Bank of Botetourt posts profitable third quarter financial results

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Bank of Botetourt announces unaudited financial results for Q3 2023, with net income of $2.08M. Total deposit growth of 0.91% and total asset growth of 3.69%. CEO states strong financial performance despite challenges.

Positive

• Net income of $2.08M for Q3 2023, compared to $2.31M for the same period last year.
• Total deposit growth of 0.91% and total asset growth of 3.69%.
• Net interest margin decreased from 3.63% to 3.21% compared to one year prior.
• Board of Directors voted to pay 7.00% preferred dividend and $0.1925 per share quarterly dividend.
• Net loans increased by 16.26%.
• Non-performing assets decreased from $946,000 to $550,000.
• Bank of Botetourt reported a Community Bank Leverage Ratio of 10.51%.

Negative

• Decrease in net income of $223,000 or 9.66% compared to the same period last year.
• Net interest margin decreased from 3.63% to 3.21% compared to one year prior.
• Noninterest income decreased by $54,000 or 4.27%.
• Noninterest expense increased by $464,000.
• Impaired loans decreased from $1,616,000 to $1,209,000.
• Loss exposure on impaired loans increased from $63,000 to $66,000.

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 Income Statement For the nine months ended and three months ended September 30, 2023 and 2022 (Unaudited)
	Nine Months Ended September 30,				Three Months Ended September 30,
	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 Balance Sheets, unconsolidated September 30, 2023(unaudited) and December 31, 2022
		(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

 

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SOURCE Bank of Botetourt

FAQ

What is the net income for Q3 2023?

The net income for Q3 2023 is $2,085,000.

What is the total deposit growth?

The total deposit growth is 0.91%.

What is the total asset growth?

The total asset growth is 3.69%.

What is the net interest margin?

The net interest margin decreased from 3.63% to 3.21% compared to one year prior.

What dividends will be paid by the Bank of Botetourt?

The Bank of Botetourt will pay a 7.00% preferred dividend and a $0.1925 per share quarterly dividend.

What is the increase in net loans?

Net loans increased by 16.26%.

What is the decrease in non-performing assets?

Non-performing assets decreased from $946,000 to $550,000.

What is the Community Bank Leverage Ratio?

The Community Bank Leverage Ratio for Bank of Botetourt is 10.51%.