BV Financial Q3 net income falls to $3.4 million on lower loan balances

BV Financial, Inc. (NASDAQ: BVFL) reported net income of $3.4 million, or $0.42 per diluted share, for the quarter ended September 30, 2026, a decline from $3.7 million in the same period last year. The Baltimore-based holding company for BayVanguard Bank attributed the year-to-date income decrease to a $2.2 million executive transition expense in the first quarter and related tax impacts, alongside changes in credit loss provisions.

The bank's balance sheet contracted during the period, with total assets decreasing by $34.2 million to $877.9 million. This reduction was driven primarily by the use of cash from a shrinking loan portfolio to repay $30.0 million in borrowings from the Federal Home Loan Bank of Atlanta. Consequently, FHLB stock holdings fell by $1.4 million, a 61.3% decrease, as the required ownership amount dropped following the advance pay-off.

Loan receivables declined by $22.2 million to $732.7 million, with the largest decreases occurring in commercial, construction and land, and one-to-four family non-owner-occupied segments. Net interest income for the quarter was $9.1 million, down from $9.4 million in the prior year period, largely due to lower average loan balances. However, the net interest margin improved to 4.46% from 4.40%. For the nine-month period ended September 30, 2026, net interest income rose to $27.7 million from $27.1 million, a result management linked to lower borrowing costs after paying off subordinated debentures in December 2025.

Deposits remained relatively stable, decreasing slightly by $2.1 million to $674.0 million. Noninterest-bearing deposits increased by $1.1 million to $139.5 million, while interest-bearing deposits fell by $3.2 million to $534.5 million. Cash and cash equivalents decreased by $5.7 million to $50.0 million, primarily reflecting the FHLB debt repayment.

Noninterest expense for the third quarter totaled $5.1 million, a decrease from $5.9 million in the same period last year. This reduction was driven by a $0.7 million drop in compensation and benefits due to lower staffing and reduced costs for the 2024 Equity Incentive Plan, as well as a $0.1 million decrease in other expenses related to lower fraud losses. Over the nine-month period, noninterest expense increased slightly to $18.1 million from $17.8 million, with data processing expenses rising by $81,000 for new product implementation.

Asset quality metrics showed mixed results. Non-accrual loans increased by $0.9 million to $3.2 million at September 30, 2026, up from $2.3 million at year-end 2025. The company recorded a provision for credit losses of $0.2 million for the quarter and a reversal of $14,000 for the nine-month period. Management highlighted operating pre-provision net revenue (OPPNR) as a non-GAAP metric to monitor core earnings capacity before credit costs, which stood at $5.3 million for the quarter and $15.4 million for the nine months ended September 30, 2026.