PR Newswire
KILMARNOCK, Va., Feb. 1, 2016
KILMARNOCK, Va., Feb. 1, 2016 /PRNewswire/ -- Bay Banks of Virginia, Inc. (OTCQB: BAYK), holding company for Bank of Lancaster and Bay Trust Company, reported a loss $134,000 for the quarter ended December 31, 2015, compared to earnings of $598,000 for the same quarter in 2014. For the year 2015, earnings were $822,000 compared to $1.8 million in 2014.
"Our strategic focus for the last two years has been to expand into a higher growth metropolitan area, with continued emphasis on basic community banking, gathering deposits and making loans. Deposits in the Richmond market have grown to 20% of total deposits, with the Patterson Avenue office now the second largest branch in our franchise. All the while, we maintained our number one market share position in the Northern Neck. Loan growth remained strong in the fourth quarter, up 4.5% from the third quarter, and up 16.5% since the end of 2014. Net interest income is up by $1.3 million for 2015 compared to 2014. The net loss in the fourth quarter is primarily related to an early retirement offer, write-downs on foreclosed properties and loan loss provision expense due mainly to one large commercial credit," said Randal R. Greene, President and Chief Executive Officer. He continued, "We invested substantial current earnings in the Richmond market in 2015 and that franchise is now poised to begin making a positive contribution in the first quarter of 2016. We also eliminated nine positions in the fourth quarter in order to improve efficiency, and raised $7.0 million of subordinated debt in the second quarter to support our growth and maintain our strong capital position."
HIGHLIGHTS
Net income for the fourth quarter of 2015:
Net income for 2015:
Asset quality remains good:
Net interest margin:
Capital levels remained solid:
FOURTH QUARTER 2015 COMPARED TO FOURTH QUARTER 2014
Net Interest Income
Net interest income for the fourth quarter of 2015 increased $205,000, or 6.3%, compared to the fourth quarter of 2014. This improvement was attributed to a $517,000 increase in interest income driven primarily by loan growth, which offset a reduced yield on loans. Interest expense increased by $312,000 due to growth of money market deposit accounts in the Richmond market and the subordinated debt issued in May 2015.
Non-Interest Income
Non-interest income for the three months ended December 31, 2015 decreased $90,000, or 10.3%, compared to the three months ended December 31, 2014. This decrease was primarily the result of increased losses on other real estate owned ("OREO") of $100,000, and reduced non-deposit product income of $75,000, which were offset by increases of $72,000 in income related to sales of loans to FNMA.
Non-Interest Expense
For the three months ended December 31, 2015 and 2014, non-interest expense totaled $4.0 million and $3.2 million, respectively. The increase of $790,000 was primarily related to an increase of $533,000 in salaries and benefits expense, which includes $132,000 of severance expense related to the fourth quarter voluntary early retirement and severance program. Also contributing to the increase in non-interest expense was an increase of $53,000 in occupancy expense and a $55,000 increase in FDIC insurance due to the higher deposit level. Compared to the fourth quarter of 2014, the salaries and benefits increase was also due mainly to the Richmond market growth, as was the increase in occupancy expense.
TWELVE MONTHS ENDING DECEMBER 31, 2015 COMPARED TO THE SAME PERIOD IN 2014
Net Interest Income
Net interest income for 2015 increased by $1.3 million, or 10.8%, compared to 2014. This improvement was attributed to a $2.1 million increase in interest income driven primarily by loan growth, which offset a reduced yield on loans. Interest expense increased by $837,000 due mainly to growth in money market deposit accounts in the Richmond market and the subordinated debt issued in May 2015.
Non-Interest Income
Non-interest income for 2015 decreased by $322,000, or 8.8%, compared to 2014. Contributing to this decrease was a reduction in gains from the disposal of assets. In 2014, a former branch office was sold for a gain of $138,000. Other factors contributing to the decrease were a decline of $198,000 in non-deposit product income and increased losses of $68,000 on foreclosed properties. An increase of $100,000 in income related to sales of loans to FNMA partially mitigated the aforementioned reductions in non-interest income.
Non-Interest Expense
For 2015 and 2014, non-interest expense totaled $14.8 million and $12.6 million, respectively. The increase of $2.2 million was primarily related to an increase of $1.5 million in salaries and benefits and an increase of $327,000 in occupancy expense. Compared to 2014, the salaries and benefits increase was due primarily to the Richmond market growth, including support functions, and the retirement and severance program. The increase in occupancy expense was also mainly due to the expansion into Richmond. A decrease of $63,000 in maintenance of foreclosed properties and $74,000 in telephone expense partially mitigated those increases.
BALANCE SHEET
Total assets increased by $66.3 million, or 17.0%, to $456.8 million during 2015. This was primarily due to loan growth of $49.1 million, or 16.5%. On the liability side of the balance sheet, for the same time frame, deposits grew by $52.3 million, or 17.0%. Capital increased by $787,000 due primarily to earnings. Partially offsetting these increases were buybacks of 43,000 shares of common stock.
ASSET QUALITY
Non-performing assets and loan charge-off levels remain comparable to our peer banks. During 2015, non-performing assets, excluding troubled debt restructures (TDRs), increased by $1.3 million to $6.1 million, or 1.3% of assets, due mainly to one large relationship which was placed on nonaccrual. Classified assets decreased by $213,000 during the same period to $8.8 million, or 20.7% of tier 1 capital plus the allowance for loan losses. Loan charge-offs totaled 0.18% of loans during 2015, compared to 0.12 % for 2014.
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 | | | | | |
| | | | | |
Quarters ended: | 12/31/2015 | 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 |
(in thousands except for per share and share amounts) | | | | | |
BALANCE SHEET | | | | | |
Assets | $ 456,752 | $ 429,966 | $ 421,727 | $ 393,598 | $ 390,486 |
Loans receivable | 347,546 | 332,605 | 316,881 | 304,111 | 298,447 |
Deposits | 359,858 | 339,384 | 333,601 | 308,848 | 307,585 |
Loans to deposits | 96.6% | 98.0% | 95.0% | 98.5% | 97.0% |
| | | | | |
CAPITAL | | | | | |
Common equity | $ 40,025 | $ 40,058 | $ 39,587 | $ 39,756 | $ 39,238 |
Regulatory capital | 49,324 | 49,246 | 49,097 | 41,850 | 41,484 |
Total equity to assets | 8.76% | 9.32% | 9.39% | 10.10% | 10.05% |
Tangible common equity to tangible assets | 8.33% | 8.86% | 8.92% | 9.62% | 9.56% |
Tier 1 Leverage Ratio | 8.94% | 9.16% | 9.52% | 9.89% | 10.37% |
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