LYNCHBURG, Va., Jan. 09, 2026 (GLOBE NEWSWIRE) -- Bank of the James Financial Group, Inc. (the “Company”) (NASDAQ: BOTJ), the parent company of Bank of the James (the “Bank”), today announced the retirement of J. Todd Scruggs from the Boards of Directors of the Company and the Bank and from his executive roles, effective January 5, 2026. Mr. Scruggs, along with Robert R. Chapman III, was one of the two founders of Bank of the James in 1998, and was instrumental in recruiting the initial Board of Directors a ...

Core Insights - Community banks are facing competitive deposit pricing, high operating costs, and a focus on disciplined credit oversight, with Peoples Bancorp of North Carolina, Inc. (PEBK) and Bank of the James Financial Group, Inc. (BOTJ) as notable examples of differing operational models [1][2] Company Overview - PEBK operates primarily through Peoples Bank and has a layered business model that includes investment services, real estate advisory, appraisal management, and real estate holdings, broadening client engagement beyond traditional banking [1] - BOTJ is anchored by Bank of the James and diversifies its offerings through a mortgage division, an insurance agency, and investment advisory services, creating multiple fee-based revenue streams alongside its core banking operations [1][2] Stock Performance & Valuation - Over the past three months, PEBK has outperformed BOTJ with a stock increase of 19.6% compared to BOTJ's 18.7%, but in the past year, BOTJ has outperformed with a gain of 23.5% versus PEBK's 18.8% [3] - PEBK's trailing 12-month price-to-sales (P/S) ratio is 1.8X, slightly above its five-year median of 1.7X, while BOTJ's P/S ratio is 1.4X, above its five-year median of 1.2X; both companies are considered inexpensive compared to the Zacks Finance sector average of 7.1X [4] Factors Driving Peoples Bancorp's Stock - PEBK benefits from a favorable rate and funding environment, with easing deposit-cost pressures and solid loan growth contributing to profitability without aggressive balance sheet expansion [6] - The bank's nonbank contributions, particularly from its appraisal-management platform, have driven noninterest revenue, offsetting weaker performance in other fee lines [7] - PEBK maintains a disciplined capital-return approach, sustaining regular cash dividends and encouraging long-term participation through reinvestment plans, indicating confidence in cash-flow stability [8] Factors Driving Bank of the James' Stock - BOTJ is experiencing a favorable funding and margin environment, aided by tighter deposit pricing discipline and strategic balance-sheet actions that enhance net interest margins [9] - The bank's diversified business model generates non-interest income from commercial treasury management, mortgage banking, and advisory fees, broadening revenue sources [10] - Investor confidence in BOTJ is supported by a growth strategy focused on sound credit oversight, with an emphasis on conservative underwriting and asset quality monitoring [11] Investment Recommendation - PEBK is currently viewed as a more attractive investment opportunity compared to BOTJ, with stronger recent performance and a favorable risk-reward profile [12][15] - Despite BOTJ's stronger one-year gain and diversified revenue streams, its valuation has increased, reducing the margin of safety compared to PEBK, which remains attractively priced relative to sector norms [14][15]

Credit and Loan Commitments - As of September 30, 2025, the Bank's commitments to extend credit increased to $201,227,000 from $182,522,000 as of December 31, 2024, representing a growth of approximately 10.3%[145] - The total off-balance sheet commitments, including letters of credit, amounted to $203,685,000 as of September 30, 2025, compared to $186,029,000 at the end of 2024, indicating an increase of about 9.5%[145] - Total loans, excluding loans held for sale, increased by 2.37% to $659,586,000, with growth primarily in commercial and commercial real estate portfolios[153] - Nonperforming loans totaled approximately $1,895,000 at September 30, 2025, representing 0.29% of total loans, up from 0.25% at year-end 2024[218] Financial Performance - For the three months ended September 30, 2025, the company reported net income of $2,752,000, an increase of 38.3% compared to $1,990,000 for the same period in 2024[182] - Basic and diluted earnings per common share were $0.61 for the three months ended September 30, 2025, compared to $0.44 for the same period in 2024[183] - Interest income increased to $11,771,000 for the three months ended September 30, 2025, up from $11,563,000 in 2024, driven by higher average loan balances and improved yields[187] - Net interest income rose to $8,300,000 for the three months ended September 30, 2025, representing a 10.5% increase from $7,509,000 in 2024[191] - Noninterest income totaled $4,169,000 for the three months ended September 30, 2025, a 9.1% increase from $3,823,000 in 2024[195] Asset and Liability Management - Total assets increased by 4.18% to $1,020,125,000 as of September 30, 2025, compared to $979,244,000 at December 31, 2024[151] - Total deposits rose by 4.24% to $919,796,000, driven by inflows into money market and time deposit products[152] - Total uninsured deposits were approximately $276,000,000, or 30% of total deposits, as of September 30, 2025[174] - The Bank had no borrowings from correspondent relationships or the FHLBA as of September 30, 2025, indicating adequate liquidity[172] Capital and Equity - Stockholders' equity rose by 18.66% to $76,972,000, primarily due to retained earnings growth[177] - The Bank's Tier 1 risk-based capital ratio was 11.41%, exceeding the well-capitalized institution requirements[175] Credit Losses and Allowance - The allowance for credit losses is based on management's estimates of expected credit losses, which may differ from actual losses due to various factors[128] - The allowance for credit losses was $6,298,000 as of September 30, 2025, representing 0.95% of total loans, down from 1.09% at year-end 2024[215] - The provision for credit losses recorded was $91,000 for Q3 2025, compared to $92,000 for the same period in 2024, while a recovery of $300,000 was noted for the nine months ended September 30, 2025[214] Branch Expansion and Strategy - The Bank opened a new full-service branch in Nellysford, Virginia, in September 2025, while continuously evaluating potential new branch locations for future expansion[140] - Management expects that each new branch will become profitable within 12 to 18 months of operation, although the financial impact of each new branch cannot be predicted with certainty[141] - The Bank's expansion plans are subject to regulatory approval, and it may open additional branches in the next two fiscal years[141] Operational Efficiency - Noninterest expense for Q3 2025 increased to $9,160,000, a 4.4% rise from Q3 2024, and year-to-date expenses reached $28,441,000, up 11.1% from the previous year[205] - Total personnel expenses for Q3 2025 were $5,516,000, reflecting a 12.1% increase from $4,920,000 in Q3 2024, driven by merit increases and staffing additions[206] - The company anticipates monthly cost savings of over $40,000 from the amended core-service provider contract initiated in April 2025[211] Market Conditions and Economic Factors - The Bank's financial condition is influenced by regional economic conditions, interest rate fluctuations, and changes in real estate values in its market area[127] - The company anticipates that elevated interest rates may continue to limit refinancing activity in the near term[201] Interest Income and Margin - The net interest margin was 3.44% for the quarter ended September 30, 2025, compared to 3.16% for the same period in 2024[192] - The average interest rate on loans, including fees, rose to 5.65% in 2025 from 5.45% in 2024, showing an increase of 20 basis points[226] - The interest spread improved to 3.07% in 2025 from 2.73% in 2024, indicating enhanced profitability on interest-earning assets[228]

Core Viewpoint - Bank of the James Financial Group, Inc. reported record quarterly results for Q3 2025, leading to a significant stock price increase and outperforming the broader market [1][14]. Earnings & Revenue Performance - The company achieved a record net income of $2.75 million for Q3 2025, a 38.3% increase from $1.99 million in Q3 2024 [2]. - Earnings per share (EPS) rose to 61 cents from 44 cents year-over-year, while EPS for the first nine months of 2025 remained flat at $1.39 compared to the same period in 2024 [2]. - Total interest income for Q3 2025 increased by 1.8% year-over-year to $11.77 million, and for the first nine months, it rose by 4.9% to $34.64 million [2]. Revenue Growth Drivers - Modest revenue growth was supported by higher loan yields and strong commercial real estate lending activity [3]. - Net interest income advanced 10.5% year-over-year to $8.30 million for Q3 2025 and 12.6% to $24.27 million for the first nine months [3]. Key Business Metrics - The net interest margin expanded by 28 basis points to 3.44% in Q3 2025 from 3.16% a year earlier [4]. - The interest spread improved to 3.15% from 2.81%, aided by reduced funding costs [4]. - Total interest expenses fell by 14.3% to $3.47 million from $4.05 million in the prior-year quarter [4]. Non-Interest Income and Expenses - Non-interest income rose by 9% year-over-year to $4.17 million, driven by gains on mortgage loan sales and wealth management fees [5]. - Non-interest expenses increased by 4.4% to $9.16 million, reflecting higher salaries and costs associated with new banking facilities [5]. Efficiency and Profitability Metrics - The efficiency ratio improved to 73.46% from 77.44%, indicating enhanced operating leverage [6]. - Return on average assets climbed to 1.07% from 0.80%, and return on equity improved to 15.24% from 12.86% [6]. Management Commentary - CEO Robert R. Chapman III attributed the record performance to a disciplined focus on fundamentals and strategic management of loan yields [7]. - The diversified revenue base supported sustainable earnings amid economic uncertainty [7]. Credit Quality and Asset Management - The allowance for credit losses declined to $6.30 million from $7.04 million, indicating robust credit quality [10]. - Non-performing loans totaled $1.90 million, representing just 0.29% of total loans, showcasing exceptional asset quality [10]. Balance Sheet Strength - Total assets reached $1.02 billion, up 4.2% since December 2024, while total deposits rose 4.2% to $919.8 million [11]. - Shareholders' equity advanced 18.7% year-to-date to $76.97 million, and book value per share rose to $16.94 from $14.28 at the end of 2024 [11]. Future Outlook - Management expressed optimism about sustaining profitability through disciplined balance sheet management and prudent credit practices [12]. - The company expects continued margin stability as rate pressures ease and loan demand remains resilient [12]. Other Developments - The bank extinguished approximately $10 million in capital notes, improving its funding profile and reducing interest expenses [13]. - A quarterly dividend of 10 cents per share was declared, payable on December 5, 2025 [13].

Earnings Performance - Earnings per share were $0.61 for the third quarter and $1.39 for the first nine months of 2025, compared to $0.44 and $1.39 for the same periods in 2024[3]. - Net income for the three months ended September 30, 2025, was $2.75 million, a 38.29% increase compared to $1.99 million in the same period of 2024[39]. Interest Income and Margin - Total interest income increased by 1.8% to $11.77 million in Q3 2025 and by 4.9% to $34.64 million for the first nine months, driven by higher yields on loans and commercial real estate loan growth[3]. - Net interest income rose 10.5% to $8.30 million in Q3 2025 and 12.62% to $24.27 million for the first nine months compared to the previous year[3]. - The net interest margin improved to 3.44% in Q3 2025 from 3.16% in Q3 2024, and to 3.37% for the first nine months from 3.07% in the prior year[12]. - The net interest margin increased to 3.44%, up 0.28 percentage points year-over-year, indicating better profitability on interest-earning assets[40]. Asset and Loan Growth - Loans, net of the allowance for credit losses, increased to $653.29 million at September 30, 2025, up from $636.55 million at December 31, 2024[6]. - Total assets reached $1.02 billion at September 30, 2025, compared to $979.24 million at December 31, 2024[17]. - Total loans increased by 4.31% year-over-year to $657,028 million, with a 5.66% increase in the year-to-date figure[40]. - Total assets rose by 2.29% year-over-year to $1,017,872 million, reflecting overall growth in the company's balance sheet[40]. Deposits and Equity - Total deposits grew to $919.80 million at September 30, 2025, up from $882.40 million at December 31, 2024[27]. - Stockholders' equity increased to $76.97 million as of September 30, 2025, up from $64.87 million at December 31, 2024, representing a growth of 18.66%[28]. - Total deposits grew by 2.18% year-over-year to $922,270 million, showing continued customer trust[40]. Noninterest Income and Expenses - Noninterest income was stable at $4.17 million in Q3 2025 and $11.53 million for the first nine months, supported by commercial treasury services and wealth management fees[6]. - The efficiency ratio improved to 73.46%, a decrease of 3.98 percentage points compared to the previous year[40]. Credit Quality - The ratio of nonperforming loans to total loans was 0.29% at September 30, 2025, indicating strong asset quality[24]. - Nonperforming loans increased by 15.55% year-over-year to $1,895 million, indicating potential asset quality concerns[42]. - The allowance for credit losses for loans to total loans decreased to 0.95%, down 0.14 percentage points from the previous year[42]. - The provision for credit losses saw a significant decrease of 91.51%, indicating improved credit quality management[40]. Dividends and Retained Earnings - The Company approved a quarterly dividend of $0.10 per common share to be paid on December 5, 2025[6]. - Retained earnings rose to $47.74 million at September 30, 2025, compared to $42.80 million at December 31, 2024, reflecting an increase of 11.36%[28]. - Book value per share increased to $16.94 at September 30, 2025, from $14.28 at December 31, 2024, marking a rise of 18.66%[28].

Core Insights - Bank of the James Financial Group, Inc. reported record quarterly earnings driven by loan growth, stable funding costs, and exceptional asset quality [1][3][4] Financial Performance - Earnings per share for Q3 2025 were $0.61, up from $0.44 in Q3 2024, while year-to-date earnings per share remained stable at $1.39 [2][32] - Total interest income increased to $11.77 million in Q3 2025, a 1.8% rise from $11.56 million in Q3 2024, and $34.64 million for the first nine months of 2025, up 4.9% from $33.01 million in the same period last year [2][5] - Net interest income rose 10.5% to $8.30 million in Q3 2025, compared to $7.51 million in Q3 2024, and increased 12.62% to $24.27 million for the first nine months of 2025 [2][4][32] - Interest expense decreased by 14.3% to $3.47 million in Q3 2025 from $4.05 million in Q3 2024, reflecting effective rate management [7][32] Asset Quality and Growth - Loans, net of the allowance for credit losses, grew to $653.29 million at September 30, 2025, from $636.55 million at December 31, 2024, with commercial real estate loans leading the growth [2][15][19] - The ratio of nonperforming loans to total loans was 0.29% at September 30, 2025, indicating strong asset quality [19][20] - Total assets reached $1.02 billion at September 30, 2025, up from $979.24 million at December 31, 2024, primarily due to loan growth and increases in securities [13][22] Shareholder Value - Stockholders' equity increased to $76.97 million at September 30, 2025, from $64.87 million at December 31, 2024, with a book value per share rising to $16.94 [23][30] - The Company declared a quarterly dividend of $0.10 per common share, reflecting its commitment to returning value to shareholders [2][3] Revenue Streams - Noninterest income for Q3 2025 was $4.17 million, compared to $3.82 million in Q3 2024, driven by strong contributions from commercial treasury services and wealth management [10][32] - The balanced revenue stream from various services has provided financial stability, even amid economic uncertainty [4][10]

Core Insights - The Bank of the James Financial Group is implementing leadership changes to enhance oversight and coordination of financial and investment strategies [1][2][10] Leadership Transition Overview - J. Todd Scruggs will transition from Chief Financial Officer (CFO) to Chief Investment Officer (CIO), while Eric J. Sorenson, Jr. will take over as CFO [7][9] - This transition aims to support the Company's long-term strategic and governance goals by separating oversight of the investment portfolio from financial operations [8] - The leadership changes reflect the Board's confidence in the capabilities of both executives, emphasizing their experience and commitment to the Bank's values [3][10] Executive Profiles - J. Todd Scruggs has been with the Bank since its founding, overseeing financial planning and risk functions, and will now focus on managing the investment portfolio [5][7] - Eric J. Sorenson, Jr. has extensive experience in regulatory and legal matters, and will oversee financial, accounting, treasury, budgeting, and reporting functions as CFO [4][7] Transition Details - The leadership transition will take effect on January 1, 2026, with a focus on ensuring continuity and minimal disruption to operations [9] - Both executives will collaborate closely during the transition period to maintain operational stability [9]

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the Company's unaudited consolidated financial statements, management's analysis, market risk, and internal controls [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201%2E%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Bank of the James Financial Group, Inc. and its subsidiaries for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, income statements, comprehensive income, cash flows, and changes in stockholders' equity, along with detailed notes on accounting policies, debt, fair value measurements, securities, business segments, and credit losses [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total assets | $1,004,242 | $979,244 | | Total liabilities | $932,577 | $914,379 | | Total stockholders' equity | $71,665 | $64,865 | - Total assets increased by **2.56%** from December 31, 2024, to June 30, 2025, primarily driven by growth in federal funds sold, securities available-for-sale, and loans[10](index=10&type=chunk)[146](index=146&type=chunk) - Total deposits increased by **3.19% to $910,527,000** as of June 30, 2025, largely due to the reversal of one-way Insured Cash Sweep (ICS) placements[11](index=11&type=chunk)[147](index=147&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) This section outlines the Company's financial performance over specific periods, presenting revenues, expenses, and net income | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $11,638 | $10,935 | $22,872 | $21,444 | | Total interest expense | $3,388 | $3,844 | $6,903 | $7,403 | | Net interest income | $8,250 | $7,091 | $15,969 | $14,041 | | Recovery of credit losses | $(528) | $(123) | $(391) | $(676) | | Total noninterest income | $4,075 | $4,191 | $7,358 | $7,498 | | Total noninterest expenses | $9,455 | $8,739 | $19,281 | $16,827 | | Income before income taxes | $3,398 | $2,666 | $4,437 | $5,388 | | Net Income | $2,704 | $2,148 | $3,546 | $4,335 | | Net income per common share - basic | $0.60 | $0.47 | $0.78 | $0.95 | - Net income for the three months ended June 30, 2025, increased by **25.9%** year-over-year, while for the six months, it decreased by **18.2%** year-over-year[173](index=173&type=chunk) - Net interest income increased for both the three-month (**16.3%**) and six-month (**13.7%**) periods ended June 30, 2025, driven by higher loan portfolio growth and increased yields on earning assets, coupled with an **11.9% decline in total interest expense**[12](index=12&type=chunk)[176](index=176&type=chunk)[181](index=181&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the Company's total comprehensive income, including net income and other comprehensive income components | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $2,704 | $2,148 | $3,546 | $4,335 | | Other comprehensive income (loss), net of tax | $1,066 | $(422) | $4,162 | $(1,758) | | Comprehensive income | $3,770 | $1,726 | $7,708 | $2,577 | - Comprehensive income significantly increased for both periods in 2025, primarily due to unrealized gains on available-for-sale securities, net of tax, which were **positive $1,066,000 and $4,162,000** for the three and six months ended June 30, 2025, respectively, compared to losses in the prior year[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $4,416 | $1,653 | | Net cash used in investing activities | $(16,449) | $(6,914) | | Net cash provided by financing activities | $16,631 | $5,050 | | Increase (decrease) in cash and cash equivalents | $4,598 | $(211) | | Cash and cash equivalents at end of period | $77,907 | $74,627 | - Net cash provided by operating activities increased significantly to **$4,416,000** for the six months ended June 30, 2025, from $1,653,000 in the prior year, mainly due to adjustments reconciling net income[16](index=16&type=chunk) - Investing activities saw a higher net cash outflow of **$16,449,000** in 2025, primarily due to increased purchases of available-for-sale securities and loan originations[16](index=16&type=chunk) - Financing activities provided substantially more cash, **$16,631,000**, in 2025, driven by a net increase in deposits and repayment of capital notes[16](index=16&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section tracks changes in the Company's equity accounts, including common stock, retained earnings, and comprehensive income | Metric (in thousands) | Balance at Dec 31, 2024 | Net Income (Q1 2025) | Dividends Paid (Q1 2025) | Other Comprehensive Income (Q1 2025) | Balance at Mar 31, 2025 | Net Income (Q2 2025) | Dividends Paid (Q2 2025) | Other Comprehensive Income (Q2 2025) | Balance at Jun 30, 2025 | | :-------------------- | :---------------------- | :------------------- | :----------------------- | :----------------------------------- | :---------------------- | :------------------- | :----------------------- | :----------------------------------- | :---------------------- | | Common Stock | $9,723 | - | - | - | $9,723 | - | - | - | $9,723 | | Additional Paid-in Capital | $35,253 | - | - | - | $35,253 | - | - | - | $35,253 | | Retained Earnings | $42,804 | $842 | $(455) | - | $43,191 | $2,704 | $(455) | - | $45,442 | | Accumulated Other Comprehensive (Loss) | $(22,915) | - | - | $3,096 | $(19,819) | - | - | $1,066 | $(18,753) | | Total Stockholders' Equity | $64,865 | $842 | $(455) | $3,096 | $68,348 | $2,704 | $(455) | $1,066 | $71,665 | - Total stockholders' equity increased from **$64,865,000** at December 31, 2024, to **$71,665,000** at June 30, 2025, primarily due to net income and positive other comprehensive income from unrealized gains on available-for-sale securities, partially offset by dividends paid[11](index=11&type=chunk)[18](index=18&type=chunk) [Note 1 – Basis of Presentation](index=12&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation) This note describes the geographical market, accounting principles, and key intangible assets underlying the financial statements - The Company's primary market area is Region 2000 in Central Virginia, with recent expansion into Charlottesville, Roanoke, Blacksburg, Harrisonburg, Lexington, Rustburg, Wytheville, Buchanan, and Nellysford[20](index=20&type=chunk) - The unaudited consolidated financial statements reflect all necessary adjustments for fair presentation as of June 30, 2025, and December 31, 2024, in conformity with GAAP[21](index=21&type=chunk) - An intangible asset for customer relationships, valued at **$8,406,000** from the PWW acquisition, is amortized straight-line over 15 years, with a net balance of **$6,445,000** as of June 30, 2025[22](index=22&type=chunk) [Note 2 – Significant Accounting Policies and Estimates](index=12&type=section&id=Note%202%20%E2%80%93%20Significant%20Accounting%20Policies%20and%20Estimates) This note outlines the critical accounting policies and estimates, such as credit loss allowance and securities valuation, used in financial reporting - The financial statements rely on management estimates and assumptions, particularly for the allowance for credit losses on loans (ACLL) and the valuation of available-for-sale securities, which are susceptible to changes in regional economic conditions and interest rates[23](index=23&type=chunk)[119](index=119&type=chunk) - There have been no significant changes to the application of significant accounting policies since December 31, 2024[25](index=25&type=chunk) [Note 3 – Earnings Per Common Share (EPS)](index=13&type=section&id=Note%203%20%E2%80%93%20Earnings%20Per%20Common%20Share%20%28EPS%29) This note details the calculation of basic and diluted earnings per common share for the reported periods | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $2,704 | $2,148 | $3,546 | $4,335 | | Weighted average shares outstanding | 4,543,338 | 4,543,338 | 4,543,338 | 4,543,338 | | Earnings per common share - basic and diluted | $0.60 | $0.47 | $0.78 | $0.95 | - Basic and diluted EPS increased to **$0.60** for the three months ended June 30, 2025, from $0.47 in the prior year, but decreased to **$0.78** for the six months ended June 30, 2025, from $0.95 in the prior year[26](index=26&type=chunk)[173](index=173&type=chunk) [Note 4 – Debt (Current and Long Term)](index=13&type=section&id=Note%204%20%E2%80%93%20Debt%20%28Current%20and%20Long%20Term%29) This note provides information on the Company's debt obligations, including subordinated notes and the NBB Note, and their repayment or modification - The Company repaid **$10,050,000** in 3.25% fixed-rate subordinated notes on their maturity date of June 30, 2025, using parent-company cash, which is expected to save approximately **$327,000 annually** in interest expense[28](index=28&type=chunk)[168](index=168&type=chunk) - The NBB Note, with a principal balance of approximately **$8,992,000** at June 30, 2025, had its balloon payment date extended to December 31, 2026, and its interest rate lowered to **3.90%** from 4.00% in June 2022[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 5 – Fair Value Measurements](index=14&type=section&id=Note%205%20%E2%80%93%20Fair%20Value%20Measurements) This note explains the three-level hierarchy for fair value measurements and the classification of assets like available-for-sale securities and IRLCs - Fair value measurements are categorized into a three-level hierarchy based on the observability of inputs, with Level 1 for quoted prices in active markets, Level 2 for observable inputs, and Level 3 for unobservable inputs[35](index=35&type=chunk)[39](index=39&type=chunk) | Asset (in thousands) | June 30, 2025 (Level 2) | June 30, 2025 (Level 3) | December 31, 2024 (Level 2) | December 31, 2024 (Level 3) | | :------------------- | :---------------------- | :---------------------- | :-------------------------- | :-------------------------- | | Securities available-for-sale | $196,585 | $0 | $187,916 | $0 | | IRLCs - asset | $0 | $239 | $0 | $42 | - All of the Company's available-for-sale securities are classified as **Level 2**, while Interest Rate Lock Commitments (IRLCs) are classified as **Level 3** due to unobservable inputs like the range of pull-through rates[37](index=37&type=chunk)[38](index=38&type=chunk)[42](index=42&type=chunk) - No nonrecurring fair value adjustments were recorded for collateral-dependent loans or loans held for sale at June 30, 2025, or December 31, 2024[45](index=45&type=chunk)[46](index=46&type=chunk) [Note 6 – Securities](index=19&type=section&id=Note%206%20%E2%80%93%20Securities) This note details the Company's held-to-maturity and available-for-sale securities, including unrealized gains/losses and pledged collateral | Security Type (in thousands) | Amortized Costs (Jun 30, 2025) | Fair Value (Jun 30, 2025) | Amortized Costs (Dec 31, 2024) | Fair Value (Dec 31, 2024) | | :--------------------------- | :----------------------------- | :------------------------ | :----------------------------- | :------------------------ | | Held-to-Maturity | $3,598 | $3,251 | $3,606 | $3,170 | | Available-for-sale | $220,322 | $196,585 | $216,921 | $187,916 | - As of June 30, 2025, available-for-sale securities had gross unrealized losses of **$24,025,000**, primarily due to market volatility and increased interest rates, but management does not expect to realize these losses[52](index=52&type=chunk)[54](index=54&type=chunk)[161](index=161&type=chunk) - The Company had no sales of available-for-sale securities during the three and six months ended June 30, 2025, compared to **$8,754,000** in sales during the same periods in 2024[58](index=58&type=chunk) - The Company pledged approximately **$49,360,000** of available-for-sale securities as collateral for public deposits, **$37,000,000** with correspondent banks, and **$26,000,000** for advances at the Federal Reserve Bank's discount window as of June 30, 2025[60](index=60&type=chunk)[165](index=165&type=chunk) [Note 7 – Business Segments](index=22&type=section&id=Note%207%20%E2%80%93%20Business%20Segments) This note provides financial information for the Company's Community Banking, Mortgage Banking, and Investment Advisory segments - The Company operates three business segments: Community Banking (loans, deposits), Mortgage Banking (residential mortgage originations for sale), and Investment Advisory (investment advisory and financial planning services through PWW)[61](index=61&type=chunk)[64](index=64&type=chunk) | Segment (in thousands) | Segment Income Before Taxes (Q2 2025) | Segment Income Before Taxes (Q2 2024) | Segment Income Before Taxes (YTD 2025) | Segment Income Before Taxes (YTD 2024) | | :--------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------- | :------------------------------------- | | Community Banking | $2,607 | $2,147 | $3,279 | $4,212 | | Mortgage Banking | $369 | $202 | $370 | $447 | | Investment Advisory | $614 | $522 | $1,187 | $1,001 | - Investment Advisory's Assets Under Management (AUM) increased to **$930.0 million** at June 30, 2025, from $854.0 million at December 31, 2024, due to new asset inflows and market value increases[66](index=66&type=chunk)[191](index=191&type=chunk) - Community Banking's total loans held for investment, net, increased to **$649.1 million** at June 30, 2025, from $636.6 million at December 31, 2024, and deposits grew to **$915.4 million** from $882.4 million[63](index=63&type=chunk) [Note 8 – Loans and allowance for credit losses](index=27&type=section&id=Note%208%20%E2%80%93%20Loans%20and%20allowance%20for%20credit%20losses) This note details the Company's loan portfolio by segment, the allowance for credit losses, and nonperforming assets | Loan Segment (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Commercial | $70,510 | $66,418 | | Commercial Real Estate | $366,351 | $359,415 | | Consumer | $80,617 | $78,310 | | Residential | $137,919 | $139,453 | | Total loans | $655,397 | $643,596 | | Less allowance for credit losses | $6,308 | $7,044 | | Net loans | $649,089 | $636,552 | - Total loans, net of allowance, increased by **1.97% to $649,089,000** at June 30, 2025, driven by higher balances in commercial, commercial real estate, and consumer loan categories, partially offset by decreases in residential loans[148](index=148&type=chunk) - The allowance for credit losses decreased to **$6,308,000 (0.96% of total loans)** at June 30, 2025, from $7,044,000 (1.10%) at December 31, 2024, and the Company recorded a recovery of **$528,000** for the three months ended June 30, 2025[80](index=80&type=chunk)[199](index=199&type=chunk) - Nonperforming assets increased to **$1,846,000** at June 30, 2025, from $1,640,000 at December 31, 2024, consisting of nonaccrual loans and loans past due 90 days or more and still accruing[156](index=156&type=chunk) - The allowance for credit losses for unfunded commitments was **$678,000** at June 30, 2025, with a provision of **$27,000** for the three months ended June 30, 2025[108](index=108&type=chunk)[109](index=109&type=chunk) [Note 9 – Recent accounting pronouncements and other authoritative guidance](index=41&type=section&id=Note%209%20%E2%80%93%20Recent%20accounting%20pronouncements%20and%20other%20authoritative%20guidance) This note discusses the impact of recently issued accounting pronouncements, specifically ASU 2024-03, on the Company's financial reporting - ASU 2024-03, requiring disaggregation of income statement expenses, is effective for public business entities for annual periods beginning after December 15, 2026, and interim periods after December 15, 2027. The Company does not expect a material impact from its adoption[111](index=111&type=chunk) [Note 10 - Subsequent Events](index=41&type=section&id=Note%2010%20-%20Subsequent%20Events) This note confirms management's review of events occurring after the balance sheet date, with no material adjustments or disclosures required - Management has reviewed events through the financial statement issuance date and determined no subsequent events require accrual or disclosure beyond those already provided[113](index=113&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance and condition, highlighting key drivers of changes in assets, liabilities, equity, and earnings. It includes discussions on critical accounting policies, business overview, off-balance sheet arrangements, and detailed analysis of interest income, expense, noninterest income, noninterest expense, and credit losses [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS](index=42&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that the report contains forward-looking statements subject to various risks and uncertainties, including economic and regulatory factors - The report contains forward-looking statements subject to risks and uncertainties, including technology problems, regulatory changes, economic conditions, geopolitical risks, liquidity, credit loss allowance adequacy, management team reliance, real estate value changes, and new accounting standards[115](index=115&type=chunk)[117](index=117&type=chunk) [GENERAL](index=43&type=section&id=GENERAL) This section provides an overview of the Company's critical accounting policies, business activities, and strategic plans for branch expansion - The Company's financial statements are prepared in accordance with GAAP, with critical accounting policies including the Allowance for Credit Losses on Loans (ACLL) and Goodwill impairment testing[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - Financial is a bank holding company primarily engaged in retail banking through Bank of the James, with additional activities in mortgage banking, investment services, insurance, and investment advisory services via PWW[123](index=123&type=chunk) - PWW, the investment advisory subsidiary, manages approximately **$929,957,000** in assets as of June 30, 2025, generating revenue primarily through investment advisory fees[126](index=126&type=chunk)[191](index=191&type=chunk) - The Bank plans to open additional branches, including relocating its Temporary Nellysford Branch to a permanent location in Fall 2025, and anticipates new branches to become profitable within **12 to 18 months**[135](index=135&type=chunk)[140](index=140&type=chunk) [OFF-BALANCE SHEET ARRANGEMENTS](index=45&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) This section describes the Company's off-balance sheet financial instruments, such as credit commitments and mortgage rate lock commitments, and associated risks - The Bank uses off-balance sheet financial instruments, including commitments to extend credit and standby letters of credit, totaling **$189,294,000** at June 30, 2025, which involve credit and interest rate risk[141](index=141&type=chunk) - Mortgage rate lock commitments (IRLCs) are presold to third-party investors, mitigating credit or interest rate risk for the Bank[143](index=143&type=chunk) [SUMMARY OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=46&type=section&id=SUMMARY%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section summarizes the Company's financial position and operational performance, detailing changes in assets, liabilities, equity, and earnings drivers [Financial Condition Summary](index=46&type=section&id=Financial%20Condition%20Summary) This section summarizes the Company's balance sheet, including asset and deposit growth, loan portfolio composition, nonperforming assets, and capital levels - Total assets increased by **2.56% to $1,004,242,000** at June 30, 2025, from $979,244,000 at December 31, 2024, driven by growth in federal funds sold, available-for-sale securities, and loans[146](index=146&type=chunk) - Total deposits increased by **3.19% to $910,527,000**, primarily due to the reversal of one-way Insured Cash Sweep (ICS) placements[147](index=147&type=chunk) - Total loans, net of allowance, increased by **1.97% to $649,089,000**, with growth in commercial, commercial real estate, and consumer loans, partially offset by a decrease in residential loans[148](index=148&type=chunk) - Non-owner occupied commercial real estate loans totaled **$202,147,000**, or approximately **31% of total loans**, with minimal exposure to large office buildings or shopping centers[151](index=151&type=chunk) - Nonperforming assets increased to **$1,846,000** at June 30, 2025, from $1,640,000 at December 31, 2024[156](index=156&type=chunk) - The Bank's regulatory capital levels exceeded well-capitalized institution requirements at June 30, 2025, with a **Tier 1 risk-based capital ratio of 11.38%** and a **total risk-based capital ratio of 12.19%**[167](index=167&type=chunk)[169](index=169&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) This section analyzes the Company's income statement, focusing on net income, net interest income, noninterest income, expenses, and credit loss recovery | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income | $2,704 | $2,148 | $3,546 | $4,335 | | Net interest income | $8,250 | $7,091 | $15,969 | $14,041 | | Noninterest income | $4,075 | $4,191 | $7,358 | $7,498 | | Noninterest expenses | $9,455 | $8,739 | $19,281 | $16,827 | | Recovery of credit losses | $(528) | $(123) | $(391) | $(676) | - Net interest income increased by **16.3%** for the three months and **13.7%** for the six months ended June 30, 2025, driven by higher yields on earning assets (loan rates up to **5.70%** from 5.42% YoY for Q2) and a decline in interest expense[176](index=176&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk) - Noninterest income slightly decreased for both periods, primarily due to lower other income and no gains on available-for-sale securities sales in 2025, partially offset by increased gains on loan sales and wealth management fees[176](index=176&type=chunk)[184](index=184&type=chunk)[192](index=192&type=chunk) - Noninterest expense increased by **8.2%** for the quarter and **14.6%** year-to-date, mainly due to higher salaries, employee benefits, and a significant rise in professional, data processing, and other outside services, including a **$1,000,000** consulting fee[176](index=176&type=chunk)[194](index=194&type=chunk) - The allowance for credit losses decreased, and the Bank recorded a recovery of **$528,000** for the three months ended June 30, 2025, influenced by updated CECL loss models incorporating post-pandemic loss history and revised loss-rate parameters[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - The effective tax rate for the three and six months ended June 30, 2025, was **20.43%** and **20.08%**, respectively, lower than the statutory rate due to tax benefits from bank-owned life insurance and tax-exempt municipal bonds[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the Company in this report - The Company has no applicable quantitative and qualitative disclosures about market risk in this report[212](index=212&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the effectiveness of the Company's disclosure controls and procedures, concluding they were effective as of June 30, 2025. No significant changes in internal controls over financial reporting occurred during the quarter - Financial's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, ensuring timely and accurate reporting of required information[213](index=213&type=chunk) - No significant changes occurred in the Company's internal controls over financial reporting during the quarter ended June 30, 2025[214](index=214&type=chunk) [PART II – OTHER INFORMATION](index=59&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=59&type=section&id=Item%201%2E%20Legal%20Proceedings) The Company is not currently involved in any legal proceedings other than routine litigation incidental to its business - The Company is not involved in any pending legal proceedings beyond routine litigation incidental to its business[215](index=215&type=chunk) [Item 1A. Risk Factors](index=59&type=section&id=Item%201A%2E%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the Company's risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[217](index=217&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=60&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This item is not applicable to the Company for the reporting period - This item is not applicable[218](index=218&type=chunk) [Item 3. Defaults Upon Senior Securities](index=60&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - This item is not applicable[218](index=218&type=chunk) [Item 4. Mine Safety Disclosures](index=60&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - This item is not applicable[218](index=218&type=chunk) [Item 5. Other Information](index=60&type=section&id=Item%205%2E%20Other%20Information) This item is not applicable to the Company for the reporting period - This item is not applicable[218](index=218&type=chunk) [Item 6. Exhibits](index=60&type=section&id=Item%206%2E%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications under the Sarbanes-Oxley Act and XBRL-formatted financial statements - Exhibits include certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, dated August 13, 2025[218](index=218&type=chunk) - The financial statements for the quarter ended June 30, 2025, are provided in eXtensible Business Reporting Language (XBRL) format[218](index=218&type=chunk) [SIGNATURES](index=61&type=section&id=SIGNATURES) This section contains the official signatures of the Company's principal executive and financial officers, certifying the report's accuracy [SIGNATURES](index=61&type=section&id=SIGNATURES) The report is signed on behalf of Bank of the James Financial Group, Inc. by Robert R. Chapman III, President (Principal Executive Officer), and J. Todd Scruggs, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer), both dated August 13, 2025 - The report was signed by Robert R. Chapman III, President (Principal Executive Officer), and J. Todd Scruggs, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer) on August 13, 2025[221](index=221&type=chunk)[223](index=223&type=chunk)

Core Insights - Bank of the James Financial Group, Inc. reported strong financial performance for the second quarter and first half of 2025, with net income increasing to $2.70 million or $0.60 per share, compared to $2.15 million or $0.47 per share in the same period of 2024 [2][3][10] - The company demonstrated growth in commercial lending, mortgage originations, and core deposits, establishing a solid base for continued positive financial performance [3][6] - The net interest margin improved to 3.45% in the second quarter of 2025, the highest in several quarters, reflecting effective management of loan yields and interest expenses [4][15] Financial Performance - Net interest income for the second quarter of 2025 was $8.25 million, up 16% from $7.09 million in the second quarter of 2024, while total interest income rose to $11.64 million, a 6% increase year-over-year [10][11][35] - Total interest expense decreased by 12% to $3.39 million in the second quarter of 2025, contributing to a net interest income after recovery of credit losses of $8.78 million, up 22% from the previous year [13][35] - Noninterest income remained stable at $4.08 million in the second quarter of 2025, with contributions from commercial treasury services and wealth management fees [16][35] Asset Quality and Growth - Loans, net of allowance for credit losses, increased to $649.09 million at June 30, 2025, from $636.55 million at December 31, 2024, driven by growth in commercial real estate loans [10][18][19] - The ratio of nonperforming loans to total loans was 0.28% at June 30, 2025, indicating strong asset quality, with no other real estate owned [22][23] - Total assets reached $1.004 billion at June 30, 2025, up from $979.24 million at December 31, 2024, reflecting increases in securities and loan growth [18][36] Shareholder Value - Stockholders' equity grew to $71.67 million at June 30, 2025, from $64.87 million at December 31, 2024, with a book value per share of $15.77, up from $14.28 [25][36] - The company declared a quarterly dividend of $0.10 per common share, payable on September 26, 2025, to stockholders of record as of September 12, 2025 [10][35] Strategic Initiatives - The company successfully retired approximately $10 million in capital notes, expected to reduce annual interest expenses by approximately $327,000, enhancing financial stability [7][8] - A balanced revenue stream from various sources, including commercial and retail banking, has provided predictable earnings amid economic challenges [6][10]

[Executive Summary and Company Overview](index=1&type=section&id=Executive%20Summary%20and%20Company%20Overview) This section provides an overview of the company's Q2/H1 2025 financial performance and strategic highlights [Company Introduction and Q2/H1 2025 Performance Highlights](index=1&type=section&id=Company%20Introduction%20and%20Q2%2FH1%202025%20Performance%20Highlights) Bank of the James Financial Group reported significant Q2 2025 net income growth, while H1 2025 net income decreased, operating as a full-service bank and investment advisor in Virginia Net Income and EPS Performance (Q2 & H1 2025 vs. 2024) | Metric | Q2 2025 | Q2 2024 | Change | H1 2025 | H1 2024 | Change | | :-------------------- | :------ | :------ | :----- | :------ | :------ | :----- | | Net Income ($ millions) | $2.70 | $2.15 | +25.58% | $3.55 | $4.34 | -18.20% | | EPS (basic & diluted) | $0.60 | $0.47 | +27.66% | $0.79 | $0.95 | -16.84% | - Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) is the parent company of Bank of the James, a full-service commercial and retail bank, and Pettyjohn, Wood & White, Inc. (PWW), an SEC-registered investment advisor[1](index=1&type=chunk) - The Bank serves Region 2000 (greater Lynchburg metropolitan statistical area) and other Virginia markets including Blacksburg, Buchanan, Charlottesville, Harrisonburg, Lexington, Nellysford, Roanoke, and Wytheville[1](index=1&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Robert R. Chapman III highlighted strong Q2 2025 performance driven by lending and deposits, improved net interest margin, and the retirement of capital notes - Financial results, particularly Q2 2025, demonstrated continued traction in commercial lending, mortgage originations, and core deposits[3](index=3&type=chunk) - Net interest margin consistently improved, reaching **3.45% in Q2 2025**, the highest in a number of quarters, reflecting a focus on loan yields, controlling interest expense, and managing borrowings[4](index=4&type=chunk) - The parent company retired approximately **$10 million in capital notes**, expected to reduce annual interest expense by approximately **$327,000**[8](index=8&type=chunk) Key Capitalization Metric | Metric | June 30, 2025 | | :------------------ | :------------ | | Tier 1 leverage ratio | 8.85% | - The Company continues building value for shareholders, evidenced by growth in stockholders' equity, retained earnings, and book value per share[10](index=10&type=chunk) [Financial Highlights and Operational Review](index=2&type=section&id=Financial%20Highlights%20and%20Operational%20Review) This section details the financial performance and operational drivers for the second quarter and first half of 2025 [Second Quarter, First Half of 2025 Highlights](index=2&type=section&id=Second%20Quarter%2C%20First%20Half%20of%202025%20Highlights) Key financial highlights include a significant recovery of allowance for credit losses, increased interest income, improved net interest margin, and growth in commercial real estate loans - Net income and EPS in Q2 2025 partially reflected a **$528,000 recovery of allowance for credit losses**[11](index=11&type=chunk) Interest Income and Net Interest Income (Q2 & H1 2025 vs. 2024) | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | YoY Change | H1 2025 ($ millions) | H1 2024 ($ millions) | YoY Change | | :------------------------------------------ | :------------------- | :------------------- | :--------- | :------------------- | :------------------- | :--------- | | Total Interest Income | $11.64 | $10.94 | +6% | $22.87 | $21.44 | +7% | | Net Interest Income after Recovery of Credit Losses | $8.78 | $7.21 | +22% | $16.36 | $14.72 | +11% | Interest Expense and Net Interest Margin (Q2 & H1 2025 vs. 2024) | Metric | Q2 2025 | Q2 2024 | YoY Change | Q1 2025 | H1 2025 | H1 2024 | YoY Change | | :---------------- | :------ | :------ | :--------- | :------ | :------ | :------ | :--------- | | Interest Expense | | | -12% | | | | -7% | | Net Interest Margin | 3.45% | 3.02% | +0.43 ppt | 3.25% | 3.34% | 3.02% | +0.32 ppt | Key Balance Sheet Items (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($ millions) | Dec 31, 2024 ($ millions) | Change | | :------------------------------------ | :------------------------- | :------------------------- | :----- | | Loans, net of allowance for credit losses | $649.09 | $636.55 | +$12.54M | | Commercial Real Estate Loans | $355.67 | $335.53 | +$20.14M | | Total Assets | $1,040.00 | $979.24 | +$60.76M | | Total Deposits | $910.53 | $882.40 | +$28.13M | | Book Value Per Share | $15.77 | $14.28 | +$1.49 | - The Company's board of directors approved a quarterly dividend of **$0.10 per common share** on July 12, 2025[18](index=18&type=chunk) [Second Quarter, First Half of 2025 Operational Review](index=3&type=section&id=Second%20Quarter%2C%20First%20Half%20of%202025%20Operational%20Review) Operational review shows strong net interest income growth from loan yields and controlled interest expense, stable noninterest income, and increased noninterest expenses from strategic investments Net Interest Income and Yield on Earning Assets (Q2 & H1 2025 vs. 2024) | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | YoY Change | H1 2025 ($ millions) | H1 2024 ($ millions) | YoY Change | | :-------------------------- | :------------------- | :------------------- | :--------- | :------------------- | :------------------- | :--------- | | Net Interest Income | $8.25 | $7.09 | +16% | $15.97 | $14.04 | +14% | | Yield on Total Earning Assets | 4.86% | 4.68% | +0.18 ppt | 4.79% | 4.62% | +0.17 ppt | - Total interest expense declined in both Q2 and H1 2025 primarily due to a relatively stable interest rate environment and the Bank's management of rates paid on interest-bearing deposits[15](index=15&type=chunk) Net Interest Margin and Interest Spread (Q2 & H1 2025 vs. 2024) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :---------------- | :------ | :------ | :--------- | :------ | :------ | :--------- | | Net Interest Margin | 3.45% | 3.02% | +0.43 ppt | 3.34% | 3.04% | +0.30 ppt | | Interest Spread | 3.15% | 2.69% | +0.46 ppt | 3.15% | 2.68% | +0.47 ppt | - Noninterest income was predominantly generated by fees from debit card activity, commercial treasury services, gains on sale of loans held for sale by the mortgage division, and wealth management fees from PWW[17](index=17&type=chunk) - Noninterest expense increases reflected consulting fees for a major vendor agreement amendment, the addition of revenue-generating employees, new banking facilities, and quarterly accruals of year-end employee compensation[18](index=18&type=chunk)[19](index=19&type=chunk) [Balance Sheet and Asset Quality](index=4&type=section&id=Balance%20Sheet%20and%20Asset%20Quality) This section reviews the company's balance sheet growth, asset composition, and maintained high asset quality metrics [Balance Sheet Overview](index=4&type=section&id=Balance%20Sheet%20Overview) Total assets surpassed $1.04 billion, driven by growth in securities and commercial real estate loans, while construction loans saw mixed trends Key Balance Sheet Growth (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($ millions) | Dec 31, 2024 ($ millions) | Change | | :------------------------------------ | :------------------------- | :------------------------- | :----- | | Total Assets | $1,040.00 | $979.24 | +$60.76M | | Loans, net of allowance for credit losses | $649.09 | $636.55 | +$12.54M | | Commercial Real Estate Loans (total) | $355.68 | $335.53 | +$20.15M | | Commercial Construction/Land Loans | $10.68 | $23.88 | -$13.20M | | Residential Construction/Land Loans | $29.04 | $26.15 | +$2.89M | | Commercial and Industrial Loans | $70.51 | $66.42 | +$4.09M | - The Bank closely monitors concentrations in commercial real estate segments and has no commercial real estate loans secured by large office buildings in large metropolitan city centers[21](index=21&type=chunk) - Residential mortgage loans intended to be kept on the balance sheet totaled **$108.88 million**, with the Bank continuing to focus on selling the majority of originated mortgage loans to the secondary market[23](index=23&type=chunk) [Asset Quality](index=4&type=section&id=Asset%20Quality) The company maintained strong asset quality with low nonperforming loans and no OREO, reflecting diligent credit management Asset Quality Metrics (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 | Dec 31, 2024 | Change (ppt) | | :------------------------------------ | :------------ | :------------ | :----------- | | Nonperforming loans to total loans | 0.28% | 0.25% | +0.03 | | Allowance for credit losses for loans to total loans | 0.96% | 1.09% | (0.13) | - Total nonperforming loans were **$1.85 million** at June 30, 2025, and there was no other real estate owned (OREO), meaning total nonperforming assets were equal to total nonperforming loans[25](index=25&type=chunk) [Deposits and Shareholder Value](index=4&type=section&id=Deposits%20and%20Shareholder%20Value) Total deposits and core deposits increased, contributing to positive trends in stockholders' equity, retained earnings, and book value per share Deposit Growth (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($ millions) | Dec 31, 2024 ($ millions) | Change | | :------------- | :------------------------- | :------------------------- | :----- | | Total Deposits | $910.53 | $882.40 | +$28.13M | | Core Deposits | $681.36 | $651.90 | +$29.46M | - The Bank had no brokered deposits at June 30, 2025, and December 31, 2024, reflecting its focus on growing and retaining lower-cost core deposits[26](index=26&type=chunk) Shareholder Value Metrics (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($ millions) | Dec 31, 2024 ($ millions) | Change | | :------------------- | :------------------------- | :------------------------- | :----- | | Stockholders' Equity | $71.67 | $64.87 | +$6.80M | | Retained Earnings | $45.44 | $42.80 | +$2.64M | | Book Value Per Share | $15.77 | $14.28 | +$1.49 | [Available-for-Sale Securities Portfolio](index=5&type=section&id=Available-for-Sale%20Securities%20Portfolio) The portfolio, primarily government-guaranteed, experiences fair value adjustments due to interest rate fluctuations, with unrealized losses excluded from regulatory capital - The available-for-sale securities portfolio is composed primarily of securities with explicit or implicit government guarantees, including U.S. Treasuries and U.S. agency obligations, and other highly rated debt instruments[29](index=29&type=chunk) - Interest rate fluctuations result in adjustments to the fair value (mark-to-market) of the available-for-sale securities portfolio, reflected in accumulated other comprehensive loss, but these losses are excluded when calculating the Bank's regulatory capital ratios[29](index=29&type=chunk) - The Company does not expect to realize the unrealized losses, as it has the intent and ability to hold the securities until their recovery, which may be at maturity[29](index=29&type=chunk) [Corporate Information](index=5&type=section&id=Corporate%20Information) This section provides details about the company's structure, services, and a cautionary statement regarding forward-looking information [About the Company](index=5&type=section&id=About%20the%20Company) Bank of the James Financial Group is the parent company of Bank of the James, offering comprehensive banking, investment, and insurance services across Virginia - Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) is the parent company of Bank of the James, headquartered in Lynchburg, Virginia[30](index=30&type=chunk) - The Bank offers full investment and insurance services through its BOTJ Investment Services division and BOTJ Insurance, Inc. subsidiary, and mortgage loan origination through Bank of the James Mortgage[30](index=30&type=chunk) - The Company provides investment advisory services through its wholly-owned subsidiary, Pettyjohn, Wood & White, Inc., an SEC-registered investment advisor[30](index=30&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This standard disclaimer warns that forward-looking statements are subject to risks and uncertainties, and actual results may differ materially - The press release contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995, identified by words like "believe," "estimate," "expect," "intend," and "anticipate"[31](index=31&type=chunk) - Readers are cautioned that forward-looking statements are not guarantees of future performance and involve risks and uncertainties, with actual results potentially differing materially[31](index=31&type=chunk) - Factors that could cause actual results to differ include competition, general economic conditions, potential changes in interest rates, changes in real estate values, and geopolitical conditions[31](index=31&type=chunk) [Consolidated Financial Statements and Supplementary Data](index=6&type=section&id=Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents detailed consolidated financial statements, including balance sheets, income statements, and selected financial data [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet shows total assets exceeding $1 billion, driven by growth in securities and loans, with increased deposits and stockholders' equity Consolidated Balance Sheet Highlights (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | | Total assets | $1,004,242 | $979,244 | | Loans, net of allowance for credit losses | $649,089 | $636,552 | | Securities available-for-sale, at fair value | $196,585 | $187,916 | | Total deposits | $910,527 | $882,404 | | Capital notes, net | $- | $10,048 | | Total stockholders' equity | $71,665 | $64,865 | [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2025 net income increased significantly due to higher interest income and lower interest expense, while H1 2025 net income decreased year-over-year Consolidated Statements of Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :----------------------------------- | :-------------------- | :-------------------- | :--------- | | Total interest income | $11,638 | $10,935 | 6.43% | | Total interest expense | $3,388 | $3,844 | -11.86% | | Net interest income | $8,250 | $7,091 | 16.34% | | Recovery of credit losses | $(528) | $(123) | 329.27% | | Net income | $2,704 | $2,148 | 25.88% | | Basic net income per common share | $0.60 | $0.47 | 27.66% | Consolidated Statements of Income (H1 2025 vs. H1 2024) | Metric | H1 2025 ($ thousands) | H1 2024 ($ thousands) | Change (%) | | :----------------------------------- | :-------------------- | :-------------------- | :--------- | | Total interest income | $22,872 | $21,444 | 6.66% | | Total interest expense | $6,903 | $7,403 | -6.75% | | Net interest income | $15,969 | $14,041 | 13.73% | | Recovery of credit losses | $(391) | $(676) | -42.16% | | Net income | $3,546 | $4,335 | -18.20% | | Basic net income per common share | $0.79 | $0.95 | -16.84% | [Selected Financial Data](index=10&type=section&id=Selected%20Financial%20Data) This section provides a comparative overview of key financial metrics for the three and six months ended June 30, 2025, and 2024, highlighting significant year-over-year changes Selected Income Statement Changes (Q2 2025 vs. Q2 2024) | Metric | Change (%) | | :------------------------------------------ | :--------- | | Interest income | 6.43% | | Interest expense | -11.86% | | Net interest income | 16.34% | | Provision for (recovery of) credit losses | 329.27% | | Noninterest income | -2.77% | | Noninterest expense | 8.19% | | Net income | 25.88% | Selected Income Statement Changes (H1 2025 vs. H1 2024) | Metric | Change (%) | | :------------------------------------------ | :--------- | | Interest income | 6.66% | | Interest expense | -6.75% | | Net interest income | 13.73% | | Provision for (recovery of) credit losses | -42.16% | | Noninterest income | -1.87% | | Noninterest expense | 14.58% | | Net income | -18.20% | Selected Balance Sheet Changes (June 30, 2025 vs. Dec 31, 2024) | Metric | Change (%) | | :------------------- | :--------- | | Loans, net | 1.97% | | Loans held for sale | 16.87% | | Total securities | 4.52% | | Total deposits | 3.19% | | Stockholders' equity | 10.48% | | Total assets | 2.55% | | Book value per share | $1.49 (absolute change) | [Daily Averages and Financial Ratios](index=11&type=section&id=Daily%20Averages%20and%20Financial%20Ratios) This section presents daily average balances for key assets and liabilities, along with important financial ratios, providing insights into profitability and operational efficiency Key Financial Ratios (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (ppt) | | :-------------------------- | :------ | :------ | :----------- | | Return on average assets | 1.06% | 0.87% | 0.19 | | Return on average equity | 15.89% | 14.35% | 1.54 | | Net interest margin | 3.45% | 3.02% | 0.43 | | Efficiency ratio | 76.71% | 77.46% | (0.75) | | Average equity to average assets | 6.69% | 6.05% | 0.64 | Key Financial Ratios (H1 2025 vs. H1 2024) | Metric | H1 2025 | H1 2024 | Change (ppt) | | :-------------------------- | :------ | :------ | :----------- | | Return on average assets | 0.70% | 0.89% | (0.19) | | Return on average equity | 10.81% | 14.60% | (3.79) | | Net interest margin | 3.34% | 3.02% | 0.32 | | Efficiency ratio | 82.66% | 78.12% | 4.54 | | Average equity to average assets | 6.52% | 6.11% | 0.41 | Daily Average Balances (H1 2025 vs. H1 2024) | Metric | H1 2025 ($ thousands) | H1 2024 ($ thousands) | Change (%) | | :---------------------- | :-------------------- | :-------------------- | :--------- | | Loans | $650,292 | $611,375 | 6.37% | | Total deposits | $921,241 | $891,152 | 3.38% | | Stockholders' equity | $66,526 | $60,045 | 10.79% | | Interest earning assets | $964,062 | $934,396 | 3.17% | | Total assets | $1,020,182 | $982,441 | 3.84% | [Allowance for Credit Losses and Nonperforming Assets](index=11&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Nonperforming%20Assets) This section details the allowance for credit losses and nonperforming assets, showing changes in balances and asset quality ratios reflecting ongoing credit management Allowance for Credit Losses (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($ thousands) | Dec 31, 2024 ($ thousands) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Beginning balance | $7,022 | $7,044 | | Provision for (recovery of) credit losses* | $(555) | $(391) | | Charge-offs | $(160) | $(223) | | Recoveries | $1 | $13 | | Ending balance | $6,308 | $6,308 | *does not include provision for or recovery of unfunded loan commitment liability Nonperforming Assets (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 ($ thousands) | Dec 31, 2024 ($ thousands) | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------- | | Total nonperforming loans | $1,846 | $1,640 | 12.56% | | Total nonperforming assets | $1,846 | $1,640 | 12.56% | Asset Quality Ratios (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 | Dec 31, 2024 | Change (ppt) | | :------------------------------------------ | :------------ | :------------ | :----------- | | Nonperforming loans to total loans | 0.28% | 0.25% | 0.03 | | Allowance for credit losses for loans to total loans | 0.96% | 1.09% | (0.13) | | Allowance for credit losses for loans to nonperforming loans | 341.71% | 429.51% | (87.80) |