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Bay Bancorp, Inc. Announces First Quarter 2015 Results

LUTHERVILLE, Md., May 1, 2015 (GLOBE NEWSWIRE) -- Bay Bancorp, Inc. ("Bay") (Nasdaq:BYBK), the savings and loan holding company for Bay Bank, FSB ("Bank"), announced today net income of $0.34 million or $0.03 per basic and diluted share for the quarter ended March 31, 2015, compared to net income of $0.08 million or $0.01 per basic and diluted share for the quarter ended March 31, 2014.

According to Joseph J. Thomas, Chairman, President and CEO, "Our management team remains committed to executing a differentiated business strategy articulated as the bank built by entrepreneurs for entrepreneurs in the Baltimore/Washington corridor, and executed by having lead relationships with businesses, real estate owners and professionals via an optimal network of sales offices and technology solutions to provide loans, deposits, e-services, mortgage banking and financial advisory services." "For the quarter ended March 31, 2015, we continued to progress toward our goal of improved profitability resulting in expanded market capitalization. Our goal is to achieve the improvement through capital utilization with a keen eye on expense efficiency. While seeking growth, we preserved a very high quality balance sheet by reporting a 16.2% tier one risk-based capital to asset ratio, a 46.3% Adversely Classified Asset ratio and a 202.7% Commercial Real Estate loans to Capital ratio," Thomas continued.

Highlights from the First Three Months of 2015

The Bank's relationship management activities resulted in the growth of new loans in the Bank's originated portfolio by a 32.8% annualized pace in the first quarter of 2015. Deposit growth, and particularly noninterest-bearing deposit growth, was strong during the first quarter of 2015, as the Bank recorded annualized growth of over 16%. Bay has a very strong capital position and capacity for future growth with total regulatory capital to risk weighted assets of 16.6% as of March 31, 2015. The Bank has a proven record of success in acquisitions and acquired problem asset resolutions and, at March 31, 2015, had $13.4 million in remaining net purchase discounts on the acquired loan portfolios.

Specific highlights are listed below:

  • The return on average assets for the three months ended March 31, 2015 was 0.29%, as compared to 1.09% for the three months ended December 31, 2014 and 0.08% for the same period of 2014. The return on average equity for the three-months ended March 31, 2015 was 2.08% compared to 7.87% for the three-months ended December 31, 2014 and 0.61%, for the first quarter of 2014.
  • Total assets were $487 million at March 31, 2015 compared to $480 million at December 31, 2014 and increased by $57 million from $430 million at March 31, 2014.
  • Total loans were $392 million at March 31, 2015, a decrease of 0.4% from $393 million at December 31, 2014 and an increase of 26% from $312 million at March 31, 2014.
  • Total deposits were $404 million at March 31, 2015, an increase of 4% from $388 million at December 31, 2014 and an increase of 9% from $372 million at March 31, 2014. Non-interest bearing deposits were $101 million, an increase of 10% from $92 million at December 31, 2014.
  • Net interest income for the three-months ended March 31, 2015 totaled $5.3 million compared to $5.2 million for the same period of 2014. Interest income associated with discount accretion on purchased loans, deferred costs and deferred fees will vary due to the timing and nature of loan principal payments. Earning asset leverage was the primary driver in year-over-year results, as average earning loans and investments increased to $428 million for the quarter ended March 31, 2015, compared to $354 million for the same period of 2014.
  • Net interest margin for the three-months ended March 31, 2015 was 4.73%, compared to 5.40% for the same period of 2014. The margin for the first quarter of 2015 reflects the variable pace of discount accretion recognition within interest income and the impact of fair value amortization on the interest expense of acquired deposits. For the quarter ended March 31, 2015, the earning asset portfolio yield was influenced by a $.42 million decline in net discount accretion of purchased loan discounts recognized in interest income and a $.35 million decrease in the fair value amortization on deposits when compared to the same period of 2014. The margin declined by 67 basis points during the quarter compared to a year earlier, nearly all related to loan and deposit accretion fluctuations.
  • Nonperforming assets increased to $15.61 million at March 31, 2015, from $14.34 million at December 31, 2014. The first quarter of 2015 increase resulted from the Bank's delayed resolution of several acquired nonperforming loans from previous acquisitions.
  • The provision for loan losses for the three-months ended March 31, 2015 was $275,000, compared to $219,000 for the same period of 2014. The increase for the 2015 period was primarily the result of an increase in loan originations. As a result, the allowance for loan losses was $1.35 million at March 31, 2015, representing 0.35% of total loans, compared to $1.29 million, or 0.33% of total loans, at December 31, 2014. Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future due to the gradual accretion of the discount on the acquired loan portfolios and an increase in new loan originations.

Balance Sheet Review

Total assets were $487 million at March 31, 2015, an increase of $7 million, or 1.48%, when compared to December 31, 2014. Loans held for sale increased by $5.3 million or 73% during the quarter and were offset by a $1.5 million or 0.39% decline in loans held for investment and a $2.5 million or 6.96% decline in investments available for sale.

Total deposits were $404 million at March 31, 2015, an increase of $16 million, or 4.25%, when compared to December 31, 2014. The increase was primarily assisted by a $9.5 million or 10.38% increase in non-interest bearing accounts. The increase in deposits resulted in a $10 million decrease in short-term borrowings over the quarter.

Stockholders' equity decreased to $65.7 million at March 31, 2015 from $66.6 million at December 31, 2014 and increased from $54.9 million at March 31, 2014. The decrease over the first quarter of 2015 related to an increase in the Bay Bank retirement income plan liability due to changes in actuarial assumptions, offset by related deferred taxes. The book value of Bay's common stock was $5.96 per share at March 31, 2015, compared to $6.05 per share at December 31, 2014.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and real estate acquired through foreclosure, increased slightly to $15.61 million at March 31, 2015 from $14.34 million at December 31, 2014. The increase related to a $.8 million reclassification of troubled debt restructurings to impaired loans offset by a decrease in nonaccrual loans. Nonperforming assets represented 3.22% of total assets at March 31, 2015, which was slightly elevated from the 2.99% recorded at December 31, 2014.

At March 31, 2015, the Bank remained above all "well-capitalized" regulatory requirement levels. The Bank's tier 1 risk-based capital ratio was 16.22% at March 31, 2015 as compared to 16.31% at December 31, 2014 and 15.23% at March 31, 2014. Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the investment portfolio.

Review of Financial Results

Net income for the three-months ended March 31, 2015 was $0.34 million compared to net income of $0.08 million for the same period of 2014. Individual categories reflect variability between years.

Net interest income increased by $0.2 million for the quarter ended March 31, 2015 when compared to the same period of 2014. The increase was supported by a $69 million growth in average interest-earning assets largely due to the Slavie Bank Acquisition ("the Slavie Acquisition") in May 30, 2014, offset by a $.42 million decline in net discount accretion of purchased loan discounts recognized in interest income and a $.35 million decrease in the fair value amortization on deposits. Excluding the impact of the fair value accounting, net interest income increased by $.93 million from the quarter ended March 31, 2014. The net interest margin for the first quarter of 2015 decreased to 4.73% from 5.40% for the first quarter of 2014 due to the decline in discount accretion on loans and deposits. As of March 31, 2015, the remaining net loan discounts on the Bank's loan portfolio, including loans acquired in "the Slavie Acquisition," totaled $13.4 million.

Noninterest income for the three-months ended March 31, 2015 was $1.2 million compared to $1.3 million for the same quarter of 2014. This decrease was primarily the result of $.06 million decrease in electronic banking fees and a $.09 million decrease in other income partially offset by a $.08 million increase in mortgage banking fees and gains. Expectations are for increased mortgage fees and gains to expand in 2015.

Noninterest expense reduction is a key focus for 2015 net income improvement. For the three-months ended March 31, 2015 noninterest expense was $5.7 million compared to $6.3 million for the first quarter of 2014. The primary contributors to the decrease when compared to the first quarter of 2014 decreases of $.45 million in salary and employee benefits, $.14 million in foreclosed property expenses and a decrease of $.11 million in Merger-related expenses.

In the fourth quarter of 2014, Bay filed amended 2011 and 2012 Federal and Maryland tax returns for the former Carrollton Bancorp, resulting in the accrual of $.6 million in tax refunds. Combined with a reversal of a deferred tax valuation allowance, the Bank recognized $1.2 million in favorable tax benefits in the fourth quarter of 2014.

Bay Bancorp, Inc. Information

Bay Bancorp, Inc. is a financial holding company and a savings and loan holding company headquartered in Lutherville, Maryland. Through Bay Bank, FSB, its federal savings bank subsidiary, Bay Bancorp, Inc. serves the community with a network of 10 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of Baltimore, Anne Arundel, Howard, Carroll, and Harford. The Bank serves local consumers, small and medium size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including on-line and mobile banking, commercial banking, cash management, mortgage lending and retail banking. The Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit. The Bank's subsidiary, Bay Financial Services, Inc., provides investment advisory and brokerage services. Additional information is available at www.baybankmd.com.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as "anticipate," "estimate," "should," "expect," "believe," "intend," and similar expressions. Although these statements reflect management's good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Bay Bancorp, Inc. with the Securities and Exchange Commission entitled "Risk Factors".

Bay Bancorp, Inc.
Consolidated Balance Sheets
March 31, March 31,
2015 December 31, 2014 December 31,
(unaudited) 2014 (unaudited) 2013
ASSETS
Cash and due from banks $ 6,335,049 $ 7,062,943 $ 7,706,885 $ 7,126,720
Interest bearing deposits with banks and federal funds sold 17,250,151 9,794,382 43,371,284 16,146,340
Total Cash and Cash Equivalents 23,585,200 16,857,325 51,078,169 23,273,060
Time deposits with banks -- 34,849 -- --
Investment securities available for sale, at fair value 32,890,719 35,349,889 36,040,327 36,586,669
Investment securities held to maturity, at amortized cost 1,296,793 1,315,718 -- --
Restricted equity securities, at cost 1,291,095 1,862,995 791,195 1,009,695
Loans held for sale 12,494,787 7,233,306 4,983,638 12,836,234
Loans, net of deferred fees and costs 391,537,271 393,051,192 311,969,640 320,680,332
Less: Allowance for loan losses (1,353,849) (1,294,976) (941,715) (851,000)
Loans, net 390,183,422 391,756,216 311,027,925 319,829,332
Real estate acquired through foreclosure 1,501,135 1,480,472 1,529,334 1,290,120
Premises and equipment, net 5,398,901 5,553,957 5,771,667 5,998,532
Bank owned life insurance 5,516,549 5,485,377 5,388,898 5,356,575
Core deposit intangible 3,223,737 3,478,282 3,719,384 3,993,679
Deferred tax assets, net 4,117,563 3,214,100 5,364,441 6,564,121
Accrued interest receivable 1,300,297 1,306,111 1,045,383 1,186,748
Accrued taxes receivable 2,819,468 3,122,885 539,781 --
Defined benefit pension asset -- 680,668 -- --
Other assets 1,410,994 1,210,835 2,312,855 1,164,538
Total Assets $ 487,030,660 $ 479,942,985 $ 429,592,997 $ 419,089,303
LIABILITIES
Noninterest-bearing deposits $ 101,629,926 $ 91,676,534 $ 95,090,887 $ 90,077,139
Interest-bearing deposits 302,674,673 296,153,598 276,846,536 270,916,332
Total Deposits 404,304,599 387,830,132 371,937,423 360,993,471
Short-term borrowings 12,150,000 22,150,000 -- --
Defined benefit pension liability 1,731,102 -- 131 42,492
Accrued expenses and other liabilities 3,194,319 3,319,567 2,707,149 3,499,072
Total Liabilities 421,380,020 413,299,699 374,644,703 364,535,035
STOCKHOLDERS' EQUITY
Common stock - par value $1.00, authorized 20,000,000 shares, issued and outstanding 11,014,517, 11,014,517, 9,379,753 and 9,379,753 shares as of March 31, 2015, December 31, 2014, March 31, 2014 and December 31, 2013, respectively. 11,014,517 11,014,517 9,379,753 9,379,753
Additional paid-in capital 43,372,280 43,228,950 36,497,449 36,357,001
Retained earnings 11,079,558 10,736,305 7,785,332 7,703,597
Accumulated other comprehensive income 184,285 1,663,514 1,285,760 1,113,917
Total Stockholders' Equity 65,650,640 66,643,286 54,948,294 54,554,268
Total Liabilities and Stockholders' Equity $ 487,030,660 $ 479,942,985 $ 429,592,997 $ 419,089,303
Bay Bancorp, Inc.
Consolidated Statements of Income (Loss)
(Unaudited)
Three Months Ended March 31,
2015 2014
Interest income:
Interest and fees on loans $ 5,507,767 $ 5,140,386
Interest on loans held for sale 61,511 85,801
Interest and dividends on securities 257,436 247,349
Interest on deposits with banks and federal funds sold 10,612 13,368
Total Interest Income 5,837,326 5,486,904
Interest expense:
Interest on deposits 484,401 309,059
Interest on short-term borrowings 13,776 --
Total Interest Expense 498,177 309,059
Net Interest Income 5,339,149 5,177,845
Provision for loan losses 275,109 219,165
Net interest income after provision for loan losses 5,064,040 4,958,680
Noninterest income:
Electronic banking fees 576,190 639,994
Mortgage banking fees and gains 393,642 312,675
(Loss) gain on sale of real estate acquired through foreclosure (628) 1,829
Service charges on deposit accounts 79,017 92,513
Gain on securities sold 77,490 --
Other income 111,509 206,361
Total Noninterest Income 1,237,220 1,253,372
Noninterest Expenses:
Salary and employee benefits 2,919,119 3,365,432
Occupancy expenses 719,832 749,279
Furniture and equipment expenses 275,401 312,129
Legal, accounting and other professional fees 368,028 394,120
Data processing and item processing services 342,673 275,150
FDIC insurance costs 106,311 67,709
Advertising and marketing related expenses 28,749 39,405
Foreclosed property expenses 60,363 199,363
Loan collection costs 87,510 47,179
Core deposit intangible amortization 254,546 274,295
Merger and acquisition related expenses -- 111,323
Other expenses 537,352 504,289
Total Noninterest Expenses 5,699,884 6,339,673
Income (loss) before income taxes 601,376 (127,621)
Income tax (benefit) expense 258,123 (209,356)
Net income $ 343,253 $ 81,735
Basic net (loss) income per common share $ 0.03 $ 0.01
Diluted net (loss) income per common share $ 0.03 $ 0.01
Bay Bancorp, Inc.
Consolidated Statements of Stockholders' Equity
For the Three Months Ended March 31, 2015 and 2014
(Unaudited)
Accumulated
Additional Other
Common Paid-in Retained Comprehensive
Stock Capital Earnings Income (loss) Total
Balance December 31, 2013 $ 9,379,753 $ 36,357,001 $ 7,703,597 $ 1,113,917 $ 54,554,268
Net income -- -- 81,735 -- 81,735
Other comprehensive income -- 171,843 171,843
Stock-based compensation -- 140,448 -- -- 140,448
Balance March 31, 2014 $ 9,379,753 $ 36,497,449 $ 7,785,332 $ 1,285,760 $ 54,948,294
Accumulated
Additional Other
Common Paid-in Retained Comprehensive
Stock Capital Earnings Income (loss) Total
Balance December 31, 2014 $ 11,014,517 $ 43,228,950 $ 10,736,305 $ 1,663,514 $ 66,643,286
Net income -- -- 343,253 -- 343,253
Other comprehensive income -- (1,479,229) (1,479,229)
Stock-based compensation -- 143,330 -- -- 143,330
Balance March 31, 2015 $ 11,014,517 $ 43,372,280 $ 11,079,558 $ 184,285 $ 65,650,640
Bay Bank, FSB
Capital Ratios
(Unaudited)
To Be Well
Capitalized Under
To Be Considered Prompt Corrective
Actual Adequately Capitalized Action Provisions
Amount Ratio Amount Ratio Amount Ratio
As of March 31, 2015:
Total Risk-Based Capital Ratio $ 64,172 16.57 % $ 30,982 8.00 % $ 38,728 10.00 %
Tier I Risk-Based Capital Ratio $ 62,818 16.22 % $ 15,491 4.00 % $ 23,237 6.00 %
Leverage Ratio $ 62,818 13.01 % $ 19,314 4.00 % $ 24,142 5.00 %
As of December 31, 2014:
Total Risk-Based Capital Ratio $ 62,743 16.66 % $ 30,129 8.00 % $ 37,661 10.00 %
Tier I Risk-Based Capital Ratio $ 61,448 16.31 % $ 15,070 4.00 % $ 22,605 6.00 %
Leverage Ratio $ 61,448 12.94 % $ 18,995 4.00 % $ 23,743 5.00 %
As of September 30, 2014:
Total Risk-Based Capital Ratio $ 60,376 16.14 % $ 29,922 8.00 % $ 37,402 10.00 %
Tier I Risk-Based Capital Ratio $ 59,247 15.84 % $ 14,961 4.00 % $ 22,441 6.00 %
Leverage Ratio $ 59,247 12.51 % $ 18,943 4.00 % $ 23,679 5.00 %
As of June 30, 2014:
Total Risk-Based Capital Ratio $ 60,205 15.99 % $ 30,122 8.00 % $ 37,653 10.00 %
Tier I Risk-Based Capital Ratio $ 59,105 15.70 % $ 15,061 4.00 % $ 22,592 6.00 %
Leverage Ratio $ 59,105 12.27 % $ 19,263 4.00 % $ 24,079 5.00 %
As of March 31, 2014:
Total Risk-Based Capital Ratio $ 49,354 15.53 % $ 25,423 8.00 % $ 31,778 10.00 %
Tier I Risk-Based Capital Ratio $ 48,412 15.23 % $ 12,711 4.00 % $ 19,067 6.00 %
Leverage Ratio $ 48,412 11.44 % $ 16,927 4.00 % $ 21,159 5.00 %
As of December 31, 2013:
Total Risk-Based Capital Ratio $ 47,815 14.68 % $ 26,079 8.00 % $ 32,562 10.00 %
Tier I Risk-Based Capital Ratio $ 46,964 14.42 % $ 13,025 4.00 % $ 19,537 6.00 %
Leverage Ratio $ 46,964 11.41 % $ 16,461 4.00 % $ 20,577 5.00 %
Bay Bancorp, Inc.
Selected Financial Data
(Unaudited)
Three Months Ended Twelve Months Ended
March 31, 2015 March 31, 2014 December 31, 2014 December 31, 2014 December 31, 2013
Financial Data:
Assets $ 487,030,660 $429,592,997 $479,942,985 $479,942,985 $419,089,303
Investment securities 34,187,512 36,040,327 36,665,607 36,665,607 36,586,669
Loans (net of deferred fees and costs) 391,537,271 311,969,640 393,051,192 393,051,192 320,680,332
Allowance for loan losses 1,353,849 941,715 1,294,976 1,294,976 851,000
Deposits 404,304,599 371,937,423 387,830,132 387,830,132 360,933,471
Borrowings 12,150,000 -- 22,150,000 22,150,000 --
Stockholders' equity 65,650,640 54,948,294 66,643,286 66,643,286 54,554,268
Net income (loss) 343,253 81,735 1,310,327 3,032,708 3,241,134
Average Balances:
Assets 485,027,802 417,018,727 476,700,436 459,782,360 358,397,210
Investment securities 35,318,852 36,434,000 35,827,735 36,561,271 24,427,877
Loans (net of deferred fees and costs) 392,780,700 317,227,783 392,275,709 364,511,290 259,698,504
Borrowings 16,155,556 -- 18,500,000 9,269,231 92,328
Deposits 399,249,747 359,929,587 391,419,769 385,700,292 306,040,717
Stockholders' equity 66,785,682 54,751,281 66,079,174 61,530,969 48,537,003
Performance Ratios:
Return on average assets 0.29% 0.08% 1.09% 0.66% 0.90%
Return on average equity 2.08% 0.61% 7.87% 4.93% 6.68%
Yield on average interest-earning assets 5.17% 5.72% 5.90% 5.60% 5.71%
Rate on average interest-bearing liabilities 0.63% 0.46% 0.43% 0.42% 0.55%
Net interest spread 4.54% 5.26% 5.47% 5.18% 5.16%
Net interest margin 4.73% 5.40% 5.59% 5.31% 5.33%
Book value per share $ 5.96 $ 4.99 $ 6.05 $ 6.05 $ 5.83
Basic net income per share 0.03 0.01 0.12 0.29 0.39
Diluted net income per share 0.03 0.01 0.12 0.29 0.39
March 31, 2015 March 31, 2014 December 31, 2014
Asset Quality Ratios:
Allowance for loan losses to loans 0.35% 0.30% 0.33%
Nonperforming loans to total loans 3.59% 3.34% 3.27%
Nonperforming assets to total assets 3.22% 2.69% 2.99%
Net charge-offs annualized to avg. loans 0.06% 0.17% 0.06%
Capital Ratios (Bay Bank, FSB):
Total risk-based capital ratio 16.57% 15.53% 16.66%
Tier 1 risk-based capital ratio 16.22% 15.23% 16.31%
Leverage ratio 13.01% 11.44% 12.94%

CONTACT: For investor inquiries contact: Joseph J. Thomas, Chairman, President and CEO 410-536-7336 jthomas@baybankmd.com 7151 Columbia Gateway Drive, Suite A Columbia, MD 21046 For further information contact: Larry D. Pickett, Chief Financial Officer lpickett@baybankmd.com 410-427-3726Source:Bay Bancorp, Inc.