Buchanan-based Bank of Botetourt has announced its unaudited financial results for the three months-end June 30, 2020. The bank produced net income amounting to $1,172,000 or $0.68 per basic share in the second quarter. This amount compares to a net income of $1,104,000 or $0.64 per share, for the same period last year. For the six months-ended the bank produced net income amounting to $2,210,000 or $1.28 per basic share. This amount compares to a net income of $2,258,000 or $1.32 per share, for the same period last year.
At June 30, 2020, select financial information and key highlights include:
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Return on average assets of 0.84 percent
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Return on average equity of 8.63 percent
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Book value of $30.28
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Provision for loan losses at 1.07 percent of loans
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455 loans for $29.5 million funded under the federal Paycheck Protection Program (“PPP”)
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Community Bank Leverage Ratio (“CBLR”) of 9.44 percent
As a result of the solid financial performance, the Board of Directors voted to pay the $0.175 per share quarterly dividend, or $0.70 per share annualized which is payable on August 19, 2020 to shareholders of record August 12, 2020.
President & CEO G. Lyn Hayth III said, “Our second quarter financial results exceeded budget expectations. We remain cautiously optimistic as we navigate the uncertain economic conditions amid the health pandemic. Bank of Botetourt assisted many customers with their financial needs during this unprecedented time. We continue to monitor the local and national economic conditions and will continue to work appropriately with impacted customers.”
Net income for the three months ended June 30, 2020 was $1,172,000 compared to $1,104,000 for the same period last year, representing an increase of $68,000 or 6.2 percent. Basic and diluted earnings per share increased $0.04 from $0.64 at June 30, 2019 to $0.68 at June 30, 2020. The bank has realized continued strong loan demand in 2020 as net loans increased 10.6 percent. The increase in net income is primarily attributed to an increase in net interest income resulting from higher loan demand resulting in more loan interest income and fees on loans. Net income for the six months ended June 30, 2020 was $2,210,000 compared to $2,258,000 for the same period last year, representing a decrease of $48,000 or 2.1 percent. Basic and diluted earnings per share decreased $0.04 from $1.32 at June 30, 2019 to $1.28 at June 30, 2020. The decrease in net income is primarily attributed to an increase in a higher provision for loan losses related to the uncertain economic conditions related to the COVID-19 health pandemic. Provision for loan losses totaled $1,190,000 at June 30, 2020 compared to $595,000 at June 30, 2019. The 100.0 percent increase is related to growth in the portfolio as well as accounting for the environmental factors related to the large span of industries negatively impacted by the social distancing guidance, unemployment claims, and the anticipated expiration of the temporary increase in unemployment compensation benefits under the Federal Pandemic Unemployment Compensation program.
At June 30, 2020 total assets amounted to $576,704,000, an increase of 17.0 percent above total assets at December 31, 2019 of $492,817,000, an increase of $83,887,000. Total net loans increased $44,844,000 or 10.6 percent from $421,417,000 at December 31, 2019 to $466,261,000 at June 30, 2020. Approximately $29,500,000 of the growth was related to PPP lending.
Total deposits at December 31, 2019 amounted to $434,268,000, compared to $510,126,000 at June 30, 2020, an increase of 17.5 percent or $75,858,000. The majority of the increase in deposits was organic growth. In addition, a substantial majority of the PPP loan proceeds were deposited to accounts at the bank.
As of June 30, Bank of Botetourt reported its CBLR ratio at 9.44 percent which exceeds the required regulatory minimum ratio. The CARES Act temporarily reduced the CBLR minimum ratio from 9.0 percent to 8.0 percent through December 31, 2020.
Paycheck Protection Program
Bank of Botetourt is participating in the Paycheck Protection Program (“PPP”) initiated by the U.S. Department of the Treasury on April 3, 2020. As of June 30, 2020, the bank has processed and received approval from the U.S. Small Business Administration on 455 applications for approximately $29.5 million. Bank of Botetourt initially has funded these loans using its on-balance sheet liquidity.
COVID-19 Customer & Employee Care
Bank of Botetourt continues to take numerous steps to assist customers and employees during the pandemic. For loan customers impacted by COVID-19, the bank has granted extensions, skip-a-payment, and modifications consistent with regulatory guidance. For depositing customers, the bank is permitting unlimited withdrawals from savings accounts without additional fee or penalty as announced and permitted by banking regulators.
All of the bank’s offices remain open, although lobbies are under controlled access. When customers enter branches, facemasks are required for all parties. Plexiglass shields and social distancing floor markers have been installed in the offices. For employees, the bank continues to provide flexible work practices as approximately 30 percent to work remotely and thereby promote social distancing. The bank has had no layoffs as a result of COVID-19. Non-essential work travel is not permitted. Employees continue to use online meeting platforms for social distancing.
