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Bay Banks of Virginia Holds Annual Meeting


Bay Banks of Virginia, holding company for Bank of Lancaster and Bay Trust Company, recently held its Annual Shareholders Meeting at Indian Creek Yacht & Country Club. Almost 200 shareholders were in attendance.

Bay Banks of Virginia, Inc. (OTC BB: BAYK), holding company for Bank of Lancaster and Bay Trust Company, held its annual stockholders meeting and luncheon in May at Indian Creek Yacht & Country Club, Kilmarnock, Virginia. Chairman Robert F. Hurliman welcomed almost 200 in attendance, including stockholders, directors, retirees and several members of the Company’s staff.

Mrs. Pam Varnier, Corporate Secretary for the Company, reported that by proxy and in person 74% of the Company stock was represented; and Chairman Hurliman called the meeting to order.

Austin L. Roberts, III was re-elected to the holding company’s Board of Directors to serve another three-year term.

Chairman Hurliman welcomed guest speaker Rob Strand, Senior Economist for the American Bankers Association (ABA). Strand received a Ph.D. in Economics from the University of North Carolina in Chapel Hill, and a Bachelor of Science degree from Davidson College in Davidson, North Carolina. His responsibilities with the ABA include handling policy and economic analysis on a range of bank regulatory and legislative issues, with special interests in the condition of banks, credit conditions, risk-management, capital policy and the FDIC. He administers the ABA Economic Advisory Committee, which meets twice a year with the Federal Reserve Governors and President’s Council of Economic Advisors. He also has responsibility for the ABA Model Validation Working Group and ICAAP Working Group. Prior to his work with the ABA, Strand analyzed banking issues as a financial economist with the U. S. Government Accountability Office. He also worked for the Federal Reserve Bank of Richmond and the National Institute of Environmental Health Sciences.

In his remarks, Strand stated that he is optimistic about the economy and feels that while there are many complicated issues before us, including the highest unemployment we have seen since the Depression, low home sales, and an overall lack of consumer confidence in the economy that is creating low consumer spending, it is important to know that we are seeing progress. He noted, however, that this will be a long, slow recovery. With regulatory burdens still very heavy, banks both big and small will continue to feel pressure as they try to serve their customers and their communities. With proposed regulations now before Congress, banks may even be limited in their ability to create new products and services. Having said this, Strand noted, the ABA will continue to be the advocate for legislation that will both help the banks deal with regulatory burdens and at the same time protect the consumer and allow financial institutions to help their customers, which is why banks are in business.

Deborah M. Evans, Chief Financial Officer and Treasurer of Bay Banks addressed the meeting and first thanked everyone present for supporting Bay Banks and its family of companies. She reported that during 2010, “our neighbors and local businesses expressed their support and confidence in us by entrusting us with an additional $6.7 million dollars in savings and checking accounts.” Evans advised that the Company reported a slightly smaller balance sheet at year-end 2010, with a reduction in total assets of $3.2 million dollars, or only 1.0%, to $327 million. This was mainly a result of the decline in demand for loans. Total deposits also declined by design, due to the reduced need for funding for loans. In consideration of data provided by the Virginia Association of Community Banks (“VACB”) for 2010, where more than half of the banks in our Commonwealth saw their loan portfolios shrink, and nearly a third saw their total deposit balances shrink, Evans noted “our results are not uncommon. However, our core deposit relationships of checking and savings accounts grew by $6.7 million, as noted above, and our newest retail offices, in Burgess and Colonial Beach, are also still growing.”

Evans reported, “In the area of loan quality, even though our charge-offs were historically high in 2010, relative to banks like ours nationwide which averaged net charge-off ratios of 0.99% of their loan portfolios, ours were half of that at 0.5%.

“Our shareholders’ value grew 1.7%, in 2010, to $27.3 million dollars, which exceeds regulatory requirements and ensures our continued classification as ‘well capitalized.’ This is a clear indication of our strength and soundness. Protection of our shareholders’ value remains a priority. Earnings are improving, and this will ultimately allow us to pay cash dividends again in the future. We anticipate that the Board will be considering resurrection of such dividends by the time of next year’s Annual Meeting. We are confident in our prospects for earnings improvement in 2011 as our strategies are already showing great promise.”

Bay Banks achieved positive earnings and a positive Return on Average Assets of 0.11% for 2010, Evans reported. “When you compare this to the VACB data for the group of banks in the area of Richmond and eastward, which includes the Northern Neck, where there was an aggregate net loss with a corresponding Return on Average Assets of negative 0.09%, you can see why we are very proud of our net profits for 2010,” she stated.

J. B. Wallin, President of Bay Trust Company, began his remarks by thanking the shareholders for the confidence they place in their Company. He reported that client relationships at Bay Trust grew by greater than 10% in the calendar year 2010. He also talked briefly about the market over the last decade, and the strategy put in place by Bay Trust to provide attractive opportunities for its clients with high-quality dividend paying stocks to provide a steady and growing stream of income.

Kenneth O. Bransford, Jr., Executive Vice President at the time of the Stockholders Meeting but now the Bank’s President & CEO, gave the closing remarks. Bransford first thanked Indian Creek for hosting the meeting and for doing an excellent job of getting everyone seated and served in such a timely manner.

Bransford recognized the retirees who were in attendance, noting that if this group were all present, they would represent almost 650 years of service to the Company. He also shared with the Stockholders about the Company’s “Lighthouse Keepers” Club, an organization within the Company for those family members who have 25 or more years of service. Bransford stated that today that Club has 21 active members, representing 708 years of service. He stated, “I don’t think many companies today have such a remarkable track record of employee retention.”

Bransford also recognized Margaret Eppes Curtis, who retired after 16 years of service to the Company. Curtis was a Vice President and headed the Bank’s Residential Lending area. He introduced Sharon Kendall, who joined the Company to assume Curtis’ responsibilities. Kendall brings 29 years of banking experience with her and Bransford stated the Company feels very fortunate to have her as a part of the team. He also introduced Joe Biddlecomb, who has joined the Company to manage the Heathsville and Burgess offices.

Ron Whitt, the Bay Banks Employee of the Year, was also introduced by Bransford.

Bransford comments highlighted the Company’s 80 years of service to the communities of the Northern Neck, which is the feature article in the Company’s Annual Report. He noted, “In 1930 our founding fathers had one primary purpose when they opened our doors at the onset of the depression: help their friends and neighbors … to make sure businesses in what was then the Village of Kilmarnock, and neighboring towns, kept their doors open, to help farmers and watermen get through tough times. Over the past 80 years we have continued to build on that foundation. As community bankers, we understand the importance of helping our friends and neighbors own their homes, educate their children, establish and sustain their business, save for retirement … banking is not complicated … it’s all about helping people achieve their dreams. That might sound like a marketing line to some; but after 40 years with this Company, I know it’s the way we do business, every day. Our banking family members also participate corporately and individually in more than 150 civic and charitable organizations throughout our Northern Neck. As community bankers, we embrace the philosophy of giving back; it’s who we are and what we do.”

Bransford closed his remarks by saying “So while the economy isn’t the greatest, and it certainly wasn’t when our doors opened in 1930, we’ve weathered some tough storms together over the past 80 years. There are a lot of wonderful things taking place within our Company, things that will sustain us, and sustain future generations.”

Chairman Hurliman again thanked everyone for their attendance and the meeting was adjourned.


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