UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 29, 2014
BAY BANKS OF VIRGINIA, INC.
(Exact Name of Registrant as Specified in Charter)
Virginia | 0-22955 | 54-1838100 |
(State or Other Jurisdiction of Incorporation)
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(Commission File Number) |
(IRS Employer Identification No.)
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100 S. Main Street, Kilmarnock, Virginia 22482
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (804) 435-1171
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On July 29, 2014, Bay Banks of Virginia, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2014.
A copy of the Company’s press release is attached and furnished herewith as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |
99.1 | Press release, dated July 29, 2014, announcing the Company’s financial results for the quarter ended June 30, 2014. |
SIGNATURES
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, INC.
By: /s/ Deborah M. Evans
Deborah M. Evans
Chief Financial Officer
July 29, 2014
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press release, dated July 29, 2014, announcing the Company’s financial results for the quarter ended June 30, 2014. |
Bay Banks of Virginia, Inc. Reports Second Quarter Earnings Up 12%
KILMARNOCK, Va., July 29, 2014 /PRNewswire/ -- Bay Banks of Virginia, Inc. (OTCQB: BAYK), holding company for Bank of Lancaster and Bay Trust Company, reported a 12.1% improvement in earnings of $260,000 for the quarter ended June 30, 2014 compared to $232,000 for the same quarter in 2013. Earnings improved 93.5% to $720,000 for the six months ended June 30, 2014 compared to $372,000 for the six months ended June 30, 2013.
"Our second quarter results were highlighted by loan growth, higher margins and improved asset quality, with nonperforming assets down to 1.37% of total assets. Regulatory approval has been obtained to allow for deposit gathering activities at our new Richmond loan production office. Core earnings remain solid and we anticipate the announcement of a new deposit program and further growth in the Richmond market in the near future," said Randal R. Greene, President and Chief Executive Officer.
Highlights
Net income:
For the second quarter 2014 compared to the second quarter of 2013 –
For the first six months of 2014 compared to the same period of 2013 –
Asset quality:
Asset quality continues to improve –
Net interest margin improved this quarter:
Capital levels remained solid this quarter:
Second Quarter 2014 compared to Second Quarter 2013
Net Interest Income
Net interest income for the second quarter of 2014 increased $301,000, or 11.5%, compared to the second quarter of 2013. This improvement was primarily attributed to a $176,000 reduction in interest expense, which was driven by reductions in costs of time deposits, savings deposits and FHLB advances, plus an increase in interest income of $125,000, which was driven by loan growth.
Non-Interest Income
Non-interest income for the three months ended June 30, 2014 decreased $398,000, or 38.9%, compared to the three months ended June 30, 2013. The decrease was due primarily to losses recognized on the sale of securities of $16,000 in 2014 compared to gains of $268,000 in 2014. Other factors contributing to the decrease in non-interest income were declines of $165,000 in VISA-related fees due to the assignment of merchant agreements to a third party, which was offset by a similar decline in non-interest expense, and $100,000 in secondary market lending fees due to a reduction in mortgage loans originated for sale to Fannie Mae. Offsetting these declines was an increase of $120,000 due to an impairment loss recognized in 2013.
Non-Interest Expense
For the three months ended June 30, 2014, non-interest expense totaled $3.2 million which was relatively flat compared to the same period in 2013.
Six Months ended June 30, 2014 compared to the Six Months ended June 30, 2013
Net Interest Income
Net interest income for the first six months of 2014 increased $519,000 compared to the same period in 2013. This improvement was driven primarily by a $389,000 reduction in interest expense, which was driven by reductions in costs of time deposits, savings deposits and FHLB advances, plus an increase of $130,000 in interest income due to loan growth.
Non-Interest Income
Non-interest income for the six months ended June 30, 2014 decreased $271,000, or 13.5%, compared to the six months ended June 30, 2013. The decrease was due primarily to losses recognized on the sale of securities of $17,000 in 2014 compared to gains of $271,000 in 2014. Other factors contributing to the decrease in non-interest income were declines of $256,000 in VISA-related fees due to the assignment of merchant agreements to a third party, which were offset by reductions in non-interest expense, and $122,000 in secondary market lending fees due to reduced originations of mortgage loans for sale to Fannie Mae. Offsetting these declines was an increase of $120,000 due to an impairment loss recognized in 2013 and a gain of $138,000 due to the sale of the Heathsville branch in the first quarter of 2014.
Non-Interest Expense
For the six months ended June 30, 2014, non-interest expenses totaled $6.3 million, a decrease of $172,000, or 2.7%, compared to the same period in 2013. This decrease is primarily the result of a reduction in salaries and benefits of $154,000.
Balance Sheet
Total assets increased $10.0 million, or 3.0%, to $341.2 million during the six months ended June 30, 2014. This was primarily due to loan growth of $8.5 million, or 3.4%, and an increase in bank owned life insurance of $2.1 million. On the liability side of the balance sheet for the same time frame, the deposit mix improved as non-interest-bearing deposits grew by $1.0 million and time deposit balances shrank by $1.6 million. Borrowings from the Federal Home Loan Bank increased by $10.0 million. Capital increased $740,000 due to improved earnings, net of reductions in accumulated other comprehensive losses.
Asset quality
During the first six months of 2014, asset quality improved. Non-performing assets, excluding troubled debt restructures (TDRs) declined by $2.0 million to $4.7 million, or 1.37% of assets. Classified assets decreased by $2.4 million during the same period to $9.1 million or 22.6% of tier 1 capital plus the allowance for loan losses, due primarily to improved performance of one large credit relationship and the charge-off of another.
For additional details on the Company's financial results, please refer to the Selected Financial Data attached.
About Bay Banks of Virginia, Inc.
Bay Banks of Virginia, Inc. is the bank holding company for Bank of Lancaster and Bay Trust Company. Bank of Lancaster is a state-chartered community bank headquartered in Kilmarnock, Virginia. With eight banking offices located throughout the Northern Neck region, a residential lending production office in Middlesex County, and a new branch office in Richmond, Virginia, the bank serves businesses, professionals and consumers with a wide variety of financial services, including retail and commercial banking, investment services, and mortgage banking. Bay Trust Company provides management services for personal and corporate trusts, including estate planning, estate settlement and trust administration as well as financial planning, investment services, management of IRAs and other investment accounts.
For further information, contact Randal R. Greene, President and Chief Executive Officer, at 800-435-1140 or inquiries@baybanks.com.
This report 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, changes in: interest rates, general economic conditions, the legislative/regularity 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, and accounting principles, polices and guidelines. 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.
Selected Financial Data |
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Quarters ended: |
| 6/30/2014 |
| 3/31/2014 |
| 12/31/2013 |
| 9/30/2013 |
| 6/30/2013 |
(in thousands except for per share and share amounts) |
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BALANCE SHEET |
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Assets |
| $ 341,156 |
| $ 330,097 |
| $ 331,135 |
| $ 334,940 |
| $ 335,316 |
Loans receivable |
| 259,318 |
| 253,599 |
| 250,837 |
| 248,865 |
| 234,161 |
Deposits |
| 267,086 |
| 266,906 |
| 268,347 |
| 271,964 |
| 271,175 |
Loans to deposits |
| 97.1% |
| 95.0% |
| 93.5% |
| 91.5% |
| 86.4% |
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CAPITAL |
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Common equity |
| $ 38,432 |
| $ 37,939 |
| $ 37,136 |
| $ 36,640 |
| $ 36,111 |
Total equity to assets |
| 11.27% |
| 11.49% |
| 11.21% |
| 10.94% |
| 10.77% |
Tangible common equity to tangible assets |
| 10.53% |
| 10.73% |
| 10.46% |
| 10.19% |
| 10.02% |
Tier 1 Leverage Ratio |
| 11.30% |
| 11.34% |
| 10.93% |
| 10.86% |
| 10.76% |
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PROFITABILITY MEASURES |
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Interest Income |
| $ 3,464 |
| $ 3,357 |
| $ 3,357 |
| $ 3,400 |
| $ 3,339 |
Interest Expense |
| 537 |
| 560 |
| 659 |
| 688 |
| 713 |
Net Interest Income |
| $ 2,927 |
| $ 2,797 |
| $ 2,698 |
| $ 2,712 |
| $ 2,626 |
Provision for Loan Losses |
| 97 |
| 165 |
| 210 |
| 304 |
| 179 |
Net Interest Income after Provision |
| $ 2,830 |
| $ 2,632 |
| $ 2,488 |
| $ 2,408 |
| $ 2,447 |
Noninterest Income |
| 624 |
| 1,113 |
| 973 |
| 1,745 |
| 1,022 |
Noninterest Expense |
| 3,167 |
| 3,108 |
| 3,190 |
| 3,306 |
| 3,178 |
Income before Taxes |
| $ 287 |
| $ 637 |
| $ 271 |
| $ 847 |
| $ 291 |
Income Taxes |
| 27 |
| 177 |
| 41 |
| 227 |
| 59 |
Net Income |
| $ 260 |
| $ 460 |
| $ 230 |
| $ 620 |
| $ 232 |
Return on Average Assets |
| 0.31% |
| 0.56% |
| 0.27% |
| 0.74% |
| 0.28% |
Return on Average Equity |
| 2.72% |
| 4.90% |
| 2.49% |
| 6.82% |
| 2.55% |
Net interest margin |
| 3.92% |
| 3.81% |
| 3.61% |
| 3.60% |
| 3.51% |
Yield on earning assets |
| 4.63% |
| 4.56% |
| 4.47% |
| 4.49% |
| 4.45% |
Cost of funds |
| 0.74% |
| 0.78% |
| 0.88% |
| 0.92% |
| 0.97% |
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PER SHARE DATA |
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Basic Earnings per share (EPS) |
| $0.05 |
| $0.10 |
| $0.05 |
| $0.13 |
| $0.05 |
average basic shares outstanding |
| 4,818,733 |
| 4,817,885 |
| 4,817,856 |
| 4,817,856 |
| 4,817,856 |
Diluted Earnings per share (EPS) |
| $0.05 |
| $0.10 |
| $0.05 |
| $0.13 |
| $0.05 |
diluted average shares outstanding |
| 4,836,783 |
| 4,827,921 |
| 4,820,639 |
| 4,820,172 |
| 4,820,014 |
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ASSET QUALITY |
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Classified assets |
| $ 9,063 |
| $ 9,780 |
| $ 11,494 |
| $ 15,369 |
| $ 13,797 |
Classified assets to Tier 1 capital + ALL |
| 22.60% |
| 24.55% |
| 29.23% |
| 39.27% |
| 35.82% |
Non-performing assets (excluding TDR's) |
| $ 4,684 |
| $ 5,870 |
| $ 6,670 |
| $ 6,391 |
| $ 5,842 |
Non-performing assets to total assets |
| 1.37% |
| 1.78% |
| 2.01% |
| 1.91% |
| 1.74% |
Net charge-offs |
| $ 74 |
| $ 140 |
| $ 262 |
| $ 309 |
| $ 231 |
Net charge-offs to average loans |
| 0.12% |
| 0.22% |
| 0.42% |
| 0.51% |
| 0.39% |
Loan loss reserves to non-performing loans |
| 166.55% |
| 126.50% |
| 105.48% |
| 120.12% |
| 119.75% |
Loan Loss Reserve to Loans |
| 1.15% |
| 1.16% |
| 1.17% |
| 1.20% |
| 1.27% |