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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

Baltimore, Md. (September 12, 2016) — Israel Bonds Maryland announced today that Bay Bank will continue its legacy partnership with the Israel Bonds High Holidays Matching Partners Program following Bay Bank’s acquisition of Hopkins Federal Savings Bank earlier this year.

Bay Bank assumes Hopkins Federal Savings Bank’s previous role and joins matching partners The Associated: Jewish Community Federation of Baltimore, The Haron Dahan Foundation and Sandra R. & Malcolm C. Berman as they continue to provide 100 percent matching purchases for all Israel bonds investments made by the community during the 2016 High Holidays season. An Israel bond investment declares appreciation for the ideals and values of the State of Israel — democracy, diversity and putting human creativity and ingenuity to work to make the world a cleaner, safer, healthier, better place. To maximize support for Israel Bonds, Bay Bank is a participating bank in the Israel Bonds financing program.   

“Having Bay Bank as a Matching Partner continues the program started by Hopkins Federal Savings Bank and strengthens the bond between the Baltimore community and Israel,” said Alan Dorenfeld, executive director of the Israel Bonds Maryland office.    

The Israel Bonds Maryland High Holidays matching program began in 2006 with a 50 percent match from Hopkins Federal Savings. The Associated became Israel Bonds’ second matching partner in 2008 with a 100 percent match. Since then, the program has grown to include four partners.  Throughout the past 10 years, the High Holidays campaign has generated investments of over $75 million for Israel through more than 6,000 participants.  

“We are proud to continue Hopkins Federal Savings Bank's 10-year tradition of being a Matching Partner,” said Bay Bank President and CEO Joseph J. Thomas. “We look forward to supporting the State of Israel and continuing the legacy of Hopkins Federal Savings Bank and Alvin and Lois Lapidus in the community.”

Individuals interested in participating in the Israel Bonds High Holidays matching campaign can turn down their tab card during their synagogue’s High Holidays appeal, contact the Israel Bonds office at 410-484-6670 X1, or visit www.israelbonds.com.   

About Israel Bonds
Development Corporation for Israel/Israel Bonds offers investment and gift options that provide semi-annual interest or interest upon maturity.  Israel bonds are also a personal connection to a nation not only of Jewish heritage, but also of cutting-edge innovation that saves lives and changes the world on a daily basis.  Israel bonds start at $36 and are available online at israelbonds.com. Member FINRA.

About Bay Bank
Bay Bank, FSB is headquartered in Columbia, Maryland, and serves the community with a network of 12 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. Since its opening in 2010, Bay Bank has successfully acquired four other community banks — Bay National Bank, Carrollton Bank, Slavie Federal Savings Bank and Hopkins Federal Savings Bank.  The bank’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.” Member FDIC.

(Columbia, MD) – July 22, 2016 – Bay Bank announced today that it has partnered with RapidAdvance, a small business lender, to offer business financing alternatives to its entrepreneur and small business customers. 


By partnering with RapidAdvance, Bay Bank is able to expand their business lending solutions, supporting the growth of more of their business clients.  The partnership offers a streamlined, simple and efficient process to Bay Bank’s clients through a RapidAdvance dedicated business advisor who will review their needs and provide customized solutions to help them accomplish their goals. 


“Bay Bank is committed to helping entrepreneurs grow their businesses, and we are pleased to be able to provide another responsive debt alternative for early stage or transitioning small businesses when traditional bank credit isn’t the appropriate solution,” said Joe Thomas, Bay Bank President and CEO. “We view this as a step toward preparing our deposit customers for traditional bank senior debt financing in the future with Bay Bank as their banking partner.” 


RapidAdvance, a leader in the small business finance industry, helps businesses meet their financing needs when they are looking to grow or expand, acquire inventory, take advantage of a marketing opportunity or buy out a partner, replace or update equipment.


“This partnership allows Bay Bank and RapidAdvance to better serve clients by providing a centralized place to secure financing which allows them to grow.  We’re proud to support the country’s small business community,” said Will Tumulty, CEO at RapidAdvance.This partnership also opens new growth opportunities and we look forward to working with Bay Bank and its business clients.” 


The approval process at RapidAdvance is based on a business’s financial health and overall performance – not solely on credit. Approval is not dependent on collateral – which complements traditional financing offered by banks. It provides financing ranging from $5,000 to $1 million in as little as one day. RapidAdvance business advisors support clients through the process with ongoing counsel and beyond the life of their financing.

# # #

 

About Bay Bank


Bay Bank, FSB is headquartered in Columbia, Maryland and serves the community with a network of 12 branches strategically located throughout the region. Founded in 2010, the bank has quickly developed a strong reputation for its focus on commercial and small business clients and respective service offerings. The bank has total assets of around $650 million. The bank’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.” Member FDIC.


About RapidAdvance 


RapidAdvance is a leader in the small business finance industry. The company has provided more than $1 billion in working capital to thousands of US small businesses. RapidAdvance supports businesses including traditional retail establishments, brand name chain restaurants, automotive repair, manufacturing, trucking, and professional service providers.


The company is continually celebrated as an employer of choice, as measured by its team members’ high engagement in their jobs, job satisfaction, satisfaction with leadership, and the overall health of the organization.

Columbia, Md. (July 8, 2016) — Bay Bancorp, Inc. (NASDAQ:  BYBK), the parent company of Bay Bank, announced today that it has completed its acquisition of Hopkins Bancorp, Inc.  Bay Bank, FSB is now the fifth largest community bank headquartered in the Baltimore region based upon deposit market share. Following the merger, Bay Bank will have total assets of approximately $650 million and 12 branches in the Baltimore-Washington corridor.

 

Bay Bank acquired two branches from Hopkins Federal Savings Bank in the Baltimore market.  The Pikesville branch will be rebranded with the Bay Bank name immediately.  Bay Bank will relocate the Hopkins Federal Highlandtown branch to the Bay Bank Highlandtown Branch on Monday, July 11th for the immediate convenience of customers and staff.  

 

“We appreciate the hard work of the Hopkins team who have assisted us in our efforts to complete this transaction,” said Bay Bank President and CEO Joseph J. Thomas. “It is our plan to continue Hopkins’ legacy in the community and bring Bay Bank’s customer focus and entrepreneurial spirit.”

 

The merger is expected to have no immediate impact on the customer base, other than the change in the name.  Hopkins will continue to run its operating system until late July when it will be consolidated into the Bay Bank system.  With this consolidation, the former Hopkins customers will have full access to Bay Bank’s experienced relationship banking team led by Baltimore Market President, Todd Warren, 12 branches across the region, and expanded products and service offerings.    

 

“On behalf of the Board of Directors of Bay Bank, we are pleased to welcome Alvin Lapidus, former chairman of Hopkins Federal Savings Bank, as our chairman emeritus,” continued Thomas.  “We look forward to his insights throughout the transition process and to him helping the bank grow in this important new market for Bay.”

 

 

About Bay Bank

 

Bay Bank, FSB is headquartered in Columbia, Maryland, and serves the community with a network of 12 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. Since its opening in 2010, Bay Bank has successfully acquired three other community banks—Bay National Bank, Carrollton Bank and Slavie Federal Savings Bank.  The bank’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.” Member FDIC.

 

 

 

Additional Information

 

Stockholders of Hopkins Bancorp, Inc. will receive instructions from Bay Bancorp, Inc.’s exchange agent, American Stock Transfer & Trust Company, regarding the surrender of their shares of Hopkins Bancorp, Inc. common stock for the merger consideration.  Stockholders should wait for and follow those instructions and should not surrender their shares to Bay Bancorp, Inc., or Bay Bank, FSB.

(Columbia, Md.) – July 1, 2016 – Bay Bank announced today that it has formed a new industry group focused on serving the debt capital, treasury and advisory needs of government contracting and cybersecurity clients. The bank engaged Col. Edward C. Rothstein, USA (Ret.), as a senior advisor to help launch this effort. He will work closely with Bay’s Market Presidents Rich Ohnmacht and Todd Warren. 

“Our location and business strategy of serving entrepreneurs in the Baltimore Washington Corridor puts us in a unique position to be a leading financial partner to government and commercial contractors in the premier cybersecurity hub in the U.S.,” said Bay Bank President and CEO Joseph J. Thomas. “Ed Rothstein brings a wealth of knowledge in both government and commercial sectors of the cyber industry. He is a proven leader that will contribute greatly to the Bay Bank team, providing immediate results and value to our clients as we serve this growing industry.”

Rothstein had a celebrated 30-year career as an Army Intelligence Officer with assignments from tactical to strategic. He served in multiple deployments, culminating with his last post as Garrison Commander of Fort George G. Meade, where he was committed to partnering with civilian communities. His passion for creating an inclusive environment was recognized throughout the state. After retiring from the Army, Rothstein served as president and CEO of Anne Arundel Economic Development Corporation.  

“It is a great pleasure to join Joe Thomas and the Bay Bank team on this new endeavor,” said Rothstein. “It did not take long for me to see the commitment Bay Bank has in strengthening our community through a team effort focused on cybersecurity. I appreciate Joe’s upfront vision in this regard, and most of all his willingness to apply the resources that take it from a concept to an operational success.”

Bay Bank’s Industry Group will provide a range of financing, treasury management and capital and financial advisory solutions to its government contracting and cybersecurity clients with a dedicated team of banking professionals and industry experts, including Rothstein and Thomas, as well as experienced staff from the bank’s Relationship Managers, Credit, IT and Treasury departments.

With a diverse base of clients, including emerging and established private and public companies, the bank’s financial experts help companies design tailored capital structures and credit solutions to meet their individual needs. Offerings include venture debt, sponsor-led buyout financing and capital call lines.

In addition to traditional lending and financing services, Bay Bank offers a strong treasury management platform.

For more information about Bay Bank’s financing solutions, treasury management offerings and financial advisory services for the cybersecurity industry, visit www.baybankmd.com/cyber.

 

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 commercial and small business clients and respective service offerings. The bank has total assets of around $463 million. The bank’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.”

Columbia, Md. (May 31, 2016) — Bay Bancorp, Inc. (NASDAQ:  BYBK), the parent company of Bay Bank, and Hopkins Bancorp, Inc., the parent company of Hopkins Federal Savings Bank, announced today the next step in their merger.  The acquisition by Bay Bancorp., Inc. of Hopkins Bancorp., Inc. and Hopkins Federal Savings Bank has been approved by the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency.  The closing of the transaction is subject to various conditions, including approval by the stockholders of Hopkins Bancorp, Inc.  Subject to the satisfaction or waiver of those conditions, the parties expect to consummate the transaction no later than July 2016.

At that time, the Baltimore-based Hopkins Federal Savings Bank branches in Highlandtown and Pikesville will be rebranded with the Bay Bank name, although the Highlandtown branch will be consolidated with Bay Bank’s Highlandtown branch on July 25, 2016. After a system conversion in late July, all former Hopkins Federal Savings Bank customers will be able to transact business at any of Bay Bank’s 12 branches. Hopkins Federal Savings Bank business and consumer customers will also benefit from additional services, such as mobile banking and deposits, e-statements, robust online banking capabilities and remote deposit service. 

 “We’re excited to expand to the Pikesville market as a natural extension of our footprint. Bay Bank is committed to the same level of customer care Hopkins Federal Savings Bank customers are accustomed to, while also offering  new products and services to make their banking experience more convenient,” said Bay Bank President and CEO Joseph J. Thomas. “We have established a solid foundation as a premier community bank serving entrepreneurs in the Baltimore Washington corridor, and we look forward to continued growth, both organic and through acquisition.”

 Alvin Lapidus, chairman of Hopkins Federal Savings Bank, will serve as Bay Bank’s chairman emeritus, and will help ensure a successful transition and ongoing service to clients.  Once the transaction is closed, Bay Bank will have the fifth largest community bank deposit share in the Baltimore region with assets of approximately $650 million. Since its opening in 2010, Bay Bank has successfully acquired three other community banks—Bay National Bank, Carrollton Bank and Slavie Federal Savings Bank.

 
 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’s parent company, Bay Bancorp, Inc., trades on the NASDAQ Capital Market under the ticker symbol “BYBK.”

 Caution Regarding Forward-Looking Statements

 Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, risks related to the satisfaction of the conditions to closing the acquisition in the anticipated timeframe or at all, including risks related to the failure to obtain necessary regulatory and Hopkins stockholder approvals and the possibility that the merger does not close, including in circumstances in which Hopkins would be obligated to pay Bay Bancorp, Inc. a termination fee or other expenses and vice versa; negative effects of this announcement or the consummation of the proposed acquisition on the market price of Bay Bancorp, Inc.’s common stock.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.  Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.  Bay Bancorp, Inc. and Hopkins expressly disclaim any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise. 

 Additional Information and Where to Find It

 In connection with the proposed merger, Hopkins will mail or otherwise provide to its stockholders a proxy statement regarding the proposed Merger.  BEFORE MAKING ANY VOTING DECISION, HOPKINS’ STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS THAT BAY BANCORP, INC. MAY FILE WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE THEREIN BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND THE PARTIES TO THE PROPOSED MERGER.