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Section 1: 8-K (8-K)

bayk-8k_20190930.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): October 29, 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, 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 October 29, 2019, Bay Banks of Virginia, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and year-to-date periods ended September 30, 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 October 29, 2019, announcing the Company’s financial results for the quarter and year-to-date periods ended September 30, 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

 

October 29, 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 Third Quarter and Year-to-date 2019 Results

RICHMOND, VA, October 29, 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 three and nine months ended September 30, 2019.

The company reported net income of $1.8 million, or $0.14 per diluted share, for the third quarter of 2019 compared to $1.7 million, or $0.13 per diluted share, for the second quarter of 2019 and $1.0 million, or $0.08 per diluted share, for the third quarter of 2018. For the first nine months of 2019, the company reported net income of $5.1 million, or $0.39 per diluted share, compared to $3.1 million, or $0.24 per diluted share, for the first nine months of 2018. Net income in the first nine months 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: “I am again pleased to report improved quarterly results. On a pre-tax, pre-loan loss provision basis, income increased $600 thousand1 when comparing the third quarter to the second quarter of 2019 and $1.1 million1 when comparing the third quarter of 2019 to the third quarter of 2018. In the third quarter of 2019, we continued to realize the benefit of stronger loan yields, though recent index rate declines are resulting in downward pressure on yields.

“As noted last quarter, deposit costs in our markets are stabilizing. We began to lower deposit costs late in the second quarter, and due to this and lower rates on alternative funding sources, I am pleased to report declining funding costs on a sequential quarter basis. In addition, we are experiencing some success in growing noninterest-bearing accounts, though this growth is occurring at a slower pace than we would like. We’ve had many wins, though it takes time for these accounts to fund.”

Operating Results

Third Quarter 2019 compared to Second Quarter 2019

 

Income before income taxes for the third quarter of 2019 was $2.3 million compared to $2.1 million for the second quarter of 2019.

 

Interest income for the three months ended September 30, 2019 was $12.8 million, on average interest-earning assets of $1.04 billion, compared to $12.3 million, on average interest-earning assets of $1.04 billion, for the three months ended June 30, 2019. Interest income in the third quarter of 2019 included accretion of acquired loan discounts of $357 thousand, while interest income in the second quarter of 2019 included $197 thousand of accretion of acquired loan discounts. Higher accretion in the third quarter of 2019 was primarily attributable to early payoffs of loans acquired in the Merger. Yields on average interest-earning assets were 4.87% and 4.77% for the sequential quarter periods, including the effect of accretion. Of the increase in yield from the second quarter to the third quarter of 2019, 6 basis points were attributable to higher accretion of acquired loan discounts of $160 thousand.

 

Interest expense was $3.7 million and $3.8 million for the three months ended September 30, 2019 and June 30, 2019, respectively, and cost of funds was 1.52% and 1.58% for the sequential quarter periods. Average interest-bearing liabilities were $851.4 million and $857.4 million for the third and second quarters of 2019, respectively.

 

Net interest margin (“NIM”) was 3.45% for the third quarter of 2019 compared to 3.29% for the second quarter of 2019. Of the increase in NIM from the second quarter to the third quarter of 2019, 6 basis points were attributable to higher accretion of acquired loan discounts in the third quarter of 2019.

 

Provision for loan losses was $495 thousand in the third quarter of 2019, while provision for loan losses in the second quarter of 2019 was $62 thousand. Higher provision for loan losses 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 gross loan growth of $14.4 million.

 

Noninterest income for the three months ended September 30, 2019 and June 30, 2019 was $1.2 million and $1.3 million, respectively. Lower noninterest income in the third quarter of 2019 compared to the second quarter of 2019 was primarily due to lower wealth management revenue, which decreased $77 thousand on a sequential quarter basis.

 

Noninterest expense for the three months ended September 30, 2019 and June 30, 2019 was $7.4 million and $7.6 million, respectively. Noninterest expense for the third quarter of 2019 included the benefit of a small bank assessment credit from the Federal Deposit Insurance Corporation (“FDIC”) of $171 thousand and a decrease in salaries and employee benefits expense, partially offset by a net loss on the sale and valuation of other real estate owned of $375 thousand. The company’s efficiency ratio for the third quarter of 2019 was 72.8% compared to 77.7% for the second quarter of 2019.

 

Income tax expense for the third quarter of 2019 was $448 thousand, reflective of a 19.6% effective income tax rate, while income tax expense for the second quarter of 2019 was $395 thousand, reflective of an 18.7% effective income tax rate.

 

Nine Months Ended September 30, 2019 compared to Nine Months Ended September 30, 2018

 

 

Income before income taxes for the nine months ended September 30, 2019 was $6.2 million compared to $3.7 million for the first nine months of 2018.

 

Interest income for the nine months ended September 30, 2019 was $37.4 million, on average interest-earning assets of $1.04 billion, compared to $32.1 million for the nine months ended September 30, 2018, on average interest-earning assets of $916.2 million. Interest income in the nine months ended September 30, 2019 included accretion of acquired loan discounts of $993 thousand, while interest income in the nine months ended September 30, 2018 included $1.4 million of accretion of acquired loan discounts. Yields on average interest-earning assets were 4.85% and 4.69% for the first nine months of 2019 and 2018, respectively. The higher yield on average interest-earning assets in the 2019 period was primarily due to higher loan yields, partially offset by lower accretion of acquired loan discounts of $407 thousand, which had a negative 5 basis point effect.

 

Interest expense was $11.2 million and $7.0 million for the nine months ended September 30, 2019 and 2018, respectively, and cost of funds was of 1.55% and 1.08% for the respective periods. Higher cost of funds in the nine months ended September 30, 2019 was primarily due to competition for deposits in the company’s markets, the repricing of maturing time deposits, greater use and cost of Federal Home Loan Bank of Atlanta advances, and higher interest rates in general. Average interest-bearing liabilities were $854.1 million and $752.5 million for the nine months ended September 30, 2019 and 2018, respectively.

 

NIM was 3.39% for the nine months ended September 30, 2019 compared to 3.67% for the nine months ended September 30, 2018. Lower NIM in the 2019 period was primarily due to higher cost of funds and lower accretion of acquired loan discounts, partially offset by higher loan yields. Lower accretion of acquired loan discounts had a negative 6 basis point effect on NIM in the 2019 period compared to the 2018 period.

 

Provision for loan losses was $871 thousand for the nine months ended September 30, 2019, primarily attributable to net charge-offs and additions to the specific reserve in the third quarter of 2019, noted previously, and gross loan growth of $29.7 million. Provision for loan losses in the nine months ended September 30, 2018 was $481 thousand, which 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 nine months ended September 30, 2019 and 2018 was $3.6 million and $3.3 million, respectively. The 2018 period included a gain of $352 thousand on the curtailment of the company’s post-retirement benefit plan.

 

Noninterest expense for the nine months ended September 30, 2019 and 2018 was $22.7 million and $24.2 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 nine months ended September 30, 2019 and 2018, respectively.

 

Income tax expense for the nine months ended September 30, 2019 was $1.2 million, reflective of an 18.9% effective income tax rate, while income tax expense for the nine months ended September 30, 2018 was $645 thousand, reflective of a 17.2% effective income tax rate.

Third Quarter 2019 compared to Third Quarter 2018

 

Income before income taxes for the third quarter of 2019 was $2.3 million compared to $1.2 million for the third quarter of 2018.

 

Interest income for the three months ended September 30, 2019 was $12.8 million, on average interest-earning assets of $1.04 billion, compared to $10.9 million, on average interest-earning assets of $929.1 million, for the three months ended September 30, 2018. Interest income in the third quarter of 2019 and 2018 included accretion of acquired loan discounts of

 


 

 

$357 thousand. Yields on average interest-earning assets were 4.87% and 4.66% for the third quarters of 2019 and 2018, respectively. The increase in yield on average interest-earning assets was primarily attributable to higher loan yields in the 2019 period.

 

Interest expense was $3.7 million and $2.6 million for the three months ended September 30, 2019 and 2018, respectively, and cost of funds was 1.52% and 1.19%, for the respective periods. Higher costs of funds in the 2019 period was primarily due to higher cost of deposits of 1.40% in the 2019 period compared to 1.02% in the 2018 period due to the reasons noted above. Average interest-bearing liabilities were $851.4 million and $762.0 million for the third quarters of 2019 and 2018, respectively.

 

NIM was 3.45% for the third quarter of 2019 compared to 3.57% for the third quarter of 2018. The decline in NIM was primarily attributable to higher cost of deposits, partially offset by higher loan yields in the 2019 period.

 

Provision for loan losses was $495 thousand for the three months ended September 30, 2019, primarily attributable to net charge-offs from a select portfolio of purchased consumer loans, a specific reserve for a commercial and industrial loan, and gross loan growth of $14.4 million in the third quarter of 2019. Provision for loan losses for the three months ended September 30, 2018 was $509 thousand, primarily attributable to gross loan growth of $52.7 million.

 

Noninterest income for the three months ended September 30, 2019 and 2018 was $1.2 million and $996 thousand, respectively. The increase of $204 thousand quarter over quarter was primarily attributable to higher secondary market sales and servicing income, as the company sold a greater volume of mortgages originated in the 2019 period.

 

Noninterest expense for the three months ended September 30, 2019 and 2018 was $7.4 million and $7.5 million, respectively. In the third quarter of 2019, the company received a small bank assessment credit of $171 thousand from the FDIC, as noted previously. Higher consulting, legal, and audit and accounting fees in the 2018 period were primarily related to projects, such as the implementation of an enterprise risk management platform, legal services related to the company’s employment benefit plans, and a Sarbanes-Oxley readiness assessment. Additionally, in the third quarter of 2019, the company reported a $375 thousand net loss on the sale and valuation of other real estate owned, while a net gain of $112 thousand was reported in the 2018 period. The company’s efficiency ratio for the third quarter of 2019 was 72.8% compared to 81.3% for the same quarter of 2018.

 

Income tax expense for the third quarter of 2019 and 2018 was $448 thousand and $198 thousand, respectively, reflective of a 19.6% and 16.2% effective income tax rate, respectively.

 

Balance Sheet

 

Total assets were $1.11 billion and $1.08 billion at September 30, 2019 and December 31, 2018, respectively.

 

Loans, net of allowance for loan losses, were $924.3 million at September 30, 2019 compared to $894.2 million at December 31, 2018, an annualized growth rate of over 4%. Excluding the payoff of approximately $31.8 million in the first nine months of 2019 of purchased portfolio loans, including those acquired in the Merger, loan growth, annualized, was approximately 9% for the first nine months of 2019.

 

Deposits were $893.7 million at September 30, 2019 compared to $842.2 million at December 31, 2018. Noninterest-bearing demand accounts comprised 14.0% of total deposits at September 30, 2019, up 40 basis points from 13.6% at December 31, 2018.

 

Shareholders’ equity was $124.9 million and $117.5 million at September 30, 2019 and December 31, 2018, respectively, an increase of $7.4 million. The increase in shareholders’ equity in the first nine months of 2019 was primarily attributable to net income of $5.1 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 $8.491 and $7.981 at September 30, 2019 and December 31, 2018, respectively. Capital ratios for Virginia Commonwealth Bank were above regulatory minimum guidelines for well-capitalized banks as of September 30, 2019 and December 31, 2018.

 

Annualized return on average assets for the quarters ended September 30, 2019, June 30, 2019, and September 30, 2018 was 0.66%, 0.62%, and 0.41%, respectively, while annualized return on average equity for the same periods was 5.97%, 5.72%, and 3.55%, respectively.

Asset Quality

 

Nonperforming assets were $9.4 million, or 0.84% of total assets, as of September 30, 2019, compared to $7.7 million, or 0.71% of total assets, as of June 30, 2019, and $8.8 million, or 0.81% of total assets, as of December 31, 2018. The increase in nonperforming assets as of September 30, 2019 was primarily attributable to a commercial and industrial loan participation to a professional service firm being classified as substandard and placed on nonaccrual during the third quarter of 2019. During the third quarter of 2019, the borrower announced its plan to liquidate and subsequently filed for Chapter 7 bankruptcy. The outstanding balance of the loan as of September 30, 2019 was $2.7 million. As of June 30, 2019, the outstanding balance of the loan was $5.9 million and was classified as special mention. This increase in nonperforming

 


 

 

assets in the third quarter of 2019 was partially offset by a $990 thousand reduction of other real estate owned, net, as the company continues to reduce its foreclosed properties portfolio.

 

The ratio of allowance for loan losses to total gross loans was 0.80%, 0.82%, and 0.88% at September 30, 2019, June 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 $2.9 million, $3.3 million, and $3.9 million as of September 30, 2019, June 30, 2019, and December 31, 2018, respectively.

Outlook

Greene concluded: “Our loan pipeline continues to be strong; however, the lower rate environment is resulting in some competitors offering terms with which we will not compete. Additionally, we anticipate accelerated pay-offs in this down-rate environment. We will continue our strategy of funding the highest yielding loans and emphasizing residential loan originations that can be sold in the secondary market. We will continue to walk-down deposit costs, which I expect will provide some support to our net interest margin.

“I continue to believe we are operating in two of Virginia’s strongest markets and that these markets will perform well during most market conditions. Our recent $25 million subordinated notes offering provides us with adequate capital to continue our growth strategy, funding to possibly call our existing subordinated notes, and the ability to weather any unforeseen negative market conditions. Finally, our board of directors recently approved a share repurchase program, which we will utilize as market opportunities arise.”

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)

 

September 30, 2019

 

 

December 31, 2018 (1)

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

7,419

 

 

$

7,685

 

Interest-earning deposits

 

 

23,894

 

 

 

18,981

 

Federal funds sold

 

 

92

 

 

 

625

 

Certificates of deposit

 

 

3,498

 

 

 

3,746

 

Available-for-sale securities, at fair value

 

 

80,748

 

 

 

82,232

 

Restricted securities

 

 

6,684

 

 

 

7,600

 

Loans receivable, net of allowance for loan losses of $7,495 and

   $7,902, respectively

 

 

924,268

 

 

 

894,191

 

Loans held for sale

 

 

268

 

 

 

368

 

Premises and equipment, net

 

 

20,532

 

 

 

18,169

 

Accrued interest receivable

 

 

3,104

 

 

 

3,172

 

Other real estate owned, net

 

 

2,178

 

 

 

3,597

 

Bank owned life insurance

 

 

19,632

 

 

 

19,270

 

Goodwill

 

 

10,374

 

 

 

10,374

 

Mortgage servicing rights

 

 

910

 

 

 

977

 

Core deposit intangible

 

 

1,675

 

 

 

2,193

 

Deferred tax asset, net

 

 

740

 

 

 

1,510

 

Other assets

 

 

6,203

 

 

 

5,927

 

Total assets

 

$

1,112,219

 

 

$

1,080,617

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

$

124,670

 

 

$

114,122

 

Savings and interest-bearing demand deposits

 

 

372,404

 

 

 

359,400

 

Time deposits

 

 

396,614

 

 

 

368,670

 

Total deposits

 

 

893,688

 

 

 

842,192

 

 

 

 

 

 

 

 

 

 

Securities sold under repurchase agreements

 

 

6,323

 

 

 

6,089

 

Federal Home Loan Bank advances

 

 

68,000

 

 

 

100,000

 

Subordinated notes, net of unamortized issuance costs

 

 

6,906

 

 

 

6,893

 

Other liabilities

 

 

12,445

 

 

 

7,967

 

Total liabilities

 

 

987,362

 

 

 

963,141

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

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

   outstanding - 13,334,302 and 13,201,682 shares, respectively) (2)

 

 

66,671

 

 

 

66,008

 

Additional paid-in capital

 

 

36,781

 

 

 

36,972

 

Unearned employee stock ownership plan shares

 

 

(1,593

)

 

 

(1,734

)

Retained earnings

 

 

22,658

 

 

 

17,557

 

Accumulated other comprehensive income (loss), net

 

 

340

 

 

 

(1,327

)

Total shareholders' equity

 

 

124,857

 

 

 

117,476

 

Total liabilities and shareholders' equity

 

$

1,112,219

 

 

$

1,080,617

 

 

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

(2) Preferred stock is authorized; however, none was outstanding as of September 30, 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)

 

September 30, 2019

 

 

June 30, 2019

 

 

September 30, 2018

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

11,930

 

 

$

11,458

 

 

$

10,124

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

553

 

 

 

577

 

 

 

498

 

Tax-exempt

 

 

113

 

 

 

97

 

 

 

119

 

Federal funds sold

 

 

6

 

 

 

18

 

 

 

3

 

Interest-earning deposit accounts

 

 

145

 

 

 

152

 

 

 

106

 

Certificates of deposit

 

 

18

 

 

 

19

 

 

 

18

 

Total interest income

 

 

12,765

 

 

 

12,321

 

 

 

10,868

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,123

 

 

 

3,088

 

 

 

2,027

 

Securities sold under repurchase agreements

 

 

4

 

 

 

4

 

 

 

3

 

Subordinated notes and other borrowings

 

 

142

 

 

 

138

 

 

 

128

 

Federal Home Loan Bank advances

 

 

465

 

 

 

614

 

 

 

441

 

Total interest expense

 

 

3,734

 

 

 

3,844

 

 

 

2,599

 

Net interest income

 

 

9,031

 

 

 

8,477

 

 

 

8,269

 

Provision for loan losses

 

 

495

 

 

 

62

 

 

 

509

 

Net interest income after provision for loan losses

 

 

8,536

 

 

 

8,415

 

 

 

7,760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Income from fiduciary activities

 

 

201

 

 

 

206

 

 

 

151

 

Service charges and fees on deposit accounts

 

 

243

 

 

 

246

 

 

 

251

 

Wealth management

 

 

185

 

 

 

262

 

 

 

144

 

Interchange fees, net

 

 

108

 

 

 

121

 

 

 

105

 

Other service charges and fees

 

 

32

 

 

 

27

 

 

 

30

 

Secondary market sales and servicing

 

 

293

 

 

 

267

 

 

 

152

 

Increase in cash surrender value of bank owned life insurance

 

 

122

 

 

 

121

 

 

 

123

 

Net gains (losses) on sale of available-for-sale securities

 

 

1

 

 

 

(2

)

 

 

 

Net (losses) gains on disposition of other assets

 

 

 

 

 

(1

)

 

 

51

 

Gain on rabbi trust assets

 

 

 

 

 

40

 

 

 

5

 

Other

 

 

15

 

 

 

8

 

 

 

(16

)

Total noninterest income

 

 

1,200

 

 

 

1,295

 

 

 

996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

3,666

 

 

 

3,892

 

 

 

4,022

 

Occupancy

 

 

805

 

 

 

837

 

 

 

948

 

Data processing

 

 

541

 

 

 

609

 

 

 

546

 

Bank franchise tax

 

 

209

 

 

 

230

 

 

 

178

 

Telecommunications and other technology

 

 

258

 

 

 

262

 

 

 

171

 

FDIC assessments

 

 

(7

)

 

 

162

 

 

 

151

 

Foreclosed property

 

 

48

 

 

 

19

 

 

 

45

 

Consulting

 

 

156

 

 

 

147

 

 

 

214

 

Advertising and marketing

 

 

124

 

 

 

109

 

 

 

126

 

Directors' fees

 

 

148

 

 

 

213

 

 

 

146

 

Audit and accounting

 

 

193

 

 

 

189

 

 

 

236

 

Legal

 

 

20

 

 

 

27

 

 

 

123

 

Core deposit intangible amortization

 

 

164

 

 

 

173

 

 

 

196

 

Net other real estate owned losses (gains)

 

 

375

 

 

 

72

 

 

 

(112

)

Other

 

 

747

 

 

 

651

 

 

 

542

 

Total noninterest expense

 

 

7,447

 

 

 

7,592

 

 

 

7,532

 

Income before income taxes

 

 

2,289

 

 

 

2,118

 

 

 

1,224

 

Income tax expense

 

 

448

 

 

 

395

 

 

 

198

 

Net income

 

$

1,841

 

 

$

1,723

 

 

$

1,026

 

Basic and diluted earnings per share

 

$

0.14

 

 

$

0.13

 

 

$

0.08

 

 


 

BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

For the Nine Months Ended

 

(Dollars in thousands, except per share data)

 

September 30, 2019

 

 

September 30, 2018

 

INTEREST INCOME

 

 

 

 

 

 

 

 

Loans, including fees

 

$

34,849

 

 

$

29,853

 

Securities:

 

 

 

 

 

 

 

 

Taxable

 

 

1,725

 

 

 

1,392

 

Tax-exempt

 

 

327

 

 

 

356

 

Federal funds sold

 

 

31

 

 

 

14

 

Interest-earning deposit accounts

 

 

432

 

 

 

399

 

Certificates of deposit

 

 

57

 

 

 

54

 

Total interest income

 

 

37,421

 

 

 

32,068

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

Deposits

 

 

9,019

 

 

 

5,427

 

Securities sold under repurchase agreements

 

 

11

 

 

 

10

 

Subordinated notes and other borrowings

 

 

417

 

 

 

384

 

Federal Home Loan Bank advances

 

 

1,784

 

 

 

1,140

 

Total interest expense

 

 

11,231

 

 

 

6,961

 

Net interest income

 

 

26,190

 

 

 

25,107

 

Provision for loan losses

 

 

871

 

 

 

481

 

Net interest income after provision for loan losses

 

 

25,319

 

 

 

24,626

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

Income from fiduciary activities

 

 

621

 

 

 

596

 

Service charges and fees on deposit accounts

 

 

727

 

 

 

538

 

Wealth management

 

 

654

 

 

 

558

 

Interchange fees, net

 

 

330

 

 

 

221

 

Other service charges and fees

 

 

88

 

 

 

91

 

Secondary market sales and servicing

 

 

632

 

 

 

528

 

Increase in cash surrender value of bank owned life insurance

 

 

362

 

 

 

374

 

Net losses on sale of available-for-sale securities

 

 

(1

)

 

 

 

Net losses on disposition of other assets

 

 

(2

)

 

 

(18

)

Gain (losses) on rabbi trust assets

 

 

130

 

 

 

(11

)

Gain on curtailment of post-retirement benefit plan

 

 

 

 

 

352

 

Other

 

 

44

 

 

 

101

 

Total noninterest income

 

 

3,585

 

 

 

3,330

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

11,532

 

 

 

12,407

 

Occupancy

 

 

2,510

 

 

 

2,607

 

Data processing

 

 

1,738

 

 

 

1,852

 

Bank franchise tax

 

 

655

 

 

 

531

 

Telecommunications and other technology

 

 

727

 

 

 

532

 

FDIC assessments

 

 

371

 

 

 

521

 

Foreclosed property

 

 

110

 

 

 

110

 

Consulting

 

 

418

 

 

 

937

 

Advertising and marketing

 

 

300

 

 

 

347

 

Directors' fees

 

 

525

 

 

 

382

 

Audit and accounting

 

 

586

 

 

 

839

 

Legal

 

 

130

 

 

 

380

 

Merger-related

 

 

 

 

 

363

 

Core deposit intangible amortization

 

 

517

 

 

 

610

 

Net other real estate owned losses (gains)

 

 

441

 

 

 

(169

)

Other

 

 

2,108

 

 

 

1,966

 

Total noninterest expense

 

 

22,668

 

 

 

24,215

 

Income before income taxes

 

 

6,236

 

 

 

3,741

 

Income tax expense

 

 

1,180

 

 

 

645

 

Net income

 

$

5,056

 

 

$

3,096

 

Basic and diluted earnings per share

 

$

0.39

 

 

$

0.24

 

 

 


 

BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Nine

 

 

 

As of and for the Three Months Ended

 

 

Months Ended

 

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

(Dollars in thousands, except per share amounts)

 

2019

 

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2019

 

 

2018

 

Select Consolidated Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,112,219

 

 

$

1,094,260

 

 

$

1,103,840

 

 

$

1,080,617

 

 

$

1,027,440

 

 

 

 

 

 

 

 

 

Cash, interest-earning deposits and federal funds sold

 

 

34,811

 

 

 

27,506

 

 

 

30,677

 

 

 

27,291

 

 

 

22,713

 

 

 

 

 

 

 

 

 

Available-for-sale securities, at fair value

 

 

80,748

 

 

 

81,169

 

 

 

82,030

 

 

 

82,232

 

 

 

81,215

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage loans on real estate

 

 

731,280

 

 

 

713,247

 

 

 

725,494

 

 

 

713,997

 

 

 

682,321

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

186,281

 

 

 

187,531

 

 

 

173,360

 

 

 

164,608

 

 

 

144,118

 

 

 

 

 

 

 

 

 

Consumer

 

 

14,471

 

 

 

16,889

 

 

 

20,095

 

 

 

23,740

 

 

 

27,920

 

 

 

 

 

 

 

 

 

Loans receivable

 

 

932,032

 

 

 

917,667

 

 

 

918,949

 

 

 

902,345

 

 

 

854,359

 

 

 

 

 

 

 

 

 

Unamortized net deferred loan fees

 

 

(269

)

 

 

(275

)

 

 

(329

)

 

 

(252

)

 

 

(79

)

 

 

 

 

 

 

 

 

Allowance for loan losses (ALL)

 

 

(7,495

)

 

 

(7,479

)

 

 

(7,858

)

 

 

(7,902

)

 

 

(7,287

)

 

 

 

 

 

 

 

 

Net loans

 

 

924,268

 

 

 

909,913

 

 

 

910,762

 

 

 

894,191

 

 

 

846,993

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

268

 

 

 

593

 

 

 

 

 

 

368

 

 

 

 

 

 

 

 

 

 

 

 

Other real estate owned, net

 

 

2,178

 

 

 

3,168

 

 

 

3,718

 

 

 

3,597

 

 

 

3,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

$

987,362

 

 

$

971,643

 

 

$

983,903

 

 

$

963,141

 

 

$

910,893

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

 

124,670

 

 

 

116,229

 

 

 

112,315

 

 

 

114,122

 

 

 

108,602

 

 

 

 

 

 

 

 

 

Savings and interest-bearing demand deposits

 

 

372,404

 

 

 

374,175

 

 

 

371,587

 

 

 

359,400

 

 

 

330,690

 

 

 

 

 

 

 

 

 

Time deposits

 

 

396,614

 

 

 

385,218

 

 

 

372,751

 

 

 

368,670

 

 

 

369,836

 

 

 

 

 

 

 

 

 

Total deposits

 

 

893,688

 

 

 

875,622

 

 

 

856,653

 

 

 

842,192

 

 

 

809,128

 

 

 

 

 

 

 

 

 

Securities sold under repurchase agreements

 

 

6,323

 

 

 

6,983

 

 

 

7,220

 

 

 

6,089

 

 

 

6,083

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

 

68,000

 

 

 

70,000

 

 

 

100,000

 

 

 

100,000

 

 

 

80,000

 

 

 

 

 

 

 

 

 

Subordinated notes, net of unamortized issuance costs

 

 

6,906

 

 

 

6,902

 

 

 

6,897

 

 

 

6,893

 

 

 

6,889