Bank of Botetourt posts profitable second quarter financial results

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BUCHANAN, Va., July 27, 2023 /PRNewswire/ -- Buchanan-based Bank of Botetourt (OTCPK: BORT and BORTP) announced today its unaudited financial results for the three and six months-end June 30, 2023. The Bank produced net income amounting to $1,993,000 or $0.96 per basic share in the second quarter. This amount compares to a net income of $1,763,000 or $0.91 per share, for the same period last year. For the six months-ended the Bank produced net income amounting to $4,287,000 or $2.08 per basic share. This amount compares to a net income of $3,306,000 or $1.72 per share, for the same period last year. 

At June 30, 2023, select financial information and key highlights include:

• Return on average assets of 1.19%
• Return on average equity of 12.53%
• Book value of $36.09
• Total deposit growth of 1.96%
• Total asset growth of 4.38%
• Total loan growth of 11.28%
• Community Bank Leverage Ratio of 10.75%
• Strong liquidity position
• Net interest margin of 3.25% at June 30, 2023 compared to 3.26% 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 August 9, 2023 to preferred shareholders of record August 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 August 18, 2023 to common shareholders of record August 11, 2023. CEO & Vice-Chairman, G. Lyn Hayth, III stated "Our financial results for 2023 continue to meet budget expectations, despite the impact of significant increases in interest rates.  Bank of Botetourt continues to sustain significant loan growth while conserving strong relationships with our current customers."

Results of Operations

Net income for the three months ended June 30, 2023 was $1,993,000 compared to $1,763,000 for the same period last year, representing an increase of $230,000 or 13.05%. Basic and diluted earnings per share increased $0.05 from $0.91 at June 30, 2022 to $0.96 at June 30, 2023. The increase in net income is primarily due to $1,790,000 more loan interest income, $583,000 more investment income, offset by $1,524,000 increase in interest expense and $171,000 provision for credit loss.

For the three months ended June 30, 2023, the Bank recorded a provision for credit loss expense of $396,000, which includes $43,000 related to provision for unfunded commitments, compared to $225,000 provision for loan loss for the three months ended June 30, 2022. The provision expense 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 1.38% at the end of the quarter, down 3 basis points from the prior quarter and 5 basis point higher from the end of the same quarter of 2022. Net charge-offs were $104,000 at June 30, 2023 as compared to $233,000 at June 30, 2022.

At June 30, 2023 net loans increased 11.28%. Interest and fees on loans at June 30, 2023 increased $1,790,000 over the same three month time period of 2022. Interest expense increased by $1,524,000 from $433,000 at June 30, 2022 to $1,957,000 at June 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 increased by $97,000, or 7.57%, to $1,379,000 for the three months ended June 30, 2023 compared to $1,282,000 for same time period of 2022. The increase is attributable primarily to income from service charges on deposit accounts and income from title insurance subsidiaries, partially offset by a decrease of income on the sale of mortgage loans.

Noninterest expense increased $484,000 from $4,247,000 at June 30, 2022 to $4,731,000 at June 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 June 30, 2023 was $513,000 compared to $452,000 one year prior. The increase in tax expense is due to higher revenue for the quarter.

Financial Condition

At June 30, 2023 total assets amounted to $746,836,000, an increase of 4.38% above total assets at December 31, 2022 of $715,514,000, an increase of $31,322,000. Total net loans increased $54,406,000 or 11.28% from $482,163,000 at December 31, 2022 to $536,569,000 at June 30, 2023. Total deposits at December 31, 2022 amounted to $645,720,000, compared to $658,362,000 at June 30, 2023, an increase of 1.96% or $12,642,000. The increase in deposits is attributable to organic growth coupled with the addition of $11,000,000 in brokered deposits.

Stockholders' equity totaled $70,163,000 at June 30, 2023 compared to $66,393,000 at December 31, 2022. The $3,770,000 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 June 30, 2023, respectively. Non-performing assets decreased from $946,000 at December 31, 2022 to $607,000 at June 30, 2023. The decrease is attributable to the sale of collateral on two non-accrual loans, one secured by raw land and one 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 1-4 family residential loan followed by the subsequent charge-off of the remaining total loan balance.  Furthermore, one residential real estate loan was charged off and one commercial loan was paid in full resulting in the total $339,000 decrease in non-performing assets. There were no new additions 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 $1,268,000 at June 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 decreased from $63,000 at December 31, 2022 to $56,000 at June 30, 2023. The decrease is attributable to the 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 June 30, 2023 Bank of Botetourt reported its CBLR ratio at 10.75% which meets the required regulatory minimum ratio. This compares to a CBLR ratio of 10.32% at December 31, 2021.

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
Income Statement
For the six months ended and three months ended June 30, 2023 and 2022 (Unaudited)
	Six Months Ended June 30,				Three Months Ended June 30,
	2023		2022		2023		2022
Interest income
Loans and fees on loans	$      13,483,000		$      10,385,000		$        6,969,000		$        5,179,000
Securities:
U.S. Treasury and Government Agencies	439,000		311,000		217,000		196,000
Mortgage-backed securities	160,000		21,000		79,000		21,000
All other securities	428,000		353,000		200,000		194,000
Due from depository institutions	1,540,000		306,000		741,000		247,000
Federal funds sold	9,000		1,000		5,000		1,000
Total Interest income	16,059,000		11,377,000		8,211,000		5,838,000
Interest expense
Deposits	3,350,000		887,000		1,914,000		433,000
Other borrowings	43,000		-		43,000		-
Total Interest expense	3,393,000		887,000		1,957,000		433,000
Net Interest Income	12,666,000		10,490,000		6,254,000		5,405,000
Provision for credit losses	668,000		430,000		396,000		225,000
Net Interest Income after credit loss expense	11,998,000		10,060,000		5,858,000		5,180,000
Noninterest income
Service charges on deposit accounts	525,000		430,000		271,000		233,000
Securities brokerage and annuities	124,000		154,000		67,000		79,000
Other income, net of gains	2,066,000		1,869,000		1,041,000		970,000
Total noninterest income	2,715,000		2,453,000		1,379,000		1,282,000
Noninterest expense
Salaries and employee benefits	4,150,000		3,831,000		2,101,000		1,913,000
Premises and fixed assets expense	929,000		870,000		446,000		441,000
Other expense	4,250,000		3,654,000		2,184,000		1,893,000
Total noninterest expense	9,329,000		8,355,000		4,731,000		4,247,000
Income before income taxes	5,384,000		4,158,000		2,506,000		2,215,000
Income tax expense	1,097,000		852,000		513,000		452,000
Net income	4,287,000		3,306,000		1,993,000		1,763,000
Preferred stock dividends	238,000		-		119,000		-
Net income available to common shareholders	$        4,049,000		$        3,306,000		$        1,874,000		$        1,763,000
Basic earnings per share	$                   2.08		$                   1.72		$                   0.96		$                   0.91
Diluted earnings per share	$                   2.08		$                   1.72		$                   0.96		$                   0.91
Dividends declared per share	$                0.385		$                0.370		$              0.1925		$                0.185
Basic weighted average shares outstanding	1,944,073		1,927,195		1,945,467		1,930,282
Diluted weighted average shares outstanding	1,944,073		1,927,195		1,945,467		1,930,282

 

Bank of Botetourt
Balance Sheets, unconsolidated
June 30, 2023 (unaudited) and December 31, 2022
		(unaudited)		(audited)
		June 30,		December 31,
		2023		2022
Assets
Cash and due from banks		$       9,995,000		$       8,996,000
Interest-bearing deposits with banks		68,697,000		91,659,000
Federal funds sold		565,000		523,000
Total cash and cash equivalents		79,257,000		101,178,000
Debt securities held-to-maturity, net of allowance
for credit losses of $18,000 at June 30, 2023 and $0
at December 31, 2022		9,932,000		9,950,000
Debt securities available for sale		89,197,000		92,552,000
Loans, net of allowance for credit losses of $7,518,000 at
June 30, 2023 and $6,686,000 at December 31, 2022		536,569,000		482,163,000
Loans held for sale		478,000		177,000
Premises and fixed assets, net		14,486,000		14,063,000
Other real estate owned		-		-
Investment in unconsolidated subsidiaries		2,976,000		2,777,000
Other assets		13,941,000		12,654,000
Total assets		$  746,836,000		$  715,514,000
Liabilities and Stockholders' Equity
Liabilities
Noninterest-bearing deposits		$  166,381,000		$  170,958,000
Interest-bearing deposits		491,981,000		474,762,000
Total deposits		658,362,000		645,720,000
Other borrowings		14,000,000		-
Other liabilities		4,311,000		3,401,000
Total liabilities		676,673,000		649,121,000
Commitments and contingencies		-		-
Stockholders' Equity
Preferred stock, $1.00 par value; 500,000 shares
authorized non-cumulative perpetual; 243,659 issued and
outstanding at June 30, 2023 and at December 31, 2022
respectively		244,000		244,000
Common stock, $1.50 par value; 2,500,000 shares
authorized; 1,946,773 and 1,940,879 issued and
outstanding at June 30, 2023 and at December 31, 2022,
respectively		2,920,000		2,912,000
Additional paid-in capital		23,813,000		23,654,000
Retained earnings		50,481,000		47,681,000
Accumulated other comprehensive loss		(7,295,000)		(8,098,000)
Total stockholders' equity		70,163,000		66,393,000
Total liabilities and stockholders' equity		$  746,836,000		$  715,514,000

 

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SOURCE Bank of Botetourt