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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

Form 10-Q

______________________

(Mark one)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

BANK OF THE JAMES FINANCIAL GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

______________________

Virginia

001-35402

20-0500300

(State or other jurisdiction of

incorporation or organization)

(Commission file number)

(I.R.S. Employer

Identification No.)

828 Main Street, Lynchburg, VA

24504

(Address of principal executive offices)

(Zip Code)

(434) 846-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

☐

  

Accelerated filer

 

☐

Non-accelerated filer

 

☒

  

Smaller reporting company

 

☒

Emerging growth company

 

☐

  

 

______________________

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

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, 2.14 per share par value

BOTJ

The NASDAQ Stock Market LLC

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.  ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 4,628,657 shares of Common Stock, par value $2.14 per share, were outstanding at Novmber 10, 2022.
‎

PART I – FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollar amounts in thousands, except per share amounts) (2022 unaudited)

September 30,

December 31,

Assets

2022

2021

Cash and due from banks

$                 38,622

$                 29,337

Federal funds sold

42,398

153,816

Total cash and cash equivalents

81,020

183,153

Securities held-to-maturity, at amortized cost (fair value of $3,192 in 2022 and $4,006 in 2021)

3,643

3,655

Securities available-for-sale, at fair value

191,131

161,267

Restricted stock, at cost

1,387

1,324

Loans, net of allowance for loan losses of $6,394 in 2022 and $6,915 in 2021

614,117

576,469

Loans held for sale

3,239

1,628

Premises and equipment, net

18,250

18,351

Interest receivable

2,382

2,064

Cash value - bank owned life insurance

19,123

18,785

Other real estate owned

566

761

Customer relationship intangibles, net

7,986

8,406

Goodwill

3,819

3,001

Other assets

15,907

8,770

Total assets

$               962,570

$               987,634

Liabilities and Stockholders’ Equity

Deposits

Noninterest bearing demand

$               155,984

$               162,286

NOW, money market and savings

598,964

582,000

Time deposits

128,121

142,770

Total deposits

883,069

887,056

Capital notes, net

10,037

10,031

Other borrowings

10,596

10,985

Interest payable

37

46

Other liabilities

10,492

10,087

Total liabilities

$               914,231

$               918,205

Commitments and Contingencies

 

 

Stockholders’ equity

Preferred stock; authorized 1,000,000 shares; none issued and outstanding

$                           -

$                           -

Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,628,657 and 4,740,657 as of September 30, 2022 and December 31, 2021

9,905

10,145

Additional paid-in-capital

36,068

37,230

Retained earnings

29,450

23,440

Accumulated other comprehensive (loss)

(27,084)

(1,386)

Total stockholders’ equity

$                 48,339

$                 69,429

Total liabilities and stockholders’ equity

$               962,570

$               987,634


‎

1

See accompanying notes to these consolidated financial statements

Table of Contents

 

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Income

(dollar amounts in thousands, except per share amounts) (unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

Interest Income

2022

2021

2022

2021

Loans

$                   6,830

$                   6,605

$                 18,909

$                 20,089

Securities

US Government and agency obligations

331

230

911

640

Mortgage backed securities

437

138

1,196

299

Municipals - taxable

257

234

812

572

Municipals - tax exempt

32

9

55

27

Dividends

5

4

36

39

Corporates

144

55

395

155

Interest bearing deposits

101

7

135

26

Federal Funds sold

262

33

463

67

Total interest income

8,399

7,315

22,912

21,914

Interest Expense

Deposits

NOW, money market savings

133

146

374

419

Time deposits

143

239

467

890

Finance leases

24

26

73

80

Other borrowings

117

-

339

-

Capital notes

82

82

245

245

Total interest expense

499

493

1,498

1,634

Net interest income

7,900

6,822

21,414

20,280

Recovery of loan losses

(300)

-

(900)

-

Net interest income after recovery of loan losses

8,200

6,822

22,314

20,280

Noninterest income

Gain on sales of loans held for sale

1,472

2,091

4,675

6,175

Service charges, fees and commissions

1,313

612

2,563

1,803

Wealth management fees

959

-

2,935

-

Life insurance income

113

117

338

315

Other income (loss)

(3)

2

8

12

Total noninterest income

3,854

2,822

10,519

8,305

Noninterest expenses

Salaries and employee benefits

4,529

4,093

13,051

11,901

Occupancy

445

437

1,348

1,270

Equipment

647

626

1,870

1,883

Supplies

116

120

380

354

Professional, data processing, and other outside expense

1,619

1,029

3,544

2,978

Marketing

222

209

661

720

Credit expense

244

309

765

869

Other real estate expenses

195

1

207

74

FDIC insurance expense

121

137

382

425

Amortization of intangibles

140

-

420

-

Other

601

337

1,491

950

Total noninterest expenses

8,879

7,298

24,119

21,424

Income before income taxes

3,175

2,346

8,714

7,161

Income tax expense

601

465

1,709

1,431

Net Income

$                   2,574

$                   1,881

$                   7,005

$                   5,730

Weighted average shares outstanding - basic and diluted

4,683,581

4,740,657

4,721,423

4,750,235

Earnings per common share - basic and diluted

$                     0.55

$                     0.40

$                     1.48

$                     1.21

2

See accompanying notes to these consolidated financial statements

Table of Contents

 

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

(dollar amounts in thousands) (unaudited)

For the Three Months

For the Nine Months

Ended September 30,

Ended September 30,

2022

2021

2022

2021

Net Income

$          2,574 

$          1,881 

$          7,005 

$          5,730 

Other comprehensive (loss):

Unrealized (loss) on securities available-for-sale

(7,368)

(914)

(32,530)

(2,757)

Tax effect

1,548 

192 

6,832 

579 

Other comprehensive (loss) income, net of tax

(5,820)

(722)

(25,698)

(2,178)

Comprehensive (loss) income

$        (3,246)

$          1,159 

$      (18,693)

$          3,552 


‎

3

See accompanying notes to these consolidated financial statements

Table of Contents

 

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(dollar amounts in thousands) (unaudited)

For the Nine Months Ended September 30,

2022

2021

Cash flows from operating activities

Net Income

$                    7,005 

$                    5,730 

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

1,022 

1,423 

Stock based compensation expense

-

80 

Net amortization and accretion of premiums and discounts on securities

338 

284 

Amortization of debt issuance costs

10 

4 

(Gain) on sales of loans held for sale

(4,675)

(6,175)

Proceeds from sales of loans held for sale

176,736 

254,369 

Origination of loans held for sale

(173,732)

(247,554)

Recovery of loan losses

(900)

-

Loss on sale and valuation adjustments of other real estate owned

195 

66 

Amortization of intangibles

420 

-

Bank owned life insurance income

(338)

(315)

(Increase) decrease in interest receivable

(318)

244 

(Increase) decrease in other assets

(838)

388 

(Decrease) in interest payable

(9)

(36)

Increase in other liabilities

447 

424 

Net cash provided by operating activities

$                    5,363 

$                    8,932 

Cash flows from investing activities

Purchases of securities available-for-sale

$                 (71,581)

$                 (71,319)

Proceeds from maturities, calls and paydowns of securities available-for-sale

8,861 

6,177 

Purchases of bank owned life insurance

-

(2,000)

(Purchase) redemption of Federal Home Loan Bank stock

(63)

227 

Proceeds from sale of other real estate owned

-

344 

Origination of loans, net of principal collected

(36,748)

18,251 

Purchases of premises and equipment

(921)

(1,423)

Net cash (used in) investing activities

$               (100,452)

$                 (49,743)

Cash flows from financing activities

Net (decrease) increase in deposits

$                   (3,987)

$                  88,862 

Principal payments on finance lease obligations

(267)