FVCBankcorp, Inc.
Annual Report 2021

Plain-text annual report

ANNUAL REPORT 2021 Scan the QR code for the digital version of the 2021 Annual Report. I ANNUAL REPORT 2021Employees Implement Automated Systems to BOLSTER PARTNERSHIP Automating warehouse transitions accounts for a significant portion of Bank’s loan growth for 2021. 12 8 Expediting the lending process leads to increased revenue and customer satisfaction. FEATURES 10 14 18 20 New Product will Ensure Accessibility in a Changing World Banking is more accessible to customers than ever before. Automation Expedites Underwriting Processes Systemization of small business loan decisioning slashes approval timeline. Empowering Better Data Analyses and Decision Making Intelligent data analysis allows for collaboration confident decision-making. Focusing Efforts Where They are Needed Most Improving accuracy of repetitive tasks with automation. 16 Enhancing Borrowing Base Certificate (BBC) Leveraging technology to offer valuable financial service products to customers. “ Our collective success comes from the ways in which we empower our team members to achieve greatness. Each of them brings a unique and diverse skill set and experience, along with a dedication to supporting our customers to achieve their goals. At FVCbank, we celebrate and encourage innovation to create efficiencies and provide the service our customers and the community need to thrive. – PATRICIA A. FERRICK, PRESIDENT ANNUAL REPORT 2021 1 INSIDE“ Your FVCbank team delivered record earnings, double- digit loan and deposit growth, and solid credit quality metrics during 2021. – DAVID W. PIJOR, ESQ., CHAIRMAN/CEO TO OUR Shareholders I am pleased to provide you with our 2021 Annual Report. Your FVCbank team delivered record earnings, double-digit loan and deposit growth, and solid credit quality metrics during 2021. We are well-positioned to carry this strong momentum into 2022. Even more significant, we are re-energized as we consider the opportunities ahead for our bank. After making the difficult but necessary decision to mutually terminate our announced merger of equals transaction with Blue Ridge Bankshares, Inc., we are focused on embracing technology to enhance our bank offerings and further improve efficiencies as we execute our deliberate strategy to be a premier community bank that serves its customers and its communities while valuing the many relationships developed along the way. To further illustrate this renewed commitment, during 2021, we partnered with Atlantic Coast Mortgage, LLC (“ACM”), a leading mortgage originator headquartered in Fairfax, Virginia, through our acquisition of a 28.7% ownership interest in ACM. This partnership will allow us to provide competitive residential mortgage products to our customers, while increasing our financial opportunities and expanding our revenue mix. In addition, our partnership provides ACM a warehouse lending facility, including a construction-to-permanent financing line, which contributed $72 million to our 2021 loan growth. Strong earnings highlight our 2021 results as we recorded record net income of $21.9 million, or $1.50 diluted earnings per share for the year ended December 31, 2021, compared to $15.5 million, or $1.10 diluted earnings per share, for the same period of 2020, an increase of $6.4 million, or 41%. For the year ended December 31, 2021, return on average assets was 1.11% and return on average equity was 10.92% compared to return on average assets of 0.91% and return on average equity of 8.48% for the year ended December 31, 2020. SELECTED HIGHLIGHTS Strong Loan Growth. Loans receivable, net of deferred fees and excluding loans made under the U.S. Small Business Administration’s Paycheck Protection Program (“PPP”), totaled $1.48 billion at December 31, 2021, compared to $1.31 billion at December 31, 2020, an increase of $162.6 million, or 12%. Strong Credit Quality Metrics. Past due loans 30 days or more decreased to $301 thousand from $2.1 million at December 31, 2021, a decrease of $1.8 million, or 85%. No commercial loans were past due at December 31, 2021. Nonperforming assets decreased to 0.16% of total assets or $3.5 million at December 31, 2021, compared to 0.52% or $9.5 million at December 31, 2020. We sold our other real estate owned property totaling $3.9 million during the fourth quarter of 2021 and recorded a gain on the sale totaling $236 thousand. Strong Core Deposit Growth. Deposits increased 23% year over year, of which noninterest-bearing deposits increased 46%. Increased Net Interest Income. Net interest income increased $5.3 million to $57.9 million for the year ended 2021, compared to $52.6 million for the same 2020 period. Net interest margin was 3.09% for the year ended December 31, 2021, compared to 3.28% for the year ended December 31, 2020. Increased Noninterest Income. Noninterest income increased 49% to $4.3 million for the year ended December 31, 2021, compared to $2.9 million for the year ended December 31, 2020. The increase in noninterest income is primarily related to our investment in ACM, which contributed $1.5 million to noninterest income during 2021. BALANCE SHEET Total assets were $2.20 billion at December 31, 2021, an increase of $381.4 million, or 21%, compared to $1.82 billion at December 31, 2020. Loans receivable, net of deferred fees were $1.50 billion at December 31, 2021 compared to $1.47 billion at December 31, 2020. Excluding PPP loans, loans receivable, net of deferred fees totaled $1.48 billion at December 31, 2021, an increase of $162.6 million, or 12%, compared to $1.31 billion at December 31, 2020. PPP loans, net of fees, totaled $28.1 million at December 31, 2021, a decrease from $153.0 million at December 31, 2020. Loans forgiven during 2021 totaled $124.8 million for the year ended December 31, 2021. Investment securities were $358.0 million at December 31, 2021, an increase of $231.6 million compared to $126.4 million at December 31, 2020. We have been investing in fixed income securities funded through our increase in deposits and PPP forgiveness to deploy excess liquidity to optimize net interest margin. Total deposits were $1.88 billion at December 31, 2021, an increase of $351.3 million, or 23%, from $1.53 billion at December 31, 2020. Noninterest-bearing deposits were $581.3 million at December 31, 2021, an increase of $182.2 million, or 46%, for the year ended December 31, 2021. Our bank subsidiary, FVCbank, remains well-capitalized at December 31, 2021 with a tier 1 leverage ratio of 10.53%. INCOME STATEMENT For the year ended December 31, 2021, net income was $21.9 million, an increase of $6.4 million, or 41%, compared to $15.5 million for the same period of 2020. For the years ended December 31, 2021 and 2020, net interest income was $58.0 million and $52.6 million, respectively, an increase of $5.3 million, or 10%, year-over- year. Net interest income was impacted by accelerated debt issuance costs of $380 thousand for the year ended December 31, 2021, a result of the September 2021 redemption of our subordinated debt issued in 2016. Interest expense on deposits decreased $4.7 million for the year ended December 31, 2021 compared to the same period of 2020. PPP loan income contributed $5.4 million to interest income, of which $3.0 million was related to recognition of net deferred fees on forgiven loans for the year ended December 31, 2021. This compares to interest income from PPP loans of $3.0 million for the year ended December 31, 2020. Net interest margin for the year ended December 31, 2021 was 3.09%, a decrease of 19 basis points from the year ended December 31, 2020. The average yield on total loans for the year ended December 31, 2021 was 4.37%, compared to 4.46% a year ago. Cost of interest-bearing deposits for the year ended December 31, 2021 was 0.66%, a decrease of 52 basis points from 1.18% for the year ended December 31, 2020. The cost of deposits, which includes noninterest-bearing deposits, decreased 41 basis points, or 48%, to 0.45% for the year ended December 31, 2021 compared to 0.86% for the year ended December 31, 2020. Noninterest income for the year-to-date period ended December 31, 2021 was $4.3 million, compared to $2.9 million for the 2020 year-to-date period, an increase of $1.4 million, or 49%, which was primarily driven by the aforementioned income associated with our membership interest in ACM. For the years ended December 31, 2021 and 2020, noninterest expense was $34.5 million and $30.8 million, respectively, an increase of $3.7 million, or 12%, primarily as merger-related expenses and additions to business development staffing and associated increases in incentive accruals. Excluding these merger-related expenses, noninterest expense was $33.1 million for the year ended December 31, 2021, an increase of $2.9 million, or 10%, compared to $30.2 million (excluding our 2020 branch closure impairment charges) for the year ended December 31, 2020. The efficiency ratios for the years ended December 31, 2021 and 2020, excluding merger-related costs and accelerated subordinated debt issuance costs recorded during 2021, and branch closure costs recorded during 2020, were 52.8% and 54.3%, respectively. ASSET QUALITY We released $500 thousand in reserves in our allowance of loan losses for the year ended December 31, 2021, compared to recording provision for loan losses of $5.0 million for the year ended December 31, 2020. The decrease in the provision for loan losses for the year ended December 31, 2021 is primarily related to the improvement in certain credit quality metrics; specifically, a reduction in our past due loans and specific reserves for certain watchlist loans which improved in credit quality during the year. In addition, our COVID-impacted portfolio segments showed improved performance during 2021. The allowance for loan losses to total loans, excluding PPP loans, was 0.94% at December 31, 2021, compared to 1.14% at December 31, 2020. The effective reserve coverage, which includes both the allowance for loan losses and the remaining unaccreted fair value discount on acquired loans, to total loans, excluding PPP loans, was 0.99% at December 31, 2021 compared to 1.27% at December 31, 2020. Our FVCbank team is poised to continue our growth trajectory and we are excited to execute on opportunities we see in 2022 and beyond. On behalf of your Board of Directors and employees, we thank you for your continued support. We also thank our team of bankers who provide excellent personalized service to our customers. We are proud to be part of the markets we serve and to be a part of such resilient communities. Best regards, David W. Pijor, Chairman and Chief Executive Officer 2 3 ANNUAL REPORT 2021ANNUAL REPORT 2021DIRECTORS OFFICERS David W. Pijor, Esq., Chairman/CEO L. Burwell Gunn, Vice Chairman Patricia A. Ferrick, President Morton A. Bender Meena Krishnan Scott Laughlin Thomas L. Patterson Devin Satz Lawrence W. Schwartz Sidney G. Simmonds Daniel M. Testa Philip “Trey” R. Wills III Steven M. Wiltse REGIONAL LENDING OFFICERS Alissa Curry Briggs, Executive Director of Commercial Real Estate Lending James C. Elliott, Market President, Virginia Oliver James, Director of C&I Lending Gerald A. Muccioli, Market President, MD and D.C. Eric Pietras, Executive Director of Government Contract Lending Michelle L. Buckles, Senior Vice President, Director of Compliance Joseph Catalano, Senior Vice President, Commercial Loan Officer Lisa M. Craze, Senior Vice President, Loan Documentation and Administration Craig Gajewski, Senior Vice President, Commercial Loan Officer Alberta A. Gibson, Senior Vice President, Director of Human Resources Thomas W. Grantham, Senior Vice President, Commercial Loan Officer Sharon Gray, Senior Vice President, Loan Operations Craig Laudeman, Senior Vice President, Commercial Loan Officer Linda Long, Senior Vice President, Commercial Loan Officer David Mancia, Senior Vice President, Controller Jacqueline S. Marbell-Edson, Senior Vice President, Credit Administration Tim Moorstein, Market President, GovCon/Metro DC Farideh Mullafiorze, Senior Vice President, Business Development Officer Chris Muracco, Senior Vice President, MIS/Analytics Mark Palmer, Senior Vice President, Commercial Loan Officer Cynthia L. Piccione, Senior Vice President, Deposit Operations Eric Radcliffe, Senior Vice President, Commercial Loan Officer Sharon Ricciardi, Senior Vice President, Director of Business Development Christine M. Rowe, Senior Vice President, Treasury Services Manager Altaf Shadick, Senior Vice President, Director of Retail Huong V. Song, Senior Vice President, Commercial Loan Officer Joshua F. Steele, Senior Vice President, Commercial Loan Officer Steffany R. Watson, Senior Vice President, Director of Treasury Management Services FVCbank GIVES BACK In 2021, the Bank provided significant loans to empower and advocate for communities in need. At the same time, the FVCbank staff generously gave of themselves through personal monetary donations and volunteer hours for numerous organizations in their communities. Clearly, one person and one Bank can make a difference. Community REINVESTMENT Act (cra) community investment loans: $28,053,408.14 reportable loans 2021 509 Loans in the amount of $89,551,017.62 EXECUTIVE COMMITTEE Seated, from left to right: Patricia A. Ferrick, President; David W. Pijor, Chairman and Chief Executive Officer. Standing, from left to right, B. Todd Dempsey, Executive Vice President and Chief Operating Officer; Alissa Curry Briggs, Executive Director of Commercial Real Estate Lending; Michael G. Nassy, Executive Vice President and Chief Credit Officer; Sharon L. Jackson, Executive Vice President and Chief Deposit Officer; William G. Byers, Executive Vice President and Chief Lending Officer; and Jennifer L. Deacon, Executive Vice President and Chief Financial Officer. Employee Volunteer Services 27 EMPLOYEES VOLUNTEERED 51 ORGANIZATIONS DIFFERENT WITH 4 ANNUAL REPORT 2021 ANNUAL REPORT 2021 5 2021 2020 2019 2018 2017 LOANS RECEIVABLE, NET OF FEES (MILLIONS) TOTAL DEPOSITS (MILLIONS) SELECTED FINANCIAL DATA (Dollars and shares in thousands, except per share data) INCOME STATEMENT DATA: Interest income Interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Non-interest income Non-interest expense Net income before income taxes Provision for income taxes Net income BALANCE SHEET DATA: Total assets Loans receivable, net of fees Allowance for loan losses Total investment securities Total deposits Other borrowed funds Total shareholders’ equity Common shares outstanding PER COMMON SHARE DATA: Basic net income Fully diluted net income Book value Tangible book value (1) PERFORMANCE RATIOS: Return on average assets Return on average equity Net interest margin (2) Efficiency ratio (3) Non-interest income to average assets Non-interest expense to average assets Loans receivable, net of fees to total deposits ASSET QUALITY RATIOS: Net charge-offs (recoveries) to average loans receivable, net of fees Nonperforming loans to loans receivable, net of fees Nonperforming assets to total assets Allowance for loan losses to nonperforming loans Allowance for loan losses to loans receivable, net of fees CAPITAL RATIOS (Bank Only): Tier 1 risk-based capital Total risk-based capital Common Equity Tier 1 capital Leverage capital ratio OTHER: Average shareholders’ equity to average total assets Average loans receivable, net of fees to average total deposits Average common shares outstanding: Basic Diluted $68,428 10,481 57,947 (500) 58,447 4,302 34,540 28,209 6,276 $21,933 $2,202,924 1,503,849 (13,829) 358,038 1,883,769 25,000 209,796 13,727 $1.61 1.50 15.28 14.70 1.11% 10.92% 3.09 % 55.49% 0.22 % 1.75% 79.83% 0.04% 0.23 % 0.16 % 394.21 % 0.92 % NA NA NA 10.53% 10.15% 86.80% 13,650 14,581 $67,103 14,483 52,620 5,016 47,604 2,891 30,838 19,657 4,156 $15,501 $1,821,481 1,466,083 (14,958) 126,415 1,532,493 69,085 189,500 13,511 $1.14 1.10 14.03 13.41 0.91% 8.48% 3.28% 55.55% 0.17% 1.80% 95.67% 0.02% 0.38% 0.52% 266.11% 1.02% NA NA NA 11.65% 10.70% 98.51% 13,542 14,134 $66,734 18,671 48,063 1,720 46,343 2,546 28,877 20,012 4,184 $15,828 $1,537,295 1,270,526 (10,231) 141,589 1,285,722 49,487 179,078 13,902 $1.15 1.07 12.88 12.26 1.09% 9.32% 3.48% 57.06% 0.18% 1.99% 98.82% 0.05% 0.84% 0.95% 95.39% 0.81% 12.72% 13.43% 12.72% 12.15% 11.71% 98.56% 13,817 14,825 $51,924 12,110 39,814 1,920 37,894 1,661 26,448 13,107 2,238 $10,869 $1,351,576 1,136,743 (9,159) 125,298 1,162,440 24,407 158,336 13,713 $0.93 0.85 11.55 10.93 0.94% 9.29% 3.51 % 63.07 % 0.14 % 2.28% 97.79% 0.05% 0.34% 0.57 % 285.24 % 0.81 % 13.27% 14.02% 13.27% 12.41 % 10.09% 96.56% 11,715 12,822 $40,302 8,195 32,107 1,200 30,907 2,975 19,346 14,536 6,846 $7,690 $1,053,224 888,677 (7,725) 117,712 928,163 24,327 98,283 10,869 $0.74 0.67 9.04 9.03 0.80% 8.63% 3.43% 57.16% 0.31% 2.02% 95.75% (0.01)% 0.09 % 0.44% 979.09% 0.87% 12.05% 12.83% 12.05% 11.79% 9.32% 97.74% 10,435 11,545 (1) Tangible book value is calculated as total shareholders’ equity, less goodwill and other intangible assets, divided by common shares outstanding. (2) Net interest margin is calculated as net interest income divided by total average earning assets. (3) Efficiency ratio is calculated as total non-interest expense divided by the total of net interest income and non-interest income. 1,500 1,200 900 600 300 $ $1,504 $1,466 % CA G R 1 4 $1,271 $1,137 $889 2017 2018 2019 2020 2021 2000 1500 1000 $928 CAgr 1 9 % $1,884 $1,532 $1,286 $1,162 500 $ 2017 2018 2019 2020 2021 INCOME BEFORE NONRECURRING EXPENSES AND TAXES (THOUSANDS) EFFICIENCY RATIO $29,798 $20,145 $20,333 30,000 25,000 20,000 15,000 $14,536 CAGR 20 % $16,446 10,000 5000 $ 2017 2018 2019 2020 2020 90 80 70 60 50 40 30 20 10 % 63.07% 57.16% 57.06% 55.55% 55.49% 2017 2018 2019 2020 2021 6 ANNUAL REPORT 2021 7 ANNUAL REPORT 2021Faster Construction Funding with NEW TECHNOLOGY Construction lending occupies a sizable high-risk category within FVCbank’s loan portfolio. High-risk can also mean high-reward, so “Previously, it was difficult to Customers can now use this In addition to the increased monitor changes to the budget technology to discover the status capability to serve customers, or specific line items after the of their draw request in real-time, quicker funding of draw requests initial loan approval had occurred, allowing them to see how FVCbank allowed by the software generates when Alissa Curry Briggs, FVCbank executive director of commercial which created additional and disbursed funds within the project’s a significant source of revenue for real estate, and her team decided to increase support for this sector, they knew they needed a new and robust monitoring program. “ Customers can now use this technology to discover the status of their draw request in real-time. unnecessary risk in moving the budget and providing them peace the Bank. project to completion and getting of mind that they are in lockstep fully repaid,” said Curry Briggs. “Too with FVCbank throughout the many spreadsheets from different entire project timeline. stakeholders created inefficient operations and caused higher load processing times for customers along with additional work for Bank employees.” “Our new construction loan software system securely encapsulates the entire construction portfolio allowing real-time access to loans for all parties involved—from They found inspiration by the borrowers to contractors to potential of a new monitoring architects, inspectors and title application to achieve budget companies,” reflected Curry Briggs. transparency and certainty and offer stakeholders new functionality. They also saw the opportunity to augment FVCbank’s interest income by speeding up construction funding. The team’s decision to invest in this construction lending monitoring software has also led to significant advancements in customer satisfaction. Borrowers also enjoy total ease of use, with the ability to upload relevant documents directly to the software system, which is easily accessible for all concerned parties. FVCbank now has access to an activity log associated with each loan, enhancing compliance and improving audits, ensuring appropriate approvals are in place if the project changes over time. 8 ANNUAL REPORT 2021 ANNUAL REPORT 2021 9 NEW PRODUCT will ensure accessibility in a changing world While The COVID-19 pandemic seemed to wane momentarily in 2021, multiple infection waves challenged communities and impeded a return to normalcy for most of the year. Contactless options remain preferred by consumers. Employees at FVCbank saw a comfortable and practical way to The working group had to move fast clear need to develop and offer start new accounts. and navigate a host of complexities, something new within their suite of digital products to maintain safe and healthy environments for both employees and customers. Each wanted the ability to connect and interface while in-person interactions remained impractical. Ensuring a fully functional digital platform for account opening proved challenging yet worthwhile. The effort to implement a new platform spanned teams, showcasing the collaborative culture at FVCbank. including combining two core providers into one functional FVCbank product. Creating the new digital portal encapsulated FVCbank’s service philosophy: listening, thinking, innovating, solving and inspiring. The answer was a contactless Comprised of employees across In the end, the work paid off. account opening tool, dubbed multiple departments, the group’s As social distancing guidelines “Open Online.” With no risk to health immense effort also served remain in place, the Bank’s or safety, Open Online provides as a proof point of FVCbank recently launched product new and existing customers with a employees’ dedication to provides a convenient new way community support. for all customers to connect with FVCbank online. The new feature is poised to enhance the Bank’s customer experience and relationship with the communities it serves well beyond the pandemic. “Technology rules, but we think common sense can be just as revolutionary,” reads one of FVCbank’s core philosophies. To the Bank, listening to and empowering employees leads to more lasting and accessible connections with customers and their communities. Employees at FVCbank saw a clear need to develop and offer something new within their suite of digital products to maintain safe and healthy environments for both employees and customers. “ Employees at FVCbank saw a clear need to develop and offer something new within their suite of digital products to maintain safe and healthy environments for both employees and customers. DID YOU KNOW? “At FVCbank, investments in our teams facilitate our success and helps fuel our motivation to do the best work we can.” – STEFFON NELSON, D.C. BRANCH Looking for an employer that puts employees first? Join the FVCbank Team! 10 ANNUAL REPORT 2021 ANNUAL REPORT 2021 11 Employees Implement Automated System to BOLSTER PARTNERSHIP In its partnership with Atlantic Coast Mortgage The relatively new partnership required warehouse wire transfers to ACM, a cumbersome process that the Bank’s team knew could (ACM), FVCbank expanded its portfolio to include be streamlined. FVCbank set out to revenue opportunities associated with residential mortgages. FVCbank’s partnership with Atlantic Coast Mortgage has resulted in benefits well beyond a typical bank subsidiary relationship. ACM’s mortgage professionals now have access to the FVCbank team of commercial lenders, retail bankers and cash management specialists for their customers looking implement a system that could be best in its class, making the process more efficient and effective. “We wanted to take full advantage of our great new partnership with ACM,” said Tonya Smith, FVCbank vice president of mortgage operations. “We wanted to for a new banking relationship. Conversely, FVCbank support more of our community’s now has a group of mortgage professionals dedicated residents in purchasing or to assisting clients with their residential property financing needs. refinancing their home, purchasing a second house, or acquiring an investment property.” After researching industry best FVCbank’s warehouse financing This new partnership and the practices, executives invested capabilities enhance ACM’s access automation enhancements in an automated system for to capital as they expand their demonstrate to existing and processing warehouse wire mortgage business. In addition, the prospective customers looking for a transitions. The automation they portfolio mortgage program allows new financial partner that FVCbank developed allowed all general the Bank to selectively purchase truly cares about them. ledger transitions to be sent mortgage loans from ACM, especially automatically from the Warehouse those that fall outside the standard Lending System to the Bank’s secondary market guidelines. The core operating system each night, Bank also provides access to a single eliminating manual processing of settlement construction-permanent those entries and leaving manual loan program for customers wishing entries only for any transactions to build their dream home. involving basic direct deduction or checking accounts. Josh Grimes, FVCbank IT director, invested significant time and attention toward ensuring the new system worked seamlessly. And in the spirit of FVCbank’s collaboration philosophy, Grimes set up the system such that the Bank’s Operations staff receives an automatic email alert when a wire arrives for processing. With this success, the warehouse line accounted for a significant portion of the Bank’s loan growth for 2021. Along with its stake in ACM, the elevated revenue associated with mortgage fees and interest will continue to contribute significantly to the institution’s profitability in the future. “ We wanted to support more of our community’s residents in purchasing or refinancing their home, purchasing a second house or acquiring an investment property. 12 ANNUAL REPORT 2021 ANNUAL REPORT 2021 13 AUTOMATION expedites underwriting processes In 2021, Jim Elliott, FVCbank market president for Virginia, noticed potential improvements that could increase competitiveness and a stronger position to “Our timeline for approving smaller loans at FVCbank challenged our ability to remain competitive in the lending market,” said Elliott. The team ultimately selected a decisioning module that allowed the Bank to input approval parameters to create an automated process for approving small business loans. support communities. He and his team discovered that THE BANK BECOMES MORE ATTRACTIVE TO BORROWERS the amount of underwriting for smaller loan amounts rivaled that of more complex loan deals and the idea that a simple process change could make the FVCbank team more efficient was born. Since the software’s implementation, Elliott and his team have noticed decisioning timelines for small loan requests have shortened exponentially. “The deployment of the systems for small business loans has created a more effective process for underwriting while maintaining the credit quality of the overall loan portfolio, allowing us to increase our position within the competitive market,” Elliot added. The team celebrated the marked increase in efficiency the software has provided. The enhancement required fewer hands to touch a transaction to keep it moving, improving the dexterity of the entire operation. This investment in a practical, system optimizing tool for FVCbank illustrates a clear commitment to continuous enhancements to support small businesses, the backbone of the community. “ The team ultimately selected a decisioning module that allowed the Bank to input approval parameters to create an automated process for approving small business loans. 14 ANNUAL REPORT 2021 ANNUAL REPORT 2021 15 ENHANCING BORROWING BASE CERTIFICATE (BBC) processing with ease, accuracy and efficiency “ The Bank searched for a solution that would offer ease, accuracy and consistency to better serve our clients’ needs. DID YOU KNOW? “Our work isn’t just work. It’s different personalities coming together to achieve mutual success, exemplified when I hear my team’s interactions. With sports banter around the coffee machine and team members sharing their love for multicultural music and art, we all bring passion to the workplace.” – PEGGY ELIE, RESTON BRANCH Looking for an employer that puts employees first? Join the FVCbank Team! Government contractors, small businesses and corporations serve as the lifeblood of our local communities. They require a banking partnership that can provide financial products and services that bolster their bottom line and enable their commitment to serve their community. That’s why FVCbank decided to invest in optimizing its Asset Based Lending (ABL) product to improve how borrowers receive and record Borrowing Base Certificates (BBC). The Bank’s Credit Administration, led by Vice President Brandon Parker and his portfolio credit risk team, implemented a premier BBC software that helps FVCbank determine the maximum amount of funding it can offer under a borrower’s line of credit. Previously, borrowers were customers,” said Parker. “The Bank automatically notifies internal responsible for manually searched for a solution that would banking partners to adjust the calculating BBCs and submitting offer ease, accuracy and consistency clients’ borrowing capacity their calculations to the Bank to better serve our clients’ needs.” under the line of credit. via email. While a standard for many financial institutions, this practice led to inaccuracies and inefficiencies for both the satisfaction Software improves internal “FVCbank also invested in operations and customer staffing with the creation of an borrower and FVCbank. Now equipped with new automated functionality, borrowers are no longer required to calculate their own BBCs, saving them significant time and reducing the number of ABL Analyst role to manage the software and offer support to team members so they can dedicate more time to other customer service efforts,” added Parker. miscalculations, allowing for faster Clearly, FVCbank is no stranger availability to capital. Additionally, to challenging the status borrowers now have ease of mind quo and pursuing innovative with the receipt of automatic solutions to constantly approval notifications. improve customer service and satisfaction. Without a standard submittal process, borrowers submitted their BBCs to various individuals, sometimes in entirely different departments, leading to inconsistencies in processing times and recordation. Furthermore, miscalculations of the BBC exacerbated delays in processing and approval Internally, the software automatically timelines. routes certificates to one central “One of the goals of FVCbank is to leverage technology by offering innovative financial service products to our Bank area, eliminating the need for cross-team coordination and streamlining processing. The software’s automation also 16 ANNUAL REPORT 2021 17 ANNUAL REPORT 2021EMPOWERING better data analyses and decision making “ We needed a tool that not only enhanced but complimented our collaborative culture and workflow. Data supports effective management and guides superior decision- making. As most financial sector professionals say, the more intuitive your data evaluation process is, the more effective it makes your team. FVCbank decided to invest in an “We wanted everyone to be able new product to each department in enterprise-wide data analytics tool to look at the same data to tell the the Bank. With an understanding of to improve data management and Bank’s story so that management KlariVis’ full capabilities, the team asked Chris Muracco, FVCbank could have the confidence that enhanced their storytelling through senior vice president of MIS/ decisions get made based on easy-to-digest data visualization Analytics, to lead the charge. He consistent data integrity and can be that kept employees focused on the knows the importance of creating documented,” Muracco said. big picture. Following the program’s company- FVCbank’s loan and development wide rollout, executives noted officers now have customers their confidence in the software’s portfolios at their disposal with data integrity and its universal more data than ever before. Now, comprehensibility. Now, two they no longer wait for month-end different teams can pull the same reports and can access daily data analytics and feel empowered to like never before. This allows them work seamlessly on behalf of the to manage portfolios at a granular customer. level and helps them diversify their “We needed a tool that not only sales strategies. enhanced but complimented our The Bank’s focus on improving its internal dashboards and reports to help the team analyze data. Muracco, who supports all areas of the Bank, knew this new tool would offer a more efficient and simpler way to pull data and make sense of the information. After comprehensive research FVCbank improves operations collaborative culture and workflow,” offerings for the communities it about the product and its company, KlariVis was selected as FVCbank’s new data analytics software partner. Muracco successfully introduced the and customer satisfaction Muracco added. serves is evident in its investments Muracco and the KlariVis team have since integrated the new system throughout the Bank, with over 80 users at all levels of the operation. Now, every business unit has access to the same data at its fingertips. in resources the team on the front line needs to support their customers effectively and efficiently. DID YOU KNOW? “FVCbank facilitates personal and professional growth. Among the life lessons I’ve learned, take each day one at a time, stay positive, learn from one another, and reach for the highest to make the day a successful one.” – BEVERLY HOLLOWAY, BETHESDA BRANCH Looking for an employer that puts employees first? Join the FVCbank Team! 18 ANNUAL REPORT 2021 ANNUAL REPORT 2021 19 FOCUSING efforts where they are needed most The FVCbank team, like many other financial institutions, performs a wide variety of tasks. Some tasks are complex and require time-consuming, yet essential close professional attention by individual employees. Others are equally necessary and time-consuming but are far more tedious and repetitive, increasing the possibility of invalid or erroneous entries. The indispensable FVCbank IT team, Employees have remarked that they found that process times for such in collaboration with a diverse group can now focus on more advanced tasks have been slashed from hours of interdepartmental colleagues, projects that require their careful to just minutes, with an estimated listened to team members’ feedback attention and judgment. time savings of hundreds of hours and concluded that the discrepancy between these two groups of tasks could be effectively eliminated by integrating Robotic Process Automation (RPA) to support the human workforce. “We are seeing increased reliability per year. in large transaction processes. The However, the main benefit of robotic higher productivity is also reducing automation ultimately falls on expenses and creating room for FVCbank customers. Customers now growth for employees,” added enjoy even better and more focused Muracco. “It is also giving our support from team members on “While Robotic Process Automation employees assurance that we are requests that can’t be automated. is a rapidly emerging technology, we giving them the tools to do their jobs here at FVCbank have adopted this efficiently and allow them to focus with open arms,” said Chris Muracco, their time on higher-value work.” FVCbank senior vice president of MIS/Analytics. Automated processing “robots,” or as some might say, FVCbank’s Speeding up processes, automated heroes, have more than increasing accuracy proven their worth by tackling With the bank-wide implementation of RPA, tedious and time-consuming repetitive processes have been sped up significantly. Human error extensive, repetitive routine processes like large volumes of transaction and mass maintenance issues. has been virtually eliminated from The benefits to the Bank are these tasks, and overall output per plenty. Employees have noted FVCbank employee has increased the consistency and predictability dramatically. resulting from the automation. They FVCbank continues to prioritize innovation and inspired changes to address challenges head-on. “ While Robotic Process Automation is a rapidly emerging technology, we here at FVCbank have adopted this with open arms. ANNUAL REPORT 2021 21 20 ANNUAL REPORT 2021 OUR LOCATIONS HEADQUARTERS 11325 Random Hills Road, Suite 240 Fairfax, VA 22030 Phone: 703.436.3800 FAIRFAX BRANCH (VA) 11325 Random Hills Road, Suite 140 Fairfax, VA 22030 Phone: 703.672.2580 ROCKVILLE BRANCH (MD) 1600 E. Gude Drive Rockville, MD 20850 Phone: 240.268.2265 ARLINGTON BRANCH (VA) 2500 Wilson Boulevard, Suite 100 Arlington, VA 22201 Phone: 703.387.5050 LUTHERVILLE LOAN OFFICE (MD) 22 West Padonia Road, Suite A-200 Lutherville, MD 21093 Phone: 410.387.2620 SPRINGFIELD BRANCH (VA) 6975 Springfield Boulevard Springfield, VA 22150 Phone: 703.672.2590 BALTIMORE BRANCH (MD) 224 Albemarle Street Baltimore, MD 21202 Phone: 410.685.4611 BETHESDA BRANCH (MD) 6929 Arlington Road Bethesda, MD 20814 Phone: 301.652.2265 MANASSAS BRANCH (VA) 7900 Sudley Road, Suite 100 Manassas, VA 20109 Phone: 703.656.7300 WASHINGTON, D.C. BRANCH 1301 9th Street NW Washington, D.C. 20001 Phone: 202.628.5500 RESTON BRANCH (VA) 11260 Roger Bacon Drive, Suite 101 Reston, VA 20190 Phone: 703.436.3880 BALTIMORE MARYLAND WASHINGTON, D.C. VIRGINIA 22 www.fvcbank.com ANNUAL REPORT 2021

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