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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BV Financial, Inc. Announces Financial Results