BOTJ Bank of the James Financial Group Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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Current Report

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 25, 2024

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BANK OF THE JAMES FINANCIAL GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 - Results of Operations and Financial Condition

On Friday, October 25, 2024, Bank of the James Financial Group, Inc. (the "Company") issued a press release announcing financial results for the three and nine months ended September 30, 2024 (the "Press Release"). A copy of the Press Release is attached hereto as Exhibit 99.1.

Item 9.01 - Financial Statements and Exhibits

(a) Financial statements of businesses acquired – not applicable

(b) Pro forma financial information – not applicable

(c) Shell company transactions – not applicable

(d) Exhibits

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99.1





Bank of the James Announces Third Quarter,  First Nine Months of 2024

Financial Results and Declaration of Dividend

Year-Over-Year Loan Growth, Deposit Expansion, High Asset Quality



LYNCHBURG, VA, October 25, 2024 -- 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 and nine month periods ended September 30, 2024.  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 September 30, 2024 was $1.99 million or $0.44 per basic and diluted share compared with $2.08 million or $0.46 per basic and diluted share for the three months ended September 30, 2023. Net income for the nine months ended September 30, 2024 was $6.33 million or $1.39 per share compared with $6.60 million or $1.44 per share for the nine months ended September 30, 2023.

Robert R. Chapman III, CEO of the Bank, commented: “The Company delivered stable, strong earnings that contributed to building value, growing stockholders’ equity, and a  significant increase in book value per share. Our performance once again generated positive returns for shareholders, which have for many years included paying a quarterly cash dividend.

“Our performance reflected strong interest expense management, sound investment practices, and a  balanced and diversified stream of interest and noninterest income. Disciplined credit management has supported superior asset quality, maximizing the value of the revenue generated.  Our team of skilled, dedicated professionals continue to do an outstanding job meeting customers’ financial needs, which has led to consistently positive and steady financial results.

“Even through a period of unusually high interest rates that has moderated lending activity and provided challenges, we have worked with customers to find solutions. A healthy loan portfolio has been a key growth driver as total assets surpassed the $1 billion mark in the third quarter. Assets have increased more than $30 million during 2024,  primarily reflecting loan portfolio growth, net of fees, of more than $25 million since the beginning of the year.

“Initiatives to earn new deposits and a focus on retaining customers’ deposits have led to growth of total deposits since the beginning of the year. At September 30, 2024, interest bearing demand accounts have grown by $2.7 million, time deposits have increased, and noninterest-bearing demand deposits have held steady. We continue to focus on building this important source of funding for loans and providing liquidity.



“Strategic locations in Buchanan, Virginia, opened at the end of the second quarter, and Nellysford, Virginia, opened at the beginning of the third quarter, are off to strong starts and further expand the Bank’s footprint and deposit-gathering capabilities.



“The third quarter reflected healthy year-over-year growth of noninterest income. Expanding fee income from wealth management, treasury services for our business customers, and gains on sales of originated mortgage loans to the secondary market have fueled noninterest income.



“During the third quarter of 2024, we saw encouraging signs that stabilizing interest rates, slowing inflation, and continued economic health in our served markets is supporting positive trends. We are continuing to see increased commercial lending demand, positive trends in residential mortgage volume and origination fees, and continued deposit growth.

“Looking ahead, we feel that the interest rate environment and continuing economic stabilization and predictability will be clear positives. We anticipate a gradual lessening of the intense pressure on margins and slowing of interest expense increases that have characterized the past two years.



“Our longstanding commitment to building strong, lasting banking relationships with customers has provided many opportunities to demonstrate the Bank of the James’ value. As a result, use of our commercial cash management services and digital banking capabilities continues to grow, retail customers take advantage of a wide range of digital and in-person banking options, and residential mortgage customers and retail banking benefit customers from our efficient service, digital capabilities and integrated financial offerings.

“We feel the Company is well-positioned to continue on our path of providing superior value to our shareholders, customers, and the communities we serve.”

Third Quarter and First Nine Months of 2024 Highlights



Third Quarter,  First Nine Months of 2024 Operational Review

Net interest income after provision for credit losses for the third quarter of 2024 was $7.42 million compared to net interest income after recovery of credit losses of $7.53 million a year earlier. In the first nine months of 2024, net interest income after recovery of credit losses was $22.13 million compared with $22.63 million a year earlier. The Company recorded a small provision for credit losses in the third quarter of 2024,  primarily due to higher loan levels. The credit loss recovery in the first nine months of 2024 was $584,000 compared with  $278,000 in the first nine months of 2023.

Total interest income increased to $11.56 million in the third quarter of 2024 compared with $10.14 million a year earlier.  The first nine months of 2024 total interest income was  $33.01 million, up from $28.82 million in the first nine months of 2023. The year-over-year increases primarily reflected upward adjustments to variable rate commercial loans and new loans reflecting the prevailing rate environment.

Investment portfolio management has enabled the Company to capitalize on attractive Fed funds rates. In the third quarter of 2024, the yield on all interest-earning assets was 4.86% compared with 4.43% a year earlier. The yield on interest-bearing loans, including fees, was 5.65% in the third quarter of 2024 compared with 5.13% a year earlier. The interest rates on certain existing commercial loans continue to reprice upward in accordance with their terms.

Total interest expense in the third quarter and first nine months of 2024 increased significantly compared with the prior periods of 2023, primarily reflecting higher deposit rates commensurate with the prevailing interest rate environment, and growth of interest-bearing time deposits. Rates on interest-bearing deposits and total interest-bearing liabilities have placed continuing pressure on margins. The net interest margin in the third quarter of 2024 was 3.16% and the interest spread was 2.81% compared with 3.21% and 2.94%, respectively, in the third quarter of 2023.

J. Todd Scruggs, Executive Vice President and CFO of the Bank commented: “Even before the Federal Reserve announced a 50 basis point reduction in rates, we anticipated that a stabilizing rate environment would gradually lessen the pressure on margins we have experienced. While not directly reflecting the Fed rate cut announced in mid-September, our third quarter net interest margin of 3.16% improved from the 3.02% margin in the second quarter of 2024. We anticipate continuing gradual margin and spread improvement in future quarters.”

Noninterest income in the third quarter of 2024 rose 19% to $3.82 million compared with $3.20 million in the third quarter of 2023.  In the first nine months of 2024, noninterest income was up 17% to $11.32 million from $9.70 million a year earlier.

Noninterest income reflected income contributions from debit card activity, a gain on an investment in an SBIC fund, commercial treasury services, and the mortgage division. In the third quarter of 2024, income from wealth management fees increased 19% compared with a year earlier and gains on sale of loans held for sale rose 34% from a year earlier.

Noninterest expense in the third quarter of 2024 was $8.78 million, up 8% compared with $8.14 million in the first nine months of 2023. Noninterest expense in the first nine months of 2024 was $25.60 million, up 6% from $24.09 million a year earlier. Noninterest expense in the first nine months of 2024 reflected additional personnel costs related to staffing new locations, and the decision to begin accruing for anticipated year-end performance-based compensation ahead of the fourth quarter.

Balance Sheet:  Strong Cash Position, Asset Quality,  Stability

Total assets grew to $1.01 billion at September 30, 2024 compared with $969.37 million at December 31, 2023, with the increase primarily reflecting loan growth.

Loans, net of allowance for credit losses, were $627.11 million at September 30, 2024 compared with $601.92 million at December 31, 2023, primarily reflecting growth of commercial real estate loans and strong, stable residential mortgage, consumer, and construction lending.

Commercial real estate loans (owner-occupied and non-owner occupied and excluding construction loans) were $333.77 million compared with $306.86 million at December 31, 2023,  reflecting a decreasing rate of loan payoffs and new loans. Of this amount, commercial non-owner occupied was approximately $189.98 million and commercial owner occupied was $143.79 million.    The Bank closely monitors  concentrations in these segments.  We have no commercial real estate loans secured by large office buildings in large metropolitan city centers.

Commercial construction/land loans and residential construction/land loans were $50.00 million at September 30, 2024 compared with $53.64 million at December 31, 2023.  The Company continued experiencing positive activity and health in commercial and residential construction projects.

Commercial and industrial loans were $60.34 million at September 30, 2024, reflecting a continuing trend of stability in this loan segment. Commercial and industrial loans were $64.92 million at June 30, 2024 and $65.32 million at December 31, 2023.

Residential mortgage loans were $114.99 million at September 30, 2024 compared with $112.73 million at June 30, 2024 and $106.99 million at December 31, 2023.  Growth of 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) were $75.09 million at September 30, 2024, essentially unchanged from totals at December 31, 2023.

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 September 30, 2024 was 0.20%  compared with 0.06% at December 31, 2023.  The allowance for credit losses on loans to total loans was 1.12% at September 30, 2024 compared with 1.22%  on December 31, 2023. Total nonperforming loans were $1.30 million at September 30, 2024. As a result of having no OREO, total nonperforming assets were the same as total nonperforming loans.

Total deposits were $907.61 million at September 30, 2024, compared with $878.46 million at December 31, 2023. Noninterest bearing demand deposits were $132.22 million compared with $134.28 million at December 31, 2023. Initiatives to attract deposit business and new locations contributed to the approximately $2.8 million growth in NOW, money market, and savings totals since December 31, 2023.

Time deposits were $234.42 million at September 30, 2024 compared with $205.96 million at December 31, 2023.  At both September 30, 2024 and December 31, 2023, the Bank had no brokered deposits.

Key measures of shareholder value continued trending positively. Book value per share rose to $15.15 compared with $13.21 at December 31, 2023, reflecting strong financial performance and a smaller unrealized loss in the Company’s available-for-sale investment portfolio. Total stockholders’ equity rose to $68.83 million from $60.04 million at December 31, 2023. Retained earnings at September 30, 2024 were $41.64 million compared with $36.68 million at December 31, 2023.

Some balance sheet measures are impacted by interest rate fluctuations and fair market valuation measurements in the Company’s  available-for-sale securities portfolio and 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 Subsidiaries

Consolidated Balance Sheets

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Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operation

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Bank of the James Financial Group, Inc. and Subsidiaries

Dollar amounts in thousands, except per share data

unaudited











  * does not include provision for or recovery of unfunded loan commitment liability