Bay Bancorp (BYBK) 8-K Bay Bancorp, Inc. Reports Record First Quarter 2017 Results

Exhibit 99.1

Bay Bancorp, Inc. Reports Record First Quarter 2017 Results

COLUMBIA, Md., April 27, 2017 (GLOBE NEWSWIRE) -- Bay Bancorp, Inc. (“Bay”) (NASDAQ:BYBK), the savings and loan holding company for Bay Bank, FSB (“Bank”), announced today net income of $0.96 million, or $0.09 per basic and diluted common share for the quarter ended March 31, 2017 compared to net income of $0.19 million or $0.02 per basic and diluted common share for the quarter ended March 31, 2016.  The Bank now has total assets of over $633 million and 11 branches in the Baltimore-Washington region, and is the fifth largest community bank headquartered in the Baltimore region based upon deposit market share.

Commenting on the announcement, Joseph J. Thomas, President and CEO, said, “We are  pleased with our company’s performance in the first quarter of 2017, the best quarterly earnings results in our history.  We are demonstrating  organic loan growth, attractive low cost core deposit funding and improved operational efficiencies and cost savings from prior acquisitions.  Our income before taxes of $1.54 million represents a $1.24 million increase over the $0.30 million recorded for the first quarter in 2016 and $0.57 million increase over the $0.97 million recorded for the quarter ended December 31, 2016. As a result, our return on average assets for the three-month period ended March 31, 2017 was 0.63% as compared to 0.53% and 0.16% for the three-month periods ended December 31, 2016 and March 31, 2016, respectively, and return on average equity for the three-month period ended March 31, 2017 was 5.87%, as compared to 5.04% and 1.11% for the three-month periods ended December 31, 2016 and March 31, 2016, respectively.”

Highlights from the First Three-months of 2017

The Bank continued organic net growth in the first quarter of 2017.  Net loan growth was favorable and targeted core deposit growth was strong.  Planned declines in certificate of deposit balances following the successful closing of Bay’s merger with Hopkins Bancorp, Inc. and the related merger of Hopkins Federal Savings Bank into the Bank (collectively, the “Hopkins Merger”) led to an attractive 0.38% cost of funds for the first quarter of 2017.  Bay has strong liquidity and capital positions along with capacity for future growth, with total regulatory capital to risk weighted assets of approximately 12.90% at March 31, 2017.  The Bank has a record of success in acquisitions and acquired problem asset resolutions and had $7.6 million in remaining net purchase discounts on acquired loan portfolios at March 31, 2017.

Specific highlights are listed below:

• With the completion of the Hopkins Merger and consistent organic growth, total assets were $633 million at March 31, 2017 compared to $463 million at March 31, 2016 and $620 million at December 31, 2016.
   
• Total loans were $495 million at March 31, 2017, an increase of 25% from $397 million at March 31, 2016, and an increase of 2% from $487 million at December 31, 2016.
   
• Total deposits were $526 million at March 31, 2017, an increase of 44% from $366 million at March 31, 2016, and no change from $526 million at December 31, 2016.  Non-interest bearing deposits were $112 million at March 31, 2017, an increase of 14% from $98 million at March 31, 2016 and an increase of 1% from $111 million at December 31, 2016.
   
• Net interest income for the three-month period ended March 31, 2017 totaled $5.8 million, compared to $4.7 million for the same period of 2016.  Interest income associated with discount accretion on purchased loans, deferred costs and deferred fees will vary due to the timing and nature of loan principal payments.  Earning asset leverage was the primary driver in year-over-year results, as average earning loans and investments increased to $552 million for the three months ended March 31, 2017, compared to $425 million for the same period of 2016.
   
• Net interest margin for the three-month period ended March 31, 2017 was 4.05%, compared to 4.20% for the same period of 2016.  The margin for each period reflects the variable pace of discount accretion recognition within interest income, the impact of fair value amortization on the interest expense of acquired deposits, and the higher level of investments, including interest bearing federal funds acquired in the Hopkins Merger.
   
• Nonperforming assets increased to $16.1 million at March 31, 2017 from $15.8 million at December 31, 2016, and from $9.7 million at March 31, 2016.  The first quarter of 2017 increases resulted primarily from the Hopkins Merger, offset by continued resolution of acquired nonperforming loans.  Loans acquired in the Hopkins Merger include appropriate fair value adjustments.
   
• The provision for loan losses for the three-month period ended March 31, 2017 was $0.4 million, compared to $0.3 million for the same period of 2016.  The increases for the 2017 period were primarily the result of increases in loan originations and the continued transition from an acquired loan portfolio to an originated portfolio.  As a result, the allowance for loan losses was $3.16 million at March 31, 2017, representing 0.64% of loans, compared to $1.95 million, or 0.49% of loans, at March 31, 2016 and $2.82 million, or 0.58% of total loans, at December 31, 2016.  The allowance for loan losses at March 31, 2017 represents 1.00% of the Bay originated portfolio, with the remaining discount on acquired loans mitigating the need for additional loan loss reserves on these portfolios.  Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future due to the gradual accretion of the discount on the acquired loan portfolios and an increase in new loan originations.

Balance Sheet Review

Total assets were $633 million at March 31, 2017, increases of $13 million, or 2%, and $170 million, or 37%, when compared to December 31, 2016 and March 31, 2016, respectively.  Investment securities increased by $39 million, or 144%, when compared to March 31, 2016, while loans held for investment increased by $98 million, or 25%, over the same period.

Total deposits were $526 million at March 31, 2017, with no significant change compared to the $526 million at December 31, 2016.  Activity included a managed decline in certificates of deposits, seasonal deposit fluctuations and no significant change in non-interest bearing deposits.  Short-term borrowings from the Federal Home Loan Bank increased to $34 million compared to $20 million at December 31, 2016.

Stockholders’ equity increased to $67.3 million at March 31, 2017, from $65.9 million at December 31, 2016, and $66.9 million at March 31, 2016.  These increases related primarily to corporate earnings, with the increase over the first quarter being offset by the $2.4 million decline related to the purchase of 568,436 shares of Bay’s common stock.  The combined activity improved the book value of Bay’s common stock to $6.38 per share at March 31, 2017, compared to $6.29 per share at December 31, 2016 and $6.15 per share at March 31, 2016.

In the third quarter of 2016, the Board of Directors authorized an additional stock purchase program, authorizing Bay to purchase an additional 250,000 shares of its common stock over a 12-month period in open market and/or through privately negotiated transactions, at Bay’s discretion. During the third quarter of 2016, Bay purchased 150,000 shares at an average price of $5.10 per share along with a purchase of 418,436 shares through a privately negotiated transaction at an average price of $5.18 per share.  Bay Bancorp has not elected to repurchase additional shares since that time. As of March 31, 2017, Bay has 250,000 shares remaining under the third quarter 2016 purchase authorization.  The Board may modify, suspend or discontinue the program at any time.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and real estate acquired through foreclosure, increased to $16.1 million at March 31, 2017 from $15.8 million at December 31, 2016 and from $9.7 million at March 31, 2016.  The changes were driven by loans acquired in the Hopkins Merger offset by decreases in purchased credit impaired loans.  Nonperforming assets represented 2.53% of total assets at March 31, 2017, compared to 2.55% at December 31, 2016 and 2.10% at March 31, 2016.

At March 31, 2017, the Bank remained above all “well-capitalized” regulatory requirement levels.  The Bank’s tier 1 risk-based capital ratio was approximately 12.29% at March 31, 2017 as compared to 12.31% at December 31, 2016 and 16.20% at March 31, 2016.  Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the investment portfolio.

Review of Financial Results

Net income for the three-months period ended March 31, 2017 was $0.96 million, compared to net income of $.81 million and $0.19 million for the three month periods ended December 31, 2016 and March 31, 2016, respectively.

Net interest income for the three months ended March 31, 2017 totaled $5.8 million compared to $4.7 million for the same period of 2016.  Interest income resulting from interest-earning asset growth from expansion of the Bay originated loan portfolio, selective investment purchases and the Hopkins Merger was partially offset by a decrease in discount accretion on purchased loans, deferred costs and deferred fees.  As of March 31, 2017, the remaining net loan discounts on the Bank’s loan portfolio totaled $7.6 million.

Noninterest income for the three months ended March 31, 2017 was $1.3 million, increasing by $0.1 million when compared to the $1.2 million for the three months ended March 31, 2016.  Changes for the first quarter of 2017 were primary related to a $0.1 million increase in electronic banking fees.

Noninterest expense reduction continues to be a key focus for 2017 net income improvement.  For the three-month periods ended March 31, 2017, noninterest expense was $5.2 million, compared to $5.3 million for the same period of 2016.  The primary contributors to the decrease when compared to the first quarter of 2016 were a $0.2 million decrease in occupancy and foreclosed property costs, offset by a $0.1 million increase in merger related expenses.

Bay Bancorp, Inc. Information

Bay is a financial holding company and a savings and loan holding company headquartered in Columbia, Maryland.  Through the Bank, Bay serves the community with a network of 11 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of Baltimore Washington corridor.  The Bank serves small and medium size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including on-line and mobile banking, commercial banking, cash management, mortgage lending and retail banking.  The Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit.  Additional information is available at www.baybankmd.com.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on Bay. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Bay.  There can be no assurance that future developments affecting the Company will be the same as those anticipated by management.  These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions.  Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements.  For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Bay with the Securities and Exchange Commission entitled “Risk Factors”.

BAY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
	March 31,						March 31,
	2017			December 31,			2016			December 31,
	(unaudited)			2016			(unaudited)			2015
ASSETS
Cash and due from banks	$	5,981,700		$	7,591,685		$	6,074,891		$	8,059,888
Interest bearing deposits with banks and federal funds sold		36,822,635			32,435,771			8,682,578			26,353,334
Total Cash and Cash Equivalents		42,804,335			40,027,456			14,757,469			34,413,222
Investment securities available for sale, at fair value		64,455,089			60,232,727			25,018,385			33,352,233
Investment securities held to maturity, at amortized cost		1,137,200			1,158,238			1,553,671			1,573,165
Restricted equity securities, at cost		2,322,295			1,823,195			1,870,395			2,969,595
Loans held for sale		848,975			1,613,497			3,560,752			4,864,344
Loans, net of deferred fees and costs		495,236,254			487,103,713			396,854,139			393,240,567
Less: Allowance for loan losses		(3,159,769	)		(2,823,153	)		(1,948,536	)		(1,773,009	)
Loans, net		492,076,485			484,280,560			394,905,603			391,467,558
Real estate acquired through foreclosure		564,678			1,224,939			1,501,896			1,459,732
Premises and equipment, net		3,835,945			3,882,343			4,903,369			5,060,802
Bank owned life insurance		15,844,759			15,729,302			5,641,561			5,611,352
Core deposit intangible		2,794,844			3,030,309			2,431,376			2,624,184
Deferred tax assets, net		2,890,703			2,984,718			2,793,504			2,723,557
Accrued interest receivable		1,921,253			1,884,945			1,372,456			1,271,871
Accrued taxes receivable		660,993			1,153,102			2,136,804			2,775,237
Prepaid expenses		972,721			1,001,723			777,683			691,372
Other assets		220,863			276,540			209,732			303,614
Total Assets	$	633,351,138		$	620,303,594		$	463,434,656		$	491,161,838
LIABILITIES
Noninterest-bearing deposits	$	112,411,694		$	111,378,694		$	98,085,001		$	101,838,210
Interest-bearing deposits		413,390,788			415,079,700			267,800,996			265,577,728
Total Deposits		525,802,482			526,458,394			365,885,997			367,415,938
Short-term borrowings		34,000,000			20,000,000			26,275,000			52,300,000
Defined benefit pension liability		964,334			994,156			1,361,177			829,237
Accrued expenses and other liabilities		5,302,656			6,923,818			2,974,857			2,934,174
Total Liabilities		566,069,472			554,376,368			396,497,031			423,479,349
STOCKHOLDERS’ EQUITY
Common stock - par value $1.00, authorized 20,000,000 shares, issued and outstanding 10,543,862, 10,456,098, 10,887,932 and 11,062,932 shares as of March 31, 2017, December 30, 2016, March 31, 2016 and December 31, 2015, respectively.		10,543,862			10,456,098			10,887,932			11,062,932
Additional paid-in capital		41,187,024			40,814,285			42,730,014			43,378,927
Retained earnings		15,383,778			14,426,969			12,853,469			12,667,070
Accumulated other comprehensive income		167,002			30,383			466,210			573,560
Total controlling interest		67,281,666			65,727,735			66,937,625			67,682,489
Non-controlling interest		-			199,491			-			-
Total Stockholders' Equity		67,281,666			65,927,226			66,937,625			67,682,489
Total Liabilities and Stockholders' Equity	$	633,351,138		$	620,303,594		$	463,434,656		$	491,161,838

BAY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	Three Months Ended March 31,
		2017		2016
Interest income:
Interest and fees on loans	$	5,920,144	$	4,844,320
Interest on loans held for sale		6,882		39,666
Interest and dividends on securities		350,885		211,384
Interest on deposits with banks and federal funds sold		77,675		19,045
Total Interest Income		6,355,586		5,114,415
Interest expense:
Interest on deposits		455,850		309,177
Interest on short-term borrowings		60,204		63,795
Total Interest Expense		516,054		372,972
Net Interest Income		5,839,532		4,741,443
Provision for loan losses		440,521		298,000
Net interest income after provision for loan losses		5,399,011		4,443,443
Noninterest income:
Payment sponsorship fees		656,192		551,009
Mortgage banking fees and gains		182,944		158,547
Service charges on deposit accounts		62,633		70,614
Bargain purchase gain (adjustment)		873		-
Gain on securities sold		5,521		272,963
Other income		418,200		137,944
Total Noninterest Income		1,326,363		1,191,077
Noninterest expenses:
Salary and employee benefits		2,857,245		2,889,456
Occupancy and equipment expenses		757,645		871,195
Legal, accounting and other professional fees		232,956		310,561
Data processing and item processing services		327,794		281,992
FDIC insurance costs		65,014		77,479
Advertising and marketing related expenses		24,320		32,528
Foreclosed property expenses and OREO sales, net		16,859		74,479
Loan collection costs		34,666		20,800
Core deposit intangible amortization		235,465		192,808
Merger and acquisition related expenses		149,543		-
Other expenses		480,054		578,699
Total Noninterest Expenses		5,181,561		5,329,997
Income before income taxes		1,543,813		304,523
Income tax expense		587,005		118,124
Net income	$	956,808	$	186,399
Basic net income per common share	$	0.09	$	0.02
Diluted net income per common share	$	0.09	$	0.02

BAY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Twelve Months Ended December 31, 2016 and 2015
(Unaudited)
										Accumulated
					Additional					Other			Non-
		Common			Paid-in			Retained		Comprehensive			controlling
		Stock			Capital			Earnings		Income (loss)			Interest			Total
Balance December 31, 2015	$	11,062,932		$	43,378,927		$	12,667,070	$	573,560		$	-		$	67,682,489
Net income		-			-			186,399		-			-			186,399
Other comprehensive income		-			-			-		(107,350	)		-			(107,350	)
Stock-based compensation		-			35,587			-		-			-			35,587
Repurchase of common stock		(175,000	)		(684,500	)		-		-			-			(859,500	)
Balance March 31, 2016	$	10,887,932		$	42,730,014		$	12,853,469	$	466,210		$	-		$	66,937,625
										Accumulated
					Additional					Other			Non-
		Common			Paid-in			Retained		Comprehensive			controlling
		Stock			Capital			Earnings		Income (loss)			Interest			Total
Balance December 31, 2016	$	10,456,098		$	40,814,285		$	14,426,969	$	30,383		$	199,491		$	65,927,226
Net income		-			-			956,808		-			-			956,808
Sale of iReverse		-			-			1		-			(199,491	)		(199,490	)
Other comprehensive income		-			-			-		136,619			-			136,619
Stock-based compensation		-			62,564			-		-			-			62,564
Issuance of common stock under stock option plan		87,764			310,175			-		-			-			397,939
Balance March 31, 2017	$	10,543,862		$	41,187,024		$	15,383,778	$	167,002		$	-		$	67,281,666

BAY BANK, FSB
CAPITAL RATIOS
										To Be Well
										Capitalized Under
						To Be Considered				Prompt Corrective
		Actual				Adequately Capitalized				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of March 31, 2017:
(unaudited)
Total Risk-Based Capital Ratio	$	67,183	12.90	%	$	41,674	8.00	%	$	52,093	10.00	%
Tier I Risk-Based Capital Ratio	$	64,023	12.29	%	$	31,256	6.00	%	$	41,674	8.00	%
Common Equity Tier I Capital Ratio	$	64,023	12.29	%	$	23,442	4.50	%	$	33,860	6.50	%
Leverage Ratio	$	64,023	10.34	%	$	24,770	4.00	%	$	30,963	5.00	%
As of December 31, 2016:
Total Risk-Based Capital Ratio	$	65,883	12.87	%	$	40,959	8.00	%	$	51,199	10.00	%
Tier I Risk-Based Capital Ratio	$	63,057	12.32	%	$	30,719	6.00	%	$	40,959	8.00	%
Common Equity Tier I Capital Ratio	$	63,057	12.32	%	$	23,039	4.50	%	$	33,279	6.50	%
Leverage Ratio	$	63,057	10.45	%	$	24,133	4.00	%	$	30,166	5.00	%
As of March 31, 2016:
(unaudited)
Total Risk-Based Capital Ratio	$	67,204	16.68	%	$	32,231	8.00	%	$	40,289	10.00	%
Tier I Risk-Based Capital Ratio	$	65,255	16.20	%	$	24,174	6.00	%	$	32,231	8.00	%
Common Equity Tier I Capital Ratio	$	65,255	16.20	%	$	18,130	4.50	%	$	26,188	6.50	%
Leverage Ratio	$	65,255	13.74	%	$	19,004	4.00	%	$	23,755	5.00	%
As of December 31, 2015:
Total Risk-Based Capital Ratio	$	67,238	16.58	%	$	32,443	8.00	%	$	40,553	10.00	%
Tier I Risk-Based Capital Ratio	$	65,465	16.14	%	$	24,332	6.00	%	$	32,443	8.00	%
Common Equity Tier I Capital Ratio	$	65,465	16.14	%	$	18,249	4.50	%	$	26,360	6.50	%
Leverage Ratio	$	65,465	13.75	%	$	19,041	4.00	%	$	23,801	5.00	%

BAY BANCORP, INC. AND SUBSIDIARY
SELECTED FINANCIAL DATA
	Three Months Ended									Year Ended
	March 31,			March 31,			December 31,			December 31,			December 31,
	2017			2016			2016			2016			2015
	(unaudited)			(unaudited)			(unaudited)
Financial Data:
Assets	$	633,351,138		$	463,434,656		$	620,303,594		$	620,303,594		$	491,161,838
Investment securities		65,592,289			26,572,056			61,390,965			61,390,965			34,925,398
Loans (net of deferred fees and costs)		495,236,254			396,854,139			487,103,713			487,103,713			393,240,567
Allowance for loan losses		(3,159,769	)		(1,948,536	)		(2,823,153	)		(2,823,153	)		(1,773,009	)
Deposits		525,802,482			365,885,997			526,458,394			526,458,394			367,415,938
Borrowings		34,000,000			26,275,000			20,000,000			20,000,000			52,300,000
Equity attributable to non-controlling interest								199,491			199,491			-
Equity attributable to common shareholders		67,281,664			66,937,625			65,727,735			65,727,735			67,682,489
Net income - Bay Bancorp		956,808			186,399			750,170			1,759,899			1,930,765
Net income - Non-controlling interest		-			-			61,279			199,491			-
Average Balances: (unaudited)
Assets		617,613,946			476,747,246			603,746,545			536,333,860			481,145,938
Investment securities		62,069,734			29,466,610			53,358,950			40,537,934			36,649,655
Loans (net of deferred fees and costs)		490,288,543			395,839,666			483,690,335			436,793,412			389,684,221
Borrowings		23,779,661			44,265,934			1,975,000			26,493,284			23,188,219
Deposits		520,795,226			361,610,047			529,537,517			443,144,111			388,245,405
Stockholders' equity		66,063,753			67,564,670			64,084,518			66,146,705			65,747,418
Performance Ratios:
Annualized return on average assets		0.63	%		0.16	%		0.53	%		0.37	%		0.40	%
Annualized return on average equity		5.87	%		1.11	%		5.04	%		2.96	%		2.94	%
Yield on average interest-earning assets		4.41	%		4.53	%		4.41	%		4.50	%		5.10	%
Rate on average interest-bearing liabilities		0.48	%		0.48	%		0.48	%		0.50	%		0.58	%
Net interest spread		3.93	%		4.05	%		3.93	%		4.00	%		4.51	%
Net interest margin		4.05	%		4.20	%		4.05	%		4.14	%		4.70	%
Book value per share	$	6.38		$	6.15		$	6.29		$	6.29		$	6.13
Basic net income per share		0.09			0.02			0.07			0.16			0.17
Diluted net income per share		0.09			0.02			0.07			0.16			0.17
		March 31,			March 31,			December 31,
		2017			2016			2016
Asset Quality Ratios:
Allowance for loan losses to loans		0.64	%		0.49	%		0.58	%
Nonperforming loans to avg. loans		3.17	%		2.07	%		3.02	%
Nonperforming assets to total assets		2.54	%		2.10	%		2.55	%
Net charge-offs annualized to avg. loans		0.08	%		0.03	%		0.00	%
Capital Ratios (Bay Bank, FSB):
Total risk-based capital ratio		12.90	%		16.68	%		12.87	%
Common equity tier 1 capital ratio		12.29	%		16.20	%		12.32	%
Tier 1 risk-based capital ratio		12.29	%		16.20	%		12.32	%
Leverage ratio		10.34	%		13.74	%		10.45	%

For investor inquiries contact:

Joseph J. Thomas, President and CEO
410-536-7336
jthomas@baybankmd.com
7151 Columbia Gateway Drive,
Suite A
Columbia, MD 21046

For further information contact:

Larry D. Pickett, Chief Financial Officer
lpickett@baybankmd.com
410-312-5415