BANK OF BOTETOURT BUCHANAN, Va., Feb. 1, 2023 /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, 2022. The Bank produced net income amounting to $2,191,000 or $1.13 per basic share in the fourth quarter. This amount compares to a net income of $1,501,000 or $0.77 per share, for the same period last year. For the twelve months-ended December 31, 2022 the Bank produced net income amounting to $7,805,000 or $4.04 per basic share. This amount compares to net income of $6,879,000 or $3.58 per share, for the same period last year.
At December 31, 2022, select financial information and key highlights include:
- Return on average assets of 1.10%
- Return on average equity of 12.99%
- Book value of $32.48
- Total deposit growth of 7.8%
- Total asset growth of 7.8%
- Total loan growth of 13.2%
- Community Bank Leverage Ratio of 10.32%
- Strong liquidity position
- Net interest margin of 3.67% at December 31, 2022 compared to 2.98% 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 February 9, 2023 to preferred shareholders of record February 2, 2023. The Board voted to increase the quarterly common dividend from $0.185 to $0.1925 per share, or $0.77 per share annualized which is payable on February 17, 2023 to common shareholders of record February 13, 2023. President & CEO, G. Lyn Hayth, III stated, "We are gratified by the exceptional financial performance of our Bank during 2022. We were able to successfully meet business objectives that we established for 2022, especially increasing shareholder value."
Results of Operations
Net income for the three months ended December 31, 2022 was $2,191,000 compared to $1,501,000 for the same period last year, representing an increase of $690,000 or 46.0%. Basic and diluted earnings per share increased $0.36 from $0.77 at December 31, 2021 to $1.13 at December 31, 2022. The increase in net income is primarily due to $1,234,000 increase in investment income, $834,000 increase in loans and fees on loans, partially offset by a $444,000 increase in deposit interest expense and a $355,000 increase in the provision for loan loss.
The provision for loan losses was $585,000 for the three months ended December 31, 2022 as compared to $230,000 for the three months ended December 31, 2021. The increase in bad debt expense is due to an increase in the historical loss factor on loans and inflationary concerns in the economy. In determining the estimated allowance, the Bank considered national and local unemployment trends, market conditions, and customer requests for payment deferrals. Net charge-offs were $498,000 at December 31, 2022 as compared to $(11,000) at December 31, 2021, whereby recoveries exceeded charge-offs.
Interest and fees on loans at December 31, 2022 increased $834,000 over the same three month time period of 2021 primarily due to increased loan growth, partially offset by a $169,000 decrease in PPP loan servicing fees. Interest expense increased by $430,000 from $492,000 at December 31, 2021 to $922,000 at December 31, 2022. The higher interest expense is a result of higher interest rates paid on the balances of interest-bearing deposits over the same time period of 2021.
Noninterest income decreased by $149,000, or 9.76%, to $1,378,000 for the three months ended December 31, 2022 compared to $1,527,000 for same time period of 2021. The decrease is attributable primarily to $170,000 decrease in mortgage origination fees for the fourth quarter compared to the same time period of 2021, partially offset by a $84,000 increase in service charges on deposit accounts.
Noninterest expense increased $237,000 from $4,469,000 at December 31, 2021 to $4,706,000 at December 31, 2022. The increase is primarily due to an increase in equipment related expenses of $82,000, an increase in fees for outside services of $75,000, and an increase in ATM and debit card fees of $40,000.
Income tax expense for the three months ended December 31, 2022 was $511,000 compared to $301,000 one year prior. The increase in tax expense is due to higher revenue for the quarter.
Financial Condition
At December 31, 2022 total consolidated assets amounted to $713,718,000, an increase of 7.8% above total assets at December 31, 2021 of $662,230,000, an increase of $51,488,000. Total net loans increased $56,263,000 or 13.2% from $425,899,000 at December 31, 2021 to $482,162,000 at December 31, 2022. Total deposits at December 31, 2021 amounted to $597,122,000, compared to $643,923,000 at December 31, 2022, an increase of 7.8% or $46,801,000. The increase in deposits is attributable to organic growth.
Stockholders' equity totaled $66,393,000 at December 31, 2022 compared to $59,137,000 at December 31, 2021. The $7,256,000 increase during the period is primarily due net income for 2022, the successful results of a Series A Preferred Stock Rights Offering which resulted in net proceeds of $6,642,261, net proceeds from the issuance of common stock from the Dividend Reinvestment and Stock Purchase Plan, and offset by the increase in accumulated other comprehensive loss.
Non-Performing Assets
Non-performing assets, which consist of nonaccrual loans and foreclosed properties decreased by $811,000 from $1,757,000 at December 31, 2021 to $946,000 at December 31, 2022. The decrease is attributable to the charge-off of two commercial real estate loans and the charge-off of one unsecured loan, offset by the addition of two residential loans, one residential revolving loan, one residential lot loan and one unsecured loan. No foreclosed properties remained at December 31, 2022. Nonaccrual loans were $946,000 at December 31, 2022 compared to $1,730,000 at December 31, 2021, a decrease of $784,000.
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 $1,616,000 December 31, 2022 compared to $2,915,000 at December 31, 2021. Loss exposure on impaired loans decreased from $204,000 at December 31, 2021 to $63,000 at December 31, 2022. The decrease is attributable to the charge-off of one consumer loan with a specific reserve of $198,000, offset by the addition of a specific reserve of $57,000 for the aforementioned additions to nonaccrual loans.
The Bank historically makes a conscious effort to attempt work-out loan scenarios with past due customers. In some cases, loan restructuring is appropriate. Bank management has procedures and processes in place to identify, monitor, and report troubled debt restructurings. At December 31, 2022, troubled debt restructurings ("TDRs") totaled $914,000 and were spread among various loan categories. No new TDRs have been identified in 2022.
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, 2022 Bank of Botetourt reported its CBLR ratio at 10.32% which meets the required regulatory minimum ratio. This compares to a CBLR ratio of 9.14% on December 31, 2021.
In November 2022, Bank of Botetourt issued 243,659 shares of its noncumulative, convertible, perpetual preferred stock at a price of $28.00 per share and resulted in net proceeds of $6,642,261. The Bank intends to use the net proceeds for general corporate purposes which may include increasing its capital position, supporting future growth such as branching and infrastructure, and funding loan demand.
Paycheck Protection Program
Bank of Botetourt was a participant in the Paycheck Protection Program ("PPP") initiated by the U.S. Department of the Treasury. Both rounds of PPP lending totaled $48.16 million with all receiving forgiveness from the SBA through December 31, 2022. As a result, no PPP loans and no deferred loan servicing fees remain on the balance sheet at December 31, 2022. The Bank recognized $460,000 in PPP revenue during 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 | ||||
(unaudited) | (audited) | |||
December 31 | December 31 | |||
2022 | 2021 | |||
Assets | ||||
Cash and due from banks | $ 8,987,000 | $ 6,988,000 | ||
Interest-bearing deposits with banks | 91,418,000 | 135,690,000 | ||
Federal funds sold | 523,000 | 445,000 | ||
Total cash and cash equivalents | 100,928,000 | 143,123,000 | ||
Time deposits with banks | 250,000 | 250,000 | ||
Investment debt and equity securities held-to-maturity | 9,950,000 | 8,950,000 | ||
Investment securities available for sale | 92,552,000 | 57,529,000 | ||
Restricted equity securities | 412,000 | 561,000 | ||
Loans held for sale | 177,000 | 409,000 | ||
Loans, net of allowance for loan losses of $6,686,000 at | 482,162,000 | 425,899,000 | ||
December 31, 2021 and $5,674,000 at December 31, 2020 | ||||
Property and equipment, net | 14,063,000 | 14,369,000 | ||
Bank owned life insurance | 4,313,000 | 4,401,000 | ||
Accrued income | 1,828,000 | 1,372,000 | ||
Foreclosed assets | - | 27,000 | ||
Other assets | 7,083,000 | 5,340,000 | ||
Total assets | 713,718,000 | 662,230,000 | ||
Liabilities and Stockholders' Equity | ||||
Liabilities | ||||
Noninterest-bearing deposits | $ 169,162,000 | $ 84,086,000 | ||
Interest-bearing deposits | 474,761,000 | 513,036,000 | ||
Total deposits | 643,923,000 | 597,122,000 | ||
Other Borrowings | - | 3,000,000 | ||
Accrued interest payable | 324,000 | 197,000 | ||
Other liabilities | 3,078,000 | 2,774,000 | ||
Total liabilities | 647,325,000 | 603,093,000 | ||
Commitments and contingencies | - | - | ||
Stockholders' Equity | ||||
Preferred stock, $1.00 par value; 325,000 shares authorized | ||||
non-cumulative perpetual; 243,659 and 0 issued and | ||||
outstanding at December 31, 2022 and 2021, respectively | 244,000 | - | ||
Common stock, $1.50 par value; 2,500,000 shares | ||||
authorized; 1,940,879 and 1,921,995 issued and | ||||
outstanding at December 31, 2022 and at December 31, 2021, | ||||
respectively | 2,911,000 | 2,883,000 | ||
Additional paid-in capital | 23,655,000 | 16,779,000 | ||
Retained earnings | 47,681,000 | 41,304,000 | ||
Accumulated other comprehensive loss | (8,098,000) | (1,829,000) | ||
Total stockholders' equity | 66,393,000 | 59,137,000 | ||
Total liabilities and stockholders' equity | 713,718,000 | 662,230,000 | ||
Bank of Botetourt | |||||||
Twelve Months Ended | Three Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Interest income | |||||||
Loans and fees on loans | $ 22,031,000 | $ 21,724,000 | $ 6,028,000 | $ 5,194,000 | |||
Federal Funds Sold | 5,000 | - | 3,000 | - | |||
Investment securities: | |||||||
Taxable | 1,549,000 | 560,000 | 456,000 | 212,000 | |||
Exempt from federal income tax | 124,000 | - | 42,000 | - | |||
Dividend income | 19,000 | 23,000 | 5,000 | 5,000 | |||
Deposits with banks | 2,039,000 | 164,000 | 1,003,000 | 55,000 | |||
Total Interest income | 25,767,000 | 22,471,000 | 7,537,000 | 5,466,000 | |||
Interest expense | |||||||
Deposits | 2,292,000 | 2,556,000 | 922,000 | 478,000 | |||
Other borrowings | 20,000 | 69,000 | - | 14,000 | |||
Total Interest expense | 2,312,000 | 2,625,000 | 922,000 | 492,000 | |||
Net Interest Income | 23,455,000 | 19,846,000 | 6,615,000 | 4,974,000 | |||
Provision for loan losses | 1,510,000 | 425,000 | 585,000 | 230,000 | |||
Net Interest Income after provision for loan losses | 21,945,000 | 19,421,000 | 6,030,000 | 4,744,000 | |||
Noninterest income | |||||||
Service charges on deposit accounts | 987,000 | 713,000 | 288,000 | 204,000 | |||
ATM and debit card | 1,711,000 | 1,605,000 | 442,000 | 418,000 | |||
Other service charges and fees | 682,000 | 494,000 | 182,000 | 126,000 | |||
Mortgage origination fees | 392,000 | 1,148,000 | 47,000 | 217,000 | |||
Other income | 1,339,000 | 1,354,000 | 419,000 | 562,000 | |||
Total noninterest income | 5,111,000 | 5,314,000 | 1,378,000 | 1,527,000 | |||
Noninterest expense | |||||||
Salaries and employee benefits | 8,032,000 | 7,276,000 | 2,274,000 | 2,255,000 | |||
Occupancy | 983,000 | 867,000 | 193,000 | 196,000 | |||
Equipment | 883,000 | 817,000 | 305,000 | 223,000 | |||
Foreclosed assets, net | (66,000) | 702,000 | 6,000 | 39,000 | |||
Outside services | 2,070,000 | 1,838,000 | 570,000 | 495,000 | |||
FDIC insurance premiums and assessment | 341,000 | 332,000 | 95,000 | 98,000 | |||
ATM and debit card | 1,108,000 | 957,000 | 316,000 | 276,000 | |||
Franchise tax | 496,000 | 437,000 | 130,000 | 112,000 | |||
Telephone and communication | 292,000 | 263,000 | 75,000 | 70,000 | |||
Other professional fees | 210,000 | 235,000 | 52,000 | 68,000 | |||
Marketing | 772,000 | 618,000 | 197,000 | 172,000 | |||
Other operating expenses | 2,140,000 | 1,826,000 | 493,000 | 465,000 | |||
Total noninterest expense | 17,261,000 | 16,168,000 | 4,706,000 | 4,469,000 | |||
Income before income taxes | 9,795,000 | 8,567,000 | 2,702,000 | 1,802,000 | |||
Income tax expense | 1,990,000 | 1,688,000 | 511,000 | 301,000 | |||
Net income | $ 7,805,000 | $ 6,879,000 | $ 2,191,000 | $ 1,501,000 | |||
Basic earnings per share | $ 4.04 | $ 3.58 | $ 1.13 | $ 0.77 | |||
Diluted earnings per share | $ 4.04 | $ 3.58 | $ 1.13 | $ 0.77 | |||
Dividends declared per share | $ 0.74 | $ 0.72 | $ 0.185 | $ 0.180 | |||
Basic weighted average shares outstanding | 1,932,448 | 1,921,203 | 1,939,403 | 1,952,076 | |||
Diluted weighted average shares outstanding | 1,932,448 | 1,921,203 | 1,939,403 | 1,952,076 | |||
View original content:https://www.prnewswire.com/news-releases/bank-of-botetourt-records-profitable-2022-board-votes-to-pay-preferred-dividend-and-increase-common-dividend-301735559.html
SOURCE Bank of Botetourt
