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BALTIMORE--([ BUSINESS WIRE ])--BV Financial, Inc. (OTCBB: BVFL), the holding company for Bay-Vanguard Federal Savings Bank, today reported net income of $208,000, or $0.10 per diluted share, for the three-month period ended September 30, 2011 compared to net income of $53,000, or $0.02 per diluted share for the three-month period ended September 30, 2010.

The increase in net income was attributed largely to an increase in net interest income and a decrease in non-interest expense, offset by an increase in the provision for loan losses. Net interest income increased due to a decrease in interest expense, as deposit rates and balances decreased. Non-interest expense decreased due to a decrease in compensation expense from reduced staffing attributed to a branch consolidation and closure and a decrease in FDIC insurance premiums, which were lower due to the new assessment calculation that became effective on April 1, 2011. The provision for loan losses increased $49,000 for the three months ended September 30, 2011, compared to the previous year period, primarily due to higher loan loss valuation allowances being required for an increase in non-performing loans. Non-performing loans increased to $4.3 million at September 30, 2011 compared to $3.8 million at June 30, 2011 mainly due to an increase in non-performing one- to four-family residential loans. At September 30, 2011, the loan loss allowance was $1.7 million, which represented 1.65% of total loans and 41.3% of non-performing loans compared to $1.5 million at June 30, 2011, which represented 1.45% of total loans and 39.4% of non-performing loans.

The investment portfolio decreased $3.7 million as excess funds from liquid cash accounts were used to fund deposit outflows and were also retained by the Bank. The mortgage loan portfolio increased by $443,000 due to originations exceeding payoffs and amortizations. Weak loan demand continues to hinder our ability to originate new loans. Deposits decreased $2.5 million for the three-month period ended September 30, 2011, primarily as demand deposit and savings accounts decreased.

Bay-Vanguardas Tier 1 capital ratio was 8.44% at September 30, 2011 compared to 7.60% at June 30, 2011. This ratio and the Bank's other capital measurements continue to exceed all regulatory standards for awell-capitalizeda financial institutions.

This press release may contain certain forward-looking statements that are based on managementas current expectations regarding economic, legislative and regulatory issues that may impact the Companyas earnings in future periods. Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, real estate values and competition, changes in accounting principles, policies or guidelines, changes in legislation or regulation and other economic, competitive, governmental, regulatory and technological factors affecting the Companyas operations, pricing, products and services.

BV Financial, Inc. is the parent company of Bay-Vanguard Federal Savings Bank. Bay-Vanguard Federal Savings Bank is headquartered in Baltimore, Maryland with five branches in the Baltimore metropolitan area. The Bank is a full service community-oriented financial institution dedicated to serving the financial service needs of consumers and businesses within its market area.