FVCBankcorp, Inc. (FVCB) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of FVCBankcorp. Please note that today's meeting is being recorded. Following each motion and after the business portion of the meeting, we will have a question-and-answer session. [Operator Instructions] It is now my pleasure to turn today's meeting over to David Pijor, Chairman and CEO of FVCBankcorp, Inc. Mr. Pijor, the floor is yours.

Thank you. Good afternoon. My name is David Pijor. I am the Chairman and CEO of FVCBankcorp. It is my honor and privilege to welcome each of you to this, the Annual Meeting of FVCBankcorp. I will serve as Chair of the Annual Meeting. Since it is after 4:30 p.m., I would like to call the meeting to order. Brandon Driver and Jeff Mathias of the company's independent registered public accounting firm of Yount, Hyde & Barbour, PC, are attending the meeting today. Also present are Scott Richter and Ben McCall, the company's legal counsel, from the law firm of Williams Mullen. Before proceeding to the business of this meeting, I would like to thank each of you for attending this virtual annual meeting. In addition, I would like to introduce your bank's executive management team. Patricia Ferrick is our President; Alissa Curry Briggs, Executive Vice President and Chief Lending Officer; Jennifer Deacon, Senior Executive Vice President and Chief Financial Officer; Sharon Jackson, our Executive Vice President and Chief Banking Officer; Michael Nassy, our Senior Executive Vice President and Chief Credit Officer. Jennifer Deacon will act as the Inspector of Election for this meeting. The agenda at this meeting consists of first, the formal determination of a quorum and second, the consideration of 3 items: the election of directors, approval of a nonbinding resolution that the shareholders of FVCBankcorp approved the compensation of the named executive officers as disclosed in the proxy statement pursuant to the rules of the Securities and Exchange Commission, and the ratification of Yount, Hyde & Barbour PC as the company's independent registered public accounting firm to audit the 2025 financial statements of the company. In a few moments, I will ask Ms. Deacon to report on the number of shareholders present in person or by proxy at this meeting. As we proceed with the business of the meeting, the votes will be computed and Ms. Deacon will report the votes to me. Thank you for voting early. This has been a great help to us. Let me point out if you've already voted by proxy, you will simplify the vote count, if you would allow your proxy to remain in effect since it has already been tabulated. Accordingly, shareholders who have already mailed or electronically submitted a proxy are requested not to vote again unless they wish to change their vote from the way they mark their proxies. If any shareholder in attendance today intends to vote during the meeting and is not already voted by proxy, they may do so electronically in a few moments as shown on your screen. The polls for voting are now open to the electronic web portal. Ms. Deacon will now report on the mailing of the notice of this meeting and the presence of a quorum.

This meeting is held pursuant to printed notice mailed out on April 15, 2025, to each shareholder of record on April 4, 2025, who is entitled to vote. A list of shareholders entitled to vote at this meeting is available on the web portal to shareholders who have logged into the meeting with an authenticated control number. All documents concerning the call and notice of the meeting, including the Secretary's affidavit concerning mailing, will be filed with the records of the meeting. The count of holders of shares of the company's common stock immediately prior to the commencement of this meeting, indicated that the holders of 15,715,918 shares of the company's common stock were in attendance at the meeting or represented by proxy. This represents 85.4% and a majority of the total votes eligible to be voted at this meeting and a quorum.

I hereby declare a quorum present at the meeting. This meeting is duly constituted and officially convened. I would now like to proceed with the business of this annual meeting. There are 3 items for consideration. The first item is the election of directors. The shareholders have received proxy statements regarding the proposed directors. The following directors of FVCBankcorp have been nominated to serve until the 2026 Annual Meeting of Shareholders or their successors have been elected and qualified. Marc N. Duber, Patricia A. Ferrick, L. Burwell Gunn, Meena Krishnan, Scott Laughlin, David W. Pijor, Devin Satz, Lawrence W. Schwartz, Sidney G. Simmonds, Daniel M. Testa, Philip R. Wills III, Steven M. Wiltse. At this time, I would entertain a motion to elect these directors to a 1-year term to the Board of Directors. I have a motion made by Patricia Ferrick and a second by Jennifer Deacon. There were no other nominations made in accordance with the bylaws. Therefore, I declare that nominations for directors are closed. Are there any questions concerning this first item? [Operator Instructions] Seeing no questions, we will turn to the second matter. The second item for consideration is the nonbinding resolution that the shareholders of FVCBankcorp approved the compensation of the named executive officers as disclosed in the proxy statement, pursuant to the rules of the Securities and Exchange Commission. At this time, I will entertain a motion to approve the resolution as presented. I have a motion made by Patricia Ferrick and a second by Jennifer Deacon. Are there any questions related to this item? As there are no questions, we turn to the third and final matter. The third item for consideration is the ratification of the appointment of Yount, Hyde & Barbour,, PC as the company's independent registered public accounting firm to audit the financial statements of the company for the year ending December 31, 2025. The proxy materials contain information regarding Yount, Hyde & Barbour, PC. At this time, I will entertain a motion to ratify the appointment of Yount, Hyde & Barbour, PC as the company's independent registered public accounting firm for 2025. I have a motion made by Patricia Ferrick and a second by Jennifer Deacon. Are there any questions relating to this item? I received no questions on this matter. I hereby declare the polls closed. Will the inspector of elections please report the preliminary results of the voting.

The ballots and proxies have been counted. The nominees for director have each been elected by the vote of at least 97.4% of the shares voted. The nonbinding resolution that the shareholders of FVCBankcorp approved the compensation of the named executive officers as disclosed in the proxy statement pursuant to the rules of the Securities and Exchange Commission have been approved by the affirmative vote of approximately 77.4% of the shares voted. The appointment of Yount, Hyde & Barbour, PC has been ratified by the affirmative vote of approximately 99.2% of the shares voted.

I hereby declare that each of the director nominees has been duly elected. The nonbinding resolution that the shareholders of FVCBankcorp approved the compensation of the named executive officers has been ratified and the appointment of Yount, Hyde & Barbour, PC had been ratified. I would like briefly to report on the financial performance of the bank during 2024 and the first quarter of 2025. FVCBank is pleased to report continuing and significant improvement in its financial metrics. For the full year of 2024, your bank increased it's net income by $11.2 million or 294% over our net income in 2023. Total assets of the bank increased by $8.5 million or 3.9%, and we increased our total loans outstanding by $42 million or 3.3%. In April, we reported our fifth consecutive quarter of improved profitability and increased net interest margin. This trajectory of improved earnings includes net interest income improvement of 18% and net interest margin improvement of 15% compared to the year ago quarter. For this first quarter of 2025, commercial bank operating earnings increased by 39% over the year ago quarter. On a GAAP basis, FVCBank's return on average assets reflects a significant improvement from 0.25% for the first quarter of 2024 to 0.94% for the first quarter of 2025. Notably, FVCBank's pretax preprovision return on average assets has also increased from 0.85% to 1.2% in the first quarter of 2025 over the prior year's first quarter. FVCBank has also continued to stay to report strong credit quality and well-capitalized balance sheet. On March 31, 2025, this year, we reported tangible common equity to tangible assets of 10.98%, an improvement from 10.3% for the first quarter of '24. Tangible common equity reached $234.7 million on March 31, 2025, from the year ago quarter figure of $213.1 million representing a 10.1% increase in tangible common equity. With respect to our strong credit quality, loans past due 30 days or more, totaled $1.3 million on March 31, 2025. This represents a decrease of $7.2 million or 84% down from $8.4 million at December 31, 2024. Your bank also reported net loan recoveries of $139,000 for the quarter ending March 31, 2025. Finally, I also note that subsequent to our first quarter 2025 earnings release, your bank repurchased 415,000 shares of its common stock for an average price of $11.14 a share. All of these repurchase shares have been canceled and returned to the status of authorized but unissued shares. Slide 4 of the presentation focuses on 2 important pillars of our bank's success story during the last several years. Well, actually, one, technology. The most important of these 2 pillars is our emphasis on relationships and continuing to strengthen our connections to our clients and the communities we serve. As shareholders of our bank, you all understand our laser focus on building and maintaining long-term relationships with their clients. We have somewhat recently begun to more effectively communicate our bank's use of technology to drive top-tier performance. We use technology to improve our clients' experience in banking with FVCBank to provide new and exciting products and services to our clients, to reduce instances of fraud and to streamline our bank's internal workflows and increase efficiencies. Although we at FVCBank have always utilized technology appropriately and effectively since the bank's initial organization on November 27, 2007, almost exactly 17.5 years ago, we have enhanced both the breadth and scope of our technology offerings and have also more effectively communicated to our clients and to our communities, our use of technology to make banking with FVCBank easier, safer and more convenient. As we serve our clients' banking needs and increasingly uncertain financial environment, we strongly believe that our dual emphasis on building long-term relationships and utilizing the best available technology platforms will guide FVCBank's continued growth and increasing profitability. Of the several technology platforms and initiatives we list on Slide 4, I would like to briefly mention a few specifically. First, I'd like to note our partnership with and use of KlariVis. We're also partnered with KlariVis having made an early investment in the company over 4 years ago. Since that early investment, KlariVis has gained significant market share and now provides a unique dashboard-based data analytics functionality to over 100 banks in the United States. All areas of our bank use KlariVis daily to manage and respond to client needs. Internally, KlariVis allows our bankers to easily analyze activities in their respective departments. Their KlariVis functionality saves FVCBank hundreds of thousands of dollars in staff time each year. Q2 is a digital platform which delivers online banking solutions and management services with maximum client flexibility. In January 2023, the bank made a strategic decision to embrace digital banking when it upgraded to this customizable comprehensive online banking platform for all businesses and consumers. The platform provides fast, flexible and secure access to all of our customers on any device. Our bankers could better serve our customers through a variety of options to offer personalized service to support our suite of online banking products, including wire transfers, ACH, remote deposit and external transfers, sweeps and positive pay for wires and ACH payments. The platform can manage multicompany operators or small businesses and owners can view their personal and business accounts on 1 screen. Slide 6 illustrates in graphic form, FVCBank's growth in certain balance sheet metrics. From 2020 through March 31, 2005 (sic) [ 2025 ] , we have reported growth in total assets, total loans and total deposits of 5% and 5.3%, respectively, in compound annual growth rates. During our most recent first quarter of 2025, total assets increased at an annual rate of 7.6%, and total loans increased at an annual rate of 2.5% and our total deposits increased at an annual rate of 7.7%. Slide 7 reflects the bank's performance with respect to certain profitability metrics. FVCBank reported net income of $15.1 million in 2024 compared to $3.8 million in 2023. The first quarter of 2025, FVCBank earned $5.2 million with pretax pre-provision income of $6.6 million. The net interest margin reported by FVCBank has improved for 5 consecutive quarters and reached a level of 2.83% for the first quarter of 2025 from 2.49% during calendar 2023. Slide 7 also reflects our increased income reported over the last 2 years showing an annualized income of 62.8% based on the first quarter '25 results of $15.7 million. Our bank's efficiency has also significantly improved over the last several years from 64% in 2023 to 58.1% reported in the most recent quarter. We believe the bank is well positioned to continue to report earnings growth in the future as we pursue our relationship-driven growth strategy, coupled with smart use of technology. Finally, it is my special privilege to identify the nonprofit organization awarded as a 2025 recipient of the L. Burwell Citizenship Award. Each year for the past 9 years, we have recognized a nonprofit organization work in support of the communities we all serve. This award is named after FVCBank's previous President, who retired from bank in 2014 after over 44 years of serving the banking and nonprofit segments. We are lucky to benefit from Mr. Gunn's continued service on our Board of Directors as our Lead Outside Director. This year's Recipient is the Center for Disaster Philanthropy. The Center for Disaster philanthropy envisions a world where the impact of disasters is minimized by thoughtful, equitable and responsible recovery for all. The center provides direct financial and technical support where it is most needed. It provides expert and timely advice from professionals with deep disaster planning, response and preparedness expertise and experience at philanthropist. It also offers educational resources so you can make informed decisions about where and when to give FVCBank is very pleased to support the work of the Center for Disaster philosophy. There is no other business to be conducted, and this concludes the formal business of our meeting. And at this time, I would welcome any questions. [Operator Instructions] I would like again to express my sincere appreciation to those shareholders who have joined us today. as well as to those who have submitted a proxy, but were not able to attend. The continued success of our bank is attributable in large part by the continued support of our shareholders. At this time, I would consider a motion for adjournment. Patricia Ferrick has made the motion, and this was seconded by Jennifer Deacon. I declare the motion carried and the meeting adjourned. Thank you all.

This concludes the meeting. You may now disconnect.