United States securities and exchange commission logo
April 11, 2023
David M. Flair
Co-President and Chief Executive Officer
BV Financial, Inc.
7114 North Point Road
Baltimore, Maryland 21219
Re: BV Financial, Inc.
Registration
Statement on Form S-1
Filed March 13,
2023
File No. 333-270496
Dear David M. Flair:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Form S-1 filed March 13, 2023
General, page i
1. In light of recent
market events and activities within the banking sector, please revise your
disclosures in the
Business, Risk Factors, Management s Discussion and Analysis and
Quantitative and
Qualitative Disclosures about Market Risk sections, where appropriate,
to address any material
impact these events and activities have had on your financial
condition, operations,
customer base, liquidity, capital position and risk profile. For
example, consider the
need to further expand your discussion of interest rate risk and
asset/liability
management policies and discuss any changes management has undertaken
in response to the
recent events. If available, consider supplementing your qualitative
disclosure with
additional quantitative details in order for an investor to understand
changes to your
liquidity position, activities, trends and market driven impacts as of a
David M. Flair
FirstName LastNameDavid M. Flair
BV Financial, Inc.
Comapany
April NameBV Financial, Inc.
11, 2023
April 211, 2023 Page 2
Page
FirstName LastName
more recent date.
2. Please advise if BayVanguard Bank 401(k) Profit Sharing Plan is
intended to be a co-
registrant. Additionally, please revise to indicate, if true, that
there is no affiliation
between BayVanguard and the Vanguard funds identified on pages 11-14.
3. We note that the reorganization of BV Financial will not be completed
until after a vote
and filing of amended articles of incorporation. With a view to
disclosure, please advise
us of the timing of the steps of the reorganization and confirm
whether the reorganization
is a condition to closing the offering.
4. We note the multiple cover pages that appear to be prepared for
different offerings. If
applicable, please revise to provide explanatory notes and separate
pagination to clearly
indicate when separate pages will be used.
Summary, page 1
5. We note your disclosure on page 102 that depositors of BayVanguard
Bank have voting
rights in Bay-Vanguard, M.H.C. as to all matters requiring a vote of
members, and that
upon completion of the conversion, depositors will no longer have
voting rights. Please
disclose this in the summary section or include a cross-reference to
this section.
6. Please provide a separate discussion for each loan category in your
portfolio and discuss
the risks that are unique to each category to the extent material.
7. Please refer to Market for Common Stock on pages 11 and 37 and the
statement that you
are required to have at least 3 broker-dealers to list on the Nasdaq
Capital Market. Revise
to clarify the anticipated timeline, identify the other listing
requirements and further
clarify the risk that the common stock could be rejected for listing
after completion of the
offering.
Risk Factors, page 18
8. Please revise here and Management's Discussion and Analysis to further
clarify
the significant increase in your dependence on Federal Home Loan Bank
borrowings. In
this regard, we also note the statement no page 54 that you "may
utilize Federal Home
Loan Bank advances" to meet liquidity needs depending on the retention
of time deposits.
Changes in interest rates could reduce our profits and asset values, page 20
9. We note the statements page 20 regarding the spread between interest
rates and your
"asset sensitivity," which you indicate is "preferable as it results
in improvement in our net
interest margin." We also note the reference to any "substantial,
unexpected, prolonged
change in market interest rates." Please revise Management's
Discussion and Analysis to
further explain your asset sensitivity and how it improved your
results of operations. With
respect to the substantial increase in interest rates during 2022,
revise here and
Management's Discussion and Analysis to provide quantitative and
qualitative disclosure
David M. Flair
BV Financial, Inc.
April 11, 2023
Page 3
regarding the increase in rates and the extent to which it materially
impacted your results
of operations and liquidity.
Inflation can have an adverse impact on our business and on our customers, page
21
10. We note your risk factor on page 21 indicating that inflation can have
an adverse impact
on your business and on your customers. Please update this risk factor
if recent
inflationary pressures have materially impacted your operations. In
this regard, if
applicable, discuss how your business has been materially affected by
the various types of
inflationary pressures you are facing.
We outsource critical operations to third-party service providers, page 25
11. We note from this and the preceding risk factor that your business is
subject to
cybersecurity risks. To the extent cybersecurity risks are material to
your business, please
disclose here or in another appropriately captioned section the nature
of the board s role in
overseeing your cybersecurity risk management, the manner in which the
board
administers this oversight function and any effect this has on the
board s leadership
structure.
12. Additionally, please revise to clarify the board's role in risk
oversight regarding other key
areas. In this regard, we note the 2023 annual report available on the
company's website
discusses the Enterprise Risk Management Committee.
Selected Consolidated Financial and Other Data
Asset Quality Ratios, page 32
13. We note your allowance for loan losses as a percentage of
non-performing loans disclosed
on page 32 is inconsistent with the percentages you disclose on page
72. In addition, it is
unclear how some of these amounts recalculate based on the amount of
non-performing
loans and allowance for loan losses at period end disclosed on pages
70 and 72,
respectively. Please provide us with your calculations of Allowance
for loan losses as a
percentage of non-performing loans, Non-performing loans as a
percentage of total
loans, Non-performing loans as a percentage of total assets, and Total
non-
performing assets as a percentage of total assets. In addition, revise
to ensure your
disclosure of these ratios are both mathematically accurate and
consistent.
Use of Proceeds, page 35
14. Please revise here and the cover pages to clarify, if true that you will
not close the offering
FirstName LastNameDavid M. Flair
if you do not sell the "minimum of 10,625,000 shares," as stated on the
second cover page
Comapany
afterNameBV Financial, Inc.please advise us if you will use an escrow
consistent with
page 19. Additionally,
Rule
April 11, 10b-9.
2023 Page 3
FirstName LastName
David M. Flair
FirstName LastNameDavid M. Flair
BV Financial, Inc.
Comapany
April NameBV Financial, Inc.
11, 2023
April 411, 2023 Page 4
Page
FirstName LastName
Management of Market Risk, page 55
15. We note your tabular presentation of changes in net interest income
and economic value
of equity due to difference scenarios for changes in interest rates.
Please supplement your
disclosure in these sections to qualitatively discuss the information
presented in these
tables and the relationship between the changes in rates with the
measures you have
presented.
Lending Activities, page 61
16. We note your disclosure on page 63 that you purchase and participate
in commercial real
estate loans from other financial institutions, and that such loans
are "subject to the same
underwriting criteria and loan approval requirements applied to loans
originated by
BayVanguard Bank." Please clarify how you apply the same underwriting
criteria and
loan approval requirements to existing loans that have already be
underwritten by other
financial institutions, such as whether you independently go through
the underwriting
process for each loan prior to acquisition or participation, or
whether this statement
reflects your belief based on your due diligence that the other
financial institutions applied
the same criteria and requirements during their underwriting prior to
your acquisition or
participation.
Commercial Real Estate Lending, page 62
17. We note your disclosure that at December 31, 2022, $146.8 million, or
46.2% of your
commercial real estate loans were secured by collateral located
outside of Maryland.
However, on page 19, we note that that at December 31, 2022, $137.5
million, or 60.8%,
of investor commercial real estate loans were secured by collateral
located outside of
Maryland. Please clarify the difference between these two metrics and
revise your
disclosures accordingly.
Our Directors and Executive Officers, page 86
18. We note your disclosure that the Board has nominated P. David Bramble
for election at
the 2023 Annual Meeting of Stockholders. Please refer to Rule 438
which requires that
when any person who has not signed the registration statement is named
therein as about
to become a director, the written consent of such person shall be
filed with the registration
statement. Please revise or advise why you believe a consent is not
required.
Approvals Required, page 101
19. We note that the affirmative vote of a majority of the total votes
eligible to be cast by the
members of Bay-Vanguard, M.H.C. (i.e., eligible depositors of
BayVanguard Bank)
is required to approve the plan of conversion. Please revise to
disclose when you plan to
conduct these votes and how this vote will be conducted, such as with
a proxy
statement, or advise. Please also briefly describe what types of
matters currently require
David M. Flair
BV Financial, Inc.
April 11, 2023
Page 5
depositor approval under "Effect on Voting Rights of Depositors and
Borrowers" at page
102.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Michael Henderson, Staff Accountant, at 202-551-3364 or
Robert
Klein, Accounting Branch Chief, at 202-551-3847 if you have questions regarding
comments on
the financial statements and related matters. Please contact John Stickel,
Staff Attorney, at 202-
551-3324 or James Lopez, Office Chief, at 202-551-3536 with any other
questions.
FirstName LastNameDavid M. Flair Sincerely,
Comapany NameBV Financial, Inc.
Division of
Corporation Finance
April 11, 2023 Page 5 Office of Finance
FirstName LastName