-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JbE8IlDUyW7nI1+Vfil/SDhLlgvdH9FCEWMgcqeBvx8P/r6Ns7JhXMqU49pwF1zF E3mLjjtGaXLsXzVdnPOYPw== 0000916641-99-000440.txt : 19990517 0000916641-99-000440.hdr.sgml : 19990517 ACCESSION NUMBER: 0000916641-99-000440 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAY BANKS OF VIRGINIA INC CENTRAL INDEX KEY: 0001034594 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 541838100 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-22955 FILM NUMBER: 99624234 BUSINESS ADDRESS: STREET 1: P O BOX 1869 CITY: KILMARNICK STATE: VA ZIP: 22482 BUSINESS PHONE: 8044351171 MAIL ADDRESS: STREET 1: P O BOX 1869 CITY: KILMARNOCK STATE: VA ZIP: 22482 10QSB 1 BAY BANKS OF VIRGINIA, INC. 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 BAY BANKS OF VIRGINIA, INC. (EXACT NAME OF SMALL BUSINESS ISSUER) VIRGINIA 54-1838100 (STATE OF INCORPORATION) (IRS EMP. ID NO.) 100 S. MAIN STREET, KILMARNOCK, VA 22482 (ADDRESS OF PRINCIPAL OFFICE) (804)435-1171 (ISSUER'S TELEPHONE NO.) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days __X___yes _____no State the number of shares outstanding of each of the issuer's classes of common equity, as of the Latest practicable date: 1,168,633 shares of common stock at March 31, 1999. Transitional Small Business Disclosure Format ____yes __X__no BAY BANKS OF VIRGINIA, INC. FORM 10-QSB For the interim period ending March 31, 1999. INDEX PART I - FINANCIAL INFORMATION ITEM 1. INTERIM FINANCIAL STATEMENTS (UNAUDITED) 1-3 CONSOLIDATED BALANCE SHEETS MARCH 1999 AND DECEMBER 1998 1 CONSOLIDATED STATEMENT OF EARNINGS THREE MONTHS ENDED MARCH 31, 1999 AND 1998 2 CONSOLIDATED STATEMENT OF CASH FLOWS YEAR TO DATE MARCH 1999 AND 1998 3 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 4-7 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 8 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 8 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 8 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 8 ITEM 5. OTHER INFORMATION 8 ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K 8 SIGNATURES 9 BAY BANKS OF VIRGINIA, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) MARCH DECEMBER BALANCE SHEET CATEGORIES 1999 1998 ASSETS: CASH DUE FROM BANKS 7,436,952 5,268,229 U. S. TREASURY SECURITIES 2,542,815 4,566,875 U. S. GOVERNMENT SECURITIES 15,177,896 17,198,694 STATE AND MUNICIPAL SECURITIES 26,249,124 25,354,483 OTHER SECURITIES 17,041,045 11,831,332 FED FUNDS SOLD 5,220,000 12,007,706 TOTAL LOANS,NET UNEARNED 116,244,188 114,988,545 LESS: LOAN LOSS RESERVE (1,041,367) (1,011,935) NET LOANS 114,709,718 113,976,610 NET PREM., FURN., FIXT. 4,629,676 4,699,797 ACCRUED INTEREST RECEIVABLE 1,452,137 1,537,745 OTHER REAL ESTATE OWNED 1,031,338 1,179,556 OTHER ASSETS 3,351,395 2,582,685 TOTAL ASSETS 199,335,199 200,203,712 LIABILITIES DEMAND DEPOSITS 19,278,927 19,851,650 SAVINGS AND NOW 107,103,524 105,347,377 CERTIFICATES OF DEPOSIT 51,452,534 53,656,050 TOTAL DEPOSITS 176,378,036 178,855,077 FED FUNDS PURCHASED - - OTHER LIABILITIES 1,006,430 840,495 TOTAL LIABILITIES 177,834,985 179,695,572 SHAREHOLDERS EQUITY: COMMON STOCK AUTHORIZED-5,000,000 SHARES OUTSTANDING-1,168,633 AND 1,164,728 5,843,165 5,823,640 PAID IN CAPITAL 3,605,195 3,529,924 RETAINED EARNINGS 10,843,929 10,528,706 MKT.ADJ.-SEC.-UNREALIZED 201,495 626,500 TOTAL SHAREHOLDERS EQUITY 20,493,784 20,508,140 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 199,335,199 200,203,712 BAY BANKS OF VIRGINIA, INC. CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) QUARTER END QUARTER END MARCH 31, 1999 MARCH 1998 INTEREST INCOME INTEREST AND FEES ON LOANS 2436585 2352341 INTEREST ON US TREASURY SECURITIES 54619 115113 INTEREST ON US GOVERNMENT SECURITIES 282717 211286 INTEREST ON MUNICIPAL SECURITIES 328507 258691 INTEREST ON OTHER SECURITIES 199891 115561 INTEREST ON FED FUNDS SOLD 107605 244564 TOTAL INTEREST INCOME 3409924 3297556 INTEREST EXPENSE INTEREST ON INT. BEARING TRANSACTION 255982 227277 INTEREST ON SAVINGS DEPOSITS 707925 777111 INTEREST ON CERTIFICATES 656284 732712 INTEREST ON FED FUNDS PURCHASED 0 0 TOTAL INTEREST EXPENSE 1620191 1737100 NET INTEREST INCOME 1789733 1560456 PROVISION FOR LOAN LOSSES 70000 45000 NET INTEREST INCOME AFTER PROV. 1719733 1515456 NON-INTEREST INCOME VISA INCOME 43524 38754 DEPOSIT FEES 82760 64535 TRUST DEPARTMENT FEES 122334 120670 OTHER FEES 58140 66950 SECURITIES GAINS AND LOSSES 0 0 TOTAL NON-INTEREST INCOME 306758 290909 NON-INTEREST EXPENSE SALARIES AND BENEFITS 710524 632285 OCCUPANCY 69829 58103 FURNITURE AND EQUIPMENT 137815 175543 OTHER OPERATING 440455 498671 TOTAL NON-INTEREST EXPENSE 1358623 1364602 INCOME BEFORE TAXES 667868 441763 INCOME TAXES 164000 80000 NET INCOME 503868 361763 EARNINGS PER SHARE 0.43 0.32 BANKS OF VIRGINIA, INC. CONDENSED STATEMENT OF CASHFLOWS (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES MARCH 1999 MARCH 1998 NET INCOME 503,868 361,763 ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED BY OPERATING ACTIVITIES: DEPRECIATION 137,815 121,128 PROVISION FOR LOAN LOSS 70,000 45,000 NET (GAIN) LOSS ON SALE OF SECURITIES - - DECREASE IN ACCRUED INTEREST RECEIVABLE 85,608 22,592 (DECREASE) IN ACCRUED INTEREST PAYABLE (122,317) 60,330 DECREASE IN OTHER ASSETS (768,710) (4,459,485) (DECREASE) IN OTHER LIABILITIES 288,252 502,508 --------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES (377,046) (3,707,927) CASH FLOWS FROM INVESTING ACTIVITIES PURCHASES OF AFS SECURITIES (7,380,822) (15,083,154) PROCEEDS FROM SALES OF AFS SECURITIES 0 0 PROCEEDS FROM MATURITIES OF AFS SECURITIES 3,196,118 2,326,564 NET (INCREASE) IN LOANS OUTSTANDING 1,255,643 271,708 NET (INCREASE) DECREASE IN FED FUNDS SOLD 6,787,706 (4,749,597) PURCHASE OF PREMISES AND EQUIPMENT (70,121) (1,701,798) DECREASE IN OTHER REAL ESTATE OWNED 148,218 81,312 --------------------------------------- NET CASH USED IN INVESTING ACTIVITIES 3,936,742 (18,854,965) CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE(DECREASE) IN DEMAND, SAVINGS, AND NOW (273,525) 15,246,412 NET INCREASE(DECREASE) IN TIME DEPOSITS (2,203,516) 9,802,556 PROCEEDS FROM ISSUANCE OF COMMON STOCK 95,426 21,305 DIVIDENDS PAID (225,000) (195,823) --------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES (2,606,615) 24,874,450 NET INCREASE (DECREASE) IN CASH 1,456,949 2,673,321 CASH AND DUE FROM AT BEGINNING OF PERIOD 5,628,229 3,302,389 CASH AND DUE FROM AT END OF PERIOD 6,725,178 5,975,710
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION(UNAUDITED) The following discussion is intended to assist in understanding and evaluating the results of operations and the financial condition of Bay Banks of Virginia, Incorporated, a single bank holding company. This discussion should be read in conjunction with the attached Balance Sheet, Statement of Income and Statement of Cash Flows. EARNINGS SUMMATION For the three months ended March 1999 net income was $504 thousand as compared to $362 thousand for the comparable period in 1998, for an increase of 39.28%. Earnings per share through the first quarter were $.43 as compared to $.32 in 1998, which represents an increase of 34.74%. Return on Average Equity was 9.53% for 1999 and 10.12% for 1998. Return on Average Assets was 1.01% and .91% consecutively. Management continues to review interest rate spreads and opportunities for improving the Net Interest Margin during this cycle of a sustained flat yield curve. Net Interest Income through the first quarter of 1999 was $1.79 million and for the same period in 1998 the total was $1.56 million. This is an increase 14.69% over 1998. The Net Interest Margin on a fully tax equivalent basis for the year to date 1999 was 5.46%, up from 5.24% for the comparable period in 1998. Average interest earning assets totaled $187.65 million. As a result, interest-bearing assets exceeded interest- bearing liabilities by $29.21 million, or 18.43%. Earning assets as a percentage of total average assets at quarter end 1999 was 94.19% and for 1998 was 94.05%. PROVISION/ALLOWANCE FOR LOAN LOSSES Increases in the Provision for Loan Losses were $70,000 through the three months. The total allowance for loan losses as of March 31 was $1,041,367. The Loan Loss Provision as a percentage of Average Total Loans through the first quarter of 1999 was .90%. As of March 31, 1999, loans on Non-Accrual status totaled $51,123. Loans on Non-Accrual status as of March 31, 1998 were $347,224. Loans still accruing interest but delinquent 90 days were $487,056 at quarter end 1999 as compared to $1,412,603 for quarter end 1998. The Allowance for Loan Losses is analyzed for adequacy on a quarterly basis to determine the necessary provision. A loan by loan review is conducted on all loan classes and inherent losses on these individual loans are determined. This valuation is then compared to historical data in an effort to determine the prevailing trends. A third component of the process is the analysis of a tabular presentation of loss allocation percentages by loan type. Through this process the Holding Company assesses the appropriate provision for the coming quarter. As of March 31, 1999, management deemed the loan loss reserve reasonable for the loss risk identified in the loan portfolio. NON INTEREST INCOME Other Income through the first quarter of 1999 totaled $306,758 as compared to $290,909 for 1998. Other Income for the Company is composed of Visa Merchant Fees, Deposit Fees, Trust Department Income, Miscellaneous Income, and Gains on the Sale of Securities. Of these categories, the Visa program, Deposit Fees and the Trust Department contribute the majority. Through the three months ended March 31, 1999 Visa Fees were $43,524, Deposit Fees were $82,760, and Trust Income was $122,334. NON INTEREST EXPENSE Non Interest Expense totaled $1.36 million through the first quarter of 1999 as compared to $1.36 million for comparable period in 1998. Non Interest Expenses include Salaries and Benefits, Occupancy Expense, Furniture and Equipment Expense and Other Operating Expense. Of these categories, Salaries and Benefits are the major expense. Through the three months ended March 31, 1999, Salary and Benefit Expense was $710,524, Occupancy was $69,829, Furniture and Equipment was $137,815 and Other Operating was $440,455. Bay Banks of Virginia acquired two branches from the former Signet Bank of Richmond, Virginia in February of 1998. Associated with the acquisition were the normal expenses of purchase, many of which were realized in the first quarter of 1998 as non-recurring. FINANCIAL CONDITION Total Assets at first quarter end of 1999 were $199.33 million as compared to $200.20 million at December 30, 1998. This represents a nominal decrease of .04% during the three month period. Total Loans through the first quarter were $116.24 million as compared to $103.96 million for the comparable period in 1998. Total Loans at year end 1998 were $114.99 million, resulting in an increase of 1.09% through the three months ended March 31, 1999. Management continues to focus on new products and services that will further stimulate lending activity in our market area. Through the first three months of 1999, charged off loans totaled $41,744. For the comparable period in 1998 total loans charged off were $2,840. As of March 31, 1999, the Holding Company held $61.01 million in investment securities. This compares with December 1998 balances of $58.95 million. This represents an increase of 3.50% of the total portfolio during the three months ended March 31, 1999. As of March 31, 1999, total deposits were $177.83 million as compared to $176.14 million at quarter end 1998 and $178.85 at year end 1998. This represents a net decrease of $1.02 million or .57% for the three months ended March 31, 1999. For the period of March 31, 1999 to 1998, Non Interest-bearing Demand Deposits increased to $20.46 million, and Interest-bearing Transaction Accounts increased to $36.24 million. Savings and certificates of deposit increased to $121.22 million. The Bank of Lancaster maintained $1.03 million on Other Real Estate Owned as of March 31, 1999. For the comparable period in 1998 the balance was $1.18 million. The Bank of Lancaster is aggressively marketing all properties on OREO, and further, management expects no loss on any of these properties. LIQUIDITY AND CAPITAL RESOURCES Bay Banks of Virginia maintains adequate short-term assets to meet liquidity needs that are anticipated by management. Federal Funds Sold and investments that mature in one year or less provide the major sources of funding for liquidity needs. At March 31, 1999 Federal Funds Sold totaled $5.22 million and securities maturing in one year or less totaled $4.99 million, for a total pool of $10.21 million. The liquidity ratio as of March 31, 1999 was 39.34% as compared to 44.69% for the prior period. Bay Banks of Virginia determines this ratio by dividing net liabilities into the sum of cash and due from, un-pledged investment securities and Federal Funds Sold. Management, through historical analysis, has deemed 15% an adequate liquidity ratio. As excess funds are diverted from Federal Funds to loans and investments, this ratio will decline to levels more consistent with prior periods. Total shareholder equity at March 31, 1999 was $20.49 million as compared to $18.84 million for the same period 1998. This represents an increase of 8.75% over March 1998. Shareholder equity at year-end 1998 was $20.51 million. Shareholder equity was impacted by unrealized gains on securities in the amount of $201,495 at quarter end 1999, while these unrealized gains at year-end were $626,500. The Holding Company is required to maintain minimum amounts of Capital to Total Risk Weighted Assets, as defined by FFIEC guidelines. As of quarter end 1999, the Company maintained Tier 1 Capital of $18.25 million, Tier 2 Capital of $1.04 million and Total Risk Based Capital of $16.70 million. Net Risk Weighted Assets totaled $126.91 million. As of March 31, 1999, the Holding Company maintained 14.38% and 13.16% Tier 1 and Total Capital Ratios. The respective minimums are 5.50% and 6.00%. The Holding Company's Leverage Ratio at March 31, 1999 was 7.93% with a regulatory minimum of 3.00%. Book Value per share of common stock for the 1999 interim period was $15.33 and for 1998 the book value per share was $15.25. Cash dividends paid through March 31, 1999 were $221,488. Total number of shares outstanding at March 31, 1999 was 1,168,633. Part I Item 1. Financial Information Bank of Lancaster Notes to Consolidated Financial Statements Bay Banks of Virginia, Inc. owns 100% of the Bank of Lancaster. The consolidated financial statements include the accounts of the Bank of Lancaster and Bay Banks of Virginia, Incorporated. The accounting and reporting policies of the registrant conform to generally accepted accounting principals and to the general practices within the banking industry. This interim statement has not been audited, however, in management's opinion, it reflects a fair and accurate presentation of the consolidated financial statements. These financial statements should be read in conjunction with the financial statements and notes to financial statements included in the registrants 1997 Annual Report to Shareholders. PART 2. ITEM 1. LEGAL PROCEEDINGS None to report. ITEM 2. CHANGES IN SECURITIES See ITEM 4. ITEM 3. DEFAULT UPON SENIOR SECURITIES None to report. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None to report. ITEM 5. OTHER INFORMATION None to report. ITEM 13: EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K. Exhibit Index (2) Plan of reorganization. N/A (3) (i)(ii)Articles of Incorporation and Bylaws. N/A (4) (i)Rights of Holders. N/A (10) (ii)(A)Material Contracts. N/A (11) Statement: Computation of Earnings per Share N/A (15) Letter: Unaudited financial information N/A (18) Letter: Change in accounting principals N/A (19) Report furnished to security holders N/A Published report regarding matters submitted to a vote of security holders N/A (23) Consent of council N/A (24) Power of Attorney N/A (27) Financial Data Schedule Attached (99) Additional Exhibits N/A (b) No filings were made on Form 8-K for the period. SIGNATURES BAY BANKS OF VIRGINIA Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Bay Banks of Virginia --------------------- (Registrant) 5/14/1998 s/s Austin L. Roberts, III --------------------------- President and Chief Executive Officer 5/14/1998 s/s Paul T. Sciacchitano ------------------------- Executive Vice President and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
9 US 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1 7436952 158556058 5220000 0 61010880 60705609 6101880 116244188 (1041367) 199335199 177834985 0 1006430 0 0 0 5843165 14650619 199335199 2436585 865734 107605 3409924 1620191 0 1789733 70000 0 1358623 667868 667868 0 0 503868 .43 .43 5.28 51123 1182518 0 0 1011935 41744 1177 1041367 1041367 0 0
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