Bay Banks of Virginia, Inc. Reports First Quarter 2019 Results

RICHMOND, Va., April 30, 2019 /PRNewswire/ -- Bay Banks of Virginia, Inc. BAYK, holding company of Virginia Commonwealth Bank and VCB Financial Group, Inc., announced financial results for the first quarter ended March 31, 2019.

Bay Banks of Virginia Logo

The company reported net income of $1.5 million, or $0.11 per diluted share, for the first quarter of 2019 compared to $782 thousand, or $0.06 per diluted share, for the fourth quarter of 2018 and $1.1 million, or $0.09 per diluted share, for the first quarter of 2018. Net income for the fourth quarter of 2018 included $483 thousand ($382 thousand1 after income tax) of expenses incurred in connection with the company's previously announced early retirement program. Net income in the first quarter of 2018 included $363 thousand ($287 thousand1 after income tax) of merger-related expenses in connection with the company's merger with Virginia BanCorp, Inc. on April 1, 2017 (the "Merger"). Costs associated with the succession of the company's CFO and costs related to fees incurred relating to the completion of the company's 2017 year-end financial reporting in the first quarter of 2018 totaled approximately $1.0 million.

Randal R. Greene, President and Chief Executive Officer, commented: "I am pleased to report improved first quarter 2019 results, which reflect the strongest quarterly earnings reported since the Merger. Our results reflect an intentional slowing of loan growth as we exercise a disciplined approach of investing our liquidity in higher yielding loans. Growing deposits, particularly noninterest-bearing accounts, continues to be challenging in a fiercely competitive environment and our deposit costs continue to increase due to both this competition and the natural repricing of our maturing time deposits. In the first quarter of 2019, higher loan yields contributed to some stability in our net interest margin, when excluding accretion of loan discounts. Also, in the first quarter of 2019, we completed the closure of our Hopewell, Virginia branch, as planned."

Operating Results

First Quarter 2019 compared to Fourth Quarter 2018

  • Income before income taxes for the first quarter of 2019 was $1.8 million compared to $670 thousand for the fourth quarter of 2018. Income before income taxes, excluding the costs incurred to implement the company's early retirement program, was $1.2 million1 for the fourth quarter of 2018.
  • Interest income for the three months ended March 31, 2019 was $12.3 million, on average interest-earning assets of $1.0 billion, compared to $11.7 million on average interest-earning assets of $989.3 million for the three months ended December 31, 2018. Interest income in the first quarter of 2019 included accretion of acquired loan discounts of $439 thousand, while interest income in the fourth quarter of 2018 included $352 thousand of accretion of acquired loan discounts. Yields on average interest-earning assets were 4.90% and 4.72% for the linked quarter periods.
  • Interest expense was $3.7 million and $3.3 million for the three months ended March 31, 2019 and December 31, 2018, respectively, and cost of funds was 1.54% and 1.40% for the linked quarter periods. Average interest-bearing liabilities were $853.6 million and $817.3 million for the first and fourth quarters of 2019 and 2018, respectively. Higher funding costs in the first quarter of 2019 was primarily due to competition for deposits in the company's markets, higher interest rates in general, and the repricing of maturing time deposits.
  • Net interest margin ("NIM") was 3.45% for the first quarter of 2019 compared to 3.41% for the fourth quarter of 2018. NIM excluding accretion of acquired loan discounts and amortization of fair value marks on acquired time deposits ("Core NIM") for the first quarter of 2019 was 3.26%1 compared to 3.25%1 for the fourth quarter of 2018.
  • Provision for loan losses was $314 thousand in the first quarter of 2019, while provision for loan losses in the fourth quarter of 2018 was $870 thousand. Provision for loan losses in both periods was primarily attributable to loan growth of $16.5 million and $48.0 million for the first quarter of 2019 and the fourth quarter of 2018, respectively.
  • Noninterest income for the three months ended March 31, 2019 and December 31, 2018 was $1.1 million and $1.0 million, respectively. Wealth management and secondary market sales and servicing income were higher in the fourth quarter of 2018 compared to the first quarter of 2019 by $78 thousand and $60 thousand, respectively, offset by a $138 thousand loss in the fourth quarter of 2018 on rabbi trust assets associated with the company's deferred compensation plan.
  • Noninterest expenses for the three months ended March 31, 2019 and December 31, 2018 were $7.6 million and $7.9 million, respectively. Noninterest expenses for the fourth quarter of 2018 included $483 thousand incurred to implement the company's early retirement program. Additionally, fourth quarter of 2018 noninterest expenses included the reversal of approximately $300 thousand of costs related to certain management incentives, as the basis for these were not met. The company's efficiency ratio for the three months ended March 31, 2019 was 78.1% compared to 83.7% (78.6%1 excluding expenses incurred to implement the early retirement program) for the three months ended December 31, 2018.
  • Income tax expense in the first quarter of 2019 was $337 thousand, reflective of an 18.4% effective income tax rate, while income tax expense for the fourth quarter of 2018 was a benefit of $112 thousand. The income tax benefit was primarily attributable to higher than estimated tax deductions reported in the company's 2017 federal income tax return at the higher 2017 corporate tax rate and a lower effective income tax rate for the full year of 2018 than was recorded for the 2018 period through the third quarter of 2018.

First Quarter 2019 compared to First Quarter 2018

  • Income before income taxes for the first quarter of 2019 was $1.8 million compared to $1.4 million for the first quarter of 2018.
  • Interest income for the three months ended March 31, 2019 was $12.3 million, on average interest-earning assets of $1.0 billion, compared to $10.7 million on average interest-earning assets of $905.0 million for the three months ended March 31, 2018. Interest income in the first quarter of 2019 included accretion of acquired loan discounts of $439 thousand, while interest income in the first quarter of 2018 included $503 thousand of accretion of acquired loan discounts and approximately $330 thousand of additional fee income and other adjustments, a portion of which was reversed in the second quarter of 2018. Yields on average interest-earning assets were 4.90% and 4.74% for the first quarters of 2019 and 2018, respectively.
  • Interest expense was $3.7 million and $2.0 million for the three months ended March 31, 2019 and 2018, respectively, and the cost of funds was 1.54% and 0.95% for the quarter-over-quarter periods. Higher funding costs in the 2019 period was primarily due to higher cost of deposits, as noted above, and greater use of FHLB borrowings. Average interest-bearing liabilities were $853.6 million and $747.8 million for the first quarters of 2019 and 2018, respectively.
  • NIM was 3.45% for the first quarter of 2019 compared to 3.83% for the first quarter of 2018. Core NIM for the first quarter of 2019 was 3.26%1 compared to 3.58%1 for the same quarter of 2018. The decline in Core NIM was primarily attributable to higher cost of funds (59 basis points), partially offset by higher yields on interest-earning assets (16 basis points). The effect of the interest income adjustments, noted above, on NIM in the first quarter of 2018 was approximately 14 basis points.
  • Provision for loan losses was $314 thousand for the first quarter of 2019, while provision for loan losses in the first quarter of 2018 was $320 thousand.
  • Noninterest income for the first quarters of 2019 and 2018 was $1.1 million and $1.2 million, respectively. Contributing to higher noninterest income in the 2018 period was a gain on the curtailment of the company's post-retirement benefit plan of $352 thousand. Partially offsetting this gain in the first quarter of 2018 was higher service charges and fees on deposit accounts and interchange fee income, net, in the first quarter of 2019 of $103 thousand and $109 thousand, respectively.
  • Noninterest expenses for the first quarters of 2019 and 2018 were $7.6 million and $8.1 million, respectively. Noninterest expenses in the first quarter of 2018 included $363 thousand of merger-related expenses, while there were no merger-related expenses in the first quarter of 2019. Costs associated with the succession of the company's CFO and costs related to fees incurred in the first quarter of 2018 in the completion of the company's 2017 year-end financial reporting totaled approximately $1.0 million. First quarter of 2019 noninterest expenses compared to the same period of 2018, excluding these items, were higher due to the company's expansion into the Virginia Beach market, expansion of VCB Financial Group in the Richmond, Virginia market, and costs for general infrastructure to support the company's growing operations. Additionally, the first quarter of 2018 included a net gain on the sale of other real estate owned of $141 thousand compared to a $6 thousand gain in the first quarter of 2019. The company's efficiency ratio for the first quarter of 2019 was 78.1% compared to 82.7% for the same quarter of 2018 (79.0%1 excluding merger-related expenses).
  • Income tax expense in the first quarter of 2019 and 2018 was $337 thousand and $250 thousand, respectively, reflective of an 18.4% and 18.2% effective income tax rate, respectively.

Balance Sheet

  • Loans, net of allowance for loan losses, were $910.8 million at March 31, 2019 compared to $894.2 million at December 31, 2018, an annualized growth rate of over 7%. Excluding the pay-down of approximately $16.4 million in the first quarter of 2019 of purchased portfolio loans, including those acquired in the Merger, loan growth, annualized, was approximately 14.5% for the first quarter ended March 31, 2019.
  • Total assets were $1.1 billion at March 31, 2019 and at December 31, 2018.
  • Deposits were $856.7 million at March 31, 2019 compared to $842.2 million at December 31, 2018. Noninterest-bearing accounts comprised 13.1% of total deposits at March 31, 2019, down slightly from 13.6% at December 31, 2018.
  • Shareholders' equity was $119.9 million and $117.5 million at March 31, 2019 and December 31, 2018, respectively, an increase of $2.5 million. The increase in shareholders' equity in the first quarter of 2019 was primarily attributable to net income of $1.5 million and $806 thousand of unrealized gains on the company's available-for-sale securities portfolio due to declining long-term interest rates. 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 $8.111 and $7.981 at March 31, 2019 and December 31, 2018, respectively. Capital ratios for Virginia Commonwealth Bank were above regulatory minimum guidelines for well-capitalized banks as of March 31, 2019 and December 31, 2018.
  • Annualized return on average assets for the quarters ended March 31, 2019, December 31, 2018, and March 31, 2018 was 0.55%, 0.30%, and 0.46%, respectively, while annualized return on average equity for the same periods was 5.05%, 2.69%, and 3.92%, respectively. Annualized operating return on average assets, which excludes expenses incurred implementing the early retirement program and merger-related expenses, for the quarters ended March 31, 2019, December 31, 2018, and March 31, 2018 was 0.55%1, 0.44%1, and 0.57%1, respectively.

Asset Quality

  • Nonperforming assets were $9.1 million, or 0.82% of total assets, as of March 31, 2019, compared to $8.8 million, or 0.81% of total assets, as of December 31, 2018, and $9.5 million, or 0.95% of total assets, as of March 31, 2018.
  • The ratio of allowance for loan losses to total gross loans was 0.86%, 0.88%, and 1.00% at March 31, 2019, December 31, 2018, and March 31, 2018, respectively. The company's allowance for loan losses does not include discounts recorded on acquired loans. The ratio of allowance for loan losses plus remaining discounts on acquired loans to total gross loans (adding the remaining discounts on acquired loans) was 1.23%1, 1.31%1, and 1.65%1, as of the same three period ends, respectively.

Outlook

Greene concluded: "As noted, we expect to slow 2019 loan growth when compared to 2018 to preserve liquidity for higher yielding loans. In particular, we will place a greater emphasis on residential loan originations that can be sold in the secondary market. Secondary market sales are an important source of fee income and allow us to avoid higher incremental funding costs. We've also restructured our residential lending group to align with this shift. We are addressing deposit growth on a number of fronts; we have dedicated deposit managers and have in place 2019 incentive plans for our lenders that are heavily weighted on noninterest-bearing account generation.

"Additionally, we continue to evaluate the transaction activity in our branches. To align staffing with the needs of our customers, we recently moved to staffing certain of our branches with part-time personnel. We believe this model will allow us to operate more efficiently, while continuing to provide our customers with the quality service they expect. The changes in our retail staffing and residential lending group should result in annualized savings of approximately $400,000, which we expect to begin to realize in the second quarter of 2019."

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 production office, located throughout the greater Richmond area, the Northern Neck region, Middlesex County, the Tri-Cities area of Petersburg, Hopewell and Colonial Heights, Suffolk, and Virginia Beach, the bank serves businesses, professionals, and consumers with a wide variety of financial services, including retail and commercial banking, and mortgage banking. VCB Financial Group provides management services for personal and corporate trusts, including estate planning, estate settlement and trust administration, and investment and wealth management services.

Caution About Forward-Looking Statements

This press release contains statements concerning the company's expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements may constitute "forward-looking statements" as defined by federal securities laws. These statements may address issues that involve estimates and assumptions made by management, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the company include, but are not limited to: changes in interest rates and general economic conditions; the legislative/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 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.

Supplemental Financial Data

CONSOLIDATED BALANCE SHEETS







March 31, 2019





December 31, 2018 (1)



(Dollars in thousands, except share data)



(unaudited)











ASSETS

















Cash and due from banks



$

7,404





$

7,685



Interest-earning deposits





23,091







18,891



Certificates of deposit





3,746







3,746



Federal funds sold





182







625



Available-for-sale securities, at fair value





82,030







82,232



Restricted securities





7,804







7,600



Loans receivable, net of allowance for loan losses of $7,858 and

   $7,902, respectively





910,762







894,191



Loans held for sale











368



Premises and equipment, net





21,822







18,169



Accrued interest receivable





3,274







3,172



Other real estate owned, net





3,718







3,597



Bank owned life insurance





19,390







19,270



Goodwill





10,374







10,374



Mortgage servicing rights





923







977



Core deposit intangible





2,013







2,193



Deferred tax asset, net





1,295







1,510



Other assets





6,012







5,927



Total assets



$

1,103,840





$

1,080,617





















LIABILITIES

















Noninterest-bearing demand deposits



$

112,315





$

114,122



Savings and interest-bearing demand deposits





371,587







359,400



Time deposits





372,751







368,670



Total deposits





856,653







842,192





















Securities sold under repurchase agreements





7,220







6,089



Federal Home Loan Bank advances





100,000







100,000



Subordinated notes, net of unamortized issuance costs





6,897







6,893



Other liabilities





13,133







7,967



Total liabilities





983,903







963,141





















SHAREHOLDERS' EQUITY

















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

   outstanding - 13,313,537 and 13,201,682 shares, respectively) (2)





66,568







66,008



Additional paid-in capital





36,493







36,972



Unearned employee stock ownership plan shares





(1,697)







(1,734)



Retained earnings





19,094







17,557



Accumulated other comprehensive loss, net





(521)







(1,327)



Total shareholders' equity





119,937







117,476



Total liabilities and shareholders' equity



$

1,103,840





$

1,080,617





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

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

 

 

BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued

CONSOLIDATED STATEMENTS OF OPERATIONS







For the Three Months Ended



(Dollars in thousands, except per share data)



March 31, 2019





December 31, 2018





March 31, 2018



INTEREST INCOME

























Loans, including fees



$

11,461





$

10,899





$

9,984



Securities:

























Taxable





595







569







397



Tax-exempt





118







119







120



Federal funds sold





56







62







74



Interest-bearing deposit accounts





86







69







98



Certificates of deposit





20







17







19



Total interest income





12,336







11,735







10,692





























INTEREST EXPENSE

























Deposits





2,809







2,565







1,604



Securities sold under repurchase agreements





3







3







3



Subordinated notes and other borrowings





137







128







128



Federal Home Loan Bank advances





704







568







313



Total interest expense





3,653







3,264







2,048



Net interest income





8,683







8,471







8,644



Provision for loan losses





314







870







320



Net interest income after provision for loan losses





8,369







7,601







8,324





























NONINTEREST INCOME

























Income from fiduciary activities





214







114







247



Service charges and fees on deposit accounts





238







261







135



Wealth management





206







284







132



Interchange fees, net





101







118







(8)



Other service charges and fees





29







25







30



Secondary market sales and servicing





71







131







133



Increase in cash surrender value of bank owned life insurance





120







123







127



Net (loss) gain on disposition of other assets





(1)







11







(69)



Gain (loss) on rabbi trust assets





90







(138)







(52)



Gain on curtailment of post-retirement benefit plan

















352



Other





22







75







143



Total noninterest income





1,090







1,004







1,170





























NONINTEREST EXPENSE

























Salaries and employee benefits





4,001







3,826







4,106



Occupancy





868







1,015







785



Data processing





588







581







472



Bank franchise tax





216







195







176



Telecommunications and other technology





207







212







195



FDIC assessments





216







198







183



Foreclosed property





43







66







12



Consulting





115







133







382



Advertising and marketing





67







92







68



Directors' fees





164







179







168



Audit and accounting





204







290







363



Legal





83







120







133



Merger-related

















363



Core deposit intangible amortization





180







188







211



Net other real estate owned (gains) losses





(6)







62







(141)



Other





684







778







644



Total noninterest expense





7,630







7,935







8,120



Income before income taxes





1,829







670







1,374



Income tax expense (benefit)





337







(112)







250



Net income



$

1,492





$

782





$

1,124



Basic and diluted earnings per share



$

0.11





$

0.06





$

0.09



 

 

BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued







As of and for the Three Months Ended





As of and for the

Year Ended





March 31,





December 31,





September 30,





June 30,





March 31,





December 31,

(Dollars in thousands, except per share amounts)



2019





2018





2018





2018





2018





2018

Select Consolidated Balance Sheet Data















































Total assets



$

1,103,840





$

1,080,617





$

1,027,440





$

983,216





$

994,676









Cash, interest-bearing deposits and federal

funds sold





30,677







28,061







22,713







38,526







63,696









Available-for-sale securities, at fair value





82,030







82,232







81,215







74,322







75,434









Loans:















































Mortgage loans on real estate





725,494







713,997







682,321







644,202







624,424









Commercial and industrial





173,360







164,608







144,118







124,563







129,225









Consumer





20,095







23,740







27,920







32,767







37,011









Loans receivable





918,949







902,345







854,359







801,532







790,660









Unamortized net deferred loan (fees) costs





(329)







(252)







(79)







24







228









Allowance for loan losses (ALL)





(7,858)







(7,902)







(7,287)







(7,113)







(7,923)









Net loans





910,762







894,191







846,993







794,443







782,965









Loans held for sale











368













669







414









Other real estate owned, net





3,718







3,597







3,663







3,501







2,593

























































Total liabilities



$

983,903





$

963,141





$

910,893





$

867,492





$

879,757









Deposits:















































Noninterest-bearing demand deposits





112,315







114,122







108,602







108,943







124,572









Savings and interest-bearing demand

deposits





371,587







359,400







330,690







296,206







299,216









Time deposits





372,751







368,670







369,836







369,917







373,163









Total deposits





856,653







842,192







809,128







775,066







796,951









Securities sold under repurchase agreements





7,220







6,089







6,083







7,008







6,551









Federal Home Loan Bank advances





100,000







100,000







80,000







70,000







60,000









Subordinated notes, net of unamortized

issuance costs





6,897







6,893







6,889







6,885







6,881

























































Shareholders' equity





119,937







117,476







116,547







115,724







114,919

























































Condensed Consolidated Statements of

Operations















































Interest income



$

12,336





$

11,735





$

10,870





$

10,508





$

10,692





$

43,803

Interest expense





3,653







3,264







2,599







2,314







2,048







10,225

Net interest income





8,683







8,471







8,271







8,194







8,644







33,578

Provision for (recovery of) loan losses





314







870







509







(348)







320







1,351

Noninterest income





1,090







1,004







994







1,164







1,170







4,303

Noninterest expense





7,630







7,935







7,532







8,563







8,120







32,119

Income before income taxes





1,829







670







1,224







1,143







1,374







4,411

Income tax expense (benefit)





337







(112)







198







197







250







533

Net income



$

1,492





$

782





$

1,026





$

946





$

1,124





$

3,878

 

 

BAY BANKS OF VIRGINIA, INC.

Supplemental Financial Data (Unaudited) – Continued







As of and for the Three Months Ended





As of and for the

Year Ended







March 31,





December 31,





September 30,





June 30,





March 31,





December 31,



(Dollars in thousands, except per share amounts)



2019





2018





2018





2018





2018





2018



Basic earnings per share



$

0.11





$

0.06





$

0.08





$

0.07





$

0.09





$

0.30



Diluted earnings per share





0.11







0.06







0.08







0.07







0.09







0.30



Book value per share





9.01







8.90







8.80







8.75







8.69











Tangible book value per share (1)





8.11







7.98







7.88







7.81







7.74











Shares outstanding at end of period





13,313,537







13,201,682







13,238,716







13,226,096







13,223,096







13,201,682



Weighted average shares outstanding, basic





12,972,850







13,050,791







13,080,372







13,059,604







13,038,593







13,057,537



Weighted average shares outstanding, diluted





13,008,817







13,099,707







13,142,549







13,126,419







13,106,214







13,122,136





















































Performance Measures (tax-equivalent basis):

















































Yield on average interest-earning assets





4.90

%





4.72

%





4.66

%





4.61

%





4.74

%





4.70

%

Cost of funds





1.54

%





1.40

%





1.19

%





1.08

%





0.95

%





1.17

%

Cost of deposits





1.34

%





1.22

%





1.03

%





0.93

%





0.83

%





1.01

%

Net interest spread





3.15

%





3.14

%





3.30

%





3.37

%





3.64

%





3.37

%

Net interest margin (NIM)





3.45

%





3.41

%





3.57

%





3.60

%





3.83

%





3.61

%

NIM, excluding acquisition accounting adjustments

NIM) (1)





3.26

%





3.25

%





3.40

%





3.34

%





3.58

%





3.40

%

Average interest-earnings assets to total average assets





94.1

%





93.8

%





93.5

%





92.4

%





92.1

%





93.5

%

Return on average assets (quarter-to-date annualized)





0.55

%





0.30

%





0.41

%





0.38

%





0.46

%





0.39

%

Operating return on average assets (quarter-to-date

annualized) (1)





0.55

%





0.44

%





0.41

%





0.38

%





0.57

%





0.45

%

Return on average equity (quarter-to-date annualized)





5.05

%





2.69

%





3.55

%





3.28

%





3.92

%





3.36

%

Merger-related expense



$





$





$





$





$

363





$

363



Efficiency ratio





78.1

%





83.7

%





81.3

%





91.5

%





82.7

%





84.8

%

Operating efficiency ratio (1)





78.1

%





78.6

%





81.3

%





91.5

%





79.0

%





82.6

%

Average assets



$

1,088,180







1,055,144







994,209







988,946







982,616







999,895



Average interest-earning assets





1,024,058







989,327







929,111







913,486







904,991







934,528



Average interest-bearing liabilities





853,611







817,225







761,986







747,227







747,813







768,826



Average shareholders' equity





118,099







116,291







115,454







115,321







114,736







115,468



Shareholders' equity to total assets ratio





10.9

%





10.9

%





11.3

%





11.8

%





11.6

%









Tangible shareholders' equity to tangible total assets

(1)





9.9

%





9.9

%





10.3

%





10.6

%





10.4

%



























































Asset Quality Data and Ratios:

















































Nonaccrual loans



$

5,384





$

5,206





$

4,204





$

3,474





$

6,892











Loans past due 90 days or more and still accruing

(excludes purchased credit-impaired loans)







































Other real estate owned, net





3,718







3,597







3,663







3,501







2,593











Total nonperforming assets





9,102







8,803







7,867







6,975







9,485











Net charge-offs (recoveries)





358







255







335







462







167







1,219



Net charge-offs to average loans (quarter-to-date

annualized)





0.16

%





0.12

%





0.17

%





0.23

%





0.09

%





0.15

%

Total non-performing assets to total assets





0.82

%





0.81

%





0.77

%





0.71

%





0.95

%









Gross loans to total assets





83.2

%





83.5

%





83.2

%





81.5

%





79.5

%









ALL to gross loans





0.86

%





0.88

%





0.85

%





0.89

%





1.00

%









ALL plus acquisition accounting adjustments

(discounts) on acquired loans to gross loans (1)





1.23

%





1.31

%





1.35

%





1.46

%





1.65

%











(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) – Continued







As of and for the Three Months Ended





As of and for the

Year Ended







March 31,





December 31,





September 30,





June 30,





March 31,





December 31,



(Dollars in thousands, except per share amounts)



2019





2018





2018





2018





2018





2018



Reconciliation of Non-GAAP Financial Measures (1)

















































NIM, excluding acquisition accounting adjustments (Core

NIM)

















































Interest income, including fees



$

12,336





$

11,735





$

10,870





$

10,508





$

10,692





$

43,803



Add: tax-equivalent yield adjustment for tax-exempt

securities (b)





31







32







30







31







32







125



Less: accretion of discounts on acquired loans





439







352







357







547







503







1,759



Interest income, adjusted





11,928







11,415







10,543







9,992







10,221







42,169



Average interest-earning assets



$

1,024,058





$

989,327





$

929,111





$

913,486





$

904,991





$

934,528



Yield on interest-earning assets, excluding accretion of

discounts on acquired loans (quarter-to-date annualized)





4.72

%





4.58

%





4.54

%





4.38

%





4.52

%





4.51

%

Interest expense



$

3,653





$

3,264





$

2,599





$

2,314





$

2,048





$

10,225



Add: amortization of premium on acquired time deposits





34







37







40







42







68







187



Interest expense, adjusted





3,687







3,301







2,639







2,356







2,116







10,412



Net interest income, excluding acquisition accounting

adjustments





8,241







8,114







7,904







7,637







8,105







31,757



Average interest-bearing liabilities



$

853,611





$

817,225





$

761,986





$

747,227





$

747,813





$

768,826



Cost of interest-bearing liabilities, excluding amortization of

premium on acquired time deposits (quarter-to-date annualized)





1.75

%





1.60

%





1.39

%





1.26

%





1.13

%





1.35

%

NIM, excluding acquisition accounting adjustments (Core NIM)





3.26

%





3.25

%





3.40

%





3.34

%





3.58

%





3.40

%



















































ALL plus discounts on acquired loans to gross loans

















































Allowance for loan losses



$

7,858





$

7,902





$

7,287





$

7,113





$

7,923











Add: discounts on acquired loans





3,464







3,922







4,280







4,655







5,212











ALL plus discounts on acquired loans





11,322







11,824







11,567







11,768







13,135











Gross loans + discounts on acquired loans



$

922,084





$

906,015





$

858,560





$

806,211





$

796,100











ALL plus discounts on acquired loans to gross loans





1.23

%





1.31

%





1.35

%





1.46

%





1.65

%



























































Tangible book value per share

















































Total shareholders' equity



$

119,937





$

117,476





$

116,547





$

115,724





$

114,919











Less: intangible assets, net of deferred tax liability on core

deposit intangible (a)(b)





11,964







12,106







12,255







12,409







12,570











Tangible shareholders' equity



$

107,973





$

105,370





$

104,292





$

103,316





$

102,350











Shares outstanding at end of period





13,313,537







13,201,682







13,238,716







13,226,096







13,223,096











Tangible book value per share



$

8.11





$

7.98





$

7.88





$

7.81





$

7.74





























































Tangible shareholders' equity to tangible assets

















































Total assets



$

1,103,840





$

1,080,617





$

1,027,440





$

983,216





$

994,676











Less: intangible assets, net of deferred tax liability on core

deposit intangible (a)(b)





11,964







12,106







12,255







12,409







12,570











Tangible assets



$

1,091,876





$

1,068,511





$

1,015,185





$

970,807





$

982,106











Tangible shareholders' equity



$

107,973





$

105,370





$

104,292





$

103,316





$

102,350











Tangible shareholders' equity to tangible assets





9.9

%





9.9

%





10.3

%





10.6

%





10.4

%



























































Select noninterest expenses, after-tax basis (ATB)

















































Merger-related expenses



$





$





$





$





$

363





$

363



Merger-related expenses, ATB (b)





























287







287





















































Early retirement program expenses



$





$

483





$





$





$





$

483



Early retirement program expenses, ATB (b)











382

























382





















































Operating return on average assets

















































Net income (loss)



$

1,492





$

782





$

1,026





$

946





$

1,124





$

3,878



Add: Early retirement program expenses, ATB











382

























382



Add: Merger-related expenses, ATB





























287







287



Operating net income



$

1,492





$

1,164





$

1,026





$

946





$

1,411





$

4,546



Average assets



$

1,088,180





$

1,055,144





$

994,209





$

988,946





$

982,616





$

999,895



Operating return on average assets





0.55

%





0.44

%





0.41

%





0.38

%





0.57

%





0.45

%



















































Operating efficiency ratio

















































Total noninterest expense



$

7,630





$

7,935





$

7,532





$

8,563





$

8,120





$

32,119



Less: Early retirement program expenses











483

























483



Less: Merger-related expenses





























363







363



Operating noninterest expense





7,630







7,452







7,532







8,563







7,757







31,273



Net interest income





8,683







8,471







8,271







8,194







8,644







33,578



Noninterest income





1,090







1,004







994







1,164







1,170







4,303



Operating efficiency ratio





78.1

%





78.6

%





81.3

%





91.5

%





79.0

%





82.6

%



(a) Excludes mortgage servicing rights.

(b) Assumes a federal income tax rate of 21%.





































































































(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. NIM, excluding acquisition accounting adjustments, ALL plus discounts on acquired loans to gross loans, tangible book value per share, tangible shareholders' equity to tangible total assets ratio, select noninterest expenses on an after-tax basis, operating return on average assets, and operating efficiency ratio are supplemental financial measures that are not required nor presented in accordance with GAAP.  Management believes ALL plus discounts on acquired loans to gross loans, tangible book value per share, and tangible shareholders' equity to tangible total assets ratios are meaningful because they are measures management uses to assess asset quality and capital levels, respectively, of the Company.  Management believes that NIM, excluding acquisition accounting adjustments, select noninterest expenses on an after-tax basis, operating return on average assets, and operating efficiency ratios 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.

 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/bay-banks-of-virginia-inc-reports-first-quarter-2019-results-300841186.html

SOURCE Bay Banks of Virginia, Inc.

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