Bank of Botetourt posts profitable second quarter financial results

BUCHANAN, Va., July 30, 2021 /PRNewswire/ -- Buchanan-based Bank of Botetourt (OTCPK: BORT) announced today its unaudited financial results for the three and six months-end June 30, 2021. The Bank produced net income amounting to $1,582,000 or $0.91 per basic share in the second quarter. This amount compares to a net income of $1,172,000 or $0.68 per share, for the same period last year.  For the six months-ended the Bank produced net income amounting to $3,562,000 or $2.05 per basic share. This amount compares to a net income of $2,210,000 or $1.28 per share, for the same period last year. 

At June 30, 2021, select financial information and key highlights include:

• Return on average assets of 1.13%
• Return on average equity of 12.86%
• Book value of $32.76
• Total deposit growth of 8.3%
• Total asset growth of 8.0%
• Community Bank Leverage Ratio of 9.00%
• Strong liquidity position
• Net interest margin of 3.02% at June 30, 2021 compared to 3.09% one year prior.
• Outstanding Paycheck Protection Program ("PPP") loans of $26.2 million reported at December 31, 2020 decreased to $5.8 million at June 30, 2021 after receiving SBA forgiveness on $20.4 million. The Bank recognized $624,000 in revenue from the forgiven loans.
• In 2021, the Bank participated in the next round of the SBA's PPP Program.  During the first six months, the Bank generated $18.0 million new PPP loans.  At June 30, 2021, $855,000 had been forgiven by the SBA. The bank recognized $147,000 in revenue related to this tranche of PPP lending.
• At quarter-end, remaining PPP loan balances from both rounds totaled $23.0 million with $1,121,000 in deferred revenue.

As a result of the solid financial performance, the Board of Directors voted to pay the $0.18 per share quarterly dividend, or $0.72 per share annualized which is payable on August 19, 2021 to shareholders of record August 12, 2021. President & CEO, G. Lyn Hayth, III stated "Our second quarter financial results continued to exceed budget expectations. Additional PPP lending, SBA loan forgiveness, and the subsequent revenue recognition contributed to our successful financial results.  In addition, strong and consistent revenue generated by our mortgage loan activity has been a strong contributor to earnings."

Results of Operations

Net income for the three months ended June 30, 2021 was $1,582,000 compared to $1,172,000 for the same period last year, representing an increase of $410,000 or 35.0%.  Basic and diluted earnings per share increased $0.23 from $0.68 at June 30, 2020 to $0.91 at June 30, 2021.  The increase in net income is primarily due to $403,000 in PPP loan revenue recognized and $266,000 in secondary market mortgage income.

Net income was augmented because there was no provision for loan losses required by the quarterly calculation for the three months ended June 30, 2021 as compared to $745,000 for June 30, 2020. The decrease in the provision is due to a reduction in exposure on impaired loans, overall improved economic trends, and partially offset by the historic loss factor in the allowance for loan loss reserve calculation. In determining the estimated allowance, the Bank considered national and local unemployment trends, market conditions, and customer requests for payment deferrals.

Loan growth remained virtually unchanged as net loans decreased  0.54%. Interest and fees on loans at June 30, 2021 increased $134,000 over the same three month time period of 2020. Interest expense decreased by $525,000 from $1,216,000 at June 30, 2020 to $691,000 at June 30, 2021.  The lower interest expense is a result of lower interest rates paid on the balances of interest-bearing deposits than for the same time period of 2020 and less interest paid on a borrowing with a smaller principal balance.

Noninterest income decreased by $45,000, or 5.1%, to $840,000 for the three months ended June 30, 2021 compared to $885,000 for same time period of 2020.  The decrease is attributable primarily to the losses on sale of other real estate offset by income from loans held-for-sale, and income from title insurance subsidiaries.

Noninterest expense increased $875,000 from $2,917,000 at June 30, 2020 to $3,792,000 at June 30, 2021.  The increase is primarily related to an increase in salary and employee benefits expense for the quarter. The majority of the increase in salaries expense is related to the deferred costs of PPP lending during the quarter.

Income tax expense for the three months ended June 30, 2021 was $410,000 compared to $298,000 one year prior. The increase in tax expense is due to higher revenue for the quarter.

Financial Condition

At June 30, 2021 total assets amounted to $645,341,000, an increase of 8.0% above total assets at December 31, 2020 of $597,794,000, an increase of $47,547,000. Total net loans decreased $2,472,000 or 0.5% from $454,680,000 at December 31, 2020 to $452,208,000 at June 30, 2021. Total deposits at December 31, 2020 amounted to $536,805,000, compared to $581,293,000 at June 30, 2021, an increase of 8.3% or $44,488,000. The increase in deposits is attributable to organic growth.

Stockholders' equity totaled $56,872,000 at June 30, 2021 compared to $53,816,000 at December 31, 2020. The $3,056,000 increase during the period is net income for 2021, net proceeds from the issuance of common stock from the Dividend Reinvestment and Stock Purchase Plan, and partially offset by dividends paid and accumulated other comprehensive loss.

Non-Performing Assets

Non-performing assets, which consist of nonaccrual loans and foreclosed properties decreased from $3,200,000 at December 31, 2020 to $1,481,000 at June 30, 2021.  The decrease is attributable to the sale of multiple foreclosed properties during the quarter with losses on sale of approximately $339,000.  Nonaccrual loans were $1,213,000 at June 30, 2021 compared to $1,286,000 at December 31, 2020.  There were no new additions to nonaccruals loans during the quarter. 

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 $2,200,000 June 30, 2021 compared to $2,300,000 at December 31, 2020.  Loss exposure on impaired loans decreased from $98,000 at December 31, 2020 to $9,000 at June 30, 2021 after obtaining current appraisals on collateral securing a significant number of impaired loans in the portfolio and estimating selling costs based on historical experience.

The Bank historically makes a conscious effort to attempt work-out loan scenarios with past due customers.  In some cases, loan restructuring is appropriate.  Bank management has procedures and processes in place to identify, monitor, and report troubled debt restructurings. At June 30, 2021, troubled debt restructurings ("TDRs") totaled $1.2 million and were spread among various loan categories. No new TDRs have been identified in 2021.

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 June 30, 2021 Bank of Botetourt reported its CBLR ratio at 9.0% which meets the required regulatory minimum ratio. The CARES Act temporarily reduced the CBLR minimum ratio from 9.0% to 8.5% through December 31, 2021.

Paycheck Protection Program

Bank of Botetourt was a participant in the Paycheck Protection Program ("PPP") initiated by the U.S. Department of the Treasury.  At June 30, 2021 both rounds of PPP lending totaled $44.2, with $21.2 receiving forgiveness from the SBA. As result, $23.0 million of PPP loans remain on the balance sheet at the end of the second quarter. Deferred PPP loan servicing fees totaled $1,121,000 at June 30, 2021 while the Bank recognized $771,000 in revenue during 2021.

COVID-19 Customer & Employee Care

Bank of Botetourt assisted our customers and employees during the pandemic.  For loan customers impacted by COVID-19, the Bank granted extensions, skip-a-payment, and modifications consistent with regulatory guidance.  During the second quarter, additional requests for assistance slowed to only two requests. With the decline in requests for assistance for two consecutive quarters, Bank of Botetourt ended its COVID relief program on May 1, 2021.  All of our offices are open will full access and all employees who worked from home during the pandemic have returned to the office environment.  All Bank employees are eligible for and were encouraged to receive the  COVID-19 vaccine.  At June 30, 2021, the Bank had a bank-wide vaccination rate of 73%.

Vinton Office

On July 26, 2021 Bank of Botetourt opened its thirteenth retail office at 410 South Pollard Street, Vinton, in Roanoke County, Virginia.  In addition to traditional retail banking services, the office will support commercial lending, treasury services, and merchant card services. Financial services will be offered through our Botetourt Wealth Management division.  A grand opening celebration is planned for August 19, 2021.

About Bank of Botetourt

Bank of Botetourt was chartered in 1899 and operates thirteen retail offices in Botetourt, Rockbridge, Roanoke, and Franklin counties and the City of Salem, 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 Income Statement For the six months ended and three months ended June 30, 2021 and 2020 (Unaudited)
	Six Months Ended June 30,				Three Months Ended June 30,
	2021		2020		2021		2020
Interest income
Loans and fees on loans	$      11,023,000		$      10,741,000		$        5,495,000		$        5,361,000
Investment securities:
U.S. Treasury and Government Agencies	43,000		93,000		32,000		38,000
All other securities	148,000		116,000		78,000		58,000
Due from depository institutions	57,000		50,000		30,000		6,000
Federal Funds Sold	-		1,000		-		-
Total Interest income	11,271,000		11,001,000		5,635,000		5,463,000
Interest expense
Deposits	1,501,000		2,430,000		655,000		1,156,000
Other borrowings	36,000		60,000		36,000		60,000
Total Interest expense	1,537,000		2,490,000		691,000		1,216,000
Net Interest Income	9,734,000		8,511,000		4,944,000		4,247,000
Provision for loan losses	-		1,190,000		-		745,000
Net Interest Income after provision for loan losses	9,734,000		7,321,000		4,944,000		3,502,000
Noninterest income
Service charges on deposit accounts	300,000		306,000		149,000		111,000
Securities brokerage and annuities	86,000		59,000		63,000		26,000
Other income, net of gains	1,566,000		1,543,000		628,000		748,000
Total noninterest income	1,952,000		1,908,000		840,000		885,000
Noninterest expense
Salaries and employee benefits	3,192,000		2,817,000		1,695,000		1,096,000
Premises and fixed assets expense	776,000		731,000		398,000		364,000
Other expense	3,231,000		2,911,000		1,699,000		1,457,000
Total noninterest expense	7,199,000		6,459,000		3,792,000		2,917,000
Income before income taxes	4,487,000		2,770,000		1,992,000		1,470,000
Income tax expense	925,000		560,000		410,000		298,000
Net income	$        3,562,000		$        2,210,000		$         1,582,000		$        1,172,000
Basic earnings per share	$                  2.05		$                  1.28		$                  0.91		$                  0.68
Diluted earnings per share	$                  2.05		$                  1.28		$                  0.91		$                  0.68
Dividends declared per share	$                  0.36		$                  0.35		$                0.180		$                0.175
Basic weighted average shares outstanding	1,733,973		1,722,683		1,736,230		1,723,712
Diluted weighted average shares outstanding	1,733,973		1,722,683		1,736,230		1,723,712

 

 

Bank of Botetourt Balance Sheets, unconsolidated June 30, 2021(unaudited) and December 31, 2020
		(unaudited)		(audited)
		June 30,		December 31,
		2021		2020
Assets
Cash and Due from banks		$        8,101,000		$        7,979,000
Interest-bearing deposits with banks		120,450,000		90,791,000
Federal funds sold		389,000		387,000
Total cash and cash equivalents		128,940,000		99,157,000
Investment securities available for sale		30,870,000		16,802,000
Investment securities held to maturity		6,950,000		-
Equity securities with readily determinable fair values		76,000		51,000
Loans, net of allowance for loan losses of $5,220,000 at		452,208,000		454,680,000
June 30, 2021 and $5,239,000 at December 31, 2020
Loans held for sale		174,000		686,000
Premises and fixed assets, net		13,940,000		13,417,000
Other real estate owned		268,000		1,961,000
Investment in unconsolidated subsidiaries		2,330,000		2,082,000
Other assets		9,585,000		8,958,000
Total assets		645,341,000		597,794,000
Liabilities and Stockholders' Equity
Liabilities
Noninterest-bearing deposits		$      84,465,000		$      65,965,000
Interest-bearing deposits		496,828,000		470,840,000
Total deposits		581,293,000		536,805,000
Other borrowings		4,000,000		4,000,000
Other liabilities		3,176,000		3,173,000
Total liabilities		588,469,000		543,978,000
Commitments and contingencies		-		-
Stockholders' Equity
Common stock, $1.50 par value; 2,500,000 shares
authorized; 1,740,575 and 1,729,880 issued and
outstanding at June 30, 2021 and at December 31, 2020,
respectively		2,611,000		2,595,000
Additional paid-in capital		11,844,000		11,569,000
Retained earnings		43,619,000		40,681,000
Accumulated other comprehensive loss		(1,202,000)		(1,029,000)
Total stockholders' equity		56,872,000		53,816,000
Total liabilities and stockholders' equity		645,341,000		597,794,000

 

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SOURCE Bank of Botetourt