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Bay Bancorp, Inc. Announces First Quarter 2016 Results

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COLUMBIA, Md., April 28, 2016 (GLOBE NEWSWIRE) -- Bay Bancorp, Inc. ("Bay") (NASDAQ: BYBK), the savings and loan holding company for Bay Bank, FSB ("Bank"), announced today net income of $0.19 million or $0.02 per basic and diluted common share for the quarter ended March 31, 2016, compared to net income of $0.34 million or $0.03 per basic and diluted common share for the quarter ended March 31, 2015.  The pre-tax results for 2016 include $0.06 million of merger-related expenses related to the previously announced pending Hopkins Federal Savings Bank ("Hopkins Bank") merger (the "Hopkins Merger").

Commenting on the announcement, Joseph J. Thomas, President and CEO said, "We continued to invest in our franchise by hiring Todd Warren as Baltimore Market President and we achieved growth of new loans in the Bank's originated portfolio at an 18.6% annualized pace in the first quarter of 2016.  However, our earnings were negatively impacted by a decline in net interest margin for the quarter ended March 31, 2016 to 4.20% from 4.73% for the same period of 2015 due to a decrease in net discount accretion recognized into income from acquired loans.  Our ongoing efficiency efforts continue in 2016 and for the three months ended March 31, 2016, noninterest expense was $5.3 million compared to $5.7 million for the same period of 2015.  The contributors to the decrease were broad based and would be even more substantial after considering the Hopkins Merger related expenses incurred in the first quarter 2016.  Core, pre-provision income, excluding accelerated accretion on acquired loans, provision for loan loss, intangible asset amortization and merger related expenses, was $0.84 million for the three months ended March 31, 2016 compared to $0.80 million for the same period of 2015.  We expect the approval and completion of the Hopkins Merger during the 2nd quarter of 2016 and are excited about the new client opportunities, additional scale, and enhanced earnings performance we will gain in the combination with Hopkins Bank."

Highlights from the First Three Months of 2016

Bay focused on deposit costs and liquidity management over the quarter as Bay prepared for the Hopkins Merger balance sheet.  Partially related to the focus, deposits declined by $1.5 million for the three months ended March 31, 2016, when compared to December 31, 2015.  Bay's capital position remains very strong with the capacity for both the Hopkins Merger and for future growth.  Total regulatory capital to risk weighted assets was 16.6% as of March 31, 2016.  The Bank has a proven record of success in acquisitions and acquired problem asset resolutions and, at March 31, 2016, had $9.0 million in remaining net purchase discounts on the acquired loan portfolios.

Specific highlights are listed below:

  • Total assets were $463 million at March 31, 2016 compared to $491 million at December 31, 2015 and decreased by $24 million from $487 million at March 31, 2015.
     
  • Total loans were $397 million at March 31, 2016, an increase of 0.9% from $393 million at December 31, 2015 and an increase of 1.4% from $392 million at March 31, 2015.
     
  • Total deposits were $366 million at March 31, 2016, a decrease of 0.4% from $367 million at December 31, 2015 and a decrease of 9.5% from $404 million at March 31, 2015.  Noninterest bearing deposits at March 31, 2016 were $98 million, a decrease of 3.7% from $101 million at December 31, 2015.
     
  • Net interest income for the three months ended March 31, 2016 totaled $4.7 million compared to $5.3 million for the same period of 2015.  Interest income associated with discount accretion on purchased loans, deferred costs and deferred fees will vary due to the timing and nature of loan principal payments and nonperforming loan resolutions.  The decrease in net discount accretion income was the primary driver of year-over-year results, declining $0.6 million as Bay transitions interest income reliance to the core balance sheet and ongoing net earnings growth. 
     
  • Net interest margin for the three months ended March 31, 2016 was 4.20%, compared to 4.73% for the same period of 2015.  The margin for the first quarter of 2016 reflects the variable pace of net discount accretion recognized within interest income and the impact of fair value amortization on the interest expense of acquired deposits.  For the quarter ended March 31, 2016, the earning asset portfolio yield was influenced by a $0.60 million decline in net discount accretion of purchased loan discounts recognized in interest income.  The net interest margin declined 0.53% during the quarter compared to a year earlier, nearly all related to loan and deposit accretion fluctuations.

The return on average assets for the three months ended March 31, 2016 was 0.16%, as compared to 0.43% and 0.29% for the three months ended December 31, and March 31, 2015, respectively.  The return on average equity for the three months ended March 31, 2016 was 1.11% compared to 3.10% and 2.08% for the three months ended December 31, and March 31, 2015, respectively.

  • Nonperforming assets decreased to $9.7 million at March 31, 2016, from $10.3 million at December 31, 2015 and from $15.6 million at March 31, 2015.  The decrease resulted from the Bank's consistent resolution of acquired nonperforming loans from previous acquisitions.
     
  • The provision for loan losses for the three months ended March 31, 2016 was $298,000, compared to $275,000 for the same period of 2015.  The increase for the 2016 period was primarily the result of an increase in loan originations and adjustments in certain qualitative factors.  As a result, the allowance for loan losses increased to $1.95 million at March 31, 2016, representing 0.49% of total loans, compared to $1.77 million, or 0.45% of total loans, at December 31, 2015.  Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future periods due to the reduction in the accretion of the discount on the acquired loan portfolios and an increase in new loan originations.

Stock Repurchase Program

During 2015, Bay purchased 170,492 shares of its common stock, at an average price of $5.03 per share, pursuant to the stock purchase program that the Board of Directors approved on July 30, 2015.  The program authorized Bay to purchase up to 250,000 shares of its common stock over a 12-month period in open market and/or through privately negotiated transactions, at Bay's discretion.  During the first quarter of 2016, Bay purchased 79,508 shares of its common stock pursuant to the stock purchase program at an average price of $4.91 per share.  Also during the first quarter of 2016, the Board of Directors authorized an additional stock purchase program, authorizing Bay to purchase an additional 250,000 shares of its common stock over a 12-month period in open market and/or through privately negotiated transactions, at Bay's discretion.  As of March 31, 2016, Bay has repurchased 95,492 shares under this authorization at an average price of $4.95 per share.  The Board may modify, suspend or discontinue the program at any time.

Balance Sheet Review
             
Total assets were $463.4 million at March 31, 2016, a decrease of $27.7 million, or 5.6%, when compared to December 31, 2015.  Cash and interest bearing deposits decreased by $19.7 million or 57.1%, when compared to December 31, 2015 as the bank reduced wholesale short-term borrowings, while investment securities available for sale decreased by $8.3 million or 25.0%, over the same period.  Loans held for sale decreased by $1.3, million or 26.8%, during the quarter ended March 31, 2016 and were offset by a $3.6 million, or 0.9%, increase in loans held for investment.
             
Total deposits were $365.9 million at March 31, 2016, a decrease of $1.5 million, or 0.4%, when compared to December 31, 2015.  The decrease was primarily the result of a $3.8 million, or 3.7%, decrease in non-interest bearing accounts.  The decrease in assets resulted in a $26.0 million decrease in short-term borrowings over the quarter.

Stockholders' equity decreased to $66.9 million at March 31, 2016 from $67.7 million at December 31, 2015 and increased from $65.7 million at March 31, 2015.  The decrease since December 31, 2015 related to the ongoing stock repurchase program and a $0.1 million decrease in Accumulated Other Comprehensive Income offset by corporate earnings.  The book value of Bay's common stock improved to $6.15 per share at March 31, 2016, compared to $6.12 per share at December 31, 2015.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and real estate acquired through foreclosure, decreased to $9.7 million at March 31, 2016 from $10.3 million at December 31, 2015.  The decrease related primarily to decreases in nonaccrual loans and troubled debt restructurings.  Nonperforming assets represented 2.1% of total assets at March 31, 2016, which, due to lower reported assets, was unchanged from December 31, 2015. 

At March 31, 2016, the Bank remained above all "well-capitalized" regulatory requirement levels.  The Bank's tier 1 risk-based capital ratio was 16.20% at March 31, 2016 as compared to 16.14% at December 31, 2015 and 16.22% at March 31, 2015.  Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the investment portfolio.

Review of Financial Results

Net income for the three months ended March 31, 2016 was $0.19 million compared to net income of $0.34 million for the same period of 2015.  Individual categories reflect variability between years. 

Net interest income decreased by $0.6 million for the quarter ended March 31, 2016 when compared to the same period of 2015.  The decrease was the result of a $0.6 million decrease in net discount accretion recognized into income when compared to the same period of 2015.  Excluding the net discount accretion impact, Bay was able to offset decreases in earning asset yield, with a reduction in deposit costs due to pricing discipline and a favorable change in deposit mix and effective utilization of short-term wholesale funding alternatives.  The net interest margin for the quarter ended March 31, 2016 decreased to 4.20% from 4.73% for the same period of 2015.  As of March 31, 2016, the remaining net loan discounts on the Bank's acquired loan portfolio totaled $9.0 million.

Noninterest income for the three months ended March 31, 2016 was $1.2 million compared to $1.2 million for the same period of 2015.  A $0.24 million net decrease in mortgage banking fees and gains were offset by a $0.2 million increase in gains on security sales and redemptions during the quarter ended March 31, 2016.  Expectations are for increased mortgage banking fees and gains to expand throughout 2016.

Noninterest expense reduction continues as a key focus for 2016 net income improvement.  For the three months ended March 31, 2016, noninterest expense was $5.3 million compared to $5.7 million for the same period of 2015.  The contributors to the decrease when compared to the quarter ended March 31, 2015 were broad based and led by decreases of $0.12 million in occupancy and equipment expenses, $0.06 million in loan collection costs, $0.06 million in data processing and item processing services and a $0.06 million in core deposit intangible amortization.  The decrease is more substantial after consideration that 2016 contains $0.06 million in Hopkins Merger related expenses.

Bay Bancorp, Inc. Information

Bay Bancorp, Inc. is a financial holding company and a savings and loan holding company headquartered in Columbia, Maryland.  Through Bay Bank, FSB, its federal savings bank subsidiary, Bay Bancorp, Inc. serves the community with a network of 11 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of Baltimore Washington corridor.  The Bank serves small and medium size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including on-line and mobile banking, commercial banking, cash management, mortgage lending and retail banking.  The Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit.  Additional information is available at www.baybankmd.com.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company.  Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company.  There can be no assurance that future developments affecting the Company will be the same as those anticipated by management.  These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions.  Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements.  For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Bay Bancorp, Inc. with the Securities and Exchange Commission entitled "Risk Factors", as well as the cautionary statements contained in the other reports and documents that Bay Bancorp, Inc. files with or furnishes the SEC.

BAY BANCORP, INC. AND SUBSIDIARY            
CONSOLIDATED BALANCE SHEETS            
             
 March 31,   March 31,   
 2016 December 31, 2015 December 31, 
 (unaudited) 2015 (unaudited) 2014 
             
ASSETS            
Cash and due from banks$   6,074,891  $   8,059,888  $   6,335,049  $   7,062,943  
Interest bearing deposits with banks and federal funds sold    8,682,578      26,353,334      17,250,151      9,829,231  
Total Cash and Cash Equivalents    14,757,469      34,413,222      23,585,200      16,892,174  
             
Investment securities available for sale, at fair value    25,018,385      33,352,233      32,890,719      35,349,889  
Investment securities held to maturity, at amortized cost    1,553,671      1,573,165      1,296,793      1,315,718  
Restricted equity securities, at cost    1,870,395      2,969,595      1,291,095      1,862,995  
Loans held for sale    3,560,752      4,864,344      12,494,787      7,233,306  
             
Loans, net of deferred fees and costs  396,854,139    393,240,567    391,537,271    393,051,192  
Less: Allowance for loan losses    (1,948,536)     (1,773,009)     (1,353,849)     (1,294,976) 
Loans, net  394,905,603    391,467,558    390,183,422    391,756,216  
             
Real estate acquired through foreclosure    1,501,896      1,459,732      1,501,135      1,480,472  
Premises and equipment, net    4,903,369      5,060,802      5,398,901      5,553,957  
Bank owned life insurance    5,641,561      5,611,352      5,516,549      5,485,377  
Core deposit intangible    2,431,376      2,624,184      3,223,737      3,478,282  
Deferred tax assets, net    2,793,504      2,723,557      4,117,563      3,214,100  
Accrued interest receivable    1,372,456      1,271,871      1,300,297      1,306,111  
Accrued taxes receivable    2,136,804      2,775,237      2,819,468      3,122,885  
Defined benefit pension asset    -       -       -       680,668  
Prepaid expenses    777,683      691,372      996,363      925,288  
Other assets    209,732      303,614      414,631      285,547  
Total Assets$ 463,434,656   $ 491,161,838   $ 487,030,660   $ 479,942,985   
             
LIABILITIES             
Noninterest-bearing deposits$ 98,085,001  $ 101,838,210  $ 101,629,926  $  91,676,534  
Interest-bearing deposits  267,800,996    265,577,728    302,674,673    296,153,598  
Total Deposits  365,885,997    367,415,938    404,304,599    387,830,132  
             
Short-term borrowings    26,275,000      52,300,000      12,150,000      22,150,000  
Defined benefit pension liability    1,361,177      829,237      1,731,102      -   
Accrued expenses and other liabilities    2,974,857      2,934,174      3,194,319      3,319,567  
Total Liabilities  396,497,031    423,479,349    421,380,020    413,299,699  
             
STOCKHOLDERS' EQUITY            
Common stock - par value $1.00, authorized 20,000,000 shares, issued and outstanding 10,887,932, 11,062,932, 11,014,517 and 11,014,517 shares as of March 31, 2016, December 31, 2015, March 31, 2015 and December 31, 2014, respectively.    10,887,932      11,062,932      11,014,517      11,014,517  
Additional paid-in capital    42,730,014      43,378,927      43,274,558      43,228,950  
Retained earnings    12,853,469      12,667,070      11,079,558      10,736,305  
Accumulated other comprehensive income    466,210      573,560      282,007      1,663,514  
Total Stockholders' Equity    66,937,625      67,682,489      65,650,640      66,643,286  
Total Liabilities and Stockholders' Equity$ 463,434,656   $ 491,161,838   $ 487,030,660   $ 479,942,985   
             

 

BAY BANCORP, INC. AND SUBSIDIARY     
CONSOLIDATED STATEMENTS OF INCOME       
(Unaudited)
       
  Three Months Ended March 31, 
   2016  2015
       
Interest income:      
Interest and fees on loans $  4,844,320 $  5,507,767
Interest on loans held for sale    39,666    61,511
Interest and dividends on securities    211,384    257,436
Interest on deposits with banks and federal funds sold    19,045    10,612
Total Interest Income    5,114,415    5,837,326
       
Interest expense:      
Interest on deposits    309,177    484,401
Interest on short-term borrowings    63,795    13,776
Total Interest Expense    372,972    498,177
Net Interest Income    4,741,443    5,339,149
       
Provision for loan losses    298,000    275,109
Net interest income after provision for loan losses    4,443,443    5,064,040
       
Noninterest income:      
Electronic banking fees    551,009    576,190
Mortgage banking fees and gains    158,547    393,642
Service charges on deposit accounts    70,614    79,017
Gain on securities sold    272,963    77,490
Other income     137,944    111,509
Total Noninterest Income    1,191,077    1,237,848
       
Noninterest expenses:      
Salary and employee benefits    2,889,456    2,919,119
Occupancy and equipment expenses    871,195    995,233
Legal, accounting and other professional fees    310,561    368,028
Data processing and item processing services    281,992    342,673
FDIC insurance costs    77,479    106,311
Advertising and marketing related expenses    32,528    28,749
Foreclosed property expenses and OREO sales, net    74,479    60,991
Loan collection costs    20,800    87,510
Core deposit intangible amortization    192,808    254,545
Other expenses    578,699    537,353
Total Noninterest Expenses    5,329,997    5,700,512
Income before income taxes    304,523    601,376
Income tax expense     118,124    258,123
Net income $  186,399  $  343,253
       
Basic net income per common share  $  0.02 $  0.03
       
Diluted net income per common share $  0.02 $  0.03

 

BAY BANCORP, INC. AND SUBSIDIARY        
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY      
For the Three Months Ended March 31, 2016 and 2015      
(Unaudited)           
            
         Accumulated  
     Additional   Other  
   Common Paid-in Retained Comprehensive  
   Stock Capital Earnings Income (loss) Total
            
Balance December 31, 2014 $   11,014,517 $   43,228,950 $  10,736,305$   1,663,514 $   66,643,286 
            
Net income     -      -     343,253    -      343,253 
Other comprehensive income       -     -     (1,381,507)    (1,381,507)
Stock-based compensation     -      45,608    -     -      45,608 
Balance March 31, 2015 $   11,014,517 $   43,274,558 $  11,079,558$   282,007 $   65,650,640 
            
         Accumulated  
     Additional   Other  
   Common Paid-in Retained Comprehensive  
   Stock Capital Earnings Income (loss) Total
            
Balance December 31, 2015 $   11,062,932  $    43,378,927  $   12,667,070 $    573,560  $    67,682,489 
            
Net income     -      -     186,399    -      186,399 
Other comprehensive income        -     (107,350)    (107,350)
Stock-based compensation     -      35,587    -     -      35,587 
Repurchase of common stock      (175,000)    (684,500)   -     -      (859,500)
Balance March, 2016 $   10,887,932 $   42,730,014 $  12,853,469$   466,210 $   66,937,625 
            

 

 BAY BANK, FSB                   
 CAPITAL RATIOS                   
                     
          To Be Well  
          Capitalized Under  
       To Be Considered  Prompt Corrective  
    Actual   Adequately Capitalized  Action Provisions  
   Amount Ratio Amount Ratio Amount Ratio 
 As of March 31, 2016:                   
 (unaudited)                   
                     
 Total Risk-Based Capital Ratio $  67,204 16.68% $  32,231 8.00% $  40,289 10.00% 
                     
 Tier I Risk-Based Capital Ratio $  65,255 16.20% $  24,174 6.00% $  32,231 8.00% 
                     
 Common Equity Tier I Capital Ratio $  65,255 16.20% $  18,130 4.50% $  26,188 6.50% 
                     
 Leverage Ratio $  65,255 13.74% $  19,004 4.00% $  23,755 5.00% 
                     
 As of December 31, 2015:                   
                     
 Total Risk-Based Capital Ratio $  67,238 16.58% $  32,443 8.00% $  40,553 10.00% 
                     
 Tier I Risk-Based Capital Ratio $  65,465 16.14% $  24,332 6.00% $  32,443 8.00% 
                     
 Common Equity Tier I Capital Ratio $  65,465 16.14% $  18,249 4.50% $  26,360 6.50% 
                     
 Leverage Ratio $  65,465 13.75% $  19,041 4.00% $  23,801 5.00% 
                     
 As of March 31, 2015:                   
 (unaudited)                   
                     
 Total Risk-Based Capital Ratio $  64,172 16.57% $  30,990 8.00% $  38,738 10.00% 
                     
 Tier I Risk-Based Capital Ratio $  62,818 16.22% $  23,243 6.00% $  30,990 8.00% 
                     
 Common Equity Tier I Capital Ratio $  62,818 16.22% $  17,432 4.50% $  25,180 6.50% 
                     
 Leverage Ratio $  62,818 13.01% $  19,313 4.00% $  24,141 5.00% 
                     
 As of December 31, 2014:                   
                     
 Total Risk-Based Capital Ratio $  62,743 16.66% $  30,132 8.00% $  37,665 10.00% 
                     
 Tier I Risk-Based Capital Ratio $  61,448 16.31% $  15,066 4.00% $  22,599 6.00% 
                     
 Leverage Ratio $  61,448 12.94% $  18,988 4.00% $  23,735 5.00% 

 

BAY BANCORP, INC. AND SUBSIDIARY            
SELECTED FINANCIAL DATA               
                
 Three Months Ended Twelve Months Ended 
 March 31, March 31, December 31, December 31, December 31, 
 (unaudited) (unaudited) (unaudited)       
 2016 2015 2015 2015 2014 
Financial Data:               
Assets$   463,434,656  $   487,030,660  $   491,161,838  $   491,161,838  $   479,942,985  
Investment securities    26,572,056      34,187,512      34,925,398      34,925,398      36,665,607  
Loans (net of deferred fees and costs)    396,854,139      391,537,271      393,240,567      393,240,567      393,051,192  
Allowance for loan losses    (1,948,536)     (1,353,849)     (1,773,009)     (1,773,009)     (1,294,976) 
Deposits    365,885,997      404,304,599      367,415,938      367,415,938      387,830,132  
Borrowings    26,275,000      12,150,000      52,300,000      52,300,000      22,150,000  
Stockholders' equity    66,937,625      65,650,640      67,682,489      67,682,489      66,643,286  
                
Net income     186,399      343,253      512,180      1,930,765      3,032,708  
                
Average Balances: (unaudited)               
Assets    476,747,246      485,027,802      475,843,083      481,145,938      459,782,360  
Investment securities    29,466,610      35,318,852      35,141,189      36,649,655      36,561,271  
Loans (net of deferred fees and costs)    395,839,666      392,780,699      391,709,601      389,684,221      364,511,290  
Borrowings    44,265,934      16,155,556      30,558,696      23,188,219      9,269,231  
Deposits    361,610,047      399,249,747      375,606,120      388,245,405      385,700,291  
Stockholders' equity     67,564,670      66,785,682      65,565,103      65,747,418      61,530,969  
                
Performance Ratios:               
Annualized return on average assets   0.16%   0.29%   0.43%   0.40%   0.66% 
Annualized return on average equity  1.11%   2.08%   3.10%   2.94%   4.93% 
Yield on average interest-earning assets  4.53%   5.17%   4.85%   5.10%   5.60% 
Rate on average interest-bearing liabilities  0.48%   0.64%   0.52%   0.58%   0.42% 
Net interest spread  4.05%   4.53%   4.33%   4.51%   5.18% 
Net interest margin  4.20%   4.73%   4.49%   4.70%   5.31% 
                
Book value per share$   6.15  $   5.96  $   6.12  $   6.12  $   6.05  
Basic net income per share    0.02      0.03      0.05      0.17      0.29  
Diluted net income per share    0.02      0.03      0.05      0.17      0.29  
                
                
  March 31, March 31,  December 31,      
  2016  2015   2015      
Asset Quality Ratios:               
Allowance for loan losses to loans  0.49%   0.35%   0.45%       
Nonperforming loans to total loans  2.07%   3.59%   2.26%       
Nonperforming assets to total assets  2.10%   3.21%   2.10%       
Net charge-offs annualized to avg. loans  0.03%   0.06%   0.03%       
                
Capital Ratios (Bay Bank, FSB):                
Total risk-based capital ratio  16.68%   16.57%   16.58%       
Common equity tier 1 capital ratio  16.20%   16.22%   16.14%       
Tier 1 risk-based capital ratio  16.20%   16.22%   16.14%       
Leverage ratio  13.74%   13.01%   13.75%       

 

For investor inquiries contact: Joseph J. Thomas, President and CEO 410-536-7336 jthomas@baybankmd.com 7151 Columbia Gateway Drive, Suite A Columbia, MD 21046 For further information contact: Larry D. Pickett, Chief Financial Officer 410-312-5415 lpickett@baybankmd.com 7151 Columbia Gateway Drive, Suite A Columbia, MD 21046

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