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Section 1: 8-K (8-K)

bayk-8k_20190206.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): February 6, 2019

 

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, 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))

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.

 


Item 2.02Results of Operations and Financial Condition.

On February 6, 2019, Bay Banks of Virginia, Inc. (the “Company”) issued a press release announcing its financial results for the year ended December 31, 2018.

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 February 6, 2019 announcing the Company’s financial results for the year ended December 31, 2018.


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

 

Chief Financial Officer

 

February 6, 2019

(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 2018 Results

2018 Loan Growth Over 17%

RICHMOND, VA, February 6, 2019 /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, 2018.

The company reported net income of $782 thousand, or $0.06 per diluted share, for the fourth quarter of 2018 compared to $1.0 million, or $0.08 per diluted share, for the third quarter of 2018, and to a net loss of $2.4 million, or ($0.18) per diluted share, for the fourth quarter of 2017. 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. Net income in the fourth quarter of 2017 included $850 thousand ($561 thousand1 after income taxes) of merger-related expenses in connection with the company’s merger with Virginia BanCorp, Inc. on April 1, 2017 (the “Merger”).

For the year of 2018, the company reported net income of $3.9 million, or $0.31 per diluted share, compared to a net loss of $1.2 million, or ($0.14) per diluted share, for the year of 2017. Expenses incurred in connection with the Merger were $363 thousand and $2.0 million for the years ended December 31, 2018 and 2017, respectively.

Randal R. Greene, President and Chief Executive Officer, commented: "Since our merger with Virginia BanCorp, Inc. at the beginning of the second quarter of 2017, we have grown our balance sheet by 30%. Our larger balance sheet coupled with the cost savings initiatives announced during the third quarter of 2018 are beginning to result in improved profitability. Income before income taxes for the fourth quarter of 2018 when excluding the provision for loan losses and the costs incurred in implementing our early retirement program was just over $2.0 million. Our challenge continues to be growing deposits at acceptable rates to keep pace with the loan growth opportunities we have in our very strong markets."

Operating Results

Fourth Quarter 2018 compared to Third Quarter 2018

 

Income before income taxes for the fourth quarter of 2018 was $670 thousand compared to $1.2 million for the third quarter of 2018. Income before income taxes, excluding the costs incurred to implement the company’s early retirement program, was $1.2 million1 for the fourth quarter of 2018.

 

Interest income for the three months ended December 31, 2018 was $11.7 million, on average interest-earning assets of $989.3 million, compared to $10.9 million for the three months ended September 30, 2018, on average interest-earning assets of $929.1 million. Interest income in the fourth quarter of 2018 included accretion of acquired loan discounts of $352 thousand, while interest income in the third quarter of 2018 included $357 thousand of accretion of acquired loan discounts. Yields on average interest-earning assets were 4.72% and 4.66% for the linked quarter periods.

 

Interest expense was $3.3 million and $2.6 million for the three months ended December 31, 2018 and September 30, 2018, respectively, and cost of funds was 1.40% and 1.19% for the linked quarter periods. Average interest-bearing liabilities were $817.3 million and $762.0 million for the fourth and third quarters of 2018, respectively. Higher funding cost in the fourth quarter period was primarily due to heightened competition for deposits in the company's markets and greater use of higher cost Federal Home Loan Bank of Atlanta (“FHLB”) borrowings to fund loan growth, both affected by higher interest rates, in general.

 

Net interest margin (“NIM”) was 3.41% for the fourth quarter of 2018 compared to 3.57% for the third quarter of 2018. Net interest margin excluding accretion of acquired loan discounts and amortization of fair value marks on time deposits (“Core NIM”) for the fourth quarter of 2018 was 3.25%1 compared to 3.40%1 for the third quarter of 2018. The decline in Core NIM for the linked quarter periods was primarily attributable to higher cost of funds, partially offset by higher yields on interest-earning assets.


 

Provision for loan losses was $870 thousand in the fourth quarter of 2018, while provision for loan losses in the third quarter of 2018 was $509 thousand. Provision for loan losses in the fourth quarter of 2018 was primarily attributable to an increase of $48.0 million of gross loans in the quarter and higher reserves attributed to certain loan types as the company’s loan portfolio mix shifts from residential and consumer loans to commercial loans.  

 

Noninterest income for the three months ended December 31, 2018 and September 30, 2018 was $1.0 million and $944 thousand, respectively. Increased income from the company’s wealth management business was partially offset by lower income from fiduciary activities from the company’s trust management and administration services business.

 

Noninterest expenses for the three months ended December 31, 2018 and September 30, 2018 were $7.9 million and $7.5 million, respectively. Noninterest expenses for the fourth quarter of 2018 included $483 thousand incurred to implement the company’s early retirement program. Efficiency ratio for the three months ended December 31, 2018 was 83.7% (78.6%1 excluding expenses incurred to implement the early retirement program) compared to 81.3% for the three months ended September 30, 2018.

 

Income taxes for the fourth quarter of 2018 were a benefit of $112 thousand. The income tax benefit was primarily attributable to higher than estimated tax deductions reported in the company’s 2017 federal income tax return at the higher 2017 corporate tax rate and a lower effective income tax rate for the full year of 2018 than was recorded for the 2018 period through the third quarter of 2018.

 

Full-Year 2018 compared to Full-Year 2017

 

Income before income taxes for the year of 2018 was $4.4 million compared to a loss before income taxes of $475 thousand for 2017. Results for the year of 2017 include the operations of Virginia BanCorp, Inc. since the effective date of the Merger, April 1, 2017.

 

Interest income for the year ended December 31, 2018 was $43.8 million, on average interest-earning assets of $934.5 million, compared to $33.7 million for the year ended December 31, 2017, on average interest-earning assets of $702.1 million. Average interest-earning assets for the year of 2017 included those acquired in the Merger from the effective date of the Merger. Interest income for the year of 2018 included accretion of acquired loan discounts of $1.8 million, while interest income for the year of 2017 included $1.9 million of accretion of acquired loan discounts. Yields on average interest-earning assets were 4.70% and 4.83% for the years ended December 31, 2018 and 2017, respectively. Yields on average interest-earning assets in 2017 were favorably affected by higher accretion, higher average balances of higher yielding consumer loans, and higher fee income, some of which was to align policies for recording certain fees as a result of the Merger.

 

Interest expense was $10.2 million and $6.0 million for the years ended December 31, 2018 and 2017, respectively, and cost of funds was 1.17% and 0.91% for the respective periods. Average interest-bearing liabilities were $768.8 million and $569.0 million for the years of 2018 and 2017, respectively. Average interest-bearing liabilities in 2017 included those assumed in the Merger from the effective date of the Merger. Higher funding cost in the 2018 period was primarily due to higher cost of deposits and greater use of higher cost FHLB borrowings to fund loan growth.

 

Net interest margin was 3.61% for the year ended December 31, 2018 compared to 3.98% for the year ended December 31, 2017. Core NIM for the years ended December 31, 2018 and 2017 was 3.40%1 and 3.66%1, respectively.

 

Provision for loan losses was $1.4 million for the year of 2018, while provision for loan losses for the year of 2017 was $4.9 million. Provision for loan losses in the 2018 period included the correction in the second quarter of 2018 of the overstatement recorded in the company’s 2017 allowance for loan losses, as previously reported, while provision for loan losses in the 2017 period was primarily due to higher reserves for a certain portfolio of consumer loans.

 

Noninterest income for the years ended December 31, 2018 and 2017 was $4.3 million and $3.5 million, respectively. Noninterest income in the 2018 period included a $352 thousand gain on the discontinuance of the company's post-retirement benefit plan effective March 1, 2018, while noninterest income in the 2017 period included an additional $213 thousand of losses recorded on the disposition of assets.

 

Noninterest expenses for the years ended December 31, 2018 and 2017 were $32.1 million and $26.7 million, respectively. Merger-related expenses were $363 thousand and $2.0 million for the years ended December 31, 2018 and 2017, respectively. Expenses in 2018 associated with the succession of the company's CFO and fees incurred in the completion of the company's 2017 year-end reporting totaled approximately $1.2 million, all of which were recorded in the first six months of 2018. Efficiency ratio for the year ended December 31, 2018 was 84.8% compared to 85.7% for the year ended December 31, 2017.

 

Income tax expense for the year ended December 31, 2018 was $533 thousand, representing an effective rate of 12.1%. The effective 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 noted above. Income tax expense for 2017 of $797 thousand reflected the effect of the revaluation of the company’s net deferred tax asset upon the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) at the end of 2017.


Fourth Quarter 2018 compared to Fourth Quarter 2017

 

Income before income taxes for the fourth quarter of 2018 was $670 thousand compared to a loss of $2.0 million for the fourth quarter of 2017. Income before income taxes, excluding the costs incurred to implement 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, 2018 was $11.7 million, on average interest-earning assets of $989.3 million, compared to $10.5 million for the three months ended December 31, 2017, on average interest-earning assets of $900.6 million. Interest income in the fourth quarter of 2018 included accretion of acquired loan discounts of $352 thousand, while interest income in the fourth quarter of 2017 included $1.0 million of accretion of acquired loan discounts. Yields on average interest-earning assets were 4.72% and 4.69% for the three months ended December 31, 2018 and 2017, respectively.

 

Interest expense was $3.3 million and $1.9 million for the three months ended December 31, 2018 and 2017, respectively, and the cost of funds was 1.40% and 0.92% for the quarter-over-quarter periods. Higher funding cost in the 2018 period was primarily due to higher cost of deposits and greater use of FHLB borrowings, as noted above. Average interest-bearing liabilities were $817.2 million and $742.0 million for the fourth quarters of 2018 and 2017, respectively.

 

Net interest margin was 3.41% for the fourth quarter of 2018 compared to 3.82% for the fourth quarter of 2017. Core NIM for the fourth quarter of 2018 was 3.25%1 compared to 3.31%1 for the same quarter of 2017. The decline in Core NIM was primarily attributable to higher cost of funds.

 

Provision for loan losses was $870 thousand for the fourth quarter of 2018, while provision for loan losses in the fourth quarter of 2017 was $3.1 million. Provision for loan losses in the fourth quarter of 2018 was primarily attributable to an increase of $48.0 million of gross loans in the quarter and higher reserves attributed to certain loan types as the company’s loan portfolio mix shifts from residential and consumer loans to commercial loans. Provision for loan losses in the 2017 period included higher reserves for a certain portfolio of consumer loans.

 

Noninterest income for the fourth quarters of 2018 and 2017 was $1.0 million and $562 thousand, respectively. Contributing to higher noninterest income in the 2018 period was higher income from the company’s wealth management business and losses recorded on the disposition of assets in the 2017 period.

 

Noninterest expenses for the fourth quarters of 2018 and 2017 were $7.9 million and $8.0 million, respectively. Noninterest expenses in the fourth quarter of 2018 included $483 thousand of expenses incurred to implement the company’s early retirement program, while merger-related expenses were $850 thousand in the fourth quarter of 2017. Higher noninterest expenses in the 2018 period compared to the 2017 period were primarily due to higher occupancy and data processing costs due to growth, partially offset by lower advertising and marketing and consulting costs incurred in the 2017 period. Efficiency ratio for the fourth quarter of 2018 was 83.7% (78.6%1 excluding expenses incurred to implement the early retirement program) compared to 88.2% for the same quarter of 2017 (78.7%1 excluding merger-related expenses).

 

Income taxes for the fourth quarter of 2018 were a benefit of $112 thousand. The benefit was primarily attributable to greater than estimated income tax deductions reported in the company’s 2017 federal income tax return and the adjustment to the year-to-date 2018 effective rate recorded in the fourth quarter of 2018, noted above. Income tax expense for the fourth quarter of 2017 of $391 thousand reflected the effect of the revaluation of the company’s net deferred tax asset upon the enactment of the TCJA at the end of 2017.

Balance Sheet

 

Loans, net of allowance for loan losses, were $894.2 million at December 31, 2018 compared to $758.7 million at December 31, 2017, a growth rate of over 17%. Excluding the pay-down of approximately $67 million in the year of 2018 of purchased portfolio loans, including those acquired in the Merger, gross loan growth was approximately 27% for 2018.

 

Total assets were $1.1 billion at December 31, 2018 compared to $970.6 million at December 31, 2017.

 

Deposits were $842.2 million at December 31, 2018 compared to $761.8 million at December 31, 2017. Noninterest-bearing accounts comprised 13.6% of total deposits at December 31, 2018, slightly up from 13.5% at December 31, 2017.

 

Shareholders' equity was $117.5 million and $114.6 million at December 31, 2018 and December 31, 2017, respectively. 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 $7.981 and $7.711 at December 31, 2018 and December 31, 2017, respectively. Capital ratios for Virginia Commonwealth Bank and Bay Banks of Virginia, Inc. were above regulatory minimum guidelines for well-capitalized banks and bank holding companies, respectively, as of December 31, 2018 and December 31, 2017.

 

Return on average assets for the years ended December 31, 2018 and 2017 was 0.39% and (0.17)%, respectively, while return on average equity for the same periods was 3.36% and (1.58)%, respectively. Return on average assets for the fourth quarter of 2018, annualized, was 0.30% (0.44%1 excluding expenses incurred implementing the early retirement program) compared to 0.41% for the third quarter of 2018.


Asset Quality

 

Nonperforming assets were $8.8 million, or 0.81% of total assets, as of December 31, 2018, compared to $7.9 million, or 0.77% of total assets, as of September 30, 2018, and $10.8 million, or 1.12% of total assets, as of December 31, 2017. Net charge-offs to average gross loans were 0.15% and 0.17% for the years ended December 31, 2018 and 2017, respectively.

 

The ratio of allowance for loan losses to total gross loans was 0.88%, 0.85%, and 1.00% at December 31, 2018, September 30, 2018, and December 31, 2017, respectively. The company's allowance for loan losses does not include discounts recorded on acquired loans. The ratio of allowance for loan losses plus remaining discounts on acquired loans to total gross loans (adding the remaining discounts on acquired loans) was 1.31%1, 1.35%1, and 1.76%1, as of the same three period ends, respectively.

Outlook

Greene concluded: "I am optimistic moving into 2019, in spite of mixed economic headwinds. Our team is aligned. We have a three-year plan guiding us to our goals, but we are nimble and will adjust as our markets and economic conditions require. Deposit growth could slow attainment of our goals and we are sharply focused on growing them, primarily noninterest-bearing deposits.

As I reflect on 2018, I am pleased with the accomplishments of our team. This has been a building year, building of both infrastructure and talent. I believe we now have both to take our over $1 billion company to the next level. I express my thanks to our employees for what they have accomplished in 2018, to our board for their advice and counsel, to our shareholders for their continuing support, and to our customers who trust us to meet many of their financial needs every day.”

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 20 banking offices, including one production office, located throughout the greater Richmond area, the Northern Neck region, Middlesex County, the Tri-Cities area of Petersburg, Hopewell and Colonial Heights, Suffolk, and Virginia Beach, 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/regularity 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, 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

 

December 31, 2018

 

 

December 31, 2017

 

(Dollars in thousands, except share data)

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

7,685

 

 

$

9,396

 

Interest-bearing deposits

 

 

19,751

 

 

 

41,971

 

Certificates of deposit

 

 

2,976

 

 

 

3,224

 

Federal funds sold

 

 

625

 

 

 

6,961

 

Available-for-sale securities, at fair value

 

 

82,232

 

 

 

77,153

 

Restricted securities

 

 

7,600

 

 

 

5,787

 

Loans receivable, net of allowance for loan losses of $7,902 and

   $7,770, respectively

 

 

894,191

 

 

 

758,726

 

Loans held for sale

 

 

368

 

 

 

1,651

 

Premises and equipment, net

 

 

18,169

 

 

 

17,463

 

Accrued interest receivable

 

 

3,172

 

 

 

3,194

 

Other real estate owned, net

 

 

3,597

 

 

 

4,284

 

Bank owned life insurance

 

 

19,270

 

 

 

18,773

 

Goodwill

 

 

10,374

 

 

 

10,374

 

Mortgage servicing rights

 

 

977

 

 

 

999

 

Core deposit intangible

 

 

2,193

 

 

 

2,991

 

Deferred tax asset, net

 

 

1,510

 

 

 

2,342

 

Other assets

 

 

5,927

 

 

 

5,267

 

Total assets

 

$

1,080,617

 

 

$

970,556

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

114,122

 

 

$

103,037

 

Savings and interest-bearing demand deposits

 

 

359,400

 

 

 

299,820

 

Time deposits

 

 

368,670

 

 

 

358,989

 

Total deposits

 

 

842,192

 

 

 

761,846

 

 

 

 

 

 

 

 

 

 

Securities sold under repurchase agreements

 

 

6,089

 

 

 

9,498

 

Federal Home Loan Bank advances

 

 

100,000

 

 

 

70,000

 

Subordinated notes, net of unamortized issuance costs

 

 

6,893

 

 

 

6,877

 

Other liabilities

 

 

7,967

 

 

 

7,781

 

Total liabilities

 

 

963,141

 

 

 

856,002

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

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

   outstanding - 13,201,682 and 13,203,605 shares, respectively) (1)

 

 

66,008

 

 

 

66,018

 

Additional paid-in capital

 

 

36,972

 

 

 

37,142

 

Unearned employee stock ownership plan shares

 

 

(1,734

)

 

 

(1,129

)

Retained earnings

 

 

17,557

 

 

 

13,679

 

Accumulated other comprehensive loss, net

 

 

(1,327

)

 

 

(1,156

)

Total shareholders' equity

 

 

117,476

 

 

 

114,554

 

Total liabilities and shareholders' equity

 

$

1,080,617

 

 

$

970,556

 

 

(1) Preferred stock is authorized; however, none was outstanding as of December 31, 2018 and December 31, 2017.


BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

For the Three Months Ended

 

(Dollars in thousands, except per share data)

 

December 31, 2018

 

 

September 30, 2018

 

 

December 31, 2017

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

10,899

 

 

$

10,126

 

 

$

9,742

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

569

 

 

 

498

 

 

 

453

 

Tax-exempt

 

 

119

 

 

 

119

 

 

 

79

 

Federal funds sold

 

 

62

 

 

 

46

 

 

 

87

 

Interest-bearing deposit accounts

 

 

69

 

 

 

64

 

 

 

134

 

Certificates of deposit

 

 

17

 

 

 

17

 

 

 

19

 

Total interest income

 

 

11,735

 

 

 

10,870

 

 

 

10,514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

2,565

 

 

 

2,027

 

 

 

1,515

 

Securities sold under repurchase agreements

 

 

3

 

 

 

3

 

 

 

3

 

Subordinated notes

 

 

128

 

 

 

128

 

 

 

128

 

Federal Home Loan Bank advances

 

 

568

 

 

 

441

 

 

 

299

 

Total interest expense

 

 

3,264

 

 

 

2,599

 

 

 

1,945

 

Net interest income

 

 

8,471

 

 

 

8,271

 

 

 

8,569

 

Provision for loan losses

 

 

870

 

 

 

509

 

 

 

3,101

 

Net interest income after provision for loan losses

 

 

7,601

 

 

 

7,762

 

 

 

5,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Income from fiduciary activities

 

 

114

 

 

 

151

 

 

 

213

 

Service charges and fees on deposit accounts

 

 

261

 

 

 

250

 

 

 

204

 

Wealth management

 

 

284

 

 

 

144

 

 

 

70

 

Interchange fees, net

 

 

118

 

 

 

106

 

 

 

(84

)

Other service charges and fees

 

 

25

 

 

 

31

 

 

 

70

 

Secondary market sales and servicing

 

 

131

 

 

 

150

 

 

 

112

 

Increase in cash surrender value of bank owned life insurance

 

 

123

 

 

 

123

 

 

 

132

 

Net gain (loss) on disposition of other assets

 

 

11

 

 

 

51

 

 

 

(210

)

(Loss) gain on rabbi trust assets

 

 

(138

)

 

 

 

 

 

29

 

Other

 

 

75

 

 

 

(12

)

 

 

26

 

Total non-interest income

 

 

1,004

 

 

 

994

 

 

 

562

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

3,826

 

 

 

4,022

 

 

 

3,571

 

Occupancy

 

 

1,043

 

 

 

962

 

 

 

792

 

Data processing

 

 

589

 

 

 

556

 

 

 

361

 

Bank franchise tax

 

 

195

 

 

 

178

 

 

 

174

 

Telecommunications

 

 

143

 

 

 

132

 

 

 

93

 

FDIC assessments

 

 

198

 

 

 

151

 

 

 

265

 

Foreclosed property

 

 

66

 

 

 

45

 

 

 

33

 

Consulting

 

 

142

 

 

 

228

 

 

 

456

 

Advertising and marketing

 

 

92

 

 

 

126

 

 

 

437

 

Directors' fees

 

 

179

 

 

 

146

 

 

 

129

 

Audit and accounting

 

 

290

 

 

 

236

 

 

 

380

 

Legal

 

 

120

 

 

 

123

 

 

 

25

 

Merger-related

 

 

 

 

 

 

 

 

850

 

Core deposit intangible amortization

 

 

188

 

 

 

196

 

 

 

218

 

Net other real estate owned losses (gains)

 

 

62

 

 

 

(112

)

 

 

120

 

Other

 

 

802

 

 

 

543

 

 

 

129

 

Total non-interest expense

 

 

7,935

 

 

 

7,532

 

 

 

8,033

 

Income (loss) before income taxes

 

 

670

 

 

 

1,224

 

 

 

(2,003

)

Income tax (benefit) expense

 

 

(112

)

 

 

198

 

 

 

391

 

Net income (loss)

 

$

782

 

 

$

1,026

 

 

$

(2,394

)

Basic and diluted earnings (loss) per share

 

$

0.06

 

 

$

0.08

 

 

$

(0.16

)


BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data – Continued

CONSOLIDATED STATEMENTS OF OPERATIONS

 

For the Year Ended

 

 

 

December 31, 2018

 

 

December 31, 2017

 

(Dollars in thousands, except per share data)

 

(unaudited)

 

 

 

 

 

INTEREST INCOME

 

 

 

 

 

 

 

 

Loans, including fees

 

$

40,752

 

 

$

31,330

 

Securities:

 

 

 

 

 

 

 

 

Taxable

 

 

1,961

 

 

 

1,399

 

Tax-exempt

 

 

475

 

 

 

423

 

Federal funds sold

 

 

234

 

 

 

164

 

Interest-bearing deposit accounts

 

 

311

 

 

 

310

 

Certificates of deposit

 

 

70

 

 

 

74

 

Total interest income

 

 

43,803

 

 

 

33,700

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

Deposits

 

 

7,992

 

 

 

4,513

 

Federal funds purchased

 

 

 

 

 

11

 

Securities sold under repurchase agreements

 

 

13

 

 

 

15

 

Subordinated notes

 

 

513

 

 

 

482

 

Federal Home Loan Bank advances

 

 

1,707

 

 

 

980

 

Total interest expense

 

 

10,225

 

 

 

6,001

 

Net interest income

 

 

33,578

 

 

 

27,699

 

Provision for loan losses

 

 

1,351

 

 

 

4,934

 

Net interest income after provision for loan losses

 

 

32,227

 

 

 

22,765

 

 

 

 

 

 

 

 

 

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

Income from fiduciary activities

 

 

710

 

 

 

904

 

Service charges and fees on deposit accounts

 

 

768

 

 

 

900

 

Wealth management

 

 

842

 

 

 

370

 

Interchange fees, net

 

 

339

 

 

 

230

 

Other service charges and fees

 

 

116

 

 

 

145

 

Secondary market sales and servicing

 

 

659

 

 

 

469

 

Increase in cash surrender value of bank owned life insurance

 

 

497

 

 

 

473

 

Net gains on sale of available-for-sale securities

 

 

 

 

 

2

 

Net losses on disposition of other assets

 

 

(7

)

 

 

(220

)

Gain on curtailment of post-retirement benefit plan

 

 

352

 

 

 

 

(Loss) gain on rabbi trust assets

 

 

(138

)

 

 

180

 

Other

 

 

165

 

 

 

54

 

Total non-interest income

 

 

4,303

 

 

 

3,507

 

 

 

 

 

 

 

 

 

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

16,233

 

 

 

13,403

 

Occupancy

 

 

3,682

 

 

 

2,735

 

Data processing

 

 

2,531

 

 

 

1,258

 

Bank franchise tax

 

 

726

 

 

 

533

 

Telecommunications

 

 

512

 

 

 

308

 

FDIC assessments

 

 

719

 

 

 

580

 

Foreclosed property

 

 

175

 

 

 

147

 

Consulting

 

 

1,098

 

 

 

665

 

Advertising and marketing

 

 

439

 

 

 

664

 

Directors' fees

 

 

561

 

 

 

444

 

Audit and accounting

 

 

1,129

 

 

 

746

 

Legal

 

 

500

 

 

 

128

 

Merger-related

 

 

363

 

 

 

1,976

 

Core deposit intangible amortization

 

 

798

 

 

 

679

 

Net other real estate owned (gains) losses

 

 

(107

)

 

 

221

 

Other

 

 

2,760

 

 

 

2,260

 

Total non-interest expense

 

 

32,119

 

 

 

26,747

 

Income (loss) before income taxes

 

 

4,411

 

 

 

(475

)

Income tax expense

 

 

533

 

 

 

797

 

Net income (loss)

 

$

3,878

 

 

$

(1,272

)

Basic and diluted earnings (loss) per share

 

$

0.31

 

 

$

(0.14

)


BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued

 

  

 

As of and for the Three Months Ended

 

 

As of and for the Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

(Dollars in thousands, except per share amounts)

 

2018

 

 

2018

 

 

2018

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Select Consolidated Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,080,617

 

 

$

1,027,440

 

 

$

983,216

 

 

$

994,676

 

 

$

970,556

 

 

 

 

 

 

 

 

 

Cash, interest-bearing deposits and federal funds sold

 

 

28,061

 

 

 

22,713

 

 

 

38,526

 

 

 

63,696

 

 

 

58,328

 

 

 

 

 

 

 

 

 

Available-for-sale securities, at fair value

 

 

82,232

 

 

 

81,215

 

 

 

74,322

 

 

 

75,434

 

 

 

77,153

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage loans on real estate

 

 

713,997

 

 

 

682,321

 

 

 

644,202

 

 

 

624,424

 

 

 

609,637

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

164,608

 

 

 

144,118

 

 

 

124,563

 

 

 

129,225

 

 

 

114,093

 

 

 

 

 

 

 

 

 

Consumer

 

 

23,740

 

 

 

27,920

 

 

 

32,767

 

 

 

37,011

 

 

 

42,566

 

 

 

 

 

 

 

 

 

Loans receivable

 

 

902,345

 

 

 

854,359

 

 

 

801,532

 

 

 

790,660

 

 

 

766,296

 

 

 

 

 

 

 

 

 

Unamortized net deferred loan (fees) costs

 

 

(252

)

 

 

(79

)

 

 

24

 

 

 

228

 

 

 

200

 

 

 

 

 

 

 

 

 

Allowance for loan losses (ALL)

 

 

(7,902

)

 

 

(7,287

)

 

 

(7,113

)

 

 

(7,923

)

 

 

(7,770

)

 

 

 

 

 

 

 

 

Net loans

 

 

894,191

 

 

 

846,993

 

 

 

794,443

 

 

 

782,965

 

 

 

758,726

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

368

 

 

 

 

 

 

669

 

 

 

414

 

 

 

1,651

 

 

 

 

 

 

 

 

 

Other real estate owned, net

 

 

3,597

 

 

 

3,663

 

 

 

3,501

 

 

 

2,593

 

 

 

4,284

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

$

963,141

 

 

$

910,893

 

 

$

867,492

 

 

$

879,757

 

 

$

856,002

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

 

114,122

 

 

 

108,602

 

 

 

108,943

 

 

 

124,572

 

 

 

103,037

 

 

 

 

 

 

 

 

 

Savings and interest-bearing deposits

 

 

359,400

 

 

 

330,690

 

 

 

296,206

 

 

 

299,216

 

 

 

299,820

 

 

 

 

 

 

 

 

 

Time deposits

 

 

368,670

 

 

 

369,836

 

 

 

369,917

 

 

 

373,163

 

 

 

358,989

 

 

 

 

 

 

 

 

 

Total deposits

 

 

842,192

 

 

 

809,128

 

 

 

775,066

 

 

 

796,951

 

 

 

761,846

 

 

 

 

 

 

 

 

 

Securities sold under repurchase agreements

 

 

6,089

 

 

 

6,083

 

 

 

7,008

 

 

 

6,551

 

 

 

9,498

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

 

100,000

 

 

 

80,000

 

 

 

70,000

 

 

 

60,000

 

 

 

70,000

 

 

 

 

 

 

 

 

 

Subordinated notes, net of unamortized issuance costs

 

 

6,893

 

 

 

6,889

 

 

 

6,885

 

 

 

6,881

 

 

 

6,877