Bank of Botetourt posts profitable third quarter financial results
BUCHANAN, Va., Oct. 26, 2023 /PRNewswire/ -- Buchanan-based Bank of Botetourt (OTCPK: BORT and BORTP) announced today its unaudited financial results for the three and nine months-end September 30, 2023. The Bank produced net income amounting to $2,085,000 or $1.01 per basic share in the third quarter. This amount compares to a net income of $2,308,000 or $1.19 per share, for the same period last year. For the nine months-ended the Bank produced net income amounting to $6,372,000 or $3.09 per basic share. This amount compares to a net income of $5,614,000 or $2.91 per share, for the same period last year.
At September 30, 2023, select financial information and key highlights include:
- Return on average assets of 1.16%
- Return on average equity of 12.30%
- Book value of $36.54
- Total deposit growth of 0.91%
- Total asset growth of 3.69%
- Total loan growth of 16.26%
- Community Bank Leverage Ratio of 10.51%
- Net interest margin of 3.21%, compared to 3.63% one year prior.
As a result of the solid financial performance, the Board of Directors voted to pay the 7.00% preferred dividend, which calculates to $0.49 per share on November 9, 2023 to preferred shareholders of record November 2, 2023. Furthermore, the Board of Directors voted to pay the $0.1925 per share quarterly dividend, or $0.77 per share annualized which is payable on November 17, 2023 to common shareholders of record November 10, 2023. CEO & Vice-Chairman, G. Lyn Hayth, III stated "Despite navigating a challenging net interest margin landscape, we produced strong financial results for the third quarter. We remain committed to giving back to the communities that sustain us. It is our privilege to not only thrive as a business but also to contribute to the well-being of those around us."
Results of Operations
Net income for the three months ended September 30, 2023 was $2,085,000 compared to $2,308,000 for the same period last year, representing an decrease of $223,000 or 9.66%. Basic and diluted earnings per share decreased $0.18 from $1.19 at September 30, 2022 to $1.01 at September 30, 2023. The decrease in net income is primarily due to $2,184,000 more interest expense, $222,000 more employee salary and benefits, offset by $1,879,000 more interest and fees on loans and $512,000 less provision for credit losses.
For the three months ended September 30, 2023, the Bank recorded a provision for credit loss expense of ($17,000), which includes $3,000 related to provision for unfunded commitments, compared to $495,000 provision for loan loss for the three months ended September 30, 2022. The provision recorded during the quarter mainly reflected allocations necessitated by net loan growth and adjustments to historical loss factors to better represent expectations for future credit losses. The ratio of the allowance for credit losses to total loans and leases outstanding was 1.30% at the end of the quarter, down 8 basis points from the prior quarter and down 6 basis points from the end of the same quarter of 2022. Net charge-offs were $117,000 at September 30, 2023 as compared to $353,000 at September 30, 2022.
At September 30, 2023 net loans increased 16.26%. Interest and fees on loans at September 30, 2023 increased $1,879,000 over the same three month time period of 2022. Interest expense increased by $2,184,000 from $503,000 at September 30, 2022 to $2,687,000 at September 30, 2023. The higher interest expense is a result of higher interest rates paid on the balances of interest-bearing deposits than for the same time period of 2022 and the addition of interest on borrowed funds.
Noninterest income decreased by $54,000, or 4.27%, to $1,211,000 for the three months ended September 30, 2023 compared to $1,264,000 for same time period of 2022. The decrease is attributable primarily to less income on the sale of mortgage loans, less income from title insurance subsidiaries, partially offset by an increase in service charges on deposit accounts.
Noninterest expense increased $464,000 from $4,271,000 at September 30, 2023 to $4,735,000 at September 30, 2023. The increase is primarily related to increases in salary and employee benefits, debit card expense and premise and fixed asset expense.
Income tax expense for the three months ended September 30, 2023 was $481,000 compared to $541,000 one year prior. The decrease in tax expense is due to lower revenue for the quarter.
Financial Condition
At September 30, 2023 total assets amounted to $741,916,000, an increase of 3.69% above total assets at December 31, 2022 of $715,514,000, an increase of $26,402,000. Total net loans increased $78,398,000 or 16.26% from $482,163,000 at December 31, 2022 to $560,561,000 at September 30, 2023. Total deposits at December 31, 2022 amounted to $645,720,000, compared to $651,575,000 at September 30, 2023, an increase of 0.91% or $5,855,000.
Stockholders' equity totaled $71,090,000 at September 30, 2023 compared to $66,393,000 at December 31, 2022. The $4,697,000 increase during the period is net income for 2023, net proceeds from the issuance of common stock from the Dividend Reinvestment and Stock Purchase Plan, the decrease in accumulated other comprehensive loss, and partially offset by dividends paid.
Non-Performing Assets
Bank of Botetourt has no foreclosed properties. Therefore, non-performing assets only consisted of nonaccrual loans at December 31, 2022 and September 30, 2023, respectively. Non-performing assets decreased from $946,000 at December 31, 2022 to $550,000 at September 30, 2023. The decrease is attributable to the sale of collateral on three non-accrual loans, one secured by raw land and two secured by a residential property. The sale of collateral resulted in the subsequent payoff of the total loan balance for one loan secured by raw land and the paydown of the two 1-4 family residential loans followed by the subsequent charge-off of the remaining total loan balance. Furthermore, one residential lot loan was partially charged off, one residential real estate loan was fully charged off, and one commercial loan was paid in full resulting in the total $396,000 decrease in non-performing assets. One residential lot loan totaling $56,000 was added to nonaccrual loans during the second quarter. The decrease in nonaccrual loans is attributable to the charge-off payment activity of the aforementioned loans.
A loan is considered impaired if it is probable that the Bank will be unable to collect all amounts due under the contractual terms of the loan agreement. Impaired loans amounted to $1,209,000 at September 30, 2023 compared to $1,616,000 at December 31, 2022. The decrease in impaired loans is attributable to one real estate loan being paid off from the sale of collateral, another real estate loan being paid in full and one raw land loan being written off. Loss exposure on impaired loans increased from $63,000 at December 31, 2022 to $66,000 at September 30, 2023. The increase is attributable to the addition of one residential lot loan with a specific reserve of $12,000, offset by a charge-off of one consumer loan with a specific reserve of $5,000 and the decrease in exposure on a consumer loan and residential loan as a result of payments made during 2023.
Capital Ratios
Bank of Botetourt qualified for and adopted the optional, simplified measure of capital adequacy, the community bank leverage ratio framework, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. A qualifying community banking organization is defined as having less than $10 billion in total consolidated assets, a leverage ratio greater than 9%, off-balance sheet exposures of 25% or less of total consolidated assets, and trading assets and liabilities of 5% or less of total consolidated assets. It also cannot be an advanced approaches institution. Bank of Botetourt qualified to opt-in to the Community Bank Leverage Ratio ("CBLR"). As of September 30, 2023 Bank of Botetourt reported its CBLR ratio at 10.51% which meets the required regulatory minimum ratio. This compares to a CBLR ratio of 10.32% at December 31, 2022.
About Bank of Botetourt
Bank of Botetourt was chartered in 1899 and operates thirteen retail offices in Botetourt, Rockbridge, Roanoke, and Franklin counties, the City of Salem, and the Town of Vinton, all in Virginia. Bank of Botetourt also operates a mortgage division, Virginia Mountain Mortgage and a financial services division, Botetourt Wealth Management.
Bank of Botetourt |
|||||||
Nine Months Ended |
Three Months Ended |
||||||
2023 |
2022 |
2023 |
2022 |
||||
Interest income |
|||||||
Loans and fees on loans |
$ 20,980,000 |
$ 16,003,000 |
$ 7,497,000 |
$ 5,618,000 |
|||
Securities: |
|||||||
U.S. Treasury and Government Agencies |
653,000 |
537,000 |
214,000 |
226,000 |
|||
Mortgage-backed securities |
235,000 |
104,000 |
75,000 |
83,000 |
|||
All other securities |
628,000 |
548,000 |
200,000 |
195,000 |
|||
Due from depository institutions |
2,309,000 |
1,037,000 |
769,000 |
731,000 |
|||
Federal funds sold |
14,000 |
2,000 |
5,000 |
1,000 |
|||
Total Interest income |
24,819,000 |
18,231,000 |
8,760,000 |
6,854,000 |
|||
Interest expense |
|||||||
Deposits |
5,845,000 |
1,390,000 |
2,495,000 |
503,000 |
|||
Other borrowings |
235,000 |
- |
192,000 |
- |
|||
Total Interest expense |
6,080,000 |
1,390,000 |
2,687,000 |
503,000 |
|||
Net Interest Income |
18,739,000 |
16,841,000 |
6,073,000 |
6,351,000 |
|||
Provision for credit losses |
651,000 |
925,000 |
(17,000) |
495,000 |
|||
Net Interest Income after credit loss expense |
18,088,000 |
15,916,000 |
6,090,000 |
5,856,000 |
|||
Noninterest income |
|||||||
Service charges on deposit accounts |
790,000 |
679,000 |
265,000 |
249,000 |
|||
Securities brokerage and annuities |
176,000 |
205,000 |
52,000 |
51,000 |
|||
Other income, net of gains |
2,960,000 |
2,833,000 |
894,000 |
964,000 |
|||
Total noninterest income |
3,926,000 |
3,717,000 |
1,211,000 |
1,264,000 |
|||
Noninterest expense |
|||||||
Salaries and employee benefits |
6,299,000 |
5,758,000 |
2,149,000 |
1,927,000 |
|||
Premises and fixed assets expense |
1,365,000 |
1,321,000 |
436,000 |
451,000 |
|||
Other expense |
6,400,000 |
5,547,000 |
2,150,000 |
1,893,000 |
|||
Total noninterest expense |
14,064,000 |
12,626,000 |
4,735,000 |
4,271,000 |
|||
Income before income taxes |
7,950,000 |
7,007,000 |
2,566,000 |
2,849,000 |
|||
Income tax expense |
1,578,000 |
1,393,000 |
481,000 |
541,000 |
|||
Net income |
6,372,000 |
5,614,000 |
2,085,000 |
2,308,000 |
|||
Preferred stock dividends |
358,000 |
- |
120,000 |
- |
|||
Net income available to common shareholders |
$ 6,014,000 |
$ 5,614,000 |
$ 1,965,000 |
$ 2,308,000 |
|||
Basic earnings per common share |
$ 3.09 |
$ 2.91 |
$ 1.01 |
$ 1.19 |
|||
Diluted earnings per common share |
$ 3.09 |
$ 2.91 |
$ 1.01 |
$ 1.19 |
|||
Dividends declared per common share |
$ 0.578 |
$ 0.555 |
$ 0.1925 |
$ 0.185 |
|||
Basic weighted average common shares outstanding |
1,945,359 |
1,930,104 |
1,947,887 |
1,935,826 |
|||
Diluted weighted average common shares outstanding |
1,945,359 |
1,930,104 |
1,947,887 |
1,935,826 |
|||
Bank of Botetourt |
||||
(unaudited) |
(audited) |
|||
September 30, |
December 31, |
|||
2023 |
2022 |
|||
Assets |
||||
Cash and due from banks |
$ 11,070,000 |
$ 8,996,000 |
||
Interest-bearing deposits with banks |
43,838,000 |
91,659,000 |
||
Federal funds sold |
181,000 |
523,000 |
||
Total cash and cash equivalents |
55,089,000 |
101,178,000 |
||
Debt securities held-to-maturity, net of allowance |
||||
for credit losses of $18,000 at September 30, 2023 and $0 |
||||
at December 31, 2022 |
9,932,000 |
9,950,000 |
||
Debt securities available for sale |
83,878,000 |
92,552,000 |
||
Loans, net of allowance for credit losses of $7,398,000 at |
||||
September 30, 2023 and $6,686,000 at December 31, 2022 |
560,561,000 |
482,163,000 |
||
Loans held for sale |
607,000 |
177,000 |
||
Premises and fixed assets, net |
14,493,000 |
14,063,000 |
||
Other real estate owned |
- |
- |
||
Investment in unconsolidated subsidiaries |
3,005,000 |
2,777,000 |
||
Other assets |
14,351,000 |
12,654,000 |
||
Total assets |
$ 741,916,000 |
$ 715,514,000 |
||
Liabilities and Stockholders' Equity |
||||
Liabilities |
||||
Noninterest-bearing deposits |
$ 164,148,000 |
$ 170,958,000 |
||
Interest-bearing deposits |
487,427,000 |
474,762,000 |
||
Total deposits |
651,575,000 |
645,720,000 |
||
Other borrowings |
14,000,000 |
- |
||
Other liabilities |
5,251,000 |
3,401,000 |
||
Total liabilities |
670,826,000 |
649,121,000 |
||
Commitments and contingencies |
- |
- |
||
Stockholders' Equity |
||||
Preferred stock, $1.00 par value; 1,000,000 shares |
||||
authorized non-cumulative perpetual; 243,659 issued and |
||||
outstanding at September 30, 2023 and at December 31, 2022 |
||||
respectively |
244,000 |
244,000 |
||
Common stock, $1.50 par value; 5,000,000 shares |
||||
authorized; 1,949,103 and 1,940,879 issued and |
||||
outstanding at September 30, 2023 and at December 31, 2022, |
||||
respectively |
2,924,000 |
2,912,000 |
||
Additional paid-in capital |
23,876,000 |
23,654,000 |
||
Retained earnings |
52,072,000 |
47,681,000 |
||
Accumulated other comprehensive loss |
(8,026,000) |
(8,098,000) |
||
Total stockholders' equity |
71,090,000 |
66,393,000 |
||
Total liabilities and stockholders' equity |
$ 741,916,000 |
$ 715,514,000 |
||
SOURCE Bank of Botetourt
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