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,
