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Columbia Maryland (July 24, 2017)—Bay Bancorp, Inc. (“Bay”) (NASDAQ: BYBK), the savings and loan holding company for Bay Bank, FSB (“Bank”), announced today net income increased to $1.23 million or $0.12 per basic and $0.11 per diluted common share for the second quarter of 2017 over the $0.96 million or $0.09 per basic and diluted common share recorded for the first quarter of 2017. Net income for the second quarter of 2016 was $0.45 million or $0.04 per basic and diluted common share. Bay reported net income of $2.18 million or $0.21 per basic and $0.20 per diluted common share for the first half of 2017, compared to $0.64 million or $0.06 per basic and diluted common share for the first half of 2016. Net loans increased by $14.4 million or 2.9% when compared to March 31, 2017. The Bank now has total assets exceeding $646 million and 11 branches in the Baltimore-Washington region, and is the fifth largest community bank headquartered in the Baltimore region based upon deposit market share.

Commenting on the announcement, Joseph J. Thomas, President and CEO, said, “I am gratified to see our team sustain and build upon the company’s higher level of growth and profitability in the second quarter of 2017. We grew loans and deposits at a 12% and 10% on an annualized basis, respectively, in the three-month period ending June 30, 2017. Along with the organic growth, our low cost core deposit funding and improved operational efficiencies drove the company’s net income before taxes to $1.97 million, a 28% increase over the $1.54 million recorded for the quarter ended March 31, 2017. We are also able to improve asset quality through resolutions of acquired loans and our nonperforming assets decreased 36% on an annualized basis to $14.6 million at June 30, 2017 from $16.1 million at March 31, 2017. With higher levels of profitability, excess capital and strong asset quality, we are well positioned to execute our ongoing growth plan as the bank built by entrepreneurs for entrepreneurs.”

Highlights from the First Six Months of 2017

The Bank continued organic net growth in the second quarter of 2017. Net loan growth was favorable and targeted core deposit growth was strong. Planned declines in certificate of deposit balances following the successful closing of Bay’s merger with Hopkins Bancorp, Inc. and the related merger of Hopkins Federal Savings Bank into the Bank (collectively, the “Hopkins Merger”) led to an attractive 0.39%cost of funds for the second quarter of 2017. Bay has strong liquidity and capital positions along with capacity for future growth, with total regulatory capital to risk weighted assets of approximately 12.82% at June 30, 2017. The Bank has a record of success in acquisitions and acquired problem asset resolutions and had $7.3 million in remaining net purchase discounts on acquired loan portfolios at June 30, 2017.

Specific highlights are listed below:

• Return on average assets for the three-month period ended June 30, 2017 was 0.78% as compared to 0.63% and 0.38% for the three-month periods ended March 31, 2017 and June 30, 2016, respectively, and return on average equity for the three-month period ended June 30, 2017 was 7.4%, as compared to 5.9% and 2.7% for the three-month periods ended March 31, 2017 and June 30, 2016, respectively.

• With consistent organic growth, total assets were $646 million at June 30, 2017 compared to $633 million at March 31, 2017 and $496 million at June 30, 2016.

• Total loans were $510 million at June 30, 2017, an increase of 2.9% from $495 million at March 31, 2017, an increase of 4.7% from $487 million at December 31, 2016 and an increase of 22.2% from $417 million at June 30, 2016.

• Total deposits were $536 million at June 30, 2017, an increase of 1.9% from $526 million at March 31, 2017, an increase of 1.8% from $526 million at December 31, 2016 and an increase of 47.6% from $363 million at June 30, 2016. Non-interest bearing deposits were $120 million at June 30, 2017, an increase of 25% from $96 million at June 30, 2016.

• Net interest income for the three-month period ended June 30, 2017 totaled $6.3 million, compared to $5.8 million for the first quarter of 2017 and $4.9 million for the same period of 2016. Interest income associated with discount accretion on purchased loans, deferred costs and deferred fees will vary due to the timing and nature of loan principal payments. Earning asset leverage was the primary driver in year-over-year results, as average earning loans and investments increased to $563 million for the three-month period ended June 30, 2017, compared to $432 million for the same period of 2016.

• Net interest margin for the three- and six-month period ended June 30, 2017 was 4.27% and 4.16%, slightly less than , the 4.34% and 4.28%, respectively, for the same periods of 2016. The margin for the six-month period ended June 30, 2017 reflects the variable pace of discount accretion recognition within interest income and the impact of fair value amortization on the interest expense of acquired deposits, and the higher level of investments, including interest bearing federal funds acquired in the Hopkins Merger.

• Nonperforming assets decreased to $14.6 million at June 30, 2017 from $16.1 million at March 31, 2017 and was $15.8 million at December 31, 2016, and $9.1 million at June 30, 2016. The first quarter of 2017 decreases resulted primarily from continued resolution of acquired nonperforming loans.

• The provision for loan losses for the three- and six-month period ended June 30, 2017 was $0.52 million and $0.96 million, respectively, compared to $0.36 million and $0.66 million, respectively, for the same periods of 2016. The increases for the 2017 periods were primarily the result of increases in loan originations. As a result, the allowance for loan losses was $3.61 million at June 30, 2017, representing 0.71% of total loans, compared to $3.16 million, or 0.64% of total loans, at March 31, 2017 and $2.29 million, or 0.55% of total loans, at June 30, 2016. Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future periods due to the gradual accretion of the discount on the acquired loan portfolios and an increase in new loan originations.


Balance Sheet Review

Total assets were $646 million at June 30, 2017, increases of $13 million, or 2%, $26 million , or 4%, and $150 million, or 30%, when compared to March 31, 2017, December 31, 2016 and June 30, 2016, respectively. Investment securities increased by $39 million, or 144%, when compared to June 30, 2016, while loans held for sale decreased by $2 million, or 46%, over the same period.

Total deposits were $536 million at June 30, 2017, an increase of $10 million or 2% compared to the $526 million at March 31, 2017, an increase of $10 million or 2% compared to the $526 million at December 31, 2016 and an increase of $173 million or 48% compared to the $363 million at June 30, 2016. Activity included normal cyclical deposit fluctuations and an $8 million increase in non-interest bearing deposits. Short-term borrowings from the Federal Home Loan Bank increased to $35 million compared to $34 million at March 31, 2017.

Stockholders’ equity increased to $69.3 million at June 30, 2017, from $67.3 million at March 31, 2017, $65.9 million at December 31, 2016, and $67.5 million at June 30, 2016. These increases related primarily to corporate earnings, with the increase over the second quarter of 2016 being offset by the $2.4 million decline related to the purchase of 568,436 shares of Bay’s common stock. The combined activity improved the book value of Bay’s common stock to $6.52 per share at June 30, 2017, compared to $6.38 per share at March 31, 2017, $6.29 per share at December 31, 2016 and $6.18 per share at June 30, 2016.

In the third quarter of 2016, the Board of Directors authorized an additional stock purchase program, authorizing Bay to purchase an additional 250,000 shares of its common stock over a 12-month period in open market and/or through privately negotiated transactions, at Bay’s discretion. During the third quarter of 2016, Bay purchased 150,000 shares at an average price of $5.10 per share along with a purchase of 418,436 shares through a privately negotiated transaction at an average price of $5.18 per share. Bay Bancorp has not elected to repurchase additional shares since that time. As of June 30, 2017, Bay has 250,000 shares remaining under the third quarter 2016 purchase authorization. The Board may modify, suspend or discontinue the program at any time.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and real estate acquired through foreclosure, decreased to $14.6 million at June 30, 2017 from $16.1 million at March 31, 2017, from $15.8 million at December 31, 2016 and from $9.1 million at June 30, 2016. The changes were driven by loans acquired in the Hopkins Merger offset by decreases in purchased credit impaired loans. Nonperforming assets represented 2.26% of total assets at June 30, 2017, compared to 2.54% at March 31, 2017, 2.55% at December 31, 2016 and 1.84% at June 30, 2016.

At June 30, 2017, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was approximately 12.15% at June 30, 2017 as compared to 12.29% at March 31, 2017, 12.32% at December 31, 2016 and 15.56% at June 30, 2016. Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the investment portfolio.

Review of Financial Results

For the three-month periods ended June 30, 2017 and 2016


Net income for the three-month period ended June 30, 2017 was $1.23 million, compared to net income of $.96 million and $0.45 million for the three-month periods ended March 31, 2017 and June 30, 2016, respectively.

Net interest income for the three-month period ended June 30, 2017 totaled $6.3 million compared to $5.8 million for the previous quarter and $4.9 million for the same period of 2016. Interest income resulted from interest-earning asset growth from expansion of the Bay originated loan portfolio, selective investment purchases and the Hopkins Merger. As of June 30, 2017, the remaining net loan discounts on the Bank’s loan portfolio totaled $7.3 million.

Noninterest income for the three-month period ended June 30, 2017 was $1.4 million, up slightly when compared to the $1.3 million for the three-month period ended June 30, 2016 which included $0.21 million of security sale gains. Changes for the second quarter of 2017 were primary related to a $0.25 million increase in electronic banking fees.

Noninterest expense reduction continues to be a key focus for 2017 net income improvement. Despite 32% growth in average assets, for the three-month period ended June 30, 2017, noninterest expense was $5.2 million, compared to $5.1 million for the same period of 2016. The primary contributors to the change when compared to the second quarter of 2016 was a $0.2 million decrease in occupancy and foreclosed property costs, offset by a $0.3 million increase in salaries, employee benefit, professional and data processing expenses.

For the six-month periods ended June 30, 2017 and 2016

Net income for the six-month period ended June 30, 2017 was $2.18 million, compared to net income of $0.64 million for the six-month period ended June 30, 2016.

Net interest income for the six-month period ended June 30, 2017 totaled $12.18 million compared to $9.62 million for the same period of 2016. Interest income resulted from interest-earning asset growth from expansion of the Bay originated loan portfolio, selective investment purchases and the Hopkins Merger.

Noninterest income for the six-month period ended June 30, 2017 was $2.68 million, up slightly when compared to the $2.52 million for the six-month period ended June 30, 2016 which included $0.49 million of security sale gains. Changes for the second quarter of 2017 were primary related to a $0.36 million increase in electronic banking fees and a $0.33 million increase in other noninterest income related to increase bank owned life insurance earnings.

Noninterest expense was $10.39 million, compared to $10.44 million for the same period of 2016. The primary contributors to the change when compared to the second quarter of 2016 was a $0.39 million decrease in occupancy and foreclosed property costs, offset by a $0.33 million increase in salaries, employee benefit, data processing, core deposit intangible amortization and loan collection expenses.

Bay Bancorp, Inc. Information

Bay is a financial holding company and a savings and loan holding company headquartered in Columbia, Maryland. Through the Bank, Bay serves the community with a network of 11 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of Baltimore Washington corridor. The Bank serves small and medium size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including on-line and mobile banking, commercial banking, cash management, mortgage lending and retail banking. The Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit. Additional information is available at www.baybankmd.com.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on Bay. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Bay. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Bay with the Securities and Exchange Commission entitled “Risk Factors”.


For investor inquiries contact:

Joseph J. Thomas, President and CEO
410-536-7336
jthomas@baybankmd.com
7151 Columbia Gateway Drive,
Suite A
Columbia, MD 21046


For further information contact:

Larry D. Pickett, Chief Financial Officer
lpickett@baybankmd.com
410-312-5415

Columbia, Md. (May 8, 2017) — Bay Bank announced today that Kyle Becraft has joined the company as Senior Vice President and Director of Mortgage Banking.

Becraft, a well-known veteran of the mortgage banking industry, will lead the effort to expand Bay Bank’s presence in the Baltimore-Washington residential construction and mortgage banking markets. He will manage Bay Bank’s current team of mortgage lenders and will launch a new effort focused on the bank’s residential construction and permanent mortgage loan product.

With over 30 years in the banking industry, Becraft brings with him deep relationships with regional builders, particularly those constructing homes in Bay Bank’s target markets. Becraft’s specialty is helping consumers with construction/permanent financing to build their homes, and he also assists builders with builder line financing.  

“We are thrilled to have Kyle join our company in a new leadership role and accelerate the growth and profitability of our residential mortgage business,” said Joe Thomas, Bay Bank President and CEO. “His relationship-oriented philosophy and track record working with residential builders is a perfect extension of Bay Bank’s strategy to serve local entrepreneurs. We will now have a more complete specialty financing product array to serve land acquisition, development, construction, and permanent mortgage solutions for our commercial and consumer clients.” 

Becraft is highly respected in the mortgage banking industry and has collected many accolades throughout his career. He has been named as a Top 100 mortgage lender in the country and was honored at his previous company, Sandy Spring Bank, for his commitment to outstanding customer service and for consistently being one of the bank’s top producers.

“I’m excited to have this opportunity with Bay Bank,” said Becraft. “Bay Bank’s entrepreneurial culture and integrated organizational structure really fit well with providing the financing and quality service that self-employed builders and homeowners are looking for.”

Becraft will be located in the bank’s corporate headquarters in Columbia, Maryland.

 

About Bay Bank

Bay Bank, FSB is headquartered in Columbia, Maryland, and serves the community with a network of 11 branches strategically located throughout the region. Founded in 2010, the bank has quickly developed a strong reputation for its focus on being the bank built by entrepreneurs, for entrepreneurs. The bank has total assets of around $633 million. The bank’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.”

 

Columbia, Maryland (April 27, 2017)—Bay Bancorp, Inc. (“Bay”) (NASDAQ: BYBK), the savings and loan holding company for Bay Bank, FSB (“Bank”), announced today net income of $0.96 million, or $0.09 per basic and diluted common share for the quarter ended March 31, 2017 compared to net income of $0.19 million or $0.02 per basic and diluted common share for the quarter ended March 31, 2016. The Bank now has total assets of over $633 million and 11 branches in the Baltimore-Washington region, and is the fifth largest community bank headquartered in the Baltimore region based upon deposit market share.

Commenting on the announcement, Joseph J. Thomas, President and CEO, said, “We are pleased with our company’s performance in the first quarter of 2017, the best quarterly earnings results in our history. We are demonstrating organic loan growth, attractive low cost core deposit funding and improved operational efficiencies and cost savings from prior acquisitions. Our income before taxes of $1.54 million represents a $1.24 million increase over the $0.30 million recorded for the first quarter in 2016 and $0.57 million increase over the $0.97 million recorded for the quarter ended December 31, 2016. As a result, our return on average assets for the three-month period ended March 31, 2017 was 0.63% as compared to 0.53% and 0.16% for the three-month periods ended December 31, 2016 and March 31, 2016, respectively, and return on average equity for the three-month period ended March 31, 2017 was 5.87%, as compared to 5.04% and 1.11% for the three-month periods ended December 31, 2016 and March 31, 2016, respectively.”

Highlights from the First Three-months of 2017

The Bank continued organic net growth in the first quarter of 2017. Net loan growth was favorable and targeted core deposit growth was strong. Planned declines in certificate of deposit balances following the successful closing of Bay’s merger with Hopkins Bancorp, Inc. and the related merger of Hopkins Federal Savings Bank into the Bank (collectively, the “Hopkins Merger”) led to an attractive 0.38% cost of funds for the first quarter of 2017. Bay has strong liquidity and capital positions along with capacity for future growth, with total regulatory capital to risk weighted assets of approximately 12.90% at March 31, 2017. The Bank has a record of success in acquisitions and acquired problem asset resolutions and had $7.6 million in remaining net purchase discounts on acquired loan portfolios at March 31, 2017.

Specific highlights are listed below:

• With the completion of the Hopkins Merger and consistent organic growth, total assets were $633 million at March 31, 2017 compared to $463 million at March 31, 2016 and $620 million at December 31, 2016.

• Total loans were $495 million at March 31, 2017, an increase of 25% from $397 million at March 31, 2016, and an increase of 2% from $487 million at December 31, 2016.

• Total deposits were $526 million at March 31, 2017, an increase of 44% from $366 million at March 31, 2016, and no change from $526 million at December 31, 2016. Non-interest bearing deposits were $112 million at March 31, 2017, an increase of 14% from $98 million at March 31, 2016 and an increase of 1% from $111 million at December 31, 2016.

• Net interest income for the three-month period ended March 31, 2017 totaled $5.8 million, compared to $4.7 million for the same period of 2016. Interest income associated with discount accretion on purchased loans, deferred costs and deferred fees will vary due to the timing and nature of loan principal payments. Earning asset leverage was the primary driver in year-over-year results, as average earning loans and investments increased to $552 million for the three months ended March 31, 2017, compared to $425 million for the same period of 2016.

• Net interest margin for the three-month period ended March 31, 2017 was 4.05%, compared to 4.20% for the same period of 2016. The margin for each period reflects the variable pace of discount accretion recognition within interest income, the impact of fair value amortization on the interest expense of acquired deposits, and the higher level of investments, including interest bearing federal funds acquired in the Hopkins Merger.

• Nonperforming assets increased to $16.1 million at March 31, 2017 from $15.8 million at December 31, 2016, and from $9.7 million at March 31, 2016. The first quarter of 2017 increases resulted primarily from the Hopkins Merger, offset by continued resolution of acquired nonperforming loans. Loans acquired in the Hopkins Merger include appropriate fair value adjustments.

• The provision for loan losses for the three-month period ended March 31, 2017 was $0.4 million, compared to $0.3 million for the same period of 2016. The increases for the 2017 period were primarily the result of increases in loan originations and the continued transition from an acquired loan portfolio to an originated portfolio. As a result, the allowance for loan losses was $3.16 million at March 31, 2017, representing 0.64% of loans, compared to $1.95 million, or 0.49% of loans, at March 31, 2016 and $2.82 million, or 0.58% of total loans, at December 31, 2016. The allowance for loan losses at March 31, 2017 represents 1.00% of the Bay originated portfolio, with the remaining discount on acquired loans mitigating the need for additional loan loss reserves on these portfolios. Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future due to the gradual accretion of the discount on the acquired loan portfolios and an increase in new loan originations.


Balance Sheet Review

Total assets were $633 million at March 31, 2017, increases of $13 million, or 2%, and $170 million, or 37%, when compared to December 31, 2016 and March 31, 2016, respectively. Investment securities increased by $39 million, or 144%, when compared to March 31, 2016, while loans held for investment increased by $98 million, or 25%, over the same period.

Total deposits were $526 million at March 31, 2017, with no significant change compared to the $526 million at December 31, 2016. Activity included a managed decline in certificates of deposits, seasonal deposit fluctuations and no significant change in non-interest bearing deposits. Short-term borrowings from the Federal Home Loan Bank increased to $34 million compared to $20 million at December 31, 2016.

Stockholders’ equity increased to $67.3 million at March 31, 2017, from $65.9 million at December 31, 2016, and $66.9 million at March 31, 2016. These increases related primarily to corporate earnings, with the increase over the first quarter being offset by the $2.4 million decline related to the purchase of 568,436 shares of Bay’s common stock. The combined activity improved the book value of Bay’s common stock to $6.38 per share at March 31, 2017, compared to $6.29 per share at December 31, 2016 and $6.15 per share at March 31, 2016.

In the third quarter of 2016, the Board of Directors authorized an additional stock purchase program, authorizing Bay to purchase an additional 250,000 shares of its common stock over a 12-month period in open market and/or through privately negotiated transactions, at Bay’s discretion. During the third quarter of 2016, Bay purchased 150,000 shares at an average price of $5.10 per share along with a purchase of 418,436 shares through a privately negotiated transaction at an average price of $5.18 per share. Bay Bancorp has not elected to repurchase additional shares since that time. As of March 31, 2017, Bay has 250,000 shares remaining under the third quarter 2016 purchase authorization. The Board may modify, suspend or discontinue the program at any time.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and real estate acquired through foreclosure, increased to $16.1 million at March 31, 2017 from $15.8 million at December 31, 2016 and from $9.7 million at March 31, 2016. The changes were driven by loans acquired in the Hopkins Merger offset by decreases in purchased credit impaired loans. Nonperforming assets represented 2.53% of total assets at March 31, 2017, compared to 2.55% at December 31, 2016 and 2.10% at March 31, 2016.

At March 31, 2017, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was approximately 12.29% at March 31, 2017 as compared to 12.31% at December 31, 2016 and 16.20% at March 31, 2016. Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the investment portfolio.

Review of Financial Results

Net income for the three-months period ended March 31, 2017 was $0.96 million, compared to net income of $.81 million and $0.19 million for the three month periods ended December 31, 2016 and March 31, 2016, respectively.

Net interest income for the three months ended March 31, 2017 totaled $5.8 million compared to $4.7 million for the same period of 2016. Interest income resulting from interest-earning asset growth from expansion of the Bay originated loan portfolio, selective investment purchases and the Hopkins Merger was partially offset by a decrease in discount accretion on purchased loans, deferred costs and deferred fees. As of March 31, 2017, the remaining net loan discounts on the Bank’s loan portfolio totaled $7.6 million.

Noninterest income for the three months ended March 31, 2017 was $1.3 million, increasing by $0.1 million when compared to the $1.2 million for the three months ended March 31, 2016. Changes for the first quarter of 2017 were primary related to a $0.1 million increase in electronic banking fees.

Noninterest expense reduction continues to be a key focus for 2017 net income improvement. For the three-month periods ended March 31, 2017, noninterest expense was $5.2 million, compared to $5.3 million for the same period of 2016. The primary contributors to the decrease when compared to the first quarter of 2016 were a $0.2 million decrease in occupancy and foreclosed property costs, offset by a $0.1 million increase in merger related expenses.

Bay Bancorp, Inc. Information

Bay is a financial holding company and a savings and loan holding company headquartered in Columbia, Maryland. Through the Bank, Bay serves the community with a network of 11 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of Baltimore Washington corridor. The Bank serves small and medium size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including on-line and mobile banking, commercial banking, cash management, mortgage lending and retail banking. The Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit. Additional information is available at www.baybankmd.com.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on Bay. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Bay. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Bay with the Securities and Exchange Commission entitled “Risk Factors”.


For investor inquiries contact:

Joseph J. Thomas, President and CEO
410-536-7336
jthomas@baybankmd.com
7151 Columbia Gateway Drive,
Suite A
Columbia, MD 21046


For further information contact:

Larry D. Pickett, Chief Financial Officer
lpickett@baybankmd.com
410-312-5415

Columbia, Md. (April 10, 2017) — Bay Bank, the bank built by entrepreneurs for entrepreneurs, announced today that Lynn Mason has joined the company as Vice President and Commercial Banking Relationship Manager under the leadership of Todd Warren, Baltimore Market President and Senior Vice President.

Mrs. Mason comes to Bay Bank with more than 20 years in the banking industry, having held several leadership positions with Sandy Spring Bank, Provident Bank (which was then acquired by M&T Bank) and Riggs National Bank.  In her previous roles, she led commercial banking and business development teams that were focused on companies with up to $100MM in revenue.  She also has extensive experience in treasury management, working with middle market and large national companies in the Baltimore-Washington Metropolitan area. 

“Lynn is joining us at a time where we are focused on developing a greater presence in Anne Arundel County,” said Warren. “With her knowledge of this market and proven track record of developing new commercial business, we are thrilled to have her lead this charge.”

Mrs. Mason holds a B.A. from Pennsylvania State University in political science and Spanish, is a Certified Public Accountant and a graduate of the RMA Credit Training Program and the Maryland Banking School.  She is currently a participant in Leadership Anne Arundel – an intense nine month curriculum of civic information and leadership skills development.   Mrs. serves on the Board of the American Red Cross Anne Arundel and Southern MD Chapter and is active in the North Anne Arundel County Chamber.  She is also an advocate with Anne Arundel County CASA and volunteers with several local community organizations.

About Bay Bank

Bay Bank, FSB is headquartered in Columbia, Maryland and serves the community with a network of 11 branches strategically located throughout the region. Founded in 2010, the bank has quickly developed a strong reputation for its focus on being the bank built by entrepreneurs, for entrepreneurs. The bank has total assets of over $620 million at December 31, 2016. The bank’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.”

Columbia, Maryland – (April 4, 2017) – Bay Bank announced today that Zach Alter, a native Baltimore resident, will be joining the bank as a Commercial Real Estate Relationship Manager in the Bank’s Commercial Real Estate Division. In this position, he will be responsible for developing new relationships in the commercial and residential real estate industry in the greater Baltimore region.

Alter comes to Bay Bank with a background in commercial real estate and expertise in the financial and operational analysis of retail, industrial, multi-family and residential real estate projects.  Prior to coming to Bay Bank, he held positions with Manekin LLC and Bozzuto Management Company where he handled all facets of the commercial real estate process.

“Zach’s experience in commercial real estate and in-depth knowledge of the local market will be a significant asset to our team and his customers” said Rich Ohnmacht, Corridor Market President.  “Working for commercial real estate companies gives him a unique understanding of this industry and his perspectives will be of great value to his customers,” continued Ohnmacht.  

Alter holds a bachelor’s degree from Syracuse University and will be completing his Masters in Real Estate and Infrastructure from Johns Hopkins, Carey School of Business this spring.  Prior to starting his professional career in Baltimore, he spent two years living abroad serving in the Israeli Defense Forces.    Alter is affiliated with the American Israel Public Affairs Committee and a member of Friends of the Israeli Defense Forces where he served as a former board member of the Young Leadership Group. 

Alter will be working out of the Corporate Headquarters located in Columbia. 

 

About Bay Bank

Bay Bank, FSB is headquartered in Columbia, Maryland and serves the community with a network of 11 branches strategically located throughout the region. Founded in 2010, the bank has quickly developed a strong reputation for its focus on being the bank built by entrepreneurs, for entrepreneurs. The bank has total assets of over $620 million at December 31, 2016. The bank’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.”

 

Columbia, Maryland (January 30, 2017)—Bay Bancorp, Inc. (“Bay”) (NASDAQ: BYBK), the savings and loan holding company for Bay Bank, FSB (“Bank”), announced today net income of $1.75 million or basic and diluted net income per common share of $0.16 for the year ended December 31, 2016 compared to net income of $1.93 million or basic and diluted net income per common share of $0.17, for the year ended December 31, 2015.  For the fourth quarter of 2016, Bay reported net income of $0.74 million, or basic and diluted net income per common share of $0.07 compared to net income of $0.37 million, or basic and diluted net income per common share of $0.04 and $0.03, respectively, for the third quarter of 2016.  This was after $1.8 million in one-time merger integration expenses and a $1.0 million bargain purchase gain associated with the Bank’s merger with Hopkins Federal Savings Bank (“the Hopkins Merger”), and net income of $0.51 million, or basic and diluted income per common share of $0.05 for the fourth quarter of 2015.  Pre-tax earnings in the fourth quarter of 2016, were up 43% and 52% when compared to the prior quarter and the fourth quarter of 2015, respectively.  With consistent organic growth, along with the Hopkins Merger, the Bank has total assets exceeded $620 million at December 31, 2016, supported by 11 branches in the Baltimore-Washington region, and is the fifth largest community bank headquartered in the Baltimore region based upon deposit market share.

Commenting on the announcement, Joseph J. Thomas, President and CEO, said, “We are very proud of our team’s accomplishments this year with over $100 million in new loan originations, successful completion of the Hopkins acquisitions, and leadership transition in numerous key banking, credit and operations roles.  The efforts of our team have translated into significantly higher earnings momentum in the fourth quarter of 2016 with pre-tax, pre-provision earnings, increasing 52% compared to the same period in 2015 before consideration of merger-related costs.  When combined with the Bank’s 2016 stock repurchases, the Return on Equity increased a full 60% over the same period in 2015.  We are well positioned with talent and technology to entrepreneurially serve our small business, private real estate and professional clients in the dynamic and robust Baltimore Washington Corridor and sustain and extend this higher level of earnings in 2017 to continue growing our tangible book value from its $6.30 per share level at year-end 2016.”


Highlights from 2016

The Bank resumed organic net growth in the fourth quarter of 2016 after third quarter completion of the Hopkins Merger.  Net loan growth, particularly after the Hopkins Merger, was favorable and targeted core deposit growth was strong.  Planned declines in certificate of deposit balances prior to and in anticipation of the Hopkins Merger led to an attractive 0.39% cost of funds for the fourth quarter of 2016.  Bay has a strong liquidity and capital position along with capacity for future growth with total regulatory capital to risk weighted assets estimated at 12.9% as of December 31, 2016.  The Bank has a record of success in acquisitions and acquired problem asset resolutions and, at December 31, 2016, had $8.2 million in remaining net purchase discounts on acquired loan portfolios.

Specific highlights are listed below:

•    The return on average assets for the three months and year ended December 31, 2016 was 0.53% and 0.36%, respectively, as compared to 0.43% and 0.40%, respectively, for the same periods of 2015.  The return on average equity for the three months and year ended December 31, 2016 was 4.96% and 2.94%, respectively, as compared to 3.10% and 2.94%, respectively, for the same periods in 2015.  

•    Total assets were $620 million at December 31, 2016 compared to $606 million at September 30, 2016 and $491 million at December 31, 2015.

•    Total loans were $487 million at December 31, 2016, an increase of 1.0% from $482 million at September 30, 2016, and an increase of 23.9% from $393 million at December 31, 2015.

•    Total deposits were $526 million at December 31, 2016, a decrease of 0.9% from $531 million at September 30, 2016, and an increase of 43.3% from $366 million at December 31, 2015.

•    Net interest income for the three- and twelve-month periods ended December 31, 2016 totaled $5.9 million and $21.2 million, respectively, compared to $5.1 million and $21.4 million, respectively, for the same periods of 2015.  Interest income associated with discount accretion on purchased loans, deferred costs and deferred fees will vary due to the timing and nature of loan principal payments.  Earning asset leverage was the primary driver in year-over-year results, as average earning assets, primarily loans and investments, increased to $512 million for the year ended December 31, 2016, compared to $455 million for 2015.

•    Net interest margin for the three- and twelve-month periods ended December 31, 2016 was 4.05% and 4.14%, respectively, compared to 4.49% and 4.70%, respectively, for the same periods of 2015.  The margin decrease from 2015 reflects the variable pace of discount accretion recognition within interest income, the impact of fair value amortization on the interest expense of acquired deposits, and the higher level of investments, including interest bearing federal funds sold acquired in the Hopkins Merger.  For the year ended December 31, 2016, the earning asset portfolio yield was influenced by a $1.1 million decline in net discount accretion of purchased loan discounts recognized in interest income when compared to 2015.

•    Nonperforming assets increased to $15.8 million at December 31, 2016 from $15.7 million at September 30, 2016, an increase of $0.1 million or 0.6%, and increased $5.5 million or 53.4%, from $10.3 million at December 31, 2015.  The increase compared to 2015 resulted primarily from the Hopkins Merger offset by continued resolution of acquired impaired loans.  All loans acquired in merger agreements include appropriate fair value adjustments.

•    The provision for loan losses for the three- and twelve-month periods ended December 31, 2016 was $0.37 million and $1.39 million, respectively, compared to $0.26 million and $1.14 million, respectively, for the same periods of 2015.  The increases for 2016 were primarily the result of growth in the Bank’s originated portfolio, combined with modest increases in qualitative factors used for calculating the required reserve.  As a result, the allowance for loan losses was $2.82 million at December 31, 2016, representing 0.58% of total loans, compared to $2.45 million or 0.51% of total loans at September 30, 2016, and $1.77 million, or 0.45% of total loans, at December 31, 2015.  The allowance for loan losses at December 31, 2016 represents 1.05% of the Bank’s originated portfolio, with the remaining discount on acquired loans mitigating the need for additional loan loss reserves on these portfolios.  Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future due to the gradual accretion of the discount on the acquired loan portfolios and an increase in new loan originations.

Recent Events

During the most recent quarter, the Bank made a $10 million additional investment in Bank Owned Life Insurance “BOLI”.  The BOLI investment, with favorable tax attributes, should positively add to 2017 non-interest income.  The Bank closed the Northern Parkway branch location in December 2016, incurring $0.08 million in closing related costs, which will reduce 2017 operating expenses.  The Bank sold the Joppa Road building that includes a branch location, reducing the Bank’s premises and equipment by nearly 25%.  The Bank has leased back this key branch space under an equitable agreement.  The gain on this sale lease-back transaction was deferred and will be recognized as a reduction of rent expense over the term of the lease.


Balance Sheet Review

Total assets were $620 million at December 31, 2016, an increase of $129 million, or 26.3%, when compared to $491 million at December 31, 2015.  The increase was mainly the result of the Hopkins Merger and organic loan and other asset growth.  Investment securities increased by $26 million or 75.8%, for the year, while loans held for investment increased by $94 million or 23.9%, which was primarily driven by the $58 million of loans acquired in the Hopkins Merger.

Total deposits were $526 million at December 31, 2016, an increase of $159 million, or 43.3%, when compared to $367 million at December 31, 2015.  The increase was due to the deposits acquired as part of the Hopkins Merger and an increase in non-interest bearing deposits offset by a managed decline in certificates of deposits.  Following the Hopkins Merger, the Bank repaid $75 million of short-term borrowings from the Federal Home Loan Bank.

Stockholders’ equity increased to $65.5 million at December 31, 2016, from $65.2 million at September 30, 2016, and decreased from $67.7 million at December 31, 2015.  The 2016 increase related to corporate earnings, which were offset by the $3.8 million decline related the 2016 repurchase of shares of Bay’s common stock.  The combined activity improved the book value of Bay’s common stock to $6.30 per share at December 31, 2016 compared to $6.29 per share at September 30, 2016 and $6.13 per share at December 31, 2015.

In the first quarter of 2016, the Board of Directors authorized an additional stock purchase program, authorizing Bay to purchase 250,000 shares of its common stock over a 12-month period in open market and/or through privately negotiated transactions, at Bay’s discretion.  During the third quarter of 2016, Bay purchased 150,000 shares at an average price of $5.10 per share along with a purchase of 418,436 shares through a privately negotiated transaction at an average price of $5.18 per share.  No additional shares were purchased during the fourth quarter of 2016 as Bay has 254,508 shares remaining under the 2016 purchase authorization.  The Board may modify, suspend or discontinue the program at any time.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and real estate acquired through foreclosure, increased to $15.8 million at December 31, 2016 from $15.7 million at September 30, 2016 and $10.3 million at December 31, 2015.  The changes were driven by loans acquired in the Hopkins Merger offset by decreases in purchased credit impaired loans.  Nonperforming assets represented 2.55% of total assets at December 31, 2016, compared to 2.60% at September 30, 2016 and 2.10% at December 31, 2015.

At December 31, 2016, the Bank remained above all “well-capitalized” regulatory requirement levels.  The Bank’s tier 1 risk-based capital ratio was estimated at 12.31% at December 31, 2016 as compared to 12.28% at September 30, 2016 and 16.14% at December 31, 2015.  Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the investment portfolio.

Review of Financial Results

Net income for the three-months and year ended December 31, 2016 was $0.74 million and $1.75 million, respectively, compared to net income of $0.51 million and $1.93 million, respectively, for the same periods of 2015.  With the changes to net income for the year primarily the result of the $1.03 million Hopkins Merger bargain purchase gain, offset by $1.76 million in merger related expenses, changes were less comparable to prior periods.  

Net interest income for the three months ended December 31, 2016 totaled $5.9 million compared to $5.1 million for the same period of 2015.  Interest income resulting from interest-earning asset growth from the Hopkins Merger and legacy net loan growth was partially offset by a decrease in discount accretion on purchased loans, deferred costs and deferred fees.

Net interest income decreased to $21.2 million for year ended December 30, 2016, from $21.4 million for the same period of 2015.  The decrease was largely the result of a $1.1 million decline in net discount accretion on purchased loans recognized in interest income offset by the growth of earning assets both organically and from the Hopkins Merger.  Excluding the impact of the net discount accretion on purchased loans, net interest income increased when compared to 2015.  The net interest margin for the year ended December 31, 2016 decreased to 4.05%, from 4.70% for 2015, due to the decline in discount accretion on loans and deposits.  As of December 31, 2016, the remaining net loan discounts on the Bank’s loan portfolio totaled $8.6 million.

Noninterest income for the three months ended December 31, 2016 was $2.9 million compared to $3.8 million for the three months ended September 30, 2016 and $1.1 million for the three months ended December 31, 2015.  The decrease from the immediately prior quarter related to $1.0 million bargain purchase gain attributed to the Hopkins Merger and a $0.1 million decrease in mortgage banking fees.  The decline from the immediately prior quarter was partially offset by a $0.1 million increase in electronic banking fees and a $0.19 million increase in gains from the sale of certain securities.  The increase from the fourth quarter of 2015 was primarily the result of $1.7 million in loan fees related to the reverse mortgage operation acquired in the Hopkins Merger, along with a $0.1 million increase in electronic banking fees, a $0.1 million increase in gains from the sale of securities.

Noninterest income for the year ended December 31, 2016 was 9.2 million compared to $5.4 million for 2015.  The increase related to the $1.0 million bargain purchase gain attributed to the Hopkins Merger along with $3.09 million of loan broker fees related to the reverse mortgage operation acquired in the Hopkins Merger.  The remainder of the change was primarily the result of $0.39 million increase in gains from the sale of securities, a $0.12 million increase in electronic banking fees, offset by a $0.88 million decrease in mortgage banking fees and gains.

Noninterest expense reduction was a key focus for 2016 net income improvement.  For the three months ended December 31, 2016, noninterest expense was $7.2 million compared to $8.4 million for the prior quarter and $5.2 million for the fourth quarter of 2015.  The primary contributors to the decrease when compared to the third quarter of 2016 were $1.5 million decrease in merger related expenses, and a $0.04 million decrease in salary and employee benefit expense, offset by a $0.3 million increase in expenses related to the reverse mortgage operation and a $0.03 million increase in core deposit intangible expenses.  The primary contributors to the increase when compared to the fourth quarter of 2015 were $1.7 million of expenses related to the reverse mortgage operation, a $0.1 million increase in professional fees, a $0.1 increase in FDIC insurance costs and a $0.1 increase in other expenses, offset by $0.06 million decreases in both foreclosure related expenses and data processing costs.

For the year ended December 31, 2016, noninterest expense was $26.0 million compared to $22.6 million for 2015.  The primary contributors to the increase when compared to 2015 were $1.8 million in merger related expenses and $3.0 million of expenses related to the reverse mortgage brokerage operation.  Excluding the merger and reverse mortgage related expenses, noninterest expenses declined by $1.2 million or 5.5%.  The 2016 decreases, excluding reverse mortgage related expenses, included $0.37 million in salary and employee benefits, $0.18 million in occupancy expense, $0.27 million in professional fees, $0.24 million in loan collection costs, $0.06 million in core deposit intangible amortization and $0.16 million in data processing expenses.

Bay Bancorp, Inc. Information

Bay Bancorp, Inc. is a financial holding company and a savings and loan holding company headquartered in Columbia, Maryland.  Through Bay Bank, FSB, its federal savings bank subsidiary, Bay Bancorp, Inc. serves the community with a network of 11 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of the Baltimore Washington corridor.  The Bank serves small and medium size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including on-line and mobile banking, commercial banking, cash management, mortgage lending and retail banking.  The Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit.  Additional information is available at www.baybankmd.com.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company.  There can be no assurance that future developments affecting the Company will be the same as those anticipated by management.  These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions.  Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements.  For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Bay Bancorp, Inc. with the Securities and Exchange Commission entitled “Risk Factors”.


For investor inquiries contact:

Joseph J. Thomas, President and CEO
410-536-7336
jthomas@baybankmd.com
7151 Columbia Gateway Drive,
Suite A
Columbia, MD 21046


For further information contact:

Larry D. Pickett, Chief Financial Officer
lpickett@baybankmd.com
410-312-5415

Columbia Maryland—November 14, 2016—Bay Bancorp, Inc. (“Bay”) (NASDAQ: BYBK), the savings and loan holding company for Bay Bank, FSB (“Bank”), announced today net income of $0.46 million, or basic and diluted net income per common share of $0.04 for the third quarter of 2016 after $1.5 million in one-time merger integration expenses and a $1.0 million bargain purchase gain associated with the Bank’s merger with Hopkins Federal Savings Bank (“the Hopkins Merger”) compared to net income of $0.45 million, or basic and diluted net income per common share of $0.04 for the second quarter of 2016, and income of $0.53 million, or basic and diluted income per common share of $0.05 for the third quarter of 2015.  Pre-tax earnings in the third quarter, adjusted for the merger expenses and bargain purchase gain, were up 72% when compared to the second quarter of 2016.  Bay reported net income of $1.15 million, or basic and diluted net income per common share of $0.10 for the first nine months of 2016 after giving effect to the one-time merger integration expenses of $1.5 million, compared to $1.42 million, or basic or diluted net income per common share of $0.13, for the same period of 2015.  With the Hopkins Merger, the Bank has total assets of over $600 million and 12 branches in the Baltimore-Washington region, becoming the fifth largest community bank headquartered in the Baltimore region based upon deposit market share.

Commenting on the announcement, Joseph J. Thomas, President and CEO, said, We were pleased to complete our merger with Hopkins Federal Savings Bank on July 8, 2016 and integrate the two legacy systems on July 25th.  Our earlier estimates for the transaction are coming in as or better than expected, with cost savings exceeding 60% of Hopkins non-interest expense, year-to-date one-time merger expenses at $1.7 million and core deposit intangible of $1.2 million.  The combination of these factors, additional share repurchases in the quarter and a $1.0 million bargain purchase gain resulted in a $0.11 per share or 1.8% increase in book value to $6.29 per share at September 30, 2016.  We continue to expect the merger to be approximately 40% accretive to Bay earnings per share in 2017. Excluding merger-related expenses and bargain purchase gains, return on average assets and return on average equity improved to 0.65% and 6.02%, respectively, for the three-month period ended September 30, 2016.”

Highlights from the First Nine Months of 2016

The Bank completed the Hopkins Merger on July 8, 2016, adding investments, loans, deposits, and Hopkins’ Pikesville branch location.  The Bank acquired $58 million in loans and assumed $186.1 million in deposits from Hopkins.  Deposit mix changes were favorable, with planned declines in certificate of deposit balances leading to an attractive 0.42% cost of deposits for the third quarter of 2016.  Bay has a strong capital position and capacity for future growth with total regulatory capital to risk weighted assets estimated at 12.8% as of September 30, 2016.  The Bank has a proven record of success in acquisitions and acquired problem asset resolutions and, at September 30, 2016, had $9.0 million in remaining net purchase discounts on acquired loan portfolios.

Specific highlights are listed below:

·   The return on average assets for the three- and nine-month periods ended September 30, 2016 was 0.33% and 0.29%, respectively, as compared to 0.43% and 0.39%, respectively, for the same periods of 2015.  The return on average equity for the three- and nine-month periods ended September 30, 2016 was 3.12% and 2.30%, respectively, as compared to 3.12% and 2.81%, respectively, for the same periods in 2015. 

·   With the completion of the Hopkins Merger, total assets were $606 million at September 30, 2016 compared to $496 million at June 30, 2016 and $491 million at December 31, 2015.

·   Total loans were $482 million at September 30, 2016, an increase of 15.6% from $417 million at June 30, 2016, an increase of 22.7% from $393 million at December 31, 2015 and an increase of 23.9% from $389 million at September 30, 2015.

·   Total deposits were $531 million at September 30, 2016, an increase of 46.2% from $363 million at June 30, 2016, an increase of 44.5% from $367 million at December 31, 2015 and an increase of 39.2% from $382 million at September 30, 2015.  Non-interest bearing deposits were $100 million at September 30, 2016, an increase of 9.0% from $92 million at September 30, 2015.

·   Net interest income for the three- and nine-month periods ended September 30, 2016 totaled $5.7 million and $15.3 million, respectively, compared to $5.4 million and $16.3 million, respectively, for the same periods of 2015.  Interest income associated with discount accretion on purchased loans, deferred costs and deferred fees will vary due to the timing and nature of loan principal payments.  Earning asset leverage was the primary driver in year-over-year results, as average earning loans and investments increased to $497 million for the nine months ended September 30, 2016, compared to $457 million for the same period of 2015.

·   Net interest margin for the three- and nine-month periods ended September 30, 2016 was 3.86% and 4.11%, respectively, compared to 4.68% and 4.76%, respectively, for the same periods of 2015.  The margin for nine months ended September 30, 2016 reflects the variable pace of discount accretion recognition within interest income, the impact of fair value amortization on the interest expense of acquired deposits, and the higher level of investments, including interest bearing federal funds sold acquired in the Hopkins Merger.  For the nine months ended September 30, 2016, the earning asset portfolio yield was influenced by a $0.99 million decline in net discount accretion of purchased loan discounts recognized in interest income when compared to the same period of 2015.  The margin declined by 0.65% during the nine months ended September 30, 2016 when compared to a year earlier.

·   Nonperforming assets increased to $15.7 million at September 30, 2016 from $9.1 million at June 30, 2016, an increase of $6.6 million or 73.0%, and increased $5.1 million or 22.6%, from $12.8 million at September 30, 2015.  The third quarter of 2016 increases resulted primarily from the Hopkins Merger offset by continued resolution of acquired nonperforming loans.  Loans acquired in the Hopkins Merger include appropriate fair value adjustments.

·   The provision for loan losses for the three- and nine-month periods ended September 30, 2016 was $360,000 and $1,016,000, respectively, compared to $306,000 and $878,000, respectively, for the same periods of 2015.  The increases for the 2016 periods were primarily the result of increases in loan originations.  As a result, the allowance for loan losses was $2.45 million at September 30, 2016, representing 0.51% of total loans, compared to $2.29 million, or 0.55% of total loans, at June 30, 2016 and $1.77 million, or 0.45% of total loans, at December 31, 2015.  The allowance for loan losses at September 30, 2016 represents 0.98% of the Bay originated portfolio, with the remaining discount on acquired loans mitigating the need for additional loan loss reserves on these portfolios.  Management expects both the allowance for loan losses and the related provision for loan losses to increase in the future due to the gradual accretion of the discount on the acquired loan portfolios and an increase in new loan originations.

·   Shortly after the consummation of the Hopkins Merger, Alvin M. Lapidus, the former Chairman of Hopkins, and Lois F. Lapidus, his wife, filed a federal lawsuit against the Bank in which they alleged that a former employee embezzled at least $1.45 million from their deposit accounts at Hopkins prior to the Hopkins Merger, with a significant portion of the embezzlement occurring during the seven days that preceded the Hopkins Merger.  The Bank has filed an answer to this complaint and intends to vigorously defend the litigation.  The Bank cannot at this time predict the outcome of the litigation or determine the Bank’s potential exposure.  The Bank believes that its insurance policies will cover any loss and its legal expenses relating to this litigation and has recorded appropriate accruals in the fair value accounting of the assets and liabilities acquired in the Hopkins Merger.

Balance Sheet Review

Total assets were $606 million at September 30, 2016, an increase of $115 million, or 23.5%, when compared to December 31, 2015.  Investment securities increased by $18 million or 52.3% for the nine month period ending September 30, 2016, while loans held for investment increased by $89 million or 22.7%, which was primarily driven by the $58 million acquired in the Hopkins Merger.


Total deposits were $531 million at September 30, 2016, an increase of $164 million, or 44.5%, when compared to $367 million at December 31, 2015.  The increase was due to the $186 million in deposits acquired as part of the Hopkins Merger.  Additional activity included a managed decline in certificates of deposits and seasonal deposit fluctuations and a $2 million, or 2.0%, decrease in non-interest bearing deposits.  Following the Hopkins Merger, Bay repaid $75 million of short-term borrowings from the Federal Home Loan Bank.

Stockholders’ equity decreased to $65.2 million at September 30, 2016, from $67.5 million at June 30, 2016, $67.7 million at December 31, 2015, and $66.9 million at September 30, 2015.  The third quarter 2016 decrease related to corporate earnings, which were offset by the $2.4 million decline related to the purchase of 568,436 shares of Bay’s common stock.  The combined activity improved the book value of Bay’s common stock to $6.29 per share at September 30, 2016 compared to $6.18 per share at June 30, 2016 and $6.05 per share at September 30, 2015.

In the first quarter of 2016, the Board of Directors authorized an additional stock purchase program, authorizing Bay to purchase an additional 250,000 shares of its common stock over a 12-month period in open market and/or through privately negotiated transactions, at Bay’s discretion.  During the third quarter of 2016, Bay purchased 150,000 shares at an average price of $5.10 per share along with a purchase of 418,436 shares through a privately negotiated transaction at an average price of $5.18 per share.  As of September 30, 2016, Bay has 100,000 shares remaining under the 2016 purchase authorization.  The Board may modify, suspend or discontinue the program at any time.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and real estate acquired through foreclosure, increased to $15.7 million at September 30, 2016 from $9.1 million at June 30, 2016 and from $10.3 million at December 31, 2015.  The changes were driven by loans acquired in the Hopkins Merger offset by decreases in purchased credit impaired loans.  Nonperforming assets represented 2.60% of total assets at September 30, 2016, compared to 1.84% at June 30, 2016 and 2.71% at September 30, 2015.

At September 30, 2016, the Bank remained above all “well-capitalized” regulatory requirement levels.  The Bank’s tier 1 risk-based capital ratio was estimated at 12.76% at September 30, 2016 as compared to 16.01% at June 30, 2016 and 16.50% at September 30, 2015.  Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the investment portfolio.

Review of Financial Results

Net income for the three- and nine-month periods ended September 30, 2016 was $0.51 million and $1.15 million, respectively, compared to net income of $0.53 million and $1.42 million, respectively, for the same periods of 2015.  With the changes to net income for the three- and nine-month periods ending September 30, 2016 primarily the result of the $1.03 million Hopkins Merger bargain purchase gain, offset by $1.71 million in merger related expenses, changes were less comparable to prior periods. 

Net interest income for the three months ended September 30, 2016 totaled $5.7 million compared to $5.4 million for the same period of 2015.  Interest income resulting from interest-earning asset growth from the Hopkins Merger and legacy Bay net loan growth was partially offset by a decrease in discount accretion on purchased loans, deferred costs and deferred fees.

Net interest income decreased to $15.3 million for the nine months ended September 30, 2016, from $16.3 million for the same period of 2015.  The decrease was largely the result of a $0.99 million decline in net discount accretion on purchased loans recognized in interest income offset by the growth in third quarter earning assets resulting from the Hopkins Merger.  Excluding the impact of the net discount accretion on purchased loans, net interest income increased slightly when compared to the nine months ended September 30, 2015.  The net interest margin for the nine months ended September 30, 2016 decreased to 4.11%, from 4.76% for the same period of 2015, due to the decline in discount accretion on loans and deposits.  As of September 30, 2016, the remaining net loan discounts on the Bank’s loan portfolio totaled $9.0 million.

Noninterest income for the three months ended September 30, 2016 was $3.8 million compared to $1.3 million for the three months ended June 30, 2016 and $1.5 million for the three months ended September 30, 2015.  The increase for the third quarter of 2016 related to a $1.0 million bargain purchase gain attributed to the Hopkins Merger along with $1.4 million of loan fees related to the reverse mortgage operation acquired in the Hopkins Merger.  The remainder of the change from the immediately prior quarter was primarily the result of a $0.1 million increase in electronic banking fees offset by a $0.21 million decrease in gains from the sale of certain securities.  The increase from the third quarter of 2015 was primarily the result of the bargain purchase gain and the reverse mortgage operations broker fees, along with a $0.045 million decrease in electronic banking fees, offset by a $0.12 million decrease in gains from the sale of securities and a $0.26 million decrease in mortgage banking fees and gains.

Noninterest income for the nine months ended September 30, 2016 was $6.3 million compared to $4.3 million for the same period of 2015.  The increase related to the $1.0 million bargain purchase gain attributed to the Hopkins Merger along with $1.4 million of loan broker fees related to the reverse mortgage operation acquired in the Hopkins Merger.  The remainder of the change was primarily the result of a $0.29 million increase in gains from the sale of securities, a $0.024 million decrease in electronic banking fees, and a $0.84 million decrease in mortgage banking fees and gains.

Noninterest expense reduction is a key focus for 2016 net income improvement.  For the three months ended September 30, 2016, noninterest expense was $8.4 million compared to $5.1 million for the prior quarter and $5.8 million for the third quarter of 2015.  The primary contributors to the increase when compared to the third quarter of 2016 were a $1.4 million increase in merger related expenses, $1.3 million of expenses related to the reverse mortgage operation and a $0.11 million increase in data processing expenses, increases of $1.1 million in salary and employee benefits expenses.  The primary contributors to the increase when compared to the third quarter of 2015 were $1.5 million in merger related expenses and $1.3 million of expenses related to the reverse mortgage operation and a $0.10 million increase in foreclosure related expenses, increases of $0.9 million in salary and employee benefits expenses, and a $0.1 million decrease in professional fees.

For the nine months ended September 30, 2016, noninterest expense was $18.7 million compared to $17.3 million for the same period of 2015.  The primary contributors to the increase when compared to the nine months ended September 30, 2015 were $1.7 million in merger related expenses and $1.3 million of expenses related to the reverse mortgage operation.  The increases were offset by $1.6 million of operational cost reductions in 2016, including decreases of $0.54 million in salary and employee benefits after excluding the reverse mortgage operation, $0.24 million in occupancy expense, $0.34 million in professional fees, $0.27 million in loan collection costs, and $0.10 million in core deposit intangible amortization and $0.09 million in data processing expenses.

Bay Bancorp, Inc. Information

Bay Bancorp, Inc. is a financial holding company and a savings and loan holding company headquartered in Columbia, Maryland.  Through Bay Bank, FSB, its federal savings bank subsidiary, Bay Bancorp, Inc. serves the community with a network of 11 branches strategically located throughout the Baltimore Metropolitan Statistical Area, particularly Baltimore City and the Maryland counties of Baltimore Washington corridor.  The Bank serves small and medium size businesses, professionals and other valued customers by offering a broad suite of financial products and services, including on-line and mobile banking, commercial banking, cash management, mortgage lending and retail banking.  The Bank funds a variety of loan types including commercial and residential real estate loans, commercial term loans and lines of credit, consumer loans and letters of credit.  Additional information is available at www.baybankmd.com.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company.  There can be no assurance that future developments affecting the Company will be the same as those anticipated by management.  These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions.  Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements.  For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Bay Bancorp, Inc. with the Securities and Exchange Commission entitled “Risk Factors”.

For investor inquiries contact:

Joseph J. Thomas, President and CEO
410-536-7336
jthomas@baybankmd.com
7151 Columbia Gateway Drive,Suite A
Columbia, MD 21046
 For further information contact:
Larry D. Pickett,
Chief Financial Officer
lpickett@baybankmd.com
410-312-5415