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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

COMMISSION FILE NUMBER 0-22955

 

 

BAY BANKS OF VIRGINIA, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

 

VIRGINIA   54-1838100

(STATE OR OTHER JURISDICTION OF

INCORPORATION OR ORGANIZATION)

  

(I.R.S. EMPLOYER

IDENTIFICATION NO.)

100 SOUTH MAIN STREET, KILMARNOCK, VA   22482
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)   (ZIP CODE)

 

(804)435-1171

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

 

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days    x  yes    ¨  no

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    ¨  yes    x  no

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 2,341,613 shares of common stock on August 9, 2004.

 

Table of Contents

FORM 10-Q

 

For the interim period ending June 30, 2004.

 

INDEX

 

PART I FINANCIAL INFORMATION     
ITEM 1. FINANCIAL STATEMENTS     
     CONSOLIDATED BALANCE SHEETS JUNE 30, 2004 (UNAUDITED) AND DECEMBER 31, 2003    3
     CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (UNAUDITED)    4
     CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (UNAUDITED)    5
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (UNAUDITED)    6
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION    10
     FINANCIAL HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO JUNE 30, 2003 (UNAUDITED)    11
     NET INTEREST INCOME ANALYSIS FOR THE SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO JUNE 30, 2003 (UNAUDITED)    14
     INTEREST RATE SENSITIVITY GAP ANALYSIS AS OF JUNE 30, 2004 (UNAUDITED)    15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    18
ITEM 4. CONTROLS AND PROCEDURES    18
PART II OTHER INFORMATION     
ITEM 1. LEGAL PROCEEDINGS    18
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS    18
ITEM 3. DEFAULTS UPON SENIOR SECURITIES    19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS    19
ITEM 5. OTHER INFORMATION    19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K    19

 

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Table of Contents

PART I – FINANCIAL INFORMATION

 

Item 1. FINANCIAL STATEMENTS.

 

Bay Banks of Virginia, Inc.

Consolidated Balance Sheets

 

     June 30, 2004
    December 31, 2003
     (unaudited)     

ASSETS

              

Cash and due from banks

    $ 9,306,850    $ 7,762,030

Interest-bearing deposits

      125,915      102,868

Federal funds sold

      13,424,727      13,907,525

Securities available for sale, at fair value

      60,572,800      66,077,470

Securities held to maturity, at amortized cost

      423,254      416,261

Loans, net of allowance for loan losses of $1,954,387 and $1,901,576

      204,176,888      188,450,953

Premises and equipment, net

      8,357,680      8,411,776

Accrued interest receivable

      1,211,453      1,261,784

Other real estate owned

      135,512      76,514

Core deposit intangible

      2,807,842      2,807,842

Other assets

      1,869,215      1,435,602
    
  

Total Assets

    $ 302,412,136    $ 290,710,625
    
  

LIABILITIES

              

Demand deposits

    $ 38,745,066    $ 34,290,391

Savings and interest-bearing demand deposits

      129,850,833      126,127,299

Time deposits

      94,064,787      96,665,504
    
  

Total Deposits

      262,660,686      257,083,194

Securities sold under repurchase agreements

      5,918,025      6,478,601

FHLB Advance

      7,500,000      0

Other liabilities

      1,638,959      2,070,426
    
  

Total Liabilities

    $ 277,717,670    $ 265,632,221
    
  

SHAREHOLDERS’ EQUITY

              

Common stock - $5 par value; Authorized - 5,000,000 shares; Outstanding - 2,341,613 and 2,326,080 shares

    $ 11,708,064    $ 11,630,401

Additional paid-in capital

      4,489,907      4,336,929

Retained earnings

      8,249,457      8,146,613

Accumulated other comprehensive income, net

      247,038      964,461
    
  

Total Shareholders’ Equity

    $ 24,694,466    $ 25,078,404
    
  

Total Liabilities and Shareholders’ Equity

    $ 302,412,136    $ 290,710,625
    
  

 

See Notes to Consolidated Financial Statements.

 

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Table of Contents

Bay Banks of Virginia, Inc.

Consolidated Statements of Income

(Unaudited)

 

    

Quarter

ended

June 30, 2004

   

Quarter
ended

June 30, 2003

   

For the six
months
ended

June 30, 2004

   

For the six
months
ended

June 30, 2003

INTEREST INCOME

                            

Loans receivable (incl fees)

    $ 2,881,844    $ 2,685,975    $ 5,701,770    $ 5,418,464

Securities:

                            

Taxable

      318,790      386,846      669,674      812,255

Tax-exempt

      199,772      179,431      400,153      358,984

Federal funds sold

      34,241      97,201      63,479      170,007
    
  
  
  

Total interest income

      3,434,647      3,349,453      6,835,076      6,759,710

INTEREST EXPENSE

                            

Deposits

      1,044,526      1,217,271      2,102,425      2,476,249

Securities Sold to Repurchase

      4,664      10,511      10,575      19,838

Short term borrowings

      4,375      0      4,375      0
    
  
  
  

Total interest expense

      1,053,565      1,227,782      2,117,375      2,496,087
    
  
  
  

Net Interest Income

      2,381,082      2,121,671      4,717,701      4,263,623

Provision for loan losses

      75,000      78,000      150,000      156,000
    
  
  
  

Net interest income after provision for loan losses

      2,306,082      2,043,671      4,567,701      4,107,623

NONINTEREST INCOME

                            

Income from fiduciary activities

      163,450      148,874      328,456      287,342

Service charges & fees on deposit accounts

      164,148      158,627      301,684      296,921

Other miscellaneous fees

      215,137      160,468      397,426      308,464

Secondary market brokerage income

      80,709      113,927      102,190      206,215

Other real estate gains

      15,611      157,048      22,747      191,959

Net securities gains

      138      3,986      154,737      24,843

Other income

      14,937      12,873      38,106      49,751
    
  
  
  

Total noninterest income

      654,130      755,803      1,345,346      1,365,495

NONINTEREST EXPENSES

                            

Salaries and employee benefits

      1,242,066      1,094,659      2,647,361      2,139,268

Occupancy expense

      337,486      344,685      696,248      702,180

Bank franchise tax

      56,454      49,904      112,909      102,392

Visa Expense

      102,162      90,671      182,576      162,037

Telephone

      33,425      44,214      74,621      90,514

Other expense

      552,226      571,541      997,602      1,042,774
    
  
  
  

Total noninterest expenses

      2,323,819      2,195,674      4,711,317      4,239,165

Net Income before income taxes

      636,393      603,800      1,201,730      1,233,953

Income tax expense

      185,185      165,078      353,803      356,310
    
  
  
  

Net Income

    $ 451,208    $ 438,722    $ 847,927    $ 877,643

Average basic shares outstanding

      2,334,145      2,311,052      2,330,033      2,308,234

Earnings per share, basic

      0.19      0.19      0.36      0.38

Average diluted shares outstanding

      2,351,794      2,337,883      2,352,255      2,327,101

Earnings per share, diluted

      0.19      0.19      0.36      0.38

 

See Notes to Consolidated Financial Statements.

 

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Table of Contents

Bay Banks of Virginia, Inc.

Consolidated Statements of Cash Flows

 

Six months ended:

    June 30, 2004
     June 30, 2003
  

CASH FLOWS FROM OPERATING ACTIVITIES

                 

Net Income

    $ 847,927     $ 877,643  

Adjustments to reconcile net income to net cash provided by operating activities:

                 

Depreciation

      375,529       371,086  

Net amortization / (accretion) of securities

      26,687       11,740  

Provision for Loan Losses

      150,000       156,000  

Gain on Sale of Securities

      (154,737 )     (24,843 )

Gain on sale of other real estate owned

      (22,747 )     (191,959 )

(Increase) / Decrease in other assets

      (383,281 )     484,794  

Decrease in Other Liabilities

      (61,885 )     (199,648 )
    
 

Net Cash Provided by Operating Activities

      777,493       1,484,813  

CASH FLOWS FROM INVESTING ACTIVITIES

                 

Proceeds from maturities of Available-for-Sale Securities

      2,533,919       3,831,853  

Proceeds from sales of Available-for-Sale Securities

      18,440,720       5,237,000  

Purchases of Available-for-Sale Securities

      (16,435,918 )     (8,551,399 )

Increase in interest bearing deposits

      (23,047 )     (2,990 )

(Increase) / Decrease in Fed Funds Sold

      482,798       (11,046,211 )

Increase in Loans outstanding

      (15,923,905 )     (2,798,129 )

Purchases of Premises and Equipment

      (321,433 )     (634,928 )

Proceeds from sale of other real estate owned

      11,719       743,730  
    
 

Net Cash (Used in) Investing Activities

      (11,235,147 )     (13,221,074 )

CASH FLOWS FROM FINANCING ACTIVITIES

                 

Increase in Demand, Savings, & other interest-bearing demand deposits

      8,178,209       13,831,152  

Increase / (Decrease) in Time Deposits

      (2,600,717 )     2,203,489  

Net increase / (Decrease) in securities sold under repurchase agreements

      (560,576 )     406,627  

Increase in FHLB advances

      7,500,000       0  

Proceeds from issuance of Common Stock

      223,968       198,793  

Dividends paid

      (699,156 )     (646,177 )

Repurchase of Common Stock

      (39,254 )     (61,770 )
    
 

Net Cash Provided by Financing Activities

      12,002,474       15,932,114  

Net Increase in Cash & Due from Banks

    $ 1,544,820     $ 4,195,853  

Cash & Due From Banks at Beginning of period

      7,762,030       9,875,840  

Cash & Due From Banks at End of period

      9,306,850       14,071,693  

SUPPLEMENTAL DISCLOSURES

                 

Interest paid

      2,122,317       2,515,266  

Income taxes paid

      340,000       342,129  

Unrealized gain / (loss) on investment securities

      (1,087,005 )     460,282  

Loans transferred to other real estate owned

      60,180       7,564  

 

See Notes to Consolidated Financial Statements.

 

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Table of Contents

Bay Banks of Virginia, Inc.

Consolidated Statement of Changes in Shareholders’ Equity

(Unaudited)

 

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