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

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 BotetourtConsolidated Balance SheetsDecember 31, 2024(unaudited) and December 31, 2023 (audited) (unaudited) (audited) December 31, December 31, 2024 2023AssetsCash and due from banks $ 12,439,000 $ 10,410,000Interest-bearing deposits with banks 53,381,000 58,800,000Federal funds sold 936,000 524,000Total cash and cash equivalents 66,756,000 69,734,000Debt securities held to maturity, net of allowancefor credit losses of $18,000 at December 31, 2024 andat December 31, 2023, respectively 9,982,000 9,932,000Debt securities available for sale 73,159,000 85,663,000Loans, net of allowance for credit losses of $7,989,000 atDecember 31, 2024 and $7,542,000 at December 31, 2023 671,590,000 593,256,000Loans held for sale 634,000 -Premises and fixed assets, net 17,356,000 14,652,000Investment in unconsolidated subsidiaries 3,257,000 3,000,000Bank owned life insurance 7,544,000 -Accrued interest receivable 2,633,000 -Other assets 4,162,000 14,778,000Total assets $ 857,073,000 $ 791,015,000Liabilities and Stockholders' EquityLiabilitiesNoninterest-bearing deposits $ 179,420,000 $ 161,464,000Interest-bearing deposits 587,802,000 530,120,000Total deposits 767,222,000 691,584,000Other borrowings – 19,000,000Accrued interest payable 3,544,000 -Other liabilities 3,797,000 5,653,000Total liabilities 774,563,000 716,237,000Commitments and contingencies – -Stockholders' EquityPreferred stock, $1.00 par value; 1,000,000 sharesauthorized; 243,659 issued and outstandingat December 31, 2024 and at December 31, 2023, respectively 244,000 244,000Common stock, $1.50 par value; 5,000,000 sharesauthorized; 1,960,879 and 1,951,372 issued andoutstanding at December 31, 2024 and at December 31, 2023,respectively 2,941,000 2,927,000Additional paid-in capital 24,198,000 23,937,000Retained earnings 59,277,000 53,377,000Accumulated other comprehensive loss (4,150,000) (5,707,000)Total stockholders' equity 82,510,000 74,778,000Total liabilities and stockholders' equity $ 857,073,000 $ 791,015,000Bank of BotetourtIncome StatementFor the twelve months ended and three months ended December 31, 2024 and 2023 (Unaudited) Twelve Months Ended Three Months Ended December 31, December 31, 2024 2023 2024 2023Interest incomeLoans and fees on loans $ 37,603,000 $ 29,225,000 $ 10,234,000 $ 8,245,000Federal funds sold 23,000 19,000 7,000 5,000Securities:Taxable 1,572,000 1,737,000 360,000 422,000Exempt from federal income tax 207,000 234,000 53,000 51,000Dividend income 107,000 41,000 28,000 20,000Deposits with banks 2,295,000 3,119,000 534,000 813,000Total Interest income 41,807,000 34,375,000 11,216,000 9,556,000Interest expenseDeposits 15,029,000 8,917,000 4,220,000 3,072,000Other borrowings 825,000 235,000 82,000 233,000Total Interest expense 15,854,000 9,385,000 4,302,000 3,305,000Net Interest Income 25,953,000 24,990,000 6,914,000 6,251,000Provision for credit losses 918,000 891,000 364,000 304,000Net Interest Income after credit loss expense 25,035,000 24,099,000 6,550,000 5,947,000Noninterest incomeService charges on deposit accounts 1,284,000 1,306,000 316,000 300,000ATM and debit card 1,871,000 1,956,000 479,000 465,000Other service charges and fees 818,000 742,000 217,000 182,000Mortgage origination fees 198,000 226,000 57,000 74,000Other income, net of gains 1,220,000 969,000 417,000 191,000Total noninterest income 5,391,000 5,199,000 1,486,000 1,212,000Noninterest expenseSalaries and employee benefits 8,947,000 8,407,000 2,356,000 2,108,000Occupancy 1,002,000 973,000 233,000 174,000Equipment 1,077,000 907,000 319,000 224,000Foreclosed assets, net 45,000 3,000 46,000 3,000Outside services 2,771,000 2,269,000 770,000 620,000FDIC insurance premiums and assessment 477,000 348,000 125,000 105,000ATM and debit card 1,455,000 1,427,000 375,000 359,000Franchise tax 657,000 598,000 167,000 155,000Telephone and communication 320,000 262,000 76,000 62,000Other professional fees 240,000 298,000 56,000 74,000Marketing 870,000 944,000 286,000 338,000Other operating expenses 2,594,000 2,603,000 775,000 689,000Total noninterest expense 20,455,000 19,039,000 5,584,000 4,911,000Income before income taxes 9,971,000 10,259,000 2,452,000 2,248,000Income tax expense 2,029,000 2,086,000 498,000 448,000Net income 7,942,000 8,173,000 1,954,000 1,800,000Preferred stock dividends 478,000 478,000 119,000 119,000Net income available to common shareholders $ 7,464,000 $ 7,695,000 $ 1,835,000 $ 1,681,000Basic earnings per share $ 3.82 $ 3.95 $ 0.94 $ 0.86Diluted earnings per share $ 3.82 $ 3.95 $ 0.94 $ 0.86Dividends declared per share $ 0.80 $ 0.77 $ 0.20 $ 0.1925Basic weighted average shares outstanding 1,956,428 1,946,576 1,959,791 1,950,188Diluted weighted average shares outstanding 1,956,428 1,946,576 1,959,791 1,950,188

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SOURCE Bank of Botetourt

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