from BV Financial, Inc. (NASDAQ:BVFL)
BV Financial, Inc Announces Financial Results
BALTIMORE, MD / ACCESSWIRE / April 22, 2024 / BV Financial, Inc. (NASDAQ:BVFL), (the "Company") the holding company for BayVanguard Bank (the "Bank"), reported net income of $2.6 million or $0.24 per diluted share for the quarter ended March 31, 2024 compared to net income of $3.1 million or $0.39 per diluted share for the quarter ended March 31, 2023.
Financial Highlights
During the quarter ended March 31, 2024, the Company paid off $3.0 million in junior subordinated debt assumed via previous acquisition that had an interest rate in the most recent quarter of 8.49%. This resulted in the write-off (increase in interest expense) of the remaining purchase accounting fair market value adjustment of $566,000. This write-off was the primary contributor to the decrease in net income in the quarter ended March 31, 2024 when compared to the quarter ended March 31, 2023.
Return on average assets and return on average equity for the quarter ended March 31, 2024 were 1.16% and 5.14%, respectively. Return on average assets and return on average equity for the three months ended March 31, 2023 were 1.46% and 12.57%, respectively.
Loans increased $3.9 million, or 0.56% to $708.7 million at March 31, 2024 compared to $704.8 million at December 31, 2023.
Deposits increased $5.4 million, or 0.85%, from $634.1 million at March 31, 2023 to $639.5 million at March 31, 2024.
In the quarter ended March 31, 2024, the Company recorded a provision for credit losses of $18,000 consisting of a $133,000 benefit to the provision for credit losses - loans, a $152,000 provision for credit losses for unfunded commitments and a $1,000 credit to the provision for credit losses for held-to-maturity securities. In the quarter ended December 31, 2023, the Company recorded a provision for credit losses of $435,000 consisting of $354,000 in the provision for credit losses - loans and $81,000 in the provision for credit losses for unfunded commitments.
Financial Condition
Total Assets. Total assets were $892.5 million at March 31, 2024, an increase of $7.2 million, or 0.82%, from $885.3 million at December 31, 2023. The increase was due primarily to a $5.1 million increase in cash and a $3.9 million increase in loans receivable funded by an increase in deposits and quarterly net income. The increase in deposits included the issuance of $10 million in brokered deposits during the period.
Cash and Cash Equivalents. Cash and cash equivalents increased $5.1 million, or 6.9%, to $78.8 million at March 31, 2024 from $73. 7million at December 31, 2023 primarily due to the increase in deposits.
Net Loans Receivable. Loans receivable increased $3.9 million, or 0.56%, to $708.7 million at March 31, 2024 from $704.8 million at December 31, 2023. Increases in commercial and industrial loans of $7.0 million and investor commercial real estate loans of $4.9 million offset decreases in owner and non-owner occupied one- to four-family loans and owner occupied commercial real estate loans.
Securities. Securities available for sale ("AFS") decreased $1.0 million, or 3.0%, to $33.8 million at March 31, 2024 from $34.8 million at December 31, 2023. The decrease was due to new purchases not fully replacing maturities and paydowns in the portfolio. Securities held-to-maturity were relatively unchanged at $10.2 million.
Total Liabilities. Total liabilities increased $4.6 million or 0.7%, to $690.8 million at March 31, 2024 from $686.2 million at December 31, 2023. The increase was primarily due to an increase in total deposits of $5.4 million, and an increase in escrow accounts and other accrued balances offsetting the pay-off of the junior subordinated debt.
Deposits. Total deposits increased $5.4 million, or 0.85%, to $639.5 million at March 31, 2024 from $634.1 million at December 31, 2023. Interest-bearing deposits increased $8.3 million, or 1.7%, to $500.4 million at March 31, 2024 from $492.1 million at December 31, 2023. Noninterest bearing deposits decreased $2.9 million, or 2.1%, to $139.1 million at March 31, 2024 from $142.0 million at December 31, 2023. During the first quarter of 2024, the Company replaced $10.0 million in retail certificates of deposits with $10 million of brokered deposits at a cost lower than that would have been required to retain the retail certificates.
Federal Home Loan Bank Borrowings. The Company had no Federal Home Loan Bank borrowings at March 31, 2024 or December31, 2023.
Stockholders' Equity. Stockholders' equity increased $2.7 million, or 1.3%, to $201.8 million at March 31, 2024, primarily due to net income.
Asset Quality. Non-performing assets at March 31, 2024 totaled $10.9 million consisting of $10.7 million in nonperforming loans and $170,000 in foreclosed real estate, compared to $10.7 million at December 31, 2023, consisting of $10.5 million in non-performing loans and $170,000 in foreclosed real estate. At March 31 2024, the allowance for credit losses on loans was $8.5 million, which represented 1.20% of total loans and 79.2% of non-performing loans compared to $8.6 million at December 31, 2023, which represented 1.21% of total loans and 82.9% of non-performing loans.
Comparison of Operating Results for the Three Ended March 31, 2024 and 2023
Net Interest Income. Net interest income was $8.0 million for the three months ended March 31, 2024 compared to $8.2 million in the three months ended March 31, 2023. The net interest margin for the three months ended March 31, 2024 was 3.91% compared to 4.34% for the three months ended March 31, 2023. The 125 basis point increase in the cost of interest-bearing liabilities offset the higher average balances and rates earned on loans and short-term investments. Included in interest expense is the above-mentioned write-off of the $566,000 remaining fair market value adjustment on the pay-off the $3.0 million junior subordinated debt. Additionally, the cost of interest-bearing deposits increased by 109 basis points to 1.62% in the quarter ended March 31, 2024 compared to the quarter ended March 31, 2023.
Noninterest Income. For the three months ended March 31, 2024, noninterest income totaled $578,000 compared to $807,000 in the quarter ended March 31, 2023. The decrease is almost entirely due to lower income on insurance policies. In the quarter ended March 31, 2023, the Company received a $235,000 death benefit on the policies.
Noninterest Expense. For the three months ended March 31, 2024, noninterest expense totaled $4.9 million compared to $4.7 million for the three months ended March 31, 2023. Compensation and benefits expenses increased by 8.7% due to increases in staffing and salary levels. Other expenses increased $116,000 or 22.7% primarily due to higher fraud losses. Professional fees decreased by $88,000 or 44.0% due to the recovery of previously expensed legal fees of $109,000 on the disposition of a problem loan. Foreclosed real estate expenses decreased by $122,000 or 96.1% due to the sale of large foreclosed real estate properties in 2023.
Income taxes. For the three months ended March 31, 2024, income tax expense was $1.0 million for an effective tax rate of 28.5%. In the quarter ended March 31, 2023, income tax expense was $1.2 million for an effective tax rate of 27.65%. The lower tax rate in the quarter ended March 31, 2023 was due to a higher level of income from life insurance in that quarter.
Forward-Looking Statements
This press release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative and regulatory issues that may impact the Company's earnings in future periods. Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, changes in interest rates, increased competitive pressures, the effects of inflation, potential recessionary conditions, general economic conditions or conditions within the securities markets, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the FRB, changes in the quality, size and composition of our loan and securities portfolios, changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio, changes in demand for our products and services, accounting and tax changes, deposit flows, real estate values and competition, changes in accounting principles, policies or guidelines, changes in legislation or regulation and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services, a potential government shutdown, a failure in or breach of our operational or security systems or infrastructure, including cyberattacks that could adversely affect the Company's financial condition and results of operations and the business in which the Company and the Bank are engaged and the failure to maintain current technologies, the failure to retain or attract employees.
BV Financial, Inc.
BV Financial, Inc. is the parent company of BayVanguard Bank. BayVanguard Bank is headquartered in Baltimore, Maryland with thirteen branches in the Baltimore metropolitan area and the eastern shore of Maryland. The Bank is a full-service community-oriented financial institution dedicated to serving the financial service needs of consumers and businesses.
Contact:
Michael J. Dee
Chief Financial Officer
(410) 477- 5000
| At or For the Three Months | ||||||||
| Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
Performance Ratios(1): | ||||||||
Return on average assets | 1.16 | % | 1.46 | % | ||||
Return on average equity | 5.14 | % | 12.57 | % | ||||
Interest rate spread(2) | 3.10 | % | 4.06 | % | ||||
Net interest margin(3) | 3.91 | % | 4.34 | % | ||||
Non-interest expense to average assets | 2.23 | % | 2.21 | % | ||||
Efficiency ratio(4) | 52.75 | % | 52.19 | % | ||||
Average interest-earning assets to average interest-bearing liabilities | 154.58 | % | 134.59 | % | ||||
Average equity to average assets | 22.61 | % | 11.65 | % | ||||
Credit Quality Ratios: | ||||||||
Allowance for credit losses as a percentage of total loans | 1.20 | % | 1.19 | % | ||||
Allowance for credit losses as a percentage of non-performing loans | 79.16 | % | 176.47 | % | ||||
Net charge-offs (recoveries) to average outstanding loans during the year | -0.01 | % | 0.01 | % | ||||
Non-performing loans as a percentage of total loans | 1.52 | % | 0.67 | % | ||||
Non-performing loans as a percentage of total assets | 1.20 | % | 0.53 | % | ||||
Total non-performing assets as a percentage of total assets | 1.22 | % | 0.77 | % | ||||
Other: | ||||||||
Number of offices | 13 | 15 | ||||||
Number of full-time equivalent employees | 112 | 117 | ||||||
(1) Performance ratios are annualized. | ||||||||
(2) Represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. | ||||||||
(3) Represents net interest income as a percentage of average interest-earning assets. | ||||||||
(4) Represents non-interest expenses divided by the sum of net interest income and non-interest income. | ||||||||
BV FINANCIAL, INC.
Consolidated Balance Sheets
| March 31, 2024 | December 31, 2023 | |||||||
(dollars in thousands, except share amounts) | (unaudited) | |||||||
Assets | ||||||||
Cash | $ | 8,520 | $ | 9,260 | ||||
Interest-bearing deposits in other banks | 70,317 | 64,482 | ||||||
Cash and cash equivalents | 78,837 | 73,742 | ||||||
Equity Investment | 246 | 256 | ||||||
Securities available for sale | 33,752 | 34,781 | ||||||
Securities held to maturity (fair value of $9,154 and $9,206, ACL of $6 and $5) | 10,153 | 10,209 | ||||||
Loans held for maturity | 708,736 | 704,802 | ||||||
Allowance for Credit Losses | (8,506 | ) | (8,554 | ) | ||||
Net Loans | 700,230 | 696,248 | ||||||
Foreclosed real estate | 170 | 170 | ||||||
Premises and equipment, net | 14,473 | 14,250 | ||||||
Federal Home Loan Bank of Atlanta stock, at cost | 654 | 626 | ||||||
Investment in life insurance | 19,744 | 19,657 | ||||||
Accrued interest receivable | 3,147 | 3,279 | ||||||
Goodwill | 14,420 | 14,420 | ||||||
Intangible assets, net | 967 | 1,012 | ||||||
Deferred tax assets, net | 8,699 | 8,969 | ||||||
Other assets | 7,053 | 7,635 | ||||||
Total assets | $ | 892,545 | $ | 885,254 | ||||
Liabilities and Stockholders' Equity | ||||||||
Liabilities | ||||||||
Noninterest-bearing deposits | $ | 139,107 | $ | 142,030 | ||||
Interest-bearing deposits | 500,381 | 492,090 | ||||||
Total deposits | 639,488 | 634,120 | ||||||
FHLB borrowings | - | - | ||||||
Subordinated Debentures | 34,767 | 37,251 | ||||||
Other liabilities | 16,538 | 14,818 | ||||||
Total liabilities | 690,793 | 686,189 | ||||||
Stockholders' equity | ||||||||
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued or outstanding | - | - | ||||||
Common stock, $0.01 par value; 45,000,000 shares authorized in 2024 and 14,000,000 authorized in 2023; 11,375,803 shares issued and 11,375,803 shares outstanding as of March 31, 2024; 11,375,803 shares issued and 11,375,803 shares outstanding as of December 31, 2023 | 114 | 114 | ||||||
Paid-in capital | 110,534 | 110,465 | ||||||
Unearned common stock held by employee stock ownership plan | (7,286 | ) | (7,328 | ) | ||||
Retained earnings | 100,346 | 97,772 | ||||||
Accumulated other comprehensive loss | (1,956 | ) | (1,958 | ) | ||||
Total stockholders' equity | 201,752 | 199,065 | ||||||
Total liabilities and stockholders' equity | $ | 892,545 | $ | 885,254 | ||||
BV FINANCIAL, INC.
Consolidated Statements of Income
(dollars in thousands, except per share amounts) | Three Months Ended March 31, | |||||||
Interest Income | 2024 | 2023 | ||||||
Loans, including fees | $ | 9,782 | $ | 8,773 | ||||
Investment securities available for sale | 306 | 266 | ||||||
Investment securities held to maturity | 92 | 93 | ||||||
Other interest income | 824 | 556 | ||||||
Total interest income | 11,004 | 9,688 | ||||||
Interest Expense | ||||||||
Interest on deposits | 1,986 | 665 | ||||||
Interest on FHLB borrowings | - | 289 | ||||||
Interest on Subordinated debentures | 1,055 | 534 | ||||||
Total interest expense | 3,041 | 1,488 | ||||||
Net interest income | 7,963 | 8,200 | ||||||
Provision for (recovery of) credit losses | 18 | 2 | ||||||
Net interest income after provision for (recovery of) credit losses | ||||||||