167,725
1,321,954
--
(32,129)
1,289,825
Certificates of deposit
2,235,000
10,238
(687)
2,244,551
SBA pass-through securities
446,151
--
(17,069)
429,082
Mortgage-backed securities
25,067,769
143,487
(188,672)
25,022,584
Collateralized mortgage obligations
29,998,968
54,723
(510,060)
29,543,631
Total Available-for-sale Securities
$
63,308,973
$
208,794
$
(820,369)
$
62,697,398
Annual Report 2015
14
At December 31, 2015 and 2014, securities with a market value of $957,951 and $987,971 were pledged to secure borrowings at the Federal
Reserve Bank.
At December 31, 2015 and 2014, securities with a market value of $5,144,064 and $13,427,812 were pledged to secure borrowings at the Federal
Home Loan Bank of Atlanta.
At December 31, 2015 and 2014, securities with a market value of $41,963,694 and $20,622,479 were pledged to secure public deposits with the
Treasury Board of Virginia at the Community Bankers’ Bank.
The following table shows estimated fair value and gross unrealized losses, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position, at December 31, 2015 and 2014, respectively. The reference point for determining
when securities are in an unrealized loss position is month-end. Therefore, it is possible that a security’s market value exceeded its amortized
cost on other days during the past twelve-month period.
Available-for-sale securities that have been in a continuous unrealized loss position are as follows:
AT DECEMBER 31, 2015:
LESS THAN 12 MONTHS
12 MONTHS OR LONGER
TOTAL
FAIR VALUE
UNREALIZED
LOSSES
FAIR VALUE
UNREALIZED
LOSSES
FAIR VALUE
UNREALIZED
LOSSES
$
--
$
--
$
1,483,938
$
(16,062)
$
1,483,938
$
(16,062)
Securities of U.S. government
and federal agencies
Securities of state and local
municipalities tax exempt
288,490
(234)
Corporate securities
1,940,870
(59,130)
SBA pass-through securities
--
--
Mortgage-backed securities
33,795,118
(252,341)
--
--
371,144
1,184,231
--
--
(9,439)
288,490
(234)
1,940,870
371,144
(59,130)
(9,439)
(8,848)
34,979,349
(261,189)
Collateralized mortgage
obligations
9,893,597
(223,514)
8,845,178
(396,641)
18,738,775
(620,155)
Total
$
45,918,075
$
(535,219)
$
11,884,491
$
(430,990)
$
57,802,566
$
(966,209)
AT DECEMBER 31, 2014:
LESS THAN 12 MONTHS
12 MONTHS OR LONGER
TOTAL
Securities of U.S. government
and federal agencies
Securities of state and local
municipalities taxable
Certificates of deposits
SBA pass-through securities
FAIR VALUE
UNREALIZED
LOSSES
FAIR VALUE
UNREALIZED
LOSSES
FAIR VALUE
UNREALIZED
LOSSES
$
--
$
--
$
3,667,379
$
(71,752)
$
3,667,379
$
(71,752)
807,525
(14,429)
482,300
(17,700)
1,289,825
(32,129)
244,313
--
(687)
--
--
--
429,082
(17,069)
244,313
429,082
(687)
(17,069)
Mortgage-backed securities
6,056,708
(24,442)
5,741,066
(164,230)
11,797,774
(188,672)
Collateralized mortgage
obligations
9,013,341
(78,180)
14,939,826
(431,880)
23,953,167
(510,060)
Total
$
16,121,887
$
(117,738)
$
25,259,653
$
(702,631)
$
41,381,540
$
(820,369)
As of December 31, 2015, the Company had one held-to-maturity security in an unrealized loss position of less than twelve months. The fair
value of the security was with $993,281 and the unrealized loss was $6,719. There were no held-to-maturity securities as of December 31, 2014.
15
FVCBankcorp, Inc. Securities of U.S. government and federal agencies: The unrealized
decline in market value is attributable to changes in interest rates and
losses were caused by interest rate increases. The contractual terms
not credit quality, and because the Company does not intend to sell
of these investments do not permit the issuer to settle the securities
the investments and it is not more likely than not that the Company
at a price less than the amortized cost basis of the investments.
will be required to sell the investments before recovery of their
Because the Company does not intend to sell the investments and
amortized cost basis, which may be maturity, the Company does
it is not more likely than not that the Company will be required to sell
not consider those investments to be other-than-temporarily
the investments before recovery of their amortized cost basis, which
impaired at December 31, 2015.
may be maturity, the Company does not consider those investments
to be other-than-temporarily impaired at December 31, 2015.
Mortgage-backed securities: The unrealized losses on the Company’s
investment in mortgage-backed securities were caused by interest
Securities of state and local municipalities: The unrealized losses
rate increases. The contractual cash flows of those investments are
on the investments in securities of state and local municipalities
guaranteed by an agency of the U.S. Government. Accordingly, it is
were caused by interest rate increases. The contractual terms of
expected that the securities would not be settled at a price less than
those investments do not permit the issuer to settle the securities
the amortized cost basis of the Company’s investments. Because the
at a price less than the amortized cost basis of the investments.
decline in market value is attributable to changes in interest rates and
Because the Company does not intend to sell the investments
not credit quality, and because the Company does not intend to sell
and it is not more likely than not that the Company will be required
the investments and it is not more likely than not that the Company
to sell the investments before recovery of their amortized cost
will be required to sell the investments before recovery of their
basis, which may be maturity, the Company does not consider
amortized cost basis, which may be maturity, the Company does
those investments to be other-than-temporarily impaired at
not consider those investments to be other-than-temporarily
December 31, 2015.
impaired at December 31, 2015.
Corporate securities: The unrealized losses on the investments in
Collateralized mortgage obligations (CMOs): The unrealized loss
corporate securities were caused by interest rate increases. The
associated with CMOs was caused by interest rate increases. The
contractual terms of those investments do not permit the issuer to
contractual cash flows of these investments are guaranteed by an
settle the securities at a price less than the amortized cost basis of
agency of the U.S. Government. Accordingly, it is expected that the
the investments. Because the Company does not intend to sell the
securities would not be settled at a price less than the amortized cost
investments and it is not more likely than not that the Company
basis of the Company’s investments. Because the decline in market
will be required to sell the investments before recovery of their
value is attributable to changes in interest rates and not credit quality,
amortized cost basis, which may be maturity, the Company does
and because the Company does not intend to sell the investments and
not consider those investments to be other-than-temporarily
it is not more likely than not that the Company will be required to sell
the investments before recovery of their amortized cost basis, which
may be maturity, the Company does not consider those investments
to be other-than-temporarily impaired at December 31, 2015.
impaired at December 31, 2015.
Certificates of deposit: The unrealized losses on the Company’s
investment in fully-insured certificates of deposits were caused by
interest rate increases. Because the Company does not intend to sell
the investments and it is not more likely than not that the Company
will be required to sell the investments before recovery of their
amortized cost basis, which may be maturity, the Company does
not consider those investments to be other-than-temporarily
impaired at December 31, 2015.
SBA pass-through securities: The unrealized losses on the Company’s
investment in SBA pass-through securities were caused by interest
rate increases. Repayment of the principal on those investments is
guaranteed by an agency of the U.S. Government. Accordingly, it is
expected that the securities would not be settled at a price less than
the amortized cost basis of the Company’s investments. Because the
16
Annual Report 2015
The amortized cost and fair value of securities available-for-sale as of December 31, 2015, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.
HELD-TO-MATURITY
AVAILABLE-FOR-SALES
AMORTIZED COST
FAIR VALUE
AMORTIZED COST
FAIR VALUE
Less than 1 year
$
After 1 year through 5 years
After 5 years through 10 years
After 10 years
$
--
--
$
--
--
1,983,851
263,141
1,977,201
267,189
245,000
$
5,946,706
5,893,524
54,392,488
246,337
5,886,164
5,814,856
53,600,163
Total
$
2,246,992
$
2,244,390
$
66,477,718
$
65,547,520
For the years ended December 31, 2015 and 2014, proceeds from maturities, calls and principal repayments of securities were $8,058,947 and
$9,185,981, respectively. During 2015 and 2014, proceeds from sales of securities available-for-sale amounted to $19,513,845 and $15,663,566,
gross realized gains were $144,215 and $126,670 and gross realized losses were $76,733 and $49,448, respectively.
Note 4 Loans and Allowance for Loan Losses
A summary of loan balances by type follows:
Commercial real estate
Commercial and industrial
Commercial construction
Consumer residential
Consumer nonresidential
Consumer construction
Less:
Allowance for loan losses
Unearned income and unamortized premiums
2015
2014
$
376,426,381
$
325,040,726
89,502,318
49,833,719
84,463,861
19,127,221
3,855,706
82,373,936
24,160,267
66,227,782
11,615,337
--
$
623,209,206
$
509,418,048
6,238,606
(349,437)
5,564,669
(519,572)
Loans, net
$
$
617,320,037
$
$
504,372,951
An analysis of the allowance for loan losses for the years ended December 31, 2015 and 2014 follows:
COMMERCIAL
REAL ESTATE
COMMERCIAL &
INDUSTRIAL
COMMERCIAL
CONSTRUCTION
CONSUMER
RESIDENTIAL
CONSUMER
NONRESIDENTIAL
CONSUMER
CONSTRUCTION
UNALLOCATED
TOTAL
2015 Allowance for credit losses:
Beginning Balance
$
3,721,334
$
1,276,356
$
233,751
$
204,790
$
66,204
$
(98,396)
(312,021)
11,534
--
--
--
--
--
--
--
--
--
--
$
62,234
$
5,564,669
--
--
(410,417)
11,534
367,370
478,003
67,743
77,175
32,408
23,327
26,794
1,072,820
Charge-offs
Recoveries
Provision
Ending Balance
$
4,001,842
$
1,442,338
$
301,494
$
281,965
$
98,612
$
23,327
$
89,028
$
6,238,606
2014 Allowance for credit losses:
Beginning Balance
$
3,725,137
$
786,921
$
78,143
$
177,212
$
9,134
$
2,996
$
12,173
$
4,791,716
Charge-offs
Recoveries
Provision
(112,625)
10,000
98,822
--
--
--
--
--
--
(10,107)
--
--
--
--
--
(122,732)
10,000
489,435
155,608
27,578
67,177
(2,996)
50,061
885,685
Ending Balance
$
3,721,334
$
1,276,356
$
233,751
$
204,790
$
66,204
$
--
$
62,234
$
5,564,669
17
FVCBankcorp, Inc. The following table presents the recorded investment in loans and impairment method as of December 31, 2015 and 2014
by portfolio segment:
Commercial
Real Estate
Commercial &
Industrial
Commercial
Construction
Consumer
Residential
Consumer
Nonresidential
Consumer
Construction
Unallocated
Total
2015
Allowance for credit losses:
Ending Balance:
Individually
evaluated for
impairment
Collectively
evaluated for
impairment
$
686,667
$
590,355
$
--
$
--
$
--
$
--
$
--
$
1,277,022
3,315,175
851,983
301,494
281,965
98,612
23,327
89,028
4,961,584
$
4,001,842
$
1,442,338
$
301,494
$
281,965
$
98,612
$
23,327
$
89,028
$
6,238,606
Financing receivables:
Ending Balance:
Individually
evaluated for
impairment
Collectively
evaluated for
impairment
$
4,875,051
$
4,048,385
$
--
$
110,262
$
--
$
--
$
--
$
9,033,698
371,551,330 85,453,933
49,833,719 84,353,599
19,127,221
3,855,706
--
614,175,508
$
376,426,381
$
89,502,318
$
49,833,719
$
84,463,861
$
19,127,221
$
3,855,706
$
--
$
623,209,206
Commercial
Real Estate
Commercial &
Industrial
Commercial
Construction
Consumer
Residential
Consumer
Nonresidential
Consumer
Construction
Unallocated
Total
2014
Allowance for credit losses:
Ending Balance:
Individually
evaluated for
impairment
Collectively
evaluated for
impairment
$
281,120
$
474,993
$
--
$
--
$
--
$
--
$
--
$
756,113
3,440,214
801,363
233,751
204,790
66,204
--
62,234
4,808,556
$
3,721,334
$
1,276,356
$
233,751
$
204,790
$
66,204
$
--
$
62,234
$
5,564,669
Financing receivables:
Ending Balance:
Individually
evaluated for
impairment
Collectively
evaluated for
impairment
$
3,318,469
$
2,606,878
$
--
$
121,805
$
--
$
--
$
--
$
6,047,152
321,722,257
79,767,058
24,160,267
66,105,977
11,615,337
--
-- 503,370,896
$
325,040,726
$
82,373,936
$
24,160,267
$
66,227,782
$
11,615,337
$
--
$
--
$
509,418,048
18
Annual Report 2015 Impaired loans by class as of December 31, 2015 and 2014 are summarized as follows:
Recorded Investment
2015
Unpaid Principal
Balance
Related Allowance
Average Recorded
Investment
Interest Income
Recognized
With an allowance recorded:
Commercial real estate
$
1,144,670
$
1,187,663
$
686,667
$
1,196,200
$
Commercial and industrial
1,024,744
1,024,743
590,355
1,444,976
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
2,169,414
$
2,212,406
$
1,277,022
$
2,641,176
$
123,153
64,722
58,431
--
--
--
--
3,730,381
$
3,730,381
$
3,023,641
3,037,842
--
110,262
--
--
--
116,737
--
--
$
6,864,284
$
6,884,960
$
--
--
--
--
--
--
--
$
3,644,452
$
3,690,837
--
116,737
--
--
188,026
112,221
--
--
--
--
$
7,452,026
$
300,247
Commercial construction
Consumer residential
Consumer nonresidential
Consumer construction
With no related allowance:
Commercial real estate
Commercial and industrial
Commercial construction
Consumer residential
Consumer nonresidential
Consumer construction
$
$
Recorded Investment
2014
Unpaid Principal
Balance
Related Allowance
Average Recorded
Investment
Interest Income
Recognized
With an allowance recorded:
Commercial real estate
$
770,365
$
803,708
$
281,120
$
818,694
$
Commercial and industrial
473,839
474,992
474,993
487,896
Commercial construction
Consumer residential
Consumer nonresidential
Consumer construction
With no related allowance:
Commercial real estate
Commercial and industrial
Commercial construction
Consumer residential
Consumer nonresidential
Consumer construction
$
$
--
--
--
--
--
--
--
--
--
--
--
--
1,244,204
$
1,278,700
$
756,113
2,548,104
$
2,553,086
$
2,133,039
--
121,805
--
--
2,179,073
--
121,805
--
--
$
4,802,948
$
4,853,964
$
26,617
19,525
--
--
--
--
--
--
--
--
$
$
1,306,590
$
46,142
2,568,511
$
2,438,442
--
122,835
--
--
133,485
96,112
--
6,710
--
--
$
5,129,788
$
236,307
--
--
--
--
--
--
--
No additional funds are committed to be advanced in connection with the impaired loans. There were no nonaccrual loans excluded from the
impaired loan disclosure.
19
FVCBankcorp, Inc. The Company categorizes loans into risk categories based on
Substandard: Loans classified as substandard are inadequately
relevant information about the ability of borrowers to service
protected by the current net worth and paying capacity of the
their debt such as current financial information, historical payment
obligor or of the collateral pledged, if any. Loans so classified
experience, collateral adequacy, credit documentation, and current
have a well-defined weakness or weaknesses that jeopardize
economic trends, among other factors. The Company analyzes loans
the liquidation of the debt. They are characterized by the
individually by classifying the loans as to credit risk. This analysis
enhanced possibility that the institution will sustain some
typically includes larger, non-homogeneous loans such as commercial
loss if the deficiencies are not corrected.
real estate and commercial and industrial loans. This analysis is
performed on an ongoing basis as new information is obtained.
The Company uses the following definitions for risk ratings:
Doubtful: Loans classified as doubtful include those loans which
have all the weaknesses inherent in those classified Substandard
with the added characteristic that the weaknesses make collection
Pass: Loans listed as pass include larger non-homogeneous loans not
or liquidation in full, based on currently known facts, conditions
meeting the risk rating definitions below and smaller, homogeneous
and values, improbable.
loans not assessed on an individual basis.
Special Mention: Loans classified as special mention have a potential
considered uncollectible and of such little value that their
weakness that deserves management’s close attention. If left
continuance as loans is not warranted. Even though partial
uncorrected, these potential weaknesses may result in deterioration
recovery may be achieved in the future, it is neither practical
of the repayment prospects for the loan or of the institution’s credit
nor desirable to defer writing off these loans.
Loss: Loans classified as loss include those loans which are
position at some future date.
Based on the most recent analysis performed, the risk category of loans by class of loans was as follows as of December 31, 2015 and 2014:
AS OF DECEMBER 31, 2015
Commercial
Real Estate
Commercial &
Industrial
Commercial
Construction
Consumer
Residential
Consumer
Nonresidential
Consumer
Construction
Total
Grade:
Pass
$
369,211,680
$
82,337,794
$
49,833,719
$
84,353,599
$
19,127,221
$
3,855,706
$
608,719,719
Special mention
3,536,698
4,363,035
Substandard
3,678,003
2,801,489
Doubtful
Loss
--
--
--
--
--
--
--
--
--
110,262
--
--
--
--
--
--
--
--
--
--
7,899,733
6,589,754
--
--
Total
$
376,426,381
$
89,502,318
$
49,833,719
$
84,463,861
$
19,127,221
$
3,855,706
$
623,209,206
AS OF DECEMBER 31, 2014
Commercial
Real Estate
Commercial &
Industrial
Commercial
Construction
Consumer
Residential
Consumer
Nonresidential
Consumer
Construction
Total
Grade:
Pass
$
317,316,585
$
77,206,789
$
24,160,267
$
66,105,977
$
11,615,337
$
Special mention
4,405,672
2,560,269
Substandard
3,318,469
2,606,878
Doubtful
Loss
--
--
--
--
--
--
--
--
--
121,805
--
--
--
--
--
--
Total
$
325,040,726
$
82,373,936
$
24,160,267
$
66,227,782
$
11,615,337
$
--
--
--
--
--
--
$
496,404,955
6,965,941
6,047,152
--
--
$
509,418,048
20
Annual Report 2015 Past due and nonaccrual loans presented by loan class were as follows as of December 31, 2015 and 2014:
AS OF DECEMBER 31, 2015
30–59 days
past due
60–89 days
past due
90 days or
more
past due
Total past due
Current
Total loans
90 days past
due and still
accruing
Nonaccruals
$
445,418
$
--
$
--
$
445,418
$
375,980,963
$
376,426,381
$
--
$
1,144,670
Commercial
real estate
Commercial and
Industrial
Commercial
construction
Consumer
residential
Consumer
nonresidential
Consumer
construction
1,791,576
--
162,716
--
--
--
--
--
9,860
--
Total
$
2,399,710
$
9,860
$
--
--
--
--
--
--
1,791,576
87,710,742
89,502,318
--
49,833,719
49,833,719
162,716
84,301,145
84,463,861
9,860
19,117,361
19,127,221
--
3,855,706
3,855,706
$
2,409,570
$
620,799,636
$
623,209,206
$
--
--
--
--
--
--
1,303,841
--
110,262
--
--
$
2,558,773
AS OF DECEMBER 31, 2014
30–59 days
past due
60–89 days
past due
90 days or
more
past due
Total past due
Current
Total loans
90 days past
due and still
accruing
Nonaccruals
106,645
$
190,942
$
--
$
297,587
$
324,743,139
$
325,040,726
$
--
$
266,852
232,514
922,684
1,155,198
81,218,738
82,373,936
40,447
1,172,285
--
--
--
24,160,267
24,160,267
99,647
121,805
221,452 66,006,330
66,227,782
2,030
2,726
--
--
--
--
4,756
11,610,581
11,615,337
--
--
--
--
--
--
--
--
121,805
--
--
Commercial
real estate
Commercial and
Industrial
$
Commercial
construction
Consumer
residential
Consumer
nonresidential
Consumer
construction
--
--
--
Total
$
108,675
$
525,829
$
1,044,489
$
1,678,993
$
507,739,055
$
509,418,048
$
40,447
$
1,560,942
There were overdrafts of $79,819 and $1,218,892 at December 31, 2015 and 2014 which have been reclassified from deposits to loans. At
December 31, 2015 and 2014, loans with a carrying value of $92,764,019 and $34,979,641 were pledged to the Federal Home Loan Bank
of Atlanta.
21 FVCBankcorp, Inc.
There were no troubled debt restructuring that subsequently defaulted during the year ended December 31, 2015. During the year ended
December 31, 2014, there was one troubled debt restructuring that subsequently defaulted for $10,107 in the consumer nonresidential loan
category. A summary of activity in troubled debt restructurings presented by loan class follows for the year ended December 31, 2015:
Troubled Debt Restructurings
Commercial real estate
Commercial and industrial
Commercial construction
Consumer residential
Consumer nonresidential
Consumer construction
Troubled Debt Restructurings
Commercial real estate
Commercial and industrial
Commercial construction
Consumer residential
Consumer nonresidential
Consumer construction
FOR THE YEAR ENDED DECEMBER 31, 2015
Number of Contracts
Pre-Modification Outstanding
Recorded Investment
Post-Modification Outstanding
Recorded Investment
$
2
2
3,494,920
$
861,288
3,567,476
861,288
--
--
--
--
--
--
--
--
Total 4
$
4,356,208
$
4,428,764
FOR THE YEAR ENDED DECEMBER 31, 2014
Number of Contracts
Pre-Modification Outstanding
Recorded Investment
Post-Modification Outstanding
Recorded Investment
$
1
1
--
1
--
--
76,860
$
293,259
--
--
10,107
--
Total 3
$
380,226
$
76,860
293,259
--
--
10,107
--
380,226
As of December 31, 2015 and 2014, the Company has a recorded investment in troubled debt restructurings of $5,074,007 and
1,794,962, respectively.
The concessions made in troubled debt restructurings were extensions of the maturity dates or reductions in the stated interest rate
for the remaining original life of the debt.
Annual Report 2015
22
Note 5 Premises and Equipment
A summary of the cost and accumulated depreciation of premises and equipment follows:
Leasehold improvements
Furniture, fixtures and equipment
Computer software
Less: accumulated depreciation
2015
2014
$
$
2,331,233
$
2,833,725
253,637
5,418,596
3,906,696
1,511,900
$
2,323,813
2,553,972
209,939
5,087,724
3,343,117
1,744,607
For the years ended December 31, 2015 and 2014, depreciation expense was $563,579 and $535,251, respectively.
As of December 31, 2015, the Company has a non-cancellable lease
In May 2013, the Company entered into a 10-year lease agreement
agreement for the operating headquarters. The lease states that if the
to operate a branch in Springfield, Virginia. The lease, which is
Company holds possession of the premises after the expiration date,
cancellable with penalty, expires August 31, 2023. The lease
the Company shall become a tenant on a month-to-month basis. The
contains an option to extend for two five-year periods.
monthly rental payment shall continue as provided unless notice is
given. The lease expires December 31, 2017.
In January 2008, the Company entered into a non-cancellable lease
Total rent expense for the years ended December 31, 2015 and 2014
amounted to $981,577 and $983,007, respectively.
agreement to operate a branch in Manassas, Virginia. The lease
The minimum base rent for the remainder of the leases
expires December 31, 2017. The lease contains an option to extend
are as follows:
for two five-year periods.
In December 2010, the Company entered into a five-year lease
agreement to operate a branch in Reston, Virginia. The lease, which
is cancellable with penalty, expires December 31, 2020. The lease
contains an option to extend for two five-year periods.
2016
2017
2018
2019
2020
In October 2012, the Company assumed the remaining term of a non-
Thereafter
cancellable 10-year lease agreement to operate a branch in Arlington,
Virginia. The lease expires on July 31, 2018. The lease contains an
option to extend for two five-year periods. As part of the acquisition
accounting, the Company recorded a liability for the terms of the lease
relative to the market terms at the time of the acquisition. The liability
is accreted against rent expense over the remaining lease term.
1,097,743
999,715
256,935
89,762
92,231
258,235
2,794,621
$
$
23
FVCBankcorp, Inc. The minimum base rent for the remainder of the leases
are as follows:
Note 6 Time Deposits
Remaining maturities on certificates of deposit are as follows:
2016
$
2017
2018
2019
2020
122,732,703
40,780,588
39,886,963
5,377,802
3,160,396
$
211,938,452
Total time deposits of $250,000 and greater were $50,884,076 and $52,459,472 at December 31, 2015 and 2014, respectively.
Note 7 Deposit Concentrations
At December 31, 2015 and 2014, the Company had one customer relationship, whose related balance on deposit exceeded 5% of
outstanding deposits. This customer relationship comprises 8% of outstanding deposits at December 31, 2015 and 10% of outstanding
deposits at December 31, 2014.
Brokered deposits totaled $98,959,198 and $76,972,714 at December 31, 2015 and 2014, respectively.
Note 8 Federal Home Loan Bank (FHLB) Advances and Other Borrowings
FHLB advances at December 31, 2015 consist of the following:
Amount
Weighted Average Rule
Daily rate advances maturing: 2016
$
33,150,000
$
Fixed rate advances maturing: 2017
Total FHLB advances
$
2,500,000
35,650,000
$
0.49%
1.33%
0.55%
At December 31, 2015, advances are collateralized by securities with a market value of $5,144,064, 1-4 family residential loans with a book value
of $2,916,873, multi-family residential loan with a book value of $7,756,334, home equity lines of credit with a book value of $10,711,014 and
commercial real estate loans with book value of $71,379,798. The remaining lendable collateral value at December 31, 2015 totaled $34,233,408.
The Company has unsecured lines of credit with correspondent banks totaling $37,000,000 and $22,000,000 at December 31, 2015 and 2014,
available for overnight borrowing. At December 31, 2015 and 2014, these lines of credit with correspondent banks were not drawn upon.
Note 9 Related Party Transactions
Officers, directors and their affiliates had borrowings of $3,447,180 and $1,181,159 at December 31, 2015 and 2014 with the Company. During
the years ended December 31, 2015 and 2014, total principal additions were $2,669,976 and $247,146 and total principal payments were
$403,955 and $1,983,976, respectively.
Related party deposits amounted to $20,523,012 and $27,887,131 at December 31, 2015 and 2014, respectively.
24
Annual Report 2015 Note 10 Income Taxes
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities
at December 31, 2015 and 2014 are presented below:
Deferred Tax Assets
Allowance for loan losses
Net operating loss carryforward
Bank premises and equipment and deferred rent
Unrealized loss on securities available for sale
Directors – nonqualified stock options
Organizational and start-up expenses
Acquisition accounting adjustments
Non-accrual loan interest
Deferred Tax Liabilities:
Deferred loan fees
2015
2014
$
2,071,280
$
1,804,757
475,031
391,382
316,267
272,368
122,554
111,388
43,154
$
$
$
$
3,803,424
(118,807)
(118,807)
3,684,617
$
$
$
$
Net Deferred Tax Assets
503,251
362,015
207,935
181,843
140,274
119,927
18,196
3,338,198
(127,798)
(127,798)
3,210,400
As part of the 2012 acquisition, the Company acquired approximately $1.7 million of unused net operating carryforwards. The Company may
utilize the carryforwards, subject to certain limitations, through 2032.
The income tax expense charged to operations for the years ended December 31, 2015 and 2014 consists of the following:
Current tax expense
Deferred tax benefit
2015
2014
$
$
3,225,682
(365,885)
2,859,797
$
$
2,356,318
(193,905)
2,162,413
Income tax expense (benefit) differed from amounts computed by applying the U.S. federal income tax rate of 34% to income, excluding
bargain purchase gain, before income tax expense as a result of the following:
Computed “expected” tax expense
Increase (decrease) in income taxes resulting from:
Non-deductible expense
Tax free income
Other
2015
2014
2,814,815
$
2,140,606
157,448
(110,649)
(1,817)
105,468
(67,779)
(15,882)
2,859,797
$
2,162,413
$
$
The Company files income tax returns in the U.S. federal jurisdiction. With few exceptions, the Company is no longer subject to U.S. federal
examination by tax authorities for years prior to 2012.
25
FVCBankcorp, Inc. Note 11 Financial Instruments with Off-Balance Sheet Risk
The Company is party to credit-related financial instruments with off-balance sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments
involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet.
The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit
policies in making commitments as it does for on-balance sheet instruments.
At December 31, 2015 and 2014, the following financial instruments were outstanding which contract amounts represent credit risk:
Commitments to grant loans
Unused commitments to fund loans and lines of credit
Commercial and standby letters of credit
2015
2014
$
$
6,716,250
128,093,674
2,131,978
$
$
23,978,293
96,679,991
974,762
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments
for equity lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future
cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation
of the customer.
Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments
for possible future extensions of credit to existing customers. These lines of credit usually do not contain a specified maturity date and may
not be drawn upon to the total extent to which the Company is committed. The amount of collateral obtained, if it is deemed necessary by
the Company, is based on management’s credit evaluation of the customer.
Commercial and standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer
to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of
credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The Company generally holds collateral supporting those commitments, if deemed necessary.
The Company maintains its cash accounts with the Federal Reserve and correspondent banks. The total amount of cash on deposit in
correspondent banks exceeding the federally insured limits was $1,235 and $75,924 at December 31, 2015 and 2014, respectively.
Annual Report 2015
26
Note 12 Minimum Regulatory Capital Requirements
Banks and bank holding companies are subject to various regulatory
are calculated using Basel I rules, which were effective until January 1,
capital requirements administered by the federal banking agencies.
2015. Management believes as of December 31, 2015, the Company
Failure to meet minimum capital requirements can initiate certain
meets all capital adequacy requirement to which they are subject.
mandatory, possibly additional discretionary, actions by regulators
that, if undertaken, could have a direct material effect on the
Company’s consolidated financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action,
financial institutions must meet specific capital guidelines that involve
quantitative measures of assets, liabilities, and certain off-balance-
sheet items as calculated under regulatory accounting practices.
A financial institution’s capital amounts and classification are also
subject to qualitative judgments by the regulators about components,
risk weightings, and other factors.
Prompt corrective action regulations provide five classifications:
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms
are not used to represent overall financial condition. If adequately
capitalized, regulatory approval is required to accept brokered
deposits. If undercapitalized, capital distributions are limited, as is
asset growth and expansion, and capital restoration plans are required.
At year-end 2015 and 2014, the most recent regulatory notification
categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. There are no conditions
The final rules implementing Basel Committee on Banking
or events since that notification that management believes have
Supervision’s capital guidelines for U.S. banks (Basel III rules) became
changed the institution’s category.
effective for the Company on January 1, 2015 with full compliance with
all of the requirements being phased in over a multi-year schedule, and
fully phased in by January 1, 2019. As a part of the new requirements,
the Common Equity Tier 1 Capital ratio is calculated and utilized in
the assessment of capital for all institutions. The net unrealized gain
or loss on available-for-sale securities is not included in computing
regulatory capital. Capital amounts and ratios for December 31, 2014
Federal and state banking regulations place certain restrictions
on dividends paid by the Company. The total amount of dividends
which may be paid at any date is generally limited to retained
earnings of the Company.
The Bank’s actual capital amounts and ratios are also presented
in the table.
ACTUAL
MINIMUM CAPITAL
REQUIREMENT
WELL CAPITALIZED
UNDER PROMPT
CORRECTIVE ACTION
PROVISIONS
AMOUNT
RATIO
AMOUNT
RATIO
AMOUNT
RATIO
$
$
$
$
$
$
$
79,485
12.20%
73,246
73,246
73,246
11.25%
11.25%
10.82%
69,622
13.62%
64,057
12.53%
64,057
10.96%
$
$
$
$
$
$
$
(Amounts in thousands)
52,102
8.00%
39,076
29,307
27,083
6.00%
4.50%
4.00%
40,884
8.00%
20,442
4.00%
23,381
4.00%
$
$
$
$
$
$
$
65,127
10.00%
52,102
42,333
33,854
8.00%
6.50%
5.00%
51,105
10.00%
30,663
6.00%
29,226
5.00%
As of December 31, 2015:
Total Risk Based Capital
(to Risk Weighted Assets)
Tier 1 Capital (to Risk
Weighted Assets)
Common Tier 1 (CET 1)
Tier 1 Capital
(to Average Assets)
As of December 31, 2014:
Total Risk Based Capital
(to Risk Weighted Assets)
Tier 1 Capital (to Risk
Weighted Assets)
Tier 1 Capital
(to Average Assets)
27
FVCBankcorp, Inc. Note 13 Stock-Based Compensation Plan
The Company’s 2008 Stock Option Plan (the Plan), which is
The fair value of each option award is estimated on the date of grant
shareholder-approved, was adopted to advance the interests of
using a Black-Scholes option-pricing model for determining fair value.
the Company by providing selected key employees of the Company,
The model employs the following assumptions:
their affiliates, and directors with the opportunity to acquire shares
of common stock. The Plan granted options to purchase 3,000 shares
of common stock to each of the 21 organizing shareholders of the
Company, who had funds at risk during the Company’s organizational
» Dividend yield — calculated as the ratio of historical
dividends paid per share of common stock to the stock
price on the date of grant;
period and assumed the financial risk that the Company would not
»
Expected life (term of options) — based on the
open. These shares immediately vested upon grant.
average contractual life and vesting schedule for the
The maximum number of shares with respect to which awards may be
made is 931,250 shares of common stock, subject to adjustment for
certain corporate events. On June 26, 2014, the shareholders approved
an amendment to the Amended and Restated 2008 Stock Plan to
respective options;
»
Expected volatility — based on the monthly historical
volatility of the stock price of similar banks over the
expected life of the options;
increase the number of shares authorized for issuance under the
» Risk-free interest rate — based upon the U.S. Treasury
Plan by 437,500 shares. Option awards are generally granted with an
bill rate in effect at date of grant for bonds with a maturity
exercise price equal to the market price of the Company’s stock at the
equal to the expected life of the options.
date of grant, generally vest annually over three years of continuous
service and have ten year contractual terms. At December 31, 2015,
24,655 shares were available to grant under the Plan.
Dividend yield
Expected life (in years)
Expected volatility
Risk-free interest rate
2015
2014
--
6.5
25%
1.73%
--
6.4 – 6.6
15% – 25%
2.02%
A summary of option activity under the Plan as of December 31, 2015, and changes during the year then ended is presented below:
Options
Shares
Weighted-Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
Aggregate Intrinsic
Value (1)
Outstanding at January 1, 2015
1,055,436
$
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2015
Exercisable at December 31, 2015
249,637
(2,437)
(3,833)
1,298,803
787,552
$
$
10.32
13.39
10.94
12.10
10.91
10.10
7.27
$
2,140,469
6.82
5.67
$
$
8,236,569
5,631,846
(1) The aggregate intrinsic value of stock options represents the total
The compensation cost that has been charged to income for the
pre-tax intrinsic value (the amount by which the current market value
plan was $705,000 and $481,000 for 2015 and 2014, respectively.
of the underlying stock exceeds the exercise price of the option) that
As of December 31, 2015, there was unamortized compensation
would have been received by the option holders had all option holders
expense of $1,219,074 that will be amortized over 30 months. Tax
exercised their options on December 31, 2015. This amount changes
benefits recognized for qualified stock options during 2015 and
based on changes in the market value of the Company’s stock.
2014 totaled $90,526 and $65,387.
The weighted average grant date fair value of options granted
Stock option information has been retroactively adjusted for the
during the years ended December 31, 2015 and 2014 was $3.93
five-for-four stock split declared in March 2015.
and $3.26, respectively.
28
Annual Report 2015 Note 14 Fair Value Measurements
Determination of Fair Value
Fair Value Hierarchy
The Company uses fair value measurements to record fair value
In accordance with this guidance, the Company groups its financial
adjustments to certain assets and liabilities and to determine fair
assets and financial liabilities generally measured at fair value in
value disclosures. In accordance with Fair Value Measurements and
three levels, based on the markets in which the assets and liabilities
Disclosures topic of FASB ASC, the fair value of a financial instrument
are traded and the reliability of the assumptions used to determine
is the price that would be received to sell an asset or paid to transfer
fair value.
a liability in an orderly transaction between market participants at the
measurement date. Fair value is best determined based upon quoted
market prices. However, in many instances, there are no quoted
Level 1: Valuation is based on quoted prices in active markets for
identical assets and liabilities.
market prices for the Company’s various financial instruments. In
Level 2: Valuation is based on observable inputs including quoted
cases where quoted market prices are not available, fair values are
prices in active markets for similar assets and liabilities, quoted prices
based on estimates using present value or other valuation techniques.
for identical or similar assets and liabilities in less active markets, and
Those techniques are significantly affected by the assumptions
model-based valuation techniques for which significant assumptions
used, including the discount rate and estimates of future cash flows.
can be derived primarily from or corroborated by observable data in
Accordingly, the fair value estimates may not be realized in an
the market.
immediate settlement of the instrument.
Level 3: Valuation is based on model-based techniques that use one
The fair value guidance provides a consistent definition of fair value,
or more significant inputs or assumptions that are unobservable in
which focuses on exit price in an orderly transaction (that is, not a
the market.
forced liquidation or distressed sale) between market participants
at the measurement date under current market conditions. If there
has been a significant decrease in the volume and level of activity for
the asset or liability, a change in valuation technique or the use of
multiple valuation techniques may be appropriate. In such instances,
determining the price at which willing market participants would
transact at the measurement date under current market conditions
depends on the facts and circumstances and requires the use of
significant judgment. The fair value is a reasonable point within
the range that is most representative of fair value under current
market conditions.
The following describes the valuation techniques used by the
Company to measure certain financial assets and liabilities recorded
at fair value on a recurring basis in the financial statements:
Securities available for sale: Securities available-for-sale are recorded
at fair value on a recurring basis. Fair value measurement is based
upon quoted market prices, when available (Level 1). If quoted market
prices are not available, fair values are measured utilizing independent
valuation techniques of identical or similar securities for which
significant assumptions are derived primarily from or corroborated
by observable market data. Third party vendors compile prices from
various sources and may determine the fair value of identical or
similar securities by using pricing models that considers observable
market data (Level 2).
29 FVCBankcorp, Inc.
The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis
as of December 31, 2015 and 2014:
Description
Balance as of
December 31, 2015
Fair Value Measurements at December 31, 2015 Using:
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Assets
Available-for-sales
Securities of U.S. government
and federal agencies
$
1,483,938
$
Securities of state and local
municipalities tax exempt
Securities of state and local
municipalities taxable
Corporate securities
Certificates of deposit
SBA pass-through securities
Mortgage-backed securities
Collateralized mortgage
obligations
1,728,365
1,308,000
1,940,870
992,411
371,144
37,159,780
20,563,012
Total Available-for-sale Securities
$
65,547,520
$
--
--
--
--
--
--
--
--
--
$
1,483,938
$
1,728,365
1,308,000
1,940,870
992,411
371,144
37,159,780
20,563,012
$
65,547,520
$
--
--
--
--
--
--
--
--
--
Description
Balance as of
December 31, 2014
Fair Value Measurements at December 31, 2014 Using:
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Assets
Available-for-sales
Securities of U.S. government
and federal agencies
$
4,167,725
$
Securities of state and local
municipalities
Certificates of deposit
SBA pass-through securities
1,289,825
2,244,551
429,082
Mortgage-backed securities
25,022,584
Collateralized mortgage
obligations
29,543,631
Total Available-for-Sale Securities
$
62,697,398
$
--
--
--
--
--
--
--
$
4,167,725
$
1,289,825
2,244,551
429,082
25,022,584
29,543,631
$
62,697,398
$
--
--
--
--
--
--
--
30
Annual Report 2015 Certain financial assets are measured at fair value on a nonrecurring
The vast majority of the collateral is real estate. The value of real
basis in accordance with GAAP. Adjustments to the fair value of these
estate collateral is determined utilizing a market valuation approach
assets usually result from the application of lower-of-cost-or-market
based on an appraisal conducted by an independent, licensed
accounting or write-downs of individual assets.
appraiser outside of the Company using observable market data
The following describes the valuation techniques used by the
Company to measure certain financial assets recorded at fair
value on a nonrecurring basis in the financial statements:
Impaired Loans: Loans are designated as impaired when, in the
judgment of management based on current information and events,
it is probable that all amounts due according to the contractual terms
of the loan agreement will not be collected. The measurement of loss
associated with impaired loans can be based on either the observable
market price of the loan or the fair value of the collateral. Fair value
is measured based on the value of the collateral securing the loans.
Collateral may be in the form of real estate or business assets
including equipment, inventory, and accounts receivable.
(Level 2). However, if the collateral is a house or building in the
process of construction, has the value derived by discounting
comparable sales due to lack of similar properties, or is discounted
by the Company due to marketability, then the fair value is considered
Level 3. The value of business equipment is based upon an outside
appraisal if deemed significant, or the net book value on the applicable
business’s financial statements if not considered significant using
observable market data. Likewise, values for inventory and accounts
receivables collateral are based on financial statement balances or
aging reports (Level 3). Impaired loans allocated to the Allowance
for Loan Losses are measured at fair value on a nonrecurring basis.
Any fair value adjustments are recorded in the period incurred as
provision for loan losses on the Statements of Income.
The following table summarizes the Company’s assets that were measured at fair value on a nonrecurring basis during the period:
Description
Balance as of
December 31, 2015
Fair Value Measurements at December 31, 2015 Using
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Assets
Impaired Loans, net of
valuation allowance
$
892,392
$
--
$
--
$
892,392
Description
Balance as of
December 31, 2014
Fair Value Measurements at December 31, 2014 Using
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Assets
Impaired Loans, net of
valuation allowance
$
488,091
$
--
$
--
$
488,091
The following table displays quantitative information about Level 3 Fair Value Measurements for December 31, 2015 and 2014:
Quantitative information about Level 3 Fair Value Measurements for December 31, 2015
Assets
Fair Value
Valuation Technique(s)
Unobservable Input
Range
434,389
Business asset value
458,003
Discounted appraised value
Liquidation costs
Market discount
5% – 100%
10% – 12%
Quantitative information about Level 3 Fair Value Measurements for December 31, 2014
Fair Value
Valuation Technique(s)
Unobservable Input
Range
130,016
Business asset value
358,075
Discounted appraised value
Liquidation costs
Market discount
Liquidation costs
20 – 75%
7%
20%
Impaired Loans
Assets
Impaired Loans
$
$
$
$
31
FVCBankcorp, Inc. The fair value of a financial instrument is the current amount that
Loans Receivable
would be exchanged between willing parties, other than in a forced
liquidation. Fair value is best determined based upon quoted market
prices. However, in many instances, there are no quoted market prices
for the Company’s various financial instruments. In cases where
quoted market prices are not available, fair values are based
on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash
flows. Accordingly, the fair value estimates may not be realized in
an immediate settlement of the instrument. The aggregate fair value
amounts presented may not necessarily represent the underlying
fair value of the Company.
For variable-rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on carrying
values. Fair values for certain mortgage loans (for example, one to
four family residential), credit-card loans and other consumer loans
are based on quoted market prices of similar loans sold in conjunction
with securitization transactions, adjusted for differences in loan
characteristics. Fair values for business real estate and business loans
are estimated using a discounted cash flow analyses, using interest
rates currently being offered for loans with similar terms to borrowers
of similar credit quality. Fair values for impaired loans are estimated
using discounted cash flow analyses or underlying collateral values,
where applicable.
The following methods and assumptions were used by the Company
in estimating fair values of financial instruments as disclosed herein:
Bank Owned Life Insurance
Cash and Due from Banks and Federal Funds Sold
officers of the Company. The cash values of the policies are estimated
The carrying amounts of cash and due from banks and federal funds
sold approximate their fair value.
using information provided by insurance carriers. These policies are
carried at their cash surrender values, which approximates fair values.
Bank owned life insurance represents insurance policies on senior
Securities
Accrued Interest
Fair values for securities are based on quoted market prices, where
available. If quoted market prices are not available, fair values are
based on quoted market prices of comparable instruments or
third party vendor pricing models.
The carrying amount of accrued interest approximates fair value.
Deposits
The carrying amounts of deposit liabilities payable on demand,
consisting of NOW accounts, money market deposits, and saving
Interest-Bearing Deposits at Other Financial Institutions
deposits approximate fair value. Fair value of fixed-rate certificates
The carrying amounts of interest-bearing deposits at other financial
institutions payable on demand, consisting of money market deposits,
approximate fair value. Fair value of fixed-rate certificates of deposit
is estimated based on discounted cash flow analyses using the
remaining maturity of the underlying accounts and interest
rates currently offered on certificates of deposit with similar
of deposit is estimated based on discounted cash flow analyses
using the remaining maturity of the underlying accounts and
interest rates currently offered on certificates of deposit with
similar original maturities.
FHLB Advances
original maturities.
Restricted Stock
The carrying amount of Federal Reserve Bank stock, Federal Home
Loan Bank stock and Community Bankers’ Bank Stock approximates
fair value based on redemption provisions.
The fair value of FHLB advances is estimated based on discounted
cash flow analysis using the remaining maturity of the underlying
accounts and interest rates currently offered of advance with similar
original maturities.
Off-Balance Sheet Financial Instruments
At December 31, 2015 and 2014, the fair values of loan commitments
and standby letters of credit are immaterial. Therefore, they have not
been included in the following table.
32
Annual Report 2015 Carrying Amount
Fair Value Measurements at December 31, 2015 Using
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Unobservable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Financial Assets:
Cash and due from banks
$
5,257,136
$
5,257,136
$
23,442,934
23,442,934
Interest-bearing deposits at
other institutions
Securities held-to-maturity
Securities available for sale
Restricted stock
Loans, net
Bank owned life insurance
Accrued interest receivable
2,246,992
65,547,520
4,048,000
617,320,037
10,524,789
1,908,487
Financial Liabilities:
Checking, savings and money
market accounts
$
414,701,339
$
Time deposits
FHLB advances
Accrued interest payable
211,938,452
35,650,000
132,743
$
--
--
2,244,390
65,547,520
4,048,000
--
--
--
--
--
--
619,338,000
10,524,789
1,908,487
$
414,701,339
$
211,798,000
35,428,000
132,743
--
--
--
--
--
Carrying Amount
Fair Value Measurements at December 31, 2014 Using
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Unobservable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Financial Assets:
Cash and due from banks
$
5,066,808
$
5,066,808
$
13,895
13,895
10,915,209
10,915,209
Fed funds sold
Interest-bearing deposits at
other institutions
Securities available for sale
Restricted stock
Loans, net
Bank owned life insurance
Accrued interest receivable
62,697,398
3,887,250
504,372,951
10,199,352
1,576,142
Financial Liabilities:
Checking, savings and money
market accounts
$
305,480,915
$
Time deposits
FHLB advances
Accrued interest payable
198,739,453
32,500,000
153,062
33
$
--
--
--
62,697,398
3,887,250
--
--
--
--
--
--
507,417,000
10,199,352
1,576,142
$
305,480,915
$
199,457,000
32,520,000
153,062
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
FVCBankcorp, Inc. Note 15 Earnings Per Share
Basic earnings per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if contracts to
issue common stock were exercised or converted into common stock, or resulted in the issuance of stock which then shared in the earnings of
the Company.
Earnings per share has been retroactively adjusted for the five-for-four stock split declared in March 2015.
The following shows the weighted average number of shares used in computing earnings per share and the effect of weighted average number
of shares of dilutive potential common stock. Dilutive potential common stock has no effect on income available to common shareholders.
There were 249,637 and 329,450 shares, respectively, excluded from 2015 and 2014 the calculation because their effects were anti-dilutive.
Net income
Weighted average number of shares
Options effect of dilutive securities
Weighted average diluted shares
Note 16 Subsequent Events
2015
2014
5,419,071
$
6,488,525
289,777
6,778,302
0.84
0.80
$
$
4,133,488
6,480,601
100,601
6,581,203
0.64
0.63
$
$
$
Basic EPS
Diluted EPS
In preparing the financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through
March 10, 2016, the date the financial statements were available to be issued.
Annual Report 2015
34
LOCATIONS
Headquarters
11325 Random Hills Road, Suite 240
Fairfax, VA 22030
Phone: 703.436.3800
Arlington Branch
2500 Wilson Boulevard, Suite 100
Arlington, VA 22201
Phone: 703.387.5050
Ashburn Branch
43800 Central Station Drive, Suite 150
Ashburn, VA 20147
Fairfax Branch
11325 Random Hills Road, Suite 100
Fairfax, VA 22030
Phone: 703.436.3800
Manassas Branch
7900 Sudley Road
Manassas, VA 20109
Phone: 703.656.7300
Reston Branch
11260 Roger Bacon Drive, Suite 101
Reston, VA 20190
Phone: 703.436.3880
Springfield Branch
6975 Springfield Boulevard
Springfield, VA 22150
Phone: 703.672.2590