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): January 29, 2015
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 January 29, 2015, Bay Banks of Virginia, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended December 31, 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 January 29, 2015, announcing the Company’s financial results for the quarter ended December 31, 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 |
January 29, 2015
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press release, dated January 29, 2015, announcing the Company’s financial results for the quarter ended December 31, 2014. |
Bay Banks of Virginia, Inc., Reports Fourth Quarter Earnings
KILMARNOCK, Va., Jan. 29, 2015 /PRNewswire/ -- Bay Banks of Virginia, Inc. (OTCQB: BAYK), holding company for Bank of Lancaster and Bay Trust Company, reported earnings of $598,000 for the quarter ended December 31, 2014 compared to $230,000 for the same quarter in 2013. Earnings for the full year 2014 were $1.8 million compared to $1.2 million for 2013.
"Our fourth quarter results were strong with assets growing to $390 million and earnings growing to $0.12 per share. Deposits grew significantly as a result of our new branch in Richmond, which opened in November, and the loan portfolio continues to grow," said Randal R. Greene, President and Chief Executive Officer. He continued, "Looking forward to the second quarter of 2015, to improve efficiencies we plan to consolidate three branches into two in our home county of Lancaster."
HIGHLIGHTS
Net income for the fourth quarter of 2014:
Net income for the full year 2014:
Asset quality continues to improve:
Net interest margin improved:
Capital levels remained solid:
FOURTH QUARTER 2014 COMPARED TO FOURTH QUARTER 2013
Net Interest Income
Net interest income for the fourth quarter of 2014 increased $533,000, or 19.8%, compared to the fourth quarter of 2013. This improvement was primarily attributed to a $439,000 increase in interest income driven primarily by loan growth and a reduction in interest expense of $94,000 due primarily to lower interest rates on deposits and Federal Home Loan Bank borrowings.
Non-Interest Income
Non-interest income for the three months ended December 31, 2014 decreased $99,000, or 10.1%, compared to the three months ended December 31, 2013. This was due partly to a decline of $127,000 in VISA-related fees, resulting from reduced credit card merchant fees. In order to reduce potential liabilities related to chargebacks, fraud, underwriting and compliance, merchant agreements were assigned to a third party. This decline was mitigated by similar reductions in VISA expense, mainly related to merchant interchange fees. Also, secondary market lending fee income declined by $139,000 due to lower volumes of mortgages originated for sale to Fannie Mae. Offsetting these decreases was a reduction in impairment losses of $168,000 related to an investment which was recognized in 2013.
Non-Interest Expense
For the three months ended December 31, 2014 and 2013, non-interest expense totaled $3.2 million. An increase of $149,000 in salaries and benefits was offset by a decrease of $108,000 in VISA expenses mentioned above and a decrease of $41,000 in FDIC assessments.
TWELVE MONTHS OF 2014 COMPARED TO TWELVE MONTHS OF 2013
Net Interest Income
Net interest income for 2014 increased by $1.3 million compared to 2013. This improvement was driven by a $637,000 reduction in interest expense, a result of lower interest rates on time deposits and FHLB borrowings, plus an increase of $684,000 in interest income, due primarily to loan growth.
Non-Interest Income
Non-interest income for 2014 decreased by $1.0 million, or 22.1%, compared to 2013. The decrease was due primarily to recognition of $535,000 for the mortgage servicing asset in 2013 and a reduction in VISA-related fees of $575,000. As noted above, this reduced fee income is related to the assignment of credit card merchant agreements to a third party, with similar reductions in expense offsetting the reduced income. Losses of $25,000 were recognized on the sale of securities in 2014 compared to gains of $284,000 in 2013. Offsetting these declines was an increase of $288,000 due to an impairment loss recognized in 2013, plus reductions in losses of $236,000 on foreclosed properties.
Non-Interest Expense
For 2014, non-interest expenses totaled $12.6 million, a decrease of $325,000, or 2.5%, compared to the same period in 2013. This decrease is primarily the result of $538,000 in reduced VISA expense, which is related to the assignment of credit card merchant agreements to a third party, as referenced above.
BALANCE SHEET
Total assets increased $59.4 million, or 17.9%, to $390.5 million during 2014. This was primarily due to loan growth of $47.6 million, or 19.0%. On the liability side of the balance sheet for the same time frame, deposits grew by $39.2 million, or 14.6%, and borrowings from the Federal Home Loan Bank increased by $20.0 million. Capital increased by $2.1 million due to improved earnings, net of reductions in accumulated other comprehensive losses.
ASSET QUALITY
During 2014, asset quality continued to improve. Non-performing assets, excluding troubled debt restructures (TDRs) declined by $1.9 million to $4.8 million, or 1.22% of assets. Classified assets decreased by $2.5 million during the same period to $9.0 million, or 21.7% of tier 1 capital plus the allowance for loan losses, due primarily to reductions of $1.1 million in foreclosed real estate.
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. Founded in 1930, 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 two banking offices 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.
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: | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 |
(in thousands except for per share and share amounts) |
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BALANCE SHEET |
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Assets | $ 390,486 | $ 348,734 | $ 341,156 | $ 330,097 | $ 331,135 |
Loans receivable | 298,447 | 274,131 | 259,318 | 253,599 | 250,837 |
Deposits | 307,585 | 275,905 | 267,086 | 266,906 | 268,347 |
Loans to deposits | 97.0% | 99.4% | 97.1% | 95.0% | 93.5% |
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CAPITAL |
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Common equity | $ 39,238 | $ 39,066 | $ 38,432 | $ 37,939 | $ 37,136 |
Total equity to assets | 10.05% | 11.20% | 11.27% | 11.49% | 11.21% |
Tangible common equity to tangible assets | 9.56% | 10.66% | 10.72% | 10.92% | 10.65% |
Tier 1 Leverage Ratio | 10.36% | 10.94% | 11.30% | 11.32% | 10.92% |
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PROFITABILITY MEASURES |
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Interest Income | $ 3,796 | $ 3,515 | $ 3,464 | $ 3,357 | $ 3,357 |
Interest Expense | 565 | 535 | 537 | 560 | 659 |
Net Interest Income | $ 3,231 | $ 2,980 | $ 2,927 | $ 2,797 | $ 2,698 |
Provision for Loan Losses | 159 | 190 | 97 | 165 | 210 |
Net Interest Income after Provision | $ 3,072 | $ 2,790 | $ 2,830 | $ 2,632 | $ 2,488 |
Noninterest Income | 874 | 1,070 | 624 | 1,113 | 973 |
Noninterest Expense | 3,166 | 3,177 | 3,167 | 3,108 | 3,190 |
Income before Taxes | $ 780 | $ 683 | $ 287 | $ 637 | $ 271 |
Income Taxes | 182 | 171 | 27 | 177 | 41 |
Net Income | $ 598 | $ 512 | $ 260 | $ 460 | $ 230 |
Return on Average Assets | 0.64% | 0.59% | 0.31% | 0.56% | 0.27% |
Return on Average Equity | 6.11% | 5.29% | 2.72% | 4.90% | 2.49% |
Net interest margin | 3.85% | 3.82% | 3.92% | 3.81% | 3.61% |
Yield on earning assets | 4.50% | 4.49% | 4.63% | 4.56% | 4.47% |
Cost of funds | 0.68% | 0.69% | 0.74% | 0.78% | 0.88% |
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PER SHARE DATA |
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Basic Earnings per share (EPS) | $0.12 | $0.11 | $0.05 | $0.10 | $0.05 |
average basic shares outstanding | 4,818,152 | 4,818,733 | 4,818,733 | 4,817,885 | 4,817,856 |
Diluted Earnings per share (EPS) | $0.12 | $0.11 | $0.05 | $0.10 | $0.05 |
diluted average shares outstanding | 4,825,157 | 4,828,285 | 4,836,783 | 4,827,921 | 4,820,639 |
Tangible book value per share | $7.68 | $7.64 | $7.51 | $7.41 | $7.24 |
period-end shares outstanding | 4,817,856 | 4,818,733 | 4,818,733 | 4,818,733 | 4,817,856 |
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ASSET QUALITY |
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Classified assets | $ 9,003 | $ 9,415 | $ 9,063 | $ 9,780 | $ 11,494 |
Classified assets to Tier 1 capital + ALL | 21.72% | 23.09% | 22.61% | 24.58% | 29.26% |
Non-performing assets (excluding TDR's) | $ 4,760 | $ 5,072 | $ 4,684 | $ 5,870 | $ 6,670 |
Non-performing assets to total assets | 1.22% | 1.45% | 1.37% | 1.78% | 2.01% |
Net charge-offs | $ 105 | $ 13 | $ 74 | $ 140 | $ 262 |
Net charge-offs to average loans | 0.15% | 0.02% | 0.12% | 0.22% | 0.42% |
Loan loss reserves to non-performing loans | 162.77% | 141.11% | 166.55% | 126.50% | 105.48% |
Loan Loss Reserve to Loans | 1.07% | 1.15% | 1.15% | 1.16% | 1.17% |