BV Financial, Inc. Announces Financial Results

BALTIMORE, MD / ACCESSWIRE / July 26, 2023 / BV Financial, Inc. (OTC PINK:BVFL), the holding company for BayVanguard Bank (the "Bank"), today reported net income of $3.9 million, or $0.52 per diluted share, for the quarter ended June 30, 2023 compared to net income of $2.8 million, or $0.37 per diluted share, for the quarter ended June 30, 2022. Net income for the six-month period ended June 30, 2023 was $7.0 million or $0.94 per diluted share compared to net income of $5.2 million or $0.70 per diluted share for the six-month period ended June 30, 2022.

Financial Highlights

• Return on average assets and return on average equity for the three months ended June 30, 2023 were 1.78% and 15.24%, respectively.
• Nets loans held to maturity increased $35.7 million or 5.4% compared to December 31, 2022.
• Deposits decreased $14.5 million or 2.1% from $684.6 million at December 31, 2022 to $670.1 million at June 30, 2023.
• Foreclosed real estate decreased $1.4 million or 72.1% as a commercial property was sold at a gain of $678,000.
• Total loan delinquencies at June 30, 2023 decreased by 65.2% to $3.7 million or 0.53% of loans from $10.6 million or 1.59% of total loans at December 31, 2022.
• The Company recorded a credit to the provision for credit losses of $150,000. Net recoveries for the quarter exceeded the required increase in the allowance for credit losses ("ACL")- loans. Additionally, the required ACL for unfunded commitments decreased by $88,000.

Total Assets. Total assets were $920.8 million at June 30, 2023, an increase of $75.9 million, or 8.9%, from $845.0 million at December 31, 2022. The increase was due primarily to a $45.7 million increase in cash, and a $35.7 million increase in gross loans receivable to $702.9 million at June 30, 2023, partially offset by decreases of $1.4 million in repossessed assets and $500,000 in the cash value of life insurance.

Cash and Cash Equivalents. Cash and cash equivalents increased $41.6 million, or 60.6%, to $110.3 million at June 30, 2023 from $68.7 million at December 31, 2022 as funds were held by BayVanguard Bank in conjunction with the stock offering of BV Financial, Inc. The offering is expected to close on July 31, 2023.

Net Loans Receivable. Netloans receivable increased$35.7 million, or 5.4%, to $694.8 million at June 30,2023 from $659.1 million at December 31, 2022. Increases in commercial real estate and construction loans offset decreases in owner and non-owner occupied one- to four-family loans and commercial loans. The increase in construction loans was due primarily to draws on existing lines of credit. The decreases in one- to four-family loans and commercial loans were due primarily to payoffs and paydowns exceeding originations during the six months ended June 30, 2023.

Securities. Securities increased $0.9 million, or 2.0%, to $44.4 million at June 30, 2023 from $43.5 million at December 31, 2022. This increase was primarily due to an increase of $4.0 million in agency securities, partially offset by a $2.5 million decrease in available for sale mortgage-backed securities to $28.6 million at June 30, 2023. Purchases exceeded paydowns and maturities of debt securities for the period.

Total Liabilities . Total liabilities increased $69.1 million or 9.3%, to $816.4million at June 30,2023 from $747.2million at December 31, 2022. The increase was primarily due to $54.9 million in funds collected by the Company for the capital raise in process as of June 30, 2023, a $25.5million increase in Federal Home Loan Bank borrowings, partially offset by a decrease in total deposits of $14.5 million.

Deposits. Total deposits decreased $14.5 million, or 2.1%, to $670.1 million at June 30, 2023 from $684.6 million at December 31, 2022. Interest-bearing deposits increased $7.0 million, or 1.4%, to $524.3 million at June 30,2023 from $517.4 million at December 31, 2022. Noninterest bearing deposits decreased $21.5 million, or 12.9%, to $145.7million at June 30, 2023 from $167.2 million at December 31, 2022.

The decrease in deposits primarily occurred in the month of January 2023 when deposits decreased $14.5 million, primarily from commercial customers making made routine annual post-year end distributions, moved cash to alternative investments and made certain large capital expenditures. The Company has been adjusting interest rates paid on deposits to retain and grow these balances. The turmoil experienced in the banking system in early March2023 has not led to a measurable increase in customer inquiries or withdrawals.

Federal Home Loan Bank Borrowings . The Company had$37.5 million in Federal Home Loan Bank borrowings at June 30, 2023 compared to $12.0 million in Federal Home Loan Bank borrowings at December 31, 2022. The increase was used to fund loan growth and to maintain on balance sheet liquidity.

Stockholders' Equity . Stockholders' equity increased $6.7 million, or 6.9%, to $104.5 million at June 30, 2023, primarily due to $7.0 million in net income and a $547,000 negative adjustment to retained earnings resulting from the adoption of ASC Topic 326 "Financial Instruments-Credit Losses" during the quarter ended March 31, 2023.

Net Interest Income. Net interest income was $8.2 million for the three months ended June 30, 2023 compared to $7.2 million in the three months ended June 30, 2022.The net interest margin for the three months ended June 30, 2023 was 4.19% compared to 3.70% for the three months ended June 30, 2022. The 1.23% increase in the yield on interest-earning assets offset the 1.00% increase in the cost of deposits and borrowed money. The increase in the yield on interest-earning assets was due to higher rates earned on cash balances and loans due to higher market interest rates. The increase in the cost of interest-bearing liabilities was due to an increased reliance on advances from the Federal Home Loan Bank of Atlanta and higher rates paid on deposits and a shift to higher cost certificates of deposits.

Net interest income was $16.4 million for the six months ended June 30, 2023, compared to $13.7 million in the six months ended June 30, 2022.The net interest margin for the six months ended June 30, 2023 was 4.26% compared to 3.60% for the six months ended June 30, 2022. The 1.20% increase in the yield on interest-earning assets offset the 0.72% increase in the cost of deposits and borrowed money. The increase in the yield on interest-earning assets was due to higher rates earned on cash balances and loans due to higher market interest rates. The increase in the cost of interest-bearing liabilities was due to an increased reliance on advances from the Federal Home Loan Bank of Atlanta and higher rates paid on deposits and a shift to higher cost certificates of deposits.

Noninterest Income . For the three months ended June 30, 2023, noninterest income totaled $1.4 million compared to $1.2 million in the quarter ended June 30, 2022. In the quarter ended June 30, 2023, the Company recognized a gain of $678,000 on the sale of foreclosed real estate. In the quarter ended June 30, 2022, the Company recognized a gain of $235,000 on the sale of a former branch building and a $364,000 gain on bargain purchase from the North Arundel Savings Bank acquisition.

For the six months ended June 30, 2023, noninterest income totaled $2.2 million as compared to $2.7 million for the six months ended June 30, 2022. In the six-months ended June 30, 2023, the Company recognized a gain of $678,000 on the sale of foreclosed real estate and $225,000 in excess life insurance proceeds. In the six months ended June 30, 2022, the Company recognized a $694,000 gain on bargain purchase and $620,000 in prepayment penalties on loans.

Noninterest Expense. For the three months ended June 30, 2023, noninterest expense totaled $4.5 million compared to $4.7 million in the three months ended June 30, 2022. Expenses in the quarter ended June 30, 2022 included $727,000 in data processing conversion expenses related the acquisition of North Arundel Savings Bank.

For the six months ended June 30, 2023, noninterest expense totaled $9.2 million as compared to $9.0 million in the six months ended June 30, 2023. Increases in compensation and benefits, professional fees and foreclosed real estate holding costs were partially offset by lower other expenses. Other expenses in the six months ended June 30, 2022 included the above mentioned $727,000 in data processing conversion expenses.

Asset Quality. Non-performing assets at June 30, 2023 totaled $5.1 million consisting of $4.6 million in nonperforming loans and $555,000 in other real estate owned, compared to $7.9 million at December 31, 2022, consisting of $5.9 million in non-performing loans and $2.0 million in other real estate owned. At June 30 2023, the allowance for credit losses on loans was $8.2 million, which represented 1.16% of total loans and 179.1% of non-performing loans compared to $3.8 million at December 31, 2022, which represented 0.57% of total loans and 64.8% of non-performing loans. In addition, at December 31, 2022, the Bank had credit marks of $3.8 million that was not included in the Bank's allowance for loan loss estimate which is in accordance with U.S. Generally Accepted Accounting Principles. The credit impairment allowances were established for loans acquired previous mergers.

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 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. is the parent company of BayVanguard Bank. BayVanguard Bank is headquartered in Baltimore, Maryland with fifteen 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.

BV FINANCIAL, INC.

		At or For the Three Months								At or For the Six Months
		Ended June 30,								Ended June 30,
		2023				2022				2023				2022
Performance Ratios (1) :
Return on average assets			1.78	%			1.28	%			1.62	%			1.22	%
Return on average equity			15.24	%			12.21	%			13.90	%			11.65	%
Interest rate spread (2)			3.77	%			3.55	%			3.92	%			3.44	%
Net interest margin (3)			4.19	%			3.70	%			4.26	%			3.59	%
Non-interest expense to average assets			2.07	%			2.17	%			2.14	%			2.12	%
Efficiency ratio (4)			46.57	%			57.74	%			49.27	%			56.63	%
Average interest-earning assets to average interest-bearing liabilities			135.48	%			136.03	%			135.05	%			135.39	%
Average equity to average assets			11.68	%			10.50	%			11.67	%			10.47	%
Credit Quality Ratios: (6)
Allowance for credit losses as a percentage of total loans			1.16	%			0.49	%			1.16	%			0.49	%
Allowance for credit losses as a percentage of non-performing loans			179.14	%			70.75	%			179.14	%			70.75	%
Net (charge-offs) recoveries to average outstanding loans during the year			-0.01	%			0.00	%			-0.02	%			-0.01	%
Non-performing loans as a percentage of total loans			0.65	%			0.69	%			0.65	%			0.69	%
Non-performing loans as a percentage of total assets			0.50	%			0.52	%			0.50	%			0.52	%
Total non-performing assets as a percentage of total assets			0.56	%			0.75	%			0.56	%			0.75	%
Other:
Number of offices			15				17				15				17
Number of full-time equivalent employees			117				109				117				109
(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.
(6) The Company adopted ASC 326 on January 1, 2023. Some ratios are not comparable pre and post adoption of this accounting standard.

BV FINANCIAL,INC.
Consolidated Balance Sheets

		June 30, 2023				December 31, 2022
(dollars in thousands, except share amounts)		(unaudited)				derived from audited financial statements
Assets
Cash		$	23,934			$	12,704
Interest-bearing deposits in other banks			86,333				55,948
Cash and cash equivalents			110,267				68,652
Equity Investment			217				221
Securities available for sale			34,067				33,034
Securities held to maturity (fair value of $9,175 and $9,660, ACL of $7 and $0)			10,325				10,461
Loans held for maturity			702,978				662,944
Allowance for Credit Losses			(8,163	)			(3,813	)
Net Loans			694,815				659,131
Foreclosed real estate			555				1,987
Premises and equipment, net			14,413				15,176
Federal Home Loan Bank of Atlanta stock, at cost			2,052				977
Investment in life insurance			19,480				19,983
Accrued interest receivable			3,193				2,952
Goodwill			14,420				14,420
Intangible assets, net			1,102				1,195
Deferred tax assets, net			8,888				9,113
Other assets			7,041				7,661
Total assets		$	920,835			$	844,963
Liabilities and Stockholders' Equity
Liabilities
Noninterest-bearing deposits		$	145,686			$	167,202
Interest-bearing deposits			524,378				517,416
Total deposits			670,064				684,618
FHLB borrowings			37,500				12,000
Subordinated Debentures			37,145				37,039
Other liabilities			71,646				13,555
Total liabilities			816,355				747,212
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 2023 and 14,000,000 authorized in 2022; 7,430,095 shares issued and 7,430,095 shares outstanding as of June 30, 2023; 7,418,575 shares issued and 7,418,575 shares outstanding as of December 31, 2022			74				74
Paid-in capital			15,599				15,406
Retained earnings			91,079				84,612
Accumulated other comprehensive loss			(2,272	)			(2,341	)
Total stockholders' equity			104,480				97,751
Total liabilities and stockholders' equity		$	920,835			$	844,963

BV FINANCIAL,INC.
Consolidated Statements of Income

(dollars in thousands, except per share amounts)		Three Months Ended June 30,								Six Months Ended June 30,
Interest Income		2023				2022				2023				2022
Loans, including fees		$	9,327			$	7,573			$	18,100			$	14,776
Investment securities available for sale			277				141				543				277
Investment securities held to maturity			92				54				186				89
Other interest income			843				232				1,398				268
Total interest income			10,539				8,000				20,227				15,410
Interest Expense
Interest on deposits			1,266				321				1,931				688
Interest on FHLB borrowings			495				-				783				-
Interest on Subordinated debentures			541				509				1,075				1,012
Other interest expense			-				5				-				2
Total interest expense			2,302				835				3,789				1,702
Net interest income			8,237				7,165				16,438				13,708
Provision for (recovery of) credit losses			(150	)			224				(147	)			401
Net interest income after provision for credit losses			8,387				6,941				16,585				13,307
Noninterest Income
Service fees on deposits			101				121				195				234
Fees from debit cards			188				198				360				381
Income from investment in life insurance			145				128				464				221
Gain on sale of repossessed assets			678				-				678				-
Gain on sale of fixed assets			-				235				-				235
Other income			258				500				481				1,697
Total noninterest income			1,370				1,182				2,178				2,668
Noninterest Expense
Compensation and related benefits			2,859				2,413				5,738				4,815
Occupancy			366				447				782				911
Data processing			340				367				689				731
Advertising			14				7				28				11
Professional fees			176				144				376				319
Equipment			108				102				213				214
Foreclosed real estate and repossessed assets holding costs			32				48				159				58
Amortization of intangible assets			46				46				92				91
FDIC insurance premiums			64				55				118				108
Other			539				1,060				1,049				1,789
Total noninterest expense			4,544				4,689				9,244				9,047
Net income before tax			5,213				3,434				9,519				6,928
Income tax expense			1,314				669				2,505				1,746
Net income		$	3,899			$	2,765			$	7,014			$	5,182
Basic earnings per share		$	0.52			$	0.37			$	0.94			$	0.70
Diluted earnings per share		$	0.52			$	0.37			$	0.94			$	0.70

BV FINANCIAL,INC.
Average Balance Sheet for the Quarters ended June, 30
(Dollars in thousands)

		For the Three Months Ended June 30,
		2023												2022
(dollars in thousands)		Average Outstanding Balance				Interest				Average Yield/Rate				Average Outstanding Balance				Interest				Average Yield/Rate
		(Unaudited)
Interest-earning assets:
Loans		$	679,179			$	9,327				5.51	%		$	627,675			$	7,573				4.84	%
Securities available-for-sale			35,240				277				3.15	%			37,759				141				1.49	%
Securities held-to-maturity			12,415				92				2.99	%			7,976				53				2.70	%
Cash, cash equivalents and other interest-earning assets			61,780				843				5.49	%			102,406				233				0.14	%
Total interest-earning assets			788,614				10,539				5.36	%			775,816				8,000				4.13	%
Noninterest-earning assets			87,991												86,772
Total assets		$	876,605											$	862,588
Interest-bearing liabilities:
Interest-bearing demand deposits		$	87,647				143				0.65	%		$	94,061				15				0.06	%
Savings deposits			159,790				52				0.13	%			171,425				24				0.06	%
Money market deposits			91,957				140				0.61	%			108,593				48				0.18	%
Certificates of deposit			168,064				931				2.22	%			159,327				234				0.59	%
Total interest-bearing deposits			507,458				1,266				1.00	%			533,406				321				0.24	%
Federal Home Loan Bank advances			37,500				495				5.29	%			-				-				-	%
Subordinated debentures			37,122				541				5.85	%			36,911				514				5.53	%
Total borrowings			74,622				1,036				5.57	%			36,911				514				5.53	%
Total interest-bearing liabilities			582,080				2,302				1.59	%			570,317				835				0.58	%
Noninterest-bearing demand deposits			149,444												175,619
Other noninterest-bearing liabilities			42,715												26,066
Total liabilities			774,239												772,002
Equity			102,366												90,586
Total liabilities and equity		$	876,605											$	862,588
Net interest income						$	8,237											$	7,165
Net interest rate spread											3.77	%											3.55	%
Net interest-earning assets		$	206,534											$	205,499
Net interest margin											4.19	%											3.70	%
Average interest-earning assets to interest-bearing liabilities			135.48	%											136.03	%

BV FINANCIAL,INC.
Average Balance Sheet for the Six Months ended June, 30
(Dollars in thousands)

		For the Three Months Ended June 30,
		2023												2022
(dollars in thousands)		Average Outstanding Balance				Interest				Average Yield/Rate				Average Outstanding Balance				Interest				Average Yield/Rate
		(Unaudited)
Interest-earning assets:
Loans		$	679,179			$	9,327				5.51	%		$	627,675			$	7,573				4.84	%
Securities available-for-sale			35,240				277				3.15	%			37,759				141				1.49	%
Securities held-to-maturity			12,415				92				2.99	%			7,976				53				2.70	%
Cash, cash equivalents and other interest-earning assets			61,780				843				5.49	%			102,406				233				0.14	%
Total interest-earning assets			788,614				10,539				5.36	%			775,816				8,000				4.13	%
Noninterest-earning assets			87,991												86,772
Total assets		$	876,605											$	862,588
Interest-bearing liabilities:
Interest-bearing demand deposits		$	87,647				143				0.65	%		$	94,061				15				0.06	%
Savings deposits			159,790				52				0.13	%			171,425				24				0.06	%
Money market deposits			91,957				140				0.61	%			108,593				48				0.18	%
Certificates of deposit			168,064				931				2.22	%			159,327				234				0.59	%
Total interest-bearing deposits			507,458				1,266				1.00	%			533,406				321				0.24	%
Federal Home Loan Bank advances			37,500				495				5.29	%			-				-				-	%
Subordinated debentures			37,122				541				5.85	%			36,911				514				5.53	%
Total borrowings			74,622				1,036				5.57	%			36,911				514				5.53	%
Total interest-bearing liabilities			582,080				2,302				1.59	%			570,317				835				0.58	%
Noninterest-bearing demand deposits			149,444												175,619
Other noninterest-bearing liabilities			42,715												26,066
Total liabilities			774,239												772,002
Equity			102,366												90,586
Total liabilities and equity		$	876,605											$	862,588
Net interest income						$	8,237											$	7,165
Net interest rate spread											3.77	%											3.55	%
Net interest-earning assets		$	206,534											$	205,499
Net interest margin											4.19	%											3.70	%
Average interest-earning assets to interest-bearing liabilities			135.48	%											136.03	%

ALLOWANCE FOR CREDIT LOSS - LOANS
(Dollars in 000's)

		QTR				YTD
Beginning Balance		$	8,095			$	3,813
Provision for credit loss -loans			(61	)			(48	)
CECL Transition - Gross up of PCD loans			-				3,778
CECL Transition - Cumulative effect adjustment related to adoption			-				454
Net Charge-offs (recoveries):
Owner Occupied 1-4			(17	)			(26	)
Non-Owner Occupied 1-4			(11	)			(31	)
Investor Commercial Real Estate			-				-
OO Commercial Real Estate			-				-
Construction & Land			(148	)			(153	)
Farm Loans			-				-
Marine & Consumer			49				46
Guaranteed by the US Gov't			-				-
Commercial			(2	)			(2	)
Net charge-offs (recoveries)			(129	)			(166	)
Ending Balance- ACL for Loans		$	8,163			$	8,163
Balance Reserve for unfunded loan commitments			194				194
Balance Reserve for HTM Securities			7				7
Total ACL		$	8,364			$	8,364
Provision expense for Unfunded Commitments			(88	)			(95	)
Provision expense for HTM Securities			(1	)			(4	)
Total other provision expense		$	(89	)		$	(99	)
Total provision for credit losses		$	(150	)		$	(147	)

SOURCE: BV Financial, Inc.

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