2016 Annual Report
March 10, 2017
To Our Shareholders:
2016 was a pivotal year in FVCBankcorp, Inc.’s (the “Company”) existence, as we achieved record earnings and higher asset growth
than the preceding year. We are excited about new opportunities in the market and our momentum as we begin the 10th year of
operations. I am delighted to share our financial performance with you.
The Company reported consolidated earnings of $1.7 million for the fourth quarter of 2016, or $0.20 diluted earnings per share, an
increase of $711 thousand, or 69.1%, compared with the 2015 fourth quarter net income of $1.0 million, or $0.12 diluted earnings
per share. Net income was $6.9 million and $5.4 million for the years ended December 31, 2016, and 2015, respectively, an increase
of $1.5 million, or 27.9%. Diluted earnings per share was $0.79 and $0.64 for the respective periods. The increase in net income
reflects the strong loan growth funded by low-cost deposits.
Total assets increased to $909.3 million, compared with $737.0 million as of December 31, 2016, and 2015, respectively, an increase
of $172.5 million, or 23.4%. Loans receivable totaled $768.1 million as of December 31, 2016, compared with $623.6 million as
of December 31, 2015, an increase of $144.5 million, or 23.2%. The Company deployed proceeds from the subordinated debt
offering and excess liquidity to purchase investment securities. The subordinated debt offering enabled us to continue our growth
while maintaining adequate capital without diluting our shareholders. We ended the year with our strongest quarterly loan growth to
date; loans increased $80.4 million fueled by a robust loan pipeline and customer transactions required to close before year-end.
Total deposits increased to $776.0 million as of December 31, 2016, compared with $626.6 million as of December 31, 2015, an
increase of $149.4 million, or 23.8%. Noninterest-bearing deposits increased to $165.7 million from $129.1 million as of December
31, 2016, and 2015, respectively, an increase of $36.6 million, or 28.3%. Noninterest-bearing deposits comprised 21.3% and
20.6% of total deposits at December 31, 2016, and 2015, respectively. Wholesale deposits totaled $62.2 million as of December 31,
2016, compared with $55.4 million as of December 31, 2015, representing only 8.0% and 8.8% of total deposits for the respective
periods. The increase in core deposits and, specifically, noninterest-bearing deposits, is primarily attributable to the Company’s
relationship banking strategy with our growing customer base.
We continue our efforts and our commitment to enhance shareholder value. Tangible book value per share increased to $9.79 from
$8.95 as of December 31, 2016, and 2015, respectively, representing $0.84, or 9.4% for the 12-month period.
Net interest income increased to $27.2 million, compared with $22.9 million for the years ended December 31, 2016, and 2015,
respectively, representing an increase of $4.3 million, or 18.8% for the 12-month period. Net interest income for the year ended
December 31, 2016, also includes a full six months of the Company’s $25 million subordinated debt issued on June 20, 2016.
The Company’s net interest margin was 3.53% and 3.69% for the years ended December 31, 2016, and 2015, respectively.
Noninterest expenses increased $1.7 million, or 11.9% for the years ended December 31, 2016, and 2015, respectively. The
efficiency ratio improved to 58.16%, compared with 61.46%, for the years ended December 31, 2016, and 2015, respectively.
We also improved efficiency while opening our sixth branch in Ashburn, Virginia in the fourth quarter of 2016.
Asset quality remains strong as nonperforming assets and loans 90 days or more past due totaled only $249 thousand, or 0.03%
of total assets. The Company recognized charge-offs totaling $1.3 million related to the disposition of five nonaccrual loans for the
year ended December 31, 2016. We continue to diligently monitor our loan portfolio to identify early warning signs and proactively
manage the loans.
We are grateful to our dedicated employees who consistently strive to exceed customer expectations. We appreciate the
support of our shareholders who continue to refer new customers and maintain their own banking relationship with us. We look
forward to a successful 2017 as we continue to enhance earnings while growing our balance sheet with relationship driven loans
and deposits.
Best Regards,
David W. Pijor
Chairman, President and Chief Executive Officer
DIRECTORS
David W. Pijor
Chairman
L. Burwell Gunn
Vice Chairman
EXECUTIVE OFFICERS
David W. Pijor
President
Chief Executive Officer
Patricia A. Ferrick
Executive Vice President
Chief Financial Officer
Scott Laughlin
Sidney G. Simmonds
Thomas L. Patterson
Daniel M. Testa
Devin Satz
Philip “Trey” R. Wills III
Lawrence W. Schwartz
William G. Byers
Executive Vice President
Chief Lending Officer
B. Todd Dempsey
Executive Vice President
Chief Operating Officer
Michael G. Nassy
Executive Vice President
Chief Credit Officer
REGIONAL LENDING OFFICERS
Alissa Curry Briggs
Senior Vice President
Regional Lending Executive
James C. Elliott
Senior Vice President
Regional Lending Executive
Lance D. Nobles
Senior Vice President
Regional Lending Executive
Christopher O. Turley
Senior Vice President
Regional Lending Executive
OFFICERS
Michelle L. Buckles
Senior Vice President
Compliance
Terry L. Elliott
Senior Vice President
Lending
Terry R. Frey
Senior Vice President
Lending
Alberta A. Gibson
Senior Vice President
Human Resources
Michael Y. Huang
Senior Vice President
Finance
Sharon L. Jackson
Senior Vice President
Retail
Todd E. Lattimer
Senior Vice President
Lending
Brian R. Tower
Senior Vice President
Lending
Huong K. Van
Senior Vice President
Lending
Jacqueline S. Marbell-Edson
Senior Vice President
Loan Administration
Steffany R. Watson
Senior Vice President
Cash Management
Farideh Mullafiroze
Senior Vice President
Business Development
Joshua F. Steele
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)
2016
2015
2014
2013
2012
2011
Selected Balances
Total assets
Total investment securities
Total loans
Allowance for loan losses
Total deposits
Subordinated notes, net of issuance costs
Other borrowings
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 - gains on sales of securities available-for-sale
Noninterest income - gains on sales of loans
Noninterest income - services charges and other 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 risk based capital (to risk weighted assets)
Tier 1 capital (to risk weighted assets)
Common equity tier 1 (CET1) capital (to risk weighted assets)
Tier 1 capital (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 charge-offs (recovery)
$
$
$
$
$
$
$
909,305
$
736,807
$
604,756
$
506,717
$
422,761
$
261,037
113,988
768,102
(6,452)
775,991
24,247
27,000
79,811
67,795
623,559
(6,239)
626,640
- -
35,650
72,752
62,697
509,938
(5,565)
504,220
- -
32,500
66,815
56,890
411,040
(4,792)
429,990
- -
14,500
60,903
29,128
331,428
(3,757)
378,702
- -
2,500
39,143
25,830
213,361
(2,754)
223,369
- -
2,500
33,785
$
32,587
$
26,557
$
22,473
$
18,491
$
15,095
$
12,169
5,387
27,200
1,471
25,729
71
- -
1,149
16,446
10,503
3,571
6,932
3,665
22,892
1,073
21,819
68
- -
1,093
14,701
8,279
2,860
5,419
3,288
19,185
886
18,299
77
196
1,040
13,316
6,296
2,162
4,133
2,960
15,531
803
14,728
204
- -
821
12,228
3,525
1,297
2,228
2,515
12,580
1,227
11,353
23
- -
1,075
10,168
2,283
805
1,478
0.85
0.79
9.80
9.79
$
$
$
$
0.67
0.64
8.97
8.95
$
$
$
$
0.51
0.51
8.24
8.22
$
$
$
$
0.31
0.31
7.53
7.51
$
$
$
$
0.28
0.28
7.06
7.02
$
$
$
$
2,293
9,875
649
9,226
5
- -
464
8,253
1,442
(558)
2,000
0.45
0.45
6.61
6.61
8,143,127
8,113,025
8,110,153
8,088,644
5,544,994
5,113,095
3.53%
58.16%
0.88%
8.91%
13.16%
12.37%
12.37%
11.89%
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%
12.53%
N/A
10.96%
3.59%
74.78%
0.50%
4.21%
15.89%
14.71%
N/A
12.58%
4.09%
74.46%
0.47%
4.11%
12.29%
11.13%
N/A
9.16%
249
$
2,559
$
1,601
$
2,988
$
4,623
$
0.03%
0.84%
0.35%
1.00%
0.26%
1.09%
0.59%
1.17%
2,591.16%
243.81%
347.51%
160.37%
1.09%
1.13%
81.27%
1,257
$
399
$
113
$
(231)
$
225
$
4.15%
79.76%
0.81%
7.51%
14.27%
13.14%
N/A
12.44%
5,902
2.26%
1.29%
46.67%
- -
0.00%
Net charge-offs (recovery) to average loans
0.19%
0.07%
0.03%
(0.06%)
0.07%
* Adjusted for 5-for-4 stock splits in 2016 and 2015
Consolidated Financial Report
FVCBankcorp, Inc. and Subsidiary
Fairfax, Virginia
December 31, 2016
Contents
Page
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 shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-36
Independent Auditor’s Report
To the Board of Directors and Shareholders
FVCBankcorp, Inc.
Fairfax, Virginia
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, 2016 and 2015, the related consolidated
statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the years then
ended, and the related notes to the consolidated financial statements (collectively, the 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, 2016 and 2015, and the results of their operations and
their cash flows for the years then ended in accordance with accounting principles generally accepted in the United
States of America.
Winchester, Virginia
March 10, 2017
Annual Report 2016
1
Consolidated Financial Statements
Consolidated Balance Sheets
December 31, 2016 and 2015
Assets
Cash and due from banks
Interest-bearing deposits at other financial institutions
Securities held-to-maturity (fair market value of $1,754,084 in 2016 and $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 $6,452,481 for 2016 and $6,238,606 for 2015
Premises and equipment, net
Accrued interest receivable
Prepaid expenses
Deferred tax assets, net
Core deposit intangible
Bank owned life insurance (BOLI)
Other assets
Total assets
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest-bearing
Interest-bearing checking, savings and money market
Time deposits
Total deposits
FHLB advances
Subordinated notes, net of issuance costs
Accrued interest payable
Accrued expenses and other liabilities
Total liabilities
Commitments and Contingent Liabilities
Shareholders’ Equity
Preferred stock
$
$
$
$
$
2016
2015
5,174,470
3,509,686
1,759,763
112,228,111
4,431,900
761,649,079
1,270,742
2,496,427
603,182
4,368,117
119,000
10,828,189
866,456
909,305,122
$
$
5,257,136
23,442,934
2,246,992
65,547,520
4,048,000
617,320,037
1,511,900
1,908,487
648,459
3,684,617
139,400
10,524,789
527,148
736,807,419
165,661,647
$
129,078,409
369,281,290
241,048,042
775,990,979
27,000,000
24,247,346
170,367
2,084,992
$
$
285,622,930
211,938,452
626,639,791
35,650,000
- -
132,743
1,633,195
$
829,493,684
$
664,055,729
$0.01 par value, authorized 1,000,000 shares; no shares issued and outstanding in 2016 and 2015
$
- -
$
- -
Common stock
$0.01 par value, authorized 20,000,000 shares; 8,143,127 and 6,490,420 shares issued
and outstanding in 2016 and 2015, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive (loss), net
Total shareholders’ equity
Total liabilities and shareholders’ equity
See Notes to Consolidated Financial Statements.
81,431
63,139,580
17,889,459
(1,299,032)
79,811,438
909,305,122
$
$
64,904
62,343,894
10,956,822
(613,930)
72,751,690
736,807,419
$
$
2
FVCBankcorp, Inc.
Consolidated Statements of Income
For the Years Ended December 31, 2016 and 2015
2016
2015
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
Interest on subordinated notes
Total interest expense
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
BOLI income
Other fee income
Total noninterest income
Noninterest Expenses
Salaries and employee benefits
Occupancy and equipment expense
Data processing and network administration
State franchise taxes
Audit, legal and consulting fees
Loan related expenses
FDIC insurance
Marketing, business development and advertising
Director fees
Postage, courier and telephone
Internet banking
Dues, memberships & publications
Bank insurance
Printing and supplies
Bank charges
State assessments
Core deposit intangible amortization
Other operating expenses
Total noninterest expenses
Net income before income tax expense
Income tax expense
Net income
Earnings per share, basic
Earnings per share, diluted
See Notes to Consolidated Financial Statements.
$
$
$
$
$
$
$
$
$
$
$
$
$
$
30,595,706
28,435
1,691,363
170,320
101,396
4
32,587,224
4,473,459
475
39,415
32,251
841,165
5,386,765
27,200,459
1,471,000
25,729,459
564,005
71,124
303,400
281,595
1,220,124
9,803,624
2,097,731
911,497
747,970
376,116
363,362
355,856
349,686
336,600
206,006
186,058
114,292
108,736
107,632
67,127
56,122
20,400
237,008
16,445,823
10,503,760
3,571,123
6,932,637
0.85
0.79
$
$
$
$
$
$
$
$
$
$
$
$
$
25,340,584
40,058
998,877
145,453
32,081
- -
26,557,053
3,618,983
428
11,869
33,250
- -
3,664,530
22,892,523
1,072,820
21,819,703
565,963
67,482
325,437
202,021
1,160,903
8,807,837
1,950,856
838,663
680,297
331,540
138,747
367,168
256,475
279,128
195,111
150,471
109,225
84,826
102,282
65,025
100,409
20,400
223,278
14,701,738
8,278,868
2,859,797
5,419,071
0.67
0.64
Annual Report 2016
3
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2016 and 2015
Net income
Other comprehensive (loss):
Unrealized (loss) on securities available for sale, net of tax $(345,959) and $(85,388), respectively
Reclassification adjustment for gains realized in income, net of tax $24,182 and $22,944, respectively
Total other comprehensive (loss)
Total comprehensive income
See Notes to Consolidated Financial Statements.
2016
2015
$
$
$
6,932,637
$
5,419,071
(638,160)
(46,942)
(685,102)
6,247,535
$
$
(165,753)
(44,538)
(210,291)
5,208,780
4
FVCBankcorp, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2016 and 2015
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 deferred loan costs and purchase premiums
Stock-based compensation expense
BOLI income
Realized gains on securities 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 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
Decrease (increase) 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 held-to-maturity
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 premises and equipment
Net cash (used in) investing activities
Cash Flows From Financing Activities
Net increase in noninterest-bearing, interest-bearing checking, savings, and money market deposits
Net increase in time deposits
(Decrease) increase in FHLB advances
Issuance of subordinated notes, net
Cash paid in lieu of fractional shares
Common stock issuance
Net cash provided by financing activities
Net (decrease) increase 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 (losses) on securities available-for-sale
See Notes to Consolidated Financial Statements.
2016
2015
$
$
$
$
$
$
$
$
$
$
$
6,932,637
523,392
1,471,000
386,164
423,970
697,809
(303,400)
(71,124)
(313,357)
20,400
(881,971)
489,421
9,374,941
245,000
19,933,248
(1,496,475)
(67,229,584)
3,955,150
2,000,000
2,500,000
12,462,261
(383,900)
(146,224,012)
- -
(282,234)
(174,520,546)
120,241,598
29,109,590
(8,650,000)
24,247,346
(5,250)
119,654
165,062,938
(82,667)
5,257,136
5,174,469
5,349,141
3,040,000
(1,055,243)
$
$
$
$
$
$
$
$
$
$
$
5,419,071
563,579
1,072,820
199,397
170,136
705,000
(325,437)
(67,482)
(365,885)
20,400
(595,922)
545,397
7,341,074
1,000,000
(12,527,725)
(2,246,047)
(31,874,397)
19,513,845
- -
913,043
7,145,904
(160,750)
(114,201,576)
11,534
(330,872)
(132,757,041)
109,220,424
13,198,999
3,150,000
- -
(3,348)
26,325
125,592,400
176,433
5,080,703
5,257,136
3,644,211
2,625,000
(318,623)
Annual Report 2016
5
Consolidated Statements of Changes in Shareholders’ Equity
For the Years Ended December 31, 2016 and 2015
Shares
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss)
Balance at December 31, 2014
5,190,498
$
25,952,490
$
35,728,331
$
5,537,751
$
(403,639)
$
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)
- -
- -
- -
- -
Total
66,814,933
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
Net income
Other comprehensive loss
5-for-4 stock split
- -
- -
- -
- -
- -
- -
1,627,379
16,274
(21,524)
Common stock issuance for options
exercised
Stock-based compensation expense,
net of tax benefit of $91,953
25,328
253
119,401
- -
- -
697,809
6,932,637
- -
- -
- -
- -
- -
(685,102)
- -
- -
- -
6,932,637
(685,102)
(5,250)
119,654
697,809
Balance at December 31, 2016
8,143,127
$
81,431
$
63,139,580
$
17,889,459
$
(1,299,032)
$
79,811,438
See Notes to Consolidated Financial Statements.
6
FVCBankcorp, Inc.
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.
The Bank was organized under the laws of the Commonwealth of Virginia to engage in a general banking business
serving the community in and around Fairfax, Virginia. The Bank commenced regular operations on November 27,
2007 and is a member of the Federal Reserve System and the Federal Deposit Insurance Corporation. It is subject
to the regulations of the Federal 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
The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted
in the United States of America and conform to general practices within the banking industry. The more significant of
these policies are summarized below.
Stock Split and Par Value
On May 26, 2016, the Company declared a five-for-four common stock split. The earnings per share for the years
ended December 31, 2016 and 2015 have been retroactively adjusted for this split as if it occurred on January 1, 2015.
On March 23, 2015, the Company declared a five-for-four common stock split. The earnings per share for the year
ended December 31, 2015 have been retroactively adjusted for this split as if it occurred on January 1, 2015. 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
For purposes of the statements of cash flows, cash and cash equivalents include cash on hand, amounts due from
banks and federal funds sold. Generally, federal funds are purchased and sold for one day periods.
Annual Report 2016
7
Securities
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 using the interest method over the terms of
the securities. Declines in the fair value of available-for-sale securities below their cost that are deemed to be other
than temporary are reflected in earnings 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.
Loans
The Company grants commercial real estate, commercial non-real estate and consumer loans to its customers. A
substantial portion of the loan portfolio includes commercial loans throughout the greater Washington, D.C. metropolitan
area, initially focusing on the counties of Arlington, Fairfax, Loudoun and Prince William, Virginia. The ability of the
Company’s debtors to honor their contracts is dependent upon the real estate and general economic conditions in this
area.
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. Nonperforming 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
In situations where, for economic or legal reasons related to a borrower’s financial condition, the Company may grant
a concession to the borrower that it would not otherwise consider, the related loan is classified as a troubled debt
restructuring (TDR). The Company 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.
8
FVCBankcorp, Inc.
Allowance for Loan Losses
The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged
against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent
recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan
loss experience, the nature and volume of the portfolio, information about specific borrower 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 value of estimated future cash flows
using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Smaller
balance, homogeneous loans are collectively evaluated for impairment.
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.
General reserves cover non-impaired loans and are based on peer 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; concentrations of
credit and the effect of other external factors such as competition and legal and regulatory requirements.
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.
Portfolio segments identified by the Company include commercial real estate, commercial and industrial, commercial
construction, 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.
Annual Report 2016
9
Premises and Equipment
Leasehold improvements, computer software, furniture, fixtures and equipment are stated at cost less accumulated
depreciation. Depreciation is computed using the straight-line method over the assets’ estimated useful lives or life of
lease. Estimated useful lives are 10 years for leasehold improvements and 3 to 7 years for computer software, furniture,
fixtures and equipment.
Intangible Assets
The Company’s intangible assets were acquired in the acquisition of 1st Commonwealth Bank of Virginia in 2012.
ASC 350, Intangibles-Goodwill and Other (ASC 350), prescribes accounting for intangible assets subsequent to initial
recognition. Acquired intangible assets (such as core deposit intangibles) are separately recognized if the benefit of the
assets can be sold, transferred, licensed, rented, or exchanged, and amortized 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.
Foreclosed Properties
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, 2016 and 2015.
The Company had no consumer mortgage loans secured by residential real estate properties for which formal foreclosure
proceedings were in process as of December 31, 2016 and 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.
Transfers of Financial Assets
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 before their maturity or the ability to unilaterally cause the holder to return specific assets.
Use of Estimates
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 as of the date of the balance sheet and reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to
significant change in the near term relate to the determination of the allowance for loan losses, the valuation of deferred
tax assets, and the fair value of financial instruments.
10
FVCBankcorp, Inc.
Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets and liabilities are recognized for deductible
temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities
and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it
is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates 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 all relevant information. The determination of whether or not a tax position has met
the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the
reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if,
based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will
not be realized.
Advertising Costs
The Company follows the policy of charging all of advertising to expense as incurred.
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 also recognized as separate components
of equity. Items reclassified out of accumulated other comprehensive income (loss) to net income relate solely to
realized gains (losses) on sales of securities available-for-sale and appear under the caption “Gains on sale of securities
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 15. Fair value estimates involve uncertainties and matters of significant judgment. Changes in
assumptions or in market conditions could significantly affect the estimates.
Stock Compensation Plans
Authoritative accounting guidance requires that the compensation cost relating to share-based payment transactions
be recognized in the financial statements. That cost is measured based on the fair value of the equity or liability
instruments issued. The guidance covers a wide range of share-based compensation arrangements including stock
options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase
plans. The guidance requires entities to measure the cost of employee services 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.
Annual Report 2016
11
Retirement Plan
Employee 401(k) expense is the amount of matching contributions paid by the Company. 401(k) expense was $180,214
and $172,095 for the years ended December 31, 2016 and 2015, respectively.
Earnings Per Share
Basic earnings per share represent income available to common shareholders divided by the weighted-average number
of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that
would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to
income that would result from the assumed issuance. Potential common shares that may be issued by the Company
consist solely of outstanding stock options, and are determined using the treasury method.
Reclassifications
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
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: 1)
Requires equity investments (except those accounted for under the equity method of accounting, or those that result
in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2)
Requires public business entities to use the exit price notion when measuring the fair value of financial instruments
for disclosure purposes. 3) Requires separate presentation of financial assets and financial liabilities by measurement
category and form of financial asset (i.e., securities or loans and receivables). 4) Eliminates the requirement for public
business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required
to be disclosed for financial instruments measured at amortized cost. The amendments in this ASU are effective for
public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.
The Company is currently assessing the impact that ASU 2016-01 will have on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “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 arising from a
lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right
to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely
unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee
accounting model and Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective
for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application
is permitted upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing,
and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into
after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective
approach would not require any transition accounting for leases that expired before the earliest comparative period
presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently
assessing the impact that ASU 2016-02 will have on its consolidated financial statements.
12
FVCBankcorp, Inc.
During March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718):
Improvements to Employee Shares-Based Payment Accounting.” The amendments in this ASU simplify several
aspects of the accounting for share-based payment award transactions including: (a) income tax consequences;
(b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The
amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim
periods within those annual periods. The Company is currently assessing the impact that ASU 2016-09 will have on its
consolidated financial statements.
During June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments.” The amendments in this ASU, among other things, require the measurement
of all expected credit losses for financial assets held at the reporting date based on historical experience, current
conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use
forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied
today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected
credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and
purchased financial assets with credit deterioration. The amendments in this ASU are effective for SEC filers for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2019. For public companies that are
not SEC filers, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2020. The Company is currently assessing the impact that ASU 2016-13 will have on its
consolidated financial statements.
During August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments”, to address diversity in how certain cash receipts and cash payments are
presented and classified in the statement of cash flows. The amendments are effective for public business entities for
fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should
be applied using a retrospective transition method to each period presented. If retrospective application is impractical
for some of the issues addressed by the update, the amendments for those issues would be applied prospectively as
of the earliest date practicable. Early adoption is permitted, including adoption in an interim period. The Company does
not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements.
During January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition
of a Business”. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to
assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or
businesses. Under the current implementation guidance in Topic 805, there are three elements of a business—inputs,
processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a
business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that
a seller uses in operating a set are not required if market participants can acquire the set and continue to produce
outputs. The amendments in this ASU provide a screen to determine when a set is not a business. If the screen is not
met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a
substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation
of whether a market participant could replace missing elements. The ASU provides a framework to assist entities in
evaluating whether both an input and a substantive process are present. The amendments in this ASU are effective
for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The
amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at
transition. The Company does not expect the adoption of ASU 2017-01 to have a material impact on its consolidated
financial statements.
Annual Report 2016
13
During January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying
the Test for Goodwill Impairment”. The amendments in this ASU simplify how an entity is required to test goodwill for
impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by
comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under
the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the
fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment
for a reporting unit to determine if the quantitative impairment test is necessary. Public business entities that are U.S.
Securities and Exchange Commission (SEC) filers should adopt the amendments in this ASU for annual or interim
goodwill impairment tests in fiscal years beginning after December 15, 2019. Public business entities that are not SEC
filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning
after December 15, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on
testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material
impact on its consolidated financial statements.
Note 2.
Restrictions on Cash and Amounts Due From Banks
To comply with Federal Reserve regulations, the Company is required to maintain average balances with the Federal
Reserve Bank. At December 31, 2016 and 2015, these reserve balance requirements amounted to $646,000 and
$0, respectively.
14
FVCBankcorp, Inc.
Note 3.
Securities
Amortized cost and fair values of securities held-to-maturity and securities available-for-sale as of December 31, 2016
and 2015, are as follows:
Held-to-maturity
Securities of state and local municipalities tax exempt
Securities of U.S. government and federal agencies
Total Held-to-maturity Securities
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
Corporate bonds
Corporate securities
Certificates of deposit
SBA pass-through securities
Mortgage-backed securities
Collateralized mortgage obligations
Total Available-for-sale Securities
Held-to-maturity
Securities of state and local municipalities tax exempt
Securities of U.S. government and federal agencies
Total Held-to-maturity Securities
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
Corporate bonds
Certificates of deposit
SBA pass-through securities
Mortgage-backed securities
Collateralized mortgage obligations
Total Available-for-sale Securities
2016
Amortized
Cost
$
$
$
263,285
1,496,478
1,759,763
$
$
1,000,000
$
3,709,473
2,832,466
7,000,000
466,650
740,000
317,427
80,787,404
17,360,132
Gross
Unrealized
Gains
Gross
Unrealized
(Losses)
Fair
Value
$
$
- -
- -
- -
- -
- -
1,190
81,223
44,550
4,301
- -
- -
6,449
(4,197)
(1,482)
(5,679)
$
$
259,088
1,494,996
1,754,084
(38,970)
$
(91,738)
(63,057)
(57,330)
- -
- -
(11,637)
(1,362,361)
(498,061)
961,030
3,617,735
2,770,599
7,023,893
511,200
744,301
305,790
79,425,043
16,868,520
$
114,213,552
$
137,713
$
(2,123,154)
$
112,228,111
$
$
$
2015
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
(Losses)
Fair
Value
263,141
1,983,851
2,246,992
$
$
4,048
$
69
4,117
- -
(6,719)
(6,719)
$
$
267,189
1,977,201
2,244,390
1,500,000
$
- -
$
(16,062)
$
1,726,350
1,306,314
2,000,000
985,000
380,583
37,403,209
21,176,262
2,249
1,686
- -
7,411
- -
17,760
6,905
(234)
- -
(59,130)
- -
(9,439)
(261,189)
(620,155)
1,483,938
1,728,365
1,308,000
1,940,870
992,411
371,144
37,159,780
20,563,012
$
66,477,718
$
36,011
$
(966,209)
$
65,547,520
At December 31, 2016 and 2015, securities with a market value of $807,411 and $957,951 were pledged to secure
borrowings at the Federal Reserve Bank.
Annual Report 2016
15
At December 31, 2016 and 2015, securities with a market value of $9,165,968 and $5,144,064 were pledged to
secure borrowings at the Federal Home Loan Bank of Atlanta.
At December 31, 2016 and 2015, securities with a market value of $92,756,879 and $41,963,694 were pledged to
secure public deposits with the Treasury Board of Virginia at the Community Bankers’ Bank.
The following table shows 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, 2016 and 2015,
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, 2016
Less Than 12 Months
12 Months or Longer
Total
Securities of U.S. government and federal
agencies
Securities of state and local municipalities
tax exempt
Securities of state and local municipalities
taxable
Corporate bonds
SBA pass-through securities
Mortgage-backed securities
Collateralized mortgage obligations
Total
At December 31, 2015
Securities of U.S. government and federal
agencies
Securities of state and local municipalities
tax exempt
Corporate bonds
SBA pass-through securities
Mortgage-backed securities
Collateralized mortgage obligations
Total
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
$
961,030
$
(38,970)
$
- -
$
- - $
961,030
$
(38,970)
3,617,735
(91,738)
- -
- -
3,617,735
(91,738)
1,979,109
942,670
305,790
78,598,292
5,958,540
92,363,166
$
(63,057)
(57,330)
(11,637)
(1,344,371)
(102,821)
(1,709,924)
$
- -
- -
- -
826,751
8,955,627
9,782,378
$
- -
- -
- -
(17,990)
(395,240)
(413,230)
$
1,979,109
942,670
305,790
79,425,043
14,914,167
102,145,544
$
(63,057)
(57,330)
(11,637)
(1,362,361)
(498,061)
(2,123,154)
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)
288,490
1,940,870
- -
33,795,118
9,893,597
45,918,075
$
(234)
(59,130)
- -
(252,341)
(223,514)
(535,219)
$
- -
- -
371,144
1,184,231
8,845,178
11,884,491
$
- -
- -
(9,439)
(8,848)
(396,641)
(430,990)
$
288,490
1,940,870
371,144
34,979,349
18,738,775
57,802,566
$
(234)
(59,130)
(9,439)
(261,189)
(620,155)
(966,209)
$
$
$
As of December 31, 2016 and 2015, the Company had two and one, respectively, held-to-maturity security in an
unrealized loss position of less than twelve months. The fair value of the securities was $1,754,084 and $993,281 and
the unrealized losses were $5,679 and $6,719, respectively.
Securities of U.S. government and federal agencies: The unrealized losses were caused by interest rate increases.
The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the
amortized cost basis of the investments. 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, 2016.
16
FVCBankcorp, Inc.
Securities of state and local municipalities: The unrealized losses on the investments in securities of state and local
municipalities were caused by interest rate increases. The contractual terms of those investments do not permit the
issuer to settle the securities at a price less than the amortized cost basis of the investments. 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, 2016. Seven of these nine investments
carries an S&P investment grade rating of AA- or above. Remaining two investments carry a Moody’s investment grade
rating of Aa3 or above.
Corporate bonds: The unrealized losses on the investments in corporate bonds were caused by interest rate increases.
The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the
amortized cost basis of the investments. 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, 2016. One of these six investments carries an S&P investment grade rating of A. Remaining
five investments do not carry ratings.
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 decline in market value is attributable to changes in interest
rates and not credit quality, and 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, 2016.
Mortgage-backed securities: The unrealized losses on the Company’s investment in mortgage-backed securities were
caused by interest rate increases. The contractual cash flows of those investments are 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 decline in market value is attributable to changes in interest
rates and not credit quality, and 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, 2016.
Collateralized mortgage obligations (CMOs): The unrealized loss associated with CMOs was caused by interest rate
increases. The contractual cash flows of these investments are 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 decline in market value is attributable to changes in interest rates and not credit
quality, and 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, 2016.
Annual Report 2016
17
The amortized cost and fair value of securities available-for-sale as of December 31, 2016, 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.
Less than 1 year
After 1 year through 5 years
After 5 years through 10 years
After 10 years
Total
Held-to-maturity
Available-for-sale
Amortized Cost
Fair Value
Amortized Cost
Fair Value
$
$
- -
$
- -
1,496,478
263,285
- - $
- -
1,494,996
259,088
716,650
$
4,178,006
22,767,949
86,550,947
1,759,763
$
1,754,084 $
114,213,552
$
762,305
4,147,327
22,526,543
84,791,936
112,228,111
For the years ended December 31, 2016 and 2015, proceeds from maturities, calls and principal repayments of
securities were $16,962,261 and $8,058,947, respectively. During 2016 and 2015, proceeds from sales of securities
available-for-sale amounted to $3,955,150 and $19,513,845, gross realized gains were $71,124 and $144,215 and
gross realized losses were $0 and $76,733, 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)
Loans, net
2016
2015
$
476,851,256
$
376,426,381
112,060,996
53,166,871
106,549,420
19,547,551
- -
89,502,318
49,833,719
84,463,861
19,127,221
3,855,706
$
$
768,176,094
$
623,209,206
6,452,481
74,534
6,238,606
(349,437)
761,649,079
$
617,320,037
18
FVCBankcorp, Inc.
An analysis of the allowance for loan losses for the years ended December 31, 2016 and 2015 follows:
Commercial
Real Estate
Commercial
and Industrial
Commercial
Construction
Consumer
Residential
Consumer
Nonresidential
Consumer
Construction
Unallocated
Total
2016 Allowance
for credit losses:
Beginning Balance
$
4,001,842
$
1,442,338 $
301,494
$
281,965 $
98,612
$
23,327 $
89,028 $
6,238,606
Charge-offs
Recoveries
Provision
Ending Balance
$
(512,442)
(668,513)
- -
- -
- -
- -
(76,170)
- -
- -
- -
- -
- -
- -
- -
(1,257,125)
- -
776,833
4,266,233
$
257,996
1,031,821 $
73,332
374,826
$
294,569
500,364 $
22,945
121,557
$
(23,327)
- - $
68,652
157,680 $
1,471,000
6,452,481
Commercial
Real Estate
Commercial
and 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
$
- - $
62,234 $
5,564,669
Charge-offs
Recoveries
Provision
(98,396)
11,534
367,370
(312,021)
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
(410,417)
11,534
478,003
67,743
77,175
32,408
23,327
26,794
1,072,820
Ending Balance
$
4,001,842
$
1,442,338 $
301,494
$
281,965 $
98,612
$
23,327 $
89,028 $
6,238,606
The following table presents the recorded investment in loans and impairment method as of December 31, 2016 and
2015 by portfolio segment:
Commercial
Real Estate
Commercial
and Industrial
Commercial
Construction
Consumer
Residential
Consumer
Nonresidential
Consumer
Construction
Unallocated
Total
2016 Allowance
for credit losses:
Ending Balance
Individually evaluated
for impairment
$
- -
$
- - $
- -
$
- - $
- -
$
- - $
- - $
- -
Collectively evaluated
for impairment
4,266,233
4,266,233
$
1,031,821
1,031,821 $
374,826
374,826
$
$
500,364
500,364 $
121,557
121,557
$
- -
- - $
157,680
157,680 $
6,452,481
6,452,481
Financing receivables:
Ending Balance
Individually evaluated
for impairment
$
Collectively evaluated
for impairment
10,276,080
$
1,633,583 $
- -
$
- - $
- -
$
- - $
- - $
$11,909,662
466,575,176
110,427,413
53,166,871
106,549,420
19,547,551
$
476,851,256
$
112,060,996 $ 53,166,871
$ 106,549,420 $ 19,547,551
$
- -
- - $
- -
756,266,432
- - $
768,176,094
Annual Report 2016
19
Commercial
Real Estate
Commercial
and Industrial
Commercial
Construction
Consumer
Residential
Consumer
Nonresidential
Consumer
Construction
Unallocated
Total
2015 Allowance
for credit losses:
Ending Balance
Individually evaluated
for impairment
$
686,667
$
590,355 $
- -
$
- - $
- -
$
- - $
- - $
1,277,022
Collectively evaluated
for impairment
3,315,175
4,001,842
$
851,983
1,442,338 $
301,494
301,494
$
281,965
281,965 $
98,612
98,612
$
$
23,327
23,327 $
89,028
89,028 $
4,961,584
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
Impaired loans by class as of December 31, 2016 and 2015 are summarized as follows:
2016
With an allowance recorded:
Commercial real estate
Commercial and industrial
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
2015
With an allowance recorded:
Commercial real estate
Commercial and industrial
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
Unpaid Principal
Balance
Related Allowance
Average Recorded
Investment
Interest Income
Recognized
$
$
$
$
$
$
$
$
- -
- -
- -
- -
- -
- -
- -
10,276,079
1,633,583
- -
- -
- -
- -
11,909,662
Recorded
Investment
1,144,670
1,024,744
- -
- -
- -
- -
$2,169,414
3,730,381
3,023,641
- -
110,262
- -
- -
6,864,284
$
$
$
$
$
$
$
$
- -
- -
- -
- -
- -
- -
- -
10,324,523
1,647,783
- -
- -
- -
- -
11,972,306
$
$
$
$
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
$
$
$
$
- -
- -
- -
- -
- -
- -
- -
10,240,475
1,761,146
- -
- -
- -
- -
12,001,621
Unpaid Principal
Balance
Related Allowance
Average Recorded
Investment
1,187,663
1,024,743
- -
- -
- -
- -
$2,212,406
3,730,381
3,037,842
- -
116,737
- -
- -
6,884,960
$
$
$
$
686,667
590,355
- -
- -
- -
- -
$1,277,022
- -
- -
- -
- -
- -
- -
- -
$
$
$
$
1,196,200
1,444,976
- -
- -
- -
- -
$2,641,176
3,644,452
3,690,837
- -
116,737
- -
- -
7,452,026
$
$
$
$
$
$
$
$
- -
- -
- -
- -
- -
- -
- -
506,804
93,209
- -
- -
- -
- -
600,013
Interest Income
Recognized
64,722
58,431
- -
- -
- -
- -
$123,153
188,026
112,221
- -
- -
- -
- -
300,247
20
FVCBankcorp, Inc.
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.
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to
service their debt such as current financial information, historical payment experience, collateral adequacy, credit
documentation, and current economic trends, among other factors. The Company analyzes loans individually by
classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as commercial
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:
Pass – Loans listed as pass include larger non-homogeneous loans not meeting the risk rating definitions below
and smaller, homogeneous loans not assessed on an individual basis.
Special Mention – Loans classified as special mention have a potential weakness that deserves management’s
close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects
for the loan or of the institution’s credit position at some future date.
Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying
capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or
weaknesses that jeopardize the liquidation of the debt. They are characterized by the enhanced possibility that the
institution will sustain some loss if the deficiencies are not corrected.
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 or liquidation in full, based
on currently known facts, conditions and values, improbable.
Loss – Loans classified as loss include those loans which are considered uncollectible and of such little value that
their continuance as loans is not warranted. Even though partial recovery may be achieved in the future, it is neither
practical nor desirable to defer writing off these loans.
Based on the most recent analysis performed, the risk category of loans by class of loans was as follows as of
December 31, 2016 and 2015:
Commercial
Real Estate
Commercial
and Industrial
Commercial
Construction
Consumer
Residential
Consumer
Nonresidential
Consumer
Construction
Total
As of December 31, 2016
Grade:
Pass
Special mention
Substandard
Doubtful
Loss
Total
As of December 31, 2015
Grade:
Pass
Special mention
Substandard
Doubtful
Loss
Total
$
$
$
$
465,512,835
8,590,646
2,747,775
- -
- -
476,851,256
Commercial
Real Estate
369,211,680
3,536,698
3,678,003
- -
- -
376,426,381
$
$
$
$
109,653,413
2,163,501
244,082
- -
- -
112,060,996
Commercial
and Industrial
82,337,794
4,363,035
2,801,489
- -
- -
89,502,318
$
$
$
$
53,166,871
- -
- -
- -
- -
53,166,871
Commercial
Construction
49,833,719
- -
- -
- -
- -
49,833,719
$
$
$
$
104,055,903
2,493,517
- -
- -
- -
106,549,420
$ 19,528,306 $
19,245
- -
- -
- -
$
19,547,551 $
- -
- -
- -
- -
- -
- -
Consumer
Residential
Consumer
Nonresidential
Consumer
Construction
84,353,599
- -
110,262
- -
- -
84,463,861
$
19,127,221 $
- -
- -
- -
- -
$
19,127,221 $
3,855,706
- -
- -
- -
- -
3,855,706
$
$
$
$
$
751,917,328
13,266,909
2,991,857
- -
- -
768,176,094
Total
608,719,719
7,899,733
6,589,754
- -
- -
623,209,206
Annual Report 2016
21
Total
$
As of December 31, 2015
Commercial
real estate
Commercial and
industrial
Commercial
construction
Consumer
residential
Consumer
nonresidential
Consumer
construction
Commercial
real estate
Commercial and
industrial
Commercial
construction
Consumer
residential
Consumer
nonresidential
Consumer
construction
Past due and nonaccrual loans presented by loan class were as follows as of December 31, 2016 and 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
As of December 31, 2016
$
906,738
$
1,605,427 $
155,200
$
2,667,365 $
474,183,891
$ 476,851,256 $
155,200 $
- -
- -
- -
1,135,961
211,548
94,082
305,630
111,755,366
112,060,996
- -
- -
- -
- -
- -
- -
53,166,871
53,166,871
1,135,961
105,413,459
106,549,420
9,986
19,537,565
19,547,551
- -
9,986
- -
- -
- -
- -
94,082
- -
- -
- -
- -
2,042,699
- -
$
1,826,961 $
- -
249,282
- -
$
4,118,942 $
- -
764,057,152
- -
$ 768,176,094 $
- -
155,200 $
- -
94,082
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
1,791,576
- -
162,716
- -
- -
- -
- -
- -
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
- -
- -
- -
- -
- -
1,303,841
- -
110,262
- -
- -
$
2,409,570 $
620,799,636
$ 623,209,206 $
- - $
2,558,773
Total
$
2,399,710
$
9,860 $
There were overdrafts of $77,479 and $79,819 at December 31, 2016 and 2015 which have been reclassified from
deposits to loans. At December 31, 2016 and 2015, loans with a carrying value of $81,107,118 and $92,764,019 were
pledged to the Federal Home Loan Bank of Atlanta.
22
FVCBankcorp, Inc.
There were no troubled debt restructurings that subsequently defaulted during the year ended December 31, 2016
and 2015. A summary of activity in troubled debt restructurings presented by loan class follows for the years ended
December 31, 2016 and 2015:
For the year ended December 31, 2016
Troubled Debt Restructurings
Commercial real estate
Commercial and industrial
Commercial construction
Consumer residential
Consumer nonresidential
Consumer construction
Total
For the year ended December 31, 2015
Troubled Debt Restructurings
Commercial real estate
Commercial and industrial
Commercial construction
Consumer residential
Consumer nonresidential
Consumer construction
Total
Number of
Contracts
Pre-Modification Outstanding
Recorded Investment
Post-Modification Outstanding
Recorded Investment
1
2
- -
- -
- -
- -
3
$
$
6,182,709
$
677,774
- -
- -
- -
- -
6,182,709
677,774
- -
- -
- -
- -
6,860,483
$
6,860,483
Number of
Contracts
Pre-Modification Outstanding
Recorded Investment
Post-Modification Outstanding
Recorded Investment
2
2
- -
- -
- -
- -
4
$
$
3,494,920
$
861,288
- -
- -
- -
- -
3,567,476
861,288
- -
- -
- -
- -
4,356,208
$
4,428,764
As of December 31, 2016 and 2015, the Company has a recorded investment in troubled debt restructurings of
$11,522,972 and 5,074,007, respectively.
The concessions made in troubled debt restructurings were extensions of the maturity dates or reductions in the stated
interest rate for the remaining life of the debt.
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
2016
2015
$
$
$
2,367,030
3,010,721
323,078
5,700,829
4,430,087
1,270,742
$
$
$
2,331,233
2,833,726
253,637
5,418,596
3,906,696
1,511,900
For the years ended December 31, 2016 and 2015, depreciation expense was $523,392 and $563,579, respectively.
Annual Report 2016
23
As of December 31, 2016, the Company has a non-cancellable lease agreement for the operating headquarters and a
branch in Fairfax, Virginia. The lease states that if the Company holds possession of the premises after the expiration
date, the Company shall become a tenant on a month-to-month basis. The 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 agreement to operate a branch in Manassas,
Virginia. The lease expires December 31, 2017. The lease contains an option to extend 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.
In October 2012, the Company assumed the remaining term of a non-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.
In May 2013, the Company entered into a 10-year lease agreement to operate a branch in Springfield, Virginia. The
lease, which is cancellable with penalty, expires August 31, 2023. The lease contains an option to extend for two five-
year periods.
In March 2016, the Company entered into a 10-year lease agreement to operate a branch in Ashburn, Virginia. The
lease, which is cancellable with penalty, expires August 31, 2026.
Total rent expense for the years ended December 31, 2016 and 2015 amounted to $1,029,109 and $981,577,
respectively.
The minimum base rent for the remainder of the leases are as follows:
2017
2018
2019
2020
2021
Thereafter
$
$
1,055,246
314,136
148,679
147,908
157,272
416,259
2,239,500
Note 6.
Time Deposits
Remaining maturities on certificates of deposit are as follows:
2017
2018
2019
2020
2021
$
$
153,339,474
62,307,739
11,230,459
8,030,752
6,139,618
241,048,042
Total time deposits of $250,000 and greater were $75,872,386 and $50,884,076 at December 31, 2016 and 2015,
respectively.
24
FVCBankcorp, Inc.
Note 7.
Deposit Concentrations
At December 31, 2016 and 2015, the Company had four customer relationship, whose related balance on deposit
exceeded 5% of outstanding deposits. These customer relationships comprise 25% of outstanding deposits at
December 31, 2016 and 8% of outstanding deposits at December 31, 2015.
Brokered deposits totaled $71,271,541 and $98,959,198 at December 31, 2016 and 2015, respectively.
Note 8.
Federal Home Loan Bank (FHLB) Advances and Other Borrowings
FHLB advances at December 31, 2016 consist of the following:
Daily rate advances maturing: 2017
Fixed rate advances maturing: 2017
Total FHLB advances
Amount
Weighted
Average Rate
$
$
24,500,000
2,500,000
27,000,000
0.80%
1.33%
0.85%
At December 31, 2016, advances are collateralized by securities with a market value of $9,165,968, 1-4 family
residential loans with a book value of $2,932,460, multi-family residential loan with a book value of $7,611,973, home
equity lines of credit with a book value of $9,726,644 and commercial real estate loans with book value of $60,836,041.
The remaining lendable collateral value at December 31, 2016 totaled $38,784,596.
The Company has unsecured lines of credit with correspondent banks totaling $37,000,000 and $37,000,000,
respectively, at December 31, 2016 and 2015, available for overnight borrowing. At December 31, 2016 and 2015,
these lines of credit with correspondent banks were not drawn upon.
Note 9.
Subordinated Notes
On June 20, 2016, the Company issued $25,000,000 in private placement of fixed-to-floating subordinated notes due
June 30, 2026. Interest is payable at 6.00% per annum, from and including June 20, 2016 to, but excluding June 30,
2021, payable semi-annually in arrears. From and including June 30, 2021 to the maturity date or early redemption
date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month LIBOR
rate plus 487 basis points, payable quarterly in arrears.
The Company may, at its option, beginning with the interest payment date of June 30, 2021 and on any scheduled
interest payment date thereafter redeem the subordinated notes, in whole or in part, upon not fewer than 30 nor greater
than 60 days’ notice to holders, at a redemption price equal to 100% of the principal amount of the subordinated notes
to be redeemed plus accrued and unpaid interest to, but excluding, the date of redemption. Any partial redemption will
be made pro rata among all of the holders.
The subordinated notes may be included in Tier 1 capital for the Bank (with certain limitations applicable) under current
regulatory guidelines and interpretations. As of December 31, 2016, $21,000,000 of the Company’s subordinated
notes have been included in the Bank’s Tier 1 Capital.
Annual Report 2016
25
Note 10.
Related Party Transactions
Officers, directors and their affiliates had borrowings of $8,811,847 and $4,978,876 at December 31, 2016 and 2015
with the Company. During the years ended December 31, 2016 and 2015, total principal additions were $5,235,095
and $2,669,976 and total principal payments were $1,402,124 and $403,955, respectively.
Related party deposits amounted to $24,059,602 and $20,466,376 at December 31, 2016 and 2015, respectively.
Note 11.
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, 2016 and 2015 are presented below:
Deferred Tax Assets:
Allowance for loan losses
Net operating loss carryforward
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
Nonaccrual loan interest
Deferred loan costs (fees)
Net Deferred Tax Assets
2016
2015
$
2,193,844
$
2,071,280
446,812
417,233
686,410
364,321
130,431
102,849
876
25,341
$
4,368,117
$
475,031
391,382
316,267
272,368
122,554
111,388
43,154
(118,807)
3,684,617
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, 2016 and 2015 consists of the following:
2016
2015
Current tax expense
Deferred tax benefit
$
$
3,884,480
(313,357)
3,571,123
$
$
3,225,682
(365,885)
2,859,797
Income tax expense differed from amounts computed by applying the U.S. federal income tax rate of 34% to income,
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
2016
2015
$
3,571,278
$
2,814,815
153,922
(135,531)
(18,546)
$
3,571,123
$
157,448
(110,649)
(1,817)
2,859,797
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 2013.
26
FVCBankcorp, Inc.
Note 12.
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, 2016 and 2015, the following financial instruments were outstanding which contract amounts
represent credit risk:
2016
2015
Commitments to grant loans
$
41,536,793
$
6,716,250
Unused commitments to fund loans and lines of credit
142,566,701
128,093,674
Commercial and standby letters of credit
3,424,258
2,131,978
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 $108,858 and $1,235 at December
31, 2016 and 2015, respectively.
Annual Report 2016
27
Note 13.
Minimum Regulatory Capital Requirements
Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal
banking agencies. Failure to meet minimum capital requirements can initiate certain 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.
The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (the Basel
III rules) became 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. Under the Basel III
rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios.
The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation
buffer for 2016 is 0.625%. Management believes as of December 31, 2016 and 2015, the Company meets all capital
adequacy requirement to which they are subject.
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 2016 and 2015, the most recent regulatory notification categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. There are no conditions or events since that notification
that management believes have changed the institution’s category.
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 presented in the table.
Actual
Minimum
Capital Requirement
Well Capitalized Under
Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Amounts in Thousands)
As of December 31, 2016:
Total Risk Based Capital (to Risk Weighted Assets)
$
108,764
Tier 1 Capital (to Risk Weighted Assets)
$
Common Equity Tier 1 (CET1) Capital (to risk weighted assets) $
Tier 1 Capital (to Average Assets)
$
102,312
102,312
102,312
As of December 31, 2015:
Total Risk Based Capital (to Risk Weighted Assets)
$
79,485
Tier 1 Capital (to Risk Weighted Assets)
$
Common Equity Tier 1 (CET1) Capital (to risk weighted assets) $
Tier 1 Capital (to Average Assets)
$
73,246
73,246
73,246
13.16%
12.37%
12.37%
11.89%
12.20%
11.25%
11.25%
10.82%
$
$
$
$
$
$
$
$
71,311
54,775
42,373
33,072
52,102
39,076
29,307
27,083
8.625%
6.625%
5.125%
4.000%
8.000%
6.000%
4.500%
4.000%
$
$
$
$
$
$
$
$
82,679
10.000%
66,143
53,741
43,010
8.000%
6.500%
5.000%
65,127
10.000%
52,102
42,333
33,854
8.000%
6.500%
5.000%
28
FVCBankcorp, Inc.
Note 14.
Stock-Based Compensation Plan
The Company’s 2008 Stock Option Plan (the Plan), which is shareholder-approved, was adopted to advance the
interests of the Company by providing selected key employees of the Company, their affiliates, and directors with the
opportunity to acquire shares of common stock. The Plan granted options to purchase 4,687 shares of common stock
to each of the 21 organizing shareholders of the Company, who had funds at risk during the Company’s organizational
period and assumed the financial risk that the Company would not open. These shares immediately vested upon grant.
The maximum number of shares with respect to which awards may be made is 2,023,437 shares of common stock,
subject to adjustment for certain corporate events. On April 28, 2016, the shareholders approved an amendment to the
Amended and Restated 2008 Stock Plan to increase the number of shares authorized for issuance under the Plan by
312,500 shares. Option awards are generally granted with an exercise price equal to the market price of the Company’s
stock at the date of grant, generally vest annually over three years of continuous service and have ten year contractual
terms. At December 31, 2016, 181,506 shares were available to grant under the Plan.
The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model for
determining fair value. The model employs the following assumptions:
® Dividend yield – calculated as the ratio of historical dividends paid per share of common stock to the stock price on
the date of grant;
® Expected life (term of options) – based on the average contractual life and vesting schedule for the respective
options;
® Expected volatility – based on the monthly historical volatility of the stock price of similar banks over the expected
life of the options;
® Risk-free interest rate – based upon the U.S. Treasury bill rate in effect at date of grant for bonds with a maturity
equal to the expected life of the options.
Dividend yield
Expected life (in years)
Expected volatility
Risk-free interest rate
2016
- -
6.5
16.70-18.70%
1.05%
2015
- -
6.5
25.00%
1.73%
A summary of option activity under the Plan as of December 31, 2016, 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, 2016
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2016
Exercisable at December 31, 2016
1,624,764
279,552
(50,353)
(12,032)
1,841,931
1,223,986
$
$
$
8.73
14.38
7.89
9.44
9.61
8.39
6.82
6.40
5.30
$
$
$
8,236,569
13,248,149
10,291,531
Annual Report 2016
29
(1) The aggregate intrinsic value of stock options represents the total pre-tax intrinsic value (the amount by which the
current market value of the underlying stock exceeds the exercise price of the option) that would have been received by
the option holders had all option holders exercised their options on December 31, 2016. This amount changes based
on changes in the market value of the Company’s stock.
The weighted average grant date fair value of options granted during the years ended December 31, 2016 and 2015
was $2.85 and $3.93, respectively.
The compensation cost that has been charged to income for the plan was $697,809 and $705,000 for 2016 and 2015,
respectively. As of December 31, 2016, there was unamortized compensation expense of $1,304,206 that will be
amortized over 43 months. Tax benefits recognized for qualified stock options during 2016 and 2015 totaled $91,953
and $90,526.
Stock option information has been retroactively adjusted for the five-for-four stock splits declared in May 2016 and
March 2015.
Note 15.
Fair Value Measurements
Determination of Fair Value
The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to
determine fair value disclosures. In accordance with Fair Value Measurements and Disclosures topic of FASB ASC,
the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer 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 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 fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction
(that is, not a 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.
30
FVCBankcorp, Inc.
Fair Value Hierarchy
In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured
at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the
assumptions used to determine fair value.
Level 1 − Valuation is based on quoted prices in active markets for identical assets and liabilities.
Level 2 − Valuation is based on observable inputs including quoted prices in active markets for similar assets and
liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based
valuation techniques for which significant assumptions can be derived primarily from or corroborated by
observable data in the market.
Level 3 − Valuation is based on model-based techniques that use one or more significant inputs or assumptions that
are unobservable in the market.
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).
The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis
as of December 31, 2016 and 2015:
Description
Assets
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
Corporate bonds
Corporate securities
Certificates of deposit
SBA pass-through securities
Mortgage-backed securities
Collateralized mortgage obligations
Total Available-for-Sale Securities
Annual Report 2016
Fair Value Measurements at December 31, 2016 using
Balance as of
December 31,
2016
Quoted Prices
in Active Markets for
Identical Assets
Significant Other
Observable Inputs
(Level 1)
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$
961,030
$
3,617,735
2,770,599
7,023,893
511,200
744,301
305,790
79,425,043
16,868,520
$
112,228,111
$
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
$
961,030
$
3,617,735
2,770,599
7,023,893
511,200
744,301
305,790
79,425,043
16,868,520
$
112,228,111
$
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
31
Description
Assets
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
Corporate bonds
Certificates of deposit
SBA pass-through securities
Mortgage-backed securities
Collateralized mortgage obligations
Total Available-for-Sale Securities
Fair Value Measurements at December 31, 2015 using
Balance as of
December 31,
2015
Quoted Prices
in Active Markets for
Identical Assets
Significant Other
Observable Inputs
(Level 1)
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$
$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
$
- -
- -
- -
- -
- -
- -
- -
- -
- -
$
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
$
- -
- -
- -
- -
- -
- -
- -
- -
- -
Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to
the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs
of individual assets.
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. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing a
market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the
Company using observable market data (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. No loans were recorded at
fair value at December 31, 2016.
32
FVCBankcorp, Inc.
The following table summarizes the Company’s assets that were measured at fair value on a nonrecurring basis at
December 31, 2015:
Assets
Description
Fair Value Measurements at December 31, 2015 using
Balance as of
December 31,
2015
Quoted Prices
in Active Markets for
Identical Assets
Significant Other
Observable Inputs
(Level 1)
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Impaired Loans, net of valuation allowance
$
892,392
$
- -
$
- -
$
892,392
The following table displays quantitative information about Level 3 Fair Value Measurements for December 31, 2015:
Quantitative information about Level 3 Fair Value Measurements for December 31, 2015
Assets
Impaired Loans
Fair Value
Valuation Technique(s)
Unobservable input
Range
$
$
434,389
Business asset value
Liquidation costs
458,003
Discounted appraised value
Market discount
5% - 100%
10% - 12%
The fair value of a financial instrument is the current amount that 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.
The following methods and assumptions were used by the Company in estimating fair values of financial instruments
as disclosed herein:
Cash and Due from Banks and Federal Funds Sold
The carrying amounts of cash and due from banks and federal funds sold approximate their fair value.
Interest-Bearing Deposits at Other Financial Institutions
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 original maturities.
Securities
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.
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.
Annual Report 2016
33
Loans Receivable
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.
Bank Owned Life Insurance
Bank owned life insurance represents insurance policies on senior officers of the Company. The cash values of the
policies are estimated using information provided by insurance carriers. These policies are carried at their cash surrender
values, which approximates fair values.
Accrued Interest
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 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 original maturities.
FHLB Advances
The fair value of FHLB advances is estimated based on discounted cash flow analyses using the remaining maturity of
the underlying accounts and interest rates currently offered of advance with similar original maturities.
Subordinated Notes
The fair value of the subordinated notes are estimated using discounted cash flow analyses based on the current
borrowing rates for similar for similar types of borrowing arrangements.
Off-Balance Sheet Financial Instruments
At December 31, 2016 and 2015, the fair values of loan commitments and standby letters of credit are immaterial.
Therefore, they have not been included in the following table.
34
FVCBankcorp, Inc.
Financial assets:
Cash and due from banks
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
Financial liabilities:
Checking, savings and money market accounts
Time deposits
FHLB advances and Subordinated notes
Accrued interest payable
Financial assets:
Cash and due from banks
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
Financial liabilities:
Checking, savings and money market accounts
Time deposits
FHLB advances
Accrued interest payable
Fair Value Measurements at December 31, 2016 using
Carrying
Amount
Quoted Prices
in Active Markets for
Identical Assets
(Level 1)
Significant
Unobservable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$
5,174,470
$
5,174,470
$
3,509,686
1,759,763
112,228,111
4,431,900
761,649,079
10,828,189
2,496,427
$
534,942,937
$
241,048,042
51,247,346
170,367
3,509,686
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
$
- -
- -
1,754,084
112,228,111
4,431,900
- -
10,828,189
2,496,427
- -
- -
- -
- -
769,435,000
- -
$
534,942,937
$
240,449,000
49,690,000
170,367
Fair Value Measurements at December 31, 2015 using
Carrying
Amount
Quoted Prices
in Active Markets for
Identical Assets
(Level 1)
Significant
Unobservable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$
5,257,136
$
5,257,136
$
23,442,934
2,246,992
65,547,520
4,048,000
617,320,037
10,524,789
1,908,487
$
414,701,339
$
211,938,452
35,650,000
132,743
23,442,934
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
$
- -
- -
2,244,390
65,547,520
4,048,000
- -
10,524,789
1,908,487
$
414,701,339
$
211,798,000
35,428,000
132,743
619,338,000
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
Annual Report 2016
35
Note 16.
Earnings Per Share
Basic earnings per share excludes dilution and is computed by dividing net income available to common shareholders
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 splits declared in May 2016 and 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 273,302 and 312,046 shares, respectively, excluded from
2016 and 2015 the calculation because their effects were anti-dilutive.
Net income
Weighted average number of shares
Options effect of dilutive securities
Weighted average diluted shares
Basic EPS
Diluted EPS
Note 17.
Subsequent Events
2016
2015
$
$
$
6,932,637
$
8,135,769
602,208
8,737,977
0.85
0.79
$
$
5,419,071
8,110,656
362,221
8,472,877
0.67
0.64
In preparing the financial statements, the Company has evaluated events and transactions for potential recognition or
disclosure through March 10, 2017, the date the financial statements were available to be issued.
36
FVCBankcorp, Inc.
In Memoriam
In February 2017, we lost a respected member
of the FVCbank family. James D. Holter was
our Senior Vice President of
Information
Technology. Highly skilled in IT, Jim was
supportive of his co-workers, good-hearted
and well liked. We enjoyed his company each
day that we had the pleasure of working with
him. Jim will be missed by everyone.
God speed to our good friend.
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
Phone: 571.919.6780
Fairfax Branch
11325 Random Hills Road, Suite 140
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