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.

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Consolidated Balance Sheets

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Average Balance Sheet for the Quarters ended June, 30
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Average Balance Sheet for the Six Months ended June, 30
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SOURCE: BV Financial, Inc.