Bay Banks Of Virginia Inc (BAYK) SEC Filing 10-Q Quarterly report for the period ending Sunday, June 30, 2019

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Income before income taxes for the second quarter of 2019 was $2.1 million compared to $1.8 million for the first quarter of 2019.

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Interest income for the three months ended June 30, 2019 was $12.3 million, on average interest-earning assets of $1.04 billion, compared to $12.3 million, on average interest-earning assets of $1.02 billion, for the three months ended March 31, 2019. Interest income in the second quarter of 2019 included accretion of acquired loan discounts of $197 thousand, while interest income in the first quarter of 2019 included $439 thousand of accretion of acquired loan discounts. Higher accretion in the first quarter of 2019 was primarily attributable to early payoffs of loans acquired in the Merger. Yields on average interest-earning assets were 4.77% and 4.90% for the linked quarter periods, including the effect of accretion. Of the decline in yield from the first quarter to the second quarter of 2019, 11 basis points were attributable to lower accretion of acquired loan discounts of $242 thousand.

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Interest expense was $3.8 million and $3.7 million for the three months ended June 30, 2019 and March 31, 2019, respectively, and cost of funds was 1.58% and 1.54% for the linked quarter periods. Average interest-bearing liabilities were $857.4 million and $853.6 million for the second and first quarters of 2019, respectively.

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Net interest margin (“NIM”) was 3.29% for the second quarter of 2019 compared to 3.45% for the first quarter of 2019. Of the decline in NIM from the first quarter to the second quarter of 2019, 9 basis points were attributable to lower accretion of acquired loan discounts, while the remaining decline was primarily due to higher cost of funds.

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Provision for loan losses was $62 thousand in the second quarter of 2019, while provision for loan losses in the first quarter of 2019 was $314 thousand. Provision for loan losses in the second quarter of 2019 was primarily attributable to adjustments to certain qualitative loan loss factors to adjust for the change in the composition of the company’s loan portfolio. Provision for loan losses in the first quarter of 2019 was primarily attributable to gross loan growth of $16.5 million.

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Noninterest income for the three months ended June 30, 2019 and March 31, 2019 was $1.3 million and $1.1 million, respectively. Greater noninterest income in the second quarter of 2019 compared to the first quarter of 2019 was primarily due to higher secondary market mortgage sales and servicing income, which increased $196 thousand, as the company sold a greater volume of originated loans and due to general seasonality in the mortgage banking business.