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Bank of the James Announces First Quarter of 2025 Financial Results

1. BOTJ reported Q1 2025 net income of $842,000, down from $2.19 million. 2. Non-recurring expenses affected earnings; long-term savings expected from new contracts. 3. Total assets grew 3% to $1.01 billion; deposits reached $911.68 million. 4. Net interest margin improved to 3.25%, with increasing interest income. 5. Dividends of $0.10 approved for upcoming payment in June 2025.

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Why Neutral?

The drop in net income reflects short-term pressures but indicates potential long-term savings. Historical data suggests initial drops may stabilize over time with cost-saving measures.

How important is it?

The earnings report indicates a cautious outlook with long-term growth potential, impacting investor sentiment moderately.

Why Long Term?

While current earnings are weak, anticipated contract savings could boost future profitability, aligning with patterns seen during similar transitions in past quarters.

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US TreasuryTruist
LYNCHBURG, Va., April 30, 2025 (GLOBE NEWSWIRE) -- Bank of the James Financial Group, Inc. (the “Company”) (NASDAQ:BOTJ), the parent company of Bank of the James (the “Bank”), a full-service commercial and retail bank, and Pettyjohn, Wood & White, Inc. (“PWW”), an SEC-registered investment advisor, today announced unaudited results of operations for the three month period ended March 31, 2025. The Bank serves Region 2000 (the greater Lynchburg MSA) and the Blacksburg, Buchanan, Charlottesville, Harrisonburg, Lexington, Nellysford, Roanoke, and Wytheville, Virginia markets. Net income for the three months ended March 31, 2025 was $842,000 or $0.19 per basic and diluted share compared with $2.19 million or $0.48 per basic and diluted share for the three months ended March 31, 2024. Robert R. Chapman III, CEO of the Bank, commented: “Our focus during the past several years on managing interest expense in a significantly higher rate environment was reflected in the first quarter’s lower year-over-year interest expense. Appropriate adjustments to loan rates and optimizing the performance of the Bank’s investments continued to generate steady interest income growth. As a result, net interest margin and interest spread continued to trend positively. Strong, quality earnings over the years have supported our ability to build and maintain a strong cash position and exceptional liquidity. “The Company’s core operations for first quarter of 2025 produced solid earnings. However, our earnings were negatively impacted by a non-recurring expense paid to a consultant that we used to successfully negotiate a contract with our core service provider. We anticipate that this contract will result in significant long-term cost savings. “We anticipate that the holding company’s cash position will allow it to pay off approximately $10 million of capital notes as they mature in June, without the need to raise new capital. Eliminating this debt-related interest expense will reduce our interest expense by approximately $327,000 annually and will help reduce our overall interest-bearing liabilities rate. The Company and Bank will continue to maintain sound capital positions. “Operationally, the first quarter of 2025 was highlighted by steady growth of commercial real estate loans, with stable income contributions from a balanced portfolio of commercial, residential mortgage, construction, and consumer loans. Fee income contributions from commercial treasury services, credit and debit card processing, and PWW’s wealth management activities have continued to generate complementary noninterest income. “We continue to emphasize relationship banking with commercial and retail clients, providing the broad range of capabilities and expertise that position Bank of the James as the go-to source for financial services. We offer stability and security in a period of significant economic uncertainty. “The Company is building value for shareholders, as evidenced by growth in stockholders’ equity, retained earnings, and a higher book value per share in the first quarter. We remain focused on efficient operations, maintaining superior asset quality, and sustainable growth.” President Mike Syrek commented on expansion and growth opportunities, noting, “We are very excited to announce the addition of two accomplished commercial relationship managers, Brandon Caldwell and Kevin Flint. Both bring considerable experience in the commercial lending space and will further strengthen and grow our regional markets. Caldwell comes to Bank of the James from the USDA, having served there after an extended stint as the senior lending officer at Highlands Community Bank. Caldwell has experience at both small and large-sized institutions, and along with his experience with the USDA, we believe his experience will help us expand our reach in multiple markets. Flint comes to Bank of the James with a dual background in credit and investments. Flint spent most of his career with Truist and its predecessors, managing high-profile commercial clients within the markets we serve. Kevin also is a Certified Financial Planner and has spent the last few years working as a CFP. Flint’s dual roles will help further the growth in our Harrisonburg market as well as beyond. “These additions help strengthen an already high-performing commercial team and illustrate our focus on growth and obtaining additional market share in the regions that we serve. We are delighted to have both men as part of the Bank of the James family.” First Quarter of 2025 Highlights Net income and earnings per share (EPS) in the first quarter of 2025 were impacted by higher noninterest expense, primarily reflecting a one-time approximately $1 million expense related to the negotiation of a contract with our banking core provider. Over the 65-month term of this contract, the Company anticipates realizing up to $5 million in savings as compared to our previous contract.Total interest income rose 6.90% to $11.23 million in the first quarter of 2025 compared with $10.51 million a year earlier. The growth primarily reflected higher yields on loans, commercial real estate (CRE) growth, and the addition of higher-rate residential mortgages. The average yield earned on loans, including fees, increased to 5.56% compared with 5.28% a year earlier.Net interest income after provision for credit losses increased to $7.58 million in the first quarter of 2025 compared with net interest income after recovery of credit losses of $7.50 million a year earlier for the full year of 2024. Interest expense in the first quarter declined from the previous year’s first quarter due to a decrease in the average rate paid on interest bearing liabilities.Net interest margin in the first quarter of 2025 improved to 3.25%, reflecting a steady upward quarterly trend from 3.02% in the first quarter of 2024. Interest spread in the first quarter rose to 2.95% from 2.73% in the prior year’s first quarter.Total noninterest income of $3.28 million in the first quarter of 2025 was stable compared with a year earlier, primarily reflecting continuing strong contributions from commercial treasury services, residential mortgage origination fee income, and wealth management fee income from PWW, which generated $0.09 earnings per share in the first quarter.Loans, net of the allowance for credit losses, increased to $642.39 million at March 31, 2025 from $636.55 million at December 31, 2024 and $601.12 million a year earlier.Commercial real estate loans (owner occupied and non-owner occupied) led lending activity, increasing to $359.76 million from $335.53 million at December 31, 2024 and from $305.52 million a year earlier.Measures of asset quality remained strong, highlighted by a ratio of nonperforming loans to total loans of 0.28% at March 31, 2025, low levels of nonperforming loans, and zero other real estate owned (OREO).Total assets grew 3% to $1.01 billion at March 31, 2025 from $979.24 million at December 31, 2024. Total assets increased by $26.84 million from March 31, 2024.Total deposits were $911.68 million at March 31, 2025, up from $882.40 million at December 31, 2024, reflecting growth in core deposits (noninterest bearing demand deposits, NOW, money market and savings).Shareholder value measures included growth in stockholders’ equity to $68.35 million at March 31, 2025 from $64.87 million at December 31, 2024, higher retained earnings, and a book value per share of $15.04, up from $14.28 at December 31, 2024.On April 15, 2025, the Company’s board of directors approved a quarterly dividend of $0.10 per common share to stockholders of record as of June 6, 2025, to be paid on June 20, 2025. First Quarter of 2025 Operational Review The Company retained a consultant to assist it in negotiating an amendment to and extension of the contract with its provider of its core banking platform— the platform we use for processing transactions, maintaining customer accounts, and supporting other critical banking functions. As previously noted, first quarter 2025 net income and earnings per share reflected the expense associated with this engagement. The Company anticipates that the new contract with our core provider, which was effective April 1, 2025, will generate significant savings over the 65-month term of the contract. Net interest income after provision for credit losses for the first quarter of 2025 was $7.58 million compared to net interest income after recovery of credit losses of $7.50 million a year earlier. The provision for credit losses in the first quarter of 2025 was $137,000. Total interest income was $11.23 million in the first quarter of 2025 compared with $10.51 million a year earlier. The year-over-year increases primarily reflected upward rate adjustments to variable rate commercial loans and new loans reflecting the prevailing rate environment. Investment portfolio management and appropriate rate increases on loans continued to contribute to year-over-year growth in yields on total earning assets, which were 4.73% in the first quarter of 2025 compared with 4.60% a year earlier. Total interest expense in the first quarter of 2025 was $3.52 million compared with $3.56 million a year earlier, primarily reflecting a stabilizing interest rate environment and the Bank’s management of rates paid on interest-bearing deposits, including time deposits. A stabilizing interest rate environment and the Company’s upward adjustments to floating rate commercial loans and rates on originated and retained residential mortgages contributed to gradual margin pressure relief during the past several quarters. In the first quarter of 2025, the net interest margin was 3.25% compared with 3.02% a year earlier, while interest spread was 2.95% for the quarter compared with 2.73% a year earlier. Noninterest income in the first quarter of 2025 was $3.28 million compared with $3.31 million in the first quarter of 2024. The predominant amount of noninterest income in the first quarter of 2025 was generated by fees from debit card activity, commercial treasury services, gains on sale of loans held for sale, and wealth management fees generated by PWW. This slight decrease was due to a decrease in revenue from our mortgage division. Noninterest expense in the first quarter of 2025 was $9.83 million compared with $8.09 million a year earlier. The year-over-year increase primarily reflected the previously mentioned contract negotiation fee and higher salaries and employee benefits. Balance Sheet: Strong Cash Position, High Asset Quality Total assets were $1.01 billion at March 31, 2025 compared with $979.24 million at December 31, 2024. The increase was due primarily to increases in cash and cash equivalents, securities available for sale, and loans. Loans, net of allowance for credit losses, were $642.39 million at March 31, 2025 compared with $636.55 at December 31, 2024, reflecting growth of commercial real estate loans. Commercial real estate loans (owner-occupied and non-owner occupied, excluding construction loans) totaled $359.76 million at March 31, 2025 compared with $335.53 million at December 31, 2024, reflecting new loans and moderate loan payoffs. Of this amount in the first quarter of 2025, commercial real estate (non-owner occupied) was $205.13 million and commercial real estate (owner occupied) was $154.63 million. The Bank closely monitors concentrations in these segments and has no commercial real estate loans secured by large office buildings in large metropolitan city centers. Commercial construction/land loans were $11.54 million, declining from prior levels as projects concluded. Residential construction/land loans at March 31, 2025 were $26.36 million compared with $26.15 million at December 31, 2024. Commercial and industrial loans were $59.98 million at March 31, 2025 compared to $66.42 million at December 31, 2024. Residential mortgage loans that the Company intends to keep on the balance sheet totaled $111.65 million at March 31, 2025, essentially unchanged from December 31, 2024, and from a year earlier. Growth of these retained mortgages has been minimal, as the Bank has continued to focus on selling the majority of originated mortgage loans to the secondary market. Consumer loans (open-end and closed-end) totaled $80.12 million, compared with $78.31 million at December 31, 2024. Ongoing high asset quality continues to have a positive impact on the Company’s financial performance. The ratio of nonperforming loans to total loans at March 31, 2025 was 0.28% compared with 0.25% at December 31, 2024. The allowance for credit losses on loans to total loans was 1.08% at March 31, 2025 compared with 1.09% at December 31, 2024. Total nonperforming loans were $1.80 million at March 31, 2025 compared with $1.64 million at December 31, 2024. As a result of having no OREO, total nonperforming assets were the same as total nonperforming loans. Total deposits were $911.68 million at March 31, 2025 compared with $882.40 million at December 31, 2024. Core deposits (noninterest bearing demand deposits, NOW, money market and savings) were $698.92 million compared with $651.90 million at December 31, 2024. Time deposits declined during the period. At March 31, 2025, the Bank had no brokered deposits. Key measures of shareholder value were positive. Stockholders’ equity was $68.35 million at March 31, 2025, up from $64.87 million at December 31, 2024. Retained earnings increased to $43.19 million at March 31, 2025 from $42.80 million at December 31, 2024. Book value per share rose to $15.04 at March 31, 2025 from $14.28 at December 31, 2024, and continued to reflect quarterly fluctuations in required fair market valuations of the Company’s available-for-sale investment portfolio. Interest rate fluctuations result in adjustments to the fair value in the Company’s available-for-sale securities portfolio (known as “mark-to-market”), which are reflected in accumulated other comprehensive loss. These mark-to-market losses are excluded when calculating the Bank’s regulatory capital ratios. 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. 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. Management continues to diligently monitor the creditworthiness of the issuers of the debt instruments within its securities portfolio. About the Company Bank of the James, a wholly-owned subsidiary of Bank of the James Financial Group, Inc. opened for business in July 1999 and is headquartered in Lynchburg, Virginia. The Bank currently services customers in Virginia from offices located in Altavista, Amherst, Appomattox, Bedford, Blacksburg, Buchanan, Charlottesville, Forest, Harrisonburg, Lexington, Lynchburg, Madison Heights, Nellysford, Roanoke, Rustburg, and Wytheville. The Bank offers full investment and insurance services through its BOTJ Investment Services division and BOTJ Insurance, Inc. subsidiary. The Bank provides mortgage loan origination through Bank of the James Mortgage, a division of Bank of the James. The Company provides investment advisory services through its wholly-owned subsidiary, Pettyjohn, Wood & White, Inc., an SEC-registered investment advisor. Bank of the James Financial Group, Inc. common stock is listed under the symbol “BOTJ” on the NASDAQ Stock Market, LLC. Additional information on the Company is available at www.bankofthejames.bank. Cautionary Statement Regarding Forward-Looking Statements This press release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan” and similar expressions and variations thereof identify certain of such forward-looking statements which speak only as of the dates on which they were made. Bank of the James Financial Group, Inc. (the “Company”) undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Such factors include, but are not limited to, competition, general economic conditions, potential changes in interest rates, changes in the value of real estate securing loans made by the Bank, as well as geopolitical conditions. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company’s filings with the Securities and Exchange Commission. CONTACT: J. Todd Scruggs, Executive Vice President and Chief Financial Officer (434) 846-2000. FINANCIAL RESULTS FOLLOW Bank of the James Financial Group, Inc. and SubsidiariesConsolidated Balance Sheets(dollar amounts in thousands, except per share amounts)  (unaudited)  Assets3/31/2025 12/31/2024    Cash and due from banks$25,760  $23,287 Federal funds sold 69,206   50,022 Total cash and cash equivalents 94,966   73,309     Securities held-to-maturity (fair value of $3,237 in 2025 and $3,170 in 2024) 3,602   3,606 Securities available-for-sale, at fair value 192,780   187,916 Restricted stock, at cost 1,821   1,821 Loans, net of allowance for credit losses of $7,022 in 2025 and $7,044 in 2024 642,388   636,552 Loans held for sale 4,739   3,616 Premises and equipment, net 19,257   18,959 Interest receivable 2,970   3,065 Cash value - bank owned life insurance 23,094   22,907 Customer relationship Intangible 6,585   6,725 Goodwill 2,054   2,054 Deferred tax asset 8,113   8,936 Other assets 9,357   9,778 Total assets$1,011,726  $979,244         Liabilities and Stockholders' Equity       Deposits   Noninterest bearing demand$138,619  $129,692 NOW, money market and savings 560,300   522,208 Time deposits 212,764   230,504 Total deposits 911,683   882,404     Capital notes, net 10,049   10,048 Other borrowings 9,146   9,300 Deferred tax liability 294   - Income taxes payable -   86 Interest payable 688   722 Other liabilities 11,518   11,819 Total liabilities$943,378  $914,379  Stockholders' equity   Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,543,338 as of March 31, 2025 and December 31, 2024 9,723   9,723 Additional paid-in-capital 35,253   35,253 Accumulated other comprehensive (loss) (19,819)  (22,915)Retained earnings 43,191   42,804 Total stockholders' equity$68,348  $64,865     Total liabilities and stockholders' equity$1,011,726  $979,244          Bank of the James Financial Group, Inc. and SubsidiariesConsolidated Statements of Operations(dollar amounts in thousands, except per share amounts) (unaudited)  For the Three Months Ended March 31,Interest Income2025 2024Loans$8,906  $8,024 Securities   US Government and agency obligations 454   338 Mortgage backed securities 387   809 Municipals - taxable 311   286 Municipals - tax exempt 18   18 Dividends 13   12 Corporates 135   135 Interest bearing deposits 123   133 Federal Funds sold 887   754 Total interest income 11,234   10,509     Interest Expense   Deposits   NOW, money market savings 1,248   1,275 Time deposits 2,079   2,090 Finance leases 17   20 Other borrowings 89   92 Capital notes 82   82 Total interest expense 3,515   3,559     Net interest income 7,719   6,950     Provision for (recovery of) credit losses 137   (553)    Net interest income after provision for (recovery of) credit losses 7,582   7,503     Noninterest income   Gain on sales of loans held for sale 837   927 Service charges, fees and commissions 981   953 Wealth management fees 1,255   1,163 Life insurance income 188   159 Other 22   105     Total noninterest income 3,283   3,307  Noninterest expenses   Salaries and employee benefits 4,777   4,445 Occupancy 570   493 Equipment 670   607 Supplies 142   145 Professional and other outside expense 1,715   801 Data processing 820   751 Marketing 198   30 Credit expense 186   188 FDIC insurance expense 142   109 Amortization of intangibles 140   140 Other 466   379 Total noninterest expenses 9,826   8,088     Income before income taxes 1,039   2,722     Income tax expense 197   535     Net Income$842  $2,187     Weighted average shares outstanding - basic and diluted 4,543,338   4,543,338     Earnings per common share - basic and diluted$0.19  $0.48          Bank of the James Financial Group, Inc. and SubsidiariesDollar amounts in thousands, except per share dataUnaudited Selected Data:ThreemonthsendingMar 31,2025ThreemonthsendingMar 31,2024Change   Interest income$11,234 $10,509  6.90%   Interest expense 3,515  3,559  -1.24%   Net interest income 7,719  6,950  11.06%   Provision for (recovery of) credit losses 137  (553) -124.77%   Noninterest income 3,283  3,307  -0.73%   Noninterest expense 9,826  8,088  21.49%   Income taxes 197  535  -63.18%   Net income 842  2,187  -61.50%   Weighted average shares outstanding - basic 4,543,338  4,543,338  -    Weighted average shares outstanding - diluted 4,543,338  4,543,338  -    Basic net income per share$0.19 $0.48 $(0.29)   Fully diluted net income per share$0.19 $0.48 $(0.29)          Balance Sheet atperiod end:Mar 31,2025Dec 31,2024ChangeMar 31,2024Dec 31,2023ChangeLoans, net$642,388 $636,552  0.92%$601,115 $601,921  -0.13%Loans held for sale 4,739  3,616  31.06% 4,640  1,258  268.84%Total securities 196,382  191,522  2.54% 218,440  220,132  -0.77%Total deposits 911,683  882,404  3.32% 893,494  878,459  1.71%Stockholders' equity 68,348  64,865  5.37% 60,437  60,039  0.66%Total assets 1,011,726  979,244  3.32% 984,891  969,371  1.60%Shares outstanding 4,543,338  4,543,338  -  4,543,338  4,543,338  - Book value per share$15.04 $14.28 $0.76 $13.30 $13.21 $0.09  Daily averages:ThreemonthsendingMar 31,2025ThreemonthsendingMar 31,2024Change   Loans$646,788 $608,172 6.35%   Loans held for sale 2,391  2,481 -3.63%   Total securities (book value) 219,550  248,748 -11.74%   Total deposits 922,207  884,555 4.26%   Stockholders' equity 64,778  59,891 8.16%   Interest earning assets 963,688  926,354 4.03%   Interest bearing liabilities 800,249  765,728 4.51%   Total assets 1,021,766  978,867 4.38%          Financial Ratios:ThreemonthsendingMar 31,2025ThreemonthsendingMar 31,2024Change   Return on average assets 0.33% 0.90%(0.57)   Return on average equity 5.27% 14.69%(9.42)   Net interest margin 3.25% 3.02%0.23    Efficiency ratio 89.31% 78.85%10.46    Average equity to average assets 6.34% 6.12%0.22           Allowance for credit losses:ThreemonthsendingMar 31,2025ThreemonthsendingMar 31,2024Change   Beginning balance$7,044 $7,412 -4.96%   Retained earnings adjustment related to impact of adoption of ASU 2016-13 -  - N/A   Provision for (recovery of) credit losses* 29  (501)-105.79%   Charge-offs (63) (65)-3.08%   Recoveries 12  74 -83.78%   Ending balance 7,022  6,920 1.47%          * does not include provision for or recovery of unfunded loan commitment liability              Nonperforming assets:Mar 31,2025Dec 31,2024ChangeMar 31,2024Dec 31,2023ChangeTotal nonperforming loans$1,799 $1,640 9.70%$558 $391 42.71%Other real estate owned -  - N/A -  - N/ATotal nonperforming assets 1,799  1,640 9.70% 558  391 42.71%       Asset quality ratios:Mar 31,2025Dec 31,2024ChangeMar 31,2024Dec 31,2023ChangeNonperforming loans to total loans 0.28% 0.25%0.02  0.09% 0.06%0.03 Allowance for credit losses for loans to total loans 1.08% 1.09%(0.01) 1.14% 1.22%(0.08)Allowance for credit losses for loans to nonperforming loans 390.33% 429.51%(39.18) 1240.14% 1895.65%(655.51)

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