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Bank of Botetourt posts strong second quarter financial results

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BUCHANAN, Va., July 25, 2019 /PRNewswire/ -- Buchanan-based Bank of Botetourt (OTCPK: BORT) announced today its unaudited financial results for the three months-ended June 30, 2019. The Bank produced net income amounting to $1,104,000 or $0.64 per basic share in the second quarter. This amount compares to a net income of $1,109,000 or $0.77 per share, for the same period last year.  For the six months-ended the Bank produced net income amounting to $2,258,000 or $1.32 per basic share. This amount compares to a net income of $2,221,000 or $1.55 per share, for the same period last year. 

At June 30, 2019, key performance ratios were as follows:

  • Return on average assets 1.00%
  • Return on average equity 9.56%
  • Book value $28.11

As a result of the solid financial performance, the Board of Directors voted to pay the $0.16 per share quarterly dividend, or $0.64 per share annualized which is payable on August 16, 2019 to shareholders of record August 9, 2019.

President & CEO, G. Lyn Hayth, III stated, "We have had a strong 2019 so far spurred by strong loan and deposit growth. This momentum has helped our bank exceed budget expectations the first six months of the year."

Results of Operations

Net income for the three months ended June 30, 2019 was $1,104,000 compared to $1,109,000 for the same period last year, representing a decrease of $5,000 or 0.5%.  Basic and diluted earnings per share decreased $0.13 from $0.77 at June 30, 2018 to $0.64 at June 30, 2018 as a result of the capital stock raise in December 2018 whereby 275,000 additional shares of common stock were issued.  

Net income is consistent between the two time periods. Total interest income at June 30, 2019 increased $745,000 over the same three month time period of 2018. Interest expense increased from $768,000 at June 30, 2018 to $1,142,000 at June 30, 2019. The higher interest expense is a result of both an increase in rate and volume on interest-bearing deposits.  Net interest income increased $371,000 from June 30, 2018 to June 30, 2019.

The provision for loan losses was $400,000 for the three months ended June 30, 2019 as compared to no reserve for the three months-ended June 30, 2018. The increase in the provision is due to the overall growth in the loan portfolio and increased identified exposure on certain credits. Net charge-offs were $239,000 at June 30, 2019 as compared to recoveries exceeding charge-offs by 13,000 at June 30, 2018. 

Noninterest income increased by $345,000, or 55.4%, for the three months ended June 30, 2019 compared to the same time period of 2018.  The increase is attributable primarily to debit card transaction income, gain on sales of other real estate, and income from subsidiaries.

Noninterest expense increased $330,000 or 11.1% from the three months-ended June 30, 2018 to the three months-ended June 30, 2019.  The increase is primarily related to an increase in salaries, employee benefits, and debit card related expenses.

Income tax expense for the three months ended June 30, 2019 was $304,000 compared to $313,000 one year prior.

Financial Condition

At June 30, 2019 total assets amounted to $464,034,000, an increase of 6.5% above total assets at December 31, 2018 of $435,765,000, an increase of $28,269,000. Total net loans increased $23,414,000 or 6.2% from $380,404,000 at December 31, 2018 to $403,818,000 at June 30, 2019. Total deposits at December 31, 2018 amounted to $386,324,000, compared to $412,728,000 at June 30, 2019, an increase of 6.8% or $26,404,000. The increase in deposits organically funded the loan demand without reliance on borrowed funds.

Stockholders' equity totaled $48,211,000 at June 30, 2019 compared to $46,265,000 at December 31, 2018. The $1,946,000 increase during the period is net income for 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 from $5,052,000 at December 31, 2018 to $3,603,000 at June 30, 2019.

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 $1.3 million at December 31, 2018 and at June 30, 2019, respectively. One loan was removed from impaired status during the quarter.  Loss exposure on impaired loans at December 31, 2018 was $4,000 compared to $24,000 at June 30, 2019 after obtaining current appraisals on collateral securing a significant number of impaired loans in the portfolio and estimating selling costs based on historical experience. An additional $95,000 was reserved for an unimpaired loan with probable and estimable exposure.

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 June 30, 2019, troubled debt restructurings totaled $964,000 and were spread among various loan categories. No new TDRs have been identified in 2019.

Capital Ratios

Bank of Botetourt continues to be a Well Capitalized institution and exceed the BASEL III capital requirements.  As of June 30, Bank of Botetourt reported tier 1 leverage capital of 10.63% and total capital of 14.13%. Both common equity tier 1 and tier 1 capital ratios were 13.12%.

Strategic Initiatives

During the second quarter, Bank of Botetourt constructed, expanded, and relocated its limited service office at 3214 Electric Road, Roanoke, VA to a standalone full-service office located at 3232 Electric Rd, Roanoke, VA. The new Cave Spring office is 2,660 square feet and includes an ATM with deposit capabilities and houses the Bank's mortgage company, Virginia Mountain Mortgage.

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
Balance Sheets, unconsolidated
June 30, 2019 (unaudited) and December 31, 2018












(unaudited)


(audited)



June 30,


December 31,



2019


2018

Assets










Cash and Due from banks


$        7,298,000


$        7,386,000

Interest-bearing deposits with banks


11,500,000


5,784,000

Federal funds sold


493,000


486,000

                  Total cash and cash equivalents


19,291,000


13,656,000

Investment securities available for sale


14,367,000


16,061,000

Loans, net of allowance for loan losses of $3,749,000 at


403,818,000


380,404,000

     June 30, 2019 and $3,393,000 at December 31, 2018





Loans held for sale


403,000


317,000

Premises and fixed assets, net


13,023,000


11,901,000

Other real estate owned


2,999,000


4,231,000

Investment in unconsolidated subsidiaries


1,799,000


1,670,000

Other assets


8,334,000


7,525,000

                  Total assets


464,034,000


435,765,000






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