BAY BANKS OF VIRGINIA, INC. (OTCMKTS:BAYK) Files An 8-K Entry into a Material Definitive Agreement

BAY BANKS OF VIRGINIA, INC. (OTCMKTS:BAYK) Files An 8-K Entry into a Material Definitive Agreement

BAY BANKS OF VIRGINIA, INC. (OTCMKTS:BAYK) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement

On October 7, 2019, Bay Banks of Virginia, Inc. (the “Company”) entered into Subordinated Note Purchase Agreements (collectively, the “Purchase Agreement”) with certain qualified institutional buyers and institutional accredited investors to which the Company sold and issued $25.0 million in aggregate principal amount of 5.625% fixed-to-floating rate subordinated notes due 2029 (the “Notes”).

The Notes will initially bear interest at 5.625% per annum, beginning October 7, 2019 to but excluding October 15, 2024, payable semi-annually in arrears. From and including October 15, 2024 through October 14, 2029, or up to an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 433.5 basis points, payable quarterly in arrears. Beginning on October 15, 2024 through maturity, the Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. The Notes will mature on October 15, 2029. The Purchase Agreement contains certain customary representations, warranties and covenants made by the Company, on the one hand, and the Purchasers, severally and not jointly, on the other hand.
If certain events of default occur, such as the bankruptcy of the Company, the holder of a Note may declare the principal amount of the Note to be due and immediately payable. The Notes will be unsecured, subordinated obligations of the Company and will rank junior in right of payment to the Company’s existing and future senior indebtedness. The Notes are not convertible into common stock or preferred stock, and are not callable by the holders.

The Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines, and the proceeds from the sale of the Notes will be utilized for general corporate purposes, including the potential repayment of the Company’s existing subordinated debt (which debt becomes callable in May 2020) and supporting capital levels at Virginia Commonwealth Bank, the Company’s subsidiary bank.
The Notes were offered and sold in reliance on the exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b) of Regulation D thereunder.
The foregoing descriptions of the Purchase Agreement and the Notes do not purport to be complete and are qualified in their entirety by reference to the forms of the Purchase Agreement and the Note which are attached hereto as Exhibits 10.1 and 4.1, respectively, and are incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 above is incorporated by reference into this Item 2.03.

Item 7.01 Regulation FD Disclosure.
In connection with the offering of the Notes, the Company made presentations to potential investors. The information presented to such potential investors is attached as Exhibit 99.1 to this Current Report on Form 8-K, and is incorporated herein by reference.

The information contained in this Item 7.01, including the information incorporated by reference herein from Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 8.01 Other Events.

On October 7, 2019, the Company issued a press release regarding the offering of Notes. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

To view the full exhibit click here


Bay Banks of Virginia, Inc. is a bank holding company that conducts its operations through its subsidiaries, Bank of Lancaster (the Bank) and Bay Trust Company (the Trust Company). The Bank is a state-chartered bank and a member of the Federal Reserve System. The Bank serves businesses, professionals and consumers with a range of financial services, including retail and commercial banking, investment services and mortgage banking. Its products include cash management accounts, individual retirement accounts, commercial and industrial loans, residential mortgages, commercial mortgages, home equity loans, consumer installment loans, investment accounts, insurance, credit cards and telephone banking. The Bank’s deposits include non-interest bearing demand deposits, interest bearing deposits and time deposits. The Trust Company provides management services for personal and corporate trusts, including estate planning, estate settlement and trust administration.