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): October 30, 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 October 30, 2015, Bay Banks of Virginia, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2015.
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 October 30, 2015, announcing the Company’s financial results for the quarter ended September 30, 2015. |
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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 | |||
October 30, 2015 |
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EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press release, dated October 30, 2015, announcing the Company’s financial results for the quarter ended September 30, 2015. |
Bay Banks of Virginia, Inc., Reports Third Quarter Earnings
KILMARNOCK, Va., Oct. 30, 2015 /PRNewswire/ -- Bay Banks of Virginia, Inc. (OTCQB: BAYK), holding company for Bank of Lancaster and Bay Trust Company, reported earnings of $281,000 for the quarter ended September 30, 2015 compared to $512,000 for the same quarter in 2014. For the nine months ended September 30, 2015, earnings were $956,000 compared to $1.2 million for the same period in 2014.
"We continue to focus on basic community banking, gathering deposits and making loans, in order to grow core earnings. Loan growth was strong in the third quarter, up 5.0% from the second quarter, up 11.4% since the end of 2014 and up 21.3% since September 30, 2014. Net interest income is up by $1.2 million for the first nine months of 2015 compared to 2014. Growth in the Richmond market is also good. Deposits there now make up 18% of our total deposits, however, we are still maintaining a #1 market share position in our legacy market in the Northern Neck," said Randal R. Greene, President and Chief Executive Officer. He continued, "We continue to invest current earnings in the Richmond market this year, but we expect our Richmond franchise to begin making a positive contribution in 2016."
Highlights for the third quarter included:
HIGHLIGHTS
Net income for the third quarter of 2015:
Net income for the first nine months of 2015:
Asset quality remains good:
Net interest margin:
Capital levels remained solid:
THIRD QUARTER 2015 COMPARED TO THIRD QUARTER 2014
Net Interest Income
Net interest income for the third quarter of 2015 increased $247,000, or 8.3%, compared to the third quarter of 2014. This improvement was attributed to a $565,000 increase in interest income driven primarily by loan growth, which offset a reduced net interest margin. Interest expense increased by $318,000 due to growth of money market deposit accounts in the Richmond market and the interest associated with the subordinated debt issued in May 2015.
Non-Interest Income
Non-interest income for the three months ended September 30, 2015 decreased $297,000, or 27.8%, compared to the three months ended September 30, 2014. This decrease was primarily the result of increased losses on other real estate owned ("OREO") of $107,000 and a decrease of $132,000 in non-deposit product income.
Non-Interest Expense
For the three months ended September 30, 2015 and 2014, non-interest expense totaled $3.6 million and $3.2 million, respectively. The increase of $408,000 was primarily related to an increase of $306,000 in salaries and benefits and an increase of $109,000 in occupancy expense. Compared to the third quarter of 2014, the salaries and benefits increase is due to the Richmond market growth, as is the increase in occupancy expense.
NINE MONTHS ENDING SEPTEMBER 30, 2015 COMPARED TO THE SAME PERIOD IN 2014
Net Interest Income
Net interest income for first nine months of 2015 increased by $1.1 million, or 12.4%, compared to the first nine months of 2014. This improvement was attributed to a $1.6 million increase in interest income driven primarily by loan growth, which offset a reduced net interest margin. Interest expense increased by $525,000 due mainly to growth in money market deposit accounts in the Richmond market and the interest associated with the subordinated debt issued in May 2015.
Non-Interest Income
Non-interest income for the nine months ended September 30, 2015 decreased by $232,000, or 8.3%, compared to the nine months ended September 30, 2014. This decrease was primarily due to a decrease in gains from the disposal of assets. In 2014, a former branch was sold for a gain of $138,000. Also contributing to the decrease was a decline of $123,000 in non-deposit product income.
Non-Interest Expense
For the nine months ended September 30, 2015 and 2014, non-interest expense totaled $10.8 million and $9.5 million, respectively. The increase of $1.4 million was primarily related to an increase of $1.0 million in salaries and benefits and an increase of $274,000 in occupancy expense. Compared to the first nine months of 2014, the salaries and benefits increase is due to the Richmond market growth, including support functions, as is the increase in occupancy expense.
BALANCE SHEET
Total assets increased $39.5 million, or 10.1%, to $430.0 million during the first nine months of 2015. This was primarily due to loan growth of $34.2 million, or 11.4%. On the liability side of the balance sheet, for the same time frame, deposits grew by $31.8 million, or 10.3%. Capital increased by $820,000 due to improved earnings and net decreases in accumulated other comprehensive losses. Partially offsetting these increases was buyback of 43,000 shares of common stock.
ASSET QUALITY
Non-performing assets and loan charge-off levels remain low compared to our peer banks. During 2015, non-performing assets, excluding troubled debt restructures (TDRs) increased by $1.4 million to $6.2 million, or 1.4% of assets, due mainly to one large relationship which was placed on nonaccrual. Classified assets decreased by $437,000 during the same period to $8.6 million, or 20.2% of tier 1 capital plus the allowance for loan losses. Loan charge-offs totaled 0.08% of loans during the first nine months of 2015.
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 and in Middlesex County, and three 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: | 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 |
(in thousands except for per share and share amounts) |
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BALANCE SHEET |
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Assets | $ 429,966 | $ 421,727 | $ 393,598 | $ 390,486 | $ 348,734 |
Loans receivable | 332,605 | 316,881 | 304,111 | 298,447 | 274,131 |
Deposits | 339,384 | 333,601 | 308,848 | 307,585 | 275,905 |
Loans to deposits | 98.0% | 95.0% | 98.5% | 97.0% | 99.4% |
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CAPITAL |
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Common equity | $ 40,058 | $ 39,587 | $ 39,756 | $ 39,238 | $ 39,066 |
Regulatory capital | 49,246 | 49,097 | 41,850 | 41,484 | 40,824 |
Total equity to assets | 9.32% | 9.39% | 10.10% | 10.05% | 11.20% |
Tangible common equity to tangible assets | 8.86% | 8.92% | 9.62% | 9.56% | 10.66% |
Tier 1 Leverage Ratio | 9.16% | 9.52% | 9.89% | 10.37% | 10.95% |
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PROFITABILITY MEASURES |
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Interest Income | $ 4,080 | $ 3,955 | $ 3,905 | $ 3,796 | $ 3,515 |
Interest Expense | 853 | 701 | 603 | 565 | 535 |
Net Interest Income | $ 3,227 | $ 3,254 | $ 3,302 | $ 3,231 | $ 2,980 |
Provision for Loan Losses | 84 | 205 | 65 | 159 | 190 |
Net Interest Income after Provision | $ 3,143 | $ 3,049 | $ 3,237 | $ 3,072 | $ 2,790 |
Noninterest Income | 773 | 917 | 885 | 874 | 1,070 |
Noninterest Expense | 3,585 | 3,616 | 3,645 | 3,166 | 3,177 |
Income before Taxes | $ 331 | $ 350 | $ 477 | $ 780 | $ 683 |
Income Taxes | 50 | 56 | 96 | 182 | 171 |
Net Income | $ 281 | $ 294 | $ 381 | $ 598 | $ 512 |
Return on Average Assets | 0.26% | 0.29% | 0.39% | 0.64% | 0.59% |
Return on Average Equity | 2.82% | 2.96% | 3.86% | 6.11% | 5.29% |
Net interest margin | 3.30% | 3.49% | 3.70% | 3.85% | 3.82% |
Yield on earning assets | 4.15% | 4.23% | 4.36% | 4.50% | 4.49% |
Cost of funds | 0.89% | 0.76% | 0.69% | 0.68% | 0.69% |
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PER SHARE DATA |
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Basic Earnings per share (EPS) | $0.06 | $0.06 | $0.08 | $0.12 | $0.11 |
Average basic shares outstanding | 4,780,649 | 4,802,032 | 4,809,856 | 4,818,152 | 4,818,733 |
Diluted Earnings per share (EPS) | $0.06 | $0.06 | $0.08 | $0.12 | $0.11 |
Diluted average shares outstanding | 4,796,008 | 4,819,322 | 4,821,139 | 4,825,157 | 4,828,285 |
Tangible book value per share | $7.91 | $7.79 | $7.81 | $7.68 | $7.64 |
Period-end shares outstanding | 4,774,856 | 4,787,856 | 4,802,856 | 4,817,856 | 4,818,733 |
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ASSET QUALITY |
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Classified assets | $ 8,566 | $ 9,846 | $ 8,794 | $ 9,003 | $ 9,415 |
Classified assets to Tier 1 capital + ALL | 20.20% | 23.30% | 21.01% | 21.70% | 23.06% |
Non-performing assets (excluding TDR's) | $ 6,177 | $ 7,466 | $ 5,943 | $ 4,759 | $ 5,072 |
Non-performing assets to total assets | 1.44% | 1.77% | 1.51% | 1.22% | 1.45% |
Net charge-offs | $ 149 | $ 13 | $ 23 | $ 105 | $ 13 |
Net charge-offs to average loans | 0.18% | 0.02% | 0.03% | 0.15% | 0.02% |
Loan loss reserves to non-performing loans | 88.00% | 71.02% | 102.11% | 162.86% | 141.11% |
Loan Loss Reserve to Loans | 1.01% | 1.09% | 1.07% | 1.07% | 1.15% |
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