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Section 1: 8-K (8-K)

bayk-8k_20200128.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): January 28, 2020

 

BAY BANKS OF VIRGINIA, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

Virginia

 

0-22955

 

54-1838100

(State or Other Jurisdiction

 

(Commission File Number)

 

(IRS Employer

of Incorporation)

 

 

 

Identification No.)

 

1801 Bayberry Court, Suite 101, Richmond, VA 23226

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (844) 404-9668

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      yes      no

 


Item 2.02Results of Operations and Financial Condition.

On January 28, 2020, Bay Banks of Virginia, Inc. (the “Company”) issued a press release announcing its financial results for the year ended December 31, 2019.

A copy of the Company’s press release is attached and furnished herewith as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits.

 

 

Exhibit No.

 

Description

 

 

 

 

 

99.1

 

Press release, dated January 28, 2020, announcing the Company’s financial results for the year ended December 31, 2019.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

BAY BANKS OF VIRGINIA, INC.

 

 

 

 

 

 

 

 

 

By:

  /s/ Judy C. Gavant

 

 

Judy C. Gavant

 

Executive Vice President and Chief Financial Officer

 

January 28, 2020

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

bayk-ex991_6.htm

Exhibit 99.1

Bay Banks of Virginia, Inc. Reports Fourth Quarter and Full Year 2019 Results

RICHMOND, VA, January 28, 2020 /PRNewswire/ -- Bay Banks of Virginia, Inc. (OTCQB: BAYK), holding company of Virginia Commonwealth Bank and VCB Financial Group, Inc., announced financial results for the quarter and year ended December 31, 2019.

The company reported net income of $2.0 million, or $0.15 per diluted share, for the fourth quarter of 2019 compared to $1.8 million, or $0.14 per diluted share, for the third quarter of 2019 and $782 thousand, or $0.06 per diluted share, for the fourth quarter of 2018. Net income for the fourth quarter of 2018 included $483 thousand ($382 thousand1 after income taxes) of expenses incurred in connection with the company’s previously announced early retirement program.

For the year of 2019, the company reported net income of $7.1 million, or $0.54 per diluted share, compared to $3.9 million, or $0.30 per diluted share, for the year of 2018. Net income in the year of 2018 included $363 thousand ($287 thousand1 after income tax) of merger-related expenses incurred in connection with the company’s merger with Virginia BanCorp, Inc. on April 1, 2017 (the “Merger”).

Randal R. Greene, President and Chief Executive Officer, commented: “2019 was a year of great improvement with increasing profitability in each sequential quarter. We began the year with a focus on balance sheet management and low-cost deposit growth. Our overall loan portfolio shows minimal growth in 2019; however, net growth in our markets was nearly $79 million in 2019. Our portfolio of loans acquired in the Merger and subsequent purchases of consumer portfolios have declined from $290 million since the Merger to approximately $123 million at year-end 2019. We have sold more originated residential mortgages into the secondary market, grown noninterest-bearing deposits and continue to emphasize these accounts, and we’ve aggressively lowered deposit costs since the second quarter of 2019.”

Operating Results

Fourth Quarter 2019 compared to Third Quarter 2019

 

Income before income taxes for the fourth quarter of 2019 was $2.5 million compared to $2.3 million for the third quarter of 2019.

 

Interest income for the three months ended December 31, 2019 was $13.0 million, on average interest-earning assets of $1.06 billion, compared to $12.8 million, on average interest-earning assets of $1.04 billion, for the three months ended September 30, 2019. Interest income in the fourth quarter of 2019 included accretion of acquired loan discounts of $929 thousand, while interest income in the third quarter of 2019 included $357 thousand of accretion of acquired loan discounts. Higher accretion in the fourth quarter of 2019 was primarily attributable to significant paydowns and payoffs of loans acquired in the Merger. Yields on average interest-earning assets were 4.87% for each of the sequential quarter periods, including the effect of accretion. Yields on average interest-earning assets in the fourth quarter of 2019 were positively affected by higher accretion of acquired loan discounts, which had a positive 21 basis point effect compared to yields in the third quarter of 2019. Negatively affecting yields on average interest-earning assets in the fourth quarter of 2019 were higher average balances of lower earning investment securities purchased in the quarter and lower yields on new loans originated in the latter part of the fourth quarter of 2019.

 

Interest expense was $3.9 million and $3.7 million for the three months ended December 31, 2019 and September 30, 2019, respectively, and cost of funds was 1.54% and 1.52% for the sequential quarter periods. Average interest-bearing liabilities were $860.4 million and $851.4 million for the fourth and third quarters of 2019, respectively. Interest expense on the company’s $25 million of 5.625% subordinated notes issued on October 7, 2019 and maturing on October 15, 2029 (the “2029 Notes”) contributed $354 thousand and 10 basis points to interest expense and cost of funds, respectively, in the fourth quarter of 2019. Cost of deposits was 1.34% for the fourth quarter of 2019, down six basis points from 1.40% for the third quarter of 2019.

 

Net interest margin (“NIM”) was 3.43% for the fourth quarter of 2019 compared to 3.45% for the third quarter of 2019. Higher accretion in the fourth quarter of 2019 had a positive 21 basis point effect on NIM, which was offset by higher


 

balances of lower earning investment securities, lower yields on interest-earning deposits and federal funds sold, and higher cost of funds. The 2029 Notes had a negative 10 basis point effect on NIM in the fourth quarter of 2019.

 

Provision for loan losses was $311 thousand in the fourth quarter of 2019 and was primarily attributable to net loan growth of approximately $17.2 million and net charge-offs from a select portfolio of purchased consumer loans. The majority of loans acquired in the Merger, which declined, carry no allowance for loan losses as they were recorded at fair value at the effective date of the Merger. Provision for loan losses of $495 thousand in the third quarter of 2019 was primarily attributable to net charge-offs from a select portfolio of purchased consumer loans, a specific reserve for a commercial and industrial loan, and net loan growth of $23.7 million.

 

Noninterest income for the three months ended December 31, 2019 and September 30, 2019 was $1.4 million and $1.2 million, respectively. Higher noninterest income in the fourth quarter of 2019 compared to the third quarter of 2019 was primarily due to wealth management income, which increased $69 thousand on a sequential quarter basis.

 

Noninterest expense for the three months ended December 31, 2019 and September 30, 2019 was $7.7 million and $7.4 million, respectively. Higher noninterest expense in the fourth quarter of 2019 was primarily due to higher salaries and employee benefits and higher Federal Deposit Insurance Corporation (“FDIC”) assessments, partially offset by lower net losses from other real estate owned. Higher salaries and employee benefits for the fourth quarter of 2019 were primarily due to required contributions to the company’s Employee Stock Ownership Plan (ESOP) and positive adjustments to the incentive accrual recorded in the third quarter of 2019. The company’s FDIC assessment for the third quarter of 2019 included the benefit of a small bank assessment credit of $171 thousand compared to a $55 thousand benefit in the fourth quarter of 2019. The company’s efficiency ratio for the fourth quarter of 2019 was 73.5% compared to 72.8% for the third quarter of 2019.

 

Income tax expense for the fourth quarter of 2019 was $469 thousand, reflective of a 19.0% effective income tax rate, while income tax expense for the third quarter of 2019 was $448 thousand, reflective of a 19.6% effective income tax rate.

 

Full-Year 2019 compared to Full-Year 2018

 

 

Income before income taxes for the year of 2019 was $8.7 million compared to $4.4 million for the year of 2018.

 

Interest income for the year ended December 31, 2019 was $50.4 million, on average interest-earning assets of $1.04 billion, compared to $43.8 million for the year ended December 31, 2018, on average interest-earning assets of $934.5 million. Interest income for the year ended December 31, 2019 included accretion of acquired loan discounts of $1.9 million, while interest income for the year ended December 31, 2018 included $1.8 million of accretion of acquired loan discounts. Yields on average interest-earning assets were 4.85% and 4.70% for the year of 2019 and 2018, respectively. The higher yield on average interest-earning assets in the 2019 period was primarily due to higher loan yields and higher accretion of acquired loan discounts of $163 thousand, which had a positive 2 basis point effect.

 

Interest expense was $15.1 million and $10.2 million for the years ended December 31, 2019 and 2018, respectively, and cost of funds was of 1.55% and 1.17% for the respective periods. Higher cost of funds in the year ended December 31, 2019 was primarily due to higher rates paid on deposits generated in the latter part of 2018, the repricing of maturing time deposits in a higher rate environment, the issuance of the 2029 Notes during the fourth quarter of 2019, greater use and cost of Federal Home Loan Bank of Atlanta advances, and higher interest rates in general. Average interest-bearing liabilities were $855.7 million and $768.8 million for the years ended December 31, 2019 and 2018, respectively.

 

NIM was 3.40% for the year ended December 31, 2019 compared to 3.61% for the year ended December 31, 2018. Lower NIM in the 2019 period was primarily due to higher cost of funds, partially offset by higher loan yields and higher accretion of acquired loan discounts. Higher accretion of acquired loan discounts had a positive 2 basis point effect on NIM in the 2019 period compared to the 2018 period.

 

Provision for loan losses was $1.2 million for the year ended December 31, 2019, primarily attributable to net loan growth of approximately $78.6 million and net charge-offs from a select portfolio of purchased consumer loans. The majority of loans acquired in the Merger, which declined, carry no allowance for loan losses as they were recorded at fair value at the effective date of the Merger. Provision for loan losses for the year ended December 31, 2018 was $1.4 million, which was primarily attributable net loan growth of $135.5 million during 2018. The 2018 period also included a $580 thousand benefit to correct for an overstatement in the company’s allowance for loan losses as of December 31, 2017, as previously reported.

 

Noninterest income for the years ended December 31, 2019 and 2018 was $5.0 million and $4.3 million, respectively. Noninterest income in the 2019 period reflects greater income from secondary market sales and servicing of $282 thousand, as the company sold a greater volume of mortgages originated in the 2019 period, while the 2018 period included a gain of $352 thousand on the curtailment of the company’s post-retirement benefit plan effective March 1, 2018.

 

Noninterest expense for the years ended December 31, 2019 and 2018 was $30.4 million and $32.1 million, respectively. Expenses associated with the succession of the company’s CFO and in the completion of the company’s 2017 year-end reporting incurred in the first half of 2018 were approximately $1.2 million. Merger-related expenses were $0 and $363 thousand for the years ended December 31, 2019 and 2018, respectively, and the 2018 period included $483 thousand of expenses incurred in connection with the company’s early retirement program noted above.

 

Income tax expense for the year ended December 31, 2019 was $1.6 million, reflective of an 18.9% effective income tax rate, while income tax expense for the year ended December 31, 2018 was $533 thousand, reflective of a 12.1% effective


 

income tax rate. The 2018 effective income tax rate was positively affected by higher than estimated income tax deductions reported in the company’s 2017 federal income tax return at the higher 2017 rate, as previously reported.

Fourth Quarter 2019 compared to Fourth Quarter 2018

 

Income before income taxes for the fourth quarter of 2019 was $2.5 million compared to $670 thousand for the fourth quarter of 2018. Income before income taxes, excluding the costs incurred in connection with the company’s early retirement program ($483 thousand), was $1.2 million1 for the fourth quarter of 2018.

 

Interest income for the three months ended December 31, 2019 was $13.0 million, on average interest-earning assets of $1.06 billion, compared to $11.7 million, on average interest-earning assets of $989.3 million, for the three months ended December 31, 2018. Interest income in the fourth quarters of 2019 and 2018 included accretion of acquired loan discounts of $929 thousand and $352 thousand, respectively. Yields on average interest-earning assets were 4.87% and 4.72% for the fourth quarters of 2019 and 2018, respectively. The increase in yield on average interest-earning assets was primarily attributable to higher accretion of loan discounts, which had a positive 22 basis point effect compared to the fourth quarter of 2018.

 

Interest expense was $3.9 million and $3.3 million for the three months ended December 31, 2019 and 2018, respectively, and cost of funds was 1.54% and 1.40%, for the respective periods. Higher costs of funds in the 2019 period was primarily due to higher cost of deposits of 1.34% in the 2019 period compared to 1.22% in the 2018 period, due to the reasons noted above. Average interest-bearing liabilities were $860.4 million and $817.2 million for the fourth quarters of 2019 and 2018, respectively.

 

NIM was 3.43% for the fourth quarter of 2019 compared to 3.41% for the fourth quarter of 2018. The increase in NIM was primarily attributable to higher accretion of loan discounts, partially offset by higher cost of funds.

 

Provision for loan losses was $311 thousand in the fourth quarter of 2019 and was primarily attributable to net loan growth of approximately $17.2 million and net charge-offs from a select portfolio of purchased consumer loans. The majority of loans acquired in the Merger, which declined, carry no allowance for loan losses as they were recorded at fair value at the effective date of the Merger. Provision for loan losses in the fourth quarter of 2018 was primarily attributable to an increase of $47.2 million of net loans in the quarter and higher reserves attributed to certain loan types, as the company's loan portfolio mix continues to shift from residential and consumer loans to commercial loans.

 

Noninterest income for the three months ended December 31, 2019 and 2018 was $1.4 million and $1.0 million, respectively. The increase quarter-over-quarter was primarily attributable to a gain on rabbi trust assets of $62 thousand in the 2019 period compared to a loss of $179 thousand in the 2018 period and higher secondary market sales and servicing income of $178 thousand.

 

Noninterest expense for the three months ended December 31, 2019 and 2018 was $7.7 million and $7.9 million, respectively. The fourth quarter of 2018 included $483 thousand of expenses incurred in connection with the company’s early retirement program. The company’s efficiency ratio for the fourth quarter of 2019 was 73.5% compared to 83.7% (78.6%1 excluding early retirement program expenses) for the same quarter of 2018.

 

Income tax expense for the fourth quarter of 2019 was $469 thousand, reflective of a 19.0% effective income tax rate. Income tax expense for the fourth quarter of 2018 was a benefit of $112 thousand, primarily attributable to higher than estimated tax deductions reported in the company’s 2017 federal income tax return and lower effective income tax rate for the full year of 2018, as previously reported.

 

Balance Sheet

 

Total assets were $1.13 billion and $1.08 billion at December 31, 2019 and 2018, respectively.

 

Loans, net of allowance for loan losses, were $916.6 million at December 31, 2019 compared to $894.2 million at December 31, 2018, a growth rate of approximately 2%. Excluding the payoff and amortization of approximately $56.5 million in the year of 2019 of purchased portfolio loans, including those acquired in the Merger, loan growth was approximately $78.6 million, or nearly 9%, for the year of 2019.

 

Deposits were $910.4 million at December 31, 2019 compared to $842.2 million at December 31, 2018. Noninterest-bearing demand accounts comprised 15.2% of total deposits at December 31, 2019, up from 13.6% at December 31, 2018.

 

Shareholders’ equity was $126.2 million and $117.5 million at December 31, 2019 and 2018, respectively, an increase of $8.7 million. The increase in shareholders’ equity in the year of 2019 was primarily attributable to net income of $7.1 million and $1.7 million of net unrealized gains on the company’s available-for-sale securities portfolio. Tangible book value, calculated as shareholders’ equity less goodwill and core deposit intangible assets, net of the associated deferred tax liability, divided by common shares outstanding, was $8.641 and $7.981 at December 31, 2019 and 2018, respectively. Pursuant to the company’s previously announced share repurchase program and shares purchased by operation of the ESOP, the company purchased 72,705 common shares at a weighted average price per share of $7.98 in the fourth quarter of 2019. Capital ratios for Virginia Commonwealth Bank were above regulatory minimum guidelines for well-capitalized banks as of December 31, 2019 and 2018.


 

Annualized return on average assets for the quarters ended December 31, 2019, September 30, 2019, and December 31, 2018 was 0.71%, 0.66%, and 0.30%, respectively, while annualized return on average shareholders’ equity for the same periods was 6.39%, 5.97%, and 2.69%, respectively.

Asset Quality

 

Nonperforming assets were $6.4 million, or 0.56% of total assets, as of December 31, 2019, compared to $9.4 million, or 0.84% of total assets, as of September 30, 2019, and $8.8 million, or 0.81% of total assets, as of December 31, 2018. The decrease in nonperforming assets as of December 31, 2019 was primarily attributable to an approximately $2.2 million balance decline of a commercial and industrial loan participation to a professional service firm, which announced plans to liquidate and subsequently filed for Chapter 7 bankruptcy in the third quarter of 2019, as previously reported. The loan balance as of December 31, 2019 was approximately $450 thousand compared to $2.7 million as of September 30, 2019. During the 2019 year, the company reduced its other real estate owned, net from $3.6 million at December 31, 2018 to $1.9 million at December 31, 2019.

 

The ratio of allowance for loan losses to total gross loans was 0.82%, 0.80%, and 0.88% at December 31, 2019, September 30, 2019, and December 31, 2018, respectively. The company’s allowance for loan losses does not include discounts recorded on loans acquired in the Merger, which were $1.9 million, $2.9 million, and $3.9 million as of December 31, 2019, September 30, 2019, and December 31, 2018, respectively.

Outlook

Greene concluded: “As I look to 2020, we have set a goal to reach greater profitability and have charted the course to achieve this. We have a strong customer base on which to build and the management team who can deliver. I often receive unsolicited customer feedback stating that our employees have gone above and beyond to be responsive to our customers’ banking needs, expeditiously, and with a personal touch. It is our competitive advantage. We have the team, the customers, the capital, the support of our board of directors, and operate in the best Virginia markets.”

About Bay Banks of Virginia, Inc.

Bay Banks of Virginia, Inc. is the bank holding company for Virginia Commonwealth Bank and VCB Financial Group, Inc. Founded in the 1930s, Virginia Commonwealth Bank is headquartered in Richmond, Virginia. With 19 banking offices, including one loan production office, located throughout the greater Richmond region, the Northern Neck region, Middlesex County, and the Hampton Roads region, the bank serves businesses, professionals, and consumers with a wide variety of financial services, including retail and commercial banking, and mortgage banking. VCB Financial Group provides management services for personal and corporate trusts, including estate planning, estate settlement and trust administration, and investment and wealth management services.

Caution About Forward-Looking Statements

This press release contains statements concerning the company's expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements may constitute "forward-looking statements" as defined by federal securities laws. These statements may address issues that involve estimates and assumptions made by management, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the company include, but are not limited to: changes in interest rates and general economic conditions; the legislative/regulatory climate; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and Federal Reserve Board; the quality or composition of the loan or investment portfolios; demand for loan products; deposit flows; competition; demand for financial services in the company's market area; acquisitions and dispositions; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; and tax and accounting rules, principles, policies and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation, the company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

For further information, contact Randal R. Greene, President and Chief Executive Officer, at 844-404-9668 or Judy C. Gavant, Executive Vice President and Chief Financial Officer, at 804-518-2606 or [email protected]

1 See discussion of non-GAAP financial measures at the end of the Supplemental Financial Data tables that follow.


BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data

CONSOLIDATED BALANCE SHEETS

 

 

(unaudited)

 

 

 

 

 

(Dollars in thousands, except share data)

 

December 31, 2019

 

 

December 31, 2018 (1)

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

6,096

 

 

$

7,685

 

Interest-earning deposits

 

 

34,358

 

 

 

18,981

 

Federal funds sold

 

 

1,359

 

 

 

625

 

Certificates of deposit

 

 

2,754

 

 

 

3,746

 

Available-for-sale securities, at fair value

 

 

99,454

 

 

 

82,232

 

Restricted securities

 

 

5,706

 

 

 

7,600

 

Loans receivable, net of allowance for loan losses of $7,562 and

   $7,902, respectively

 

 

916,628

 

 

 

894,191

 

Loans held for sale

 

 

1,231

 

 

 

368

 

Premises and equipment, net

 

 

20,141

 

 

 

18,169

 

Accrued interest receivable

 

 

3,035

 

 

 

3,172

 

Other real estate owned, net

 

 

1,916

 

 

 

3,597

 

Bank owned life insurance

 

 

19,752

 

 

 

19,270

 

Goodwill

 

 

10,374

 

 

 

10,374

 

Mortgage servicing rights

 

 

935

 

 

 

977

 

Core deposit intangible

 

 

1,518

 

 

 

2,193

 

Other assets

 

 

6,666

 

 

 

7,437

 

Total assets

 

$

1,131,923

 

 

$

1,080,617

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

$

137,933

 

 

$

114,122

 

Savings and interest-bearing demand deposits

 

 

382,607

 

 

 

359,400

 

Time deposits

 

 

389,900

 

 

 

368,670

 

Total deposits

 

 

910,440

 

 

 

842,192

 

 

 

 

 

 

 

 

 

 

Securities sold under repurchase agreements

 

 

6,525

 

 

 

6,089

 

Federal Home Loan Bank advances

 

 

45,000

 

 

 

100,000

 

Subordinated notes, net of unamortized issuance costs

 

 

31,001

 

 

 

6,893

 

Other liabilities

 

 

12,772

 

 

 

7,967

 

Total liabilities

 

 

1,005,738

 

 

 

963,141

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock ($5 par value; authorized - 30,000,000 shares;

   outstanding - 13,261,801 and 13,201,682 shares, respectively) (2)

 

 

66,309

 

 

 

66,008

 

Additional paid-in capital

 

 

36,658

 

 

 

36,972

 

Unearned employee stock ownership plan shares

 

 

(1,525

)

 

 

(1,734

)

Retained earnings

 

 

24,660

 

 

 

17,557

 

Accumulated other comprehensive income (loss), net

 

 

83

 

 

 

(1,327

)

Total shareholders' equity

 

 

126,185

 

 

 

117,476

 

Total liabilities and shareholders' equity

 

$

1,131,923

 

 

$

1,080,617

 

 

(1) Derived from audited December 31, 2018 Consolidated Financial Statements.

(2) Preferred stock is authorized; however, none was outstanding as of December 31, 2019 and December 31, 2018.


BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

For the Three Months Ended

 

(Dollars in thousands, except per share data)

 

December 31, 2019

 

 

September 30, 2019

 

 

December 31, 2018

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

12,149

 

 

$

11,930

 

 

$

10,899

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

573

 

 

 

553

 

 

 

569

 

Tax-exempt

 

 

98

 

 

 

113

 

 

 

119

 

Federal funds sold

 

 

12

 

 

 

6

 

 

 

3

 

Interest-earning deposit accounts

 

 

149

 

 

 

145

 

 

 

128

 

Certificates of deposit

 

 

16

 

 

 

18

 

 

 

17

 

Total interest income

 

 

12,997

 

 

 

12,765

 

 

 

11,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,056

 

 

 

3,123

 

 

 

2,565

 

Securities sold under repurchase agreements

 

 

3

 

 

 

4

 

 

 

3

 

Subordinated notes and other borrowings

 

 

494

 

 

 

142

 

 

 

128

 

Federal Home Loan Bank advances

 

 

301

 

 

 

465

 

 

 

568

 

Total interest expense

 

 

3,854

 

 

 

3,734

 

 

 

3,264

 

Net interest income

 

 

9,143

 

 

 

9,031

 

 

 

8,471

 

Provision for loan losses

 

 

311

 

 

 

495

 

 

 

870

 

Net interest income after provision for loan losses

 

 

8,832

 

 

 

8,536

 

 

 

7,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Trust management

 

 

209

 

 

 

201

 

 

 

114

 

Service charges and fees on deposit accounts

 

 

250

 

 

 

243

 

 

 

261

 

Wealth management

 

 

254

 

 

 

185

 

 

 

284

 

Interchange fees, net

 

 

108

 

 

 

108

 

 

 

118

 

Other service charges and fees

 

 

27

 

 

 

32

 

 

 

25

 

Secondary market sales and servicing

 

 

309

 

 

 

293

 

 

 

131

 

Increase in cash surrender value of bank owned life insurance

 

 

119

 

 

 

122

 

 

 

123

 

Net losses on sale of available-for-sale securities

 

 

 

 

 

1

 

 

 

 

Net (losses) gains on disposition of other assets

 

 

(1

)

 

 

 

 

 

11

 

Gain (loss) on rabbi trust assets

 

 

62

 

 

 

 

 

 

(179

)

Other

 

 

36

 

 

 

15

 

 

 

75

 

Total noninterest income

 

 

1,373

 

 

 

1,200

 

 

 

963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,065

 

 

 

3,666

 

 

 

3,785

 

Occupancy

 

 

809

 

 

 

805

 

 

 

993

 

Data processing

 

 

530

 

 

 

541

 

 

 

583

 

Bank franchise tax

 

 

209

 

 

 

209

 

 

 

195

 

Telecommunications and other technology

 

 

313

 

 

 

258

 

 

 

226

 

FDIC assessments

 

 

112

 

 

 

(7

)

 

 

198

 

Foreclosed property

 

 

35

 

 

 

48

 

 

 

66

 

Consulting

 

 

108

 

 

 

156

 

 

 

133

 

Advertising and marketing

 

 

84

 

 

 

124

 

 

 

92

 

Directors' fees

 

 

153

 

 

 

148

 

 

 

179

 

Audit and accounting

 

 

236

 

 

 

193

 

 

 

290

 

Legal

 

 

69

 

 

 

20

 

 

 

120

 

Core deposit intangible amortization

 

 

157

 

 

 

164

 

 

 

188

 

Net other real estate owned losses

 

 

19

 

 

 

375

 

 

 

62

 

Other

 

 

835

 

 

 

747

 

 

 

784

 

Total noninterest expense

 

 

7,734

 

 

 

7,447

 

 

 

7,894

 

Income before income taxes

 

 

2,471

 

 

 

2,289

 

 

 

670

 

Income tax expense (benefit)

 

 

469

 

 

 

448

 

 

 

(112

)

Net income

 

$

2,002

 

 

$

1,841

 

 

$

782

 

Basic and diluted earnings per share

 

$

0.15

 

 

$

0.14

 

 

$

0.06

 

 


BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

For the Year Ended

 

(Dollars in thousands, except per share data)

 

December 31, 2019

 

 

December 31, 2018

 

INTEREST INCOME

 

 

 

 

 

 

 

 

Loans, including fees

 

$

46,998

 

 

$

40,752

 

Securities:

 

 

 

 

 

 

 

 

Taxable

 

 

2,298

 

 

 

1,961

 

Tax-exempt

 

 

425

 

 

 

475

 

Federal funds sold

 

 

43

 

 

 

17

 

Interest-earning deposit accounts

 

 

581

 

 

 

528

 

Certificates of deposit

 

 

73

 

 

 

70

 

Total interest income

 

 

50,418

 

 

 

43,803

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

Deposits

 

 

12,075

 

 

 

7,992

 

Securities sold under repurchase agreements

 

 

14

 

 

 

13

 

Subordinated notes and other borrowings

 

 

911

 

 

 

513

 

Federal Home Loan Bank advances

 

 

2,085

 

 

 

1,707

 

Total interest expense

 

 

15,085

 

 

 

10,225

 

Net interest income

 

 

35,333

 

 

 

33,578

 

Provision for loan losses

 

 

1,182

 

 

 

1,351

 

Net interest income after provision for loan losses

 

 

34,151

 

 

 

32,227

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

Trust management

 

 

830

 

 

 

710

 

Service charges and fees on deposit accounts

 

 

977

 

 

 

768

 

Wealth management

 

 

908

 

 

 

842

 

Interchange fees, net

 

 

438

 

 

 

339

 

Other service charges and fees

 

 

115

 

 

 

116

 

Secondary market sales and servicing

 

 

941

 

 

 

659

 

Increase in cash surrender value of bank owned life insurance

 

 

481

 

 

 

497

 

Net losses on sale of available-for-sale securities

 

 

(1

)

 

 

 

Net losses on disposition of other assets

 

 

(3

)

 

 

(7

)

Gain (losses) on rabbi trust assets

 

 

192

 

 

 

(138

)

Gain on curtailment of post-retirement benefit plan

 

 

 

 

 

352

 

Other

 

 

80

 

 

 

165

 

Total noninterest income

 

 

4,958

 

 

 

4,303

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

15,597

 

 

 

16,233

 

Occupancy

 

 

3,319

 

 

 

3,528

 

Data processing

 

 

2,268

 

 

 

2,436

 

Bank franchise tax

 

 

864

 

 

 

726

 

Telecommunications and other technology

 

 

1,040

 

 

 

831

 

FDIC assessments

 

 

483

 

 

 

719

 

Foreclosed property

 

 

145

 

 

 

175

 

Consulting

 

 

526

 

 

 

1,068

 

Advertising and marketing

 

 

384

 

 

 

439

 

Directors' fees

 

 

678

 

 

 

561

 

Audit and accounting

 

 

822

 

 

 

1,129

 

Legal

 

 

199

 

 

 

500

 

Merger-related

 

 

 

 

 

363

 

Core deposit intangible amortization

 

 

674

 

 

 

798

 

Net other real estate owned losses (gains)

 

 

460

 

 

 

(107

)

Other

 

 

2,943

 

 

 

2,720

 

Total noninterest expense

 

 

30,402

 

 

 

32,119

 

Income before income taxes

 

 

8,707

 

 

 

4,411

 

Income tax expense

 

 

1,649

 

 

 

533

 

Net income

 

$

7,058

 

 

$

3,878

 

Basic and diluted earnings per share

 

$

0.54

 

 

$

0.30

 

 


BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the

 

 

 

As of and for the Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

(Dollars in thousands, except per share amounts)

 

2019

 

 

2019

 

 

2019

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Select Consolidated Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,131,923

 

 

$

1,112,219

 

 

$

1,094,260

 

 

$

1,103,840

 

 

$

1,080,617

 

 

 

 

 

 

 

 

 

Cash, interest-earning deposits and federal funds sold

 

 

41,813

 

 

 

31,405

 

 

 

24,604

 

 

 

30,677

 

 

 

27,291

 

 

 

 

 

 

 

 

 

Available-for-sale securities, at fair value

 

 

99,454

 

 

 

80,748

 

 

 

81,169

 

 

 

82,030

 

 

 

82,232

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage loans on real estate

 

 

730,788

 

 

 

731,280

 

 

 

713,247

 

 

 

725,494

 

 

 

713,997

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

181,730

 

 

 

186,281

 

 

 

187,531

 

 

 

173,360

 

 

 

164,608

 

 

 

 

 

 

 

 

 

Consumer

 

 

11,985

 

 

 

14,471

 

 

 

16,889

 

 

 

20,095

 

 

 

23,740

 

 

 

 

 

 

 

 

 

Loans receivable

 

 

924,503

 

 

 

932,032

 

 

 

917,667

 

 

 

918,949

 

 

 

902,345

 

 

 

 

 

 

 

 

 

Unamortized net deferred loan fees

 

 

(313

)

 

 

(269

)

 

 

(275

)

 

 

(329

)

 

 

(252

)

 

 

 

 

 

 

 

 

Allowance for loan losses (ALL)

 

 

(7,562

)

 

 

(7,495

)

 

 

(7,479

)

 

 

(7,858

)

 

 

(7,902

)

 

 

 

 

 

 

 

 

Net loans

 

 

916,628

 

 

 

924,268

 

 

 

909,913

 

 

 

910,762

 

 

 

894,191

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

1,231

 

 

 

268

 

 

 

593

 

 

 

 

 

 

368

 

 

 

 

 

 

 

 

 

Other real estate owned, net

 

 

1,916

 

 

 

2,178

 

 

 

3,168

 

 

 

3,718

 

 

 

3,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

$

1,005,738

 

 

$

987,362

 

 

$

971,643

 

 

$

983,903

 

 

$

963,141

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

 

137,933

 

 

 

124,670

 

 

 

116,229

 

 

 

112,315

 

 

 

114,122

 

 

 

 

 

 

 

 

 

Savings and interest-bearing demand deposits

 

 

382,607

 

 

 

372,404

 

 

 

374,175

 

 

 

371,587

 

 

 

359,400

 

 

 

 

 

 

 

 

 

Time deposits

 

 

389,900

 

 

 

396,614

 

 

 

385,218

 

 

 

372,751

 

 

 

368,670

 

 

 

 

 

 

 

 

 

Total deposits

 

 

910,440

 

 

 

893,688

 

 

 

875,622

 

 

 

856,653

 

 

 

842,192

 

 

 

 

 

 

 

 

 

Securities sold under repurchase agreements

 

 

6,525

 

 

 

6,323

 

 

 

6,983

 

 

 

7,220

 

 

 

6,089

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

 

45,000

 

 

 

68,000

 

 

 

70,000

 

 

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

 

 

Subordinated notes, net of unamortized issuance costs

 

 

31,001

 

 

 

6,906

 

 

 

6,902

 

 

 

6,897

 

 

 

6,893