Village Bank & Trust Financial Corp. [VBFC] Filings

10-Q 1 vbfc-20230630x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number: 0-50765

VILLAGE BANK AND TRUST FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Virginia	16-1694602
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

13319 Midlothian Turnpike, Midlothian, Virginia	23113
(Address of principal executive offices)	(Zip code)

804-897-3900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $4.00 per share	VBFC	Nasdaq Capital Market

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☒	Smaller Reporting Company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

1,485,813 shares of common stock, $4.00 par value, outstanding as of July 31, 2023

Table of Contents

Village Bank and Trust Financial Corp.

Form 10-Q

TABLE OF CONTENTS


Part I – Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets June 30, 2023 (unaudited) and December 31, 2022	3

Consolidated Statements of Income For the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)	4

Consolidated Statements of Comprehensive Income (Loss) For the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)	5

Consolidated Statements of Shareholders’ Equity For the Three and Six Months and Ended June 30, 2023 and 2022 (unaudited)	6

Consolidated Statements of Cash Flows For Six Months Ended June 30, 2023 and 2022 (unaudited)	8

Notes to Consolidated Financial Statements (unaudited)	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	40

Item 3. Quantitative and Qualitative Disclosures About Market Risk	57

Item 4. Controls and Procedures	57

Part II – Other Information

Item 1. Legal Proceedings	58

Item 1A. Risk Factors	58

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 3. Defaults Upon Senior Securities	58

Item 4. Mine Safety Disclosures	58

Item 5. Other Information	58

Item 6. Exhibits	58

Signatures	59

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

Village Bank and Trust Financial Corp. and Subsidiary

Consolidated Balance Sheets

June 30, 2023 (Unaudited) and December 31, 2022*

(in thousands, except share and per share data)


	June 30,		December 31,
	2023		2022
Assets
Cash and due from banks	$	12,881	$	12,062
Federal funds sold		13,101		4,616
Total cash and cash equivalents		25,982		16,678
Investment securities available for sale, at fair value		132,235		133,853
Restricted stock, at cost		2,606		1,564
Loans held for sale		6,887		2,268
Loans
Outstandings		556,170		538,427
Allowance for credit losses		(3,256)		(3,370)
Deferred costs, net		746		588
Total loans, net		553,660		535,645
Premises and equipment, net		11,890		11,748
Bank owned life insurance		12,947		12,798
Accrued interest receivable		3,482		3,651
Other assets		4,966		5,065
Total Assets	$	754,655	$	723,270

Liabilities and Shareholders’ Equity
Liabilities
Deposits
Noninterest bearing demand	$	249,059	$	255,236
Interest bearing		379,323		369,507
Total deposits		628,382		624,743
Long-term debt - trust preferred securities		8,764		8,764
Subordinated debt, net		5,700		5,692
Federal Home Loan Bank advances		45,000		20,000
Accrued interest payable		270		70
Other liabilities		2,525		2,890
Total liabilities		690,641		662,159

Shareholders’ equity
Common stock, $4 par value, 10,000,000 shares authorized; 1,485,813 shares issued and outstanding at June 30, 2023 and 1,482,790 shares issued and outstanding at December 31, 2022		5,883		5,868
Additional paid-in capital		55,420		55,167
Retained earnings		13,142		10,957
Stock in directors rabbi trust		(467)		(689)
Directors deferred fees obligation		467		689
Accumulated other comprehensive loss		(10,431)		(10,881)
Total shareholders’ equity		64,014		61,111

Total liabilities and shareholders' equity	$	754,655	$	723,270

* Derived from audited consolidated financial statements.

See accompanying notes to consolidated financial statements.

Table of Contents

Village Bank and Trust Financial Corp. and Subsidiary

Consolidated Statements of Income

Three and Six Months Ended June 30, 2023 and 2022

(Unaudited)

(in thousands, except per share data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Interest income
Loans	$	7,266	$	6,042	$	14,029	$	11,891
Investment securities		719		583		1,446		977
Federal funds sold		114		106		207		131
Total interest income		8,099		6,731		15,682		12,999

Interest expense
Deposits		1,186		252		1,810		515
Borrowed funds		789		158		1,383		303
Total interest expense		1,975		410		3,193		818

Net interest income		6,124		6,321		12,489		12,181
Provision for (recovery of) credit losses		—		—		—		(400)
Net interest income after provision for (recovery of) credit losses		6,124		6,321		12,489		12,581

Noninterest income
Service charges and fees		711		671		1,380		1,290
Mortgage banking income, net		386		1,090		864		1,969
Gain on sale of Small Business Administration loans		—		79		—		79
Other		124		98		234		229
Total noninterest income		1,221		1,938		2,478		3,567

Noninterest expense
Salaries and benefits		3,415		3,423		6,863		6,947
Occupancy		307		284		618		614
Equipment		280		270		565		558
Supplies		35		36		84		74
Professional and outside services		838		738		1,651		1,463
Advertising and marketing		140		92		251		204
FDIC insurance premium		84		64		134		123
Other operating expense		733		607		1,423		1,213
Total noninterest expense		5,832		5,514		11,589		11,196

Income before income tax expense		1,513		2,745		3,378		4,952
Income tax expense		274		555		599		962

Net income	$	1,239	$	2,190	$	2,779	$	3,990

Earnings per share, basic	$	0.83	$	1.48	$	1.87	$	2.71
Earnings per share, diluted	$	0.83	$	1.48	$	1.87	$	2.70

See accompanying notes to consolidated financial statements.

Table of Contents

Village Bank and Trust Financial Corp. and Subsidiary

Consolidated Statements of Comprehensive Income (Loss)

Three and Six Months ended June 30, 2023 and 2022

(Unaudited)

(in thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net income	$	1,239	$	2,190	$	2,779	$	3,990
Other comprehensive income (loss)
Unrealized holding gains (losses) arising during the period		(1,312)		(4,471)		564		(9,037)
Tax effect		276		939		(118)		1,898
Net change in unrealized holding gains (losses) on securities available for sale, net of tax		(1,036)		(3,532)		446		(7,139)

Minimum pension adjustment		3		3		6		6
Tax effect		(1)		(1)		(2)		(2)
Minimum pension adjustment, net of tax		2		2		4		4

Total other comprehensive income (loss)		(1,034)		(3,530)		450		(7,135)

Total comprehensive income (loss)	$	205	$	(1,340)	$	3,229	$	(3,145)

See accompanying notes to consolidated financial statements.

Table of Contents

Village Bank and Trust Financial Corp. and Subsidiary

Consolidated Statements of Shareholders' Equity

Three and Six Months Ended June 30, 2023 and 2022

(Unaudited)

(In thousands)


	Three Months Ended June 30, 2023

									Directors		Accumulated
			Additional				Stock in		Deferred		Other
	Common		Paid-in		Retained		Directors		Fees		Comprehensive
	Stock		Capital		Earnings		Rabbi Trust		Obligation		Income (Loss)		Total

Balance, March 31, 2023	$	5,881		55,256	$	12,141	$	(595)	$	595	$	(9,397)	$	63,881
Restricted stock redemption		—		—		—		128		(128)		—		—
Vesting of restricted stock		2		(2)		—		—		—		—		—
Stock based compensation		—		166		—		—		—		—		166
Cash dividend declared ($0.16 per share)		—		—		(238)		—		—		—		(238)
Net income		—		—		1,239		—		—		—		1,239
Other comprehensive loss		—		—		—		—		—		(1,034)		(1,034)
Balance, June 30, 2023	$	5,883	$	55,420	$	13,142	$	(467)	$	467	$	(10,431)	$	64,014


	Three Months Ended June 30, 2022

									Directors		Accumulated
			Additional				Stock in		Deferred		Other
	Common		Paid-in		Retained		Directors		Fees		Comprehensive
	Stock		Capital		Earnings		Rabbi Trust		Obligation		Loss		Total

Balance, March 31, 2022	$	5,835	$	54,891	$	5,103	$	(689)	$	689	$	(4,349)	$	61,480
Vesting of restricted stock		2		(2)		—		—		—		—		—
Stock based compensation		—		120		—		—		—		—		120
Cash dividend declared ($0.14 per share)		—		—		(207)		—		—		—		(207)
Net income		—		—		2,190		—		—		—		2,190
Other comprehensive loss		—		—		—		—		—		(3,530)		(3,530)
Balance, June 30, 2022	$	5,837	$	55,009	$	7,086	$	(689)	$	689	$	(7,879)	$	60,053

Six Months Ended June 30, 2023

Directors

Accumulated

Additional

Stock in

Deferred

Other

Common

Paid-in

Retained

Directors

Fees

Comprehensive

Stock

Capital

Earnings

Rabbi Trust

Obligation

Income (Loss)

Total

Balance, December 31, 2022

5,868

55,167

10,957

(689)

689

(10,881)

Village Bank & Trust Financial Corp. [VBFC] Filings
10-Q	[2023-08-11]
10-Q	[2023-05-12]
10-K	[2023-03-20]
10-Q	[2022-11-10]
10-Q	[2022-08-11]
10-Q	[2022-05-12]
10-K	[2022-03-25]
10-Q	[2021-11-12]
10-Q	[2021-08-13]
10-Q	[2021-05-13]
10-K	[2021-03-19]
10-Q	[2020-11-13]
10-Q	[2020-08-14]
10-Q	[2020-05-14]
10-K	[2020-03-16]
10-Q	[2019-11-12]
10-Q	[2019-08-09]
10-Q	[2019-05-13]
10-K	[2019-03-29]
10-Q	[2018-11-09]
10-Q	[2018-08-14]
10-Q	[2018-05-15]
10-K	[2018-03-30]
10-Q	[2017-11-13]
10-Q	[2017-08-10]
10-Q	[2017-05-10]
10-K	[2017-03-31]
10-Q	[2016-11-14]
10-Q	[2016-08-12]
10-Q	[2016-05-13]
10-K	[2016-03-30]
10-Q	[2015-11-04]
10-Q	[2015-08-12]
10-Q	[2015-05-15]
10-K	[2015-03-02]
S-1	[2014-11-12]
10-Q	[2014-10-31]
10-Q	[2014-08-01]
10-Q	[2014-05-15]
10-K	[2014-03-26]
10-Q	[2013-11-04]
10-Q	[2013-08-14]
10-Q	[2013-05-15]
10-K	[2013-03-26]
10-Q	[2012-11-13]
10-Q	[2012-08-15]
10-Q	[2012-05-15]
10-K	[2012-03-30]