Bank of Botetourt Exceeds Budget Expectations, Records Profitable 2024; Board Votes to Increase Dividend 12.5%

PR Newswire

Thu, Jan 30, 2025, 6:30 AM 12 min read

BUCHANAN, Va., Jan. 30, 2025 /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, 2024. The Bank produced net income amounting to $1,954,000 or $0.94 per basic share in the fourth quarter. This amount compares to net income of $1,800,000 or $0.86 per share, for the same period last year. For the twelve months ended December 31, 2024, the Bank produced net income amounting to $7,942,000 or $3.82 per basic share. This amount compares to a net income of $8,173,000 or $3.95 per share, for the same period last year.

At December 31, 2024, select financial information and key highlights include:

Return on average assets of 0.97%
Return on average equity of 10.10%
Book value of $38.78
Total deposit growth of 10.94%
Total asset growth of 8.35%
Total loan growth of 13.20%
Community Bank Leverage Ratio of 10.22%

The Board of Directors voted to pay the 7.00% preferred dividend, which calculates to $0.49 per share on February 7, 2025, to preferred shareholders of record January 31, 2025. Furthermore, the Board of Directors voted to pay the $0.225 per share quarterly dividend, or $0.90 per share annualized, which is payable on February 18, 2025, to common shareholders of record February 11, 2025. CEO & Vice-Chairman, G. Lyn Hayth, III stated, "We have not only surpassed our budget expectations for 2024, but we have also remained deeply committed to supporting our community and customers. This achievement reflects our dedication to sustainable growth, innovation, and providing long-term value to our shareholders."

Results of Operations

Net income for the three months ended December 31, 2024, was $1,954,000 compared to $1,800,000 for the same period last year, representing an increase of $154,000 or 8.56%. Basic and diluted earnings per share increased $0.08 from $0.86 at December 31, 2023, to $0.94 at December 31, 2024. The increase in net income is primarily due to $1,989,000 more interest and fees on loan income, offset by $997,000 more expense on deposits and other borrowings, $60,000 more provision for credit losses, and $329,000 less investment income.

For the three months ended December 31, 2024, the Bank recorded a provision for credit loss expense of $364,000 compared to $304,000 for the same period last year, representing an increase of $60,000. The provision recorded during the quarter primarily 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 1.18% at the end of the quarter, no change from the prior quarter and down eight basis points from one year prior.

At December 31, 2024, net loans increased 13.20%. Interest and fees on loans at December 31, 2024, increased $1,989,000 over the same three-month period of 2023. Interest expense increased by $997,000 from $3,305,000 at December 31, 2023, to $4,302,000 at December 31, 2024. The higher interest expense is a result of higher interest rates paid on the balances of interest-bearing deposits than for the same period of 2023, offset by a decrease of interest on borrowed funds.

Noninterest income increased by $274,000, or 22.61%, to $1,486,000 for the three months ended December 31, 2024, compared to $1,212,000 for same 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 $673,000 from $4,911,000 at December 31, 2023, to $5,584,000 at December 31, 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 December 31, 2024, was $498,000 compared to $448,000 one year prior. The increase in tax expense is due to more revenue for the quarter.

Financial Condition

At December 31, 2024, total assets amounted to $857,073,000 compared to $791,015,000 at December 31, 2023, an increase of $66,058,000 or 8.35%. Total net loans increased $78,334,000 or 13.20% from $593,256,000 at December 31, 2023, to $671,590,000 at December 31, 2024. Total deposits at December 31, 2023, amounted to $691,584,000, compared to $767,222,000 at December 31, 2024, an increase of 10.94% or $75,638,000.

Stockholders' equity totaled $82,510,000 at December 31, 2024, compared to $74,778,000 at December 31, 2023. The $7,732,000 increase during the period is attributed to 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 fourth quarter 2024. Provision for credit losses for the fourth quarter of 2024 was $364,000 compared to $411,000 in the previous quarter and $304,000 in the same quarter of 2023.

The Bank had no foreclosed properties at December 31, 2023, and December 31, 2024, respectively. Therefore, non-performing assets only consisted of nonaccrual loans. Non-performing assets decreased from $121,000 at December 31, 2023, to $51,000 at December 31, 2024. The decrease is attributed to the removal of one residential lot, five commercial and industrial loans, and one auto loan, offset by the addition of four commercial and industrial loans. 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 fourth quarter, two commercial and industrial loans totaling $194,000 were charged off. There were no new additions to nonaccrual loans during the fourth quarter. The decrease 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 fourth quarter of 2024 were $197,000 or three basis points on total average loans outstanding. Net charge-offs for the fourth quarter of 2024 were comprised of charge-offs of $263,000 partially offset by recoveries of $66,000. Compared to the prior quarter, net charge-offs increased $80,000 or one basis point on total average loans outstanding. Compared to December 31, 2023, net charge-offs increased $36,000 or .05 basis points 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 December 31, 2024, Bank of Botetourt reported its CBLR ratio at 10.25% which meets the required regulatory minimum ratio. This compares to a CBLR ratio of 10.36% at December 31, 2023.

Strategic Initiatives

On December 23, 2024, Bank of Botetourt opened its fourteenth full-service branch in the Town of Rocky Mount, Virginia. The new office is located at 875 Tanyard Road in Rocky Mount. Services include a 24/7 accessible ATM with deposit capabilities, a drive-thru, and night deposit. The Bank's mortgage company, Virginia Mountain Mortgage, also provides services from this location.

About Bank of Botetourt

Bank of Botetourt was chartered in 1899 and operates fourteen retail offices in Botetourt, Rockbridge, Roanoke, and Franklin counties, the City of Salem, and the Town of Vinton and Rocky Mount, 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 Consolidated Balance Sheets December 31, 2024(unaudited) and December 31, 2023 (audited)

	(unaudited)	(audited)
	December 31,	December 31,
	2024	2023
Assets

Cash and due from banks	$ 12,439,000	$ 10,410,000
Interest-bearing deposits with banks	53,381,000	58,800,000
Federal funds sold	936,000	524,000
Total cash and cash equivalents	66,756,000	69,734,000
Debt securities held to maturity, net of allowance
for credit losses of $18,000 at December 31, 2024 and
at December 31, 2023, respectively	9,982,000	9,932,000
Debt securities available for sale	73,159,000	85,663,000
Loans, net of allowance for credit losses of $7,989,000 at
December 31, 2024 and $7,542,000 at December 31, 2023	671,590,000	593,256,000
Loans held for sale	634,000	-
Premises and fixed assets, net	17,356,000	14,652,000
Investment in unconsolidated subsidiaries	3,257,000	3,000,000
Bank owned life insurance	7,544,000	-
Accrued interest receivable	2,633,000	-
Other assets	4,162,000	14,778,000
Total assets	$ 857,073,000	$ 791,015,000

Liabilities and Stockholders' Equity
Liabilities
Noninterest-bearing deposits	$ 179,420,000	$ 161,464,000
Interest-bearing deposits	587,802,000	530,120,000
Total deposits	767,222,000	691,584,000

Other borrowings	-	19,000,000
Accrued interest payable	3,544,000	-
Other liabilities	3,797,000	5,653,000
Total liabilities	774,563,000	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 December 31, 2024 and at December 31, 2023, respectively	244,000	244,000
Common stock, $1.50 par value; 5,000,000 shares
authorized; 1,960,879 and 1,951,372 issued and
outstanding at December 31, 2024 and at December 31, 2023,
respectively	2,941,000	2,927,000
Additional paid-in capital	24,198,000	23,937,000
Retained earnings	59,277,000	53,377,000
Accumulated other comprehensive loss	(4,150,000)	(5,707,000)
Total stockholders' equity	82,510,000	74,778,000
Total liabilities and stockholders' equity	$ 857,073,000	$ 791,015,000

Bank of Botetourt Income Statement For the twelve months ended and three months ended December 31, 2024 and 2023 (Unaudited)

	Twelve Months Ended December 31,		Three Months Ended December 31,
	Twelve Months Ended December 31,		Three Months Ended December 31,
	2024	2023	2024	2023
Interest income
Loans and fees on loans	$ 37,603,000	$ 29,225,000	$ 10,234,000	$ 8,245,000
Federal funds sold	23,000	19,000	7,000	5,000
Securities:
Taxable	1,572,000	1,737,000	360,000	422,000
Exempt from federal income tax	207,000	234,000	53,000	51,000
Dividend income	107,000	41,000	28,000	20,000
Deposits with banks	2,295,000	3,119,000	534,000	813,000
Total Interest income	41,807,000	34,375,000	11,216,000	9,556,000

Interest expense
Deposits	15,029,000	8,917,000	4,220,000	3,072,000
Other borrowings	825,000	235,000	82,000	233,000
Total Interest expense	15,854,000	9,385,000	4,302,000	3,305,000
Net Interest Income	25,953,000	24,990,000	6,914,000	6,251,000

Provision for credit losses	918,000	891,000	364,000	304,000
Net Interest Income after credit loss expense	25,035,000	24,099,000	6,550,000	5,947,000

Noninterest income
Service charges on deposit accounts	1,284,000	1,306,000	316,000	300,000
ATM and debit card	1,871,000	1,956,000	479,000	465,000
Other service charges and fees	818,000	742,000	217,000	182,000
Mortgage origination fees	198,000	226,000	57,000	74,000
Other income, net of gains	1,220,000	969,000	417,000	191,000
Total noninterest income	5,391,000	5,199,000	1,486,000	1,212,000

Noninterest expense
Salaries and employee benefits	8,947,000	8,407,000	2,356,000	2,108,000
Occupancy	1,002,000	973,000	233,000	174,000
Equipment	1,077,000	907,000	319,000	224,000
Foreclosed assets, net	45,000	3,000	46,000	3,000
Outside services	2,771,000	2,269,000	770,000	620,000
FDIC insurance premiums and assessment	477,000	348,000	125,000	105,000
ATM and debit card	1,455,000	1,427,000	375,000	359,000
Franchise tax	657,000	598,000	167,000	155,000
Telephone and communication	320,000	262,000	76,000	62,000
Other professional fees	240,000	298,000	56,000	74,000
Marketing	870,000	944,000	286,000	338,000
Other operating expenses	2,594,000	2,603,000	775,000	689,000
Total noninterest expense	20,455,000	19,039,000	5,584,000	4,911,000
Income before income taxes	9,971,000	10,259,000	2,452,000	2,248,000

Income tax expense	2,029,000	2,086,000	498,000	448,000
Net income	7,942,000	8,173,000	1,954,000	1,800,000
Preferred stock dividends	478,000	478,000	119,000	119,000
Net income available to common shareholders	$ 7,464,000	$ 7,695,000	$ 1,835,000	$ 1,681,000

Basic earnings per share	$ 3.82	$ 3.95	$ 0.94	$ 0.86
Diluted earnings per share	$ 3.82	$ 3.95	$ 0.94	$ 0.86
Dividends declared per share	$ 0.80	$ 0.77	$ 0.20	$ 0.1925
Basic weighted average shares outstanding	1,956,428	1,946,576	1,959,791	1,950,188
Diluted weighted average shares outstanding	1,956,428	1,946,576	1,959,791	1,950,188