As filed with the Securities and Exchange Commission on April 24, 2023

Registration No. 333-270496

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

PRE-EFFECTIVE AMENDMENT No. 1

TO THE

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

BV Financial, Inc.

BayVanguard Bank 401(k) Profit Sharing Plan

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Maryland		6036		14-1920944
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

7114 North Point Road

Baltimore, Maryland 21219

(410) 477-5000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

David M. Flair

Timothy L. Prindle

Co-President and Chief Executive Officers

BV Financial, Inc.

7114 North Point Road

Baltimore, Maryland 21219

(410) 477-5000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

Scott A. Brown, Esq.

Zachary A. Davis, Esq.

Luse Gorman, PC

5335 Wisconsin Avenue, N.W., Suite 780

Washington, D.C. 20015

(202) 274-2000

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:  ☒

If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 7(a)(2)(B) of the Securities Act:  ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

Prospectus Supplement

BAYVANGUARD BANK 401(k) PROFIT SHARING PLAN

Offering of Participation Interests in up to 332,610 Shares

of

BV FINANCIAL, INC.

Common Stock

 

 

BV Financial, Inc., a Maryland corporation that we refer to as “BV Financial” throughout this prospectus supplement, is offering shares of common stock for sale at $10.00 per share in connection with the conversion of Bay-Vanguard, M.H.C., Inc., which we refer to as the “MHC” throughout this prospectus supplement, from the mutual holding company to the stock holding company form of organization. The shares being offered represent the ownership interest in BV Financial, for which the MHC currently owns more than 50% of the outstanding shares. BV Financial’s common stock currently trades on the Pink Open Market, operated by OTC Markets Group under the trading symbol “BVFL.” Following the offering, we expect BV Financial’s common stock will trade on the NASDAQ Capital Market also under the trading symbol “BVFL.” We must sell a minimum of 9,775,000 shares to complete the offering.

In connection with the stock offering, BayVanguard Bank is allowing participants in the BayVanguard Bank 401(k) Profit Sharing Plan (the “401(k) Plan”) to invest all or a portion of their account balances in BV Financial common stock. Based upon the value of the 401(k) Plan assets at December 31, 2022, the trustee of the 401(k) Plan could purchase up to 332,610 shares of BV Financial common stock, at the purchase price of $10.00 per share, in the stock offering. This prospectus supplement relates to the election of 401(k) Plan participants to direct the trustee of the 401(k) Plan to invest all or a portion of their 401(k) Plan account balances in BV Financial common stock at the time of the stock offering.

Before you consider investing, you should read the prospectus of BV Financial, dated May ___, 2023, which is attached to this prospectus supplement. It contains detailed information regarding the conversion, the stock offering of BV Financial and the financial condition, results of operations and business of BayVanguard Bank. This prospectus supplement provides information regarding the 401(k) Plan. You should read this prospectus supplement together with the prospectus and keep both for future reference.

 

 

For a discussion of risks that you should consider, see “Risk Factors” beginning on page 1 in this prospectus supplement, “Risk Factors” beginning on page 15 of the attached prospectus, and “Notice of Your Rights Concerning Employer Securities” in this prospectus supplement.

The interests in the 401(k) Plan and the offering of the shares of BV Financial common stock have not been approved or disapproved by the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Office of the Commissioner of Financial Regulation for the State of Maryland, the Securities and Exchange Commission or any other federal or state agency. Any representation to the contrary is a criminal offense.

The securities offered by this prospectus supplement are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

This prospectus supplement may be used only in connection with offers and sales by BV Financial in the stock offering of BV Financial common stock that may be acquired within the 401(k) Plan. No one may use this prospectus supplement to reoffer or resell interests in shares of BV Financial common stock acquired through the 401(k) Plan.

You should rely only on the information contained in this prospectus supplement and the attached prospectus. BV Financial, BayVanguard Bank and the 401(k) Plan have not authorized anyone to provide you with different information.

This prospectus supplement does not constitute an offer to sell or solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction. Neither the delivery of this prospectus supplement and the attached prospectus nor any sale of BV Financial common stock shall under any circumstances imply that there has been no change in the affairs of BV Financial, BayVanguard Bank or the 401(k) Plan since the date of this prospectus supplement, or that the information contained in this prospectus supplement or incorporated by reference is correct as of any time after the date of this prospectus supplement.

 

 

The date of this prospectus supplement is May ___, 2023.

 

RISK FACTORS

In addition to considering the material risks disclosed under “Risk Factors” beginning on page 15 of the attached prospectus, you should also consider the following:

If you elect to purchase BV Financial common stock using your 401(k) Plan account balance and the stock offering is oversubscribed, you will bear the risk of price changes in the investment funds of the 401(k) Plan.

If you elect to purchase BV Financial common stock using your 401(k) Plan account balance, the 401(k) Plan trustee will sell the designated dollar amount within your 401(k) Plan account pro rata among your investment fund balances (other than the existing BV Financial Stock Fund). If the stock offering is oversubscribed (i.e., there are more orders for BV Financial common stock than shares available for sale in the stock offering) and the 401(k) Plan trustee cannot use any or all of the funds you allocate to purchase BV Financial common stock in the stock offering, the funds that cannot be invested in BV Financial common stock, and any interest earned on those funds, will be reinvested in your existing investment funds of the 401(k) Plan (other than the existing BV Financial Stock Fund), according to your then existing investment election (i.e., in proportion to your investment direction for future contributions). During the period from when the 401(k) Plan trustee sells a percentage of each of your investment funds until reinvestment of some or all of those funds back into your investment funds as a result of an oversubscription, you will bear the risk of price changes in the investment funds. It is possible that during this period some or all of the investment funds may have increased in value more than the amount of any interest you may have earned on the reinvested funds before reinvestment. See “The Offering – Purchases in the Stock Offering and Oversubscriptions” in this prospectus supplement.

 

THE OFFERING

 

Securities Offered		BV Financial is offering participants of the 401(k) Plan the opportunity to purchase participation interests in shares of BV Financial common stock through the 401(k) Plan. A “participation interest” represents your indirect ownership of stock units that are acquired by the 401(k) Plan pursuant to your election and is the equivalent to one share of BV Financial common stock. In this prospectus supplement, “participation interests” are referred to as shares of BV Financial common stock. At the purchase price of $10.00 per share, the 401(k) Plan may acquire up to 332,610 shares of BV Financial common stock in the stock offering, based on the approximate fair market value of the 401(k) Plan’s assets as of December 31, 2022.   Only employees of BayVanguard Bank may become participants in the 401(k) Plan and only participants may purchase shares of BV Financial common stock through the 401(k) Plan. However, your investment in shares of BV Financial common stock in connection with the stock offering is subject to the purchase priorities listed below.   Information regarding the 401(k) Plan is contained in this prospectus supplement and information with respect to the financial condition, results of operations and business of BV Financial and BayVanguard Bank is contained in the accompanying prospectus. The address of the corporate/main office of BV Financial and BayVanguard Bank is 7114 North Point Road, Baltimore, Maryland 21219 and the telephone number at this address is (410) 477-5000.

 

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		Address all questions about this prospectus supplement to Rose Searcy, EVP Human Resources Director, at BayVanguard Bank; telephone: (410) 477-5000, ext. 1013; email: rsearcy@bayvanguard.com.   Direct all questions about the stock offering, the prospectus, or obtaining a stock order form to purchase stock in the offering outside the 401(k) Plan to the Stock Information Center at (443) 637-6212 (toll-free), Monday through Friday, 9:00 a.m. through 4:30 p.m., Eastern Time, except for bank holidays.
Election to Purchase BV Financial, Inc. Common Stock		In connection with the stock offering, you may elect to designate a percentage of your 401(k) Plan account balance (other than the existing BV Financial Stock Fund) (up to 100%) to be used to purchase shares of BV Financial common stock in the stock offering. The trustee of the 401(k) Plan will purchase BV Financial common stock at $10.00 per share to be held as stock units, in accordance with your directions. However, your directions are subject to purchase priorities and purchase limitations described below.
Purchase Priorities		All 401(k) Plan participants are eligible to elect to order BV Financial common stock in the stock offering. However, the elections are subject to the purchase priorities in the Plan or Conversion and Reorganization of Bay-Vanguard, M.H.C., Inc., which provides for a subscription offering and a community offering. In the stock offering, purchase priorities are as follows and apply in case more shares of BV Financial common stock are ordered than are available for sale (i.e., an “oversubscription”):   Subscription Offering:   (1)   Each depositor of BayVanguard Bank with aggregate account balances of at least $50 at the close of business on December 31, 2021, gets first priority.   (2)   BayVanguard Bank’s tax-qualified plans, including the employee stock ownership plan and the 401(k) Plan, get second priority.   (3)   Each depositor of BayVanguard Bank with aggregate account balances of at least $50 at the close of business on March 31, 2023, gets third priority.   (4)   Each depositor of BayVanguard Bank at the close of business on May 2, 2023, get fourth priority.

 

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		Community Offering:   Shares of BV Financial common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering,” with a preference given to natural persons (including trusts of natural persons) in Baltimore City, Maryland and the Maryland Counties of Ann Arundel, Baltimore, Dorchester, Harford and Talbot.   If you fall into purchase priority (1), (3) or (4), you have subscription rights to purchase BV Financial common stock in the subscription offering. You may use up to 100% of your 401(k) Plan account balance (other than balances in the existing BV Financial) to pay for the shares of BV Financial common stock.   If you do not fall into purchase priority (1), (3) or (4), you may place an order for the purchase of BV Financial common stock through the 401(k) Plan in the Community Offering, if one.   Order to subscribe for shares of BV Financial common stock in the stock offering through the 401(k) Plan must be made using the enclosed Special Investment Election Form; to be completed and submitted in the manner described below under “How to Order Common Stock Through the 401(k) Plan During the Offering.”   If you fall into purchase priority (1), (3) or (4), you will separately receive a stock offering materials package in the mail, including a stock order form. You may use the stock order form to order shares of BV Financial common stock outside the 401(k) Plan. Refer to the prospectus for information on how to submit such orders.   Additionally, or instead of placing an order outside of the 401(k) Plan using a stock order form, you may place an order for the purchase of BV Financial common stock through the 401(k) Plan, using the enclosed Special Investment Election Form, to be completed and submitted in the manner described below under “How to Order Common Stock Through the 401(k) Plan During the Offering.”
Purchases in the Stock Offering and Oversubscriptions		The trustee of the 401(k) Plan will order shares of BV Financial common stock in the stock offering based on the designated percentage set forth on your Special Investment Election Form. Specifically, on or about the second business day following the conclusion of the 401(k) Plan Offering Period (as defined below), each of your current investment funds within your 401(k) Plan account (other than balances in the existing BV Financial Bancorp Stock Fund) will be liquidated based on the designated amount set forth in your Special Investment Election Form, and the proceeds (rounded down to the nearest $10.00 increment) will be

 

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		transferred to an interest-bearing account held by the 401(k) Plan pending the formal closing of the stock offering several weeks later. We will determine whether all, or any portion of, your order will be filled (if the offering is oversubscribed, you may not receive all, or any, of your order, depending on your purchase priority, as described above). The amount that can be used toward your order in the stock offering will be applied to the purchase of shares of BV Financial common stock in the stock offering. Following the formal closing of the stock offering, your purchased shares of BV Financial common stock in the stock offering will be reflected in the BV Financial Stock Fund, which will also then include converted shares of common stock of BV Financial currently held in the existing BV Financial Stock Fund. Your ownership interest in the BV Financial Stock Fund will initially be based on the number of shares of BV Financial common stock that you purchased through the 401(k) Plan in the stock offering, plus the converted shares of common stock of BV Financial and any cash from the existing BV Financial Stock Fund. See “Composition of the BV Financial, Inc. Stock Fund” for further details.   If the stock offering is oversubscribed (i.e., there are more orders for BV Financial common stock than shares available for sale in the stock offering) and the trustee is unable to use the full amount allocated by you to purchase BV Financial common stock in the stock offering, the amount that cannot be invested in BV Financial common stock, and any interest earned on that amount, will be reinvested in the existing investment funds of the 401(k) Plan (other than the existing BV Financial Stock Fund), in accordance with your then existing investment election (in proportion to your investment direction for future contributions). The prospectus describes the allocation procedures in the event of an oversubscription.   If you choose not to direct the investment of your 401(k) Plan account balance towards the purchase of BV Financial common stock in the stock offering, your account balance will remain invested in the investment funds of the 401(k) Plan as you previously directed.
Composition of the BV Financial, Inc. Stock Fund		Shares purchased by the 401(k) Plan in the stock offering will be transferred to the 401(k) Plan and held by the BV Financial Stock Fund. The BV Financial Stock Fund is neither a mutual fund nor a diversified or managed investment option. Rather, it is merely a recordkeeping mechanism established by the 401(k) Plan custodian to track the shares purchased by the participants in the stock offering through the 401(k) Plan. The BV Financial Stock Fund will initially consist of shares of BV Financial common stock purchased by participants in the 401(k) Plan, which will be initially valued at $10.00 per share (i.e., the purchase price in the stock offering), plus any converted shares and cash from the existing BV Financial Stock Fund. Following the stock offering, the BV Financial Stock Fund will maintain a cash component for liquidity purposes to facilitate daily transactions, such as investment transfers or distributions from the BV Financial Stock Fund. Your ownership interest in the BV Financial Stock Fund will be denominated in stock units.

 

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		After the stock offering, a stock unit will consist of a percentage interest in both BV Financial common stock and cash held in the BV Financial Stock Fund. Stock unit values (similar to the stock’s share price) and the number of stock units (similar to number of shares) are used to designate the dollar value of the participant’s interest in the BV Financial Stock Fund. Each day the stock unit value of the BV Financial Stock Fund will be determined by dividing the total market value of the fund at the end of the day by the total number of stock units held in the fund by all participants as of the previous day’s end. The change in stock unit value reflects the day’s change in stock price of BV Financial common stock, any cash dividends accrued, and the interest earned on the cash component of the BV Financial Stock Fund, less any investment management fees (if applicable). Investment in BV Financial common stock involves special risks related to investments in shares of BV Financial common stock. For a discussion of material risks you should consider, see the “Risk Factors” section of this prospectus supplement, the “Risk Factors” section of the accompanying prospectus, and the section of this prospectus supplement called “Notice of Your Rights Concerning Employer Securities” (see below).   The market value and stock unit holdings of your 401(k) Plan account in the BV Financial Stock Fund will be reported to you on your quarterly statements, which may be accessed through your participant website.
Minimum and Maximum Investment		In connection with the stock offering, the 401(k) Plan will permit you to use up to 100% of your 401(k) Plan account balance (other than your account balance in the existing BV Financial Stock Fund) for the purchase of BV Financial common stock.   The trustee of the 401(k) Plan will subscribe for shares of the BV Financial common stock offered for sale in the stock offering, in accordance with each participant’s direction. The trustee will pay $10.00 per share, which will be the same price paid by all other persons who purchase shares in the subscription and community offerings. To purchase BV Financial common stock through the 401(k) Plan, the minimum investment will be the purchase of 25 shares of BV Financial common stock, which equals $250. The prospectus describes maximum purchase limits for investors in the stock offering.

 

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Value of 401(k) Plan Assets		The market value of the assets of the 401(k) Plan as of December 31, 2022, was approximately $3,326,103.
How to Order Common Stock Through the 401(k) Plan During the Offering		Enclosed is a Special Investment Election Form on which you can make a special election to purchase BV Financial common stock in the stock offering through the BV Financial Stock Fund. This is done by following the procedures described below. Note the following stipulations concerning this election:   •  Using your Special Investment Election Form, you can designate a percentage (up to 100%) of your total 401(k) Plan account balance (other than balances in the existing BV Financial Stock Fund) to be used to order BV Financial common stock in the stock offering.   •  Your election is subject to a minimum purchase of 25 shares of BV Financial common stock at the purchase price of $10.00 per share.   •  Your election, plus any order you placed outside the 401(k) Plan using a stock order form, are together subject to a maximum purchase limit. Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 70,000 shares ($700,000) of common stock, and no person or entity, together with associates or persons acting in concert with such person or entity, may purchase more than 70,000 shares ($700,000) of common stock in all categories of the stock offering combined.   •  The election period for the 401(k) Plan ends at 4:00 p.m., Eastern time, on June 13, 2023 (the “401(k) Plan Offering Period”).   •  During the 401(k) Plan Offering Period, you will continue to be able to transfer amounts that are not directed to be used to purchase BV Financial common stock among all other investment funds. However, you will not be permitted to change the investment amounts that you designated to be used to purchase BV Financial common stock on your Special Investment Election Form.   •  As soon as practicable following the 401(k) Plan Offering Period (most likely on or about the second day), the 401(k) Plan trustee will sell, on a pro-rata basis, a portion of each of your investment funds within your 401(k) Plan account based on the dollar amount designated in your Special Investment Election Form. Thereafter, the proceeds (rounded down to the nearest $10.00 increment) will be transferred to an interest-bearing account held by the 401(k) Plan pending the formal closing of the stock offering several weeks after the 401(k) Plan Offering Period.

 

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		•  Following the formal closing of the stock offering, your purchased shares of BV Financial common stock will be reflected in the BV Financial Stock Fund, which will be denominated in stock units. Any amounts remaining in the interest-bearing account because the amounts could not be used by the trustee to purchase BV Financial common stock in the stock offering will be reinvested in the existing investment funds of the 401(k) Plan, in accordance with your then existing investment election (in proportion to your investment direction for future contributions).
Special Investment Election Form Delivery Deadline		If you wish to elect to order BV Financial common stock in the stock offering through the 401(k) Plan, you must return your Special Investment Election Form to Rose Searcy, EVP Human Resources Director, at BayVanguard Bank, 7114 North Point Road, Baltimore, Maryland 21219 no later than the 4:00 p.m., Eastern time, deadline on June 13, 2023.   Address all questions about this prospectus supplement to Rose Searcy, EVP Human Resources Directors, at BayVanguard Bank; telephone: (410) 477-5000; email: rsearcy@bayvanguard.com.
Irrevocability of Transfer Direction		Once you make an election to purchase shares of BV Financial common stock in the stock offering through the 401(k) Plan, you may not change your election. Your election is irrevocable. You will, however, continue to be able to transfer amounts not directed towards the purchase of shares of BV Financial common stock among all other investment funds in the 401(k) Plan on a daily basis.
Future Direction to Purchase and Sell Common Stock		You will be able to purchase participation interests in the BV Financial Stock Fund after the stock offering through the 401(k) Plan. You will also be able to sell your interest in the BV Financial Stock Fund (subject to the restrictions below).   After the stock offering, you will again have complete access to any amounts you directed towards the purchase of shares in the stock offering. For example, after the stock offering closes, you generally may sell any units you purchased in the offering. However, special restrictions may apply to purchasing or selling shares of BV Financial common stock by the participants who are subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors and principal stockholders of BV Financial. Note that if you are an officer of BV Financial that is restricted by federal or state regulations from selling shares of BV Financial common stock acquired in the stock offering for one year, the BV Financial common stock that you purchased in the stock offering through the 401(k) Plan (and held by the BV Financial Stock Fund) will not be tradable until the one-year trading restriction has lapsed.

 

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Voting Rights of Common Stock		The 401(k) Plan provides that you may direct the trustee as to how to vote your interest in the shares of BV Financial common stock held by BV Financial Stock Fund. If the trustee does not receive your voting instructions, the administrator of the 401(k) Plan will direct the trustee to vote your shares in the same proportion as the voting instructions received from other participants related to their shares of BV Financial common stock held by the BV Financial Stock Fund, provided that the vote is made in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). All voting instructions will be kept confidential.

DESCRIPTION OF THE 401(k) PLAN

Introduction

BayVanguard Bank originally adopted the predecessor plan to the 401(k) Plan effective as of January 1, 1993, and amended and restated the 401(k) Plan effective January 1, 2022. The 401(k) Plan is a single-employer, tax-qualified plan with a cash or deferred compensation feature established in accordance with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”).

BayVanguard Bank intends that the 401(k) Plan, in operation, will comply with the requirements under Section 401(a) and Section 401(k) of the Code. BayVanguard Bank will adopt any amendments to the 401(k) Plan that may be necessary to ensure the continuing qualified status of the 401(k) Plan under the Code and applicable Treasury Regulations.

Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The 401(k) Plan is an “individual account plan” other than a “money purchase pension plan” within the meaning of ERISA. As such, the 401(k) Plan is subject to all of the provisions of Title I (Protection of Employee Benefit Rights) and Title II (Amendments to the Code Relating to Retirement Plans) of ERISA, except to the funding requirements contained in Part 3 of Title I of ERISA, which by their terms do not apply to an individual account plan (other than a money purchase plan). The Plan is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding requirements contained in Title IV of ERISA are not applicable to participants or beneficiaries under the 401(k) Plan.

Reference to Full Text of 401(k) Plan. The following portions of this prospectus supplement summarize certain provisions of the 401(k) Plan. They are not complete and are qualified in their entirety by the full text of the BayVanguard Bank 401(k) Profit Sharing Plan. Copies of the 401(k) Plan are available to all employees by filing a request with the 401(k) Plan Administrator c/o BayVanguard Bank, Attn: Rose Searcy. You are urged to carefully read the full text of the 401(k) Plan.

 

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Eligibility and Participation

As an employee of BayVanguard Bank, you are eligible to become a participant in the 401(k) Plan for purposes of making elective deferrals on the entry date coinciding with or immediately following your attainment of age 21 and completion of 90 consecutive calendar days of employment following date of hire in which you complete at least 250 Hours of Service. For entitlement to employer matching contributions and employer profit sharing contributions, you must complete one Year of Service and attain 21 years of age. The entry dates under the 401(k) Plan are the first day of each calendar quarter following satisfaction of the eligibility requirements for making elective deferrals. The first day of the payroll period following satisfaction of the eligibility requirements for employer matching contributions and the first day of January and July following satisfaction of the eligibility requirements for purposes of receiving employer nonelective contributions.

As of December 31, 2022, there were approximately 73 active and former employees in the 401(k) Plan.

Contributions under the 401(k) Plan

Elective Deferrals. 401(k) Plan participants are permitted to defer any whole percentage of their Compensation (as defined below) from 1% to 25% of their Compensation, subject to certain restrictions imposed by the Code, and to have that amount contributed to the 401(k) Plan on their behalf. Participants may make either traditional 401(k) deferrals (pre-tax) or Roth 401(k) deferrals (after-tax). Pre-tax deferrals are not subject to income tax until distributed from the Plan. Roth deferrals are subject to income tax at the time of deferral. The Roth 401(k) deferrals, however, are not taxed when distributed from the Plan if certain eligibility requirements are met. For purposes of the 401(k) Plan, “Compensation” means the taxable compensation reported on Form W-2, with certain exclusions. In addition, any pre-tax contributions made to the 401(k) plan and pre-tax contributions to a Section 125 cafeteria plan and qualified transportation fringe benefits are included in Compensation. For 2023, the Compensation of each participant taken into account under the 401(k) Plan is limited to $330,000. (Limits established by the Internal Revenue Service are subject to increase pursuant to an annual cost-of-living adjustment, as permitted by the Code). Canceling or changing a contribution percentage can be accomplished over the internet at any time.

Catch-up Contributions. Participants who have made the maximum amount of regular before-tax contributions allowed by the 401(k) Plan or other legal limits and have attained at least age 50 (or will reach age 50 before the end of the Plan Year, which is December 31), are also eligible to make an additional catch-up contribution. For 2023, the maximum catch-up contribution is $7,500. Participants may authorize BayVanguard Bank to withhold a specified dollar amount of their Compensation for this purpose.

Qualified Non-elective Contributions. BayVanguard Bank may make discretionary qualified non-elective contributions which are allocated to each eligible participant’s account in proportion to his or her Compensation as a percentage of all eligible participant’s Compensation. Qualified non-elective contributions will only be made to non-highly compensated employees and will be made to satisfy certain non-discrimination tests that ensure that the elective deferrals of highly compensated employees do not exceed the elective deferrals of non-highly compensated employees by more than a certain margin. If made, qualified non-elective contributions are deemed to be elective deferrals for purposes of helping to satisfy such tests. Qualified non-elective contributions are fully vested when made.

Employer Matching Contributions. BayVanguard Bank currently makes a Matching Contribution equal to 20% of the first 5% of Compensation an eligible participant contributes to the 401(k) Plan for the payroll period.

 

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Limitations on Contributions

Contribution Limits. For the Plan Year beginning January 1, 2023, the amount of before-tax contributions may not exceed $22,500 per calendar year, or $30,000, if a participant is eligible to make catch-up contributions. Contributions in excess of this limit are known as excess deferrals. For participants who defer amounts in excess of this limitation, their gross income for federal income tax purposes will include the excess in the year of the deferral. In addition, unless the excess deferral is distributed before April 15 of the following year, it will be taxed again in the year distributed. Income on the excess deferral distributed by April 15 of the immediately succeeding year will be treated, for federal income tax purposes, as earned and received by you in the tax year in which the contribution is made.

The total amount of contributions that participants make and any employer contributions made on behalf of a participant in one year is limited to the lesser of 100% of compensation or, for 2023, $66,000, or if applicable, $73,500 including catch-up contributions.

Rollovers. Participants may make a rollover contribution of an eligible rollover distribution from any other qualified retirement plan or an individual retirement arrangement (“IRA”). These funds will be maintained in a separate rollover account in which participants will have a nonforfeitable vested interest.

Benefits Under the 401(k) Plan

Vesting. At all times, participants have a fully vested, nonforfeitable interest in elective deferral and vest in employer contributions under the 401(k) Plan at the rate of 20% per year of service beginning after two years of service; so that they are fully vested after six years of service.

Distribution at Termination of Employment. You (or your beneficiary, in the event of your death) will be entitled to receive a distribution of the vested amounts in your account when your employment terminates for any reason. Your benefit will be equal to the vested balance of your account. You will receive payment of your benefit in a lump sum. You may request a partial distribution of the vested portion of your account; the minimum amount will be $1,000. You may be eligible to elect a direct rollover of your distribution to an IRA or another qualified plan to avoid current taxation of your benefit. The Plan will make involuntary cash-out distributions of vested account balances of $1,000 or less. In determining the value of your vested account balance, the Plan will include rollover contributions. If the value of your vested account balance exceeds $1,000, you must consent to any distribution of such account balance. If you are not a 5% or more owner of your employer, your required benefit commencement date is the April 1^st following the close of the year in which the later occurs: you attain age 73 or you terminate employment.

Distribution after Death of Participant. In the event of your death, the value of your entire account will be payable to your beneficiary. If your spouse is your beneficiary, distribution must begin by December 31 of the calendar year immediately following the calendar year in which you died, or by December 31 of the calendar year in which you would have attained age 73, if later.

 

S-10

Investment of Contributions and Account Balances

All amounts credited to your accounts under the 401(k) Plan are held in the 401(k) Plan trust (the “Trust”), which is administered by the trustee appointed by BayVanguard Bank’s Board of Directors. Before the effective date of the stock offering, you are currently given the opportunity to direct the investment of your account into one or more of the following investment options:

American Beacon Large Cap Value Fund

American Funds EuroPacific Growth Fund

Columbia Mid Cap Index Fund

Columbia Small Cap Index Fund

State Street S&P 500 Index Fund

T. Rowe Price Blue Chip Growth Fund

BNY Mellon Bond Market Index Fund

Vanguard Target Retirement Income Fund

Vanguard Target Retirement 2020 Fund

Vanguard Target Retirement 2025 Fund

Vanguard Target Retirement 2030 Fund

Vanguard Target Retirement 2035 Fund

Vanguard Target Retirement 2040 Fund

Vanguard Target Retirement 2045 Fund

Vanguard Target Retirement 2050 Fund

Vanguard Target Retirement 2055 Fund

Vanguard Target Retirement 2060 Fund

Vanguard Target Retirement 2065 Fund

Vanguard Target Retirement 2070 Fund

MetLife Stable Value Fund

BV Financial Stock Fund

 

*	The Vanguard funds noted in this prospectus supplement are not affiliated with BayVanguard Bank or its affiliated entities.

Qualified Default Investment Alternative. For participants who are automatically enrolled in the 401(k) Plan, or otherwise fail to direct how their 401(k) Plan contributions are to be invested, contribution amounts will be invested in the 401(k) Plan’s “qualified default investment alternative” until such time as the participant provides investment direction. The 401(k) Plan’s qualified default investment alternative is the [fund name]. The specific fund selected for a given participant will be the fund which approximately coincides with or next follows the year in which the participant will attain age 65.

In connection with the stock offering, the 401(k) Plan now provides that, in addition to the investment options specified above, you may direct the trustee, or its representative, to invest all or a portion of your account in the BV Financial Stock Fund.

Performance History

The following table provides performance data with respect to the above investment funds as of December 31, 2022 (the Vanguard funds noted in this prospectus supplement are not affiliated with BayVanguard Bank or its affiliated entities.):

 

						Total Returns as of December 31
Fund Name		Dec. 31, 2022				1 Year				3 Year				5 Year				10 Year
American Beacon Large Cap Value Fund			-5.56	%			-5.56	%			7.43	%			7.04	%			10.15	%
American Funds EuroPacific Growth Fund			-23.00	%			-23.00	%			-0.50	%			1.18	%			4.94	%
Columbia Mid Cap Index Fund			-13.49	%			-13.49	%			6.71	%			6.19	%			10.26	%
Columbia Small Cap Index Fund			-16.52	%			-16.52	%			5.29	%			5.38	%			10.29	%
State Street S&P 500 Index Fund			-18.25	%			-18.25	%			7.61	%			9.30	%			12.42	%
T. Rowe Price Blue Chip Growth Fund			-38.75	%			-38.75	%			-1.15	%			4.96	%			11.54	%
BNY Mellon Bond Market Index Fund			-13.62	%			-13.62	%			-3.15	%			-0.41	%			0.59	%
Vanguard Target Retirement Income Fund			-12.74	%			-12.74	%			0.34	%			2.30	%			3.62	%
Vanguard Target Retirement 2020 Fund			-14.15	%			-14.15	%			1.33	%			3.22	%			5.83	%
Vanguard Target Retirement 2025 Fund			-15.55	%			-15.55	%			1.66	%			3.58	%			6.43	%
Vanguard Target Retirement 2030 Fund			-16.27	%			-16.27	%			2.09	%			3.94	%			6.99	%
Vanguard Target Retirement 2035 Fund			-16.62	%			-16.62	%			2.64	%			4.34	%			7.57	%
Vanguard Target Retirement 2040 Fund			-16.98	%			-16.98	%			3.17	%			4.74	%			8.06	%
Vanguard Target Retirement 2045 Fund			-17.36	%			-17.36	%			3.74	%			5.14	%			8.34	%
Vanguard Target Retirement 2050 Fund			-17.46	%			-17.46	%			3.80	%			5.18	%			8.36	%
Vanguard Target Retirement 2055 Fund			-17.46	%			-17.46	%			3.79	%			5.18	%			8.34	%
Vanguard Target Retirement 2060 Fund			-17.46	%			-17.46	%			3.79	%			5.18	%			8.34	%
Vanguard Target Retirement 2065 Fund			-17.39	%			-17.39	%			3.78	%			5.15	%			6.42	%
Vanguard Target Retirement 2070 Fund			N/A				N/A				N/A				N/A				1.02	%
MetLife Stable Value Fund			2.48	%			2.48	%			2.28	%			2.53	%			2.49	%
BayVanguard Federal Stock			21.23	%			21.23	%			10.04	%			18.83	%			13.70	%

 

S-11

Description of the Investment Funds

The following is a description of each of the funds (the Vanguard funds noted in this prospectus supplement are in no way affiliated with BayVanguard Bank or its affiliated entities):

American Beacon Large Cap Value Fund – The Fund seeks long-term capital appreciation and current income. Normally, most of the Fund’s net assets are invested in equity securities of large market capitalization U.S. companies. These companies have market capitalizations within the market capitalization range of the companies in the Russell 1000 Index at the time of investment.

American Funds EuroPacific Growth Fund – The Fund seeks long-term growth of capital. The Fund invests primarily in common stocks of issuers in Europe and the Pacific Basin that the investment adviser believes have the potential for growth. Growth stocks are stocks that the investment adviser believes have the potential for above-average capital appreciation. The Fund may invest a portion of its assets in common stocks and other securities of companies in emerging markets.

Columbia Mid Cap Index Fund – The Fund seeks total return that corresponds to the total return of the S&P MidCap 400 Index. The Fund invests primarily in common stocks that comprise the S&P MidCap 400 Index. In seeking to match the performance of the Index, the Fund’s assets are allocated among common stocks in approximately the same weightings as the Index. The Fund attempts to achieve at least a 95% correlation between the performance of the Index and its investment results.

Columbia Small Cap Index Fund – The Fund seeks total return before fees and expenses that correspond to the total return of the Standard & Poor’s (S&P) SmallCap 600 Index. Normally, the Fund invests primarily in common stocks that comprise the S&P SmallCap 600 Index. The Investment Manager attempts to achieve at least a 95% correlation between the performance of the Index and the Fund’s investment results, before fees and expenses. The Fund may invest in derivatives, such as futures (including equity index futures), for cash equalization purposes.

State Street S&P 500 Index Fund – The Fund seeks to replicate as closely as possible the performance of the S&P 500 Index. The advisor uses an index tracking management strategy designed to track the performance of the S&P 500 Index.The index is a well-known stock market index that includes common stocks of 500 companies from a number of sectors and that measures the performance of the large-cap sector of the U.S. equities market.

T. Rowe Price Blue Chip Growth Fund – The Fund seeks long-term capital growth; income is a secondary objective. The Fund will normally invest primarily in the common stocks of large and medium-sized blue chip growth companies. It focuses on companies with leading market positions, seasoned management, and strong financial fundamentals. The Fund is non-diversified.

BNY Mellon Bond Market Index Fund – The Fund seeks to match the total return of the Bloomberg U.S. Aggregate Bond Index. The Fund invests in bonds that are included in the index or other instruments with similar economic characteristics. The Bloomberg U.S. Aggregate Bond Index is a broad-based, unmanaged index that covers the U.S. dollar-denominated, investment grade, fixed-rate, taxable bond market.

 

S-12

Vanguard Target Retirement Income Fund – The Fund seeks current income and some capital appreciation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors currently in retirement. Its indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; inflation-protected public obligations issued by the U.S. Treasury; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds.

Vanguard Target Retirement 2020 Fund – The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to a strategy designed for investors planning to retire and leave the workforce in or within a few years of 2020. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

Vanguard Target Retirement 2025 Fund – The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2025. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

Vanguard Target Retirement 2030 Fund – The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to a strategy designed for investors planning to retire and leave the workforce in or within a few years of 2030. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

Vanguard Target Retirement 2035 Fund – The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2035. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

Vanguard Target Retirement 2040 Fund – The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to a strategy designed for investors planning to retire and leave the workforce in or within a few years of 2040. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

Vanguard Target Retirement 2045 Fund – The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2045. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

 

S-13

Vanguard Target Retirement 2050 Fund – The Fund seeks capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to a strategy designed for investors planning to retire and leave the workforce in or within a few years of 2050. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

Vanguard Target Retirement 2055 Fund – The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2055. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage allocated to bonds and other fixed income investments will increase.

Vanguard Target Retirement 2060 Fund – The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of Vanguard mutual funds according to an asset allocation strategy designed for investors planning to ret ire and leave the workforce in or within a few years of 2060. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds will increase.

Vanguard Target Retirement 2065 Fund – The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation. The Fund invests in a mix of Vanguard mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2065. The Fund’s asset allocation will become more conservative over time.

Vanguard Target Retirement 2070 Fund – The investment seeks to provide capital appreciation and current income consistent with its current asset allocation. The fund invests in a mix of Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2070 (the target year). The fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase.

MetLife Stable Value Fund – The Fund’s objective is the safety and preservation of principal and accumulated interest for participant-initiated transactions. The interest credited to balances in the Fund will reflect both current market conditions and performance of the underlying investments in the Fund.

BV Financial Stock Fund (Current Employer Stock Fund) – The BV Financial Stock Fund consists primarily of common stock of BV Financial. This fund was made available to 401(k) Plan participants in connection with the mutual holding company reorganization and minority stock offering in 2005. Participants were allowed the opportunity to invest 401(k) Plan funds in the BV Financial Stock Fund. Investments in the BV Financial Stock Fund involve special risks common to investments in the shares of common stock of BV Financial. Shares of BV Financial that were held in the BV Financial Stock Fund before the conversion and offering will be converted into new shares of common stock of BV Financial, in accordance with the exchange ratio. As soon as practicable after the closing of the stock offering, the BV Financial Stock Fund will be merged into the BV Financial Stock Fund.

 

S-14

An investment in any of the funds listed above is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. As with any mutual fund investment, there is always a risk that you may lose money on your investment in any of the funds listed above.

For a discussion of material risks you should consider, see “Risk Factors” of this prospectus supplement, “Risk Factors” beginning on page _ of the attached prospectus, and the section of this prospectus supplement called “Notice of Your Rights Concerning Employer Securities” below.

Investors should carefully consider a mutual fund’s investment objectives, risks, charges, and expenses before investing. A prospectus, or summary prospectus if available, containing this and other information can be obtained by contacting the 401(k) Plan administrator. Read the prospectus carefully before investing.

Before directing retirement funds to a separate account, investors should carefully consider the investment objectives, risks, charges, and expenses of the separate account as well as their individual risk tolerance, time horizon and goals. For additional information, contact the 401(k) Plan administrator.

BV Financial, Inc. Stock Fund

In connection with the stock offering, you may, in the manner described earlier, elect to direct the trustee to invest all or a portion of your 401(k) Plan account in BV Financial common stock (other than account balances in the BV Financial Stock Fund). Your purchased shares will be held within the 401(k) Plan by the BV Financial Stock Fund. The BV Financial Stock Fund is neither a mutual fund nor a diversified or managed investment option. Rather, it is merely a recordkeeping mechanism established by the 401(k) Plan custodian to track the shares purchased by the participants in the stock offering through the 401(k) Plan.

Performance of the BV Financial Stock Fund depends on a number of factors, including the financial condition and profitability of BV Financial and BayVanguard Bank and market conditions for shares of BV Financial common stock generally.

Investments in the BV Financial Stock Fund involve special risks related to investments in the shares of common stock of BV Financial. In making a decision to invest all or a part of your account balance in the BV Financial Stock Fund, you should carefully consider the information set forth in this prospectus supplement under “Notice of Your Rights Concerning Employer Securities – The Importance of Diversifying Your Retirement Savings.”

For a discussion of material risks you should consider, see “Risk Factors” of this prospectus supplement, “Risk Factors” beginning on page [#] of the attached prospectus, and the section of this prospectus supplement called “Notice of Your Rights Concerning Employer Securities” below.

An investment in any of the investment options listed above under “Description of the 401(k) Plan – Description of the Investment Funds” is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. As with any investment option, there is always a risk that you may lose money on your investment in any of the investment options listed above.

 

S-15

Administration of the 401(k) Plan

The Trustee and Custodian. Pentegra Trust Company serves as directed trustee of all the investment funds under the 401(k) Plan, including the BV Financial Stock Fund and the BV Financial Stock Fund. Reliance Trust Company is appointed Custodian for all investment funds under the 401(k) Plan.

401(k) Plan Administrator. Pursuant to the terms of the 401(k) Plan, the 401(k) Plan is administered by the 401(k) Plan administrator, which is BayVanguard Federal Savings Bank. The address of the 401(k) Plan administrator is 7114 North Point Road, Baltimore, Maryland 21219 and the telephone number at this address is (410) 477-5000. The 401(k) Plan administrator is responsible for the administration of the 401(k) Plan, interpretation of the provisions of the 401(k) Plan, prescribing procedures for filing applications for benefits, preparation and distribution of information explaining the 401(k) Plan, maintenance of 401(k) Plan records, books of account and all other data necessary for the proper administration of the 401(k) Plan, preparation and filing of all returns and reports relating to the 401(k) Plan which are required to be filed with the U.S. Department of Labor and the Internal Revenue Service, and for all disclosures required to be made to participants, beneficiaries and others under Sections 104 and 105 of ERISA.

Reports to Plan Participants. The 401(k) Plan administrator will furnish you a statement at least quarterly showing the balance in your account as of the end of that period, the amount of contributions allocated to your account for that period, and any adjustments to your account to reflect earnings or losses (if any). In addition, you may go online to www.pentegra.com at any time to review your account balances.

Amendment and Termination

BayVanguard Bank intends to continue the 401(k) Plan indefinitely. Nevertheless, BayVanguard Bank may terminate the 401(k) Plan at any time. If the 401(k) Plan is terminated in whole or in part, then regardless of other provisions in the 401(k) Plan, you will have a fully vested interest in your 401(k) Plan account. BayVanguard Bank reserves the right to make any amendment or amendments to the 401(k) Plan which do not cause any part of the trust to be used for, or diverted to, any purpose other than the exclusive benefit of participants or their beneficiaries; provided, however, that BayVanguard Bank may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with ERISA.

Merger, Consolidation or Transfer

In the event of the merger or consolidation of the 401(k) Plan with another plan, or the transfer of the plan assets to another plan, the 401(k) Plan requires that you would, if either the 401(k) Plan or the other plan terminates, receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit you would have been entitled to receive immediately before the merger, consolidation or transfer, if the 401(k) Plan had then terminated.

Federal Income Tax Consequences

The following is a brief summary of the material federal income tax aspects of the 401(k) Plan. You should not rely on this summary as a complete or definitive description of the material federal income tax consequences relating to the 401(k) Plan. Statutory provisions change, as do their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws. Consult your tax advisor with respect to any distribution from the 401(k) Plan and transactions involving the 401(k) Plan.

 

S-16

As a “tax-qualified retirement plan,” the Code affords the 401(k) Plan special tax treatment, including:

 

(1)

the sponsoring employer is allowed an immediate tax deduction for the amount contributed to the 401(k) Plan each year;

 

(2)

participants pay no current income tax on amounts contributed by the employer on their behalf; and

 

(3)

earnings of the 401(k) Plan are tax-deferred, thereby permitting the tax-free accumulation of income and gains on investments.

BayVanguard Bank will administer the 401(k) Plan to comply with the requirements of the Code as of the applicable effective date of any change in the law.

Lump-Sum Distribution. A distribution from the 401(k) Plan to a participant or the beneficiary of a participant will qualify as a lump-sum distribution if it is made within one taxable year, on account of the participant’s death, disability or separation from service, or after the participant attains age 59^1⁄₂, and consists of the balance credited to participants under the 401(k) Plan and all other profit sharing plans, if any, maintained by BayVanguard Bank. The portion of any lump-sum distribution required to be included in your taxable income for federal income tax purposes consists of the entire amount of the lump-sum distribution, less the amount of after-tax contributions, if any, you have made to this 401(k) Plan and any other profit sharing plans maintained by BayVanguard Bank, which is included in the distribution.

BV Financial Common Stock Included in Lump-Sum Distribution. If a lump-sum distribution includes BV Financial common stock, the distribution generally will be taxed in the manner described above, except that the total taxable amount may be reduced by the amount of any net unrealized appreciation with respect to BV Financial common stock; that is, the excess of the value of BV Financial at the time of the distribution over its cost or other basis of the securities to the trust. The tax basis of BV Financial common stock, for purposes of computing gain or loss on its subsequent sale, equals the value of BV Financial common stock at the time of distribution, less the amount of net unrealized appreciation. Any gain on a subsequent sale or other taxable disposition of BV Financial common stock, to the extent of the amount of net unrealized appreciation at the time of distribution, will constitute long-term capital gain, regardless of the holding period of BV Financial common stock. Any gain on a subsequent sale or other taxable disposition of BV Financial common stock, in excess of the amount of net unrealized appreciation at the time of distribution, will be considered long-term capital gain. The recipient of a distribution may elect to include the amount of any net unrealized appreciation in the total taxable amount of the distribution, to the extent allowed by regulations to be issued by the Internal Revenue Service.

Distributions: Rollovers and Direct Transfers to Another Qualified Plan or to an IRA. You may roll over virtually all distributions from the 401(k) Plan to another qualified plan or to an individual retirement account in accordance with the terms of the other plan or account.

 

S-17

Notice of Your Rights Concerning Employer Securities

Federal law provides specific rights concerning investments in employer securities. Because you may in the future have investments in BV Financial common stock under the 401(k) Plan, you should take the time to read the following information carefully.

Your Rights Concerning Employer Securities. The 401(k) Plan must allow you to elect to move any portion of your account that is invested in BV Financial common stock from that investment into other investment alternatives under the 401(k) Plan. You may contact the 401(k) Plan administrator shown above for specific information regarding this right, including how to make this election. In deciding whether to exercise this right, you will want to give careful consideration to the information below that describes the importance of diversification. All of the investment options under the 401(k) Plan are available to you if you decide to diversify out of your investment in BV Financial common stock.

The Importance of Diversifying Your Retirement Savings. To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk.

In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the 401(k) Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerance for risk. Therefore, you should carefully consider the rights described here and how these rights affect the amount of money that you invest in BV Financial common stock through the 401(k) Plan.

It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the 401(k) Plan to help ensure that your retirement savings will meet your retirement goals.

Additional Employee Retirement Income Security Act, as amended, Considerations

As noted above, the 401(k) Plan is subject to certain provisions of ERISA, including special provisions relating to control over the 401(k) Plan’s assets by participants and beneficiaries. The 401(k) Plan’s feature that allows you to direct the investment of your account balances is intended to satisfy the requirements of Section 404(c) of ERISA relating to control over plan assets by a participant or beneficiary. The effect of this is two-fold. First, you will not be deemed a “fiduciary” because of your exercise of investment discretion. Second, no person who otherwise is a fiduciary, such as BayVanguard, the 401(k) Plan administrator, or the 401(k) Plan’s trustee is liable under the fiduciary responsibility provision of ERISA for any loss which results from your exercise of control over the assets in your 401(k) Plan account.

Because you will be entitled to invest all or a portion of your account balance in the 401(k) Plan in BV Financial common stock, the regulations under Section 404(c) of the ERISA require that the 401(k) Plan establish procedures that ensure the confidentiality of your decision to purchase, hold, or sell employer securities, except to the extent that disclosure of such information is necessary to comply with federal or state laws not preempted by ERISA. These regulations also require that your exercise of voting and similar rights with respect to BV Financial common stock be conducted in a way that ensures the confidentiality of your exercise of these rights.

 

S-18

Securities and Exchange Commission Reporting and Short-Swing Profit Liability

Section 16 of the Securities Exchange Act of 1934 imposes reporting and liability requirements on officers, directors, and persons beneficially owning more than 10% of public companies, such as BV Financial. Section 16(a) of the Securities Exchange Act of 1934 requires the filing of reports of beneficial ownership. Within 10 days of becoming an officer, director or person beneficially owning more than 10% of the shares of BV Financial, a Form 3 reporting initial beneficial ownership must be filed with the Securities and Exchange Commission. Changes in beneficial ownership, such as purchases, sales and gifts generally must be reported periodically, either on a Form 4 within two business days after the change occurs, or annually on a Form 5 within 45 days after the close of fiscal year of BV Financial. Discretionary transactions in and beneficial ownership of BV Financial common stock by officers, directors and persons beneficially owning more than 10% of BV Financial common stock generally must be reported to the Securities and Exchange Commission by such individuals.

In addition to the reporting requirements described above, Section 16(b) of the Securities Exchange Act of 1934 provides for the recovery by BV Financial of profits realized by an officer, director or any person beneficially owning more than 10% of BV Financial common stock resulting from non-exempt purchases and sales of BV Financial common stock within any six (6)-month period.

The Securities and Exchange Commission has adopted rules that provide exemptions from the profit recovery provisions of Section 16(b) for all transactions in employer securities within an employee benefit plan, provided certain requirements are met. These requirements generally involve restrictions upon the timing of elections to acquire or dispose of employer securities for the accounts of Section 16(b) persons.

Except for distributions of BV Financial common stock due to death, disability, retirement, termination of employment or under a qualified domestic relations order, persons affected by Section 16(b) are required to hold shares of BV Financial common stock distributed from the 401(k) Plan for six (6) months following such distribution and are prohibited from directing additional purchases of BV Financial common stock for six (6) months after receiving such a distribution.

Financial Information Regarding Plan Assets

Financial information representing the net assets available for 401(k) Plan benefits and the change in net assets available for 401(k) Plan benefits is available upon written request to the 401(k) Plan administrator at the address shown above.

LEGAL OPINION

The validity of the issuance of BV Financial common stock has been passed upon by Luse Gorman, PC, Washington, D.C., which firm has acted as special counsel to BV Financial in connection with the stock offering of BV Financial.

 

S-19

PROSPECTUS

 

(Holding company for BayVanguard Bank)

Up to 13,225,000 Shares of Common Stock

(Subject to Increase to up to 15,208,750 Shares)

BV Financial, Inc., a Maryland corporation that we refer to as “BV Financial” throughout this prospectus, is offering shares of common stock for sale on a best efforts basis in connection with the conversion of Bay-Vanguard, M.H.C., Inc., which we refer to as “Bay-Vanguard, M.H.C.” throughout this prospectus, from the mutual holding company to the stock holding company form of organization. The shares we are offering represent the majority ownership interest in BV Financial currently owned by Bay-Vanguard, M.H.C., a Maryland-chartered mutual holding company. BV Financial’s common stock currently trades on the Pink Open Market operated by OTC Markets Group under the symbol “BVFL.” Upon completion of the conversion, we expect the shares of BV Financial common stock will trade on the Nasdaq Capital Market under the symbol “BVFL.” We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012.

The shares of common stock are first being offered for sale in a subscription offering to eligible members of Bay-Vanguard, M.H.C. (i.e., eligible depositors of BayVanguard Bank) and to tax-qualified employee benefit plans of BayVanguard Bank. Shares not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given first to residents of the communities served by BayVanguard Bank. Any shares of common stock not purchased in the subscription or community offerings may be offered for sale to the public through a syndicate of broker-dealers, referred to in this prospectus as the syndicated community offering. The syndicated community offering may commence before the subscription and community offerings (including any extensions) have expired. However, no shares purchased in the subscription offering or the community offering will be issued until the completion of any syndicated community offering. We may sell up to 15,208,750 shares of common stock because of demand for the shares of common stock or changes in market conditions, without resoliciting subscribers. We must sell a minimum of 9,775,000 shares to complete the offering.

In addition to the shares we are selling in the offering, the shares of common stock of BV Financial currently owned by public stockholders will be exchanged for shares of common stock of BV Financial based on an exchange ratio that will result in existing public stockholders owning approximately the same percentage of common stock of BV Financial as they owned immediately before the completion of the conversion. We expect to issue up to 2,432,560 shares in the exchange.

The minimum purchase order is 25 shares. Generally, the maximum number of shares of common stock that can be ordered by any person, either individually or together with an associate or group of persons acting in concert, is 70,000 shares ($700,000) of common stock in all categories of the offering combined.

The subscription offering will expire at 4:30 p.m., Eastern Time, on June 20, 2023. If held, the community offering may begin concurrently with, during or after the subscription offering. We may extend the expiration date of the subscription and/or community offerings without notice to you until August 4, 2023, or longer if the Board of Governors of the Federal Reserve System, which we refer to as the “Federal Reserve Board,” approves a later date. No single extension may exceed 90 days and the offering must be completed by June 29, 2025. Once submitted, orders are irrevocable unless the subscription and community offerings are terminated or extended, with regulatory approval, beyond August 4, 2023, or the number of shares of common stock to be sold is increased to more than 15,208,750 shares or decreased to less than 9,775,000 shares. If the subscription and community offerings are extended past August 4, 2023, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will promptly return your funds with interest or cancel your deposit account withdrawal authorization. If the number of shares to be sold in the offering is increased to more than 15,208,750 shares or decreased to less than 9,775,000 shares, we will resolicit subscribers, and all funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly with interest. Funds received in the subscription and the community offerings will be held in a segregated account at BayVanguard Bank and will earn interest at 0.05% per annum until completion or termination of the offering.

Performance Trust Capital Partners is assisting us in selling the shares on a best efforts basis in the subscription and community offerings, and will serve as sole manager for any syndicated community offering. Performance Trust Capital Partners is not required to purchase any shares of common stock that are sold in the offering.

OFFERING SUMMARY

Price: $10.00 per Share

 

		Minimum				Midpoint				Maximum				Adjusted Maximum
Number of shares			9,775,000				11,500,000				13,225,000				15,208,750
Gross offering proceeds		$	97,750,000			$	115,000,000			$	132,250,000			$	152,087,500
Estimated offering expenses, excluding marketing agent fees and expenses (1)		$	1,350,000			$	1,350,000			$	1,350,000			$	1,350,000
Marketing agent fees and expenses (1)(2)		$	1,007,618			$	1,158,383			$	1,309,148			$	1,482,527
Estimated net proceeds		$	95,392,382			$	112,491,617			$	129,590,852			$	149,254,973
Estimated net proceeds per share		$	9.76			$	9.78			$	9.80			$	9.81

 

(1)

See “The Conversion and Offering—Plan of Distribution; Marketing Agent and Underwriter Compensation” for a discussion of Performance Trust Capital Partners’ compensation for this offering and the compensation to be received by Performance Trust Capital Partners and the other broker-dealers that may participate in the syndicated community offering.

(2)	Includes records agent fees and expenses payable to Performance Trust Capital Partners. See “The Conversion and Offering—Records Agent Services.”

This investment involves a degree of risk, including the possible loss of principal.

See “Risk Factors” beginning on page 15.

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Office of the Commissioner of Financial Regulation for the State of Maryland, the Federal Deposit Insurance Corporation, nor any state securities regulator has approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

For assistance, contact the Stock Information Center at (443) 637-6212.

The date of this prospectus is [Prospectus date].

TABLE OF CONTENTS

 

		Page
SUMMARY			1
RISK FACTORS			15
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA			26
RECENT DEVELOPMENTS			28
FORWARD-LOOKING STATEMENTS			34
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING			36
OUR DIVIDEND POLICY			37
MARKET FOR THE COMMON STOCK			38
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE			39
CAPITALIZATION			40
PRO FORMA DATA			42
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			47
BUSINESS OF BV FINANCIAL			59
BUSINESS OF BAYVANGUARD BANK			60
SUPERVISION AND REGULATION			76
TAXATION			83
MANAGEMENT			84
BENEFICIAL OWNERSHIP OF COMMON STOCK			94
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS			95
THE CONVERSION AND OFFERING			96
COMPARISON OF STOCKHOLDERS’ RIGHTS FOR STOCKHOLDERS OF BV FINANCIAL			114
RESTRICTIONS ON ACQUISITION OF BV FINANCIAL			114
DESCRIPTION OF CAPITAL STOCK OF BV FINANCIAL			116
TRANSFER AGENT			117
EXPERTS			117
LEGAL MATTERS			117
WHERE YOU CAN FIND ADDITIONAL INFORMATION			118
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF BV FINANCIAL, INC.			F-1

 

i

SUMMARY

The following summary explains the significant aspects of the conversion, the offering and the exchange of existing shares of BV Financial common stock for new shares of BV Financial common stock. It may not contain all of the information that is important to you. Before making an investment decision, you should read this entire document carefully, including the consolidated financial statements and the related notes, and the section entitled “Risk Factors.”

Our Organizational Structure and the Proposed Conversion and Stock Offering

Since 2005, we have operated in a two-tier mutual holding company structure. BV Financial is a Maryland corporation that is our publicly traded stock holding company and the parent company of BayVanguard Bank. At December 31, 2022, BV Financial had consolidated assets of $845.0 million, deposits of $684.6 million and stockholders’ equity of $97.8 million. BV Financial’s parent company is Bay-Vanguard, M.H.C., a Maryland-chartered mutual holding company. At December 31, 2022, BV Financial had 7,418,575 shares of common stock outstanding, of which 6,400,814 shares, or 86.3%, were owned by Bay-Vanguard, M.H.C., and the remaining 1,017,761 shares were held by the public.

Pursuant to the terms of the plan of conversion and reorganization, which we refer to as the “plan of conversion,” we are converting from the mutual holding company corporate structure to the fully public stock holding company corporate structure. Upon completion of the conversion, Bay-Vanguard, M.H.C. will cease to exist. The conversion will be accomplished by the merger of Bay-Vanguard, M.H.C. with and into BV Financial. The shares of BV Financial common stock being offered for sale represent the majority ownership interest in BV Financial currently owned by Bay-Vanguard, M.H.C. Public stockholders of BV Financial will receive new shares of common stock of BV Financial in exchange for their current shares of BV Financial at an exchange ratio intended to preserve approximately the same aggregate ownership interest in BV Financial as public stockholders currently have in BV Financial, adjusted downward to reflect certain assets held by Bay-Vanguard, M.H.C., without giving effect to new shares purchased in the offering or cash paid in lieu of any fractional shares. The shares of BV Financial common stock owned by Bay-Vanguard, M.H.C. will be canceled.

The following diagram shows our current organizational structure, reflecting ownership percentages at December 31, 2022:

 

After the conversion and offering are completed, we will be organized as a fully public stock holding company, with the stock of BV Financial held as follows:

 

Our Business

Our business activities are conducted primarily through BayVanguard Bank. BayVanguard Bank is a Maryland-chartered stock savings bank headquartered in Baltimore, Maryland. BayVanguard Bank was originally chartered in 1873 under the name Light Street Savings and Building Association. Through a series of mergers in the decades that followed, Light Street Savings and Building Association had by the 1990s changed its name to Bay Federal Savings Association. In 1996, following a merger with Vanguard Federal Savings and Loan Association, the name was changed to Bay-Vanguard Federal Savings Bank. In 2005, we reorganized into the mutual holding company form of ownership and, in 2019, we converted our charter to a Maryland state savings bank with the new name of BayVanguard Bank. As part of the conversion, BayVanguard Bank will convert its charter to that of a Maryland commercial bank.

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in the following types of loans:

 

•

commercial real estate loans, which include commercial – owner occupied and commercial – investor;

 

•

one- to four-family real estate loans, which include one- to four-family – owner occupied and one- to four-family – non-owner occupied;

 

•

commercial loans;

 

•

construction and land loans;

 

•

marine loans;

 

•

farm loans; and

 

•

certain consumer loans.

 

1

For more information regarding each of these loan categories and the related underwriting risks, please see “Business of BayVanguard Bank—Lending Activities” and “—Loan Underwriting Risks.”

We have in the past purchased the guaranteed portion of U.S. Department of Agriculture and SBA loans in the secondary market, though we are no longer actively engaged in this market. Our lending function focuses on three areas – consumer (e.g., residential loans and marine lending), community (e.g., non-owner occupied residential, commercial real estate and other commercial lending in the areas served by our market area) and investment real estate (e.g., larger commercial real estate lending both inside and outside of our market area). In recent years, we have increased our focus, consistent with our conservative underwriting standards, on originating commercial real estate and commercial loans. We also invest in investment securities. Our revenues are derived primarily from interest on loans and, to a lesser extent, interest on investment securities. Our primary sources of funds are deposits and principal and interest payments on loans and securities. BayVanguard Bank offers a variety of deposit accounts, including noninterest-bearing and interest-bearing checking accounts, money market accounts, savings accounts and certificates of deposit. We have also historically used Federal Home Loan Bank advances to fund our operations and had $12.0 million in advances from the Federal Home Loan Bank of Atlanta as of December 31, 2022.

We have also supplemented our organic growth through four different mergers since 2019. See “Business of BayVanguard Bank—Recent Acquisition History.”

BayVanguard Bank is subject to comprehensive regulation and examination by the Office of the Commissioner of Financial Regulation for the State of Maryland (the “OCFR”) and the Federal Deposit Insurance Corporation (the “FDIC”). BayVanguard Bank is a member of the Federal Home Loan Bank system. BV Financial is subject to comprehensive regulation and examination by the Federal Reserve Board.

Following the completion of the conversion and offering, BV Financial will continue to be the holding company for BayVanguard Bank. Our executive offices are located at 7114 North Point Road, Baltimore, Maryland 21219 and our telephone number is (410) 477-5000. Our website address is www.bayvanguard.com. Information on our website is not incorporated into this prospectus and should not be considered a part of this document.

Business Strategy

Our primary focus is on continuing and enhancing our community-oriented retail banking strategy. Highlights of our current business strategy include the following:

 

•

Pursue opportunistic acquisitions and partnerships. We intend to continue to prudently pursue opportunities to acquire banks that offer opportunities for solid financial returns. Our primary focus will be on franchises that enhance our funding profile, product capabilities or geographic density or footprint, while maintaining an acceptable risk profile. We believe in the need to make significant technological investments and the importance of scale in banking. In addition, we believe that the rate of consolidation in the banking industry will continue. We believe that the stock offering will enhance our historical position as a consolidator in the banking market because of our financial strength, reputation and culture.

 

•

Grow our loan portfolio with an emphasis on commercial real estate and residential mortgage lending. While we intend to continue our recent focus on the origination of commercial real estate loans, we intend to remain a residential mortgage lender in our market area and maintain a balance between the commercial real estate and residential mortgage portfolios. We originated $117.1 million of commercial real estate and $40.9 million of residential mortgages loans during the year ended December 31, 2022. At December 31, 2022, $318.7 million, or 48.0%, of our total loan portfolio consisted of commercial real estate loans and $262.8 million, or 39.6%, of our total loan portfolio consisted of residential mortgages. The additional capital raised in the offering will further increase our commercial lending capacity by enabling us to originate more loans and loans with larger balances. This will permit us to serve commercial borrowers with larger lending needs and to originate larger commercial loans than we have in the past.

 

•

Manage credit risk to maintain a low level of non-performing assets. We believe that maintaining strong asset quality is paramount to our long-term success. We follow conservative underwriting guidelines with sound loan administration, and focus on originating loans secured by real estate. This includes enhanced loan monitoring of higher risk portfolio segments, higher risk individual loans and larger relationships within the portfolio, and frequent loan grade review. Our non-performing assets totaled $7.9 million, or 0.93% of total assets, at December 31, 2022. Our total non-performing loans to total loans ratio was 0.88% at December 31, 2022.

 

•

Increase core deposits with an emphasis on non-interest-bearing deposits. Deposits are our primary source of funds for lending and investment. Core deposits (which we define as all deposits except for time deposits) were 78.6% of total deposits at December 31, 2022. In particular, non-interest-bearing demand deposits were 24.4% of our total deposits at December 31, 2022. We continue to focus on expanding core deposits by leveraging our business development officers and commercial lending and retail relationships.

 

2

We intend to continue to pursue these business strategies, subject to changes necessitated by future market conditions, regulatory restrictions and other factors. While we are committed to the business strategies noted above, we recognize the challenges and uncertainties of the current environment and plan to execute these strategies as market conditions allow.

Impact of COVID-19 Pandemic

Although the domestic and global economies have largely recovered from the COVID-19 pandemic, certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may persist for some time, including labor shortages and disruptions of global supply chains. The growth in economic activity and in the demand for goods and services, coupled with labor shortages and supply chain disruptions, has also contributed to rising inflationary pressures and the risk of recession. Given the continued uncertainty and evolving economic effects and social impacts of the COVID-19 pandemic, the future direct and indirect impacts on our business, results of operations and financial condition are uncertain. See “Risk Factors – Risks Related to COVID-19 – The COVID-19 pandemic could continue to pose risks to our business, our results of operations and the future prospects of BV Financial.”

Reasons for the Conversion and Offering

Our primary reasons for converting to the fully public stock form of ownership and undertaking the stock offering are to:

 

•

Facilitate future mergers and acquisitions. Although we do not currently have any understandings or agreements regarding any specific acquisition transaction, the stock holding company structure will give us greater flexibility to structure, and make us a more attractive and competitive bidder for, mergers and acquisitions of other financial institutions or financial service companies as opportunities arise. The additional capital raised in the offering also will enable us to consider larger merger transactions. In addition, although we intend to remain an independent financial institution, the stock holding company structure may make us a more attractive acquisition candidate for other institutions. Applicable regulations prohibit anyone from acquiring or offering to acquire more than 10% of our stock for three years following completion of the conversion without regulatory approval.

 

•

Support our planned growth and strengthen our regulatory capital position with the additional capital we will raise in the stock offering. A strong capital position is essential to achieving our long-term objectives of growing BayVanguard Bank and building stockholder value. Although BayVanguard Bank exceeds all regulatory capital requirements, the proceeds from the offering will materially strengthen our capital position and enable us to support our potential growth and expansion through larger legal lending limits. The augmented regulatory capital will be essential to the continued implementation of our business strategy.

 

•

Improve the liquidity of our shares of common stock. The larger number of shares that will be outstanding after completion of the conversion and offering, as well as our shares of stock being traded on the Nasdaq Capital Market, will result in a more liquid and active market for BV Financial common stock. A more liquid and active market will make it easier for our stockholders to buy and sell our common stock and will give us greater flexibility in implementing capital management strategies.

 

•

Facilitate our stock holding company’s ability to pay dividends to our public stockholders. Current regulations of the Federal Reserve Board prohibit the ability of Bay-Vanguard, M.H.C. to waive receipt of dividends declared by BV Financial. Accordingly, because any dividends declared and paid by BV Financial would have to be paid to Bay-Vanguard, M.H.C. along with all other stockholders, the amount of dividends available for all other stockholders would have been less than if Bay-Vanguard, M.H.C. were allowed to waive the receipt of dividends. The conversion will eliminate our mutual holding company structure and will facilitate our ability to pay dividends to all stockholders of BV Financial, subject to legal, regulatory and financial considerations applicable to all financial institutions. See “Our Dividend Policy.”

 

•

Transition our organization to a stock holding company structure, which gives us greater flexibility to access the capital markets compared to our existing mutual holding company structure. The stock holding company structure gives us greater flexibility to access the capital markets to support our growth through possible future equity and debt offerings. We have no current plans, agreements or understandings regarding any additional equity or debt offerings.

 

3

Terms of the Offering

We are offering for sale between 9,775,000 and 13,225,000 shares of common stock, to eligible members of Bay-Vanguard, M.H.C. (i.e., eligible depositors of BayVanguard Bank), to our tax-qualified employee benefit plans and, to the extent shares remain available, in a community offering to the general public, with a preference given first to natural persons (including trusts of natural persons) residing in Baltimore City and Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland. If necessary, we will also offer for sale shares to the general public in a syndicated community offering. The number of shares of common stock to be sold may be increased to up to 15,208,750 shares as a result of demand for the shares of common stock in the offering or changes in market conditions. Unless the number of shares of common stock to be offered is increased to more than 15,208,750 shares or decreased to fewer than 9,775,000 shares, or the subscription and community offerings are extended beyond August 4, 2023, subscribers will not have the opportunity to change or cancel their stock orders once submitted. If the subscription and community offerings are extended past August 4, 2023, all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. All subscribers will be notified by mail sent to the address the subscriber provides on the stock order form they have submitted. If you do not respond to the notice of extension, your order will be cancelled and we will promptly return your funds with interest at 0.05% per annum or cancel your deposit account withdrawal authorization. If the number of shares to be sold is increased to more than 15,208,750 shares or decreased to less than 9,775,000 shares, all subscribers’ stock orders will be canceled, their withdrawal authorizations will be canceled and funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly with interest at 0.05% per annum. We will then resolicit subscribers, giving them an opportunity to place new orders for a period of time. No shares purchased in the subscription offering and community offering will be issued until the completion of any syndicated community offering, if utilized.

The purchase price of each share of common stock offered for sale in the offering is $10.00. All investors will pay the same purchase price per share, regardless of whether the shares are purchased in the subscription offering, a community offering or a syndicated community offering. Investors will not be charged a commission to purchase shares of common stock in the offering. Performance Trust Capital Partners, LLC, which we refer to as “Performance Trust,” our marketing agent in the offering, will use its best efforts to assist us in selling shares of our common stock in the offering but is not obligated to purchase any shares of common stock in the offering.

How We Determined the Offering Range, the Exchange Ratio and the $10.00 Per Share Purchase Price

The amount of common stock we are offering for sale and the exchange ratio for the exchange of shares of BV Financial for new shares of BV Financial are based on an independent appraisal of the estimated market value of BV Financial, assuming the offering has been completed. RP Financial, LC. (“RP Financial”), our independent appraiser, has estimated that, as of April 14, 2023, the fully converted market value was $133.4 million, which represents the midpoint of the valuation range. Based on federal regulations, this market value forms the midpoint of a valuation range with a minimum of $113.4 million and a maximum of $153.4 million ($176.4 million at the adjusted maximum). Based on this valuation range from the appraisal, the 86.2% ownership interest of Bay-Vanguard, M.H.C. in BV Financial as of March 31, 2023 being sold in the offering, certain assets held by Bay-Vanguard, M.H.C. and the $10.00 per share price, the number of shares of common stock being offered for sale by BV Financial ranges from 9,775,000 shares to 13,225,000 shares. The purchase price of $10.00 per share was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. The exchange ratio ranges from 1.5271 shares at the minimum of the offering range to 2.0661 (2.3761 at the adjusted maximum) new shares at the maximum of the offering range, and will generally preserve the percentage ownership of public stockholders in BV Financial immediately before the completion of the conversion. RP Financial will update its appraisal before we complete the conversion and offering. If, as a result of demand for the shares or changes in market conditions, RP Financial determines that our estimated pro forma market value has increased, we may sell up to 15,208,750 shares without further notice to you. If our pro forma market value at that time is either below $113.4 million or above $176.4 million, then, after consulting with the Federal Reserve Board, we may: terminate the offering and promptly return all funds with interest; set a new offering range and provide all subscribers the opportunity to place a new order; or take such other actions as may be permitted by the Federal Reserve Board and the Securities and Exchange Commission.

The appraisal is based in part on BV Financial’s financial condition and results of operations, the pro forma effect of the additional capital raised in the offering, and an analysis of a peer group of ten publicly traded savings and loan holding companies that RP Financial considers comparable to BV Financial consistent with regulatory guidelines applicable to the independent valuation. The appraisal peer group consists of the following companies, all of which are traded on the Nasdaq Stock Market. Assets are as of December 31, 2022.

 

4

Company Name		Ticker Symbol		Headquarters		Total Assets
						(In millions)
1895 Bancorp of Wisconsin, Inc.		BCOW		Greenfield, Wisconsin		$	529
Affinity Bancshares, Inc.		AFBI		Covington, Georgia			791
HMN Financial, Inc.		HMNF		Rochester, Minnesota			1,096
Home Federal Bancorp, Inc. of Louisiana		HFBL		Shreveport, Louisiana			577
IF Bancorp, Inc.		IROQ		Watseka, Illinois			824
Magyar Bancorp, Inc.		MGYR		New Brunswick, New Jersey			822
Northeast Community Bancorp, Inc.		NECB		White Plains, New York			1,425
Provident Financial Holdings, Inc.		PROV		Riverside, California			1,271
Riverview Bancorp, Inc.		RVSB		Vancouver, Washington			1,599
William Penn Bancorporation		WMPN		Bristol, Pennsylvania			871

In applying each of the valuation methods, RP Financial considered adjustments to the pro forma market value based on a comparison of BV Financial with the peer group. RP Financial made upward adjustments for financial condition, profitability, growth and viability of earnings and asset growth and a downward adjustment for primary market area. RP Financial made no adjustments for dividends, liquidity of the shares, marketing of the issue, management, or effect of government regulations and regulatory reform. The upward adjustment applied for financial condition took into consideration the more favorable composition of BV Financial’s asset base, including a higher loans/assets ratio, a lower cost of funds and higher current return on equity. The upward adjustment applied for profitability, growth and viability of earnings took into consideration BV Financial’s higher earnings as a percent of assets relative to the peer group companies, which was primarily attributable to a higher net interest income ratio, a higher yield/cost spread and lower operating expense ratio. The upward adjustment applied for asset growth was due to the substantially higher pro forma equity position that BV Financial will have following the offering, which will provide for stronger growth potential compared to the peer group. The downward adjustment for market area took into consideration BV Financial’s operations in the Baltimore/Washington metropolitan area, which provides for a high level of competition, including a number of larger financial institutions that are BV Financial’s most comparable competitors.

The following table presents a summary of selected pricing ratios for BV Financial (on a pro forma basis) as of and for the twelve months ended March 31, 2023, and for the peer group companies based on earnings and other information as of and for the twelve months ended December 31, 2022 or most recent quarter available, with stock prices as of April 14, 2023, as reflected in the appraisal report. Compared to the average pricing of the peer group, and based upon the information in the following table, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 17.0% on a price-to-book value basis, a discount of 13.9% on a price-to-tangible book value basis, and a premium of 11.5% on a price-to-earnings basis.

 

		Price-to-earnings  multiple(1)				Price-to-book value ratio				Price-to-tangible book value ratio
BV Financial (on a pro forma basis, assuming completion of the conversion)
Adjusted Maximum			13.89x				76.16	%			81.63	%
Maximum			12.20x				71.58	%			77.22	%
Midpoint			10.87x				66.93	%			72.57	%
Minimum			9.35x				61.50	%			67.20	%
Valuation of peer group companies, all of which are fully converted (on an historical basis)
Averages			9.75x				80.61	%			84.27	%
Medians			9.30x				79.25	%			83.56	%

 

(1)	Price-to-earnings multiples calculated by RP Financial in the independent appraisal are based on an estimate of “core” or recurring earnings. These ratios are different than those presented in “Pro Forma Data.”

The independent appraisal does not indicate trading market value. Do not assume or expect that our valuation as indicated in the appraisal means that after the conversion and offering the shares of our common stock will trade at or above the $10.00 per share purchase price. Furthermore, the pricing ratios presented in the appraisal were used by RP Financial to estimate our pro forma appraised value for regulatory purposes and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset size and market location.

For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, see “The Conversion and Offering—Stock Pricing and Number of Shares to be Issued.”

 

5

Effect of Bay-Vanguard, M.H.C.’s Assets on Minority Stock Ownership

Public stockholders of BV Financial will receive new shares of common stock of BV Financial in exchange for their current shares of common stock of BV Financial pursuant to an exchange ratio that is designed to provide public stockholders with approximately the same ownership percentage of the common stock of BV Financial after the conversion as their ownership percentage immediately before the conversion, without giving effect to new shares purchased in the offering or cash paid in lieu of any fractional shares. However, the exchange ratio will be adjusted downward to reflect assets held by Bay-Vanguard, M.H.C. (other than shares of common stock of BV Financial) at the completion of the conversion, which net assets consisted primarily of cash totaling $8,000 as of December 31, 2022.

The Exchange of Existing Shares of BV Financial Common Stock

If you are a stockholder of BV Financial immediately before the completion of the conversion and offering, your shares will be exchanged for new shares of common stock of BV Financial. The number of shares of common stock you will receive will be based on the exchange ratio, which will depend upon our final appraised value and the percentage of outstanding shares of BV Financial common stock owned by public stockholders immediately before the completion of the conversion and offering. The following table shows how the exchange ratio will adjust, based on the appraised value of BV Financial as of February 24, 2023, assuming immediately before the completion of the conversion and offering public stockholders of BV Financial own 13.8% of BV Financial common stock and Bay-Vanguard, M.H.C. had assets (excluding its shares of BV Financial common stock) of $8,000. The table also shows the number of shares of BV Financial common stock a hypothetical owner of BV Financial common stock would receive in exchange for 100 shares of BV Financial common stock owned at the completion of the conversion and offering, depending on the number of shares of common stock issued in the offering.

 

		Shares to be Sold in This Offering								New Shares of BV Financial to be Issued for Current Shares of BV Financial								Total Shares of Common Stock to be Issued in Exchange and Offering				Exchange Ratio				Equivalent Value of Shares Based Upon Offering Price(1)				Equivalent Pro Forma Tangible Book Value Per Exchanged Share(2)				Whole Shares to be Received for 100 Existing Shares(3)
		Amount				Percent				Amount				Percent
Minimum			9,775,000				86.2	%			1,563,460				13.8	%			11,338,460				1.5271			$	15.27			$	22.74				152
Midpoint			11,500,000				86.2	%			1,839,365				13.8	%			13,339,365				1.7966				17.97				24.74				179
Maximum			13,225,000				86.2	%			2,115,270				13.8	%			15,340,270				2.0661				20.66				26.78				206
Adjusted Maximum			15,208,750				86.2	%			2,432,560				13.8	%			17,641,310				2.3761				23.76				29.11				237

 

(1)	Represents the value of new shares of BV Financial common stock to be received in the conversion by a holder of one current share of BV Financial, pursuant to the exchange ratio, based upon the $10.00 per share offering price.

(2)	Represents the pro forma tangible book value per share at each level of the offering range multiplied by the respective exchange ratio. At March 31, 2023, BV Financial’s tangible book value per share was $11.46.

(3)	Cash will be paid in lieu of fractional shares.

No fractional shares of BV Financial common stock will be issued to any public stockholder of BV Financial. For each fractional share that otherwise would be issued, BV Financial will pay cash equal to the product obtained by multiplying the fractional share interest to which the holder otherwise would be entitled by the $10.00 per share offering price.

Outstanding options to purchase shares of BV Financial common stock will convert into and become options to purchase shares of BV Financial common stock based upon the exchange ratio. The aggregate exercise price, duration and vesting schedule of these options will be unaffected by the conversion. At December 31, 2022, there were 36,350 outstanding options to purchase shares of BV Financial common stock, all of which have vested. The outstanding options will be converted into options to purchase 55,510 shares of common stock at the minimum of the offering range and 86,371 shares of common stock at the adjusted maximum of the offering range. Because federal regulations prohibit us from repurchasing our common stock during the first year following the conversion unless compelling business reasons exist to do so, we may use authorized but unissued shares to fund option exercises that occur during the first year following the conversion. If all existing options were exercised and funded with authorized but unissued shares of common stock following the conversion, stockholders would experience ownership dilution of approximately 0.49% at the minimum of the offering range.

 

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Intended Use of the Proceeds from the Offering

We intend to contribute at least 50% of the net proceeds from the offering to BayVanguard Bank, fund a loan to our employee stock ownership plan to finance its purchase of shares of common stock in the stock offering and retain the remainder of the net proceeds from the offering at BV Financial. Therefore, assuming we sell 11,500,000 shares of common stock in the stock offering at the midpoint of the offering range, and we have net proceeds of $112.5 million, we intend to contribute $56.2 million to BayVanguard Bank, loan $9.2 million to our employee stock ownership plan to fund its purchase of shares of common stock and retain the remaining $47.0 million of the net proceeds at BV Financial. Additionally, we may use a portion of the proceeds from the offering to redeem the $3.0 million of junior subordinated debt that we acquired in conjunction with our acquisition of 1880 Bank and its holding company, Delmarva Bancshares, Inc.

BV Financial may use the funds it retains for investment in securities, to repurchase shares of common stock, to acquire other financial institutions, to pay cash dividends and for other general corporate purposes. BayVanguard Bank may use the proceeds it receives to support increased lending, support growth and the development of new products and services, expand its branch network by acquiring new branches or by acquiring other financial institutions. We do not currently have any agreements or understandings regarding any acquisition or branch transactions.

See “How We Intend to Use the Proceeds from the Offering” for additional information.

Persons Who May Order Shares of Common Stock in the Offering

We are offering the shares of common stock for sale in a subscription offering in the following descending order of priority:

 

(1)

To depositors with accounts at BayVanguard Bank with aggregate balances of at least $50.00 at the close of business on December 31, 2021.

 

(2)

To our tax-qualified employee benefit plans (including BayVanguard Bank’s employee stock ownership plan), which may subscribe for, in the aggregate, up to 10% of the shares of common stock sold in the offering. We expect our employee stock ownership plan to purchase 8% of the shares of common stock sold in the offering.

 

(3)

To depositors with accounts at BayVanguard Bank with aggregate balances of at least $50.00 at the close of business on March 31, 2023.

 

(4)

To depositors of BayVanguard Bank at the close of business on May 2, 2023.

Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given first to natural persons (including trusts of natural persons) residing in Baltimore City and Anne Arundel, Baltimore, Dorchester, Harford and Talbot Counties, Maryland. The community offering, if any, may occur concurrently with, during or promptly after the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering and the community offering in a syndicated community offering. Performance Trust will act as sole manager for the syndicated community offering. We have the right to accept or reject, in whole or in part, in our sole discretion, orders received in the community offering or syndicated community offering, and our interpretation of the terms and conditions of the plan of conversion will be final. Any determination to accept or reject stock orders in the community offering or syndicated community offering will be based on the facts and circumstances available to management at the time of the determination.

If we receive orders for more shares than we are offering for sale, we may not be able to fully or partially fill your order. A detailed description of the subscription offering, the community offering and the syndicated community offering, as well as a discussion regarding allocation procedures, can be found in the section of this prospectus entitled “The Conversion and Offering.”

Limits on How Much Common Stock You May Purchase

The minimum number of shares of common stock that may be purchased is 25 shares.

Generally, no individual, or individuals acting through a single qualifying account held jointly, may purchase more than 70,000 shares ($700,000) of common stock. If any of the following persons purchase shares of common stock, their purchases, in all categories of the offering, when combined with your purchases, cannot exceed 70,000 shares ($700,000) of common stock:

 

•

your spouse or relatives of you or your spouse living in your house or who is a director of officer of BV Financial or BayVanguard Bank;

 

•

most companies, trusts or other entities in which you are a senior officer, partner, trustee or have a substantial beneficial interest; or

 

•

other persons who may be your associates or persons acting in concert with you.

Persons having the same residence or mailing address and persons exercising subscription rights through qualifying accounts registered to the same address at any of the eligibility, supplemental eligibility or voting record dates will be subject to the overall purchase limitation of 70,000 shares ($700,000).

 

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In addition to the above purchase limitations, there is an ownership limitation for current stockholders of BV Financial other than our employee stock ownership plan. Shares of common stock that you purchase in the offering individually or together with persons described above, plus any shares you and they receive in exchange for existing shares of BV Financial common stock, may not exceed 9.9% of the total shares of common stock to be issued and outstanding after the completion of the conversion and offering. However, if, based on your current ownership level, you will own more than 9.9% of the total shares of common stock of BV Financial to be issued and outstanding after the completion of the conversion and offering following the exchange of your shares of common stock, you will be ineligible to purchase any new shares in the offering. You will be required to obtain regulatory approval or non-objection before acquiring 10% or more of BV Financial’s common stock.

Subject to regulatory approval, we may increase or decrease the purchase and ownership limitations at any time. See the detailed description of the purchase limitations in “The Conversion and Offering—Additional Limitations on Common Stock Purchases.”

How You May Purchase Shares of Common Stock in the Subscription Offering and the Community Offering

In the subscription offering and community offering, you may pay for your shares only by:

 

(1)

personal check, money order or bank draft made payable directly to BV Financial, Inc.; or

 

(2)

authorizing us to withdraw available funds (without any early withdrawal penalty) from your BayVanguard Bank deposit account(s), other than checking accounts or individual retirement accounts (“IRAs”).

You may not use any type of third-party check to pay for shares of common stock. Do not submit cash. Wire transfers will not be accepted. Applicable regulations prohibit BayVanguard Bank from lending funds or extending credit to any person to purchase shares of common stock in the offering. You may not submit a BayVanguard Bank line of credit check. You may not designate withdrawal from a BayVanguard Bank account with check-writing privileges; rather, submit a check. If you request a withdrawal from an account with check-writing privileges, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and will immediately withdraw the amount from the specified account(s). You may not authorize withdrawal from a BayVanguard Bank individual retirement account. See “—Using Individual Retirement Account Funds to Purchase Shares of Common Stock.”

You may subscribe for shares of common stock in the subscription and community offerings by delivering a signed and completed original stock order form, together with full payment payable to BV Financial, Inc. or authorization to withdraw funds from one or more of your BayVanguard Bank deposit accounts, provided that the stock order form is received (not postmarked) before 4:30 p.m., Eastern Time, on June 20, 2023, which is the expiration of the subscription offering period.

Your completed and signed stock order form and payment may be submitted to us by:

 

(1)

overnight delivery to the address indicated on the stock order form for this purpose;

 

(2)

hand delivery to our Stock Information Center located at BayVanguard Bank’s branch location at 125 Mountain Road, Pasadena, Maryland; or

 

(3)

regular mail using the stock order reply envelope provided.

Hand delivery of stock order forms will be accepted only at the Stock Information Center. Do not deliver your stock order form to any other of BayVanguard Bank’s offices. The Stock Information Center is open Monday through Friday between 9:00 a.m. and 4:30 p.m., Eastern Time, except for bank holidays. Do not mail stock order forms to BayVanguard Bank’s offices.

See “The Conversion and Offering—Procedure for Purchasing Shares in the Subscription and Community Offerings—Payment for Shares” for a complete description of how to purchase shares in the subscription and community offerings.

Using Individual Retirement Account Funds to Purchase Shares of Common Stock

You may be able to subscribe for shares of common stock using funds in your IRA or other retirement account. If you wish to use some or all of the funds in your BayVanguard Bank IRA or other retirement account, the applicable funds must be transferred to a self-directed account maintained by an independent custodian or trustee, such as a brokerage firm, and the purchase must be made through that account. If you do not have such an account, you will need to establish one before placing your stock order. An annual administrative fee may be payable to the independent custodian or trustee. Because individual circumstances differ and the processing of retirement fund orders takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before the June 20, 2023 offering deadline, for assistance with purchases using funds in your IRA or other retirement account you may have at BayVanguard Bank or elsewhere. Whether you may use such funds to purchase shares in the offering may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held.

 

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See “The Conversion and Offering—Procedure for Purchasing Shares in the Subscription and Community Offerings—Payment for Shares” and “—Using Individual Retirement Account Funds” for a complete description of how to use IRA funds to purchase shares of common stock in the offering.

Market for Common Stock

Existing publicly held shares of BV Financial’s common stock are traded on the Pink Open Market operated by OTC Markets Group under the symbol “BVFL.” Upon completion of the conversion, the new shares of common stock of BV Financial will replace the existing shares, which we expect will trade on the Nasdaq Capital Market under the symbol “BVFL,” subject to compliance with certain conditions, including having 300 “round lot” stockholders (stockholders owning more than 100 shares) and at least three broker-dealers making a market for our common stock. As of May 2, 2023, BV Financial had 15 registered market makers in its common stock.

Payment of Dividends

While management intends to pay a dividend, no decision has been made with respect to the amount and timing of any dividend payments. The amount of any dividends will be subject to our capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. We cannot assure you that we will pay dividends in the future, or that any such dividends will not be reduced or eliminated in the future. For information regarding our proposed dividend policy, see “Our Dividend Policy.”

Purchases by Directors and Executive Officers

We expect our directors and executive officers, together with their associates, to subscribe for 361,500 shares of common stock in the offering, representing 3.70% of the shares to be sold at the minimum of the offering range. The purchase price paid by them will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering. Following the conversion and offering, our directors and executive officers, together with their associates, are expected to beneficially own 687,625 shares of common stock (including any stock options exercisable within 60 days of May 2, 2023), or 6.06% of our total outstanding shares of common stock at the minimum of the offering range, which includes shares they currently own in BV Financial that will be exchanged for new shares of BV Financial.

See “Subscriptions by Directors and Executive Officers” for more information on the proposed purchases of shares of common stock by our directors and executive officers.

Deadline for Orders of Shares of Common Stock in the Subscription and Community Offerings

The deadline for submitting orders to purchase shares of common stock in the subscription and community offerings is 4:30 p.m., Eastern Time, on June 20, 2023, unless we extend this deadline. If you wish to purchase shares of common stock, a properly completed and signed original stock order form, together with full payment, must be received (not postmarked) by this time.

Although we will make reasonable attempts to provide this prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at 4:30 p.m., Eastern Time, on June 20, 2023, whether or not we have been able to locate each person entitled to subscription rights.

See “The Conversion and Offering—Procedure for Purchasing Shares in the Subscription and Community Offerings—Expiration Date” for a complete description of the deadline for purchasing shares in the stock offering.

You May Not Sell or Transfer Your Subscription Rights

Applicable regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to certify that you are purchasing the common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights or the shares that you are purchasing. We intend to take legal action, including reporting persons to federal or state agencies, against anyone who we believe has sold or transferred his or her subscription rights. We will not accept your order if we have reason to believe you are attempting to sell or transfer your subscription rights to other individuals. On the stock order form, you cannot add the names of others for joint stock registration unless they are also named on your qualifying deposit account(s). Doing so may jeopardize your subscription rights. In addition, the stock order form requires that you list all deposit accounts you held at your date of eligibility, giving all names on each account and the account number at the applicable eligibility date. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation.

 

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Delivery of Shares of Common Stock

All shares of common stock sold will be issued in book entry form. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock issued in the subscription and community offerings will be mailed by our transfer agent to the persons entitled thereto at the registration address noted by them on their stock order forms as soon as practicable following consummation of the conversion. We expect trading in the stock to begin on the day of completion of the conversion or the next business day. The conversion is expected to be completed as soon as practicable following satisfaction of the conditions described below in “—Conditions to Completion of the Conversion.” Until a statement reflecting your ownership of shares of common stock is available and delivered to you, you may not be able to sell the shares of common stock that you purchased in the offering, even though the common stock will have begun trading. Your ability to sell your shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm.

Conditions to Completion of the Conversion

We cannot complete the conversion and offering unless:

 

•

The plan of conversion is approved by at least a majority of votes eligible to be cast by members of Bay-Vanguard, M.H.C. (i.e., eligible depositors of BayVanguard Bank as of the close of business on May 2, 2023);

 

•

The plan of conversion is approved by BV Financial stockholders holding at least two-thirds of the outstanding shares of common stock of BV Financial as of the close of business on May 2, 2023, including shares held by Bay-Vanguard, M.H.C.;

 

•

The plan of conversion is approved by BV Financial stockholders holding at least a majority of the outstanding shares of common stock of BV Financial as of the close of business on May 2, 2023, excluding shares held by Bay-Vanguard, M.H.C.;

 

•

We sell at least the minimum number of shares of common stock offered in the offering; and

 

•

We receive all required regulatory approvals to complete the conversion and offering.

Bay-Vanguard, M.H.C. intends to vote its shares in favor of the plan of conversion. At the close of business on May 2, 2023, Bay-Vanguard, M.H.C. owned 6,400,814 shares, or approximately 86.2%, of the outstanding shares of common stock of BV Financial. At the close of business on May 2, 2023, the directors and executive officers of BV Financial and their affiliates owned 182,561 shares of BV Financial (excluding exercisable options), or 2.46% of the outstanding shares of common stock and 17.83% of the outstanding shares of common stock excluding shares held by Bay-Vanguard, M.H.C. They intend to vote those shares in favor of the plan of conversion.

Steps We May Take if We Do Not Receive Orders for the Minimum Number of Shares

If we do not receive orders for at least 9,775,000 shares of common stock, we may take one or more steps to sell the minimum number of shares of common stock in the offering range. Specifically, we may:

 

(1)

increase the purchase limitations; and/or

 

(2)

seek regulatory approval to extend the offering beyond August 4, 2023, as long as we resolicit subscribers who previously submitted subscriptions in the offering.

If we extend the offering past August 4, 2023, all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to the notice of extension, we will cancel your stock order and promptly return your funds with interest for funds received in the subscription and community offering or cancel your deposit account withdrawal authorization. If one or more purchase limitations are increased, subscribers in the subscription offering who ordered the maximum amount will be given the opportunity to increase their subscriptions up to the then-applicable limit.

Possible Change in the Offering Range

RP Financial will update its appraisal before we complete the conversion and offering. If, as a result of demand for the shares or changes in market conditions, RP Financial determines that our pro forma market value has increased, we may sell up to 15,208,750 shares in the offering without further notice to you. If our pro forma market value at that time is either below $113.4 million or above $176.4 million (the minimum and adjusted maximum pro forma market value, respectively, based on the appraised value of BV Financial as of April 14, 2023), then, after consulting with the Federal Reserve Board, we may:

 

•

terminate the stock offering and promptly return all funds (with interest paid on funds received in the subscription and community offerings);

 

10

•

set a new offering range; or

 

•

take such other actions as may be permitted by the Federal Reserve Board and the Securities and Exchange Commission.

If we set a new offering range, we will promptly return funds, with interest at 0.05% per annum for funds received for purchases in the subscription and community offerings, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. We will then resolicit subscribers, allowing them to place a new stock order for a period of time.

Possible Termination of the Offering

We may terminate the offering at any time before the special meeting of members of Bay-Vanguard, M.H.C. and the special meeting of stockholders of BV Financial that have been called to vote on the conversion, and at any time after member and stockholder approval with regulatory approval. If we terminate the offering, we will promptly return your funds with interest at 0.05% per annum, and we will cancel deposit account withdrawal authorizations.

Benefits to Management and Potential Dilution to Stockholders Resulting from the Conversion

We expect our employee stock ownership plan, which is a tax-qualified retirement plan operated for the benefit of BayVanguard Bank’s employees, to purchase up to 8% of the shares of common stock we sell in the offering. However, if market conditions warrant, in the judgment of its trustee, the employee stock ownership plan’s subscription order may not be filled and the employee stock ownership plan may instead elect to purchase shares in the open market following the completion of the conversion, subject to the approval of the Federal Reserve Board.

We intend to implement one or more new stock-based benefit plans no earlier than six months after completion of the conversion. Stockholder approval of these plans will be required before implementation. We have not determined whether we will adopt the plans within or after 12 months following the completion of the conversion. If we implement stock-based benefit plans within 12 months following the completion of the conversion, the stock-based benefit plans would be limited to reserving a number of shares (1) up to 4% of the shares of common stock sold in the offering for awards of restricted stock or restricted stock units to employees and directors, at no cost to the recipients, and (2) up to 10% of the shares of common stock sold in the offering for issuance pursuant to the exercise of stock options by employees and directors. If the stock-based benefit plan is adopted more than 12 months after the completion of the conversion, it would not be subject to the percentage limitations set forth above. We have not yet determined the definitive number of shares that will be reserved for issuance under these plans. For a description of our current stock-based benefit plan, see “Management—Benefits to be Considered Following Completion of the Conversion—Stock-Based Benefit Plans.”

The following table summarizes the number of shares of common stock and the aggregate dollar value of grants that are available under one or more stock-based benefit plans if such plans reserve a number of shares of common stock equal to 4% and 10% of the shares sold in the stock offering for restricted stock awards or restricted stock units and stock options, respectively. The table shows the dilution to stockholders if all such shares are issued from authorized but unissued shares, instead of purchased in the open market. A portion of the stock grants shown in the table below may be made to non-management employees. The table also sets forth the number of shares of common stock to be acquired by the employee stock ownership plan for allocation to all qualifying employees.

 

		Number of Shares to be Granted or Purchased												Dilution Resulting from Issuance of Shares for Stock-Based Benefit Plans
		At Minimum of Offering Range				At Maximum of Offering Range				As a Percentage of Common Stock to be Sold in the Offering								Value of Grants (In Thousands)(1)
																		At Minimum of Offering Range				At Maximum of Offering Range
Employee stock ownership plan			782,000				1,058,000				8.0	%			N/A	%(2)		$	7,820			$	10,580
Restricted stock awards			391,000				529,000				4.0				3.34				3,910				5,290
Stock options			977,500				1,322,500				10.0				7.94				4,907				6,639
Total			2,150,500				2,909,500				22.0	%			10.78	%(2)		$	16,637			$	22,509

 

(1)

The actual value of restricted stock awards will be determined based on their fair value as of the date grants are made. For purposes of this table, fair value for restricted stock awards is assumed to be the same as the offering price of $10.00 per share. The fair value of stock options has been estimated at $5.02 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date share price and option exercise price of $10.00; an expected option term of ten years; no dividend yield; a risk-free rate of return of 3.88%; and expected volatility of 31.47%. The actual value of stock options granted will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used and the option pricing model ultimately adopted.

(2)	No dilution is reflected for the employee stock ownership plan because such shares are assumed to be purchased in the offering.

 

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We may fund our stock-based benefit plans through open market purchases, as opposed to new issuances of stock; however, if any options previously granted under our existing 2017 Stock Option Plan or 2021 Equity Incentive Plan (together, the “Equity Incentive Plans”) are exercised during the first year following completion of the offering, they will be funded with newly issued shares as federal regulations do not permit us to repurchase our shares during the first year following the completion of the offering, except to fund the grants of restricted stock under a stock-based benefit plan or under extraordinary circumstances.

 

12

The following table presents information as of December 31, 2022 regarding our Equity Incentive Plans and our proposed new stock-based benefit plans. The table below assumes that 17,627,018 shares are outstanding after the offering, which includes the sale of 15,208,750 shares in the offering at the adjusted maximum of the offering range and the issuance of new shares of BV Financial in exchange for old shares of BV Financial based on an exchange ratio of 2.3761. It also assumes that the value of the stock is $10.00 per share.

 

Existing and New Stock Benefit Plans		Participants		Shares at Adjusted Maximum of Offering Range				Estimated Value of Shares				Percentage of Shares Outstanding After the Conversion
Employee Stock Ownership Plan:		Officers and Employees
Shares to be purchased in this offering					1,216,700			$	12,167,000				6.90	%
Restricted Stock Awards:		Directors, Officers and Employees
Equity Incentive Plans(1)					353,107	(2)		$	3,531,075	(3)			2.00	%
New shares of restricted stock					608,350				6,083,500	(3)			3.45
Total shares of restricted stock					961,457			$	9,614,575				5.45	%
Stock Options:		Directors, Officers and Employees
Equity Incentive Plans(1)					223,071	(4)		$	1,119,815	(5)			1.27	%
New stock options					1,520,875				7,634,793	(5)			8.63
Total stock options					1,743,946			$	8,754,608				9.90	%
Total of stock benefit plans					3,922,103			$	30,536,182				22.25	%

 

(1)	The number of shares indicated in the table and the footnotes has been adjusted for the 2.3761 exchange ratio at the adjusted maximum of the offering range.

(2)	At December 31, 2022, 136,863 of these shares have been awarded and 95,495 have vested.

(3)	The value of restricted stock awards is determined based on their fair value as of the date grants are made. For purposes of this table, the fair value of awards under the new stock-based benefit plan is assumed to be the same as the offering price of $10.00 per share.

(4)	At December 31, 2022, 86,371 of these options have been awarded and 86,371 have vested.

(5)

The weighted-average fair value of stock options has been estimated at $5.02 per option, using the Black-Scholes option pricing model with the following assumptions: exercise price, $10.00; trading price on date of grant, $10.00; no dividend yield; expected term, ten years; expected volatility, 31.47%; and risk-free rate of return, 3.88%. The actual value of option grants will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used and the option pricing model ultimately adopted.

Tax Consequences

Bay-Vanguard, M.H.C., BV Financial and BayVanguard Bank have received an opinion of counsel, Luse Gorman, PC, regarding the material federal income tax consequences of the conversion, and have received an opinion of FORVIS, LLP regarding the material Maryland tax consequences of the conversion. As a general matter, the conversion will not be a taxable transaction for purposes of federal or state income taxes to Bay-Vanguard, M.H.C., BV Financial and BayVanguard Bank, persons eligible to subscribe in the subscription offering, or existing stockholders of BV Financial (except as to cash paid for fractional shares). Existing stockholders of BV Financial who receive cash in lieu of fractional shares of BV Financial will recognize a gain or loss equal to the difference between the cash received and the tax basis of the fractional share.

Emerging Growth Company Status

We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we are an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies. See “Risk Factors—Risks Related to Laws and Regulations—We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors” and “Supervision and Regulation—Emerging Growth Company Status.”

 

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An emerging growth company may elect to use an extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. We have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

Effect on Voting Rights of Depositors

Depositors of BayVanguard Bank are members of, and have voting rights in, Bay-Vanguard, M.H.C., as to all matters requiring a vote of members. Upon completion of the conversion, depositors will no longer have voting rights. All voting rights in BayVanguard Bank will be vested in BV Financial as the sole stockholder of BayVanguard Bank. The stockholders of BV Financial will possess exclusive voting rights with respect to BV Financial common stock.

Risk Factors

An investment in BV Financial common stock is subject to risk, including risks related to our business and this offering. Before making an investment decision, you should read this entire document carefully, including the section entitled “Risk Factors” that immediately follows and that discusses the above risks in further detail.

How You Can Obtain Additional Information—Stock Information Center

Our banking personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or offering, call our Stock Information Center at (443) 637-6212. The Stock Information Center is open Monday through Friday between 9:00 a.m. and 4:30 p.m., Eastern Time, except for bank holidays.

 

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