Bay Banks Of Virginia Inc (BAYK) 10-K Annual Report April 2018

Richmond, Va., March 26, 2018; Bay Banks of Virginia, Inc. (the "Company") (OTCQB: BAYK), holding company of Virginia Commonwealth Bank and VCB Financial Group, today reported unaudited financial results for the full year and the fourth quarter ended December 31, 2017.

"Our transformative accomplishments in 2017 provide momentum into 2018 and beyond as advancements with the sales teams in the Richmond and Hampton Roads markets have contributed to strong organic loan growth of 29.3% excluding loans acquired in the merger with Virginia BanCorp Inc. ("Virginia BanCorp"). On April 1, 2017, Virginia Commonwealth Bank and Bank of Lancaster combined in a successful merger, then core systems were converted and the headquarters moved to Richmond, Virginia prior to year-end. During the fourth quarter, net interest income continued to rise on a linked quarter basis, driving consistent core earnings expansion. For the year, one-time merger and systems conversion expenses totaled $1.9 million and one-time professional and other expenses related to the succession of our Chief Financial Officer ("CFO") were $457,000. Management also increased the allowance for loan and lease losses to 1.01% of total loans from 0.65% just after the merger. Excluding the one-time items, growth in earnings before tax and provision continued. We believe we have a well-positioned franchise, headquartered in the dynamic Richmond, Virginia market, with sound growth, asset quality and capital levels, a widening net interest margin, a freshly bolstered allowance for loan and lease losses, and an experienced and seasoned executive team. I am proud of our accomplishments in 2017 as we shift our focus to 2018 and beyond, with the intention of improving efficiency and expanding fee income while maintaining lending momentum coupled with strong risk management practices." said Randal R. Greene, President and Chief Executive Officer.

Greene continued, "In the fourth quarter, the Company updated its April 1, 2017 fair market value of Virginia BanCorp's balance sheet to better reflect the expected value of a pool of consumer loans acquired in the merger. This portfolio, which totaled $17.4 million at April 1, 2017, has experienced elevated charge offs since the merger which have exceeded the discount previously assigned to the pool of loans, and accordingly, its fair value was adjusted down by $2.2 million. The decline in fair value of these loans resulted in a $1.4 million increase in goodwill, which translated into a $0.08 per share decrease in tangible book value as of April 1, 2017. At December 31, 2017, this acquired consumer loan portfolio has paid down to a balance of $11.1 million. Loans charged-off since the merger date from this acquired portfolio totaled $696,000."

Net Income

The Company reported a net loss of $2.0 million, or $0.16 per diluted common share for the three months ended December 31, 2017 compared to net income of $571,000, or $0.12 per diluted common share for the three months ended December 31, 2016. Net loss for the full year ended December 31, 2017 totaled $943,000, or $0.10 per common share compared to net income of $2.5 million, or $0.53 per common share for the prior year. Results for the fourth quarter included merger and systems conversion costs of $850,000, expenses related to the succession of the CFO of $457,000 and provision expense for loan and lease losses of $3.1 million, which included $2.1 million in provision expense in excess of charged off loans that was attributed to growth in the loan portfolio.

Rising Net Interest Income

The Company's primary source of revenue is its net interest income, which is the sum of the Company's interest income on loans and investments less its interest costs associated with customer deposits and other interest-bearing liabilities. Net interest income continues to rise year over year and on a linked quarter basis. Net interest income totaled $8.6 million for the three months ended December 31, 2017 compared to $7.8 million for the three months ended September 30, 2017 and $3.8 million for the prior year period before the merger. Accretion income for the three and twelve-months ended December 31, 2017 totaled $1.0 million and $1.9 million, respectively. The net interest margin for the fourth quarter of 2017 totaled 3.82%, which improved from 3.45% over the same period a year ago, as interest earning asset yields increased faster than the cost of the Company's interest-bearing liabilities in the current rising interest rate environment.

The following information was filed by Bay Banks Of Virginia Inc (BAYK) on Tuesday, March 27, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Bay Banks Of Virginia Inc provided additional information to their SEC Filing as exhibits

Exhibit 3.2: Articles Of Incorporation

Exhibit 14.1: Code Of Ethics

Exhibit 21.1: Subsidaries Of The Registrant

Exhibit 23.1: Consents Of Experts And Counsel

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Ticker: BAYK
CIK: 1034594
Form Type: 10-K Annual Report
Accession Number: 0001193125-18-110334
Submitted to the SEC: Fri Apr 06 2018 7:34:41 PM EST
Accepted by the SEC: Mon Apr 09 2018
Period: Sunday, December 31, 2017
Industry: State Commercial Banks

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Bay Banks Of Virginia Inc (BAYK) SEC Filing 10-K Annual report for the fiscal year ending Sunday, December 31, 2017

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