Bank of Botetourt posts strong first quarter financial results

Bank of Botetourt posts strong first quarter financial results

BUCHANAN, Va., May 1, 2025 /PRNewswire/ -- Buchanan-based Bank of Botetourt (OTCPK: BORT and BORTP) announced today its unaudited financial results for the three months-ended March 31, 2025. The Bank produced net income amounting to $2,044,000 or $0.98 per basic share in the first quarter. This amount compares to net income of $1,828,000 or $0.88 per share, for the same period last year.

At March 31, 2025, select financial information and key highlights include:

• Return on average assets of 0.95%
• Return on average equity of 9.77%
• Book value of $39.83
• Total deposit growth of 0.50%
• Total asset growth of 0.72%
• Total loan growth of 2.27%
• Community Bank Leverage Ratio of 10.22%
• Net Interest Margin of 3.59%

The Board of Directors voted to pay the 7.00% preferred dividend, which calculates to $0.49 per share on May 9, 2025, to preferred shareholders of record May 2, 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 May 16, 2025, to common shareholders of record May 9, 2025. CEO & Vice-Chairman, G. Lyn Hayth, III stated, "We are pleased to report a strong first quarter, driven by prudent balance sheet management, solid loan growth, and disciplined cost control.  In a highly competitive environment for deposits, we remained focused on delivering differentiated value to our customers while enhancing returns for our shareholders.  Our performance reflects the strength of our institution and our continued commitment to long-term, sustainable growth."   

Results of Operations

Net income for the three months ended March 31, 2025, was $2,044,000 compared to $1,828,000 for the same period last year, representing an increase of $216,000 or 11.82%.  Basic and diluted earnings per share increased $0.10 from $0.88 at March 31, 2024, to $0.98 at March 31, 2025.  The increase in net income is primarily due to $1,585,000 more interest income, $61,000 more noninterest income, overset by $318,000 more interest expense on deposits, $766,000 more noninterest expense, and $288,000 more provision for credit losses.

For the three months ended March 31, 2025, the Bank recorded a provision for credit loss expense of $354,000 and a reserve for unfunded commitments of $(3,000), which is included in other expenses. This compares to $66,000 for the same period last year, representing an increase of $288,000.  The provision recorded during the quarter mainly 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 1.20% at the end of the quarter, up two basis points from the prior quarter and down six basis points from one year prior.    

At March 31, 2025, net loans increased 2.27%. Interest and fees on loans at March 31, 2025, increased $1,789,000 over the same three-month period of 2024. Interest expense increased by $318,000 from $3,676,000 at March 31, 2024, to $3,994,000 at March 31, 2025.  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 2024 offset by a decrease of interest on borrowed funds.

Noninterest income increased by $61,000, or 5.16%, to $1,244,000 for the three months ended March 31, 2025, compared to $1,183,000 for same period of 2024.  The increase is attributed to an increase in service charges on deposit accounts, income from title insurance subsidiaries, and an increase in gain on sale of mortgage loans. 

Noninterest expense increased $766,000 from $4,936,000 at March 31, 2024, to $5,702,000 at March 31, 2025.  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 March 31, 2025, was $529,000 compared to $471,000 one year prior. The increase in tax expense is due to more revenue for the quarter.

Financial Condition

At March 31, 2025, total assets amounted to $865,386,000, an increase of 0.72% above total assets at December 31, 2024, of $859,237,000, an increase of $6,149,000. Total net loans increased $15,267,000 or 2.27% from $671,590,000 at December 31, 2024, to $686,857,000 at March 31, 2025. Total deposits at December 31, 2024, amounted to $769,386,000, compared to $773,216,000 at March 31, 2025, an increase of 0.50% or $3,830,000.

Stockholders' equity totaled $84,803,000 at March 31, 2025, compared to $82,510,000 at December 31, 2024. The $2,293,000 increase during the period is net income for 2025, 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 first quarter of 2025. Provision for credit losses for the first quarter of 2025 was $354,000 compared with $364,000 in the previous quarter and $66,000 in the same quarter of 2024. 

The Bank had no foreclosed properties at December 31, 2024, and March 31, 2025, respectively.  Therefore, non-performing assets only consisted of nonaccrual loans.  Non-performing assets remained unchanged at March 31, 2025, from $51,000 at December 31, 2024.  There were no new additions to nonaccrual loans during the first quarter. 

Net charge-offs during the first quarter of 2025 were $25,000 or one basis point annualized on total average loans outstanding.  Net charge-offs for the first quarter of 2025 were comprised of charge-offs of $47,000 partially offset by recoveries of $22,000.  Compared to December 31, 2024, net charge-offs decreased $172,000 or two 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 March 31, 2025, Bank of Botetourt reported its CBLR ratio at 10.22% which meets the required regulatory minimum ratio. This compares to a CBLR ratio of 10.25% at December 31, 2024.

Retirement

G. Lyn Hayth, III will retire as Chief Executive Officer on June 30, 2025, after dedicating nearly four decades to the Bank. Hayth will remain Vice-Chair of the Board of Directors and transition into a part-time role as Chief Strategic Officer, where he will focus on strategic initiatives and leadership transition. The Board of Directors has appointed Michelle R. Austin, current President and Chief Operating Officer, as President and Chief Executive Officer, effective July 1,2025.

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 Towns 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. 

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SOURCE Bank of Botetourt