Bay Banks Of Virginia, Inc. Reports Fourth Quarter And Full-Year 2012 Earnings
KILMARNOCK, Va., Feb. 1, 2013 /PRNewswire/ -- Bay Banks of Virginia, Inc. (the "Company") (OTCQB: BAYK), holding company for Bank of Lancaster (the "Bank") and Bay Trust Company, announced net income of $698 thousand for the year ended December 31, 2012, an increase of 99.3% compared to $350 thousand for the prior year. Corresponding basic earnings per share increased to $0.27 in 2012 from $0.13 in 2011. Net income for the fourth quarter of 2012 was $262.5 thousand, representing a 12.9% increase from net income of $232.5 thousand for the prior quarter and a 229.0% increase from net income of $79.8 thousand for the fourth quarter of 2011.
- Earnings per basic share was $0.10 for the fourth quarter
- Total classified assets declined $3.4 million in the fourth quarter to $14.3 million
- Nonperforming assets declined $1.3 million in the fourth quarter to $9.0 million
- Other real estate owned ("OREO") decreased $54 thousand in the fourth quarter to $3.2 million
- Provision for loan losses totaled $572 thousand in the fourth quarter and $1.9 million for the year
- The Bank's total risk-based capital ratio was 14.08% and tier 1 leverage ratio was 9.00% at year-end
- Net interest margin averaged 3.63% for the quarter and 3.60% for the year
Return on average equity improved to 2.45% for the year ended December 31, 2012 compared to 1.30% for the prior year. Return on average assets improved to 0.22% for 2012 compared to 0.11% for 2011.
Randal R. Greene, President and CEO of Bay Banks of Virginia noted, "after successfully completing a private stock offering on December 31, 2012, which raised $9.35 million, we are excited about the future of our Company. The success of the offering, which was oversubscribed, is because of our focus on core earnings. When non-recurring items are excluded, non-interest income has increased by $797 thousand and non-interest expense has declined by $453 thousand year over year. This is a $1.25 million improvement in earnings before taxes. The non-recurring items are securities gains of $958 thousand in 2012 and $336 thousand in 2011, losses on OREO of $536 thousand more than budget in 2012 and $435 thousand in 2011, an insurance recovery of $217 thousand in 2012 for the defalcation loss of $246 thousand in 2011, fraud investigation and related audit expense of $107 thousand in 2012, severance expense of $133 thousand in 2012, recruitment expense of $41 thousand in 2011, and consulting expense of $185 thousand in 2012 related to earnings enhancement projects."Along with the $958 thousand in gains on sales of securities, these core earnings improvements allowed us to absorb $1.9 million in loan loss provision expense and $736 thousand in losses on foreclosed properties, and still allow the Company to report $698 thousand in net income after taxes for 2012. The additional provision for loan loss expense covered $2.0 million in net charge-offs against the Allowance for Loan Losses, a result of addressing lingering problem loans. With a full year's worth of our earnings enhancements in 2013, we expect continued improvements in earnings." The most notable of the earnings enhancements completed during 2012 include:
- An early retirement offer and a reduction in force which was completed by January 31, 2012, and saved approximately $500 thousand.
- Freezing of the pension plan as of December 31, 2012, which saved approximately $125 thousand in 2012.
- Waiving a contribution to the Employee Stock Ownership Plan in 2012 which saved $75 thousand.
- Renegotiation of the Bank's core system vendor contract, effective August 1, 2012, which saved approximately $151 thousand in 2012
- Addition of key personnel in the residential mortgage lending function who implemented process improvements which increased secondary market lending income by $472 thousand.
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