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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-22955
BAY BANKS OF VIRGINIA, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1838100
(State of Incorporation) (I.R.S. Employer Identification no.)
100 SOUTH MAIN STREET, KILMARNOCK, VIRGINIA 22482
(Address of principal executive offices) (Zip Code)
Registrants telephone number...................................804.435.1171
Securities registered under Section 12(b) of the Exchange Act.........NONE
Securities registered under Section 12(g) of the Exchange Act:
Common Stock ($5.00 Par Value)
(Title of Class)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X NO .
---- --
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S)229.405 of this chapter)is not contained herein, and
will not be contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant based on the closing sale price of the registrant's common stock on
March 28, 2001, was $40,563,880.
The number of shares outstanding of the registrant's common stock as of
March 28, 2001: 1,158,968.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 2000 Annual Report to Shareholders are incorporated
by reference into Part II of this Form 10-K.
Portions of the registrant's definitive Proxy Statement for its Annual Meeting
of Shareholders to be held on May 21, 2001 are incorporated by reference into
Part III of this Form 10-K.
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Form 10-K
TABLE OF CONTENTS
ITEM NUMBER PAGE NUMBER
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PART I
1. BUSINESS.............................................................................
STATISTICAL INFORMATION..............................................................
2. PROPERTIES...........................................................................
3. LEGAL PROCEEDINGS....................................................................
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................
6. SELECTED FINANCIAL DATA..............................................................
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS......................................................................
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........................
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..........................................
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.........................................................................
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....................................
11. EXECUTIVE COMPENSATION................................................................
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........................
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K........................
SIGNATURES..............................................................................
PART I
ITEM 1: BUSINESS
Nature of Business.
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Bay Banks of Virginia, Inc. (the "Company") is a bank holding company that
conducts substantially all of its operations through its subsidiaries, Bank of
Lancaster, (the "Bank")and Bay Trust Company, (the "Trust Company"). Bay Banks
of Virginia, Inc., was incorporated under the laws of the Commonwealth of
Virginia on June 30, 1997, in connection with the holding company reorganization
of the Bank of Lancaster.
The Bank is a state-chartered bank and a member of the Federal Reserve System.
The Bank services individual and commercial customers, the majority of which are
in the Northern Neck of Virginia, by providing a full range of banking and
related financial services, including checking, savings, other depository
services, commercial and industrial loans, residential and commercial mortgages,
home equity loans, and consumer installment loans.
The Bank has two offices located in Kilmarnock, Virginia, one office in White
Stone, Virginia, one office in Warsaw, Virginia, one office in Montross,
Virginia, one office in Heathsville, Virginia, and one office in Callao,
Virginia. A substantial amount of the Bank's deposits are interest bearing, and
the majority of the Bank's loan portfolio is secured by real estate. Deposits
of the Bank are insured by the Bank Insurance Fund of the Federal Deposit
Insurance Corporation (the "FDIC"). The Bank opened for business in 1930 and
has partnered with the community to ensure responsible growth and development
since that time.
In August of 1999, Bay Banks of Virginia formed Bay Trust Company. This
subsidiary of the Company was created to purchase and manage the assets of the
trust department of the Bank of Lancaster. This sale and transfer of assets was
completed as of the close of business on December 31, 1999. As of January 1,
2000, the Bank of Lancaster no longer owns or manages the trust function, and
thereby will no longer receive an income stream from the trust department.
Income generated by the Trust Company will be consolidated with the Bank's
income and the Company's income for the purposes of the Company's consolidated
financial statements. The Trust Company opened for business on January 1, 2000
in its permanent location on Main Street in Kilmarnock, Virginia.
The Trust Company offers a broad range of trust and related fiduciary services.
Among these are testamentary trust, revocable and irrevocable personal, managed
agency, and custodial trusts, as well as discount brokerage services.
The Company's marketplace is situated on the Northern Neck peninsula of
Virginia, and includes the counties of Lancaster, Northumberland, Middlesex,
Richmond, and Westmoreland. Second and summer homes are prevalent as is the
retirement community. Resorts and health care providers are the largest
employers in the community. Agriculture, fishing, boat repair, general retail,
financial, construction, and services are other major economic sectors.
The Company had $225,169,610 in total assets and $200,018,092 in total deposits
as of December 31, 2000. Net earnings for the year ended December 31, 2000,
were $1,612,620. Loan demand was strong as balances increased to $147,677,876.
The loan portfolio is mainly composed of residential first mortgages.
Lending Activities.
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Through the Bank of Lancaster, the Company provides a wide range of real estate,
consumer, and commercial lending services to the customers in its market area.
Real Estate Lending.
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The Bank's real estate loan portfolio is the largest segment of the loan
portfolio. Real estate mortgage loans in aggregate increased to $116,547,606
during 2000. This balance is 78.2% of the total loan portfolio. The Bank offers
fixed and adjustable rate loans on one-to-four family residential properties.
These mortgages are underwritten and documented within the guidelines of the
Regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"). The Bank underwrites mainly adjustable rate mortgages
as the marketplace allows. Construction loans with a twelve-month term are also
a major component of the Bank's portfolio. Underwritten at 80% loan to value,
and to qualified builders and individuals, the loans are disbursed as
construction progresses and is verified by Bank inspection.
The Company also offers secondary market loan origination. Through the Bank,
customers may apply for a home mortgage that will be underwritten in accordance
with the guidelines of the Federal Home Loan Mortgage Corporation. These loans
are then sold in the secondary market. The Bank earns origination fees through
offering this service. Customers, upon approval, receive a fixed or adjustable
rate of interest with terms that vary from 10 through 30 years. Since these
loans are sold into the secondary market, there is no impact on future interest
income or the loan repricing structure of the Bank.
Consumer Lending.
- -----------------
Consumer loans totaled $20,589,724 as of December 31, 2000. This is 13.8% of the
total loan portfolio. In an effort to offer a full range of services, consumer
lending includes automobile and boat financing, home improvement loans, and
unsecured personal loans. These loans historically entail greater risk than
residential real estate loans, but also offer a higher return.
Commercial Lending.
- -------------------
Commercial lending activities include small business loans, asset based loans,
and other secured and unsecured loans and lines of credit. Commercial loan
balances were $11,279,090 at year-end and 7.6% of the total portfolio.
Commercial lending also entails greater risk than residential mortgage lending,
and therefore offers a greater yield. The borrower's ability to make repayment
from cash flows of the business, as well as some form of business collateral is
the basis for establishing such an account.
Business Development.
- ---------------------
The Bank offers several services to commercial customers. These services include
Analysis Checking, Cash Management Deposit Accounts, Wire Services, and a full
line of Commercial Lending options. The Bank also offers Small Business
Administration "Low Document" Loan products. This allows commercial customers to
apply for favorable rate loans for the development of business opportunities.
Bay Services Company, Inc.
- --------------------------
The Bank has one wholly owned subsidiary, Bay Services Company, Inc., a Virginia
corporation organized in 1994. Bay Services owns an equity interest in a land
title insurance agency, Bankers Title of Fredricksburg, which generally sells
title insurance to mortgage loan customers, including customers of the Bank and
the other financial institutions that have an equity interest in the agency.
As of December 31, 2000, the Company and its subsidiaries had 101 full time
equivalent employees.
Competition.
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The Bank's marketplace is highly competitive, and the Bank is subject to
competition from a variety of commercial banks and financial service companies.
For deposits, the Bank competes with statewide banking institutions, local
community banks, major investment brokerage houses and issuers of money markets
and mutual fund products. For loans, the Bank competes with other commercial
banks, savings and loans, credit unions, and consumer finance companies. As the
marketplace continues to develop, the Bank expects competition to increase.
Supervision and Regulation.
- ---------------------------
Bank holding companies and banks are regulated under both federal and state law.
The Company is subject to regulation by the Federal Reserve. Under the Bank
Holding Company Act of 1956, the Federal Reserve exercises supervisory
responsibility for any non-bank acquisition, merger or consolidation. In
addition, the Bank Holding Company Act limits the activities of a bank holding
company and its subsidiaries to that of banking, managing or controlling banks,
or any other activity that is closely related to banking. In addition, the
Company is registered under the bank holding company laws of Virginia, and as
such is subject to regulation and supervision by the State Corporation
Commission Bureau of Financial Institutions.
The following description summarizes the significant state and Federal laws to
which the Company and the Bank are subject. To the extent statutory or
regulatory provisions or proposals are described, the description is qualified
in its entirety by reference to the particular statutory or regulatory
provisions or proposals.
The Bank is supervised and regularly examined by the Federal Reserve Board and
the Virginia State Corporation Commission. These on-site examinations verify
compliance with regulations governing corporate practices, capitalization, and
safety and soundness. Further, the Bank is subject to the requirements of the
Community Reinvestment Act (the "CRA"). The CRA requires financial institutions
to meet the credit needs of the local community, including low to moderate-
income needs. Compliance with the CRA is monitored through regular examination
by the Federal Reserve.
Federal Reserve Board regulations permit bank holding companies to engage in
non-banking activities closely related to banking or to managing or controlling
banks. These activities include the making or servicing of loans, performing
certain data processing services, and certain leasing and insurance agency
activities.
The Company owns 100% of the stock of the Bank of Lancaster. The Bank is
prohibited by The Federal Reserve from holding or purchasing its own shares
except in limited circumstances. Further, the Bank is subject to certain
requirements as imposed by state banking statutes and regulations. The Bank is
limited by the Federal Reserve Board regarding what dividends it can pay the
Company. Any dividend in excess of the total of the Bank's net profit for that
year plus retained earnings from the prior two years must be approved by the
proper regulatory agencies. Further, under the Federal Deposit Insurance
Corporation Improvement Act of 1991 (the "FDICIA"), insured depository
institutions are prohibited from making capital distributions, if, after making
such distributions, the institution would become "undercapitalized" as defined
by regulation. Based upon the Bank's current financial position, it is not
anticipated that this statute will impact the continued operation of the Bank.
As a bank holding company, Bay Banks of Virginia is required to file with the
Federal Reserve Board an annual report and such additional information as it may
require pursuant to the Bank Holding Company Act. The Federal Reserve Board may
also conduct examinations of the Company and any or all of its subsidiaries.
The Gramm-Leach-Bliley Act of 1999.
- -----------------------------------
The Gramm-Leach-Bliley Act of 1999 ("GLBA") was enacted in November 1999 and
most of its provisions became effective in March 2000. The Act covers a broad
range of issues, including a repeal of most of the restrictions on affiliations
among depository institutions, securities firms and insurance companies.
Specifically, GLBA repeals sections 20 and 32 of the Glass-Stegall Act, thus
permitting unrestricted affiliations between banks and securities firms. The Act
also permits bank holding companies to elect to become financial holding
companies. A financial holding company may engage in or acquire companies that
engage in a broad range of financial services, including securities activities
such as underwriting, dealing, brokerage, investment and merchant banking; and
insurance underwriting, sales and brokerage activities. In order to become a
financial holding company, the bank holding company and all of its affiliated
depository institutions must be well-capitalized, well-managed, and have at
least a satisfactory CRA rating. For various reasons, management has determined
that the Company should not elect to be treated as a financial holding company
at this time.
Management does not believe that GLBA will have a material adverse effect on the
operations of the Company and the Bank in the near term. However, to the extent
that it permits banks, securities firms, and insurance companies to affiliate,
the financial services industry may experience further consolidation.
Under GLBA, federal banking regulators are required to adopt rules that will
limit the ability of banks and other financial institutions to disclose
nonpublic information about consumers to nonaffiliated third parties. These
limitations will require disclosure of privacy policies to consumers and, in
some circumstances, will allow consumers to prevent disclosure of certain
personal information to a nonaffiliated third party. Federal banking regulators
issued final rules on May 10, 2000. Pursuant to the rules, financial
institutions must provide: initial notices to customers about their privacy
policies, describing the conditions under which they may disclose nonpublic
personal information to nonaffiliated third parties and affiliates; annual
notices of their privacy policies to current customers; and a reasonable method
for customers to "opt out" of disclosures to nonaffiliated third parties.
The rules were effective November 13, 2000, but compliance is optional until
July 1, 2001. These privacy provisions will affect how consumer information is
transmitted through diversified financial companies and conveyed to outside
vendors. It is not possible at this time to assess the impact of the privacy
provisions on the Bank's financial condition or results of operations.
In December 2000, pursuant to the requirements of GLBA, the federal bank
regulatory agencies adopted consumer protection rules for the sale of insurance
products by depository institutions. The rule is effective on April 1, 2001.
The final rule applies to any depository institution or any person selling,
soliciting, advertising, or offering insurance products or annuities to a
consumer at an office of the institution or on behalf of the institution. The
regulation requires oral and written disclosure before the completion of the
sale of an insurance product or annuity that such product: is not a deposit or
other obligation of, or guaranteed by, the depository institution or its
affiliate; is not insured by the FDIC or any other agency of the United States,
the depository institution or its affiliates; and has certain risks of
investment, including the possible loss of value.
The depository institution may not condition an extension of credit on the
consumer's purchase of an insurance product or annuity from the depository
institution or from any of its affiliates, or on the consumer's agreement not to
obtain, or a prohibition on the consumer from obtaining, an insurance product or
annuity from an unaffiliated entity. Furthermore, to the extent practicable, a
depository institution must keep insurance and annuity sales activities
physically segregated from the areas where retail deposits are routinely
accepted from the general public. Finally, the rule addresses cross marketing
and referral fees.
In January 2000, the banking agencies adopted guidelines requiring financial
institutions to establish an information security program to: identify and
assess the risks that may threaten customer information; develop a written plan
containing policies and procedures to manage and control these risks; implement
and test the plan; and adjust the plan on a continuing basis to account for
changes in technology, the sensitivity of customer information and internal or
external threats to information security.
Each institution may implement a security program appropriate to its size and
complexity and the nature and scope of its operations. The guidelines are
effective July 1, 2001.
Deposit Insurance.
- ------------------
Pursuant to FDICIA, the FDIC adopted a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The risk-
based system assigns an institution to one of three capital categories:
(i) well-capitalized, (ii) adequately capitalized, or (iii) undercapitalized.
The FDIC also assigns an institution to one of three supervisory subgroups
within each capital group. The supervisory subgroup to which an institution is
assigned is based on an evaluation provided to the FDIC by the institution's
primary federal regulator and information which the FDIC determines to be
relevant to the institution's financial condition and the risk posed to the
deposit insurance funds (which may include, if applicable, information provided
by the institution's state supervisor). An institution's insurance assessment
rate is then determined based on the capital category and supervisory category
to which it is assigned.
Under the final risk-based assessment system there are nine assessment risk
classifications (i.e., combinations of capital groups and supervisory subgroups)
to which different assessment rates are applied. Assessment rates for deposit
insurance currently range from zero basis points to 27 basis points. The
capital and supervisory subgroup to which an institution is assigned by the FDIC
is confidential and may not be disclosed. A bank's rate of deposit insurance
assessments will depend upon the category and subcategory to which the bank is
assigned by the FDIC. Any increase in insurance assessments could have an
adverse effect on the earnings of insured institutions, including the Bank.
Safety and Soundness Standards.
- -------------------------------
The FDIC has adopted guidelines that establish standards for safety and
soundness of banks. They are designed to identify potential safety and soundness
problems and ensure that banks address those concerns before they pose a risk to
the deposit insurance fund. If the FDIC determines that an institution fails to
meet any of these standards, the agency can require the institution to prepare
and submit a plan to come into compliance. If the agency determines that the
plan is unacceptable or is not implemented, the agency must, by order, require
the institution to correct the deficiency.
The FDIC also has safety and soundness regulations and accompanying guidelines
on asset quality and earnings standards. The guidelines provide six standards
for establishing and maintaining a system to identify problem assets and prevent
those assets from deteriorating. The guidelines also provide standards for
evaluating and monitoring earnings and for ensuring that earnings are sufficient
to maintain adequate capital and reserves. If an institution fails to comply
with a safety and soundness standard, the agency may require the institution to
submit and implement an acceptable compliance plan, or face enforcement action.
Forward-looking statements.
- ---------------------------
This report contains certain forward-looking statements with respect to the
financial condition, results of operations, plans, objectives and business of
the Company and the Bank. These forward-looking statements involve certain risks
and uncertainties. Factors that may cause actual results to differ materially
from those contemplated by such forward-looking statements include, among
others, the following possibilities: (a) competitive pressure in the financial
services industry increases significantly; (b) changes in the interest rate
environment that reduce margins; (c) general economic conditions, either
nationally or regionally, are less favorable than expected, resulting in, among
other things, a deterioration in credit quality; (d) changes occur in the
financial services regulatory environment; and (e) changes occur in the
securities markets.
Index of Statistical Tables:
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Table Description
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Table I Average Balances, Income & Expense, Yields, and Rates
Table II Volume & Rate Analysis of Changes in Net Interest Income
Table III Types of Investments
Table IV Investment Maturities & Average Yields
Table V Types of Loans
Table VI Loan Maturity Schedule of Selected Loans
Table VII Risk Elements
Table VIII Summary of Allowance for Loan Losses
Table IX Allocation of the Allowance for Loan Losses
Table X Average Deposits & Rates
Table XI Maturity Schedule of Time Deposits of $100,000 or more
Table XII Return on Equity & Assets
Table XIII Interest Rate Sensitivity Analysis
Table I
Average Balances, Income & Expense, Yields, and Rates
2000 1999 1998
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Annual Annual Annual
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(Thousands) Balance Expense Rate Balance Expense Rate Balance Expense Rate
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments (Book Value):
Taxable Investments $ 42,060 $ 2,577 6.13% $ 43,962 $ 2,746 6.25% $ 35,265 $ 2,131 6.04%
Tax-Exempt Investments (1) $ 12,935 $ 624 7.30% $ 18,210 $ 843 7.01% $ 22,421 $ 1,045 7.06%
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Total Investments $ 54,995 $ 3,201 6.40% $ 62,172 $ 3,589 6.47% $ 57,686 $ 3,176 6.44%
Loans (2) $141,858 $12,148 8.56% $120,004 $10,153 8.46% $108,221 $ 9,591 8.86%
Interest-bearing Deposits $ 310 $ 12 3.98% $ 8 $ 0 0.00% $0 $ 0 0.00%
Fed Funds Sold $ 1,646 $ 146 6.46% $ 3,955 $ 194 4.91% $ 14,608 $ 796 5.45%
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Total Interest Earning Assets $198,809 $15,507 7.94% $186,139 $13,936 7.72% $180,515 $13,563 7.81%
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LIABILITIES:
Interest-bearing Deposits:
Savings Deposits $ 59,200 $ 2,850 4.81% $ 68,334 $ 2,880 4.22% $ 67,981 $ 3,102 4.56%
NOW Deposits $ 26,553 $ 776 2.92% $ 26,188 $ 743 2.84% $ 21,485 $ 663 3.08%
CD's >= $100,000 $ 15,849 $ 983 6.20% $ 11,169 $ 549 4.92% $ 11,698 $ 616 5.27%
CD's less than $100,000 $ 48,930 $ 2,741 5.60% $ 39,422 $ 1,921 4.87% $ 42,319 $ 2,321 5.48%
Money Market Deposit Accounts $ 10,978 $ 391 3.56% $ 10,864 $ 336 3.09% $ 11,205 $ 352 3.15%
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Total Interest-bearing Deposits $161,510 $ 7,741 4.79% $155,977 $ 6,429 4.12% $154,688 $ 7,054 4.56%
Fed Funds Purchased $ 540 $ 63 6.66% $ 522 $ 55 5.48% $ 0 $ 0 0.00%
Securities Sold to Repurchase $ 2,468 $ 122 4.94% $ 1,181 $ 48 4.09% $ 293 $ 11 3.82%
Other Short Term Borrowings $ 5,493 $ 377 6.87% $ 0 $ 0 0.00% $ 0 $ 0
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Total Interest-Bearing Liabilities $170,011 $ 8,303 4.88% $157,680 $ 6,532 4.14% $154,981 $ 7,065 4.56%
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Net Interest Income/Yield $ 7,204 3.79% $ 7,404 4.21% $6,498 3.90%
===================================================================================================================================
Net Interest Rate Spread 3.06% 3.58% 3.25%
Notes:
- ------
(1)-Yield assumes a marginal federal tax rate of 34%
(2)-Includes deferred fees, Visa Program & nonaccrual loans.
Table II
Volume & Rate Analysis of Changes in Net Interest Income
2000 vs. 1999 1999 vs. 1998
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Change Change Change Change
due to due to Total due to due to Total
(Thousands) Volume Rate Change Volume Rate Change
- -----------------------------------------------------------------------------------------------------
Investments:
Taxable Investments (118) (51) (169) 542 73 615
Tax-Exempt Investments (256) 37 (219) (195) (7) (202)
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Total Investments (374) (14) (388) 347 66 413
Loans 1870 125 1995 963 (401) 562
Interest-bearing Deposits 0 12 12 0 0 0
Fed Funds Sold (182) 134 (48) (530) (72) (602)
=====================================================================================================
Total Interest Earning Assets 1314 257 1571 780 (407) 373
Interest-bearing Deposits:
Savings Deposits 501 (531) (30) 16 (238) (222)
NOW Deposits 10 23 33 126 (46) 80
CD's >= $100,000 268 166 434 (27) (40) (67)
CD's less than $100,000 506 314 820 (152) (248) (400)
Money Market Deposit Accounts 4 51 55 (10) (6) (16)
- -----------------------------------------------------------------------------------------------------
Total Interest-bearing Deposits 1289 23 1312 (47) (578) (625)
Fed Funds Purchased (3) 11 8 55 0 55
Securities Sold to Repurchase 62 12 74 36 1 37
Other Short Term Borrowings 377 0 377
=====================================================================================================
Total Interest-Bearing Liabilities 1725 46 1771 44 (577) (533)
Change in Net Interest Income (411) 211 (200) 736 170 906
Notes:
Changes due to a combination of volume and rates are allocated proportionately
to 'Due to Volume' and 'Due to Rates'.
Table III
Types of Investments
(Book Values in Thousands) 12/31/00 12/31/99 12/31/98
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U.S. Treasury Securities $ 500 $ 1,538 $ 4,542
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U.S. Government Agencies $ 9,632 $ 9,641 $17,124
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State and Municipal Governments $20,926 $21,652 $24,830
- --------------------------------------------------------------------------
Other Securities $21,918 $22,504 $11,563
==========================================================================
Total $52,976 $55,335 $58,059
Table IV
Investment Maturities & Average Yields
as of 12/31/2000
One Year or
Less or No One to Five Five to Ten Over Ten
(Thousands) Maturity Years Years Years Total
- ---------------------------------------------------------------------------------------------------------------
U.S. Treasury & Agency Securities
Book Value $2,490 $ 6,146 $ 1,496 $ 0 $10,132
Market Value $2,486 $ 6,107 $ 1,486 $ 0 $10,079
Weighted average yield 5.92% 5.93% 6.17% 0.00% 5.96%
- ---------------------------------------------------------------------------------------------------------------
States & Political Subdivisions Securities
Book Value $1,017 $ 8,717 $10,742 $ 450 $20,926
Market Value $1,021 $ 8,690 $10,753 $ 449 $20,913
Weighted average yield 7.41% 6.23% 6.71% 6.70% 6.55%
- ---------------------------------------------------------------------------------------------------------------
Other Securities:
Book Value $1,532 $11,107 $ 8,194 $1,085 $21,918
Market Value $1,525 $11,033 $ 7,948 $1,085 $21,591
Weighted average yield 5.93% 6.11% 6.30% 7.00% 6.21%
- ---------------------------------------------------------------------------------------------------------------
Total Securities:
Book Value $5,039 $25,970 $20,432 $1,535 $52,976
Market Value $5,032 $25,830 $20,187 $1,534 $52,583
Weighted average yield 6.22% 6.11% 6.51% 6.91% 6.30%
- ---------------------------------------------------------------------------------------------------------------
Notes:
Yields on tax-exempt securities have been computed on a tax-equivalent basis.
Average yields on securities held for sale are based on amortized cost.
Table V
Types of Loans
(Thousands) 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96
- --------------------------------------------------------------------------------------------------------------
Commercial $ 11,279 $ 11,081 $ 11,679 $ 9,649 $ 10,744
- --------------------------------------------------------------------------------------------------------------
Real Estate - Construction $ 4,591 $ 5,438 $ 1,130 $ 2,385 $ 1,859
- --------------------------------------------------------------------------------------------------------------
Real Estate - Mortgage $111,956 $ 95,912 $ 82,739 $ 76,541 $ 73,147
- --------------------------------------------------------------------------------------------------------------
Installment and Other (includes Visa program) $ 20,590 $ 18,673 $ 18,697 $ 16,222 $ 15,769
==============================================================================================================
Total $148,416 $131,104 $114,245 $104,797 $101,519
Notes:
Deferred loan costs & fees not included.
Allowance for loan losses not included.
Table VI
Loan Maturity Schedule of Selected Loans
as of December 31, 2000
One Year or Less One to Five Years Over Five Years
-------------------------------------------------------------------
Fixed Variable Fixed Variable Fixed Variable
(Thousands) Rate Rate Rate Rate Rate Rate
- -----------------------------------------------------------------------------------------------------------------------
Commercial $2,375 $ 7,362 $ 1,302 $ 0 $ 240 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Real Estate - Construction $ 0 $ 0 $ 0 $ 0 $ 4,591 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Real Estate - Mortgage $1,212 $19,544 $10,411 $38,518 $42,244 $27
- -----------------------------------------------------------------------------------------------------------------------
Installment and Other (includes Visa program) $1,499 $ 9,657 $ 7,580 $ 0 $ 1,854 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Totals $5,086 $36,563 $19,293 $38,518 $48,929 $27
- -----------------------------------------------------------------------------------------------------------------------
Notes:
Loans with immediate repricing are shown in the 'One Year or Less' category.
Variable rate loans are categorized based on their next repricing date.
Table VII
Risk Elements
(Thousands) 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96
- -------------------------------------------------------------------------------------------------------------------
Non-accrual Loans $ 25 $ 0 $ 79 $ 126 $ 17
- -------------------------------------------------------------------------------------------------------------------
Restructured Loans $ 0 $ 0 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------------
Foreclosed Properties $805 $925 $1,494 $1,379 $629
===================================================================================================================
Total Non-performing Assets $830 $925 $1,573 $1,505 $646
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Loans past due 90+ days as to principal or
interest payments & accruing interest $758 $793 $ 232 $ 594 $607
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
For non-accrual & restructured loans,
Gross interest income which would have been recorded
under original loan terms for the year ended $ 2 $ 2 $ 4 $ 17 $ 1
- --------------------------------------------------------------------------------------------------------------------
For non-accrual & restructured loans, Gross
interest income recorded for the year ended $ 2 $ 2 $ 4 $ 17 $ 1
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Potential problem loans as of year end not
reported above: $123 $213 $ 236 $ 74 $106
- -------------------------------------------------------------------------------------------------------------------
Notes:
Loans receivable that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at their outstanding
unpaid principal balances reduced by any charge-offs or specific valuation
accounts and net of any unearned discount and fees and costs on originating
loans.
Loan origination fees and certain direct origination costs for real estate
mortgage loans are capitalized and recognized as an adjustment of the yield of
the related loans.
The accrual of interest on impaired loans is discontinued when, in management's
opinion, the borrower may be unable to meet payments as they become due. When
interest accrual is discontinued, all unpaid accrued interest is reversed.
Interest income is subsequently recognized only to the extent cash payments are
received.
The allowance for loan losses is increased by charges to income and decreased by
charge-offs (net of recoveries). Management's periodic evaluation of the
adequacy of the allowance is based on past loan loss experience, known and
inherent risks in the portfolio, adverse situations that may affect the
borrower's ability to repay, the estimated value of any underlying collateral,
and current economic conditions.
Table VIII
Summary of Allowance for Loan Losses
(Dollars in Thousands)
For the year ended 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96
=================================================================================================================
Balance, beginning of period $ 1,198 $ 1,012 $ 861 $ 1,020 $ 925
Loans charged off:
--------------------------------------------------------------
Commercial ($27) $ 0 ($20) ($15) ($5)
--------------------------------------------------------------
Real estate - construction $ 0 $ 0 $ 0 $ 0 $ 0
--------------------------------------------------------------
Real estate - mortgage ($50) ($59) ($30) ($228) ($200)
--------------------------------------------------------------
Installment & Other (including Visa program) ($17) ($105) ($27) ($125) ($28)
--------------------------------------------------------------
Total loans charged off ($94) ($164) ($77) ($368) ($233)
--------------------------------------------------------------
Recoveries of loans previously charged off:
--------------------------------------------------------------
Commercial $ 0 $ 0 $ 6 $ 0 $ 8
--------------------------------------------------------------
Real estate - construction $ 0 $ 0 $ 0 $ 0 $ 0
--------------------------------------------------------------
Real estate - mortgage $ 7 $ 0 $ 1 $ 0 $ 0
--------------------------------------------------------------
Installment & Other (including Visa program) $ 9 $ 15 $ 13 $ 6 $ 15
--------------------------------------------------------------
Total recoveries $ 16 $ 15 $ 20 $ 6 $ 23
--------------------------------------------------------------
Net charge offs ($78) ($149) ($57) ($362) ($210)
Provision for loan losses $ 250 $ 335 $ 208 $ 203 $ 305
==============================================================
Balance, end of period $ 1,370 $ 1,198 $ 1,012 $ 861 $ 1,020
Average loans outstanding during the period $141,858 $120,004 $108,221 $103,398 $97,935
Ratio of net charge-offs during the period to
average loans outstanding during the period 0.06% 0.12% 0.05% 0.35% 0.21%
See Note 1 to Financial Statements, Loans receivable paragraph, for a
description of the factors which influenced management's determination of the
provision charged to operating expense.
Table IX
Allocation of the Allowance for Loan Losses
(Dollars in Thousands)
12/31/00 12/31/99 12/31/98 12/31/97 12/31/96
----------------------------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
===================================================================================================================================
Commercial $ 70 5.1% $ 62 5.2% $ 90 8.9% $ 84 9.8% $ 137 13.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Real estate - construction $ 22 1.6% $ 23 1.9% $ 5 0.5% $ 9 1.0% $ 6 0.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Real estate - mortgage $1,037 75.7% $ 920 76.8% $ 758 74.9% $660 76.6% $ 808 79.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Installment & Other
(including Visa program) $ 241 17.6% $ 193 16.1% $ 159 15.7% $108 12.6% $ 69 6.8%
===================================================================================================================================
Total $1,370 100.0% $1,198 100.0% $1,012 100.0% $861 100.0% $1,020 100.0%
----------------------------------------------------------------------------------------------------
Table X
Average Deposits & Rates
2000 1999 1998
-----------------------------------------------------------------
Average Yield/ Average Yield/ Average Yield/
(Dollars in Thousands) Balance Rate Balance Rate Balance Rate
- ---------------------------------------------------------------------------------------------------------
Non-interest bearing Demand Deposits $ 22,281 0.00% $ 20,117 0.00% $ 18,680 0.00%
- ---------------------------------------------------------------------------------------------------------
Interest bearing Deposits:
- ---------------------------------------------------------------------------------------------------------
NOW Accounts $ 26,553 2.92% $ 26,188 2.84% $ 21,485 3.08%
- ---------------------------------------------------------------------------------------------------------
Regular Savings $ 59,200 4.81% $ 68,334 4.22% $ 67,981 4.56%
- ---------------------------------------------------------------------------------------------------------
Money Market Deposit Accounts $ 10,978 3.56% $ 10,864 3.09% $ 11,205 3.15%
- ---------------------------------------------------------------------------------------------------------
Time Deposits:
- ---------------------------------------------------------------------------------------------------------
CD's $100,000 or more $ 15,849 6.20% $ 11,169 4.92% $ 11,698 5.27%
- ---------------------------------------------------------------------------------------------------------
CD's less than $100,000 $ 48,930 5.60% $ 39,422 4.87% $ 42,319 5.48%
- ---------------------------------------------------------------------------------------------------------
Total Interest bearing Deposits $161,510 4.79% $155,977 4.14% $154,688 4.56%
- ---------------------------------------------------------------------------------------------------------
Total Average Deposits $183,791 4.21% $176,094 3.65% $173,368 4.07%
- ---------------------------------------------------------------------------------------------------------
Table XI
Maturity Schedule of Time Deposits of $100,000 or more
(Thousands) 12/31/00 12/31/99 12/31/98
==============================================================================
3 months or less $ 8,793 $ 4,155 $ 2,280
- ------------------------------------------------------------------------------
3-6 months $ 3,456 $ 6,296 $ 5,338
- ------------------------------------------------------------------------------
6-12 months $ 4,195 $ 1,853 $ 2,775
- ------------------------------------------------------------------------------
Over 12 months $ 2,455 $ 2,199 $ 2,159
==============================================================================
Totals $18,899 $14,503 $12,552
Table XII
Return on Equity & Assets
2000 1999 1998
=============================================
Net Income $ 1,612,620 $ 2,175,378 $ 1,930,900
Average Total Assets $212,916,000 $198,668,000 $196,805,000
- ------------------------------------------------------------------------------
Return on Assets 0.8% 1.1% 1.0%
- ------------------------------------------------------------------------------
Average Equity $ 20,115,000 $ 20,024,000 $ 19,658,000
- ------------------------------------------------------------------------------
Return on Equity 8.0% 10.9% 9.8%
- ------------------------------------------------------------------------------
Dividends declared per share $ 0.86 $ 0.78 $ 0.70
Average Shares Outstanding 1,159,349 1,167,467 1,156,634
Average Diluted Shares Outstanding 1,181,202 1,187,295 1,176,462
Net Income per Share $ 1.39 $ 1.86 $ 1.67
Net Income per Diluted Share $ 1.37 $ 1.83 $ 1.64
- ------------------------------------------------------------------------------
Dividend Payout Ratio 61.8% 41.8% 41.9%
- ------------------------------------------------------------------------------
Equity to Assets Ratio 9.4% 10.1% 10.0%
- ------------------------------------------------------------------------------
Table XIII
Interest Rate Sensitivity Analysis
as of 12/31/2000
Within 3 Over 5
(Thousands) months 3-12 Months 1-5 Years Years Total
------------------------------------------------------------------
Interest-Bearing Due From Banks 100 0 0 0 100
Fed Funds Sold 4,757 0 0 0 4,757
Investments (Market Value) 1,814 3,218 25,830 21,721 52,583
Loans 18,019 21,874 63,924 45,231 149,048
=============================================================================================================
Total Earning Assets 24,690 25,092 89,754 66,952 206,488
NOW Accounts 9,311 0 19,785 0 29,096
MMDA's 4,681 0 7,637 0 12,318
Savings 36,621 0 22,446 0 59,067
CD's less than $100,000 22,434 25,476 9,046 24 56,980
CD's >= $100,000 8,693 7,651 2,555 0 18,899
- -------------------------------------------------------------------------------------------------------------
Total Interest Bearing Deposits 81,740 33,127 61,469 24 176,360
Fed Funds Purchased 0 0 0 0 0
Securities Sold to Repurchase 2,805 0 0 0 2,805
=============================================================================================================
Total Interest Bearing Liabilities 84,545 33,127 61,469 24 179,165
Rate Sensitive Gap (59,855) (8,036) 28,285 66,928 27,322
Cumulative Gap (59,855) (67,891) (39,606) 27,322
Note: Visa Receivables are classified as 'Within 3 Month' Loans.
ITEM 2: PROPERTIES
The Company owns no property, however, its subsidiary, the Bank of Lancaster,
owns the following properties free of any encumbrances:
Main Office Northside Branch White Stone Branch
The Bank of Lancaster Lancaster Square Center Route 3
100 South Main Street Kilmarnock, Virginia White Stone, Virginia
Kilmarnock, Virginia
Operations Center Montross Branch Warsaw Branch
West Church Street Route 3, Kings Highway West Richmond Road
Kilmarnock, Virginia Montross, Virginia Warsaw, Virginia
Heathsville Branch Callao Branch Bay Trust Company
Route 360 Route 360 and 202 Main Street
Heathsville, Virginia Callao, Virginia Kilmarnock, Virginia
Through the normal course of business, the Bank maintains an inventory of
foreclosed properties known as Other Real Estate Owned, or OREO. This inventory
is held at fair value, therefore the Bank expects no losses on these properties.
Balances in OREO as of December 31, 2000 were $804,507. Further information
regarding Other Real Estate Owned can be found in Notes 1 and 3 of the 2000
Annual Report to Shareholders and is hereby incorporated by reference.
Further information regarding property of the Company is incorporated herein by
reference to Note 4 of the Company's 2000 Annual Report to Shareholders,
portions of which are included in Exhibit 13.0 of this report.
ITEM 3: LEGAL PROCEEDINGS
The Company is currently not involved in any material legal proceeding other
than the ordinary & routine litigation incidental to its business.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the quarter
ended December 31, 2000.
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company currently has only one classification of common equity outstanding,
that being common stock. No established public trading market currently exists
for the Company's common stock. No brokerage firm regularly makes a market for
the stock, and trades in the Company's stock occur infrequently on a local
basis. Accordingly, the quotations set forth below do not necessarily reflect
the price that would be paid in an active and liquid market. The Company from
time to time, on an informal basis, attempts to match or pair persons who desire
to buy and sell the Company's stock. As of December 31, 2000, there were 729
stockholders of record, 518 of which participate in the Company's Dividend
Reinvestment Plan. During 2000, the Company issued shares for the Dividend
Reinvestment Plan at 100% of market value at the date of acquisition.
A limited number transfers have occurred since year-end in which the price per
share was in the range of $35.00 to $35.50. Further market information is as
follows:
Common
Equity
Market Data
Sales Sales
Price Price
- ---------------------------------------------------------------------------------------
2000 High Low Dividend 1999 High Low Dividend
=======================================================================================
Qtr1 $35.75 $30.00 $0.21 Qtr1 $33.50 $32.50 $0.19
Qtr2 36.00 30.00 0.21 Qtr2 36.00 33.00 0.19
Qtr3 38.00 33.00 0.21 Qtr3 36.00 33.00 0.19
Qtr4 35.75 34.50 0.23 Qtr4 38.00 33.00 0.21
At December 31, 2000, there were 1,161,968 shares of common stock outstanding
held by 729 holders of record.
For further information regarding the Company's common equity, refer to Note 9,
10, and 11 of the Annual Report to Shareholders, portions of which are
incorporated as Exhibit 13.0 of this report.
ITEM 6: SELECTED FINANCIAL DATA
Selected Financial Data
Years Ended December 31, 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
FINANCIAL CONDITION
Total Assets $ 225,170 $ 199,773 200,271 169,006 159,333
Total Loans, net of allowance 147,678 130,432 113,643 104,203 100,711
Total Deposits 200,018 177,702 178,269 149,605 142,110
Stockholders' Equity
before FAS 115 21,546 21,135 19,882 18,421 16,833
after FAS 115 21,287 19,706 20,508 18,692 16,785
Average Assets 212,916 198,668 196,805 161,831 156,834
Average Loans, net of allowance 140,596 118,861 107,263 102,662 94,681
Average Deposits 183,791 176,094 173,368 144,257 140,755
Average Equity, after FAS 115 20,115 20,024 19,658 16,844 15,771
RESULTS OF OPERATIONS
Interest Income $ 15,356 $ 13,937 13,564 12,222 11,628
Interest Expense 8,303 6,533 7,065 6,225 6,105
Net Interest Income 7,053 7,404 6,499 5,997 5,523
Provision for Loan Losses 250 335 208 203 305
Net Interest Income after Provision 6,803 7,069 6,290 5,794 5,218
Gain/(Loss) on Sales of Investments 54 35 205 3 54
Noninterest Income net of Securities Gains 1,718 1,542 1,481 1,186 1,086
Noninterest Expense 6,388 5,712 5,488 4,375 3,985
Income before Taxes 2,187 2,933 2,488 2,608 2,374
Income Taxes 574 758 557 648 542
Net Income 1,613 2,175 1,931 1,960 1,832
RATIOS
Total Capital to Risk Weighted Assets 13.6% 15.5% 15.9% 17.1% 18.9%
Tier 1 Capital to Risk Weighted Assets 12.7% 14.6% 15.1% 16.7% 17.8%
Leverage Ratio 8.3% 9.7% 9.0% 10.7% 10.7%
Return on Average Assets 0.8% 1.1% 1.0% 1.2% 1.2%
Return on Average Equity 8.0% 10.9% 9.8% 10.5% 11.6%
Loan Loss Reserve to Loans 0.9% 0.9% 0.9% 0.8% 1.1%
Dividends paid as a percent of Net Income 61.8% 41.8% 41.9% 36.9% 35.1%
Average Equity as a percent of Average Assets 9.4% 10.1% 10.0% 10.4% 10.1%
Average shares outstanding 1,159,349 1,167,467 1,156,634 1,146,438 1,116,396
Average Diluted shares outstanding 1,181,202 1,187,295 1,176,462 1,162,677 1,127,482
PER SHARE DATA
Basic Earnings per share (EPS) $ 1.39 $ 1.86 1.67 1.71 1.64
Diluted Earnings per share (EPS) 1.37 1.83 1.64 1.69 1.62
Cash Dividends per share 0.86 0.78 0.70 0.63 0.58
Book Value per share
before FAS 115 18.54 18.14 17.07 16.01 14.86
after FAS 115 18.32 16.91 17.61 16.24 14.81
GROWTH RATES
Year end Assets 12.7% -0.2% 18.5% 6.1% 2.0%
Year end Loans 13.2% 14.8% 9.1% 3.5% 8.0%
Year end Deposits 12.6% -0.3% 19.2% 5.3% 1.3%
Year end Equity
before FAS 115 1.9% 6.3% 7.9% 9.4% 10.4%
after FAS 115 8.0% -3.9% 9.7% 11.4% 8.5%
Average Assets 7.2% 0.9% 21.6% 3.2% 3.9%
Average Loans, net of allowance 18.3% 10.8% 4.5% 8.4% 5.1%
Average Deposits 4.4% 1.6% 20.2% 2.5% 3.2%
Average Equity 0.5% 1.9% 16.7% 6.8% 10.7%
Net Income -25.9% 12.7% -1.5% 7.0% 20.2%
Cash Dividends declared 10.2% 11.4% 11.1% 8.6% 9.4%
Book Value
before FAS 115 2.2% 6.3% 6.6% 7.7% 7.9%
after FAS 115 8.3% -4.0% 8.4% 9.7% 6.1%
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations is incorporated herein by reference to the 2000 Annual Report to
Shareholders, portions of which are included as Exhibit 13.0 of this report.
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements of the Company are incorporated herein by reference to the
2000 Annual Report to Shareholders, portions of which are included as Exhibit
13.0 of this report. Certain other financial information is provided in the
following tables.
Bay Banks of Virginia, Inc.
Parent Only Balance Sheets
Dec 31, 2000 Dec 31, 1999
------------ ------------
ASSETS
Cash and due from banks 194,573 2,113,231
Due from Subsidiaries 569,844 -
Federal funds sold - -
Investments (incl unreal G/L) - -
Loans - -
Allowance for loan losses - -
Premises and equipment 183,446 -
Other real estate owned - -
Other assets 316,542 -
Investment In Subsidiary Bank of Lancaster 18,363,686 17,322,106
Investment in Subsidiary Bay Trust Company 1,904,755 238,479
Investment In Subsidiary Chesapeake Holdings 701 701
Organizational Expenses 23,457 32,254
Total assets 21,557,004 19,706,771
LIABILITIES
Total deposits - -
Fed Funds Purchased - -
Other liabilities 317,254 432
Total liabilities 317,254 432
SHAREHOLDERS' EQUITY
Common stock - $5 par value; Authorized - 5,000,000 shares
Outstanding - 1,158,562 and 1,165,323 5,809,841 5,826,617
Additional paid-in capital 12,484,650 12,332,403
Retained Earnings 3,204,770 2,976,243
Accumulated other comprehensive income/(loss) (259,512) (1,428,924)
Total shareholders' equity 21,239,749 19,706,339
Total liabilities and shareholders' equity 21,557,004 19,706,771
Bay Banks of Virginia, Inc.
Parent Only Statements of Earnings
2000 1999 1998
---- ---- ----
INTEREST INCOME
Loans receivable (incl fees) - - -
Securities - - -
Federal funds sold - - -
Total interest income - - -
INTEREST EXPENSE
Deposits - - -
Total interest expense - - -
NET INTEREST INCOME - - -
Provision for loan losses - - -
Net interest income after provision - - -
NONINTEREST INCOME
Income from fiduciary activities - - -
Other service charges and fees - - -
Net securities gains - - -
Other income 43,087 - -
Dividend Income from Subsidiary 975,000 850,000 1,352,000
Undistributed Earnings of Bank of Lancaster 632,168 1,377,522 607,601
Undistributed Earnings of Bay Trust 6,276 (1,521) -
Undistributed Earnings of Chesapeake Hldgs - (19,686) (16,773)
Total noninterest income 1,656,531 2,206,315 1,942,828
NONINTEREST EXPENSES
Salaries and employee benefits - - -
Occupancy expense - - -
Deposit insurance premium - - -
Other expense 91,432 30,937 11,928
Total noninterest expenses 91,432 30,937 11,928
Income before income taxes 1,565,098 2,175,378 1,930,900
Income tax expense - - -
NET INCOME 1,565,098 2,175,378 1,930,900
Bay Banks of Virginia, Inc.
Parent Only Statements of Cash Flows
- --------------------------------------------------------------------------------------------------------------
For the year ended December 31, 2000 1999 1998
==============================================================================================================
(Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income 1,565 2,175 1,931
Adjustments to reconcile Net Income to Net Cash Provided by Operating Activities:
Equity in undistributed (earnings) losses of subsidiaries (637) (1,356) (591)
(Increase) / Decrease in other assets (1,061) 1,421 (170)
Increase / (Decrease) in other liabilities 317 - 23
Other - - -
Net Cash Provided (used) by Operating Activities 184 2,240 1,193
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investments in and advances to subsidiaries (900) (240) (20)
Sale or repayment of investments in and advances to subsidiaries - - -
Other - - -
Net Cash Provided (used) by Investing Activities (900) (240) (20)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances from subsidiaries - 17 -
Repayment of advances from subsidiaries - (23) -
Proceeds from issuance of common stock 397 390 434
Payments to repurchase common stock (262) (181) -
Dividends paid (997) (910) (810)
Other (340) (1,651) 531
Net Cash Provided (used) by Financing Activities (1,202) (2,358) 155
Net increase (decrease) in Cash & Cash Equivalents (1,918) (358) 1,328
Cash & Cash Equivalents at beginning of period 2,113 2,471 1,143
Cash & Cash Equivalents at end of period 195 2,113 2,471
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements between the Company and its independent
auditors in the last two fiscal years.
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
All required information on the executive officers and directors of the Company
is detailed in the Company's 2001 definitive proxy statement for the annual
meeting of shareholders ("Definitive Proxy Statement"), which is expected to be
filed with the SEC within the required time period, and is incorporated herein
by reference.
ITEM 11: EXECUTIVE COMPENSATION
Information on executive compensation is provided in the Definitive Proxy
Statement and is incorporated herein by reference.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information on security ownership of certain beneficial owners and management is
provided in the Definitive Proxy Statement, and is incorporated herein by
reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information on certain relationships and related transactions are detailed in
the Definitive Proxy Statement and icincorporated herein by reference.
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)1. Financial Statements included in Exhibit 13.0, 2000 Annual Report to
Shareholders:
Consolidated Balance Sheets - December 31, 2000 and 1999
Consolidated Statements of Income - Years ended 2000, 1999, and 1998
Consolidated Statements of Changes in Shareholders' Equity
- Years ended December 31, 2000, 1999, and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 2000,
1999, and 1998
(a)2. Financial Statement Schedules:
Schedule Location
-------- --------
Table I - Average Balances, Income & Expense, Yields, and Rates...... Part I, Item 1
Table II - Volume & Rate Analysis of Changes in Net Interest Income.. Part I, Item 1
Table III - Types of Investments..................................... Part I, Item 1
Table IV - Investment Maturities & Average Yields.................... Part I, Item 1
Table V - Types of Loans............................................. Part I, Item 1
Table VI - Loan Maturity Schedule of Selected Loans.................. Part I, Item 1
Table VII - Risk Elements............................................ Part I, Item 1
Table VIII - Summary of Allowance for Loan Losses.................... Part I, Item 1
Table IX - Allocation of the Allowance for Loan Losses............... Part I, Item 1
Table X - Average Deposits & Rates................................... Part I, Item 1
Table XI - Maturity Schedule of Time Deposits of $100,000 or more.... Part I, Item 1
Table XII - Return on Equity & Assets................................ Part I, Item 1
Table XIII - Interest Rate Sensitivity Analysis...................... Part I, Item 1
Common Equity Market Data............................................ Part II, Item 5
Selected Financial Data.............................................. Part II, Item 6
Parent Only Balance Sheets........................................... Part II, Item 8
Parent Only Statements of Earnings................................... Part II, Item 8
Parent Only Statements of Cash Flows................................. Part II, Item 8
Non-Director Executive Officers...................................... Part III, Item 10
(a)3. Exhibits:
No. Description
--- -----------
3.0 Articles of Incorporation and Bylaws of Bay Banks of Virginia,
Inc. (Incorporated by reference to Appendix I to Exhibit A of
previously filed Form 424B3, Commission File number 333-2259
dated March 23, 1997.)
10.1 Incentive Stock option plan (Incorporated by reference to the
previously filed Form S-4EF, Commission File number 333-22579
dated February 28,1997.)
10.2 1998 Non-Employee Directors Stock Option Plan (incorporated by
reference to the previously filed Annual Report on Form 10-K for
the year ended December 31, 1999).
11.0 Statement re: Computation of per share earnings. (Incorporated
by reference to Note 1 of the 2000 Annual Report to
Shareholders.)
13.0 Portions of the 2000 Annual Report to Shareholders for the year
ended December 31, 2000.
21.0 Subsidiaries of the Company (Incorporated by reference to Note 1
in the 2000 Annual Report to Shareholders.)
23.0 Consent of Auditors is filed herewith.
(b) Reports filed on Form 8K.
There were no filings on Form 8K during the fourth quarter of 2000.
Item 5. Other Events
None to report.
SIGNATURES
In accordance with the requirements of Section 13 (or 15d) of the Exchange Act,
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized on the 30th day of March 2001.
Bay Banks of Virginia, Inc.
/s/ Austin L. Roberts, III
-----------------------------
Austin L. Roberts, III,
President and Chief Executive Officer
In accordance with the requirements of the Exchange Act, this report has been
Signed below by the following persons on behalf of the registrant, in the
capacities indicated on the 30th day of March 2001.
/s/ Ammon G. Dunton, Jr.
------------------------
Ammon G. Dunton, Jr.
Chairman, Board of Directors
/s/ Austin L. Roberts, III
--------------------------
Austin L. Roberts, III
President and CEO
/s/ Weston F. Conley, Jr.
-------------------------
Weston F. Conley, Jr.
Director
/s/ William A. Creager
----------------------
William A. Creager
Director
/s/ Thomas A. Gosse
-------------------
Thomas A. Gosse
Director
/s/ Richard C. Abbott
------------------------
Richard C. Abbott
Treasurer
Supplemental Information
The company's Definitive Proxy Statement will be sent to security holders
subsequent to the filing of this Form 10-K.