BUCHANAN, Va., Jan. 30, 2020 /PRNewswire/ -- Buchanan-based Bank of Botetourt BORT announced today that it has filed its Call Report with the Federal Deposit Insurance Corporation and reports the following unaudited financial results for year ended December 31, 2019. Net income for the fiscal year ended 2019 amounted to $4,979,000, marking the highest recorded earnings in the Bank's 120-year history. This amount compares to $4,300,000 for the same period of 2018, representing an increase of $679,000 or 15.8%. Both basic and diluted earnings per share amounted to $2.90 at December 31, 2019 compared to $2.98 one year prior. Book value was $28.12 at December 31, 2019 as compared to $26.55 one year prior. As a result of the solid financial performance, the Board of Directors voted to increase the quarterly dividend payment from $0.16 to $0.175 per share, or $0.70 per share annualized which is payable on February 18, 2020 to shareholders of record February 11, 2020. This represents an increase in dividend payment of 9.4%
For the three months ended December 31, 2019, the Bank reported net income amounting to $1,238,000 or $0.72 per basic share in the fourth quarter. This amount compares to a net income of $836,000 or $0.57 per basic share, for the same period last year.
At December 31, 2019, select financial highlights include:
- Return on average assets of 1.07%
- Return on average equity of 10.31%
- Net loan growth of 10.8%
- Total deposit growth of 12.4%
- Total asset growth of 13.1%
- Seven consecutive years of increased dividend payments
President & CEO, G. Lyn Hayth, III stated, "We are so happy to share the results of the Bank's solid performance in 2019. Strong loan growth combined with a favorable local economy allowed our Bank to surpass earnings expectations. As a result, the Board of Directors voted to increase the dividend payment to our shareholders."
Management Discussion & Analysis
Results of Operations
The Bank realized strong loan demand in 2019 as gross loans increased 10.8%. The generation of new loans during a favorable local economic period was a positive contributor to the Bank's interest income and net income. Total interest income increased by $2,865,000 in 2019 as compared to 2018 due primarily to an increase in loan interest income. The increase was a result of loan growth and to a lesser extent an increase in interest earned on excess funds at due from depository institutions and federal funds sold. Interest expense increased by $1,432,000 during the period due to the increase in interest-bearing deposits, competitive interest rates paid on the deposits, and interest expense related to an advance on borrowed funds during the year. As a result, net interest income increased by $1,433,000 for the year ended December 31, 2019 compared to the same time period in 2019.
The provision for loan losses was $830,000 for the year ended December 31, 2019 and $470,000 for the year ended December 31, 2018. While asset quality remains stable, the increase in the provision is primarily due to the growth of the portfolio. In addition, management recognized a reserve for exposure related to a watchlist loan relationship. Net charge-offs increased by $29,000 from $219,000 for year ended December 31, 2018 to $248,000 for 2019.
Noninterest income increased by $491,000, or 15.9%, to $3,583,000 for the year ended December 31, 2019 compared to $3,092,000 for the year ended December 31, 2018. The increase is attributable primarily to gains on loans held for sale, service charge fee income on deposit accounts, income from sales of brokerage services and annuities, and to a lesser extent an increase in income from title services by our subsidiaries.
For the year ended December 31, 2019, noninterest expense increased by $602,000, or 4.7%, from $12,688,000 at December 31, 2018 to $13,290,000 at December 31, 2019. The increase is primarily a result of increases in salaries and benefits, marketing expense, franchise tax assessment, and ATM and debit card related expenses. These expenses were partially offset by a decrease in collections expense when compared to the prior period. In addition, these expenses were also partially offset by the Small Bank Assessment Credits from the Federal Deposit Insurance Corporation. The Bank used $95,600 in credits in 2019 for FDIC insurance assessment, thereby reducing expenses by the same amount. All credits were used at December 31, 2019 and expense reduction will not recur in 2020.
Income tax expense for the year ended December 31, 2019 was $1,169,000 compared to $886,000 one year prior.
Financial Condition
At December 31, 2019 total assets amounted to $491,660,000, an increase of 13.1% above total assets at December 31, 2018 of $434,764,000, an increase of $56,896,000. Loan demand exceeded 2019 budget expectations. Total net loans increased $41,013,000 or 10.8% from $380,404,000 at December 31, 2018 to $421,417,000 at December 31, 2019. Total deposits at December 31, 2019 amounted to $433,111,000, compared to $385,314,000 at December 31, 2018, an increase of 12.4% or $47,797,000. Loan demand was funded by the increase in deposits combined with a $5,000,000 borrowing from the Federal Home Loan Bank. At December 31, 2019, total cash and cash equivalents amounted to $26,761,000 compared to $13,406,000 at December 31, 2018, thereby improving the Bank's liquidity position. Investment securities, including restricted equity securities, increased $1,987,000 as a result of investment purchases exceeding maturing, called or redeemed investment securities. Management places daily excess deposits at the Federal Reserve Bank and earns interest on excess reserves. Total liabilities increased by $52,892,000 from $388,499,000 at December 31, 2018 to $441,391,000 at December 31, 2019 primarily attributed to the deposit growth and borrowing described.
Stockholders' equity totaled $50,269,000 at December 31, 2019 compared to $46,265,000 at December 31, 2018. The $4,004,000 increase during the period is primarily the result net income from 2019, net proceeds from the issuance of common stock from the Dividend Reinvestment and Stock Purchase Plan, partially offset by accumulated other comprehensive loss and dividends paid.
Non-Performing Assets
Non-performing assets, which consist of nonaccrual loans and foreclosed properties decreased to $3,200,000 at December 31, 2019 from $5,100,000 at December 31, 2018. The decline is due to decreases in nonaccrual loans and foreclosed property balances.
Nonaccrual loans were $656,000 at December 31, 2019 compared to $821,000 at December 31, 2018. There were three new additions to nonaccrual loans during 2019, one raw land and two residential installment loans. Four loans exited nonaccrual status, one residential lot, one commercial real estate, one residential installment, and one consumer. The net result was a reduction of $165,000in nonaccrual 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 $1,500,000 at December 31, 2019, compared to $1,300,000 at December 31, 2018. The $200,000 increase is related to one raw land loan being moved to impaired status and one raw land loan, currently performing according to contractual terms, removed from impairment status. Loss exposure on impaired loans at December 31, 2019 increased to $310,000, compared to $4,000 at December 31, 2018 after obtaining current appraisals on collateral securing a significant number of impaired loans in the portfolio and estimating selling costs based on historical experience. At December 31, 2019, $310,000, or 7.8%, of the $3,975,000 total allowance for loan losses was allocated for the loss exposure related to impaired loans, including an amount management recognized as a reserve for exposure related to a watchlist loan relationship.
Foreclosed assets consisted of nineteen properties totaling $2,500,000 at December 31, 2019. The decrease in foreclosed assets included nine sales totaling $1,900,000 and three additions totaling $237,000. Each quarter, management evaluates the carrying value of these properties to determine if a write-down to lower of cost of market value is warranted. During 2019, the Bank recorded total write-downs on foreclosed properties in the amount of $127,000. All foreclosed properties are currently being marketed for sale. No additional material loss is anticipated. The Bank had one loan secured by 1-4 family residential property in the process of formal foreclosure at December 31, 2019 totaling $96,000.
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, 2019, troubled debt restructurings totaled $1,200,000 and were spread among various loan categories. Interest rates on a majority of these loans were at prevailing market rates, with only minor concessions given on interest rate reductions from the original terms. At December 31, 2019, $273,000 of troubled debt restructurings were on nonaccrual status. No new TDRs were identified in 2019 or 2018. Bank management supports a philosophy of working with its customers to pursue plausible options. We have had some general success with these efforts in the past, although these efforts typically produce mixed results.
Capital Ratios
Bank of Botetourt continues to be a Well Capitalized institution and exceed the BASEL III capital requirements. As of December 31, 2019, Bank of Botetourt reported tier 1 leverage capital of 10.39% and total capital of 13.92%. Both common equity tier 1 and tier 1 capital ratios were 12.91%. At December 31, 2018 the ratios were 10.90%, 13.78%, and 12.85%, respectively.
Strategic Initiatives
Bank of Botetourt is expanding its merchant card services program with the hiring of an officer to focus exclusively on growing this revenue stream as part of the Bank's treasury services. Bank management feels there is untapped potential in our markets to grow the number of participating merchants in the program.
In addition, Bank of Botetourt is now offering the Insured Cash Sweep ('ICS") service to its customers whereby they are eligible for multi-million-dollar FDIC insurance by working with our bank to place deposits throughout a nationwide network of participating institutions.
About Bank of Botetourt
Bank of Botetourt was chartered in 1899 and operates twelve retail offices in Botetourt, Rockbridge, Roanoke, and Franklin counties and the City of Salem, 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, 2019 (unaudited) and December 31, 2018 (audited) | ||||
(unaudited) | (audited) | |||
December 31 | December 31 | |||
2019 | 2018 | |||
Assets | ||||
Cash and due from banks | $ 6,914,000 | $ 7,386,000 | ||
Interest-bearing deposits with banks | 19,545,000 | 5,534,000 | ||
Federal funds sold | 302,000 | 486,000 | ||
Total cash and cash equivalents | 26,761,000 | 13,406,000 | ||
Time deposits with banks | 250,000 | 250,000 | ||
Investment securities available for sale | 17,793,000 | 16,061,000 | ||
Restricted equity securities | 655,000 | 400,000 | ||
Loans held for sale | - | 317,000 | ||
Loans, net of allowance for loan losses of $3,975,000 at | 421,417,000 | 380,404,000 | ||
December 31, 2019 and $3,393,000 at December 31, 2018 | ||||
Property and equipment, net | 13,419,000 | 11,901,000 | ||
Accrued income | 1,314,000 | 1,184,000 | ||
Foreclosed assets | 2,536,000 | 4,231,000 | ||
Other assets | 7,515,000 | 6,610,000 | ||
Total assets | 491,660,000 | 434,764,000 | ||
Liabilities and Stockholders' Equity | ||||
Liabilities | ||||
Noninterest-bearing deposits | $ 44,090,000 | $ 42,610,000 | ||
Interest-bearing deposits | 389,021,000 | 342,704,000 | ||
Total deposits | 433,111,000 | 385,314,000 | ||
Other Borrowings | 5,000,000 | - | ||
Accrued interest payable | 572,000 | 465,000 | ||
Other liabilities | 2,708,000 | 2,720,000 | ||
Total liabilities | 441,391,000 | 388,499,000 | ||
Commitments and contingencies | - | - | ||
Stockholders' Equity | ||||
Common stock, $1.50 par value; 2,500,000 shares | ||||
authorized; 1,720,900 and 1,713,664 issued and | ||||
outstanding at December 31, 2019 and at December 31, 2018 | ||||
respectively | 2,581,000 | 2,570,000 | ||
Additional paid-in capital | 11,365,000 | 11,168,000 | ||
Retained earnings | 37,257,000 | 33,316,000 | ||
Accumulated other comprehensive loss | (934,000) | (789,000) | ||
Total stockholders' equity | 50,269,000 | 46,265,000 | ||
Total liabilities and stockholders' equity | 491,660,000 | 434,764,000 | ||
Bank of Botetourt | |||||||
Statements of Income | |||||||
For the Twelve and Three Months Ended December 31, 2019 (unaudited) and 2018 (audited) | |||||||
Twelve Months Ended | Three Months Ended | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Interest income | |||||||
Loans and fees on loans | $ 20,642,000 | $ 17,860,000 | $ 5,374,000 | $ 4,726,000 | |||
Investment securities: | |||||||
U.S. Treasury and Government Agencies | 181,000 | 196,000 | 43,000 | 48,000 | |||
All other securities | 183,000 | 183,000 | 53,000 | 45,000 | |||
Due from depository institutions | 294,000 | 197,000 | 100,000 | 46,000 | |||
Federal Funds Sold | 6,000 | 5,000 | 1,000 | 2,000 | |||
Total Interest income | 21,306,000 | 18,441,000 | 5,571,000 | 4,867,000 | |||
Interest expense | |||||||
Deposits | 4,592,000 | 3,174,000 | 1,257,000 | 917,000 | |||
Federal funds purchased | - | 2,000 | - | - | |||
Other borrowings | 29,000 | 13,000 | 29,000 | - | |||
Total Interest expense | 4,621,000 | 3,189,000 | 1,286,000 | 917,000 | |||
Net Interest Income | 16,685,000 | 15,252,000 | 4,285,000 | 3,950,000 | |||
Provision for loan losses | 830,000 | 470,000 | 210,000 | 330,000 | |||
Net Interest Income after provision for loan losses | 15,855,000 | 14,782,000 | 4,075,000 | 3,620,000 | |||
Noninterest income | |||||||
Service charges on deposit accounts | 738,000 | 674,000 | 205,000 | 175,000 | |||
Securities brokerage and annuities | 131,000 | 57,000 | 27,000 | 13,000 | |||
Other income, net of gains (losses) | 2,714,000 | 2,361,000 | 718,000 | 549,000 | |||
Total noninterest income | 3,583,000 | 3,092,000 | 950,000 | 737,000 | |||
Noninterest expense | |||||||
Salaries and employee benefits | 6,478,000 | 6,112,000 | 1,803,000 | 1,578,000 | |||
Premises and fixed assets expense | 1,326,000 | 1,341,000 | 281,000 | 328,000 | |||
Other expense | 5,486,000 | 5,235,000 | 1,464,000 | 1,426,000 | |||
Total noninterest expense | 13,290,000 | 12,688,000 | 3,548,000 | 3,332,000 | |||
Income before income taxes | 6,148,000 | 5,186,000 | 1,477,000 | 1,025,000 | |||
Income tax expense | 1,169,000 | 886,000 | 239,000 | 189,000 | |||
Net income | $ 4,979,000 | $ 4,300,000 | $ 1,238,000 | $ 836,000 | |||
Basic earnings per share | $ 2.90 | $ 2.98 | $ 0.72 | $ 0.57 | |||
Diluted earnings per share | $ 2.90 | $ 2.98 | $ 0.72 | $ 0.57 | |||
Dividends declared per share | $ 0.64 | $ 0.60 | $ 0.16 | $ 0.15 | |||
Basic weighted average shares outstanding | 1,717,273 | 1,445,176 | 1,720,049 | 1,478,882 | |||
Diluted weighted average shares outstanding | 1,717,273 | 1,445,176 | 1,720,049 | 1,478,882 | |||
SOURCE Bank of Botetourt
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Date | ticker | name | Actual EPS | EPS Surprise | Actual Rev | Rev Surprise |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
