Skip to main content

Market Overview

Bank of Botetourt sets record earnings in 2019; Board votes to increase dividend

Share:

BUCHANAN, Va., Jan. 30, 2020 /PRNewswire/ -- Buchanan-based Bank of Botetourt (OTCPK: 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
December 31


Three Months Ended
December 31




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









 

 

Cision View original content:http://www.prnewswire.com/news-releases/bank-of-botetourt-sets-record-earnings-in-2019-board-votes-to-increase-dividend-300996159.html

SOURCE Bank of Botetourt

View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com