Bank of Botetourt Records Profitable 2023; Board Votes to Increase Common Dividend by 3.9%
BUCHANAN, Va., Feb. 1, 2024 /PRNewswire/ -- Buchanan-based Bank of Botetourt (OTCPK: BORT and BORTP) announced today its unaudited financial results for the three and twelve months-ended December 31, 2023. The Bank produced net income amounting to $1,800,000 or $0.86 per basic share in the fourth quarter. This amount compares to a net income of $2,191,000 or $1.13 per share, for the same period last year. For the twelve months-ended December 31, 2023 the Bank produced net income amounting to $8,173,000 or $3.95 per basic share. This amount compares to net income of $7,805,000 or $4.04 per share, for the same period last year.
At December 31, 2023, select financial information and key highlights include:
- Return on average assets of 1.10%
- Return on average equity of 11.64%
- Book value of $36.26
- Total deposit growth of 7.10%
- Total asset growth of 10.55%
- Total loan growth of 22.87%
- Community Bank Leverage Ratio of 10.36%
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 February 9, 2024 to preferred shareholders of record February 2, 2024. The Board voted to increase the quarterly common dividend from $0.1925 to $0.20 per share, or $0.80 per share annualized. The dividend increase of 3.9% per share annualized is payable on February 16, 2024 to common shareholders of record February 12, 2024. CEO & Vice-Chairman, G. Lyn Hayth, III stated, "While navigating a dynamic economic landscape, we are gratified by the financial performance of our Bank during 2023. Our strong financial performance, marked by impressive loan growth, underscores our commitment to increasing shareholder value and driving sustained success."
Results of Operations
Net income for the three months ended December 31, 2023 was $1,800,000 compared to $2,191,000 for the same period last year, representing an decrease of $391,000 or 17.84%. Basic and diluted earnings per share decreased $0.27 from $1.13 at December 31, 2022 to $0.86 at December 31, 2023. The decrease in net income is primarily due to $2,150,000 increase in deposit interest expense, $233,000 increase in interest expense on other borrowings, partially offset by $2,217,000 more interest and fees on loans and $281,000 less provision for credit losses.
For the three months ended December 31, 2023, the Bank recorded a provision for credit loss expense of $304,000 and a reserve for unfunded commitments of $80,000, which is included in other expenses. This compares to $585,000 provision for loan loss for the three months ended December 31, 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 1.25% at the end of the quarter, down 5 basis points from the prior quarter and down 12 basis points from the same period in 2022. Net charge-offs were $279,000 at December 31, 2023 as compared to $498,000 at December 31, 2022.
At December 31, 2023 gross loans increased 22.87%. Interest and fees on loans at December 31, 2023 increased $2,217,000 over the same three month time period of 2022. Interest expense increased by $2,383,000 from $922,000 at December 31, 2022 to $3,305,000 at December 31, 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 $166,000, or 12.05%, to $1,212,000 for the three months ended December 31, 2023 compared to $1,378,000 for same time period of 2022. The decrease is attributable primarily to $156,000 decrease in gain on loans held for sale for the fourth quarter compared to the same time period of 2022.
Noninterest expense increased $205,000 from $4,706,000 at December 31, 2022 to $4,911,000 at December 31, 2023. The increase is primarily due to an increase in marketing of $141,000, an increase in fees for outside services of $50,000, and an increase in ATM and debit card fees of $43,000.
Income tax expense for the three months ended December 31, 2023 was $448,000 compared to $511,000 one year prior. The decrease in tax expense is due to lower revenue for the quarter.
Financial Condition
At December 31, 2023 total consolidated assets amounted to $789,024,000, an increase of 10.55% above total assets at December 31, 2022 of $713,718,000, an increase of $75,306,000. Total net loans increased $111,095,000 or 23.04% from $482,162,000 at December 31, 2022 to $593,257,000 at December 31, 2023. Total deposits at December 31, 2022 amounted to $643,923,000, compared to $689,592,000 at December 31, 2023, an increase of 7.10% or $45,669,000. The increase in deposits is attributable to organic growth and the addition of two brokered deposits totaling $11,012,000.
Stockholders' equity totaled $74,779,000 at December 31, 2023 compared to $66,393,000 at December 31, 2022. The $8,386,000 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 December 31, 2023, respectively. Non-performing assets decreased from $946,000 at December 31, 2022 to $121,000 at December 31, 2023. The decrease is attributable to the sale of collateral on four non-accrual loans, one secured by raw land and three 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 three 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, one loan was removed from non-accrual due to good performance, and two loans were paid in full resulting in the total $825,000 decrease in non-performing assets. There were no additions to nonaccrual loans during the fourth quarter. The decrease in nonaccrual loans is attributable to the charge-off and 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 $1,532,000 at December 31, 2023 compared to $1,616,000 at December 31, 2022. The decrease in impaired loans is attributable to two real estate loan being paid off from the sale of collateral and two real estate loan being paid in full and one raw land loan being written off, offset by the addition of one commercial real estate and one commercial loan. Loss exposure on impaired loans increased from $63,000 at December 31, 2022 to $93,000 at December 31, 2023. The increase is attributable to the addition of one commercial loan with a specific reserve of $69,000, offset by a charge-off of one consumer loan and one residential lot loan with specific reserves of $5,000 and $26,000, 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 December 31, 2023 Bank of Botetourt reported its CBLR ratio at 10.36% 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 |
|||||||
Twelve Months Ended |
Three Months Ended |
||||||
2023 |
2022 |
2023 |
2022 |
||||
Interest income |
|||||||
Loans and fees on loans |
$ 29,225,000 |
$ 22,031,000 |
$ 8,245,000 |
$ 6,028,000 |
|||
Federal Funds Sold |
19,000 |
5,000 |
5,000 |
3,000 |
|||
Securities: |
|||||||
Taxable |
1,737,000 |
1,549,000 |
422,000 |
456,000 |
|||
Exempt from federal income tax |
234,000 |
124,000 |
51,000 |
42,000 |
|||
Dividend income |
41,000 |
19,000 |
20,000 |
5,000 |
|||
Deposits with banks |
3,119,000 |
2,039,000 |
813,000 |
1,003,000 |
|||
Total Interest income |
34,375,000 |
25,767,000 |
9,556,000 |
7,537,000 |
|||
Interest expense |
|||||||
Deposits |
8,917,000 |
2,292,000 |
3,072,000 |
922,000 |
|||
Other borrowings |
468,000 |
20,000 |
233,000 |
- |
|||
Total Interest expense |
9,385,000 |
2,312,000 |
3,305,000 |
922,000 |
|||
Net Interest Income |
24,990,000 |
23,455,000 |
6,251,000 |
6,615,000 |
|||
Provision for credit losses |
891,000 |
1,510,000 |
304,000 |
585,000 |
|||
Net Interest Income after credit loss expense |
24,099,000 |
21,945,000 |
5,947,000 |
6,030,000 |
|||
Noninterest income |
|||||||
Service charges on deposit accounts |
1,306,000 |
987,000 |
300,000 |
288,000 |
|||
ATM and debit card |
1,956,000 |
1,711,000 |
465,000 |
442,000 |
|||
Other service charges and fees |
742,000 |
682,000 |
182,000 |
182,000 |
|||
Mortgage origination fees |
226,000 |
392,000 |
74,000 |
47,000 |
|||
Other income, net of gains |
969,000 |
1,389,000 |
191,000 |
419,000 |
|||
Total noninterest income |
5,199,000 |
5,161,000 |
1,212,000 |
1,378,000 |
|||
Noninterest expense |
|||||||
Salaries and employee benefits |
8,407,000 |
8,032,000 |
2,108,000 |
2,274,000 |
|||
Occupancy |
973,000 |
983,000 |
174,000 |
193,000 |
|||
Equipment |
907,000 |
883,000 |
224,000 |
305,000 |
|||
Foreclosed assets, net |
3,000 |
(16,000) |
3,000 |
6,000 |
|||
Outside services |
2,269,000 |
2,070,000 |
620,000 |
570,000 |
|||
FDIC insurance premiums and assessment |
348,000 |
341,000 |
105,000 |
95,000 |
|||
ATM and debit card |
1,427,000 |
1,108,000 |
359,000 |
316,000 |
|||
Franchise tax |
598,000 |
496,000 |
155,000 |
130,000 |
|||
Telephone and communication |
262,000 |
292,000 |
62,000 |
75,000 |
|||
Other professional fees |
298,000 |
210,000 |
74,000 |
52,000 |
|||
Marketing |
944,000 |
772,000 |
338,000 |
197,000 |
|||
Other operating expenses |
2,603,000 |
2,140,000 |
689,000 |
493,000 |
|||
Total noninterest expense |
19,039,000 |
17,311,000 |
4,911,000 |
4,706,000 |
|||
Income before income taxes |
10,259,000 |
9,795,000 |
2,248,000 |
2,702,000 |
|||
Income tax expense |
2,086,000 |
1,990,000 |
448,000 |
511,000 |
|||
Net income |
8,173,000 |
7,805,000 |
1,800,000 |
2,191,000 |
|||
Preferred stock dividends |
478,000 |
- |
119,000 |
- |
|||
Net income available to common shareholders |
$ 7,695,000 |
$ 7,805,000 |
$ 1,681,000 |
$ 2,191,000 |
|||
Basic earnings per share |
$ 3.95 |
$ 4.04 |
$ 0.86 |
$ 1.13 |
|||
Diluted earnings per share |
$ 3.95 |
$ 4.04 |
$ 0.86 |
$ 1.13 |
|||
Dividends declared per share |
$ 0.77 |
$ 0.74 |
$ 0.1925 |
$ 0.185 |
|||
Basic weighted average shares outstanding |
1,946,576 |
1,932,448 |
1,950,188 |
1,939,403 |
|||
Diluted weighted average shares outstanding |
1,946,576 |
1,932,448 |
1,950,188 |
1,939,403 |
|||
Bank of Botetourt |
||||
(unaudited) |
(audited) |
|||
December 31, |
December 31, |
|||
2023 |
2022 |
|||
Assets |
||||
Cash and due from banks |
$ 10,448,000 |
$ 8,987,000 |
||
Interest-bearing deposits with banks |
58,512,000 |
91,418,000 |
||
Federal funds sold |
524,000 |
523,000 |
||
Total cash and cash equivalents |
69,484,000 |
100,928,000 |
||
Time deposits with banks |
250,000 |
250,000 |
||
Debt securities held-to-maturity, net of allowance |
||||
for credit losses of $18,000 at December 31, 2023 and $0 |
||||
at December 31, 2022 |
9,932,000 |
9,950,000 |
||
Debt securities available for sale |
85,663,000 |
92,552,000 |
||
Restricted equity securities |
1,483,000 |
412,000 |
||
Loans held for sale |
- |
177,000 |
||
Loans, net of allowance for credit losses of $7,542,000 at |
||||
December 31, 2023 and $6,686,000 at December 31, 2022 |
593,257,000 |
482,162,000 |
||
Premises and fixed assets, net |
14,652,000 |
14,063,000 |
||
Bank owned life insurance |
4,399,000 |
4,313,000 |
||
Accrued income |
2,286,000 |
1,828,000 |
||
Other real estate owned |
- |
- |
||
Other assets |
7,618,000 |
7,083,000 |
||
Total assets |
$ 789,024,000 |
$ 713,718,000 |
||
Liabilities and Stockholders' Equity |
||||
Liabilities |
||||
Noninterest-bearing deposits |
$ 159,472,000 |
$ 169,162,000 |
||
Interest-bearing deposits |
530,120,000 |
474,761,000 |
||
Total deposits |
689,592,000 |
643,923,000 |
||
Other borrowings |
19,000,000 |
- |
||
Accrued interest payable |
1,574,000 |
324,000 |
||
Other liabilities |
4,079,000 |
3,078,000 |
||
Total liabilities |
714,245,000 |
647,325,000 |
||
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 December 31, 2023 and 2022, respectively |
244,000 |
244,000 |
||
Common stock, $1.50 par value; 5,000,000 shares |
||||
authorized; 1,951,372 and 1,940,879 issued and |
||||
outstanding at December 31, 2023 and at December 31, 2022, |
||||
respectively |
2,927,000 |
2,911,000 |
||
Additional paid-in capital |
23,938,000 |
23,655,000 |
||
Retained earnings |
53,377,000 |
47,681,000 |
||
Accumulated other comprehensive loss |
(5,707,000) |
(8,098,000) |
||
Total stockholders' equity |
74,779,000 |
66,393,000 |
||
Total liabilities and stockholders' equity |
$ 789,024,000 |
$ 713,718,000 |
SOURCE Bank of Botetourt
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