-----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, BoS6qSnc69e19dX9sjlHL0ab1fNGgODwhG9xT7FuxC7R5QhHmDZbdjKS4Hrh+ucN e49OUWEfsuyN7vCyt9r9Mw== 0000916641-99-000877.txt : 19991117 0000916641-99-000877.hdr.sgml : 19991117 ACCESSION NUMBER: 0000916641-99-000877 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19991115 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: 10KSB/A SEC ACT: SEC FILE NUMBER: 000-22955 FILM NUMBER: 99751509 BUSINESS ADDRESS: STREET 1: 100 S MAIN STREET CITY: KILMARNICK STATE: VA ZIP: 22482 BUSINESS PHONE: 8044351171 MAIL ADDRESS: STREET 1: 100 S MAIN STREET CITY: KILMARNOCK STATE: VA ZIP: 22482 10KSB/A 1 BAY BANKS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (A) [ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-22955 BAY BANKS OF VIRGINIA, INC. (Name of small business issuer in its charter) VIRGINIA 54-1838100 (State of Incorporation) (I.R.S. Employer Identification no.) 100 SOUTH MAIN STREET, KILMARNOCK, VIRGINIA 22482 (Address of principal executive offices) (Zip Code) Issuers telephone number............................................804.435.1171 Securities registered under Section 12(b) of the Exchange Act...............NONE Securities registered under Section 12(g) of the Exchange Act: Common Stock ($5.00 Par Value) (Title of Class) 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.......Yes _X_ NO ___. Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] State issuer's revenues for its most recent fiscal year........$15,249,477 Number of shares outstanding as of February 28, 1999..............1,164,728 As of March 29, 1999, the aggregate market value of Common Stock of Bay Banks of Virginia, Inc. held by non-affiliates was approximately $37,853,660, based upon the last sales price per share known to management on February 15, 1999 DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's 1998 Annual Report to Shareholders are incorporated by reference into Part II of this Form 10-KSB. Portions of the registrant's definitive Proxy Statement for its' Annual Meeting of Shareholders to be held on May 17, 1999 are incorporated by reference into Part III of this Form 10-KSB. Table of Contents Table Description - ----- ----------- Table I Average Balances, Income & Expense, Yields, and Rates Table II Volume & Rate Analysis of Changes in Net Interest Income Table III Investment Maturities & Average Yields Table IV Types of Loans Table V Loan Maturity Schedule of Selected Loans Table VI Risk Elements Table VII Summary of Allowance for Loan Losses Table VIII Allocation of the Allowance for Loan Losses Table IX Average Deposits & Rates Table X Maturity Schedule of Time Deposits of $100,000 or more Table XI Return on Equity & Assets Table XII Interest Rate Sensitivity Analysis Table I Average Balances, Income & Expense, Yields, and Rates
1998 1997 ----------------------------------------------------------- (Thousands) Average Annual Yield/ Average Annual Yield/ Balance Income/ Rate Balance Income/ Rate Expense Expense ASSETS: Investments: - ----------- Taxable Investments $ 33,935 $ 2,128 6.27% $ 28,565 $ 1,644 5.76% Tax-Exempt Investments (1) $ 16,885 $ 1,048 9.40% $ 15,923 $ 741 7.05% ------------------------------------------------------------ Total Investments $ 50,820 $ 3,176 6.25% $ 44,488 $ 2,386 5.36% Loans (2) $110,026 $ 9,523 8.65% $ 103,398 $ 9,391 9.08% Interest-bearing Deposits $ 0 $ 0 0.00% $ 0 $ 0 0.00% Fed Funds Sold $ 11,782 $ 796 6.76% $ 8,395 $ 390 4.65% ------------------------------------------------------------ Total Interest Earning Assets $172,628 $13,495 8.13% $ 156,280 $ 12,166 8.03% Allowance for Loan Losses ($936) ($940) Unrealized Gains & Losses on Investments $ 688 $170 Total Non-Earning Assets $ 12,084 $ 8,868 ======== ========= TOTAL ASSETS $184,465 $ 164,378 - ----------------------------------------------------------------------------------------------------- LIABILITIES & SHAREHOLDERS' EQUITY: Interest-bearing Deposits: - ------------------------- Savings Deposits $ 67,385 $ 3,102 4.60% $ 68,943 $ 3,303 4.79% NOW Deposits $ 20,334 $ 663 3.26% $ 16,642 $ 493 2.96% CD's (greater than) $100,000 $ 11,153 $ 616 5.52% $ 8,634 $ 403 4.67% CD's (less than) $100,000 $ 39,173 $ 2,321 5.92% $ 30,822 $ 1,705 5.53% Money Market Deposit Accounts $ 10,108 $ 352 3.49% $ 9,120 $ 300 3.28% ------------------------------------------------------------ Total Interest-bearing Deposits $148,152 $ 7,054 4.76% $ 134,161 $ 6,203 4.62% Fed Funds Purchased & Sec Sold to Repurchase $ 293 $ 11 3.82% $ 348 $ 22 6.24% ------------------------------------------------------------ Total Interest-Bearing Liabilities $148,445 $ 7,065 4.76% $ 134,509 $ 6,225 4.63% Non-Interest-Bearing Liabilities: - -------------------------------- Demand Deposits $ 15,784 $ 11,696 Other Liabilities $ 635 $ 434 -------- --------- TOTAL LIABILITIES $164,864 $ 146,639 SHAREHOLDER'S EQUITY $ 19,600 $ 17,738 ======== ========= TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $184,464 $ 164,377 ------------------------------------------------------------ Net Interest Income/Yield $ 6,430 4.04% $ 5,942 4.05% Notes: (1)-Yield assumes a federal tax rate of 34% (2)-Includes Visa Program & nonaccrual loans.
Table II Volume & Rate Analysis of Changes in Net Interest Income
(Thousands) 1998 vs. 1997 1997 vs. 1996 --------------- --------------- Total Total Volume Rate Change Volume Rate Change ------ ---- ------ ------ ---- ------ Investments: Taxable Investments $ 309 $ 175 $ 484 ($64) ($37) ($101) Tax-Exempt Investments $ 45 $ 262 $ 306 $4 ($167) ($163) ----------------------------------------------- Total Investments $ 354 $ 437 $ 791 ($60) ($204) ($264) Loans $ 602 ($470) $ 132 $482 $267 $749 Interest-bearing Deposits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Fed Funds Sold $ 157 $ 249 $ 406 $234 ($181) $ 53 =============================================== Total Interest Earning Assets $1,113 $ 215 $1,329 $656 ($118) $538 Interest-bearing Deposits: - ------------------------- Savings Deposits ($75) ($126) ($200) ($197) ($219) ($416) NOW Deposits $ 109 $ 60 $169 $ 48 ($14) $ 34 CD's (greater than) $100,000 $ 118 $ 95 $213 $107 $32 $139 CD's (less than) $100,000 $ 462 $154 $616 $280 $51 $331 Money Market Deposit Accounts $ 32 $ 20 $ 53 ($9) $26 $ 17 ----------------------------------------------- Total Interest-bearing Deposits $ 647 $204 $851 $229 ($125) $104 Fed Funds Purchased & Sec Sold to ($3) ($7) ($11) $ 0 $22 $ 22 Repurchase =============================================== Total Interest-Bearing Liabilities $ 645 $195 $840 $229 ($103) $126 Change in Net Interest Income $ 468 $ 20 $488 $427 ($15) $413
Notes: - ----- Changes in interest due to volume are calculated by multiplying the change in volume by the old rate. Changes in interest due to rates are calculated by multiplying the change in rates by the new volume. Table III Investment Maturities & Average Yields as of 12/31/98
- -------------------------------------------------------------------------------------------- (Thousands) One Year or Less One to or No Five Five to Over Ten Maturity Years Ten Years Years Total - -------------------------------------------------------------------------------------------- U.S. Agency Securities: Book Value $0 $ 8,602 $ 6,644 $ 1,391 $16,637 Market Value $0 $ 8,651 $ 6,657 $ 1,403 $16,712 Weighted average yield 0.00% 5.94% 6.23% 6.22% 6.08% - -------------------------------------------------------------------------------------------- U.S. Treasury Securities: Book Value $2,999 $ 496 $ 1,046 $ 0 $ 4,542 Market Value $3,010 $ 510 $ 1,046 $ 0 $ 4,567 Weighted average yield 5.63% 6.00% 7.32% 0.00% 6.05% - -------------------------------------------------------------------------------------------- State & Municipal Securities: Book Value $ 1,862 $ 8,856 $12,619 $ 812 $24,149 Market Value $ 1,880 $ 9,085 $12,922 $ 818 $24,705 Weighted average yield 7.76% 7.55% 7.05% 6.59% 7.27% - -------------------------------------------------------------------------------------------- Other Securities: Book Value $ 761 $ 4,141 $ 6,593 $ 11 $11,507 Market Value $ 765 $ 4,209 $ 6,846 $ 11 $11,831 Weighted average yield 6.16% 6.16% 6.26% 0.00% 6.21% - -------------------------------------------------------------------------------------------- Total Securities: Book Value $ 5,623 $ 22,094 $26,903 $ 2,214 $56,835 Market Value $ 5,655 $ 22,455 $27,472 $ 2,233 $57,815 Weighted average yield 6.41% 6.63% 6.66% 6.32% 6.61%
Notes: Yields on tax-exempt securities have been computed on a tax-equivalent basis, assuming a tax rate of 34%. Table IV Types of Loans (Thousands) 12/31/98 12/31/97 -------- -------- Commercial $ 11,290 $ 9,020 Real Estate - Construction $ 1,519 $ 3,014 Real Estate - Mortgage $ 83,073 $ 76,541 Installment and Other (includes Visa program) $ 18,697 $ 16,222 -------- -------- Total $114,579 $104,796 Notes: Deferred loan costs & fees not included. Allowance for loan losses not included. Table V Loan Maturity Schedule of Selected Loans as of December 31, 1998
One Year or Less One to Five Years Over Five Years (Thousands) Fixed Variable Fixed Variable Fixed Variable Rate Rate Rate Rate Rate Rate ---- ---- ---- ---- ---- ---- Commercial $4,893 $ 5,412 $ 564 $ 0 $ 284 $ 0 Real Estate - Construction $ 773 $ 0 $ 0 $ 0 $ 0 $ 0 Real Estate - Mortgage $ 803 $20,858 $10,195 $40,326 $11,320 $105 Installment and Other (includes Visa program) $1,311 $ 8,835 $ 6,471 $ 114 $ 1,409 $156 ---------------------------------------------------------------- Totals $7,781 $35,105 $17,230 $40,440 $13,013 $261
Notes: Loans with immediate repricing are shown in the 'One Year or Less' category. Table VI Risk Elements (Thousands) 12/31/1998 12/31/1997 Non-accrual Loans $ 79 $ 126 Restructured Loans $ 0 $ 0 Foreclosed Properties $1,160 $1,379 Total Non-performing Assets $1,238 $1,505 Loans past due 90+ days as to principal or $ 232 $ 594 interest payments & accruing interest For non-accrual & restructured loans, Gross $ 4 $ 17 interest income which would have been recorded under original loan terms for the year ended For non-accrual & restructured loans, Gross $ 4 $ 17 interest income recorded for the year ended Potential problem loans as of 12/31/98 not $ 236 n/a reported above: Notes: Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances reduced by any charge-offs or specific valuation accounts and net of any unearned discount and fees and costs on originating loans. Loan origination fees and certain direct origination costs for real estate mortgage loans are capitalized and recognized as an adjustment of the yield of the related loans. The accrual of interest on impaired loans is discontinued when, in management's opinion, the borrower may be unable to meet payments as they become due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received. The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Management's periodic evaluation of the adequacy of the allowance is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, and current economic conditions. Table VII Summary of Allowance for Loan Losses 12/31/98 12/31/97 ----------------------- Balance, beginning of period $ 861 $ 1,020 Loans charged off: Commercial & other $ 20 $ 15 Real estate - construction $ 0 $ 0 Real estate - mortgage $ 30 $ 228 Installment & Other (including Visa $ 27 $ 125 program) Total loans charged off ($77) ($368) Recoveries of loans previously charged off: Commercial & other $ 6 $ 0 Real estate - construction $ 0 $ 0 Real estate - mortgage $ 1 $ 0 Installment & Other (including Visa $ 12 $ 6 program) Total recoveries $ 20 $ 6 ----------------------- Net charge offs ($57) ($362) Provision for loan losses $ 208 $ 203 ====================== Balance, end of period $ 1,012 $ 861 Average loans outstanding during the period $110,026 $103,398 Ratio of net charge-offs during the 0.05% 0.35% period to average loans outstanding during the period See Note 1 to Financial Statements, Loans receivable paragraph,for a description of the factors which influenced management's determination of the provision charged to operating expense. Table VIII Allocation of the Allowance for Loan Losses 12/31/98 12/31/97 (Thousands) Amount Percent Amount Percent ------ ------- ------ ------- Commercial $90 8.90% $84 9.76% Real estate - construction $5 0.52% $9 1.04% Real estate - mortgage $758 74.92% $659 76.62% Installment & Other (including Visa program) $159 15.68% $108 12.59% ------ ------- ---- ------- Total $1,012 100.00% $861 100.00% Table IX Average Deposits & Rates 1998 1997 (Thousands) Average Yield/ Average Yield/ Balance Rate Balance Rate ------- ------ ------- ------ Non-interest bearing Demand Deposits $15,784 0.00% $11,696 0.00% Interest bearing Deposits: NOW Accounts $20,334 3.26% $16,642 2.96% Regular Savings $67,385 4.60% $68,943 4.79% Money Market Deposit Accounts $10,108 3.49% $9,120 3.28% Time Deposits: CD's $100,000 or more $11,153 5.52% $8,634 4.67% CD's (less than) $100,000 $39,173 5.92% $30,822 5.53% Total Interest bearing Deposits $148,152 4.76% $134,161 4.62% -------- ----- -------- ----- Total Average Deposits $163,936 4.30% $145,857 4.25% Table X Maturity Schedule of Time Deposits of $100,000 or more (Thousands) 12/31/98 12/31/97 ---------- ---------- 3 months or less $2,280 $4,700 3-6 months $5,338 $1,978 6-12 months $2,775 $2,212 Over 12 months $2,159 $2,142 ---------- ---------- Totals $12,552 $11,032 Table XI Return on Equity & Assets 1998 1997 ---- ---- Return on Assets 1.00% 1.21% Return on Equity 10.45% 11.64% Dividend Payout Ratio 41.93% 36.85% Equity to Assets Ratio 9.59% 10.41%
Table XII Interest Rate Sensitivity Analysis as of 12/31/98 Within 3 3-12 Over 5 Months Months 1-5 Years Years Total (Thousands) -------- ------ --------- ------ ----- Fed Funds Sold $12,008 $ 0 $ 0 $ 0 $ 12,008 Investments $ 2,254 $ 3,626 $24,617 $28,307 $ 58,804 Loans $25,325 $27,487 $49,669 $12,061 $114,542 ======== ======== ======= ======= ======== Total Earning Assets $39,587 $31,113 $74,286 $40,368 $185,354 NOW Accounts $10,629 $ 0 $13,836 $ 0 $ 24,465 MMDA's $ 8,173 $ 0 $ 3,101 $ 0 $ 11,274 Savings $42,491 $ 0 $26,531 $ 0 $ 69,022 CD's (less than) $100,000 $ 9,981 $22,233 $ 8,936 $ 0 $ 41,150 CD's (greater than or equal to) $100,000 $ 3,550 $ 6,729 $ 2,227 $ 0 $ 12,506 -------- ------- ------- ------- -------- Total Deposits $74,824 $28,962 $54,631 $ 0 $158,417 ======== ======= ======= ======= ======== Fed Funds Purchased & Sec Sold to Repurchase $ 586 $ 0 $ 0 $ 0 $ 586 ======== ======= ======= ======== ======== Total Interest Bearing Liabilities $75,410 $28,962 $54,631 $ 0 $159,003 Rate Sensitive Gap ($35,823) $ 2,151 $19,655 $40,368 $ 26,351 Cumulative Gap ($35,823) ($33,672) ($14,017) $26,351
Year 2000 Issues: The company estimates the cost of Y2K to be $262 thousand for the year ended December 31, 1998. As this process develops, costs of implementation are estimated to be $75 thousand for 1999 and 2000. Management has developed and tested a five-part plan to prepare for potential Year 2000 malfunctions. System testing has been performed in accordance with Federal Reserve Bank regulations and FFIEC guidelines. Management anticipates little or no disruption in the delivery of services. However, there can be no guarantee that no disruptions will occur as a result of Year 2000. Presently management does not expect that any problems currently anticipated will have a materially adverse impact on its' business. Annual Report - page 1: The name of the accounting firm who opined on the financial statements is Eggleston Smith P.C., of Newport News, Virginia. Annual Report - page 6: The amount of loans on which the accrual of interest has been discontinued is disclosed in Note 3 to the Financial Statements. In general, it is the Bank's policy to place all loans 90 days past due on nonaccrual status. In both 1998 and 1997 the amount of loans 90 days past due and still accruing interest was not material. Those loans were well secured and in the process of collection consistent with regulatory practices. The amount of these loans is disclosed in the statistical Guide 3 tables included in this amendment. Bay Banks of Virginia 100 South Main Street Post Office Box 1869 Kilmarnock, Virginia 22482 November 10, 1999 John W. Sniegon, Assistant Chief Accountant Division of Corporation Finance Mail Stop 4-8 United States Securities and Exchange Commission Washington, D.C. 20549 Re: Form 10-KSB filed March 31, 1999, File No. 0-22955 Dear Mr. Sniegon, In response to your letter dated August 4, 1999, copy attached, we have amended our Form 10-KSB. A copy of that amendment is being filed on the EDGAR system, and another copy is provided with this letter. Industry Guide 3 The amendment includes Guide 3 information for the year ended December 31, 1998 and 1997. Year 2000 Issues The Year 2000 issues discussed in your letter are included in the amendment. Annual Report - page 1 The name of our accounting firm, Eggleston Smith P.C., was omitted due to a clerical error in the EDGAR process. Annual Report - page 6 The amount of loans 90 days past due and accruing interest are disclosed in the Guide 3 tables included in this amendment. Please refer to the amendment for further information. We will include our policy regarding such loans in the notes to financial statements in future reports. If you have any further questions or concerns, you may contact Deb Evans, our Regulatory Accountant. Sincerely, /s/ Austin L. Roberts, III Austin L. Roberts, III President & Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----