RICHMOND, Va., Oct. 29, 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 three and nine months ended
September 30, 2020.
On August 13, 2020, the company
and Blue Ridge Bankshares, Inc. (NYSE American: BRBS)
("Blue Ridge") jointly announced
the signing of a definitive merger agreement pursuant to which the
companies will combine in an all-stock merger (the "Merger") to
create a leading Virginia-based
community bank. Under the terms of the merger agreement,
shareholders of the company will receive 0.50 shares of Blue Ridge
common stock for each share of the company's common stock they own.
Upon completion of the Merger, the company's shareholders will own
approximately 54% and Blue Ridge
shareholders will own approximately 46% of the combined company's
stock. The Merger is subject to customary closing conditions,
including regulatory approvals and approval from the shareholders
of both companies. The company anticipates the Merger will close in
the first quarter of 2021.
The company reported net income of $1.5
million, or $0.11 per diluted
share, for the third quarter of 2020 compared to a net loss of
$8.1 million or $(0.62) per diluted share, for the second quarter
of 2020 and net income of $1.8
million, or $0.14 per diluted
share, for the third quarter of 2019. For the nine months ended
September 30, 2020, the company
reported a net loss of $6.6 million,
or $(0.51) per diluted share,
compared to net income of $5.1
million, or $0.39 per diluted
share, for the nine months ended September
30, 2019. Net loss for the nine months ended September 30, 2020 included a $10.4 million ($9.8
million after tax1), or $0.751 per diluted share, charge for
the impairment of goodwill reported in the second quarter of
2020. For the three months ended September 30, 2020, results included
approximately $1.5 million
($1.4 million after tax1),
or $0.111 per diluted
share, of expenses incurred in connection with the anticipated
Merger.
In addition to the goodwill impairment charge and Merger-related
expenses, net income (loss) for the three and nine months ended
September 30, 2020 included loan loss
provision expense of $869 thousand
and $5.7 million, respectively. A
significant portion of the provision for loan losses in 2020
relates to estimated reserve needs as a result of the COVID-19
pandemic. Excluding the $10.4 million
goodwill impairment charge and $1.5
million of Merger-related expenses, pre-tax, pre-loan loss
provision income for the third quarter of 2020 was $4.5 million1 compared to $4.1 million1 and $2.8 million1 for the second quarter
of 2020 and third quarter of 2019, respectively.
The company has actively participated in the Paycheck Protection
Program ("PPP") under the Coronavirus Aid, Relief, and Economic
Security Act, closing nearly 700 loans totaling $56.8 million and receiving $2.4 million in processing fees. Of the
processing fees received, $287
thousand and $532 thousand
were recognized in interest income in the third-quarter and
year-to-date periods ended September
30, 2020, while the remaining fees were deferred and
will be recognized over the life of the loans, accelerated for
pre-payments.
From the onset of the global pandemic, the company has
proactively addressed the needs of its commercial and individual
borrowers, modifying loans allowing for the short-term deferral of
principal payments or of principal and interest payments. The
following table presents the loan balances and number by loan type
and the percentage these loans comprise within each loan type for
modified loans as of September 30,
2020. Of the following balances, $39.5 million were to borrowers in the
hotel/motel industry, $18.6 million
were to borrowers in the restaurant and restaurant-related
industry, and $9.3 million were to
borrowers in the retail industry.
|
|
|
|
Loan
Type
|
Loan
Count
|
|
Principal Balance
(in thousands)
|
|
% of Loan
Type
|
|
|
|
|
|
Mortgage loans on
real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential first
mortgages
|
14
|
|
$
|
2,886
|
|
1%
|
|
|
|
|
|
Commercial mortgages
(non-owner occupied)
|
23
|
|
|
47,102
|
|
17%
|
|
|
|
|
|
Construction, land and
land development
|
13
|
|
|
22,879
|
|
17%
|
|
|
|
|
|
Commercial mortgages
(owner occupied)
|
17
|
|
|
10,520
|
|
14%
|
|
|
|
|
|
Residential revolving
and junior mortgages
|
1
|
|
|
257
|
|
1%
|
|
|
|
|
|
Commercial and
industrial
|
87
|
|
|
17,575
|
|
9%
|
|
|
|
|
|
Consumer
|
2
|
|
|
8
|
|
0%
|
|
|
|
|
|
Total
|
157
|
|
$
|
101,227
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randal R. Greene, President and
Chief Executive Officer, commented: "The global pandemic and
resulting government mandates have caused tremendous hardships for
families and businesses. Last quarter, I stated we'd begin in the
last half of the year to gain some clarity into the lasting impact
the COVID-19 virus may have on the financial health of our
borrowers. Our borrowers have benefited from payment deferrals and,
I'm pleased to report, many are back to paying status during the
third quarter. Even though there is some improvement, some of our
borrowers are still struggling with the extended economic downturn.
Our branch lobbies are open at this time, though branch traffic is
not at pre-pandemic levels; I believe the virus has accelerated the
adoption of digital access. In spite of these difficult times, our
employees have supported our customers, grown our loan portfolio
and deposit franchise, and driven increased operating
profitability. Excluding the effect of the unusual expense items,
the company earned $4.5
million1 on a pre-tax, pre-loan loss provision
basis, exceeding any levels earned in recent periods."
Operating Results
Third Quarter 2020 compared to Second Quarter 2020
- Income before income taxes for the third quarter of 2020 was
$2.1 million compared to a loss
before income taxes of $8.3 million
for the second quarter of 2020. Income before income taxes for the
third quarter of 2020 included $1.5
million of Merger-related expenses, while the loss before
income taxes for the second quarter of 2020 included a $10.4 million goodwill impairment charge, as
reported previously.
- Interest income for the three months ended September 30, 2020 was $12.1 million, on average interest-earning assets
of $1.19 billion, compared to
$12.0 million, on average
interest-earning assets of $1.16
billion, for the three months ended June 30, 2020. Interest income in the third and
second quarters of 2020 included accretion of acquired loan
discounts of $97 thousand and
$93 thousand, respectively. Yields on
average interest-earning assets were 4.03% and 4.17% for the third
and second quarters of 2020, respectively. Yields on average
interest-earning assets in the third quarter of 2020 were
negatively affected by lower yields on loans originated or renewed
at lower rates. PPP loans, which the company began originating
early in the second quarter of 2020, had a negative 4 and 3 basis
point effect on loan yields in the third and second quarters of
2020, respectively. Partially offsetting the decline in yield were
higher average balances of gross loans in the third quarter of 2020
of $31.8 million.
- Interest expense was $2.7 million
and $3.0 million for the three months
ended September 30, 2020 and
June 30, 2020, respectively, and cost
of funds was 0.96% and 1.12% for the sequential quarter periods.
Average interest-bearing liabilities were $925.8 million and $914.8
million for the third and second quarters of 2020,
respectively. Cost of deposits was 0.82% for the third quarter of
2020, down 15 basis points from 0.97% for the second quarter of
2020.
- Net interest margin ("NIM") was 3.14% for the third quarter of
2020 compared to 3.11% for the second quarter of 2020. The increase
in NIM was primarily attributable to lower cost of funds, including
higher average noninterest-bearing demand deposit balances,
partially offset by lower yields on interest-earning assets.
- Provision for loan losses was $869
thousand for the third quarter of 2020 compared to
$2.0 million for the second quarter
of 2020. The third quarter of 2020 provision expense was primarily
attributable to specific reserves on loans to borrowers adversely
effected by the COVID-19 pandemic. Of the second quarter of 2020
provision amount, approximately $1.4
million was attributable to qualitative loss factors to
provide for losses estimated to have been incurred as of
June 30, 2020, as a result of
challenges certain borrowers are facing due to the pandemic.
- Noninterest income for the three months ended September 30, 2020 and June 30, 2020 was $2.3
million and $2.2 million,
respectively. Secondary market sales and servicing income increased
$351 thousand in the third quarter of
2020 compared to the second quarter of 2020, driven by an increase
in the demand for purchase money and refinance mortgages and a
positive fair market value adjustment to the company's mortgage
servicing rights asset. In addition, wealth management fee income
increased $122 thousand on a
sequential quarter basis. Partially offsetting these increases was
lower referral fee income of $410
thousand in the third quarter of 2020. As previously
reported, the company earns referral fees for referring loan
customers to a third-party financial institution to execute
interest rate swaps.
- Noninterest expense for the three months ended September 30, 2020 and June 30, 2020 was $8.6
million and $17.5 million,
respectively. The third quarter of 2020 included $1.5 million of Merger-related expenses compared
to none for the second quarter of 2020, while the second quarter of
2020 included a $10.4 million
goodwill impairment charge, as previously reported. The company's
efficiency ratio was 74.1% and 156.7% for the third and second
quarters of 2020, respectively. The company's efficiency ratio
excluding Merger-related expenses and the goodwill impairment
charge was 61.6%1 and 63.6%1 for the third
and second quarters of 2020, respectively.
- Income tax expense for the third quarter of 2020 was
$655 thousand, reflective of a 30.5%
effective income tax rate, while income tax benefit for the second
quarter of 2020 was $217 thousand,
reflective of a 2.6% effective income tax rate. The effective
income tax rate in the third quarter of 2020 was higher than the
statutory federal income tax rate of 21% primarily as a result of
nondeductible Merger-related expenses. The income tax benefit in
the second quarter of 2020 was a result of income tax expense
before the goodwill impairment charge, offset by an income tax
benefit (reversal of a deferred tax liability) of $590 thousand related to a portion of the
goodwill.
Year-to-date 2020 compared to Year-to-date 2019
- Loss before income taxes for the nine months ended September 30, 2020 was $6.3 million compared to income before income
taxes of $6.2 million for the nine
months ended September 30, 2019. The
loss before income taxes for the nine months ended September 30, 2020 included a $10.4 million goodwill impairment charge recorded
in the second quarter of 2020 and $1.5
million of Merger-related expenses recorded in the third
quarter of 2020.
- Interest income for the nine months ended September 30, 2020 was $36.3 million, on average interest-earning assets
of $1.14 billion, compared to
$37.5 million for the nine months
ended September 30, 2019, on average
interest-earning assets of $1.04
billion. Interest income in the first nine months of 2020
included accretion of acquired loan discounts of $381 thousand, while interest income in the first
nine months of 2019 included $993
thousand of accretion of acquired loan discounts. Yields on
average interest-earning assets were 4.24% and 4.85% for the nine
months ended September 30, 2020 and
2019, respectively. The lower yield on average interest-earning
assets in the 2020 period was primarily due to lower yields on
loans originated during the period, the repricing of variable rate
loans, the addition of lower yielding PPP loans, which had a
negative 3 basis point effect on yield, and lower accretion of
acquired loan discounts, which had a negative 8 basis point effect
on yield. Partially offsetting these negative effects were higher
average balances of gross loans in the 2020 period of $90.9 million.
- Interest expense was $9.3 million
and $11.2 million for the nine months
ended September 30, 2020 and 2019,
respectively, and cost of funds was 1.16% and 1.55% for the
respective periods. Average balances of noninterest-bearing demand
accounts increased $50.0 million for
the 2020 period from the 2019 period. Average interest-bearing
liabilities were $904.2 million and
$854.1 million for the nine months
ended September 30, 2020 and 2019,
respectively.
- NIM was 3.15% for the first nine months of 2020 compared to
3.39% for the same period of 2019. Lower NIM in the 2020 period was
primarily due to lower yields on average interest-earning assets,
primarily loans, and lower accretion of acquired loan discounts,
partially offset by lower cost of funds.
- Provision for loan losses was $5.7
million for the first nine months of 2020 compared to
$871 thousand for the same period of
2019. Provision for loan losses in the 2020 period was primarily
attributable to qualitative loss factors for increases in state
unemployment rates, including Virginia, and for losses estimated to have
been incurred as of September 30,
2020 due to the COVID-19 pandemic, gross loan growth,
excluding PPP loans, of approximately $71.9
million, and higher specific reserves on impaired loans. The
company recorded no provision for loan losses for PPP loans due to
the U.S. government guarantee.
- Noninterest income for the nine months ended September 30, 2020 and 2019 was $5.9 million and $3.6
million, respectively. The 2020 period included higher
secondary market sales and servicing income of $1.4 million and $1.1
million of referral fee income, while the 2019 period
included no income from such activities.
- Noninterest expense for the nine months ended September 30, 2020 and 2019 were $33.4 million and $22.7
million, respectively. Excluding the goodwill impairment
charge of $10.4 million and
Merger-related expenses of $1.5
million incurred in the 2020 period, noninterest expense
decreased $1.1 million on a
comparative period basis. Decreases in certain noninterest expenses
in the 2020 period were primarily attributable to reduced headcount
and occupancy costs, resulting from temporary and permanent branch
closures, and overall general expense control.
- Income tax expense for the first nine months of 2020 was
$378 thousand, reflective of a 6.0%
effective income tax rate, while income tax expense for the first
nine months of 2019 was $1.2 million,
reflective of an 18.9% effective income tax rate. Income tax
expense for the first nine months of 2020 includes the result of
income tax expense before the goodwill impairment charge, offset by
the related deferred tax benefit, and the effect of nondeductible
Merger-related expenses, as noted previously.
Third Quarter 2020 compared to Third Quarter 2019
- Income before income taxes for the third quarter of 2020 was
$2.1 million compared to income
before income taxes of $2.3 million
for the third quarter of 2019. Income before income taxes for the
third quarter of 2020 includes $1.5
million of Merger-related expenses.
- Interest income for the three months ended September 30, 2020 was $12.1 million, on average interest-earning assets
of $1.19 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 third
quarter of 2020 included accretion of acquired loan discounts of
$97 thousand, while interest income
in the third quarter of 2019 included $357
thousand of accretion of acquired loan discounts. Yields on
average interest-earning assets were 4.03% and 4.87% for the third
quarters of 2020 and 2019, respectively. Yields on average
interest-earning assets in the third quarter of 2020 were
negatively affected by lower yields on loans originated, including
PPP loans, in 2020, the repricing of variable rate loans, and lower
accretion of acquired loan discounts, which had a negative 10 basis
point effect.
- Interest expense was $2.7 million
and $3.7 million for the three months
ended September 30, 2020 and 2019,
respectively, and cost of funds was 0.96% and 1.52% for the
respective periods. Average interest-bearing liabilities were
$925.8 million and $851.4 million for the third quarters of 2020 and
2019, respectively. Cost of deposits was 0.82% for the third
quarter of 2020, down 58 basis points from 1.40% for the third
quarter of 2019.
- NIM was 3.14% for the third quarter of 2020 compared to 3.45%
for the third quarter of 2019. The decrease in NIM was primarily
attributable to lower yields on loans, partially offset by lower
cost of funds.
- Provision for loan losses was $869
thousand in the third quarter of 2020 compared to
$495 thousand in the third quarter of
2019.
- Noninterest income for the three months ended September 30, 2020 and 2019 was $2.3 million and $1.2
million, respectively. Higher noninterest income in the 2020
period was primarily due to higher secondary market sales and
servicing income of $789 thousand and
higher wealth management fee income of $165
thousand.
- Noninterest expense for the three months ended September 30, 2020 and 2019 was $8.6 million and $7.4
million, respectively. The company's efficiency ratio was
74.1% and 72.8% for the third quarters of 2020 and 2019,
respectively. The company's efficiency ratio, excluding the
$1.5 million of Merger-related
expenses incurred in the 2020 period, was 61.6%1 and
72.8%1 for the third quarters of 2020 and 2019,
respectively.
- Income tax expense for the third quarter of 2020 was
$655 thousand, reflective of a 30.5%
effective income tax rate, due to the reasons noted previously.
Income tax expense for the third quarter of 2019 was $448 thousand, reflective of an 19.6% effective
income tax rate.
Balance
Sheet
- Total assets were $1.25 billion
and $1.13 billion at September 30, 2020 and December 31, 2019, respectively.
- Loans, net of allowance for loan losses, were $1.04 billion at September
30, 2020 compared to $916.6
million at December 31, 2019,
a $125.1 million increase, including
$56.8 million of PPP loans. Excluding
PPP loans, net loan growth for the first nine months of 2020 was
$68.3 million, an annualized rate of
approximately 10%.
- Deposits were $1.03 billion at
September 30, 2020 compared to
$910.4 million at December 31, 2019, a $117.2 million increase, including an increase of
$52.9 million of noninterest-bearing
demand account balances. Noninterest-bearing demand accounts
comprised 18.6% of total deposits at September 30, 2020, an increase from 15.2% and
13.6% at December 31, 2019 and
September 30, 2019,
respectively.
- Shareholders' equity was $121.4
million and $126.2 million at
September 30, 2020 and December 31, 2019, respectively, a decrease of
$4.8 million. The decrease in
shareholders' equity in the 2020 period was primarily attributable
to a year-to-date net loss of $6.6
million, partially offset by net unrealized gains of
approximately $1.1 million 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 $9.041 and $8.641 at September 30, 2020 and December 31, 2019, respectively.
- The company made no purchases of its common stock outstanding
in the first nine months of 2020, pursuant to a share repurchase
program authorized by its board of directors in the fourth quarter
of 2019.
- Capital ratios for Virginia Commonwealth Bank were above
regulatory minimum guidelines for well-capitalized banks as of
September 30, 2020 and December 31, 2019.
- Annualized return (loss) on average assets for the quarters
ended September 30, 2020,
June 30, 2020, and September 30, 2019 was 0.48%, (2.64)%, and 0.66%,
respectively, while annualized return (loss) on average
shareholders' equity for the same periods was 4.95%, (25.40)%, and
5.97%, respectively. Excluding the $1.5
million of Merger-related expenses reported in the third
quarter of 2020, annualized return on average assets and annualized
return on average shareholders' equity for the three months ended
September 30, 2020 were
0.93%1 and 9.64%1, respectively. Excluding
the goodwill impairment charge of $10.4
million incurred in the second quarter of 2020, annualized
return on average assets and annualized return on average
shareholders' equity for the three months ended June 30, 2020 were 0.54%1 and
5.18%1, respectively.
Asset Quality
- Nonperforming assets were $18.3
million, or 1.46% of total assets, as of September 30, 2020, compared to $6.4 million, or 0.56% of total assets, as of
December 31, 2019, and $9.4 million, or 0.84% of total assets, as of
September 30, 2019. The increase in
nonperforming assets from December 31,
2019 to September 30, 2020 was
primarily attributable to $12.7
million of higher balances of nonaccrual loans to borrowers
adversely affected by the COVID-19 pandemic.
- The ratio of allowance for loan losses to total gross loans was
1.22%, 0.82%, and 0.80% at September 30,
2020, December 31, 2019, and
September 30, 2019, respectively. Due
to the full U.S. government guarantee on PPP loans, the company has
recorded no allowance for loan losses for $56.8 million of PPP loans outstanding as of
September 30, 2020. Excluding PPP
loans from the denominator of the ratio of allowance for loan
losses to total gross results in a ratio of 1.29%1 as of
September 30, 2020. Further, the
company's allowance for loan losses does not include discounts
recorded on loans acquired in the company's 2017 merger with
Virginia BanCorp, Inc., which were $1.5
million, $1.9 million, and
$2.9 million as of September 30, 2020, December 31, 2019, and September 30 2019, respectively.
Outlook
Greene concluded: "The recent up-tick in virus cases and the
stalling of further government actions to support the economy could
further impact our borrowers' ability to satisfy their loans. These
factors and the low interest rate environment expected for several
years puts pressure on banks, such as ours. We believe the ensuing
combination with Blue Ridge,
positioning us with a larger balance sheet and a more diversified
revenue base, should be to our advantage."
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 18 banking offices, located throughout the
greater Richmond region of
Virginia, the Northern Neck region
of Virginia, Middlesex County, and the Hampton Roads region of Virginia, 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:
the effect of the COVID-19 pandemic, including its potential
adverse effect on economic conditions, and the company's employees,
customers, loan losses, and financial performance; changes in
interest rates and general economic conditions; the ability to
close the Merger on the expected terms and schedule; difficulties,
delays and unforeseen costs in completing the Merger and in
integrating the company's and Blue
Ridge's businesses; the ability to realize cost savings and
other benefits of the Merger; business disruption during the
pendency of or following the Merger; 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; and
other factors discussed in the Company's Annual Report on Form 10-K
for the year ended December 31, 2019
and other reports filed with the Securities and Exchange
Commission. 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 inquiries@baybanks.com.
1 See discussion of non-GAAP financial measures
at the end of the Supplemental Financial Data tables that
follow.
BAY BANKS OF
VIRGINIA, INC. CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
(Dollars in
thousands, except share data)
|
|
September 30,
2020
|
|
|
December 31,
2019 (1)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash and due from
banks
|
|
$
|
9,324
|
|
|
$
|
6,096
|
|
Interest-earning
deposits
|
|
|
50,069
|
|
|
|
34,358
|
|
Federal funds
sold
|
|
|
152
|
|
|
|
1,359
|
|
Certificates of
deposit
|
|
|
1,266
|
|
|
|
2,754
|
|
Available-for-sale
securities, at fair value
|
|
|
87,853
|
|
|
|
99,454
|
|
Restricted
securities
|
|
|
5,022
|
|
|
|
5,706
|
|
Loans receivable, net
of allowance for loan losses of $12,899 and
$7,562, respectively
|
|
|
1,041,711
|
|
|
|
916,628
|
|
Loans held for
sale
|
|
|
2,687
|
|
|
|
1,231
|
|
Premises and
equipment, net
|
|
|
17,859
|
|
|
|
20,141
|
|
Accrued interest
receivable
|
|
|
4,664
|
|
|
|
3,035
|
|
Other real estate
owned, net
|
|
|
1,113
|
|
|
|
1,916
|
|
Bank owned life
insurance
|
|
|
20,103
|
|
|
|
19,752
|
|
Goodwill
|
|
|
—
|
|
|
|
10,374
|
|
Mortgage servicing
rights
|
|
|
845
|
|
|
|
935
|
|
Core deposit
intangible
|
|
|
1,094
|
|
|
|
1,518
|
|
Other
assets
|
|
|
7,820
|
|
|
|
6,666
|
|
Total
assets
|
|
$
|
1,251,582
|
|
|
$
|
1,131,923
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
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|
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|
|
|
|
|
|
Noninterest-bearing
demand deposits
|
|
$
|
190,843
|
|
|
$
|
137,933
|
|
Savings and
interest-bearing demand deposits
|
|
|
424,001
|
|
|
|
382,607
|
|
Time
deposits
|
|
|
412,837
|
|
|
|
389,900
|
|
Total
deposits
|
|
|
1,027,681
|
|
|
|
910,440
|
|
|
|
|
|
|
|
|
|
|
Securities sold under
repurchase agreements
|
|
|
1,117
|
|
|
|
6,525
|
|
Federal Home Loan Bank
advances
|
|
|
25,000
|
|
|
|
45,000
|
|
Federal Reserve Bank
advances
|
|
|
32,637
|
|
|
|
—
|
|
Subordinated notes,
net of unamortized issuance costs
|
|
|
31,083
|
|
|
|
31,001
|
|
Other
liabilities
|
|
|
12,635
|
|
|
|
12,772
|
|
Total
liabilities
|
|
|
1,130,153
|
|
|
|
1,005,738
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Common stock ($5 par
value; authorized - 30,000,000 shares; outstanding - 13,342,104 and 13,261,801 shares,
respectively) (2)
|
|
|
66,711
|
|
|
|
66,309
|
|
Additional paid-in
capital
|
|
|
36,816
|
|
|
|
36,658
|
|
Unearned employee
stock ownership plan shares
|
|
|
(1,326)
|
|
|
|
(1,525)
|
|
Retained
earnings
|
|
|
18,012
|
|
|
|
24,660
|
|
Accumulated other
comprehensive income, net
|
|
|
1,216
|
|
|
|
83
|
|
Total shareholders'
equity
|
|
|
121,429
|
|
|
|
126,185
|
|
Total liabilities
and shareholders' equity
|
|
$
|
1,251,582
|
|
|
$
|
1,131,923
|
|
|
|
(1)
|
Derived from audited
December 31, 2019 Consolidated Financial Statements.
|
(2)
|
Preferred stock is
authorized; however, none was outstanding as of September 30, 2020
and December 31, 2019.
|
BAY BANKS OF
VIRGINIA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
For the Three
Months Ended
|
|
(Dollars in
thousands, except per share data)
|
|
September 30,
2020
|
|
|
June 30,
2020
|
|
|
September 30,
2019
|
|
INTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including
fees
|
|
$
|
11,371
|
|
|
$
|
11,290
|
|
|
$
|
11,930
|
|
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
596
|
|
|
|
573
|
|
|
|
553
|
|
Tax-exempt
|
|
|
88
|
|
|
|
89
|
|
|
|
113
|
|
Federal funds
sold
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
Interest-earning
deposit accounts
|
|
|
6
|
|
|
|
8
|
|
|
|
145
|
|
Certificates of
deposit
|
|
|
9
|
|
|
|
14
|
|
|
|
18
|
|
Total interest
income
|
|
|
12,070
|
|
|
|
11,974
|
|
|
|
12,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
2,104
|
|
|
|
2,411
|
|
|
|
3,123
|
|
Securities sold under
repurchase agreements
|
|
|
—
|
|
|
|
1
|
|
|
|
4
|
|
Subordinated notes
and other borrowings
|
|
|
510
|
|
|
|
510
|
|
|
|
142
|
|
Federal Home Loan
Bank advances
|
|
|
50
|
|
|
|
90
|
|
|
|
465
|
|
Federal Reserve Bank
advances
|
|
|
29
|
|
|
|
20
|
|
|
|
—
|
|
Total interest
expense
|
|
|
2,693
|
|
|
|
3,032
|
|
|
|
3,734
|
|
Net interest
income
|
|
|
9,377
|
|
|
|
8,942
|
|
|
|
9,031
|
|
Provision for loan
losses
|
|
|
869
|
|
|
|
2,027
|
|
|
|
495
|
|
Net interest income
after provision for loan losses
|
|
|
8,508
|
|
|
|
6,915
|
|
|
|
8,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust
management
|
|
|
220
|
|
|
|
203
|
|
|
|
201
|
|
Service charges and
fees on deposit accounts
|
|
|
155
|
|
|
|
137
|
|
|
|
243
|
|
Wealth
management
|
|
|
350
|
|
|
|
228
|
|
|
|
185
|
|
Interchange fees,
net
|
|
|
149
|
|
|
|
130
|
|
|
|
108
|
|
Other service charges
and fees
|
|
|
33
|
|
|
|
28
|
|
|
|
32
|
|
Secondary market
sales and servicing
|
|
|
1,082
|
|
|
|
731
|
|
|
|
293
|
|
Increase in cash
surrender value of bank owned life insurance
|
|
|
117
|
|
|
|
116
|
|
|
|
122
|
|
Net gains on sales
and calls of available-for-sale securities
|
|
|
—
|
|
|
|
3
|
|
|
|
1
|
|
Net gains on
disposition of other assets
|
|
|
12
|
|
|
|
1
|
|
|
|
—
|
|
Net gains on rabbi
trust assets
|
|
|
74
|
|
|
|
114
|
|
|
|
—
|
|
Referral
fees
|
|
|
86
|
|
|
|
496
|
|
|
|
—
|
|
Other
|
|
|
8
|
|
|
|
7
|
|
|
|
15
|
|
Total noninterest
income
|
|
|
2,286
|
|
|
|
2,194
|
|
|
|
1,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee
benefits
|
|
|
3,801
|
|
|
|
3,839
|
|
|
|
3,666
|
|
Occupancy
|
|
|
700
|
|
|
|
705
|
|
|
|
805
|
|
Data
processing
|
|
|
491
|
|
|
|
498
|
|
|
|
541
|
|
Bank franchise
tax
|
|
|
256
|
|
|
|
257
|
|
|
|
209
|
|
Telecommunications
and other technology
|
|
|
396
|
|
|
|
371
|
|
|
|
258
|
|
FDIC
assessments
|
|
|
262
|
|
|
|
147
|
|
|
|
(7)
|
|
Foreclosed
property
|
|
|
22
|
|
|
|
28
|
|
|
|
48
|
|
Consulting
|
|
|
54
|
|
|
|
70
|
|
|
|
156
|
|
Advertising and
marketing
|
|
|
47
|
|
|
|
26
|
|
|
|
124
|
|
Directors'
fees
|
|
|
187
|
|
|
|
188
|
|
|
|
148
|
|
Audit and
accounting
|
|
|
92
|
|
|
|
170
|
|
|
|
193
|
|
Legal
|
|
|
(210)
|
|
|
|
154
|
|
|
|
20
|
|
Core deposit
intangible amortization
|
|
|
134
|
|
|
|
142
|
|
|
|
164
|
|
Net other real estate
owned losses
|
|
|
176
|
|
|
|
81
|
|
|
|
375
|
|
Goodwill
impairment
|
|
|
—
|
|
|
|
10,374
|
|
|
|
—
|
|
Merger-related
|
|
|
1,456
|
|
|
|
—
|
|
|
|
—
|
|
Other
|
|
|
782
|
|
|
|
403
|
|
|
|
747
|
|
Total noninterest
expense
|
|
|
8,646
|
|
|
|
17,453
|
|
|
|
7,447
|
|
Income (loss) before
income taxes
|
|
|
2,148
|
|
|
|
(8,344)
|
|
|
|
2,289
|
|
Income tax expense
(benefit)
|
|
|
655
|
|
|
|
(217)
|
|
|
|
448
|
|
Net income
(loss)
|
|
$
|
1,493
|
|
|
$
|
(8,127)
|
|
|
$
|
1,841
|
|
Basic and diluted
earnings (loss) per share
|
|
$
|
0.11
|
|
|
$
|
(0.62)
|
|
|
$
|
0.14
|
|
BAY BANKS OF
VIRGINIA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
|
|
For the Nine
Months Ended
|
|
(Dollars in
thousands, except per share data)
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
INTEREST
INCOME
|
|
|
|
|
|
|
|
|
Loans, including
fees
|
|
$
|
34,013
|
|
|
$
|
34,849
|
|
Securities:
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
1,821
|
|
|
|
1,725
|
|
Tax-exempt
|
|
|
270
|
|
|
|
327
|
|
Federal funds
sold
|
|
|
2
|
|
|
|
31
|
|
Interest-earning
deposit accounts
|
|
|
119
|
|
|
|
432
|
|
Certificates of
deposit
|
|
|
37
|
|
|
|
57
|
|
Total interest
income
|
|
|
36,262
|
|
|
|
37,421
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
7,364
|
|
|
|
9,019
|
|
Securities sold under
repurchase agreements
|
|
|
3
|
|
|
|
11
|
|
Subordinated notes
and other borrowings
|
|
|
1,531
|
|
|
|
417
|
|
Federal Home Loan
Bank advances
|
|
|
374
|
|
|
|
1,784
|
|
Federal Reserve Bank
advances
|
|
|
49
|
|
|
|
—
|
|
Total interest
expense
|
|
|
9,321
|
|
|
|
11,231
|
|
Net interest
income
|
|
|
26,941
|
|
|
|
26,190
|
|
Provision for loan
losses
|
|
|
5,673
|
|
|
|
871
|
|
Net interest income
after provision for loan losses
|
|
|
21,268
|
|
|
|
25,319
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
Trust
management
|
|
|
615
|
|
|
|
621
|
|
Service charges and
fees on deposit accounts
|
|
|
529
|
|
|
|
727
|
|
Wealth
management
|
|
|
824
|
|
|
|
654
|
|
Interchange fees,
net
|
|
|
378
|
|
|
|
330
|
|
Other service charges
and fees
|
|
|
94
|
|
|
|
88
|
|
Secondary market
sales and servicing
|
|
|
2,015
|
|
|
|
632
|
|
Increase in cash
surrender value of bank owned life insurance
|
|
|
351
|
|
|
|
362
|
|
Net gains (losses) on
sales and calls of available-for-sale securities
|
|
|
29
|
|
|
|
(1)
|
|
Net gains (losses) on
disposition of other assets
|
|
|
5
|
|
|
|
(2)
|
|
Net (losses) gains on
rabbi trust assets
|
|
|
(76)
|
|
|
|
130
|
|
Referral
fees
|
|
|
1,052
|
|
|
|
—
|
|
Other
|
|
|
54
|
|
|
|
44
|
|
Total noninterest
income
|
|
|
5,870
|
|
|
|
3,585
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
Salaries and employee
benefits
|
|
|
11,267
|
|
|
|
11,532
|
|
Occupancy
|
|
|
2,156
|
|
|
|
2,510
|
|
Data
processing
|
|
|
1,526
|
|
|
|
1,738
|
|
Bank franchise
tax
|
|
|
770
|
|
|
|
655
|
|
Telecommunications
and other technology
|
|
|
1,176
|
|
|
|
727
|
|
FDIC
assessments
|
|
|
557
|
|
|
|
371
|
|
Foreclosed
property
|
|
|
58
|
|
|
|
110
|
|
Consulting
|
|
|
195
|
|
|
|
418
|
|
Advertising and
marketing
|
|
|
140
|
|
|
|
300
|
|
Directors'
fees
|
|
|
568
|
|
|
|
525
|
|
Audit and
accounting
|
|
|
402
|
|
|
|
586
|
|
Legal
|
|
|
135
|
|
|
|
130
|
|
Core deposit
intangible amortization
|
|
|
425
|
|
|
|
517
|
|
Net other real estate
owned losses
|
|
|
256
|
|
|
|
441
|
|
Goodwill
impairment
|
|
|
10,374
|
|
|
|
—
|
|
Merger-related
|
|
|
1,456
|
|
|
|
—
|
|
Other
|
|
|
1,947
|
|
|
|
2,108
|
|
Total noninterest
expense
|
|
|
33,408
|
|
|
|
22,668
|
|
(Loss) income before
income taxes
|
|
|
(6,270)
|
|
|
|
6,236
|
|
Income tax
expense
|
|
|
378
|
|
|
|
1,180
|
|
Net (loss)
income
|
|
$
|
(6,648)
|
|
|
$
|
5,056
|
|
Basic and diluted
(loss) earnings per share
|
|
$
|
(0.51)
|
|
|
$
|
0.39
|
|
BAY BANKS OF
VIRGINIA, INC. Supplemental Financial Data
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the
|
|
|
|
As of and for the
Three Months Ended
|
|
|
Year Ended
|
|
|
|
September 30,
|
|
|
June
30,
|
|
|
March
31,
|
|
|
December
31,
|
|
|
September 30,
|
|
|
December
31,
|
|
(Dollars in
thousands, except per share amounts)
|
|
2020
|
|
|
2020
|
|
|
2020
|
|
|
2019
|
|
|
2019
|
|
|
2019
|
|
Select
Consolidated Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
1,251,582
|
|
|
$
|
1,238,226
|
|
|
$
|
1,183,553
|
|
|
$
|
1,131,923
|
|
|
$
|
1,112,219
|
|
|
|
|
|
Cash,
interest-earning deposits and federal funds sold
|
|
|
59,545
|
|
|
|
39,912
|
|
|
|
56,006
|
|
|
|
41,813
|
|
|
|
31,405
|
|
|
|
|
|
Available-for-sale
securities, at fair value
|
|
|
87,853
|
|
|
|
92,560
|
|
|
|
94,618
|
|
|
|
99,454
|
|
|
|
80,748
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real
estate
|
|
|
806,283
|
|
|
|
798,109
|
|
|
|
762,404
|
|
|
|
730,788
|
|
|
|
731,280
|
|
|
|
|
|
Commercial and
industrial
|
|
|
187,219
|
|
|
|
193,740
|
|
|
|
198,278
|
|
|
|
181,730
|
|
|
|
186,281
|
|
|
|
|
|
Paycheck Protection
Program
|
|
|
56,788
|
|
|
|
55,496
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Consumer
|
|
|
6,443
|
|
|
|
7,855
|
|
|
|
9,846
|
|
|
|
11,985
|
|
|
|
14,471
|
|
|
|
|
|
Loans
receivable
|
|
|
1,056,733
|
|
|
|
1,055,200
|
|
|
|
970,528
|
|
|
|
924,503
|
|
|
|
932,032
|
|
|
|
|
|
Unamortized net
deferred loan fees
|
|
|
(2,123)
|
|
|
|
(2,345)
|
|
|
|
(333)
|
|
|
|
(313)
|
|
|
|
(269)
|
|
|
|
|
|
Allowance for loan
losses (ALL)
|
|
|
(12,899)
|
|
|
|
(12,007)
|
|
|
|
(10,172)
|
|
|
|
(7,562)
|
|
|
|
(7,495)
|
|
|
|
|
|
Net loans
|
|
|
1,041,711
|
|
|
|
1,040,848
|
|
|
|
960,023
|
|
|
|
916,628
|
|
|
|
924,268
|
|
|
|
|
|
Loans held for
sale
|
|
|
2,687
|
|
|
|
2,521
|
|
|
|
747
|
|
|
|
1,231
|
|
|
|
268
|
|
|
|
|
|
Other real estate
owned, net
|
|
|
1,113
|
|
|
|
1,903
|
|
|
|
1,679
|
|
|
|
1,916
|
|
|
|
2,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
$
|
1,130,153
|
|
|
$
|
1,118,536
|
|
|
$
|
1,056,151
|
|
|
$
|
1,005,738
|
|
|
$
|
987,362
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
demand deposits
|
|
|
190,843
|
|
|
|
185,201
|
|
|
|
136,437
|
|
|
|
137,933
|
|
|
|
124,670
|
|
|
|
|
|
Savings and
interest-bearing demand deposits
|
|
|
424,001
|
|
|
|
413,025
|
|
|
|
394,637
|
|
|
|
382,607
|
|
|
|
372,404
|
|
|
|
|
|
Time
deposits
|
|
|
412,837
|
|
|
|
408,672
|
|
|
|
433,393
|
|
|
|
389,900
|
|
|
|
396,614
|
|
|
|
|
|
Total
deposits
|
|
|
1,027,681
|
|
|
|
1,006,898
|
|
|
|
964,467
|
|
|
|
910,440
|
|
|
|
893,688
|
|
|
|
|
|
Securities sold under
repurchase agreements
|
|
|
1,117
|
|
|
|
1,035
|
|
|
|
3,284
|
|
|
|
6,525
|
|
|
|
6,323
|
|
|
|
|
|
Federal Home Loan
Bank advances
|
|
|
25,000
|
|
|
|
35,000
|
|
|
|
45,000
|
|
|
|
45,000
|
|
|
|
68,000
|
|
|
|
|
|
Federal Reserve Bank
advances
|
|
|
32,637
|
|
|
|
33,160
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Subordinated notes,
net of unamortized issuance costs
|
|
|
31,083
|
|
|
|
31,056
|
|
|
|
31,029
|
|
|
|
31,001
|
|
|
|
6,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
121,429
|
|
|
|
119,690
|
|
|
|
127,402
|
|
|
|
126,185
|
|
|
|
124,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
12,070
|
|
|
$
|
11,974
|
|
|
$
|
12,218
|
|
|
$
|
12,997
|
|
|
$
|
12,765
|
|
|
$
|
50,418
|
|
Interest
expense
|
|
|
2,693
|
|
|
|
3,032
|
|
|
|
3,596
|
|
|
|
3,854
|
|
|
|
3,734
|
|
|
|
15,085
|
|
Net interest
income
|
|
|
9,377
|
|
|
|
8,942
|
|
|
|
8,622
|
|
|
|
9,143
|
|
|
|
9,031
|
|
|
|
35,333
|
|
Provision for loan
losses
|
|
|
869
|
|
|
|
2,027
|
|
|
|
2,777
|
|
|
|
311
|
|
|
|
495
|
|
|
|
1,182
|
|
Noninterest
income
|
|
|
2,286
|
|
|
|
2,194
|
|
|
|
1,391
|
|
|
|
1,373
|
|
|
|
1,200
|
|
|
|
4,958
|
|
Noninterest
expense
|
|
|
8,646
|
|
|
|
17,453
|
|
|
|
7,308
|
|
|
|
7,734
|
|
|
|
7,447
|
|
|
|
30,402
|
|
Income (loss) before
income taxes
|
|
|
2,148
|
|
|
|
(8,344)
|
|
|
|
(72)
|
|
|
|
2,471
|
|
|
|
2,289
|
|
|
|
8,707
|
|
Income tax expense
(benefit)
|
|
|
655
|
|
|
|
(217)
|
|
|
|
(58)
|
|
|
|
469
|
|
|
|
448
|
|
|
|
1,649
|
|
Net income
(loss)
|
|
$
|
1,493
|
|
|
$
|
(8,127)
|
|
|
$
|
(14)
|
|
|
$
|
2,002
|
|
|
$
|
1,841
|
|
|
$
|
7,058
|
|
BAY BANKS OF
VIRGINIA, INC. Supplemental Financial Data
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the
|
|
|
|
As of and for the
Three Months Ended
|
|
|
Year Ended
|
|
|
|
September 30,
|
|
|
June
30,
|
|
|
March
31,
|
|
|
December
31,
|
|
|
September
30,
|
|
|
December
31,
|
|
(Dollars in
thousands, except per share amounts)
|
|
2020
|
|
|
2020
|
|
|
2020
|
|
|
2019
|
|
|
2019
|
|
|
2019
|
|
Basic earnings (loss)
per share
|
|
$
|
0.11
|
|
|
$
|
(0.62)
|
|
|
$
|
—
|
|
|
$
|
0.15
|
|
|
$
|
0.14
|
|
|
$
|
0.54
|
|
Diluted earnings
(loss) per share
|
|
|
0.11
|
|
|
|
(0.62)
|
|
|
|
—
|
|
|
|
0.15
|
|
|
|
0.14
|
|
|
|
0.54
|
|
Book value per
share
|
|
|
9.10
|
|
|
|
8.98
|
|
|
|
9.55
|
|
|
|
9.51
|
|
|
|
9.36
|
|
|
|
|
|
Tangible book value
per share (1)
|
|
|
9.04
|
|
|
|
8.90
|
|
|
|
8.69
|
|
|
|
8.64
|
|
|
|
8.49
|
|
|
|
|
|
Shares outstanding at
end of period
|
|
|
13,342,104
|
|
|
|
13,334,049
|
|
|
|
13,346,789
|
|
|
|
13,261,801
|
|
|
|
13,334,302
|
|
|
|
|
|
Weighted average
shares outstanding, basic
|
|
|
13,090,035
|
|
|
|
13,080,689
|
|
|
|
13,056,576
|
|
|
|
13,071,708
|
|
|
|
13,077,600
|
|
|
|
13,053,080
|
|
Weighted average
shares outstanding, diluted
|
|
|
13,137,990
|
|
|
|
13,080,689
|
|
|
|
13,056,576
|
|
|
|
13,145,522
|
|
|
|
13,132,459
|
|
|
|
13,111,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Measures and Other Metrics (tax-equivalent basis):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on average
interest-earning assets
|
|
|
4.03
|
%
|
|
|
4.17
|
%
|
|
|
4.56
|
%
|
|
|
4.87
|
%
|
|
|
4.87
|
%
|
|
|
4.85
|
%
|
Accretion of
discounts on acquired loans
|
|
$
|
97
|
|
|
$
|
93
|
|
|
$
|
189
|
|
|
$
|
929
|
|
|
$
|
357
|
|
|
$
|
1,922
|
|
Cost of
funds
|
|
|
0.96
|
%
|
|
|
1.12
|
%
|
|
|
1.44
|
%
|
|
|
1.54
|
%
|
|
|
1.52
|
%
|
|
|
1.55
|
%
|
Cost of
deposits
|
|
|
0.82
|
%
|
|
|
0.97
|
%
|
|
|
1.24
|
%
|
|
|
1.34
|
%
|
|
|
1.40
|
%
|
|
|
1.37
|
%
|
Net interest
spread
|
|
|
2.88
|
%
|
|
|
2.83
|
%
|
|
|
2.90
|
%
|
|
|
3.09
|
%
|
|
|
3.13
|
%
|
|
|
3.09
|
%
|
Net interest margin
(NIM)
|
|
|
3.14
|
%
|
|
|
3.11
|
%
|
|
|
3.22
|
%
|
|
|
3.43
|
%
|
|
|
3.45
|
%
|
|
|
3.40
|
%
|
Average
interest-earnings assets to total average assets
|
|
|
95.6
|
%
|
|
|
94.1
|
%
|
|
|
94.4
|
%
|
|
|
94.2
|
%
|
|
|
94.0
|
%
|
|
|
94.0
|
%
|
Return (loss) on
average assets (annualized)
|
|
|
0.48
|
%
|
|
|
-2.64
|
%
|
|
|
0.00
|
%
|
|
|
0.71
|
%
|
|
|
0.66
|
%
|
|
|
0.64
|
%
|
Operating return on
average assets (annualized) (1)
|
|
|
0.93
|
%
|
|
|
0.54
|
%
|
|
|
0.00
|
%
|
|
|
0.71
|
%
|
|
|
0.66
|
%
|
|
|
0.64
|
%
|
Return (loss) on
average equity (annualized)
|
|
|
4.95
|
%
|
|
|
-25.40
|
%
|
|
|
-0.04
|
%
|
|
|
6.39
|
%
|
|
|
5.97
|
%
|
|
|
5.79
|
%
|
Operating return
(loss) on average equity (annualized) (1)
|
|
|
9.64
|
%
|
|
|
5.18
|
%
|
|
|
-0.04
|
%
|
|
|
6.39
|
%
|
|
|
5.97
|
%
|
|
|
5.79
|
%
|
Efficiency
ratio
|
|
|
74.1
|
%
|
|
|
156.7
|
%
|
|
|
73.0
|
%
|
|
|
73.5
|
%
|
|
|
72.8
|
%
|
|
|
75.5
|
%
|
Operating efficiency
ratio (1)
|
|
|
61.6
|
%
|
|
|
63.6
|
%
|
|
|
73.0
|
%
|
|
|
73.5
|
%
|
|
|
72.8
|
%
|
|
|
75.5
|
%
|
Average
assets
|
|
$
|
1,246,989
|
|
|
$
|
1,230,249
|
|
|
$
|
1,143,879
|
|
|
$
|
1,126,663
|
|
|
$
|
1,109,986
|
|
|
$
|
1,107,670
|
|
Average
interest-earning assets
|
|
|
1,192,670
|
|
|
|
1,158,248
|
|
|
|
1,079,351
|
|
|
|
1,061,227
|
|
|
|
1,043,243
|
|
|
|
1,041,622
|
|
Average
interest-bearing liabilities
|
|
|
925,812
|
|
|
|
914,832
|
|
|
|
871,597
|
|
|
|
860,421
|
|
|
|
851,392
|
|
|
|
855,703
|
|
Average shareholders'
equity
|
|
|
120,570
|
|
|
|
127,960
|
|
|
|
126,955
|
|
|
|
125,285
|
|
|
|
123,399
|
|
|
|
121,859
|
|
Shareholders' equity
to total assets ratio
|
|
|
9.7
|
%
|
|
|
9.7
|
%
|
|
|
10.8
|
%
|
|
|
11.1
|
%
|
|
|
11.2
|
%
|
|
|
|
|
Tangible
shareholders' equity to tangible total assets (1)
|
|
|
9.6
|
%
|
|
|
9.6
|
%
|
|
|
9.9
|
%
|
|
|
10.2
|
%
|
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Data
and Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual
loans
|
|
$
|
17,198
|
|
|
$
|
12,279
|
|
|
$
|
5,441
|
|
|
$
|
4,476
|
|
|
$
|
7,194
|
|
|
|
|
|
Other real estate
owned, net
|
|
|
1,113
|
|
|
|
1,903
|
|
|
|
1,679
|
|
|
|
1,916
|
|
|
|
2,178
|
|
|
|
|
|
Total nonperforming
assets
|
|
|
18,311
|
|
|
|
14,182
|
|
|
|
7,120
|
|
|
|
6,392
|
|
|
|
9,372
|
|
|
|
|
|
Net charge-offs
(recoveries)
|
|
|
(23)
|
|
|
|
193
|
|
|
|
166
|
|
|
|
245
|
|
|
|
478
|
|
|
|
1,522
|
|
Net charge-offs
(recoveries) to average loans (annualized)
|
|
|
-0.01
|
%
|
|
|
0.08
|
%
|
|
|
0.07
|
%
|
|
|
0.11
|
%
|
|
|
0.21
|
%
|
|
|
0.17
|
%
|
Total nonperforming
assets to total assets
|
|
|
1.46
|
%
|
|
|
1.15
|
%
|
|
|
0.60
|
%
|
|
|
0.56
|
%
|
|
|
0.84
|
%
|
|
|
|
|
Gross loans to total
assets
|
|
|
84.3
|
%
|
|
|
85.0
|
%
|
|
|
82.0
|
%
|
|
|
81.6
|
%
|
|
|
83.8
|
%
|
|
|
|
|
ALL to gross
loans
|
|
|
1.22
|
%
|
|
|
1.14
|
%
|
|
|
1.05
|
%
|
|
|
0.82
|
%
|
|
|
0.80
|
%
|
|
|
|
|
ALL to gross loans,
excluding PPP loans (1)
|
|
|
1.29
|
%
|
|
|
1.20
|
%
|
|
|
1.05
|
%
|
|
|
0.82
|
%
|
|
|
0.80
|
%
|
|
|
|
|
Discounts on acquired
loans
|
|
$
|
1,523
|
|
|
$
|
1,640
|
|
|
$
|
1,750
|
|
|
$
|
1,935
|
|
|
$
|
2,886
|
|
|
|
|
|
|
|
(1)
|
Non-GAAP financial
measure. See GAAP to Non-GAAP financial measure
reconciliation at the end of the Supplemental Financial Data tables
that follow.
|
BAY BANKS OF
VIRGINIA, INC. Supplemental Financial Data
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the
|
|
|
|
As of and for the
Three Months Ended
|
|
|
Year Ended
|
|
|
|
September 30,
|
|
|
June
30,
|
|
|
March
31,
|
|
|
December
31,
|
|
|
September 30,
|
|
|
December
31,
|
|
(Dollars in thousands, except per share amounts)
|
|
2020
|
|
|
2020
|
|
|
2020
|
|
|
2019
|
|
|
2019
|
|
|
2019
|
|
Reconciliation of
Non-GAAP Financial Measures (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book
value per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders'
equity
|
|
$
|
121,429
|
|
|
$
|
119,690
|
|
|
$
|
127,402
|
|
|
$
|
126,185
|
|
|
$
|
124,857
|
|
|
|
|
|
Less: intangible
assets, net of deferred tax liability on core deposit intangible
(a)(b)
|
|
|
864
|
|
|
|
970
|
|
|
|
11,456
|
|
|
|
11,573
|
|
|
|
11,697
|
|
|
|
|
|
Tangible
shareholders' equity
|
|
$
|
120,565
|
|
|
$
|
118,720
|
|
|
$
|
115,946
|
|
|
$
|
114,612
|
|
|
$
|
113,160
|
|
|
|
|
|
Shares outstanding at
end of period
|
|
|
13,342,104
|
|
|
|
13,334,049
|
|
|
|
13,346,789
|
|
|
|
13,261,801
|
|
|
|
13,334,302
|
|
|
|
|
|
Tangible book value
per share
|
|
$
|
9.04
|
|
|
$
|
8.90
|
|
|
$
|
8.69
|
|
|
$
|
8.64
|
|
|
$
|
8.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible
shareholders' equity to tangible total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
1,251,582
|
|
|
$
|
1,238,226
|
|
|
$
|
1,183,553
|
|
|
$
|
1,131,923
|
|
|
$
|
1,112,219
|
|
|
|
|
|
Less: intangible
assets, net of deferred tax liability on core deposit intangible
(a)(b)
|
|
|
864
|
|
|
|
970
|
|
|
|
11,456
|
|
|
|
11,573
|
|
|
|
11,697
|
|
|
|
|
|
Tangible total
assets
|
|
$
|
1,250,718
|
|
|
$
|
1,237,256
|
|
|
$
|
1,172,097
|
|
|
$
|
1,120,350
|
|
|
$
|
1,100,522
|
|
|
|
|
|
Tangible
shareholders' equity
|
|
$
|
120,565
|
|
|
$
|
118,720
|
|
|
$
|
115,946
|
|
|
$
|
114,612
|
|
|
$
|
113,160
|
|
|
|
|
|
Tangible
shareholders' equity to tangible total assets
|
|
|
9.6
|
%
|
|
|
9.6
|
%
|
|
|
9.9
|
%
|
|
|
10.2
|
%
|
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses to gross loans, excluding PPP loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
loans
|
|
$
|
1,054,610
|
|
|
$
|
1,052,855
|
|
|
$
|
970,195
|
|
|
$
|
924,190
|
|
|
$
|
931,763
|
|
|
|
|
|
Less: PPP
loans
|
|
|
56,788
|
|
|
|
55,496
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Gross loans excluding
PPP loans
|
|
$
|
997,822
|
|
|
$
|
997,359
|
|
|
$
|
970,195
|
|
|
$
|
924,190
|
|
|
$
|
931,763
|
|
|
|
|
|
Allowance for loan
losses
|
|
$
|
12,899
|
|
|
$
|
12,007
|
|
|
$
|
12,007
|
|
|
$
|
7,562
|
|
|
$
|
7,495
|
|
|
|
|
|
Allowance for loan
losses to gross loans, excluding PPP loans
|
|
|
1.29
|
%
|
|
|
1.20
|
%
|
|
|
1.05
|
%
|
|
|
0.82
|
%
|
|
|
0.80
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select noninterest
expenses, after-tax basis (ATB)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
impairment
|
|
$
|
—
|
|
|
$
|
10,374
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Goodwill impairment,
ATB (b)(c)
|
|
|
—
|
|
|
|
9,784
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Merger-related
expenses (MRE)
|
|
|
1,456
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
MRE, ATB
(b)(d)
|
|
|
1,412
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Weighted average
shares outstanding year-to-date, diluted
|
|
|
13,075,761
|
|
|
|
13,068,598
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Goodwill impairment
and MRE, ATB effect on earnings (loss) per diluted share
|
|
$
|
(0.11)
|
|
|
$
|
(0.75)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating return
on average assets (annualized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
1,493
|
|
|
$
|
(8,127)
|
|
|
$
|
(14)
|
|
|
$
|
2,002
|
|
|
$
|
1,841
|
|
|
$
|
7,058
|
|
Add: Goodwill
impairment, ATB
|
|
|
—
|
|
|
|
9,784
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Add: MRE,
ATB
|
|
|
1,412
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Operating net income
(loss)
|
|
$
|
2,905
|
|
|
$
|
1,657
|
|
|
$
|
(14)
|
|
|
$
|
2,002
|
|
|
$
|
1,841
|
|
|
$
|
7,058
|
|
Average
assets
|
|
$
|
1,246,989
|
|
|
$
|
1,230,249
|
|
|
$
|
1,143,879
|
|
|
$
|
1,126,663
|
|
|
$
|
1,109,986
|
|
|
$
|
1,107,670
|
|
Operating return on
average assets (annualized)
|
|
|
0.93
|
%
|
|
|
0.54
|
%
|
|
|
0.00
|
%
|
|
|
0.71
|
%
|
|
|
0.66
|
%
|
|
|
0.64
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating return
(loss) on average equity (annualized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
1,493
|
|
|
$
|
(8,127)
|
|
|
$
|
(14)
|
|
|
$
|
2,002
|
|
|
$
|
1,841
|
|
|
$
|
7,058
|
|
Add: Goodwill
impairment, ATB
|
|
|
—
|
|
|
|
9,784
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Add: MRE,
ATB
|
|
|
1,412
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Operating net income
(loss)
|
|
$
|
2,905
|
|
|
$
|
1,657
|
|
|
$
|
(14)
|
|
|
$
|
2,002
|
|
|
$
|
1,841
|
|
|
$
|
7,058
|
|
Average shareholders'
equity
|
|
$
|
120,570
|
|
|
$
|
127,960
|
|
|
$
|
126,955
|
|
|
$
|
125,285
|
|
|
$
|
123,399
|
|
|
$
|
121,859
|
|
Operating return
(loss) on average equity (annualized)
|
|
|
9.64
|
%
|
|
|
5.18
|
%
|
|
|
-0.04
|
%
|
|
|
6.39
|
%
|
|
|
5.97
|
%
|
|
|
5.79
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
efficiency ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest
expense
|
|
$
|
8,646
|
|
|
$
|
17,453
|
|
|
$
|
7,308
|
|
|
$
|
7,734
|
|
|
$
|
7,447
|
|
|
$
|
30,402
|
|
Less: Goodwill
impairment
|
|
|
—
|
|
|
|
10,374
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Less: MRE
|
|
|
1,456
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Operating noninterest
expense
|
|
|
7,190
|
|
|
|
7,079
|
|
|
|
7,308
|
|
|
|
7,734
|
|
|
|
7,447
|
|
|
|
30,402
|
|
Net interest
income
|
|
|
9,377
|
|
|
|
8,942
|
|
|
|
8,622
|
|
|
|
9,143
|
|
|
|
9,031
|
|
|
|
35,333
|
|
Noninterest
income
|
|
|
2,286
|
|
|
|
2,194
|
|
|
|
1,391
|
|
|
|
1,373
|
|
|
|
1,200
|
|
|
|
4,958
|
|
Operating efficiency
ratio
|
|
|
61.6
|
%
|
|
|
63.6
|
%
|
|
|
73.0
|
%
|
|
|
73.5
|
%
|
|
|
72.8
|
%
|
|
|
75.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax, pre-loan
loss provision income, excluding goodwill impairment and
MRE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
1,493
|
|
|
$
|
(8,127)
|
|
|
$
|
(14)
|
|
|
$
|
2,002
|
|
|
$
|
1,841
|
|
|
$
|
7,058
|
|
Add: Income tax
expense (benefit)
|
|
|
655
|
|
|
|
(217)
|
|
|
|
(58)
|
|
|
|
469
|
|
|
|
448
|
|
|
|
1,649
|
|
Add: Provision for
loan losses
|
|
|
869
|
|
|
|
2,027
|
|
|
|
2,777
|
|
|
|
311
|
|
|
|
495
|
|
|
|
1,182
|
|
Add: Goodwill
impairment
|
|
|
—
|
|
|
|
10,374
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Add: MRE
|
|
|
1,456
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Pre-tax, pre-loan
loss provision income, excluding goodwill impairment and
MRE
|
|
$
|
4,473
|
|
|
$
|
4,057
|
|
|
$
|
2,705
|
|
|
$
|
2,782
|
|
|
$
|
2,784
|
|
|
$
|
9,889
|
|
|
(a) Excludes
mortgage servicing rights.
|
(b) Assumes a
federal income tax rate of 21%.
|
(c) $7.6
million of the $10.4 million goodwill charged-off in the second
quarter of 2020 originated as a result of the company's tax-free
merger with Virginia BanCorp, Inc. in 2017 and is nondeductible for
federal income tax purposes. The remaining $2.8 million of goodwill
originated from branch acquisitions from 1994-2000, the basis of
which had been fully amortized for income tax purposes, resulting
in a deferred tax liability. Due to the goodwill impairment charge,
the company recorded an income tax benefit (and reversal of the
deferred tax liability) of approximately $590 thousand in the
second quarter of 2020.
|
(d) Of the
$1,456 thousand of Merger-related expenses incurred in the third
quarter of 2020, the company has determined, at this time, that
$1,246 thousand is nondeductible for federal income tax
purposes.
|
|
|
|
(1) Set forth above
are calculations of each of the non-GAAP (generally accepted
accounting principles) financial measures included in the
Supplemental Financial Data tables. Tangible book value per share,
tangible shareholders' equity to tangible total assets ratio,
allowance for loan losses to gross loans, excluding PPP loans,
select noninterest expenses on an after-tax basis, operating return
on average assets, operating efficiency ratio, and pre-tax,
pre-loan loss provision income are supplemental financial measures
that are not required nor presented in accordance with GAAP.
Management believes tangible book value per share and tangible
shareholders' equity to tangible total assets ratios are meaningful
because they are measures management uses to assess capital levels.
Management believes the ratio of allowance for loan losses to gross
loans, excluding PPP loans, is meaningful because management uses
it to assess allowance levels excluding the impact of PPP loans
which carry no allowance for loan losses due to the full U.S.
government guarantee. Management believes that select noninterest
expenses on an after-tax basis, operating return on average assets,
operating efficiency ratios, and pre-tax, pre-loan loss provision
income, excluding goodwill impairment and Merger-related expenses
are meaningful because management uses them to assess the financial
performance of the company. Calculations of these non-GAAP
financial measures may not be comparable to the calculation of
similarly titled measures reported by other companies.
|
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SOURCE Bay Banks of Virginia,
Inc.