BV Financial, Inc. Announces Financial Results

Rhea-AI Summary

BV Financial, Inc. reported net income of $3.7 million for Q3 2023, compared to $2.6 million in Q3 2022. Net income for the nine-month period was $10.7 million, compared to $7.8 million in the same period last year. Return on average assets was 1.58% for Q3 2023 and 1.61% for the nine-month period. Net loans increased by $39.8 million, while deposits decreased by $38.1 million. Total equity increased by $97.1 million. Total assets were $931.4 million at September 30, 2023, an increase of $86.4 million from December 31, 2022.

Positive

• BV Financial, Inc. reported a significant increase in net income for Q3 2023, with a 42% increase compared to the same period last year. Return on average assets and return on average equity also showed improvement, indicating strong financial performance. Net loans increased by 6%, contributing to the growth of the company. Total assets saw a substantial increase of 10.2% from the end of last year, indicating overall growth and expansion.

Negative

• Deposits decreased by 5.6% from December 31, 2022, which could indicate a potential decrease in customer confidence or a shift in deposit preferences. The decrease in deposits may impact the liquidity of the company and could potentially affect its ability to fund loan growth.

BALTIMORE, MD / ACCESSWIRE / October 23, 2023 / BV Financial, Inc. (NASDAQ:BVFL), (the "Company") the holding company for BayVanguard Bank (the "Bank"), reported net income of $3.7 million, or $0.35 per diluted share, for the quarter ended September 30, 2023 compared to net income of $2.6 million, or $0.33 per diluted share, for the quarter ended September 30, 2022. Net income for the nine-month period ended September 30, 2023 was $10.7 million or $1.20 per diluted share compared to net income of $7.8 million or $0.98 per diluted share for the nine-month period ended September 30, 2022.

Financial Highlights

• On July 31, 2023, Bay-Vanguard, M.H.C., Inc. (the "MHC"), the former mutual holding company of the Company completed its conversion from the mutual holding company to the stock holding company form of organization (the "Conversion"), and the Company completed its related stock offering. As a result of the Conversion, the MHC ceased to exist. After the sale of 9,798,980 shares in the offering and the exchange of new shares of common stock to the Company's then existing shareholders, 11,375,803 shares of Company common stock are outstanding. The sale of new shares raised $98.0 million before offering expenses.
• Return on average assets and return on average equity for the three months ended September 30, 2023 were 1.58% and 9.84%, respectively. Return on average assets and return on average equity for the nine months ended September 30, 2023 were 1.61% and 11.88%, respectively.
• Nets loans increased $39.8 million, or 6.0%, compared to December 31, 2022.
• Deposits decreased $38.1 million, or 5.6%, from $684.6 million at December 31, 2022 to $646.5 million at September 30, 2023.
• Total equity increased by $97.1 million, or 99.3%, primarily due to the stock offering noted above.
• Total loan delinquencies decreased by 71.6% to $3.0 million at September 30, 2023 or 0.43% of loans, from $10.6 million, or 1.59% of total loans, at December 31, 2022.
• In the quarter ended September 30, 2023, the Company recorded a credit to the provision for credit losses of $333,000. The calculated required allowance for credit losses ("ACL") decreased by $10,000 and the Company experienced net recoveries for the quarter of $255,000. Additionally, the required ACL for unfunded commitments decreased by $68,000. In the nine-months ended September 30, 2023, the Company recorded a recovery of the provision for credit losses of $480,000. Net recoveries for the period of $421,000 exceeded the required increase in the ACL for loans. Additionally, the required ACL for unfunded commitments decreased by $163,000.

Financial Condition

Total Assets. Total assets were $931.4 million at September 30, 2023, an increase of $86.4 million, or 10.2%, from $845.0 million at December 31, 2022. The increase was due primarily to a $45.8 million increase in cash and cash equivalents , and a $39.8 million increase in net loans receivable to $698.9 million at September 30, 2023, partially offset by decreases of $1.4 million in repossessed assets and $417,000 in the cash value of life insurance.

Cash and Cash Equivalents. Cash and cash equivalents increased $45.8 million, or 67.7%, to $114.5 million at September 30, 2023 from $68.7 millionat December 31, 2022 primarily due to the stock offering and an increase in borrowings from the FHLB.

Net Loans Receivable. Netloans receivable increased$39.8 million, or 6.0%, to $698.9 million at September 30, 2023 from $659.1 million at December31, 2022. Increasesin commercial real estate and construction loans offset decreasesin owner and non-owner occupied one- to four-family loansand 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 nine-months ended September 30, 2023.

Securities. Securities available for sale ("AFS") increased $2.6 million, or 7.8%, to $35.6 million at September 30, 2023 from $33.0 millionat December 31, 2022. This increase was primarily due to an increase of $4.0 million in agency securities, partially offset by decreases in mortgage-backed and corporate securities due to paydowns and maturities and a $30,000 decrease in the market value of the AFS portfolio.

Total Liabilities. Total liabilities decreased $10.7 million or 1.43%, to $736.5 million at September 30, 2023 from $747.2 million at December 31, 2022.The decrease was primarily due to a decrease in total deposits of $38.1 million, partially offset by an increase in borrowings.

Deposits. Total deposits decreased $38.1 million, or 5.6%, to $646.5 million at September 30, 2023 from $684.6 million at December 31, 2022. Interest-bearing deposits decreased $14.1 million, or 2.7%, to $503.3 million at September 30, 2023 from $517.4 million at December31, 2022. Noninterest bearing deposits decreased $24.0 million, or 14.4%, to $143.2 millionat September 30, 2023 from $167.2 million at December 31, 2022.

TheCompany has been adjusting interestrates paid on deposits in an attempt to retain and grow thesebalances.

Federal Home Loan Bank Borrowings. The Company had$37.5 million in Federal Home Loan Bank borrowings at September 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 $97.3 million, or 99.6%, to $195.1 millionat September 30, 2023, primarily due to the capital raise noted above, $10.7 million in net income and a $547,000negative adjustment to retained earnings resulting from the adoption of ASC Topic 326 "Financial Instruments-Credit Losses" during the quarter ended March 31, 2023.

Asset Quality. Non-performing assets at September 30, 2023 totaled $4.4 million consisting of $3.8 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 September 30 2023, the allowance for credit losses on loans was $8.2 million, which represented 1.15% of total loans and 213.5% 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 were not included in the Bank's allowance for loan loss estimate which is in accordance with U.S. Generally Accepted Accounting Principles. The credit marks were established for specific loans acquired in previous mergers.

Comparison of Operating results for the Three and Nine Months Ended September 30, 2023 and 2022

Net Interest Income. Net interest income was $8.9 million for the three months ended September 30, 2023 compared to $7.8 million in the three months ended September 30, 2022. The net interest margin for the three months ended September 30, 2023 was 4.10% compared to 4.00% for the three months ended September 30, 2022. The 100 basis point increase in the yield on interest-earning assets and the higher level of average equity offset the 139 basis point 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 higher rates paid on deposits and a shift to higher cost certificates of deposits as well as an increased reliance on advances from the Federal Home Loan Bank of Atlanta.

Net interest income was $25.3 million for the nine months ended September 30, 2023, compared to $21.5 million in the nine months ended September 30, 2022.The net interest margin for the nine months ended September 30, 2023 was 4.21% compared to 3.73% for the nine months ended September 30, 2022. The 114 basis point increase in the yield on interest-earning assets offset the 95 basis point 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 September 30, 2023, noninterest income totaled $882,000 compared to $681,000 in the quarter ended September 30, 2022. In the quarter ended September 30, 2023, the Company recognized a gain of $188,000 on the sale of a closed branch office. For the quarter ended September 30, 2022, the Company recognized a gain of $45,000 on the sale of a former branch building.

For the nine months ended September 30, 2023, noninterest income totaled $3.1 million as compared to $3.3 million for the nine months ended September 30, 2022. In the nine-months ended September 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 and a $188,000 gain on the sale of a closed branch office. In the nine months ended September 30, 2022, the Company recognized a $694,000 gain on bargain purchase from the acquisition of North Arundel Savings Bank and $620,000 in prepayment penalties on loans.

Noninterest Expense. For the three months ended September 30, 2023, noninterest expense totaled $5.0 million compared to $4.6 million for the three months ended September 30, 2022. Compensation and benefits expenses increased by 18.1% due to increases in staffing and salary levels. Occupancy, professional fees, FDIC insurance premiums and other expenses also increased. Expenses for holding foreclosed real estate decreased $325,000 as a result of a property sale.

For the nine months ended September 30, 2023, noninterest expense totaled $14.3 million as compared to $13.6 million for the nine months ended September 30, 2022. Increases in compensation and benefits, professional fees and FDIC insurance expense were partially offset by lower decreases in other categories.

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 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 Nine Months
		Ended September 30,								Ended September 30,
		2023				2022				2023				2022
Performance Ratios(1):
Return on average assets			1.58	%			1.22	%			1.61	%			1.22	%
Return on average equity			9.84	%			11.20	%			11.88	%			11.49	%
Interest rate spread(2)			3.46	%			3.85	%			3.77	%			3.58	%
Net interest margin(3)			4.10	%			4.00	%			4.21	%			3.73	%
Non-interest expense to average assets			2.15	%			2.15	%			1.41	%			2.14	%
Efficiency ratio(4)			49.63	%			55.79	%			48.13	%			56.35	%
Average interest-earning assets to average interest-bearing liabilities			149.31	%			135.49	%			139.84	%			135.42	%
Average equity to average assets			16.06	%			10.92	%			14.31	%			10.61	%
Credit Quality Ratios:(5)
Allowance for credit losses as a percentage of total loans			1.15	%			0.51	%			1.15	%			0.51	%
Allowance for credit losses as a percentage of non-performing loans			213.49	%			51.14	%			213.49	%			51.14	%
Net charge-offs (recoveries) to average outstanding loans during the year			-0.04	%			0.00	%			-0.06	%			0.00	%
Non-performing loans as a percentage of total loans			0.54	%			1.00	%			0.54	%			1.00	%
Non-performing loans as a percentage of total assets			0.41	%			0.78	%			0.41	%			0.78	%
Total non-performing assets as a percentage of total assets			0.47	%			1.01	%			0.47	%			1.01	%
Other:
Number of offices			15				17				15				17
Number of full-time equivalent employees			110				105				110				105

(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.
(5) The Company adopted ASC 326 on January 1, 2023. Some ratios are not comparable pre and post adoption of this accounting standard.

BV Financial
Consolidated Balance Sheets

		September 30, 2023				December 31, 2022
(dollars in thousands, except share amounts)		(unaudited)				derived from audited financial statements
Assets
Cash		$	6,764			$	12,704
Interest-bearing deposits in other banks			107,695				55,948
Cash and cash equivalents			114,459				68,652
Equity Investment			229				221
Securities available for sale			35,616				33,034
Securities held to maturity (fair value of $9,175 and $9,660, ACL of $7 and $0)			10,263				10,461
Loans held for maturity			707,037				662,944
Allowance for Credit Losses			(8,153	)			(3,813	)
Net Loans			698,884				659,131
Foreclosed real estate			555				1,987
Premises and equipment, net			14,405				15,176
Federal Home Loan Bank of Atlanta stock, at cost			2,407				977
Investment in life insurance			19,566				19,983
Accrued interest receivable			3,450				2,952
Goodwill			14,420				14,420
Intangible assets, net			1,057				1,195
Deferred tax assets, net			9,045				9,113
Other assets			7,021				7,661
Total assets		$	931,377			$	844,963
Liabilities and Stockholders' Equity
Liabilities
Noninterest-bearing deposits		$	143,203			$	167,202
Interest-bearing deposits			503,273				517,416
Total deposits			646,476				684,618
FHLB borrowings			37,500				12,000
Subordinated Debentures			37,198				37,039
Other liabilities			15,121				13,555
Total liabilities			736,295				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; 11,375,803 shares issued and 11,375,803 shares outstanding as of September 30, 2023; 7,418,575 shares issued and 7,418,575 shares outstanding as of December 31, 2022			114				74
Paid-in capital			110,364				15,406
Unearned common stock held by employee stock ownership plan			(7,635	)			-
Retained earnings			94,763				84,612
Accumulated other comprehensive loss			(2,524	)			(2,341	)
Total stockholders' equity			195,082				97,751
Total liabilities and stockholders' equity		$	931,377			$	844,963

BV Financial
Consolidated Statements of Income

(dollars in thousands, except per share amounts)		Three Months Ended September 30,								Nine Months Ended September 30,
Interest Income		2023				2022				2023				2022
Loans, including fees		$	9,764			$	7,936			$	27,863			$	22,712
Investment securities available for sale			302				123				846				399
Investment securities held to maturity			89				53				275				143
Other interest income			1,560				458				2,958				726
Total interest income			11,715				8,570				31,942				23,980
Interest Expense
Interest on deposits			1,764				297				3,694				987
Interest on FHLB borrowings			530				-				1,313				-
Interest on Subordinated debentures			545				519				1,621				1,531
Total interest expense			2,839				816				6,628				2,518
Net interest income			8,876				7,754				25,314				21,462
Provision for (recovery of) credit losses			(333	)			186				(480	)			587
Net interest income after provision for credit losses			9,209				7,568				25,794				20,875
Noninterest Income
Service fees on deposits			109				110				304				344
Fees from debit cards			183				186				543				567
Income from investment in life insurance			85				89				549				310
Gain on sale of loans			-				-				-				1
Gain on sale of repossessed assets			-				-				678				-
Gain on sale of fixed assets			188				45				188				279
Other income			317				251				798				1,848
Total noninterest income			882				681				3,060				3,349
Noninterest Expense
Compensation and related benefits			3,149				2,666				8,887				7,480
Occupancy			397				310				1,178				1,221
Data processing			345				339				1,034				1,070
Advertising			5				5				33				16
Professional fees			220				133				597				452
Equipment			105				197				319				412
Foreclosed real estate and repossessed assets holding costs			13				338				173				396
Amortization of intangible assets			46				46				138				137
FDIC insurance premiums			120				57				237				165
Other			608				511				1,656				2,300
Total noninterest expense			5,008				4,602				14,252				13,649
Net income before tax			5,083				3,647				14,602				10,575
Income tax expense			1,399				1,035				3,904				2,781
Net income		$	3,684			$	2,612			$	10,698			$	7,794
Basic earnings per share		$	0.35			$	0.33			$	1.21			$	0.98
Diluted earnings per share		$	0.35			$	0.33			$	1.20			$	0.98

BV Financial, Inc.
Average Balance Sheet for the Quarters ended September, 30
(Dollars in thousands)

		For the Three Months Ended September 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		$	693,956			$	9,764				5.58	%		$	639,340			$	7,936				4.92	%
Securities available-for-sale			35,868				302				3.35	%			35,619				123				1.37	%
Securities held-to-maturity			12,493				89				2.84	%			7,985				53				2.66	%
Cash, cash equivalents and other interest-earning assets			115,554				1,560				5.35	%			85,673				458				2.11	%
Total interest-earning assets			857,871				11,715				5.42	%			768,617				8,570				4.42	%
Noninterest-earning assets			74,240												85,757
Total assets		$	932,111											$	854,374
Interest-bearing liabilities:
Interest-bearing demand deposits		$	82,096				219				1.06	%		$	94,455				17				0.07	%
Savings deposits			150,522				50				0.13	%			170,742				24				0.05	%
Money market deposits			85,982				255				1.18	%			110,470				56				0.20	%
Certificates of deposit			181,292				1,240				2.71	%			154,640				200				0.52	%
Total interest-bearing deposits			499,892				1,764				1.40	%			530,307				297				0.22	%
Federal Home Loan Bank advances			37,500				530				5.60	%			-				-				-	%
Subordinated debentures			37,175				545				5.82	%			36,964				519				5.57	%
Total borrowings			74,675				1,075				5.71	%			36,964				519				5.57	%
Total interest-bearing liabilities			574,567				2,839				1.96	%			567,271				816				0.57	%
Noninterest-bearing demand deposits			144,603												173,542
Other noninterest-bearing liabilities			63,261												20,289
Total liabilities			782,431												761,102
Equity			149,680												93,272
Total liabilities and equity		$	932,111											$	854,374
Net interest income						$	8,876											$	7,754
Net interest rate spread											3.46	%											3.85	%
Net interest-earning assets		$	283,304											$	201,346
Net interest margin											4.10	%											4.00	%
Average interest-earning assets to interest-bearing liabilities			149.31	%											135.49	%

BV Financial, Inc.
Average Balance Sheet for the Nine Months ended September, 30
(Dollars in thousands)

		2023												2022
(dollars in thousands)		Average Outstanding Balance				Interest				Average Yield/Rate				Average Outstanding Balance				Interest				Average Yield/Rate
		(Unaudited)
Interest-earning assets:
Loans		$	680,436			$	27,863				5.47	%		$	627,642			$	22,712				4.84	%
Securities available-for-sale			35,746				846				3.16	%			37,443				399				1.43	%
Securities held-to-maturity			12,276				275				3.00	%			7,228				143				2.64	%
Cash, cash equivalents and other interest-earning assets			76,310				2,958				5.19	%			96,272				726				1.00	%
Total interest-earning assets			804,768				31,942				5.31	%			768,585				23,980				4.17	%
Noninterest-earning assets			81,460												83,691
Total assets		$	886,228											$	852,276
Interest-bearing liabilities:
Interest-bearing demand deposits		$	87,159				380				0.58	%		$	94,189				46				0.07	%
Savings deposits			158,324				141				0.12	%			169,997				70				0.06	%
Money market deposits			92,457				491				0.71	%			108,560				151				0.18	%
Certificates of deposit			167,313				2,682				2.14	%			157,887				721				0.61	%
Total interest-bearing deposits			505,253				3,694				0.98	%			530,633				988				0.25	%
Federal Home Loan Bank advances			33,099				1,313				5.30	%			-				-				-
Subordinated debentures			37,123				1,621				5.84	%			36,911				1,531				5.54	%
Total borrowings			70,222				2,934				5.59	%			36,911				1,531				5.54	%
Total interest-bearing liabilities			575,475				6,628				1.54	%			567,544				2,519				0.59	%
Noninterest-bearing demand deposits			154,521												172,082
Other noninterest-bearing liabilities			36,180												22,239
Total liabilities			766,176												761,865
Equity			120,052												90,411
Total liabilities and equity		$	886,228											$	852,276
Net interest income						$	25,314											$	21,461
Net interest rate spread											3.77	%											3.58	%
Net interest-earning assets		$	229,293											$	201,041
Net interest margin											4.21	%											3.73	%
Average interest-earning assets to interest-bearing liabilities			139.84	%											135.42	%

ALLOWANCE FOR CREDIT LOSS - LOANS
(Dollars in thousands)

		QTR				YTD
		9/30/2023				9/30/2023
Beginning Balance		$	8,163			$	3,813
Provision for credit loss -loans			(265	)			(313	)
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			(32	)			(58	)
Non-Owner Occupied 1-4			(214	)			(247	)
Investor Commercial Real Estate			-				-
OO Commercial Real Estate			-				-
Construction & Land			(1	)			(153	)
Farm Loans			-				-
Marine & Consumer			(8	)			39
Guaranteed by the US Gov't			-				-
Commercial			-				(2	)
Net charge-offs (recoveries)			(255	)			(421	)
Ending Balance- ACL for Loans		$	8,153			$	8,153
Balance Reserve for unfunded loan commitments			194				194
Balance Reserve for HTM Securities			7				7
Total ACL		$	8,354			$	8,354
Provision expense for Unfunded Commitments			(67	)			(163	)
Provision expense for HTM Securities			(1	)			(4	)
Total other provision expense		$	(68	)		$	(167	)
Total provision for credit losses		$	(333	)		$	(480	)

Contact:

Michael J. Dee
Chief Financial Officer
(410) 477- 5000

SOURCE: BV Financial, Inc.

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https://www.accesswire.com/795626/bv-financial-inc-announces-financial-results

FAQ

What was the net income for BV Financial, Inc. in Q3 2023?

The net income for BV Financial, Inc. in Q3 2023 was $3.7 million.

How did the net income compare to the same period last year?

The net income for Q3 2023 showed a 42% increase compared to the same period last year.

What was the return on average assets for Q3 2023?

The return on average assets for Q3 2023 was 1.58%.

How did net loans change from December 31, 2022 to September 30, 2023?

Net loans increased by $39.8 million from December 31, 2022 to September 30, 2023.

What was the change in deposits during the same period?

Deposits decreased by $38.1 million from December 31, 2022 to September 30, 2023.

What was the total assets of BV Financial, Inc. at September 30, 2023?

The total assets of BV Financial, Inc. at September 30, 2023 were $931.4 million.