Bank of Botetourt Records Profitable 2023; Board Votes to Increase Common Dividend by 3.9%

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Bank of Botetourt (OTCPK: BORT and BORTP) released its unaudited financial results for the three and twelve months-ended December 31, 2023. The bank produced net income of $1,800,000 or $0.86 per basic share in the fourth quarter, compared to $2,191,000 or $1.13 per share for the same period last year. The twelve-month net income was $8,173,000 or $3.95 per basic share, compared to $7,805,000 or $4.04 per share for the same period last year. Key highlights include a 10.55% total asset growth, a 22.87% total loan growth, and a 7.10% total deposit growth. The Board of Directors voted to pay the 7.00% preferred dividend and increased the quarterly common dividend from $0.1925 to $0.20 per share.

Positive

• Solid financial performance
• Impressive loan growth
• Increase in quarterly common dividend

Negative

• Decrease in net income for the fourth quarter
• Increase in deposit interest expense
• Increase in interest expense on other borrowings
• Decrease in noninterest income
• Increase in noninterest expense

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 Income Statement For the twelve months ended and three months ended December 31, 2023 and 2022 (Unaudited)
	Twelve Months Ended December 31,				Three Months Ended December 31,
	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 Consolidated Balance Sheets December 31, 2023 (unaudited) and December 31, 2022 (audited)
		(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

 

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SOURCE Bank of Botetourt

FAQ

What is the net income for the fourth quarter of 2023?

The net income for the fourth quarter of 2023 was $1,800,000.

What was the total asset growth percentage?

The total asset growth percentage was 10.55%.

What was the increase in quarterly common dividend?

The quarterly common dividend was increased from $0.1925 to $0.20 per share.

What was the decrease in noninterest income?

The decrease in noninterest income was $166,000, or 12.05%.

What was the increase in noninterest expense?

The increase in noninterest expense was $205,000.