Buchanan-based Bank of Botetourt has released its unaudited financial results for the three and nine months-ended September 30, 2021. The bank produced net income amounting to $1,816,000 or $1.04 per basic share in the third quarter. This amount compares to a net income of $1,095,000 or $0.64 per share, for the same period last year, an increase of $721,000 or 65.9%. For the nine months-ended the bank produced net income amounting to $5,378,000 or $3.10 per basic share. This amount compares to a net income of $3,305,000 or $1.92 per share for the same period last year.
At September 30, 2021, select financial information and key highlights include:
- Return on average assets of 1.12%
- Return on average equity of 12.76%
- Book value of $33.71
- Total deposit growth of 10.0%
- Total asset growth of 9.6%
- Community Bank Leverage Ratio of 9.09%
- Strong liquidity position
- Net interest margin of 3.02% at September 30, 2021 compared to 3.07% one year prior
- Outstanding Paycheck Protection Program (“PPP”) loans of $26.2 million reported at December 31, 2020 decreased to $0.4 million at September 30, 2021 after receiving SBA forgiveness on $25.8 million. The bank recognized $747,000 in revenue from the forgiven loans.
- In 2021, the bank participated in the next round of the SBA’s PPP Program, generating $18.0 million new PPP loans. At September 30, 2021, $8.9 million had been forgiven by the SBA leaving portfolio balance of $9.1 million. The bank recognized $523,000 in revenue related to this tranche of PPP lending.
- At quarter-end, remaining PPP loan balances from both rounds totaled $9.5 million with $629,000 in deferred revenue.
As a result of the solid financial performance, the board of directors voted to pay the $0.18 per share quarterly dividend, or $0.72 per share annualized which is payable on November 19, 2021 to shareholders of record November 12, 2021. President & CEO G. Lyn Hayth III said, “Our third quarter financial results continued to exceed budget expectations. SBA forgiveness of PPP loans and the subsequent revenue recognition contributed to our successful financial results. In addition, strong and consistent revenue generated by our mortgage loan activity has been a contributor to 2021 earnings.”
Net income for the three months ended September 30, 2021 was $1,816,000 compared to $1,095,000 for the same period last year, representing an increase of $721,000 or 65.9%. Basic and diluted earnings per share increased $0.40 from $0.64 at September 30, 2020 to $1.04 at September 30, 2021. The increase in net income is primarily due to $499,000 in PPP loan revenue recognized and $243,000 in secondary market mortgage income.
Net income for the nine months ended September 30, 2021 was $5,378,000 compared to $3,305,000 for the same period last year, representing an increase of $2,073,000 or 62.7%. Basic and diluted earnings per share increased $1.13 from $1.92 at September 30, 2020 to $3.05 at September 30, 2021. The increase in net income is primarily attributed to an increase in revenue recognized from PPP and mortgage lending. Provision for loan losses totaled $195,000 at September 30, 2021 compared to $1,610,000 at September 30, 2020. The decrease in the provision is due to a reduction in exposure on impaired loans, overall improved economic trends, and partially offset by the historic loss factor in the allowance for loan loss reserve calculation.
Financial Condition
At September 30, 2021 total assets amounted to $655,108,000, an increase of 9.6% above total assets at December 31, 2020 of $597,794,000, an increase of $57,314,000. Total net loans decreased $21,559,000 or 4.7% from $454,680,000 at December 31, 2020 to $433,121,000 at September 30, 2021. Total deposits at December 31, 2020 amounted to $536,805,000, compared to $590,440,000 at September 30, 2021, an increase of 10.0% or $53,635,000. The increase in deposits is attributable to organic growth.
As of September 30, 2021 Bank of Botetourt reported its CBLR ratio at 9.09%, which meets the required regulatory minimum ratio. The CARES Act temporarily reduced the CBLR minimum ratio from 9.0% to 8.5% through December 31, 2021.
Paycheck Protection Program
Bank of Botetourt was a participant in the Paycheck Protection Program (“PPP”) initiated by the U.S. Department of the Treasury. At September 30, 2021 both rounds of PPP lending totaled $44.2, with $34.7 receiving forgiveness from the SBA. As result, $9.5 million of PPP loans remain on the balance sheet at the end of the third quarter. Deferred PPP loan servicing fees totaled $629,000 at September 30, 2021 while the bank recognized $1,270,000 in revenue during 2021.
About Bank of Botetourt
Bank of Botetourt was chartered in 1899 and operates 13 retail offices in Botetourt, Rockbridge, Roanoke, and Franklin counties and the City of Salem. Bank of Botetourt also operates a mortgage division, Virginia Mountain Mortgage, and a financial services division, Botetourt Wealth Management.
