Bank of the James Financial (BOTJ) - 2025 Q3 - Quarterly Report

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]