Market Overview

Bay Bancorp, Inc. Announces Third Quarter 2016 Results

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COLUMBIA, Md., Nov. 14, 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 $0.46 million, or basic and diluted net income per common share of $0.04 for the third quarter of 2016 after $1.5 million in one-time merger integration expenses and a $1.0 million bargain purchase gain associated with the Bank's merger with Hopkins Federal Savings Bank ("the Hopkins Merger") compared to net income of $0.45 million, or basic and diluted net income per common share of $0.04 for the second quarter of 2016, and income of $0.53 million, or basic and diluted income per common share of $0.05 for the third quarter of 2015.  Pre-tax earnings in the third quarter, adjusted for the merger expenses and bargain purchase gain, were up 72% when compared to the second quarter of 2016.  Bay reported net income of $1.15 million, or basic and diluted net income per common share of $0.10 for the first nine months of 2016 after giving effect to the one-time merger integration expenses of $1.5 million, compared to $1.42 million, or basic or diluted net income per common share of $0.13, for the same period of 2015.  With the Hopkins Merger, the Bank has total assets of over $600 million and 12 branches in the Baltimore-Washington region, becoming the fifth largest community bank headquartered in the Baltimore region based upon deposit market share.

Commenting on the announcement, Joseph J. Thomas, President and CEO, said, "We were pleased to complete our merger with Hopkins Federal Savings Bank on July 8, 2016 and integrate the two legacy systems on July 25th.  Our earlier estimates for the transaction are coming in as or better than expected, with cost savings exceeding 60% of Hopkins non-interest expense, year-to-date one-time merger expenses at $1.7 million and core deposit intangible of $1.2 million.  The combination of these factors, additional share repurchases in the quarter and a $1.0 million bargain purchase gain resulted in a $0.11 per share or 1.8% increase in book value to $6.29 per share at September 30, 2016.  We continue to expect the merger to be approximately 40% accretive to Bay earnings per share in 2017. Excluding merger-related expenses and bargain purchase gains, return on average assets and return on average equity improved to 0.65% and 6.02%, respectively, for the three-month period ended September 30, 2016."

Highlights from the First Nine Months of 2016

The Bank completed the Hopkins Merger on July 8, 2016, adding investments, loans, deposits, and Hopkins' Pikesville branch location.  The Bank acquired $58 million in loans and assumed $186.1 million in deposits from Hopkins.  Deposit mix changes were favorable, with planned declines in certificate of deposit balances leading to an attractive 0.42% cost of deposits for the third quarter of 2016.  Bay has a strong capital position and capacity for future growth with total regulatory capital to risk weighted assets estimated at 12.8% as of September 30, 2016.  The Bank has a proven record of success in acquisitions and acquired problem asset resolutions and, at September 30, 2016, had $9.0 million in remaining net purchase discounts on acquired loan portfolios.

Specific highlights are listed below:

  • The return on average assets for the three- and nine-month periods ended September 30, 2016 was 0.33% and 0.29%, respectively, as compared to 0.43% and 0.39%, respectively, for the same periods of 2015.  The return on average equity for the three- and nine-month periods ended September 30, 2016 was 3.12% and 2.30%, respectively, as compared to 3.12% and 2.81%, respectively, for the same periods in 2015. 
     
  • With the completion of the Hopkins Merger, total assets were $606 million at September 30, 2016 compared to $496 million at June 30, 2016 and $491 million at December 31, 2015.
     
  • Total loans were $482 million at September 30, 2016, an increase of 15.6% from $417 million at June 30, 2016, an increase of 22.7% from $393 million at December 31, 2015 and an increase of 23.9% from $389 million at September 30, 2015.
     
  • Total deposits were $531 million at September 30, 2016, an increase of 46.2% from $363 million at June 30, 2016, an increase of 44.5% from $367 million at December 31, 2015 and an increase of 39.2% from $382 million at September 30, 2015.  Non-interest bearing deposits were $100 million at September 30, 2016, an increase of 9.0% from $92 million at September 30, 2015.
     
  • Net interest income for the three- and nine-month periods ended September 30, 2016 totaled $5.7 million and $15.3 million, respectively, compared to $5.4 million and $16.3 million, respectively, for the same periods 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.  Earning asset leverage was the primary driver in year-over-year results, as average earning loans and investments increased to $497 million for the nine months ended September 30, 2016, compared to $457 million for the same period of 2015.
     
  • Net interest margin for the three- and nine-month periods ended September 30, 2016 was 3.86% and 4.11%, respectively, compared to 4.68% and 4.76%, respectively, for the same periods of 2015.  The margin for nine months ended September 30, 2016 reflects the variable pace of discount accretion recognition within interest income, the impact of fair value amortization on the interest expense of acquired deposits, and the higher level of investments, including interest bearing federal funds sold acquired in the Hopkins Merger.  For the nine months ended September 30, 2016, the earning asset portfolio yield was influenced by a $0.99 million decline in net discount accretion of purchased loan discounts recognized in interest income when compared to the same period of 2015.  The margin declined by 0.65% during the nine months ended September 30, 2016 when compared to a year earlier.
     
  • Nonperforming assets increased to $15.7 million at September 30, 2016 from $9.1 million at June 30, 2016, an increase of $6.6 million or 73.0%, and increased $5.1 million or 22.6%, from $12.8 million at September 30, 2015.  The third quarter of 2016 increases resulted primarily from the Hopkins Merger offset by continued resolution of acquired nonperforming loans.  Loans acquired in the Hopkins Merger include appropriate fair value adjustments.
     
  • The provision for loan losses for the three- and nine-month periods ended September 30, 2016 was $360,000 and $1,016,000, respectively, compared to $306,000 and $878,000, respectively, for the same periods of 2015.  The increases for the 2016 periods were primarily the result of increases in loan originations.  As a result, the allowance for loan losses was $2.45 million at September 30, 2016, representing 0.51% of total loans, compared to $2.29 million, or 0.55% of total loans, at June 30, 2016 and $1.77 million, or 0.45% of total loans, at December 31, 2015.  The allowance for loan losses at September 30, 2016 represents 0.98% of the Bay originated portfolio, with the remaining discount on acquired loans mitigating the need for additional loan loss reserves on these portfolios.  Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future due to the gradual accretion of the discount on the acquired loan portfolios and an increase in new loan originations.

  • Shortly after the consummation of the Hopkins Merger, Alvin M. Lapidus, the former Chairman of Hopkins, and Lois F. Lapidus, his wife, filed a federal lawsuit against the Bank in which they alleged that a former employee embezzled at least $1.45 million from their deposit accounts at Hopkins prior to the Hopkins Merger, with a significant portion of the embezzlement occurring during the seven days that preceded the Hopkins Merger.  The Bank has filed an answer to this complaint and intends to vigorously defend the litigation.  The Bank cannot at this time predict the outcome of the litigation or determine the Bank's potential exposure.  The Bank believes that its insurance policies will cover any loss and its legal expenses relating to this litigation and has recorded appropriate accruals in the fair value accounting of the assets and liabilities acquired in the Hopkins Merger.

Balance Sheet Review

Total assets were $606 million at September 30, 2016, an increase of $115 million, or 23.5%, when compared to December 31, 2015.  Investment securities increased by $18 million or 52.3% for the nine month period ending September 30, 2016, while loans held for investment increased by $89 million or 22.7%, which was primarily driven by the $58 million acquired in the Hopkins Merger.

Total deposits were $531 million at September 30, 2016, an increase of $164 million, or 44.5%, when compared to $367 million at December 31, 2015.  The increase was due to the $186 million in deposits acquired as part of the Hopkins Merger.  Additional activity included a managed decline in certificates of deposits and seasonal deposit fluctuations and a $2 million, or 2.0%, decrease in non-interest bearing deposits.  Following the Hopkins Merger, Bay repaid $75 million of short-term borrowings from the Federal Home Loan Bank.

Stockholders' equity decreased to $65.2 million at September 30, 2016, from $67.5 million at June 30, 2016, $67.7 million at December 31, 2015, and $66.9 million at September 30, 2015.  The third quarter 2016 decrease related to corporate earnings, which were offset by the $2.4 million decline related to the purchase of 568,436 shares of Bay's common stock.  The combined activity improved the book value of Bay's common stock to $6.29 per share at September 30, 2016 compared to $6.18 per share at June 30, 2016 and $6.05 per share at September 30, 2015.

In 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.  During the third quarter of 2016, Bay purchased 150,000 shares at an average price of $5.10 per share along with a purchase of 418,436 shares through a privately negotiated transaction at an average price of $5.18 per share.  As of September 30, 2016, Bay has 100,000 shares remaining under the 2016 purchase authorization.  The Board may modify, suspend or discontinue the program at any time.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and real estate acquired through foreclosure, increased to $15.7 million at September 30, 2016 from $9.1 million at June 30, 2016 and from $10.3 million at December 31, 2015.  The changes were driven by loans acquired in the Hopkins Merger offset by decreases in purchased credit impaired loans.  Nonperforming assets represented 2.60% of total assets at September 30, 2016, compared to 1.84% at June 30, 2016 and 2.71% at September 30, 2015.

At September 30, 2016, the Bank remained above all "well-capitalized" regulatory requirement levels.  The Bank's tier 1 risk-based capital ratio was estimated at 12.76% at September 30, 2016 as compared to 16.01% at June 30, 2016 and 16.50% at September 30, 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- and nine-month periods ended September 30, 2016 was $0.51 million and $1.15 million, respectively, compared to net income of $0.53 million and $1.42 million, respectively, for the same periods of 2015.  With the changes to net income for the three- and nine-month periods ending September 30, 2016 primarily the result of the $1.03 million Hopkins Merger bargain purchase gain, offset by $1.71 million in merger related expenses, changes were less comparable to prior periods. 

Net interest income for the three months ended September 30, 2016 totaled $5.7 million compared to $5.4 million for the same period of 2015.  Interest income resulting from interest-earning asset growth from the Hopkins Merger and legacy Bay net loan growth was partially offset by a decrease in discount accretion on purchased loans, deferred costs and deferred fees.

Net interest income decreased to $15.3 million for the nine months ended September 30, 2016, from $16.3 million for the same period of 2015.  The decrease was largely the result of a $0.99 million decline in net discount accretion on purchased loans recognized in interest income offset by the growth in third quarter earning assets resulting from the Hopkins Merger.  Excluding the impact of the net discount accretion on purchased loans, net interest income increased slightly when compared to the nine months ended September 30, 2015.  The net interest margin for the nine months ended September 30, 2016 decreased to 4.11%, from 4.76% for the same period of 2015, due to the decline in discount accretion on loans and deposits.  As of September 30, 2016, the remaining net loan discounts on the Bank's loan portfolio totaled $9.0 million.

Noninterest income for the three months ended September 30, 2016 was $3.8 million compared to $1.3 million for the three months ended June 30, 2016 and $1.5 million for the three months ended September 30, 2015.  The increase for the third quarter of 2016 related to a $1.0 million bargain purchase gain attributed to the Hopkins Merger along with $1.4 million of loan fees related to the reverse mortgage operation acquired in the Hopkins Merger.  The remainder of the change from the immediately prior quarter was primarily the result of a $0.1 million increase in electronic banking fees offset by a $0.21 million decrease in gains from the sale of certain securities.  The increase from the third quarter of 2015 was primarily the result of the bargain purchase gain and the reverse mortgage operations broker fees, along with a $0.045 million decrease in electronic banking fees, offset by a $0.12 million decrease in gains from the sale of securities and a $0.26 million decrease in mortgage banking fees and gains.

Noninterest income for the nine months ended September 30, 2016 was $6.3 million compared to $4.3 million for the same period of 2015.  The increase related to the $1.0 million bargain purchase gain attributed to the Hopkins Merger along with $1.4 million of loan broker fees related to the reverse mortgage operation acquired in the Hopkins Merger.  The remainder of the change was primarily the result of a $0.29 million increase in gains from the sale of securities, a $0.024 million decrease in electronic banking fees, and a $0.84 million decrease in mortgage banking fees and gains.

Noninterest expense reduction is a key focus for 2016 net income improvement.  For the three months ended September 30, 2016, noninterest expense was $8.4 million compared to $5.1 million for the prior quarter and $5.8 million for the third quarter of 2015.  The primary contributors to the increase when compared to the third quarter of 2016 were a $1.4 million increase in merger related expenses, $1.3 million of expenses related to the reverse mortgage operation and a $0.11 million increase in data processing expenses, increases of $1.1 million in salary and employee benefits expenses.  The primary contributors to the increase when compared to the third quarter of 2015 were $1.5 million in merger related expenses and $1.3 million of expenses related to the reverse mortgage operation and a $0.10 million increase in foreclosure related expenses, increases of $0.9 million in salary and employee benefits expenses, and a $0.1 million decrease in professional fees.

For the nine months ended September 30, 2016, noninterest expense was $18.7 million compared to $17.3 million for the same period of 2015.  The primary contributors to the increase when compared to the nine months ended September 30, 2015 were $1.7 million in merger related expenses and $1.3 million of expenses related to the reverse mortgage operation.  The increases were offset by $1.6 million of operational cost reductions in 2016, including decreases of $0.54 million in salary and employee benefits after excluding the reverse mortgage operation, $0.24 million in occupancy expense, $0.34 million in professional fees, $0.27 million in loan collection costs, and $0.10 million in core deposit intangible amortization and $0.09 million in data processing 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".

             
BAY BANCORP, INC. AND SUBSIDIARY            
CONSOLIDATED BALANCE SHEETS            
             
 September 30, June 30,   September 30, 
 2016 2016 December 31, 2015 
 (unaudited) (unaudited) 2015 (unaudited) 
             
ASSETS            
Cash and due from banks$ 6,157,165  $ 6,382,734  $ 8,059,888  $ 7,157,246  
Interest bearing deposits with banks and federal funds sold  40,109,554    20,734,154    26,353,334    8,022,601  
Total Cash and Cash Equivalents  46,266,719    27,116,888    34,413,222    15,179,847  
             
Investment securities available for sale, at fair value  52,004,599    22,427,009    33,352,233    33,470,737  
Investment securities held to maturity, at amortized cost  1,179,126    1,199,284    1,573,165    1,592,496  
Restricted equity securities, at cost  973,195    3,285,595    2,969,595    1,626,595  
Loans held for sale  2,836,938    5,382,494    4,864,344    10,496,323  
             
Loans, net of deferred fees and costs  482,423,126    417,169,593    393,240,567    389,360,703  
Less: Allowance for loan losses  (2,447,785)   (2,292,950)   (1,773,009)   (1,619,755) 
Loans, net  479,975,341    414,876,643    391,467,558    387,740,948  
             
Real estate acquired through foreclosure  1,638,737    1,467,104    1,459,732    1,977,262  
Premises and equipment, net  5,288,283    4,710,947    5,060,802    5,187,841  
Bank owned life insurance  5,700,245    5,670,940    5,611,352    5,579,745  
Core deposit intangible  3,265,774    2,276,052    2,624,184    2,821,906  
Deferred tax assets, net  2,777,633    2,789,456    2,723,557    4,100,033  
Accrued interest receivable  1,736,342    1,334,104    1,271,871    1,308,152  
Accrued taxes receivable  1,532,266    1,845,339    2,775,237    1,809,750  
Prepaid expenses  941,458    960,729    691,372    809,447  
Other assets  218,860    261,923    303,614    460,086  
  Total Assets$ 606,335,516   $ 495,604,507   $ 491,161,838   $ 474,161,168   
             
LIABILITIES             
Noninterest-bearing deposits$ 100,060,567  $ 95,955,343  $ 101,838,210  $ 91,825,133  
Interest-bearing deposits  431,026,148    267,219,013    265,577,728    289,745,003  
Total Deposits  531,086,715    363,174,356    367,415,938    381,570,136  
             
Short-term borrowings  1,975,000    60,575,000    52,300,000    20,900,000  
Defined benefit pension liability  1,298,463    1,328,285    829,237    1,661,891  
Accrued expenses and other liabilities  6,753,573    3,029,265    2,934,174    3,149,747  
Total Liabilities  541,113,751    428,106,906    423,479,349    407,281,774  
             
STOCKHOLDERS' EQUITY            
Common stock - par value $1.00, authorized 20,000,000 shares, issued and outstanding 10,363,998, 10,918,228, 11,062,932 and 11,046,676 shares as of September 30, 2016, June 30, 2016, December 31, 2015 and September 30, 2015, respectively.  10,363,998    10,918,228    11,062,932    11,046,676  
Additional paid-in capital  40,526,319    42,804,154    43,378,927    43,374,650  
Retained earnings  13,758,742    13,302,573    12,667,070    12,154,890  
Accumulated other comprehensive income  516,437    472,646    573,560    303,178  
Total controlling interest  65,165,496    67,497,601    67,682,489    66,879,394  
Non-controlling interest  56,269    -    -    -  
Total Stockholders' Equity  65,221,765    67,497,601    67,682,489    66,879,394  
Total Liabilities and Stockholders' Equity$ 606,335,516   $ 495,604,507   $ 491,161,838   $ 474,161,168   
             

 

BAY BANCORP, INC. AND SUBSIDIARY              
CONSOLIDATED STATEMENTS OF INCOME               
(Unaudited) 
               
  Three Months Ended September 30,  Nine Months Ended September 30,   
   2016  2015  2016  2015  
               
Interest income:              
Interest and fees on loans $5,845,238 $5,473,097 $15,684,450 $16,566,540  
Interest on loans held for sale  31,818  97,965  110,270  291,656  
Interest and dividends on securities  311,693  295,612  728,716  811,310  
Interest on deposits with banks and federal funds sold  91,577  11,743  122,803  28,123  
Total Interest Income  6,280,326  5,878,417  16,646,239  17,697,629  
               
Interest expense:              
Interest on deposits  560,598  433,349  1,162,255  1,381,920  
Interest on Fed Funds Purchased  -  -  28  604  
Interest on short-term borrowings  27,667  23,310  171,246  46,954  
Total Interest Expense  588,265  456,659  1,333,529  1,429,478  
Net Interest Income  5,692,061  5,421,758  15,312,710  16,268,151  
               
Provision for loan losses  360,000  306,387  1,015,533  878,196  
Net interest income after provision for loan losses  5,332,061  5,115,371  14,297,177  15,389,955  
               
Noninterest income:              
Electronic banking fees  669,728  625,041  1,803,387  1,827,287  
Mortgage banking fees and gains  252,990  515,035  674,273  1,512,742  
Service charges on deposit accounts  81,907  79,375  229,534  229,106  
Bargain purchase gain  1,034,456  -  1,034,456  -  
Gain on securities sold  -  119,477  486,534  196,967  
Other income  1,772,079  155,504  2,099,056  512,834  
Total Noninterest Income  3,811,160  1,494,432  6,327,240  4,278,936  
               
Noninterest expenses:              
Salary and employee benefits  3,835,628  2,894,539  9,509,588  8,957,474  
Occupancy and equipment expenses  861,244  887,605  2,541,514  2,784,435  
Legal, accounting and other professional fees  259,134  393,035  787,148  1,130,214  
Data processing and item processing services  364,637  368,221  899,451  994,101  
FDIC insurance costs  141,714  98,375  305,895  301,758  
Advertising and marketing related expenses  211,639  184,910  352,378  280,214  
Foreclosed property expenses and OREO sales, net  157,357  66,414  327,942  256,428  
Loan collection costs  6,417  112,539  40,545  311,916  
Core deposit intangible amortization  207,278  197,722  555,410  656,375  
Merger and acquisition related expenses  1,519,840  -  1,708,892  -  
Other expenses  788,162  552,049  1,760,259  1,674,927  
Total Noninterest Expenses  8,353,050  5,755,409  18,789,022  17,347,842  
Income before income taxes  790,171  854,394  1,835,395  2,321,049  
Income tax expense  277,733  324,977  687,454  902,464  
Net income  512,438  529,417  1,147,941  1,418,585  
Less:  Net income attributable to non-controlling interest  56,269  -  56,269  -  
Net income available to common stockholders $456,169 $529,417 $1,091,672 $1,418,585  
               
Basic net income per common share $0.04 $0.05 $0.10 $0.13  
               
Diluted net income per common share $0.04 $0.05 $0.10 $0.13  
               


BAY BANCORP, INC. AND SUBSIDIARY          
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY        
For the Nine Months Ended September 30, 2016 and 2015        
(Unaudited)             
              
              
         Accumulated    
     Additional   Other Non-   
   Common Paid-in Retained Comprehensive controlling  
   Stock Capital Earnings   Income (loss) Interest   Total
              
Balance December 31, 2014 $ 11,014,517 $ 43,228,950 $10,736,305$ 1,663,514 $-$ 66,643,286 
              
Net income   -   -  1,418,585  -  -  1,418,585 
Other comprehensive income     -  -  (1,360,336) -  (1,360,336)
Stock-based compensation   -   123,179  -  -  -  123,179 
Issuance of common stock under stock option plan   202,651   709,603  -  -  -  912,254 
Repurchase of common stock   (170,492)  (687,082) -  -  -  (857,574)
Balance September 30, 2015 $ 11,046,676 $ 43,374,650 $12,154,890$ 303,178 $-$ 66,879,394 
              
              
         Accumulated    
     Additional   Other Non-   
   Common Paid-in Retained Comprehensive controlling  
   Stock Capital Earnings Income (loss) Interest     Total
              
Balance December 31, 2015 $ 11,062,932 $ 43,378,927 $12,667,070$ 573,560 $-$ 67,682,489 
              
Net income   -   -  1,091,672  -  56,269  1,147,941 
Other comprehensive income      -  (57,123) -  (57,123)
Stock-based compensation   -   68,773  -  -  -  68,773 
Issuance of restricted common stock   15,296   16,948  -  -  -  32,244 
Issuance of common stock under stock option plan   29,206   110,233  -  -  -  139,439 
Repurchase of common stock   (743,436)  (3,048,562) -  -  -  (3,791,998)
Balance September 30, 2016 $ 10,363,998 $ 40,526,319 $13,758,742$ 516,437 $56,269$ 65,221,765 
              

 

BAY BANCORP, INC. AND SUBSIDIARY                
SELECTED FINANCIAL DATA                   
                    
                    
                    
 Three Months Ended Nine Months Ended Year Ended 
                    
 September 30, June 30, September 30, September 30, September 30, December 31, 
 (unaudited) (unaudited) (unaudited)(unaudited)(unaudited)    
 2016 2016 20152016 2015 2015  
Financial Data:                   
Assets$ 606,335,516  $ 495,604,507  $ 474,161,168  $ 606,335,516  $ 474,161,168  $ 491,161,838   
Investment securities  53,183,725    23,626,293    35,063,233    53,183,725    35,063,233    34,925,398   
Loans (net of deferred fees and costs)  482,423,126    417,169,593    389,360,703    482,423,126    389,360,703    393,240,567   
Allowance for loan losses  (2,447,785)   (2,292,950)   (1,619,755)   (2,447,785)   (1,619,755)   (1,773,009)  
Deposits  531,086,715    363,174,356    381,570,136    531,086,715    381,570,136    367,415,938   
Borrowings  1,975,000    60,575,000    20,900,000    1,975,000    20,900,000    52,300,000   
Stockholders' equity  65,221,765    67,497,601    66,879,394    65,221,765    66,879,394    67,682,489   
                    
Net income - Bay Bancorp  456,169    449,104    529,417    1,091,672    1,418,585    1,930,765   
Net income - Non-controlling interest  56,269    -    -    56,269    -    -   
                    
Average Balances: (unaudited)                   
Assets  615,002,018    473,431,406    486,948,390    522,652,985    484,582,648    481,145,938   
Investment securities  55,180,076    28,211,638    40,709,454    37,683,531    37,158,002    36,649,655   
Loans (net of deferred fees and costs)  478,895,035    403,746,480    387,299,575    426,352,856    389,001,674    389,684,221   
Borrowings  9,003,261    41,074,725    32,341,304    31,951,734    20,792,308    23,188,219   
Deposits  530,943,677    361,823,111    383,155,659    418,537,356    392,504,799    388,245,405   
Stockholders' equity  65,439,159    66,826,333    67,356,613    66,605,781    67,458,129    65,747,418   
                    
Performance Ratios:                   
Annualized return on average assets  0.33%   0.38%   0.43%   0.29%   0.39%   0.40%  
Annualized return on average equity  3.12%   2.70%   3.12%   2.30%   2.81%   2.94%  
Yield on average interest-earning assets  4.26%   4.67%   5.07%  4.47%   5.18%   5.10%  
Rate on average interest-bearing liabilities  0.52%   0.49%   0.56%   0.50%   0.61%   0.58%  
Net interest spread  3.74%   4.19%   4.51%   3.97%   4.58%   4.51%  
Net interest margin  3.86%   4.34%   4.68%   4.11%   4.76%   4.70%  
                    
Book value per share$ 6.29  $ 6.18  $ 6.05  $ 6.29  $ 6.05  $ 6.12   
Basic net income per share  0.04    0.04    0.05    0.10    0.13    0.17   
Diluted net income per share  0.04    0.04    0.05    0.10    0.13    0.17   
                    
                    
  September 30, June 30, September 30,  December 31,        
  2016 2016  2015    2015         
Asset Quality Ratios:                   
Allowance for loan losses to loans  0.51%   0.55%   0.42%   0.45%        
Nonperforming loans to avg. loans  2.95%   1.86%   2.79%   2.26%        
Nonperforming assets to total assets  2.60%   1.84%   2.71%   2.10%        
Net charge-offs annualized to avg. loans  0.17%   0.01%   0.06%   0.03%        
                   
Capital Ratios (Bay Bank, FSB):  (Estimated)                 
Total risk-based capital ratio  12.76%   16.10%   16.50%   16.58%        
Common equity tier 1 capital ratio  12.28%   15.56%   16.09%   16.14%        
Tier 1 risk-based capital ratio  12.28%   15.56%   16.09%   16.14%        
Leverage ratio  10.13%   13.99%   13.19%   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 lpickett@baybankmd.com 410-312-5415

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