Bank of Botetourt exceeds budget expectations, posts profitable third quarter financial results
BUCHANAN, Va., Oct. 31, 2024 /PRNewswire/ -- Buchanan-based Bank of Botetourt (OTCPK: BORT and BORTP) announced today its unaudited financial results for the three and nine months-ended September 30, 2024. The Bank produced net income amounting to $1,967,000 or $0.94 per basic share in the third quarter. This amount compares to net income of $2,085,000 or $1.01 per share, for the same period last year. For the nine months-ended the Bank produced net income amounting to $5,988,000 or $2.88 per basic share. This amount compares to a net income of $6,372,000 or $3.09 per share, for the same period last year.
At September 30, 2024, select financial information and key highlights include:
- Return on average assets of 0.99%
- Return on average equity of 10.28%
- Book value of $38.21
- Total deposit growth of 2.49%
- Total asset growth of 3.41%
- Total loan growth of 9.65%
- Community Bank Leverage Ratio of 10.53%
The Board of Directors voted to pay the 7.00% preferred dividend, which calculates to $0.49 per share on November 8, 2024 to preferred shareholders of record November 1, 2024. Furthermore, the Board of Directors voted to pay the $0.20 per share quarterly dividend, or $0.80 per share annualized, which is payable on November 18, 2024 to common shareholders of record November 11, 2024. CEO & Vice-Chairman, G. Lyn Hayth, III stated "As we celebrate our 125th anniversary, we remain deeply committed to delivering exceptional shareholder value by consistently producing strong financial results. Surpassing our budget is a testament to the hard work and dedication of our entire team. Together, we honor our legacy while looking forward to even greater success in the future."
Results of Operations
Net income for the three months ended September 30, 2024 was $1,967,000 compared to $2,085,000 for the same period last year, representing an decrease of $118,000 or 5.66%. Basic and diluted earnings per share decreased $0.07 from $1.01 at September 30, 2023 to $0.94 at September 30, 2024. The decrease in net income is primarily due to $1,334,000 more interest expense on deposits and other borrowings, $428,000 more provision for credit losses, $332,000 less investment income, offset by $2,116,000 more interest and fees on loans.
For the three months ended September 30, 2024, the Bank recorded a provision for credit loss expense of $411,000 and a reserve for unfunded commitments of $11,000, which is included in other expenses. This compares to $(17,000) for the same period last year, representing an increase of $428,000. 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 1.19% at the end of the quarter, up 1 basis point from the prior quarter and down 11 basis points from one year prior.
At September 30, 2024 net loans increased 9.65%. Interest and fees on loans at September 30, 2024 increased $2,116,000 over the same three month time period of 2023. Interest expense increased by $1,334,000 from $2,687,000 at September 30, 2023 to $4,021,000 at September 30, 2024. 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 2023 and the increase of interest on borrowed funds.
Noninterest income increased by $140,000, or 11.56%, to $1,351,000 for the three months ended September 30, 2024 compared to $1,211,000 for same time period of 2023. The increase is attributed to an increase in service charges on deposit accounts, income from title insurance subsidiaries, partially offset by a decrease in gain on sale of mortgage loans.
Noninterest expense increased $308,000 from $4,735,000 at September 30, 2023 to $5,043,000 at September 30, 2024. The increase is primarily related to increases in salary and employee benefits, debit card expense, and core processing expenses.
Income tax expense for the three months ended September 30, 2024 was $453,000 compared to $481,000 one year prior. The decrease in tax expense is due to less revenue for the quarter.
Financial Condition
At September 30, 2024 total assets amounted to $817,971,000, an increase of 3.41% above total assets at December 31, 2023 of $791,015,000, an increase of $26,956,000. Total net loans increased $57,257,000 or 9.65% from $593,256,000 at December 31, 2023 to $650,513,000 at September 30, 2024. Total deposits at December 31, 2023 amounted to $691,584,000, compared to $708,771,000 at September 30, 2024, an increase of 2.49% or $17,187,000.
Stockholders' equity totaled $81,358,000 at September 30, 2024 compared to $74,778,000 at December 31, 2023. The $6,580,000 increase during the period is net income for 2024, net proceeds from the issuance of common stock from the Dividend Reinvestment and Stock Purchase Plan, a decrease in accumulated other comprehensive loss, partially offset by dividends paid.
Asset Quality
Bank of Botetourt's asset quality remained strong for the third quarter 2024. Provision for credit losses for the third quarter of 2024 was $411,000 compared with $36,000 in the previous quarter and $(17,000) in the same quarter of 2023.
The Bank had no foreclosed properties at December 31, 2023 and September 30, 2024, respectively. Therefore, non-performing assets only consisted of nonaccrual loans. Non-performing assets increased from $121,000 at December 31, 2023 to $247,000 at September 30, 2024. The increase is attributable to the addition of four commercial and industrial loans, offset by the removal of one residential lot, three commercial and industrial loans, and one auto loan. The commercial and industrial additions are collateralized by commercial vehicles along with a UCC blanket lien on inventory, equipment and accounts. The sale of collateral for one residential lot loan and one commercial and industrial loan resulted in the subsequent paydown of the loan with the auto loan balance being charged-off. During the third quarter, two commercial and industrial loans totaling $143,000 were charged-off. There were no new additions to nonaccrual loans during the third quarter. The increase in nonaccrual loans is attributed to the new additions and the charge-off and payment activity of the aforementioned loans.
Net charge-offs during the third quarter of 2024 were $117,000 or 7 basis points annualized on total average loans outstanding. Net charge-offs for the third quarter of 2024 were comprised of charge-offs of $171,000 partially offset by recoveries of $54,000. Compared to the prior quarter, net charge-offs decreased $30,000 or 2 basis points annualized on total average loans outstanding. Compared to December 31, 2023, net charge-offs decreased $124,000 or 8 basis point annualized on total average loans outstanding.
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, 2024, Bank of Botetourt reported its CBLR ratio at 10.53% which meets the required regulatory minimum ratio. This compares to a CBLR ratio of 10.36% at December 31, 2023.
Milestone
On October 1, 2024, Bank of Botetourt, one of Virginia's six oldest banks, commemorated its 125th anniversary at The Hotel Roanoke and Conference Center in Roanoke, Virginia. This milestone celebrated a rich history of service, innovation, and commitment to the communities it serves. Established in 1899 as Bank of Buchanan, the institution has grown to become the largest community bank headquartered in the Roanoke Metropolitan Service. During the celebration, it was announced that Bank of Botetourt was named the #1 bank in Virginia in 2024 by Forbes. Bank of Botetourt was Forbes' top selection in Virginia in its America's Best-In-State Banks 2024. The independent survey of 26,000 U.S. consumers rated financial institutions on Trust, Terms and Conditions, Branch Services, Digital Services, Customer Service, and Financial Advice.
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 | ||||
(unaudited) | (audited) | |||
September 30, | December 31, | |||
2024 | 2023 | |||
Assets | ||||
Cash and due from banks | $ 15,224,000 | $ 10,410,000 | ||
Interest-bearing deposits with banks | 25,851,000 | 58,800,000 | ||
Federal funds sold | 678,000 | 524,000 | ||
Total cash and cash equivalents | 41,753,000 | 69,734,000 | ||
Debt securities held to maturity, net of allowance | ||||
for credit losses of $18,000 at September 30, 2024 and | ||||
at December 31, 2023, respectively | 9,982,000 | 9,932,000 | ||
Debt securities available for sale | 77,767,000 | 85,663,000 | ||
Loans, net of allowance for credit losses of $7,821,000 at | ||||
September 30, 2024 and $7,542,000 at December 31, 2023 | 650,513,000 | 593,256,000 | ||
Loans held for sale | 649,000 | - | ||
Premises and fixed assets, net | 15,166,000 | 14,652,000 | ||
Other real estate owned | - | |||
Investment in unconsolidated subsidiaries | 3,183,000 | 3,000,000 | ||
Other assets | 18,958,000 | 14,778,000 | ||
Total assets | $ 817,971,000 | $ 791,015,000 | ||
Liabilities and Stockholders' Equity | ||||
Liabilities | ||||
Noninterest-bearing deposits | $ 166,878,000 | $ 161,464,000 | ||
Interest-bearing deposits | 541,893,000 | 530,120,000 | ||
Total deposits | 708,771,000 | 691,584,000 | ||
Other borrowings | 19,000,000 | 19,000,000 | ||
Other liabilities | 8,842,000 | 5,653,000 | ||
Total liabilities | 736,613,000 | 716,237,000 | ||
Commitments and contingencies | - | - | ||
Stockholders' Equity | ||||
Preferred stock, $1.00 par value; 1,000,000 shares | ||||
authorized; 243,659 issued and outstanding | ||||
at September 30, 2024 and at December 31, 2023, respectively | 244,000 | 244,000 | ||
Common stock, $1.50 par value; 5,000,000 shares | ||||
authorized; 1,958,794 and 1,951,372 issued and | ||||
outstanding at September 30, 2024 and at December 31, 2023, | ||||
respectively | 2,938,000 | 2,927,000 | ||
Additional paid-in capital | 24,138,000 | 23,937,000 | ||
Retained earnings | 57,834,000 | 53,377,000 | ||
Accumulated other comprehensive loss | (3,796,000) | (5,707,000) | ||
Total stockholders' equity | 81,358,000 | 74,778,000 | ||
Total liabilities and stockholders' equity | $ 817,971,000 | $ 791,015,000 | ||
Bank of Botetourt | |||||||
Nine Months Ended | Three Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Interest income | |||||||
Loans and fees on loans | $ 27,369,000 | $ 20,980,000 | $ 9,613,000 | $ 7,497,000 | |||
Securities: | |||||||
U.S. Treasury and Government Agencies | 582,000 | 653,000 | 188,000 | 214,000 | |||
Mortgage-backed securities | 195,000 | 235,000 | 62,000 | 75,000 | |||
All other securities | 650,000 | 628,000 | 216,000 | 200,000 | |||
Due from depository institutions | 1,779,000 | 2,309,000 | 458,000 | 769,000 | |||
Federal funds sold | 16,000 | 14,000 | 7,000 | 5,000 | |||
Total Interest income | 30,591,000 | 24,819,000 | 10,544,000 | 8,760,000 | |||
Interest expense | |||||||
Deposits | 10,809,000 | 5,845,000 | 3,769,000 | 2,495,000 | |||
Other borrowings | 743,000 | 235,000 | 252,000 | 192,000 | |||
Total Interest expense | 11,552,000 | 6,080,000 | 4,021,000 | 2,687,000 | |||
Net Interest Income | 19,039,000 | 18,739,000 | 6,523,000 | 6,073,000 | |||
Provision for credit losses | 513,000 | 651,000 | 411,000 | (17,000) | |||
Net Interest Income after credit loss expense | 18,526,000 | 18,088,000 | 6,112,000 | 6,090,000 | |||
Noninterest income | |||||||
Service charges on deposit accounts | 963,000 | 790,000 | 351,000 | 265,000 | |||
Securities brokerage and annuities | 297,000 | 176,000 | 111,000 | 52,000 | |||
Other income, net of gains | 2,607,000 | 2,960,000 | 889,000 | 894,000 | |||
Total noninterest income | 3,867,000 | 3,926,000 | 1,351,000 | 1,211,000 | |||
Noninterest expense | |||||||
Salaries and employee benefits | 6,590,000 | 6,299,000 | 2,213,000 | 2,149,000 | |||
Premises and fixed assets expense | 1,469,000 | 1,365,000 | 499,000 | 436,000 | |||
Other expense | 6,854,000 | 6,400,000 | 2,331,000 | 2,150,000 | |||
Total noninterest expense | 14,913,000 | 14,064,000 | 5,043,000 | 4,735,000 | |||
Income before income taxes | 7,480,000 | 7,950,000 | 2,420,000 | 2,566,000 | |||
Income tax expense | 1,492,000 | 1,578,000 | 453,000 | 481,000 | |||
Net income | 5,988,000 | 6,372,000 | 1,967,000 | 2,085,000 | |||
Preferred stock dividends | 358,000 | 358,000 | 119,000 | 120,000 | |||
Net income available to common shareholders | $ 5,630,000 | $ 6,014,000 | $ 1,848,000 | $ 1,965,000 | |||
Basic earnings per share | $ 2.88 | $ 3.09 | $ 0.94 | $ 1.01 | |||
Diluted earnings per share | $ 2.88 | $ 3.09 | $ 0.94 | $ 1.01 | |||
Dividends declared per share | $ 0.60 | $ 0.578 | $ 0.20 | $ 0.1925 | |||
Basic weighted average shares outstanding | 1,955,299 | 1,945,359 | 1,957,708 | 1,947,887 | |||
Diluted weighted average shares outstanding | 1,955,299 | 1,945,359 | 1,957,708 | 1,947,887 | |||
SOURCE Bank of Botetourt
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