PR Newswire
RICHMOND, Va., Oct. 29, 2020
RICHMOND, Va., Oct. 29, 2020 /PRNewswire/ -- Bay Banks of Virginia, Inc. (OTCQB: BAYK), holding company of Virginia Commonwealth Bank and VCB Financial Group, Inc., announced financial results for the three and nine months ended September 30, 2020.
On August 13, 2020, the company and Blue Ridge Bankshares, Inc. (NYSE American: BRBS) ("Blue Ridge") jointly announced the signing of a definitive merger agreement pursuant to which the companies will combine in an all-stock merger (the "Merger") to create a leading Virginia-based community bank. Under the terms of the merger agreement, shareholders of the company will receive 0.50 shares of Blue Ridge common stock for each share of the company's common stock they own. Upon completion of the Merger, the company's shareholders will own approximately 54% and Blue Ridge shareholders will own approximately 46% of the combined company's stock. The Merger is subject to customary closing conditions, including regulatory approvals and approval from the shareholders of both companies. The company anticipates the Merger will close in the first quarter of 2021.
The company reported net income of $1.5 million, or $0.11 per diluted share, for the third quarter of 2020 compared to a net loss of $8.1 million or $(0.62) per diluted share, for the second quarter of 2020 and net income of $1.8 million, or $0.14 per diluted share, for the third quarter of 2019. For the nine months ended September 30, 2020, the company reported a net loss of $6.6 million, or $(0.51) per diluted share, compared to net income of $5.1 million, or $0.39 per diluted share, for the nine months ended September 30, 2019. Net loss for the nine months ended September 30, 2020 included a $10.4 million ($9.8 million after tax1), or $0.751 per diluted share, charge for the impairment of goodwill reported in the second quarter of 2020. For the three months ended September 30, 2020, results included approximately $1.5 million ($1.4 million after tax1), or $0.111 per diluted share, of expenses incurred in connection with the anticipated Merger.
In addition to the goodwill impairment charge and Merger-related expenses, net income (loss) for the three and nine months ended September 30, 2020 included loan loss provision expense of $869 thousand and $5.7 million, respectively. A significant portion of the provision for loan losses in 2020 relates to estimated reserve needs as a result of the COVID-19 pandemic. Excluding the $10.4 million goodwill impairment charge and $1.5 million of Merger-related expenses, pre-tax, pre-loan loss provision income for the third quarter of 2020 was $4.5 million1 compared to $4.1 million1 and $2.8 million1 for the second quarter of 2020 and third quarter of 2019, respectively.
The company has actively participated in the Paycheck Protection Program ("PPP") under the Coronavirus Aid, Relief, and Economic Security Act, closing nearly 700 loans totaling $56.8 million and receiving $2.4 million in processing fees. Of the processing fees received, $287 thousand and $532 thousand were recognized in interest income in the third-quarter and year-to-date periods ended September 30, 2020, while the remaining fees were deferred and will be recognized over the life of the loans, accelerated for pre-payments.
From the onset of the global pandemic, the company has proactively addressed the needs of its commercial and individual borrowers, modifying loans allowing for the short-term deferral of principal payments or of principal and interest payments. The following table presents the loan balances and number by loan type and the percentage these loans comprise within each loan type for modified loans as of September 30, 2020. Of the following balances, $39.5 million were to borrowers in the hotel/motel industry, $18.6 million were to borrowers in the restaurant and restaurant-related industry, and $9.3 million were to borrowers in the retail industry.
Loan Type | Loan Count | Principal Balance (in thousands) | % of Loan Type | ||||||||||
Mortgage loans on real estate: | |||||||||||||
Residential first mortgages | 14 | $ | 2,886 | 1% | |||||||||
Commercial mortgages (non-owner occupied) | 23 | 47,102 | 17% | ||||||||||
Construction, land and land development | 13 | 22,879 | 17% | ||||||||||
Commercial mortgages (owner occupied) | 17 | 10,520 | 14% | ||||||||||
Residential revolving and junior mortgages | 1 | 257 | 1% | ||||||||||
Commercial and industrial | 87 | 17,575 | 9% | ||||||||||
Consumer | 2 | 8 | 0% | ||||||||||
Total | 157 | $ | 101,227 | 10% | |||||||||
Randal R. Greene, President and Chief Executive Officer, commented: "The global pandemic and resulting government mandates have caused tremendous hardships for families and businesses. Last quarter, I stated we'd begin in the last half of the year to gain some clarity into the lasting impact the COVID-19 virus may have on the financial health of our borrowers. Our borrowers have benefited from payment deferrals and, I'm pleased to report, many are back to paying status during the third quarter. Even though there is some improvement, some of our borrowers are still struggling with the extended economic downturn. Our branch lobbies are open at this time, though branch traffic is not at pre-pandemic levels; I believe the virus has accelerated the adoption of digital access. In spite of these difficult times, our employees have supported our customers, grown our loan portfolio and deposit franchise, and driven increased operating profitability. Excluding the effect of the unusual expense items, the company earned $4.5 million1 on a pre-tax, pre-loan loss provision basis, exceeding any levels earned in recent periods."
Operating Results
Third Quarter 2020 compared to Second Quarter 2020
Year-to-date 2020 compared to Year-to-date 2019
Third Quarter 2020 compared to Third Quarter 2019
Balance Sheet
Asset Quality
Outlook
Greene concluded: "The recent up-tick in virus cases and the stalling of further government actions to support the economy could further impact our borrowers' ability to satisfy their loans. These factors and the low interest rate environment expected for several years puts pressure on banks, such as ours. We believe the ensuing combination with Blue Ridge, positioning us with a larger balance sheet and a more diversified revenue base, should be to our advantage."
About Bay Banks of Virginia, Inc.
Bay Banks of Virginia, Inc. is the bank holding company for Virginia Commonwealth Bank and VCB Financial Group, Inc. Founded in the 1930s, Virginia Commonwealth Bank is headquartered in Richmond, Virginia. With 18 banking offices, located throughout the greater Richmond region of Virginia, the Northern Neck region of Virginia, Middlesex County, and the Hampton Roads region of Virginia, the bank serves businesses, professionals, and consumers with a wide variety of financial services, including retail and commercial banking, and mortgage banking. VCB Financial Group provides management services for personal and corporate trusts, including estate planning, estate settlement and trust administration, and investment and wealth management services.
Caution About Forward-Looking Statements
This press release contains statements concerning the company's expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements may constitute "forward-looking statements" as defined by federal securities laws. These statements may address issues that involve estimates and assumptions made by management, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the company include, but are not limited to: the effect of the COVID-19 pandemic, including its potential adverse effect on economic conditions, and the company's employees, customers, loan losses, and financial performance; changes in interest rates and general economic conditions; the ability to close the Merger on the expected terms and schedule; difficulties, delays and unforeseen costs in completing the Merger and in integrating the company's and Blue Ridge's businesses; the ability to realize cost savings and other benefits of the Merger; business disruption during the pendency of or following the Merger; the legislative/regulatory climate; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and Federal Reserve Board; the quality or composition of the loan or investment portfolios; demand for loan products; deposit flows; competition; demand for financial services in the company's market area; acquisitions and dispositions; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; and tax and accounting rules, principles, policies and guidelines; and other factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and other reports filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation, the company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
For further information, contact Randal R. Greene, President and Chief Executive Officer, at 844-404-9668 or Judy C. Gavant, Executive Vice President and Chief Financial Officer, at 804-518-2606 or [email protected].
1 See discussion of non-GAAP financial measures at the end of the Supplemental Financial Data tables that follow.
BAY BANKS OF VIRGINIA, INC. | ||||||||
(unaudited) | ||||||||
(Dollars in thousands, except share data) | September 30, | December 31, | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 9,324 | $ | 6,096 | ||||
Interest-earning deposits | 50,069 | 34,358 | ||||||
Federal funds sold | 152 | 1,359 | ||||||
Certificates of deposit | 1,266 | 2,754 | ||||||
Available-for-sale securities, at fair value | 87,853 | 99,454 | ||||||
Restricted securities | 5,022 | 5,706 | ||||||
Loans receivable, net of allowance for loan losses of $12,899 and $7,562, respectively | 1,041,711 | 916,628 | ||||||
Loans held for sale | 2,687 | 1,231 | ||||||
Premises and equipment, net | 17,859 | 20,141 | ||||||
Accrued interest receivable | 4,664 | 3,035 | ||||||
Other real estate owned, net | 1,113 | 1,916 | ||||||
Bank owned life insurance | 20,103 | 19,752 | ||||||
Goodwill | — | 10,374 | ||||||
Mortgage servicing rights | 845 | 935 | ||||||
Core deposit intangible | 1,094 | 1,518 | ||||||
Other assets | 7,820 | 6,666 | ||||||
Total assets | $ | 1,251,582 | $ | 1,131,923 | ||||
LIABILITIES | ||||||||
Noninterest-bearing demand deposits | $ | 190,843 | $ | 137,933 | ||||
Savings and interest-bearing demand deposits | 424,001 | 382,607 | ||||||
Time deposits | 412,837 | 389,900 | ||||||
Total deposits | 1,027,681 | 910,440 | ||||||
Securities sold under repurchase agreements | 1,117 | 6,525 | ||||||
Federal Home Loan Bank advances | 25,000 | 45,000 | ||||||
Federal Reserve Bank advances | 32,637 | — | ||||||
Subordinated notes, net of unamortized issuance costs | 31,083 | 31,001 | ||||||
Other liabilities | 12,635 | 12,772 | ||||||
Total liabilities | 1,130,153 | 1,005,738 | ||||||
SHAREHOLDERS' EQUITY | ||||||||
Common stock ($5 par value; authorized - 30,000,000 shares; outstanding - 13,342,104 and 13,261,801 shares, respectively) (2) | 66,711 | 66,309 | ||||||
Additional paid-in capital | 36,816 | 36,658 | ||||||
Unearned employee stock ownership plan shares | (1,326) | (1,525) | ||||||
Retained earnings | 18,012 | 24,660 | ||||||
Accumulated other comprehensive income, net | 1,216 | 83 | ||||||
Total shareholders' equity | 121,429 | 126,185 | ||||||
Total liabilities and shareholders' equity | $ | 1,251,582 | $ | 1,131,923 |
(1) | Derived from audited December 31, 2019 Consolidated Financial Statements. |
(2) | Preferred stock is authorized; however, none was outstanding as of September 30, 2020 and December 31, 2019. |
BAY BANKS OF VIRGINIA, INC. | ||||||||||||
For the Three Months Ended | ||||||||||||
(Dollars in thousands, except per share data) | September 30, | June 30, | September 30, | |||||||||
INTEREST INCOME | ||||||||||||
Loans, including fees | $ | 11,371 | $ | 11,290 | $ | 11,930 | ||||||
Securities: | ||||||||||||
Taxable | 596 | 573 | 553 | |||||||||
Tax-exempt | 88 | 89 | 113 | |||||||||
Federal funds sold | — | — | 6 | |||||||||
Interest-earning deposit accounts | 6 | 8 | 145 | |||||||||
Certificates of deposit | 9 | 14 | 18 | |||||||||
Total interest income | 12,070 | 11,974 | 12,765 | |||||||||
INTEREST EXPENSE | ||||||||||||
Deposits | 2,104 | 2,411 | 3,123 | |||||||||
Securities sold under repurchase agreements | — | 1 | 4 | |||||||||
Subordinated notes and other borrowings | 510 | 510 | 142 | |||||||||
Federal Home Loan Bank advances | 50 | 90 | 465 | |||||||||
Federal Reserve Bank advances | 29 | 20 | — | |||||||||
Total interest expense | 2,693 | 3,032 | 3,734 | |||||||||
Net interest income | 9,377 | 8,942 | 9,031 | |||||||||
Provision for loan losses | 869 | 2,027 | 495 | |||||||||
Net interest income after provision for loan losses | 8,508 | 6,915 | 8,536 | |||||||||
NONINTEREST INCOME | ||||||||||||
Trust management | 220 | 203 | 201 | |||||||||
Service charges and fees on deposit accounts | 155 | 137 | 243 | |||||||||
Wealth management | 350 | 228 | 185 | |||||||||
Interchange fees, net | 149 | 130 | 108 | |||||||||
Other service charges and fees | 33 | 28 | 32 | |||||||||
Secondary market sales and servicing | 1,082 | 731 | 293 | |||||||||
Increase in cash surrender value of bank owned life insurance | 117 | 116 | 122 | |||||||||
Net gains on sales and calls of available-for-sale securities | — | 3 | 1 | |||||||||
Net gains on disposition of other assets | 12 | 1 | — | |||||||||
Net gains on rabbi trust assets | 74 | 114 | — | |||||||||
Referral fees | 86 | 496 | — | |||||||||
Other | 8 | 7 | 15 | |||||||||
Total noninterest income | 2,286 | 2,194 | 1,200 | |||||||||
NONINTEREST EXPENSE | ||||||||||||
Salaries and employee benefits | 3,801 | 3,839 | 3,666 | |||||||||
Occupancy | 700 | 705 | 805 | |||||||||
Data processing | 491 | 498 | 541 | |||||||||
Bank franchise tax | 256 | 257 | 209 | |||||||||
Telecommunications and other technology | 396 | 371 | 258 | |||||||||
FDIC assessments | 262 | 147 | (7) | |||||||||
Foreclosed property | 22 | 28 | 48 | |||||||||
Consulting | 54 | 70 | 156 | |||||||||
Advertising and marketing | 47 | 26 | 124 | |||||||||
Directors' fees | 187 | 188 | 148 | |||||||||
Audit and accounting | 92 | 170 | 193 | |||||||||
Legal | (210) | 154 | 20 | |||||||||
Core deposit intangible amortization | 134 | 142 | 164 | |||||||||
Net other real estate owned losses | 176 | 81 | 375 | |||||||||
Goodwill impairment | — | 10,374 | — | |||||||||
Merger-related | 1,456 | — | — | |||||||||
Other | 782 | 403 | 747 | |||||||||
Total noninterest expense | 8,646 | 17,453 | 7,447 | |||||||||
Income (loss) before income taxes | 2,148 | (8,344) | 2,289 | |||||||||
Income tax expense (benefit) | 655 | (217) | 448 | |||||||||
Net income (loss) | $ | 1,493 | $ | (8,127) | $ | 1,841 | ||||||
Basic and diluted earnings (loss) per share | $ | 0.11 | $ | (0.62) | $ | 0.14 |
BAY BANKS OF VIRGINIA, INC. | ||||||||
For the Nine Months Ended | ||||||||
(Dollars in thousands, except per share data) | September 30, | September 30, | ||||||
INTEREST INCOME | ||||||||
Loans, including fees | $ | 34,013 | $ | 34,849 | ||||
Securities: | ||||||||
Taxable | 1,821 | 1,725 | ||||||
Tax-exempt | 270 | 327 | ||||||
Federal funds sold | 2 | 31 | ||||||
Interest-earning deposit accounts | 119 | 432 | ||||||
Certificates of deposit | 37 | 57 | ||||||
Total interest income | 36,262 | 37,421 | ||||||
INTEREST EXPENSE | ||||||||
Deposits | 7,364 | 9,019 | ||||||
Securities sold under repurchase agreements | 3 | 11 | ||||||
Subordinated notes and other borrowings | 1,531 | 417 | ||||||
Federal Home Loan Bank advances | 374 | 1,784 | ||||||
Federal Reserve Bank advances | 49 | — | ||||||
Total interest expense | 9,321 | 11,231 | ||||||
Net interest income | 26,941 | 26,190 | ||||||
Provision for loan losses | 5,673 | 871 | ||||||
Net interest income after provision for loan losses | 21,268 | 25,319 | ||||||
NONINTEREST INCOME | ||||||||
Trust management | 615 | 621 | ||||||
Service charges and fees on deposit accounts | 529 | 727 | ||||||
Wealth management | 824 | 654 | ||||||
Interchange fees, net | 378 | 330 | ||||||
Other service charges and fees | 94 | 88 | ||||||
Secondary market sales and servicing | 2,015 | 632 | ||||||
Increase in cash surrender value of bank owned life insurance | 351 | 362 | ||||||
Net gains (losses) on sales and calls of available-for-sale securities | 29 | (1) | ||||||
Net gains (losses) on disposition of other assets | 5 | (2) | ||||||
Net (losses) gains on rabbi trust assets | (76) | 130 | ||||||
Referral fees | 1,052 | — | ||||||
Other | 54 | 44 | ||||||
Total noninterest income | 5,870 | 3,585 | ||||||
NONINTEREST EXPENSE | ||||||||
Salaries and employee benefits | 11,267 | 11,532 | ||||||
Occupancy | 2,156 | 2,510 | ||||||
Data processing | 1,526 | 1,738 | ||||||
Bank franchise tax | 770 | 655 | ||||||
Telecommunications and other technology | 1,176 | 727 | ||||||
FDIC assessments | 557 | 371 | ||||||
Foreclosed property | 58 | 110 | ||||||
Consulting | 195 | 418 | ||||||
Advertising and marketing | 140 | 300 | ||||||
Directors' fees | 568 | 525 | ||||||
Audit and accounting | 402 | 586 | ||||||
Legal | 135 | 130 | ||||||
Core deposit intangible amortization | 425 | 517 | ||||||
Net other real estate owned losses | 256 | 441 | ||||||
Goodwill impairment | 10,374 | — | ||||||
Merger-related | 1,456 | — | ||||||
Other | 1,947 | 2,108 | ||||||
Total noninterest expense | 33,408 | 22,668 | ||||||
(Loss) income before income taxes | (6,270) | 6,236 | ||||||
Income tax expense | 378 | 1,180 | ||||||
Net (loss) income | $ | (6,648) | $ | 5,056 | ||||
Basic and diluted (loss) earnings per share | $ | (0.51) | $ | 0.39 |
BAY BANKS OF VIRGINIA, INC. | ||||||||||||||||||||||||
As of and for the | ||||||||||||||||||||||||
As of and for the Three Months Ended | Year Ended | |||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | December 31, | |||||||||||||||||||
(Dollars in thousands, except per share amounts) | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||||||||||
Select Consolidated Balance Sheet Data | ||||||||||||||||||||||||
Total assets | $ | 1,251,582 | $ | 1,238,226 | $ | 1,183,553 | $ | 1,131,923 | $ | 1,112,219 | ||||||||||||||
Cash, interest-earning deposits and federal funds sold | 59,545 | 39,912 | 56,006 | 41,813 | 31,405 | |||||||||||||||||||
Available-for-sale securities, at fair value | 87,853 | 92,560 | 94,618 | 99,454 | 80,748 | |||||||||||||||||||
Loans: | ||||||||||||||||||||||||
Mortgage loans on real estate | 806,283 | 798,109 | 762,404 | 730,788 | 731,280 | |||||||||||||||||||
Commercial and industrial | 187,219 | 193,740 | 198,278 | 181,730 | 186,281 | |||||||||||||||||||
Paycheck Protection Program | 56,788 | 55,496 | — | — | — | |||||||||||||||||||
Consumer | 6,443 | 7,855 | 9,846 | 11,985 | 14,471 | |||||||||||||||||||
Loans receivable | 1,056,733 | 1,055,200 | 970,528 | 924,503 | 932,032 | |||||||||||||||||||
Unamortized net deferred loan fees | (2,123) | (2,345) | (333) | (313) | (269) | |||||||||||||||||||
Allowance for loan losses (ALL) | (12,899) | (12,007) | (10,172) | (7,562) | (7,495) | |||||||||||||||||||
Net loans | 1,041,711 | 1,040,848 | 960,023 | 916,628 | 924,268 | |||||||||||||||||||
Loans held for sale | 2,687 | 2,521 | 747 | 1,231 | 268 | |||||||||||||||||||
Other real estate owned, net | 1,113 | 1,903 | 1,679 | 1,916 | 2,178 | |||||||||||||||||||
Total liabilities | $ | 1,130,153 | $ | 1,118,536 | $ | 1,056,151 | $ | 1,005,738 | $ | 987,362 | ||||||||||||||
Deposits: | ||||||||||||||||||||||||
Noninterest-bearing demand deposits | 190,843 | 185,201 | 136,437 | 137,933 | 124,670 | |||||||||||||||||||
Savings and interest-bearing demand deposits | 424,001 | 413,025 | 394,637 | 382,607 | 372,404 | |||||||||||||||||||
Time deposits | 412,837 | 408,672 | 433,393 | 389,900 | 396,614 | |||||||||||||||||||
Total deposits | 1,027,681 | 1,006,898 | 964,467 | 910,440 | 893,688 | |||||||||||||||||||
Securities sold under repurchase agreements | 1,117 | 1,035 | 3,284 | 6,525 | 6,323 | |||||||||||||||||||
Federal Home Loan Bank advances | 25,000 | 35,000 | 45,000 | 45,000 | 68,000 | |||||||||||||||||||
Federal Reserve Bank advances | 32,637 | 33,160 | — | — | — | |||||||||||||||||||
Subordinated notes, net of unamortized issuance costs | 31,083 | 31,056 | 31,029 | 31,001 | 6,906 | |||||||||||||||||||
Shareholders' equity | 121,429 | 119,690 | 127,402 | 126,185 | 124,857 | |||||||||||||||||||
Interest income | $ | 12,070 | $ | 11,974 | $ | 12,218 | $ | 12,997 | $ | 12,765 | $ | 50,418 | ||||||||||||
Interest expense | 2,693 | 3,032 | 3,596 | 3,854 | 3,734 | 15,085 | ||||||||||||||||||
Net interest income | 9,377 | 8,942 | 8,622 | 9,143 | 9,031 | 35,333 | ||||||||||||||||||
Provision for loan losses | 869 | 2,027 | 2,777 | 311 | 495 | 1,182 | ||||||||||||||||||
Noninterest income | 2,286 | 2,194 | 1,391 | 1,373 | 1,200 | 4,958 | ||||||||||||||||||
Noninterest expense | 8,646 | 17,453 | 7,308 | 7,734 | 7,447 | 30,402 | ||||||||||||||||||
Income (loss) before income taxes | 2,148 | (8,344) | (72) | 2,471 | 2,289 | 8,707 | ||||||||||||||||||
Income tax expense (benefit) | 655 | (217) | (58) | 469 | 448 | 1,649 | ||||||||||||||||||
Net income (loss) | $ | 1,493 | $ | (8,127) | $ | (14) | $ | 2,002 | $ | 1,841 | $ | 7,058 |
BAY BANKS OF VIRGINIA, INC. | ||||||||||||||||||||||||
As of and for the | ||||||||||||||||||||||||
As of and for the Three Months Ended | Year Ended | |||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | December 31, | |||||||||||||||||||
(Dollars in thousands, except per share amounts) | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||||||||||
Basic earnings (loss) per share | $ | 0.11 | $ | (0.62) | $ | — | $ | 0.15 | $ | 0.14 | $ | 0.54 | ||||||||||||
Diluted earnings (loss) per share | 0.11 | (0.62) | — | 0.15 | 0.14 | 0.54 | ||||||||||||||||||
Book value per share | 9.10 | 8.98 | 9.55 | 9.51 | 9.36 | |||||||||||||||||||
Tangible book value per share (1) | 9.04 | 8.90 | 8.69 | 8.64 | 8.49 | |||||||||||||||||||
Shares outstanding at end of period | 13,342,104 | 13,334,049 | 13,346,789 | 13,261,801 | 13,334,302 | |||||||||||||||||||
Weighted average shares outstanding, basic | 13,090,035 | 13,080,689 | 13,056,576 | 13,071,708 | 13,077,600 | 13,053,080 | ||||||||||||||||||
Weighted average shares outstanding, diluted | 13,137,990 | 13,080,689 | 13,056,576 | 13,145,522 | 13,132,459 | 13,111,853 | ||||||||||||||||||
Performance Measures and Other Metrics (tax-equivalent basis): | ||||||||||||||||||||||||
Yield on average interest-earning assets | 4.03 | % | 4.17 | % | 4.56 | % | 4.87 | % | 4.87 | % | 4.85 | % | ||||||||||||
Accretion of discounts on acquired loans | $ | 97 | $ | 93 | $ | 189 | $ | 929 | $ | 357 | $ | 1,922 | ||||||||||||
Cost of funds | 0.96 | % | 1.12 | % | 1.44 | % | 1.54 | % | 1.52 | % | 1.55 | % | ||||||||||||
Cost of deposits | 0.82 | % | 0.97 | % | 1.24 | % | 1.34 | % | 1.40 | % | 1.37 | % | ||||||||||||
Net interest spread | 2.88 | % | 2.83 | % | 2.90 | % | 3.09 | % | 3.13 | % | 3.09 | % | ||||||||||||
Net interest margin (NIM) | 3.14 | % | 3.11 | % | 3.22 | % | 3.43 | % | 3.45 | % | 3.40 | % | ||||||||||||
Average interest-earnings assets to total average assets | 95.6 | % | 94.1 | % | 94.4 | % | 94.2 | % | 94.0 | % | 94.0 | % | ||||||||||||
Return (loss) on average assets (annualized) | 0.48 | % | -2.64 | % | 0.00 | % | 0.71 | % | 0.66 | % | 0.64 | % | ||||||||||||
Operating return on average assets (annualized) (1) | 0.93 | % | 0.54 | % | 0.00 | % | 0.71 | % | 0.66 | % | 0.64 | % | ||||||||||||
Return (loss) on average equity (annualized) | 4.95 | % | -25.40 | % | -0.04 | % | 6.39 | % | 5.97 | % | 5.79 | % | ||||||||||||
Operating return (loss) on average equity (annualized) (1) | 9.64 | % | 5.18 | % | -0.04 | % | 6.39 | % | 5.97 | % | 5.79 | % | ||||||||||||
Efficiency ratio | 74.1 | % | 156.7 | % | 73.0 | % | 73.5 | % | 72.8 | % | 75.5 | % | ||||||||||||
Operating efficiency ratio (1) | 61.6 | % | 63.6 | % | 73.0 | % | 73.5 | % | 72.8 | % | 75.5 | % | ||||||||||||
Average assets | $ | 1,246,989 | $ | 1,230,249 | $ | 1,143,879 | $ | 1,126,663 | $ | 1,109,986 | $ | 1,107,670 | ||||||||||||
Average interest-earning assets | 1,192,670 | 1,158,248 | 1,079,351 | 1,061,227 | 1,043,243 | 1,041,622 | ||||||||||||||||||
Average interest-bearing liabilities | 925,812 | 914,832 | 871,597 | 860,421 | 851,392 | 855,703 | ||||||||||||||||||
Average shareholders' equity | 120,570 | 127,960 | 126,955 | 125,285 | 123,399 | 121,859 | ||||||||||||||||||
Shareholders' equity to total assets ratio | 9.7 | % | 9.7 | % | 10.8 | % | 11.1 | % | 11.2 | % | ||||||||||||||
Tangible shareholders' equity to tangible total assets (1) | 9.6 | % | 9.6 | % | 9.9 | % | 10.2 | % | 10.3 | % | ||||||||||||||
Asset Quality Data and Ratios: | ||||||||||||||||||||||||
Nonaccrual loans | $ | 17,198 | $ | 12,279 | $ | 5,441 | $ | 4,476 | $ | 7,194 | ||||||||||||||
Other real estate owned, net | 1,113 | 1,903 | 1,679 | 1,916 | 2,178 | |||||||||||||||||||
Total nonperforming assets | 18,311 | 14,182 | 7,120 | 6,392 | 9,372 | |||||||||||||||||||
Net charge-offs (recoveries) | (23) | 193 | 166 | 245 | 478 | 1,522 | ||||||||||||||||||
Net charge-offs (recoveries) to average loans (annualized) | -0.01 | % | 0.08 | % | 0.07 | % | 0.11 | % | 0.21 | % | 0.17 | % | ||||||||||||
Total nonperforming assets to total assets | 1.46 | % | 1.15 | % | 0.60 | % | 0.56 | % | 0.84 | % | ||||||||||||||
Gross loans to total assets | 84.3 | % | 85.0 | % | 82.0 | % | 81.6 | % | 83.8 | % | ||||||||||||||
ALL to gross loans | 1.22 | % | 1.14 | % | 1.05 | % | 0.82 | % | 0.80 | % | ||||||||||||||
ALL to gross loans, excluding PPP loans (1) | 1.29 | % | 1.20 | % | 1.05 | % | 0.82 | % | 0.80 | % | ||||||||||||||
Discounts on acquired loans | $ | 1,523 | $ | 1,640 | $ | 1,750 | $ | 1,935 | $ | 2,886 |
(1) | Non-GAAP financial measure. See GAAP to Non-GAAP financial measure reconciliation at the end of the Supplemental Financial Data tables that follow. |
BAY BANKS OF VIRGINIA, INC. | ||||||||||||||||||||||||
As of and for the | ||||||||||||||||||||||||
As of and for the Three Months Ended | Year Ended | |||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | December 31, | |||||||||||||||||||
(Dollars in thousands, except per share amounts) | 2020 | 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures (1) | ||||||||||||||||||||||||
Tangible book value per share | ||||||||||||||||||||||||
Total shareholders' equity | $ | 121,429 | $ | 119,690 | $ | 127,402 | $ | 126,185 | $ | 124,857 | ||||||||||||||
Less: intangible assets, net of deferred tax liability on core deposit intangible (a)(b) | 864 | 970 | 11,456 | 11,573 | 11,697 | |||||||||||||||||||
Tangible shareholders' equity | $ | 120,565 | $ | 118,720 | $ | 115,946 | $ | 114,612 | $ | 113,160 | ||||||||||||||
Shares outstanding at end of period | 13,342,104 | 13,334,049 | 13,346,789 | 13,261,801 | 13,334,302 | |||||||||||||||||||
Tangible book value per share | $ | 9.04 | $ | 8.90 | $ | 8.69 | $ | 8.64 | $ | 8.49 | ||||||||||||||
Tangible shareholders' equity to tangible total assets | ||||||||||||||||||||||||
Total assets | $ | 1,251,582 | $ | 1,238,226 | $ | 1,183,553 | $ | 1,131,923 | $ | 1,112,219 | ||||||||||||||
Less: intangible assets, net of deferred tax liability on core deposit intangible (a)(b) | 864 | 970 | 11,456 | 11,573 | 11,697 | |||||||||||||||||||
Tangible total assets | $ | 1,250,718 | $ | 1,237,256 | $ | 1,172,097 | $ | 1,120,350 | $ | 1,100,522 | ||||||||||||||
Tangible shareholders' equity | $ | 120,565 | $ | 118,720 | $ | 115,946 | $ | 114,612 | $ | 113,160 | ||||||||||||||
Tangible shareholders' equity to tangible total assets | 9.6 | % | 9.6 | % | 9.9 | % | 10.2 | % | 10.3 | % | ||||||||||||||
Allowance for loan losses to gross loans, excluding PPP loans | ||||||||||||||||||||||||
Gross loans | $ | 1,054,610 | $ | 1,052,855 | $ | 970,195 | $ | 924,190 | $ | 931,763 | ||||||||||||||
Less: PPP loans | 56,788 | 55,496 | — | — | — | |||||||||||||||||||
Gross loans excluding PPP loans | $ | 997,822 | $ | 997,359 | $ | 970,195 | $ | 924,190 | $ | 931,763 | ||||||||||||||
Allowance for loan losses | $ | 12,899 | $ | 12,007 | $ | 12,007 | $ | 7,562 | $ | 7,495 | ||||||||||||||
Allowance for loan losses to gross loans, excluding PPP loans | 1.29 | % | 1.20 | % | 1.05 | % | 0.82 | % | 0.80 | % | ||||||||||||||
Select noninterest expenses, after-tax basis (ATB) | ||||||||||||||||||||||||
Goodwill impairment | $ | — | $ | 10,374 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Goodwill impairment, ATB (b)(c) | — | 9,784 | — | — | — | — | ||||||||||||||||||
Merger-related expenses (MRE) | 1,456 | — | — | — | — | — | ||||||||||||||||||
MRE, ATB (b)(d) | 1,412 | — | — | — | — | — | ||||||||||||||||||
Weighted average shares outstanding year-to-date, diluted | 13,075,761 | 13,068,598 | N/A | N/A | N/A | N/A | ||||||||||||||||||
Goodwill impairment and MRE, ATB effect on earnings (loss) per diluted share | $ | (0.11) | $ | (0.75) | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Operating return on average assets (annualized) | ||||||||||||||||||||||||
Net income (loss) | $ | 1,493 | $ | (8,127) | $ | (14) | $ | 2,002 | $ | 1,841 | $ | 7,058 | ||||||||||||
Add: Goodwill impairment, ATB | — | 9,784 | — | — | — | — | ||||||||||||||||||
Add: MRE, ATB | 1,412 | — | — | — | — | — | ||||||||||||||||||
Operating net income (loss) | $ | 2,905 | $ | 1,657 | $ | (14) | $ | 2,002 | $ | 1,841 | $ | 7,058 | ||||||||||||
Average assets | $ | 1,246,989 | $ | 1,230,249 | $ | 1,143,879 | $ | 1,126,663 | $ | 1,109,986 | $ | 1,107,670 | ||||||||||||
Operating return on average assets (annualized) | 0.93 | % | 0.54 | % | 0.00 | % | 0.71 | % | 0.66 | % | 0.64 | % | ||||||||||||
Operating return (loss) on average equity (annualized) | ||||||||||||||||||||||||
Net income (loss) | $ | 1,493 | $ | (8,127) | $ | (14) | $ | 2,002 | $ | 1,841 | $ | 7,058 | ||||||||||||
Add: Goodwill impairment, ATB | — | 9,784 | — | — | — | — | ||||||||||||||||||
Add: MRE, ATB | 1,412 | — | — | — | — | — | ||||||||||||||||||
Operating net income (loss) | $ | 2,905 | $ | 1,657 | $ | (14) | $ | 2,002 | $ | 1,841 | $ | 7,058 | ||||||||||||
Average shareholders' equity | $ | 120,570 | $ | 127,960 | $ | 126,955 | $ | 125,285 | $ | 123,399 | $ | 121,859 | ||||||||||||
Operating return (loss) on average equity (annualized) | 9.64 | % | 5.18 | % | -0.04 | % | 6.39 | % | 5.97 | % | 5.79 | % | ||||||||||||
Operating efficiency ratio | ||||||||||||||||||||||||
Total noninterest expense | $ | 8,646 | $ | 17,453 | $ | 7,308 | $ | 7,734 | $ | 7,447 | $ | 30,402 | ||||||||||||
Less: Goodwill impairment | — | 10,374 | — | — | — | — | ||||||||||||||||||
Less: MRE | 1,456 | — | — | — | — | — | ||||||||||||||||||
Operating noninterest expense | 7,190 | 7,079 | 7,308 | 7,734 | 7,447 | 30,402 | ||||||||||||||||||
Net interest income | 9,377 | 8,942 | 8,622 | 9,143 | 9,031 | 35,333 | ||||||||||||||||||
Noninterest income | 2,286 | 2,194 | 1,391 | 1,373 | 1,200 | 4,958 | ||||||||||||||||||
Operating efficiency ratio | 61.6 | % | 63.6 | % | 73.0 | % | 73.5 | % | 72.8 | % | 75.5 | % | ||||||||||||
Pre-tax, pre-loan loss provision income, excluding goodwill impairment and MRE | ||||||||||||||||||||||||
Net income (loss) | $ | 1,493 | $ | (8,127) | $ | (14) | $ | 2,002 | $ | 1,841 | $ | 7,058 | ||||||||||||
Add: Income tax expense (benefit) | 655 | (217) | (58) | 469 | 448 | 1,649 | ||||||||||||||||||
Add: Provision for loan losses | 869 | 2,027 | 2,777 | 311 | 495 | 1,182 | ||||||||||||||||||
Add: Goodwill impairment | — | 10,374 | — | — | — | — | ||||||||||||||||||
Add: MRE | 1,456 | — | — | — | — | — | ||||||||||||||||||
Pre-tax, pre-loan loss provision income, excluding goodwill impairment and MRE | $ | 4,473 | $ | 4,057 | $ | 2,705 | $ | 2,782 | $ | 2,784 | $ | 9,889 |
(a) Excludes mortgage servicing rights. | |
(b) Assumes a federal income tax rate of 21%. | |
(c) $7.6 million of the $10.4 million goodwill charged-off in the second quarter of 2020 originated as a result of the company's tax-free merger with Virginia BanCorp, Inc. in 2017 and is nondeductible for federal income tax purposes. The remaining $2.8 million of goodwill originated from branch acquisitions from 1994-2000, the basis of which had been fully amortized for income tax purposes, resulting in a deferred tax liability. Due to the goodwill impairment charge, the company recorded an income tax benefit (and reversal of the deferred tax liability) of approximately $590 thousand in the second quarter of 2020. | |
(d) Of the $1,456 thousand of Merger-related expenses incurred in the third quarter of 2020, the company has determined, at this time, that $1,246 thousand is nondeductible for federal income tax purposes. | |
(1) Set forth above are calculations of each of the non-GAAP (generally accepted accounting principles) financial measures included in the Supplemental Financial Data tables. Tangible book value per share, tangible shareholders' equity to tangible total assets ratio, allowance for loan losses to gross loans, excluding PPP loans, select noninterest expenses on an after-tax basis, operating return on average assets, operating efficiency ratio, and pre-tax, pre-loan loss provision income are supplemental financial measures that are not required nor presented in accordance with GAAP. Management believes tangible book value per share and tangible shareholders' equity to tangible total assets ratios are meaningful because they are measures management uses to assess capital levels. Management believes the ratio of allowance for loan losses to gross loans, excluding PPP loans, is meaningful because management uses it to assess allowance levels excluding the impact of PPP loans which carry no allowance for loan losses due to the full U.S. government guarantee. Management believes that select noninterest expenses on an after-tax basis, operating return on average assets, operating efficiency ratios, and pre-tax, pre-loan loss provision income, excluding goodwill impairment and Merger-related expenses are meaningful because management uses them to assess the financial performance of the company. Calculations of these non-GAAP financial measures may not be comparable to the calculation of similarly titled measures reported by other companies. |
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SOURCE Bay Banks of Virginia, Inc.
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