Victory Bancorp: A Dividend Beacon in a Volatile Market

The banking sector has long been a barometer of economic health, yet few institutions have demonstrated the resilience of Victory Bancorp, Inc. (OTCQX: VTYB). Amid rising interest rates, geopolitical uncertainty, and a slowing economy, this regional lender has not only maintained its dividend but also fortified its balance sheet to a point of enviable strength. For income-focused investors, Victory Bancorp stands out as a rare combination of stability and growth—a company where dividends are not just a perk but a testament to disciplined execution.

The Foundation: A Balance Sheet Built for Turbulence

Victory Bancorp's financial fortress begins with its deposit growth, which has surged by $35.19 million in Q1 2025 alone, pushing total deposits to $416.97 million. This growth isn't just incremental; it's transformative. By March 2025, the bank had slashed its reliance on costly borrowings to $0, eliminating a $15.44 million liability from Q4 2024. Such discipline is rare in an industry where many banks are still navigating higher funding costs.

The result? A balance sheet that's both lean and liquid. Stockholders' equity rose to $30.15 million as of March 2025, with a book value per share of $15.25, up sharply from $14.84 a year earlier. This equity cushion isn't just a number—it's proof that Victory Bancorp can weather unexpected shocks, from loan defaults to regulatory shifts.

Credit Quality: A Benchmark of Prudence

While many banks are grappling with rising nonperforming loans (NPLs), Victory Bancorp's credit metrics border on perfection. As of March 2025, nonperforming assets (NPAs) stood at 0.00% of total assets, a staggering improvement from 0.05% in late 2024 and a stark contrast to the industry's average of 0.49%. Even more impressive, net charge-offs to average loans were just 0.01%, reflecting a loan portfolio so clean it defies the sector's norms.

This discipline isn't luck—it's strategy. Victory Bancorp's focus on small- to mid-sized businesses in Pennsylvania's stable markets (think Montgomery and Berks Counties) insulates it from systemic risks. Its relationship-driven underwriting ensures borrowers are well capitalized, while strict risk management keeps defaults at bay. For dividend sustainability, this is critical: a bank that doesn't bleed capital from bad loans can plow profits back into shareholder returns.

Dividends: Steady as She Goes

Victory Bancorp's dividend history is a masterclass in consistency. Since 2017, it has paid $0.065 per share quarterly, with the annual payout at $0.26—a yield of 2.31% as of early 2025. What makes this dividend sustainable? Look no further than its payout ratio of just 16% (as of September 2023), meaning earnings easily cover distributions. Even as net income more than doubled in Q1 2025 to $543,000, the dividend remains conservative, leaving ample room for reinvestment or unexpected downturns.

Compare this to banks that have slashed dividends during crises—Victory Bancorp's track record is a rebuttal to the idea that income stocks are inherently risky. Its dividend isn't a gamble; it's a reward for investors who prioritize reliability over volatility.

The Path Ahead: Growth Without Compromise

Victory Bancorp isn't just defending its position—it's expanding. In Q1 2025, it announced an office in Horsham, Pennsylvania, deepening its footprint in a region where it's already a trusted partner to local businesses. Meanwhile, the $4.65 million in subordinated debt raised in late 2024 has already been deployed to strengthen capital and fuel lending, a move that positions the bank to capitalize on future economic cycles.

Even in a rising-rate environment, Victory Bancorp's net interest margin—a key profitability metric—is improving. Deposit growth has reduced reliance on wholesale funding, lowering costs and boosting margins. This dynamic could accelerate if short-term rates stabilize, as Victory Bancorp's asset-sensitive balance sheet stands to benefit.

Why Act Now?

Investors often overlook smaller banks, mistaking them for relics of the past. Victory Bancorp proves the opposite: its focus on community, paired with modern financial rigor, makes it a model of resilience. With a 20.5% 5-year EBITDA growth rate, it's outperforming peers while maintaining a dividend yield that beats Treasury notes.

The risks? Of course, banking always carries macroeconomic and regulatory tailwinds. But Victory Bancorp's metrics—its ultra-low NPLs, rising equity, and disciplined dividend policy—suggest it can outlast most storms. For income investors, this is a stock that checks all the boxes: dividend sustainability, asset quality, and geographic stability.

The question isn't whether Victory Bancorp can keep paying—it's already doing so. The real question is: why wait to own a piece of this dividend machine?

The author holds no position in Victory Bancorp, Inc. and is not a financial advisor.