Bank of the James Financial (BOTJ) - 2019 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Consolidated Financial Statements This section presents the unaudited consolidated financial statements for the quarter ended March 31, 2019, including balance sheets, income statements, comprehensive income, cash flows, and changes in stockholders' equity, with notes detailing accounting policies and portfolio analysis Consolidated Balance Sheet Summary (in thousands) | Metric | March 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Total cash and cash equivalents | $48,740 | $50,325 | | Loans, net | $535,959 | $530,016 | | Total assets | $684,388 | $674,897 | | Total deposits | $616,744 | $612,043 | | Total liabilities | $627,211 | $619,754 | | Total stockholders' equity | $57,177 | $55,143 | Consolidated Statement of Income Summary (in thousands, except per share amounts) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net Interest Income | $6,130 | $5,331 | | Provision for loan losses | $210 | $22 | | Noninterest income | $1,219 | $1,186 | | Noninterest expenses | $5,599 | $5,097 | | Net Income | $1,234 | $1,123 | | Diluted EPS | $0.28 | $0.26 | - Net cash provided by operating activities was $923,000 for Q1 2019, compared to $1,007,000 in Q1 2018. Net cash used in investing activities was $6.9 million, primarily due to loan originations. Net cash from financing activities was $4.4 million, driven by a net increase in deposits[16] Notes to Consolidated Financial Statements The notes detail critical accounting policies, including allowance for loan losses and OREO valuation, fair value measurements, the adoption of ASC 842, securities portfolio, business segment performance, and loan portfolio analysis - Management identifies the evaluation of the allowance for loan losses and the valuation of other real estate owned (OREO) as critical accounting policies, requiring significant subjective judgments and estimates about uncertain matters[21] - On January 1, 2019, the Company adopted the new lease standard (ASU 2016-02), resulting in the recognition of right-of-use assets and lease liabilities of $3.0 million at the date of adoption[54] - The company operates two reportable business segments: Community Banking and Mortgage. For Q1 2019, the Community Banking segment generated $1.14 million in net income, while the Mortgage segment contributed $92,000[67][69] Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Commercial | $99,327 | $92,877 | | Commercial real estate | $289,964 | $289,171 | | Consumer | $85,289 | $86,191 | | Residential | $66,052 | $66,358 | | Total loans | $540,632 | $534,597 | - The allowance for loan losses increased to $4.67 million as of March 31, 2019, from $4.58 million at year-end 2018, representing 0.86% of total loans at quarter-end[92] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2019 financial condition and operating results, highlighting a net income increase driven by higher net interest income from loan growth and interest rates, partially offset by increased non-interest expenses due to market expansion - Net income for Q1 2019 was $1.234 million ($0.28 per share), an increase from $1.123 million ($0.26 per share) in Q1 2018, primarily due to higher interest income, partially offset by increased non-interest expenses related to market expansion[162][163] - Net interest income increased by 14.99% year-over-year to $6.13 million, with the net interest margin expanding to 3.92% from 3.65% in Q1 2018, benefiting from loan growth and rising short-term interest rates[168][170] - Total nonperforming assets increased to $5.88 million from $5.37 million at year-end 2018, with the provision for loan losses significantly rising to $210,000 for the quarter from $22,000 in the prior-year period[146][181] Bank-Level Capital Ratios (March 31, 2019) | Capital Ratio | Actual | Minimum for Well-Capitalized | | :--- | :--- | :--- | | Tier 1 leverage ratio | 9.31% | 5.00% | | Common Equity Tier 1 capital ratio | 10.97% | 6.50% | | Tier 1 risk-based capital ratio | 10.97% | 8.00% | | Total risk-based capital ratio | 11.78% | 10.00% | Quantitative and Qualitative Disclosures About Market Risk This section is reported as not applicable, consistent with disclosures for smaller reporting companies - The company states that this item is not applicable[206] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2019, with no significant changes to internal controls over financial reporting during the quarter - Based on their evaluation, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[207] - No significant changes were made to the company's internal controls over financial reporting during the quarter ended March 31, 2019[208] PART II – OTHER INFORMATION Legal Proceedings The company is not involved in any material pending legal proceedings beyond routine litigation incidental to its business operations - The Company is not involved in any pending legal proceedings at this time, other than routine litigation incidental to its business[210] Risk Factors 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, 2018 - There have been no material changes from risk factors as previously disclosed in the Company's Form 10-K for the year ended December 31, 2018[211] Unregistered Sales of Equity Securities and Other Items This section reports that Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, Mine Safety Disclosures, and Other Information are all not applicable for the period - The company reports that Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information) are not applicable[212][214] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley Act sections 302 and 906, and XBRL interactive data files - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act (Exhibits 31.1, 31.2, 32.1) and XBRL data files (Exhibit 101)[213][214][219]