Bay Banks Of Virginia Inc (BAYK) SEC Filing 10-Q Quarterly report for the period ending Tuesday, March 31, 2020

Exhibit 99.1

Bay Banks of Virginia, Inc. Reports First Quarter 2020 Results

Response to COVID-19 Pandemic

RICHMOND, VA, May 7, 2020 /PRNewswire/ -- Bay Banks of Virginia, Inc. (OTCQB: BAYK), holding company of Virginia Commonwealth Bank and VCB Financial Group, Inc., announced financial results for the first quarter of 2020 and the company’s response to the COVID-19 pandemic.

The company reported a net loss of $14 thousand, or $0.00 per diluted share, for the first quarter of 2020 compared to net income of $2.0 million, or $0.15 per diluted share, for the fourth quarter of 2019 and net income of $1.5 million, or $0.11 per diluted share, for the first quarter of 2019. The net loss for the first quarter of 2020 includes loan loss provision expense of $2.8 million (pre-tax), a significant portion of which related to estimated reserve needs as a result of the COVID-19 pandemic.

The company reported that it has been operating under a pre-determined pandemic plan since the beginning of March. From the onset of the national pandemic, it proactively addressed the needs of its commercial and individual borrowers modifying nearly 180 loans, with balances of approximately $86.5 million, in the month of March 2020. The modifications allow for the short-term deferral of principal payments or of principal and interest payments.  

Beginning on March 20, 2020, the company’s retail branch lobbies were accessible by appointment; all its drive-through access points were open, as well as access to banking services using readily-available technology. On April 13, 2020, the company temporarily closed four retail branches and reduced hours of certain other branches. The company anticipates the branches will be re-opened during the third quarter of this year. These adjustments were primarily in response to the ‘stay-at-home’ order issued by the governor of Virginia on March 30, 2020. The changes in branch staffing along with certain other positions result in noninterest expense savings of approximately $225 thousand, which will be realized over the second and third quarters of 2020.  

Beginning on April 3, 2020, the company actively participated in the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, closing 405 loans totaling $45.3 million and earning $1.8 million in processing fees, pursuant to the first appropriation of government funding, which was depleted on April 16, 2020. Beginning on April 27, 2020 and through the end of April, an additional 107 loans were closed totaling $5.5 million and resulting in $250 thousand in processing fees, pursuant to the second appropriation of PPP government funding. Through the PPP, the federal government partnered with banks to provide over $650 billion to small businesses to support payrolls and other operating expenses.

Randal R. Greene, President and Chief Executive Officer, commented: “2020 started strong; with vibrant economies in our markets and with the leadership of our new Chief Revenue Officer, we were off to a great year. On a pre-tax, pre-provision basis, we earned $2.7 million¹ in the first quarter of 2020 compared to $2.8 million¹ in the fourth quarter of 2019. Excluding the higher accretion of loan discounts of $740 thousand in the fourth quarter of 2019, pre-tax, pre-provision earnings improved $663 thousand. Of the $2.8 million we recorded in provision for loan losses during the quarter, $1.5 million was an estimate of credit issues related to the impact of the virus on our borrowers’ businesses and their ability to repay us. First quarter loan growth, on an annualized basis, was nearly 20%, and we, like other banks our size, were feeling loan yield pressure as market rates were coming down. We aggressively reduced deposit rates, bringing overall deposit costs down 10 basis points in this first quarter.

“At the beginning of 2020, few would have predicted our economy would come to a halt due to a pandemic. As a nimble community bank, our focus quickly shifted to supporting our customers, modifying their loans, and assisting them in deciphering the many stimulus programs rolled out by our federal government. I couldn’t be more proud of how our teams responded, both the team that executed the Paycheck Protection Program loans for our customers and our branch employees that interface day-to-day with the public during this complicated situation. As of the end of April, 100% of our customers that applied for a PPP loan had been approved for one. I have received an overwhelming amount of positive feedback from customers we’ve helped, many that have temporarily lost revenues they’ve worked years to build.”