KILMARNOCK, Va., April 30, 2014 /PRNewswire/ -- Bay Banks of Virginia, Inc. (OTCQB: BAYK), holding company for Bank of Lancaster and Bay Trust Company, reported a 228.6% improvement in earnings of $460,000 for the quarter ended March 31, 2014 compared to $140,000 for the same quarter in 2013.
"The first quarter has been very good. We opened a new loan production office in Richmond, sold our former Heathsville branch office for a gain and core earnings remain solid," said Randal R. Greene, President and Chief Executive Officer.
"Our first quarter results are highlighted by loan growth, improved margins and lower expense. Asset quality also improved, with nonperforming assets down to 1.8% of total assets."
- Earnings increased to $0.10 per share in 2014, compared to $0.03 in 2013.
- The bank's loan portfolio grew by $2.8 million or 1.1% since 12/31/2013.
- The first quarter's net interest margin increased to 3.81% compared to 3.40% for the first quarter of 2013.
- Non-interest expense for the first quarter declined by $161,000, or 4.9%, compared to the first quarter of 2013.
- Annualized return on assets was 0.56% for the first quarter of 2014.
Highlights
Net income:
For the first quarter 2014 compared to the first quarter of 2013 –
- Net income in 2014 was $460,000, an increase of 228.6% over 2013, due mainly to the after-tax gain of $91,000 on the sale of a former branch office
- Earnings per share were $0.10, an increase of $0.07 over 2013
- Net interest income improved 8.5% or $218,000
- Provision for loan losses increased $82,000, due to a combination of declining loan balances during the first quarter of 2013 and increasing loan balances in the first quarter of 2014
- Noninterest income increased 12.9% or $127,000
- Noninterest expense decreased 4.9% or $161,000
Asset quality:
Asset quality remains good –
- Total classified assets decreased by $1.7 million on a linked quarter basis, to $9.8 million, and by $4.3 million compared to the 1st quarter of 2013.
- Total classified assets were 24.6% of tier 1 capital plus the allowance as of 3/31/2014.
- Nonperforming assets decreased $800,000 on a linked quarter basis, to $5.9 million, and by $2.8 million compared to the 1st quarter of 2013.
- Nonperforming assets as a percent of total assets was 1.78% as of 3/31/2014, compared to 2.62% as of 3/31/2013.
- Annualized net loan charge-offs as a percent of average loans was 0.22% during the 1st quarter of 2014.
- Allowance for loan losses declined to 1.16% of loans from 1.17% on a linked quarter basis. Coverage of loan loss reserves to non-performing loans was 126.5% as of 3/31/2014.
Net interest margin improved this quarter:
- Net interest margin increased to 3.81% from 3.61% on a linked quarter basis.
- Yield on earning assets increased to 4.56% from 4.47% on a linked quarter basis.
- Cost of funds improved to 0.78% from 0.88% on a linked quarter basis.
Capital levels remained solid this quarter:
- Tangible common equity as a percent of tangible assets increased to 10.73% from 10.46% on a linked quarter basis.
- Tier 1 leverage ratio increased to 11.34% this quarter compared to 10.93% last quarter.
First Quarter 2014 compared to First Quarter 2013
Net Interest Income
Net interest income for the first three months of 2014 increased $218,000, or 8.5%, compared to the first three months of 2013. This improvement was driven primarily by a $214,000 reduction in interest expense, resulting from reductions in rates on time deposits, savings deposits and FHLB advances.
Non-Interest Income
Non-interest income for the three months ended March 31, 2014 increased $127,000, or 12.9%, compared to the three months ended March 31, 2013. This increase was primarily due a gain of $138,000 recognized on the sale of the former branch office in Heathsville, Virginia.
Non-Interest Expense
For the three months ended March 31, 2014, non-interest expenses totaled $3.1 million, a decrease of $161,000, or 4.9%, compared to the same period in 2013. This decrease is primarily the result of a reduction in salary and benefits of $143,000.
Balance Sheet
Total assets decreased $1.0 million, or 0.3%, to $330.1 million as of March 31, 2014, compared to year-end 2013. Loans grew by $2.6 million, or 1.1% and securities decreased by $919,000, primarily due to the sale of a $912,000 impaired security. On the liability side of the balance sheet, the deposit mix remained relatively unchanged from year end 2013. Capital increased $480,000 due to improved earnings, net of increased accumulated other comprehensive loss.
Asset quality
During the first quarter, asset quality improved. Non-performing assets, excluding troubled debt restructures (TDRs) declined by $800,000 to $5.9 million, or 1.8% of assets. Classified assets decreased by $1.7 million during the same period to $9.8 million or 24.6% 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 loan production 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: | 3/31/2014 | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 |
(in thousands except for per share and share amounts) |
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BALANCE SHEET |
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Assets | $ 330,097 | $ 331,135 | $ 334,940 | $ 335,316 | $ 329,132 |
Loans | 253,599 | 251,033 | 249,026 | 234,851 | 234,875 |
Deposits | 266,906 | 268,347 | 271,964 | 271,175 | 267,695 |
Loans to deposits | 95.0% | 93.5% | 91.6% | 86.6% | 87.7% |
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CAPITAL |
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Common equity | $ 37,939 | $ 37,136 | $ 36,640 | $ 36,111 | $ 36,793 |
Total equity to assets | 11.49% | 11.21% | 10.94% | 10.77% | 11.18% |
Tangible common equity to tangible assets | 10.73% | 10.46% | 10.19% | 10.02% | 10.41% |
Tier 1 Leverage Ratio | 11.34% | 10.93% | 10.86% | 10.76% | 10.77% |
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PROFITABILITY MEASURES |
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Interest Income | $ 3,357 | $ 3,357 | $ 3,400 | $ 3,339 | $ 3,353 |
Interest Expense | 560 | 659 | 688 | 713 | 774 |
Net Interest Income | $ 2,797 | $ 2,698 | $ 2,712 | $ 2,626 | $ 2,579 |
Provision for Loan Losses | 165 | 210 | 304 | 179 | 83 |
Net Interest Income after Provision | $ 2,632 | $ 2,488 | $ 2,408 | $ 2,447 | $ 2,496 |
Noninterest Income | 1,113 | 973 | 1,745 | 1,022 | 986 |
Noninterest Expense | 3,108 | 3,190 | 3,306 | 3,178 | 3,269 |
Income before Taxes | $ 637 | $ 271 | $ 847 | $ 291 | $ 213 |
Income Taxes | 177 | 41 | 227 | 59 | 73 |
Net Income | $ 460 | $ 230 | $ 620 | $ 232 | $ 140 |
Return on Average Assets | 0.56% | 0.27% | 0.74% | 0.28% | 0.17% |
Return on Average Equity | 4.90% | 2.49% | 6.82% | 2.55% | 1.53% |
Net interest margin | 3.81% | 3.61% | 3.60% | 3.51% | 3.40% |
Yield on earning assets | 4.56% | 4.47% | 4.49% | 4.45% | 4.41% |
Cost of funds | 0.78% | 0.88% | 0.92% | 0.97% | 1.08% |
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PER SHARE DATA |
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Basic Earnings per share (EPS) | $0.10 | $0.05 | $0.13 | $0.05 | $0.03 |
average basic shares outstanding | 4,817,885 | 4,817,856 | 4,817,856 | 4,817,856 | 4,813,812 |
Diluted Earnings per share (EPS) | $0.10 | $0.05 | $0.13 | $0.05 | $0.03 |
diluted average shares outstanding | 4,827,921 | 4,820,639 | 4,820,172 | 4,820,014 | 4,816,490 |
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ASSET QUALITY |
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Classified assets | $ 9,780 | $ 11,494 | $ 15,369 | $ 13,797 | $ 14,073 |
Classified assets to Tier 1 capital + ALL | 24.55% | 29.23% | 39.27% | 35.82% | 36.72% |
Non-performing assets (excluding TDR's) | $ 5,870 | $ 6,670 | $ 6,391 | $ 5,842 | $ 8,620 |
Non-performing assets to total assets | 1.78% | 2.01% | 1.91% | 1.74% | 2.62% |
Net charge-offs | $ 140 | $ 262 | $ 309 | $ 231 | $ 142 |
Net charge-offs to average loans | 0.22% | 0.42% | 0.51% | 0.39% | 0.24% |
Loan loss reserves to non-performing loans | 126.50% | 105.48% | 120.12% | 119.75% | 61.21% |
Loan Loss Reserve to Loans | 1.16% | 1.17% | 1.20% | 1.27% | 1.29% |
