BV Financial(BVFL) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents BV Financial, Inc.'s unaudited consolidated financial statements for Q2 2025, covering balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes Consolidated Balance Sheets Total assets slightly decreased to $908.3 million at June 30, 2025, driven by cash reduction for FHLB repayment, while net loans and deposits increased Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $56,323 | $70,500 | -20.1% | | Net loans | $742,414 | $729,238 | +1.8% | | Total assets | $908,327 | $911,821 | -0.4% | | Total deposits | $658,891 | $651,491 | +1.1% | | FHLB borrowings | $0 | $15,000 | -100.0% | | Total liabilities | $710,336 | $716,322 | -0.8% | | Total stockholders' equity | $197,991 | $195,499 | +1.3% | Consolidated Statements of Income Net income decreased for both Q2 and six-month periods of 2025, primarily due to increased compensation expenses and a shift to credit loss provisions Income Statement Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $9,156 | $8,909 | $17,799 | $16,872 | | Provision (Recovery) for credit losses | $178 | ($111) | $475 | ($92) | | Total noninterest income | $714 | $596 | $1,243 | $1,174 | | Total noninterest expense | $5,755 | $4,897 | $11,932 | $9,820 | | Net income | $2,861 | $3,399 | $4,960 | $5,973 | | Diluted earnings per share | $0.29 | $0.32 | $0.50 | $0.52 | - Compensation and related benefits expense increased significantly to $4.0 million in Q2 2025 from $3.1 million in Q2 2024, and to $8.5 million for the six months of 2025 from $6.2 million in the prior year period[10] Consolidated Statements of Comprehensive Income Total comprehensive income was $2.9 million for Q2 2025 and $5.2 million for the six months, including net income and unrealized gains on securities Comprehensive Income (in thousands) | Component | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $2,861 | $3,399 | $4,960 | $5,973 | | Other comprehensive income | $75 | $119 | $269 | $121 | | Total comprehensive income | $2,936 | $3,518 | $5,229 | $6,094 | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased to $198.0 million at June 30, 2025, driven by net income, partially offset by $5.3 million in stock repurchases - For the six months ended June 30, 2025, the company repurchased shares for a total cost of $5.265 million[17] - Net income of $4.960 million and other comprehensive income of $269,000 contributed positively to equity, while stock repurchases were the primary offsetting factor[17] Consolidated Statements of Cash Flows Cash and cash equivalents decreased by $14.2 million for the six months ended June 30, 2025, due to investing and financing activities, despite operating cash flow Net Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,148 | $6,068 | | Net cash (used in) provided by investing activities | ($10,520) | $5,353 | | Net cash (used in) provided by financing activities | ($10,805) | $5,476 | | Net (decrease) and increase in cash | ($14,177) | $16,897 | Notes to Unaudited Consolidated Financial Statements The notes detail accounting policies and financial items, including loan and securities portfolios, credit loss allowances, deposit structure, and regulatory capital - The company's primary business is attracting public deposits to fund various loans, including one-to-four-family real estate, commercial real estate, and construction loans, mainly in the Baltimore metropolitan area and the Eastern Shore of Maryland[24][28] - The Allowance for Credit Losses (ACL) on loans was $9.2 million as of June 30, 2025, up from $8.5 million at year-end 2024, with the methodology using historical loss rates adjusted for a 12-month GDP forecast[79][40][42] - Total loans increased to $751.6 million, with commercial investor real estate loans comprising the largest segment at 43.67% of the portfolio[79] - As of June 30, 2025, the Bank exceeded all regulatory capital requirements to be considered 'well capitalized', with a Tier 1 leverage ratio of 19.75% and a Total Capital ratio of 25.70%[135] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operating results, covering balance sheet changes, net interest income, credit losses, noninterest items, and asset quality Comparison of Financial Condition at June 30, 2025 (unaudited) and December 31, 2024 Total assets decreased to $908.3 million due to cash reduction for FHLB repayment, partially offset by increased loans, deposits, and stockholders' equity - Total assets decreased by 0.4% to $908.3 million at June 30, 2025[176] - Loans receivable increased by 1.9% to $751.6 million, while cash and cash equivalents decreased by 20.1% to $56.3 million[177][178] - Total liabilities decreased by 0.8% to $710.3 million, primarily due to the repayment of FHLB borrowings, while total deposits increased by 1.1%[180][181] - Stockholders' equity increased by 1.3% to $198.0 million, reflecting net income partially offset by $4.3 million in stock repurchases[182] Comparison of Operating Results for the Three and Six Months Ended June 30, 2025 and 2024 Net income decreased for both Q2 and six-month periods of 2025, primarily due to increased credit loss provisions and higher non-interest expenses, despite net interest income growth Net Income and EPS Comparison | Period | Net Income (2025) | Net Income (2024) | Diluted EPS (2025) | Diluted EPS (2024) | | :--- | :--- | :--- | :--- | :--- | | Three Months | $2.9M | $3.4M | $0.29 | $0.32 | | Six Months | $5.0M | $6.0M | $0.50 | $0.52 | - Net interest income for Q2 2025 increased to $9.2 million from $8.9 million in Q2 2024, with the net interest margin rising slightly to 4.36% from 4.33%[204] - A provision for credit losses of $178,000 was recorded in Q2 2025, compared to a recovery of $111,000 in Q2 2024[206] - Non-interest expense for Q2 2025 rose to $5.8 million from $4.9 million in Q2 2024, primarily due to a $927,000 increase in compensation and benefits, which included $1.1 million in costs for the 2024 Equity Incentive Plan[208] Asset Quality Asset quality slightly deteriorated, with non-performing assets increasing to $4.5 million, and the allowance for credit losses rising to $9.2 million Asset Quality Metrics | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-performing assets | $4.5 million | $4.2 million | | Non-performing loans | $4.4 million | $4.0 million | | Allowance for credit losses (ACL) | $9.2 million | $8.5 million | | ACL to total loans | 1.22% | 1.15% | | ACL to non-performing loans | 208.6% | 212.5% | Liquidity and Capital Resources The company maintains strong liquidity and capital, with primary sources including deposits and FHLB borrowing capacity, exceeding all regulatory capital requirements - Primary sources of funds are deposits, loan and security payments, and FHLB borrowings[213] - At June 30, 2025, the company had a $165.5 million line of credit with the FHLB and a $20.0 million short-term unsecured facility from a correspondent bank[213] - Uninsured deposits were $171.5 million (24.9% of total deposits), of which $53.2 million were secured by collateral or FHLB letters of credit[215] - The Bank was categorized as 'well capitalized' at June 30, 2025, exceeding all regulatory capital requirements[216] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the Company qualifies as a smaller reporting company - The company, as a smaller reporting company, is not required to provide these disclosures[217] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[218] - No material changes were identified in the company's internal controls over financial reporting during the quarter ended June 30, 2025[219] PART II. OTHER INFORMATION Legal Proceedings The company is involved in routine legal actions, with management expecting no material adverse effect on financial condition or results - The company is subject to routine legal actions but does not expect them to have a material financial impact[222] Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - Risk factors remain consistent with those disclosed in the 2024 Annual Report on Form 10-K[223] Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity The company actively repurchases stock, completing one program in January 2025 and announcing a new 10% repurchase program in April 2025 - On April 4, 2025, the Company announced a new stock repurchase program for up to 10% of its outstanding common stock (approximately 1,059,404 shares)[224] Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 40,700 | $15.33 | | May 2025 | 116,300 | $15.85 | | June 2025 | 120,080 | $14.73 | | Total | 277,080 | $15.29 | Defaults Upon Senior Securities Not applicable - There were no defaults upon senior securities[227] Mine Safety Disclosures Not applicable - This item is not applicable to the company[228] Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during Q2 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan during the quarter[229] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits include CEO and CFO certifications (302 and 906) and Inline XBRL financial data[231]