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Bank of the James Financial Group, Inc. (BOTJ)

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Previous Close10.05
Open10.25
Bid10.15 x 900
Ask10.25 x 1400
Day's Range10.11 - 10.25
52 Week Range8.00 - 16.15
Volume2,177
Avg. Volume2,390
Market Cap44.479M
Beta (5Y Monthly)N/A
PE Ratio (TTM)9.31
EPS (TTM)1.10
Earnings DateApr. 24, 2020
Forward Dividend & Yield0.28 (2.74%)
Ex-Dividend DateSep. 03, 2020
1y Target EstN/A
  • Bank of the James Announces Third Quarter, Nine Months of 2020 Financial Results and Declaration of Dividend
    GlobeNewswire

    Bank of the James Announces Third Quarter, Nine Months of 2020 Financial Results and Declaration of Dividend

    Commercial Banking Stability, Active Mortgage Origination, Strong Asset QualityLYNCHBURG, Va., Oct. 23, 2020 (GLOBE NEWSWIRE) -- Bank of the James Financial Group, Inc. (the “Company”) (NASDAQ:BOTJ), the parent company of Bank of the James, a full-service commercial and retail bank serving Region 2000 (the greater Lynchburg MSA), and the Blacksburg, Charlottesville, Harrisonburg, Lexington, and Roanoke, Virginia markets, today announced unaudited results for the three months and nine months ended September 30, 2020. Net income for the three months ended September 30, 2020 was $1.45 million or $0.34 per diluted share, compared with $1.47 million or $0.34 per diluted share for the three months ended September 30, 2019. Net income for the nine months ended September 30, 2020 was $3.27 million or $0.75 per diluted share, compared with $4.09 million or $0.93 per diluted share for the nine months ended September 30, 2019.Highlights * Net income in the third quarter and nine months of 2020 reflected strong noninterest income. Residential mortgage origination, which generates noninterest income from gains on loan sales to the secondary market, contributed significantly to increased total noninterest income, which was $3.06 million in the third quarter of 2020 compared with $2.16 million a year earlier. In the nine months of 2020, total noninterest income was $8.04 million, up from $5.04 million a year earlier, reflecting increased gains on sales of available-for-sale securities, residential mortgage origination income, fee income from corporate treasury services and other fees. * Net interest income was $6.20 million in the third quarter of 2020, up from with $6.17 million a year earlier, primarily reflecting reduced interest expense which was offset by a modest decline in interest income from commercial lending. * Loans receivable, net of the allowance for loan losses, were $616.58 million at September 30, 2020, up 8% from $573.27 million at December 31, 2019. The increase primarily reflects the addition of government-guaranteed Payroll Protection Plan (PPP) loans, relative stability in commercial real estate lending, and continued strength in commercial construction lending. * On a consecutive quarter comparison, nonperforming loans declined sharply to $2.54 million at September 30, 2020 from $5.19 million at June 30, 2020, primarily reflecting recovery of a previously reported nonaccrual loan and property sale. * Asset quality remained strong at 0.41% of nonperforming loans to total loans. Allowance for loan losses to total loans increased to 1.12% at September 30, 2020 (approximately 1.25% excluding government-guaranteed PPP loans) from 0.84% at December 31, 2019, primarily reflecting reserves related to the impact of COVID-19. * Total deposits were $763.9 million at September 30, 2020, up from $746.0 million at June 30, 2020 and $649.5 million at December 31, 2019. The increase reflects increased core deposits (noninterest-bearing demand, NOW, savings and money market accounts) as customers maintained higher balances, attributable in part to PPP loan funds not yet to be deployed, increased deposit relationships, and growth generated by offices opened over the last several years. * Total stockholders’ equity was $65.8 million at September 30, 2020 compared with $61.4 million at December 31, 2019. Book value per share rose to $15.16 per share at September 30, 2020. * On October 20, 2020 the Company’s board of directors approved a $0.07 per share dividend payable to stockholders of record on November 27, 2020, to be paid on December 11, 2020. * In the third quarter of 2020, the Company completed a private placement of unregistered debt securities totaling $10.05 million at a 3.25% interest rate. Of that amount, $5 million was used to retire an earlier private placement carrying a higher rate. * Consistent with the previously filed Form 10-Q Quarterly Reports, the Company anticipates expanded disclosure to be filed with the Securities and Exchange Commission related to business sectors and credit quality covering the three and nine month periods ended September 30, 2020.Robert R. Chapman III, President and CEO, commented: “The markets we serve throughout the region have proven resilient despite the challenges and uncertainties presented by the pandemic. Bank of the James has focused on ensuring the health and safety of our customers, our employees and the community while continuing to provide the highest levels of customer service and a personal approach to retail and business banking that has been our hallmark for more than 20 years.“We have seen the positive impact of making PPP loans to small and medium-sized businesses throughout the region, providing businesses with financial security and the ability to continue operating and supporting their employees. We recognize challenges are still ahead, however, based on our Company’s financial performance and the general economic stability of our served markets, we are cautiously optimistic. The majority of the businesses we serve have been adaptable and shown much grit and determination. We have worked with them to manage their businesses and financial challenges.“Margins, returns and interest income continue to be impacted by expected business slowdowns and the issuance of low-interest PPP loans. Importantly, the Bank has not experienced any unusual pressure on deposit balances or liquidity positions as a result of COVID-19. We believe the Company’s fundamentals are strong. We have prepared for this period by increasing capital resources, expanding reserves and provisioning for potential loan losses, building cash reserves, and more.“The Company continued to build value, with increased shareholder equity and increased book value that provided the confidence to declare another quarterly cash dividend to shareholders. The Company’s strong financial performance, prudent provisioning for loan losses, and continued focus on problem-solving and seeking out opportunities support our confidence in the future.”Third Quarter, Nine Months of 2020 Operational ReviewTotal interest income was $7.3 million in the third quarter of 2020 compared with $7.6 million a year earlier and $7.1 million in the second quarter of 2020, primarily reflecting moderate declines in commercial lending and continuing pressure on interest rates. Interest expense was $1.1 million in the third quarter of 2020 compared with $1.4 million a year earlier. The Company trimmed deposit rates slightly in the third quarter of 2020 to reflect the exceptionally low interest rate environment. A larger deposit base and increased core deposits (noninterest bearing demand and interest-bearing demand accounts) contributed to the rate paid on liabilities in the third quarter of 2020 of 0.65% compared with 0.99% a year earlier.Net interest income after provision for loan losses was $5.5 million for the three months ended September 30, 2020 compared with $6.1 million the previous year. The loan loss provision for the third quarter 2020 was $700,000 compared with $108,000 a year earlier. For the nine months of 2020, net interest income after provision for loan losses was $16.0 million compared with $18.0 million a year earlier.The Company’s provision for loan losses for the nine months of 2020 was $2.3 million compared with $434,000 a year earlier. The increase for the nine months of 2020 primarily reflects increased qualitative allocations related to the COVID-19 pandemic and its effect on economic conditions, loan concentrations in sectors adversely affected by the pandemic, and loans that have been granted payment deferrals or have been granted interest only payment status in the short term.The average rate earned on loans was 4.37% in the third quarter of 2020, compared with 4.33% in the second quarter of 2020 and 5.0% a year earlier. The net interest margin was 3.10% in the third quarter of 2020 compared with 3.13% in the second quarter of 2020 and 3.75% in the third quarter of 2019.J. Todd Scruggs, Executive Vice President and CFO, commented: “As anticipated, continuing pressure on interest rates, and the addition of low-interest PPP loans had a negative impact on rates earned, and carrying additional contingent liquidity in the form of Fed funds, contributed to net interest margin compression. Since the rate cuts in the spring, we have been encouraged by the relative stability of rates and margins.“We did not receive any PPP forgiveness payments in the third quarter of 2020, so while some PPP fees were accreted into interest income, the fees did not offset a decline in loan yields. Since the end of the third quarter, a small number of PPP loans have been repaid and we anticipate additional PPP forgiveness payments occurring in the fourth quarter of 2020, which should have a mitigating effect on the margin. Our focus continues to be on monitoring credit quality and maintaining a fair rate structure.”For the nine months of 2020, total interest income was $21.9 million compared with $22.2 million in the nine months of 2019. Total interest expense was $3.7 million in the nine months of 2020 compared with $3.8 million a year earlier. For the nine months of 2020, net interest income after the provision for loan losses was $15.9 million compared with $18.0 million a year earlier, primarily reflecting slower commercial loan activity and an increased loan loss provision. The net interest margin was 3.27% for the nine months of 2020 compared with 3.83% a year earlier.Noninterest income, including gains from the sale of residential mortgages to the secondary market, revenue contributions from BOTJ Investment Services, and income from the Bank’s line of treasury management services for commercial customers was $3.1 million in the third quarter of 2020, up from $2.2 million in the third quarter of 2019. The Company recorded $2.5 million in gains from the sale of loans held for sale in the third quarter of 2020, up from $1.3 million in the third quarter of 2019.Noninterest expense for the three months ended September 30, 2020 increased compared with the previous year, primarily reflecting increased personnel expenses that included performance-based compensation for residential mortgage production which was offset by lower personnel costs related to an early retirement program. For the nine months of 2020, noninterest expense included approximately $750,000 in one-time costs related to the early retirement program. The Company also authorized additional employee compensation of approximately $245,000 in the second quarter of 2020 related to PPP loan originations.The recognition of the origination fees and costs related to the PPP loans will be accelerated and recognized upon forgiveness or repayment of the PPP loans.In the third quarter of 2020, Return on Average Assets (ROAA) was 0.68% compared with 0.83% a year earlier, primarily reflecting asset growth and a higher loan loss provision. Return on Average Equity (ROAE) was 9.26% compared with 9.84% a year earlier. The Company’s efficiency ratio improved to 72.77% in the third quarter of 2020 from 76.54% in the prior year, reflecting the impact of the early retirement program and a companywide focus on operating expense management.Balance Sheet Review: Asset Quality, Prudent Reserves, LiquidityTotal assets were $849.1 million at September 30, 2020 compared with $725.4 million at December 31, 2019. Asset growth primarily reflected increased loans, net of allowance for loan losses, increased loans held for sale related to the Company’s mortgage originations, higher cash reserves and an increase in the securities available-for-sale portfolio. The Company has maintained higher levels of cash and liquid assets consistent with economic conditions and the potential impact of COVID-19 on customers.Loans, net of allowance for loan losses of $7.0 million, were $616.60 million at September 30, 2020 compared with loans, net of allowance for loan losses of $4.8 million, of $573.27 million at December 31, 2019. The addition of $68 million in PPP loans contributed to loan growth. Commercial lending has been relatively stable in 2020 and the Company has approved and closed new loans, but not at a pace to offset payoffs and normal amortization. The Company has increased the allowance for loan and lease losses (ALLL) throughout 2020 to reflect the Company’s ongoing consideration of the pandemic in the development of the allowance estimate.“Businesses in our served markets have generally demonstrated resilience as they navigate the economic challenges presented by COVID-19,” Chapman explained. “Although commercial loan growth has understandably slowed as businesses take appropriately cautious approaches, there has been stability and credit quality among customers.“We are diligently monitoring credit quality, measuring exposure to business sectors with particular exposure to the impact of COVID-19, and working closely with customers to help manage working and growth capital requirements. We have continued to make loans and find opportunities to build relationships through lending, deposit and electronic treasury services that provide convenience and efficiency while supporting safe remote operations.”Residential mortgage origination continued strong activity, generating noninterest income from origination fees and the sale of mortgages to the secondary market. Retained residential mortgages were $48.5 million at September 30, 2020 compared with $55.8 million a year earlier.Total commercial loans were $174.8 million at September 30, 2020 compared with $102.2 million at September 30, 2019, with the addition of approximately $68 million in PPP loans accounting for a significant portion of the increase. Total owner occupied and non-owner occupied commercial real estate loans declined slightly year-over-year. Commercial construction loans were $21.6 million at September 30, 2020, up 29% from a year earlier. The Company noted that commercial construction has been active throughout the year.Asset quality has remained strong, with a ratio of nonperforming loans to total loans of 0.41% at September 30, 2020. The allowance for loan losses to total loans was increased to 1.12% (approximately 1.25%, excluding guaranteed PPP loans) at September 30, 2020 from 0.98% at June 30, 2020. Total nonperforming loans in the third quarter of 2020 declined compared with the second quarter of 2020, and the Company’s allowance for loan losses to nonperforming loans increased to 274% at September 30, 2020, reflecting current economic uncertainties.Total deposits at September 30, 2020 were $763.93, compared with $649.46 at December 31, 2019, and up from $746.00 million at June 30, 2020. Increased demand deposits accounted for the growth, in part due to the retention of PPP funds not yet deployed by businesses. Core deposits (noninterest bearing demand, NOW, money market and savings) have increased steadily and were 78% of total deposits at September 30, 2020.The Company continued to build measures of shareholder value, with total stockholders’ equity of $65.8 million at September 30, 2020, up from $61.4 million at December 31, 2019 and retained earnings of $23.3 million compared with $20.9 million in the same periods respectively. Book value per share rose to $15.16 from $14.10 at December 31, 2019.Chapman concluded: “We are moving forward with continued vigilance with regard to maintaining credit quality, liquidity and capital strength. During these uncertain times, the Company continued to build value for shareholders and pay a cash dividend. We continue to focus on protecting the health and safety of employees and customers while effectively conducting business. Lastly, we continue to be grateful for the service to our region and country by the healthcare professionals, first-responders, and essential workers.”About the CompanyBank 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, Charlottesville, Forest, Harrisonburg, Lexington, Lynchburg, Madison Heights, Roanoke, and Rustburg. 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. 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 StatementsThis 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, the effect of the COVID-19 pandemic, and changes in the value of real estate securing loans made by Bank of the James (the "Bank"), a subsidiary of the Company. 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 and previously filed by the Bank (as predecessor of the Company) with the Federal Reserve Board.CONTACT: J. Todd Scruggs, Executive Vice President and Chief Financial Officer (434) 846-2000. tscruggs@bankofthejames.com FINANCIAL STATEMENTS FOLLOW Bank of the James Financial Group, Inc. and Subsidiaries Dollar amounts in thousands, except per share data unaudited                Selected Data:Three months ending Sep 30, 2020Three months ending Sep 30, 2019ChangeYear to date Sep 30, 2020Year to date Sep 30, 2019Change Interest income$     7,338$     7,596 -3.40%$    21,907$    22,220 -1.41% Interest expense 1,135 1,431 -20.68% 3,650 3,773 -3.26% Net interest income 6,203 6,165 0.62% 18,257 18,447 -1.03% Provision for loan losses 700 108 548.15% 2,348 434 441.01% Noninterest income 3,064 2,161 41.79% 8,039 5,039 59.54% Noninterest expense 6,744 6,373 5.82% 19,876 17,947 10.75% Income taxes 369 371 -0.54% 802 1,020 -21.37% Net income 1,454 1,474 -1.36% 3,270 4,085 -19.95% Weighted average shares outstanding - basic 4,339,436 4,378,436 (39,000) 4,342,294 4,378,436 (36,142) Weighted average shares outstanding - diluted 4,339,436 4,385,331 (45,895) 4,342,294 4,383,128 (40,834) Basic net income per share$         0.34$        0.34$           - $        0.75$        0.93$    (0.18) Fully diluted net income per share$         0.34$        0.34$           - $        0.75$       0.93$    (0.18) Balance Sheet at period end:Sep 30, 2020Dec 31, 2019ChangeSep 30, 2019Dec 31, 2018Change Loans, net$   616,581$573,274 7.55%$551,005$530,016 3.96% Loans held for sale 10,232 4,221 142.41% 5,630 1,670 237.13% Total securities 79,303 63,343 25.20% 58,090 56,427 2.95% Total deposits 763,933 649,459 17.63% 633,033 612,043 3.43% Stockholders' equity 65,782 61,445 7.06% 61,039 55,143 10.69% Total assets 849,129 725,394 17.06% 708,114 674,897 4.92% Shares outstanding 4,339,436 4,357,436 (18,000) 4,378,436 4,378,436 -  Book value per share$       15.16$    14.10$      1.06 $     13.94$      12.59$      1.35  Daily averages:Three months ending Sep 30, 2020Three months ending Sep 30, 2019ChangeYear to date Sep 30, 2020Year to date Sep 30, 2019Change Loans, net$   625,847 $558,483 12.06%$606,937 $547,833 10.79% Loans held for sale 8,881  4,435 100.25% 6,072  3,471 74.94% Total securities 63,743  55,528 14.79% 59,358  57,779 2.73% Total deposits 768,618  628,110 22.37% 720,009  621,572 15.84% Stockholders' equity 62,309  59,415 4.87% 61,778  58,350 5.87% Interest earning assets 793,709  651,644 21.80% 744,246  644,363 15.50% Interest bearing liabilities 638,166  546,657 16.74% 608,968  536,261 13.56% Total assets 849,820  701,007 21.23% 798,106  690,015 15.67% Financial Ratios: Three months ending Sep 30, 2020Three months ending Sep 30, 2019ChangeYear to date Sep 30, 2020Year to date Sep 30, 2019Change Return on average assets 0.68% 0.83%(0.15) 0.55% 0.79%(0.24) Return on average equity 9.26% 9.84%(0.58) 7.05% 9.36%(2.31) Net interest margin 3.10% 3.75%(0.65) 3.27% 3.83%(0.56) Efficiency ratio 72.77% 76.54%(3.77) 75.59% 76.42%(0.83) Average equity to average assets 7.33% 8.48%(1.15) 7.74% 8.46%(0.72) Allowance for loan losses:Three months ending Sep 30, 2020Three months ending Sep 30, 2019ChangeYear to date Sep 30, 2020Year to date Sep 30, 2019Change Beginning balance$       6,193 $      4,724 31.10%$      4,829 $      4,581 5.41% Provision for losses 700  108 548.15% 2,348  434 441.01% Charge-offs (57) (100)-43.00% (396) (319)24.14% Recoveries 130  41 217.07% 185  77 140.26% Ending balance 6,966  4,773 45.95% 6,966  4,773 45.95% Nonperforming assets:Sep 30, 2020Dec 31, 2019ChangeSep 30, 2019Dec 31, 2018Change Total nonperforming loans$       2,538$     1,30195.08%$     1,771$     2,939-39.74% Other real estate owned 1,405 2,339-39.93% 2,242 2,431-7.77% Total nonperforming assets 3,943 3,6408.32% 4,013 5,370-25.27% Troubled debt restructurings - (performing portion) 397 410-3.17% 413 424-2.59% Asset quality ratios:Sep 30, 2020Dec 31, 2019ChangeSep 30, 2019Dec 31, 2018Change Nonperforming loans to total loans0.41%0.23%0.18 0.32%0.55%(0.23) Allowance for loan losses to total loans1.12%0.84%0.28 0.86%0.86%0.00  Allowance for loan losses to nonperforming loans274.47%371.18%(96.71)269.51%155.87%113.64  Bank of the James Financial Group, Inc. and Subsidiaries Consolidated Balance Sheets (dollar amounts in thousands, except per share amounts) (unaudited)   Assets9/30/2020 12/31/2019 Cash and due from banks$          30,324 $         30,794  Federal funds sold 64,720  8,317  Total cash and cash equivalents 95,044  39,111       Securities held-to-maturity (fair value of $4,283 in 2020 and $3,861 in 2019) 3,675  3,688  Securities available-for-sale, at fair value 75,628  59,655  Restricted stock, at cost 1,551  1,506  Loans, net of allowance for loan losses of $6,966 in 2020 and $4,829 in 2019 616,581  573,274  Loans held for sale 10,232  4,221  Premises and equipment, net 16,698  16,297  Software, net 376  401  Interest receivable 2,558  1,866  Cash value - bank owned life insurance 16,489  13,686  Other real estate owned 1,405  2,339  Income taxes receivable 396  -  Deferred tax asset 576  1,177  Other assets 7,920  8,173  Total assets$       849,129 $    725,394            Liabilities and Stockholders' Equity         Deposits    Noninterest bearing demand 147,039  93,936  NOW, money market and savings 450,009  362,821  Time 166,885  192,702  Total deposits 763,933  649,459       Capital notes 10,026  5,000  Income taxes payable -  124  Interest payable 140  173  Other liabilities 9,248  9,193  Total liabilities$       783,347 $      663,949       Stockholders' equity    Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,339,436 and 4,357,436 as of September 30, 2020 and December 31, 2019 9,286  9,325  Additional paid-in-capital 30,989  31,225  Accumulated other comprehensive income (loss) 2,249  (5) Retained earnings 23,258  20,900  Total stockholders' equity$          65,782 $          61,445       Total liabilities and stockholders' equity$        849,129 $       725,394  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 For the Nine Months  Ended September 30, Ended September 30, Interest Income 2020  2019  2020  2019 Loans$          6,958 $        7,080 $       20,695 $        20,550 Securities        US Government and agency obligations 168  176  506  545 Mortgage backed securities 50  54  164  171 Municipals 94  77  249  239 Dividends 15  9  48  60 Other (Corporates) 25  23  71  70 Interest bearing deposits 15  88  85  253 Federal Funds sold 13  89  89  332 Total interest income 7,338  7,596  21,907  22,220                   Interest Expense        Deposits        NOW, money market savings 177  414  669  1,082 Time Deposits 798  876  2,559  2,294 Finance leases 29  41  87  41 Brokered time deposits 46  50  143  206 Capital notes 85  50  192  150 Total interest expense 1,135  1,431  3,650  3,773          Net interest income 6,203  6,165  18,257  18,447          Provision for loan losses 700  108  2,348  434          Net interest income after provision for loan losses 5,503  6,057  15,909  18,013                   Noninterest income        Gains on sale of loans held for sale 2,459  1,337  5,586  3,103 Service charges, fees and commissions 498  448  1,500  1,348 Life insurance income 101  81  289  248 Other 6  4  20  49 Gain (loss) on sales of available-for-sale securities -  291  644  291          Total noninterest income 3,064  2,161  8,039  5,039          Noninterest expenses        Salaries and employee benefits 3,713  3,356  11,040  9,437 Occupancy 419  414  1,237  1,252 Equipment 560  527  1,738  1,521 Supplies 120  163  353  467 Professional, data processing, and other outside expense 990  887  2,884  2,561 Marketing 185  228  500  649 Credit expense 359  195  831  478 Other real estate expenses 15  200  135  340 FDIC insurance expense 76  87  220  275 Other 307  316  938  967 Total noninterest expenses 6,744  6,373  19,876  17,947          Income before income taxes 1,823  1,845  4,072  5,105          Income tax expense 369  371  802  1,020          Net Income$           1,454 $        1,474 $         3,270 $         4,085          Weighted average shares outstanding - basic 4,339,436  4,378,436  4,342,294  4,378,436          Weighted average shares outstanding - diluted 4,339,436  4,385,331  4,342,294  4,383,128          Net income per common share - basic$            0.34 $        0.34 $           0.75 $             0.93          Net income per common share - diluted$            0.34 $       0.34 $           0.75 $            0.93

  • GlobeNewswire

    Bank of the James Announces Second Quarter, First Half 2020 Financial Results and Declaration of Dividend

    PPP Loan Closings, Robust Mortgage Origination, Completed Unregistered Debt OfferingLYNCHBURG, Va., July 24, 2020 (GLOBE NEWSWIRE) -- Bank of the James Financial Group, Inc. (the “Company”) (NASDAQ:BOTJ), the parent company of Bank of the James, a full-service commercial and retail bank serving Region 2000 (the greater Lynchburg MSA), and the Blacksburg, Charlottesville, Harrisonburg, Lexington, and Roanoke, Virginia markets, today announced unaudited results for the three months and six months ended June 30, 2020. Net income for the three months ended June 30, 2020 was $821,000 or $0.19 per diluted share, compared with $1.38 million or $0.31 per diluted share for the three months ended June 30, 2019. Net income for the six months ended June 30, 2020 was $1.82 million or $0.42 per diluted share, compared with $2.61 million or $0.60 per diluted share for the six months ended June 30, 2019.Highlights * Net income in the second quarter and first half of 2020 reflected noninterest expenses that included an additional $245,000 in compensation to employees for their work implementing the PPP. Additionally, in the second quarter the Company expensed approximately $750,000 related to an early retirement plan that was previously announced. * Loans receivable, net of the allowance for loan losses, were $623.56 million at June 30, 2020 compared with $573.27 million at December 31, 2019. The increase primarily reflects the addition of $68 million in government-guaranteed Payroll Protection Plan loans. * Commercial loans demonstrated stability and continued strong credit quality, and construction continued to be an active lending sector for the Company. * Nonperforming loans increased as of June 30, 2020, primarily reflecting one relationship of approximately $3.3 million. Management anticipates a significant curtailment of the loan balance upon the sale of the collateral.  The Bank has entered into a contract for the sale of the collateral, and the sale is scheduled to close later in the third quarter. * Interest income from loans in the second quarter of 2020 was $6.7 million compared with $6.8 million in the second quarter of 2019 and increased to $13.7 million in the first half of 2020 compared with $13.5 million in the first half of 2019, primarily reflecting loan growth. * Continuing strong residential mortgage origination, which generates income from gains on loan sales to the secondary market, contributed significantly to increased total noninterest income, which was $2.8 million in the second quarter of 2020 compared with $1.7 million a year earlier. In the first half of 2020, total noninterest income was $5.0 million, up from $2.9 million a year earlier, reflecting robust residential mortgage origination and growth in fee income from corporate treasury services and other fees. * Total deposits were $746.0 million at June 30, 2020 compared with $649.5 million at December 31, 2019. The increase reflects increased core deposits (noninterest-bearing demand, NOW, savings and money market accounts) as customers maintained higher balances, attributable in part to PPP loan funds that had yet to be deployed. * Total stockholders’ equity increased to $64.5 million at June 30, 2020 compared with $61.4 million at December 31, 2019. Tangible book value per share was $14.86 at June 30, 2020 compared with $14.10 per share at December 31, 2019. * On July 21, 2020 the Company’s board of directors approved a $0.07 per share dividend payable to stockholders of record on September 4, 2020, to be paid on September 18, 2020. * Subsequent to the close of the second quarter of 2020, the Company announced on July 8, 2020 that it completed a private placement of an unregistered debt offering of $10.05 million at a 3.25% interest rate. Of that amount, $5 million was used to retire an earlier private placement carrying a higher rate. * Consistent with the previously filed Form 10-Q for the quarter ended March 31, 2020, the Company again anticipates expanded disclosure related to business sectors and credit quality in its Form 10-Q Quarterly Report covering the three and six month periods ended June 30, 2020 to be filed with the Securities and Exchange Commission.Robert R. Chapman III, President and CEO, commented: “Although COVID-19 and the subsequent economic slowdown present numerous challenges, we believe the Company delivered a positive financial performance. We focused on being responsive and pro-active in a fluid economic and health-conscious situation, and we will continue to do so.“We appreciate our team’s dedication and commitment to serving clients safely and professionally, and to keeping operations running smoothly. We implemented extensive practices to protect the health and safety of employees and customers and continued operating consistently, while recognizing that the considerable presence of COVID-19 still presents challenges.“During the second quarter, Bank of the James processed and closed approximately $68 million in Payroll Protection Plan (PPP) loans to more than 500 small businesses, affecting approximately 9000 employees and families. We believe we accomplished this process quickly and efficiently so businesses could put funding to work immediately. Recognizing the exceptional dedication of our team, we provided approximately $245,000 in financial rewards to those who worked so hard to implement the PPP program, and to our essential employees who put in extra effort to serve customers and provide operational support therefore offsetting the challenges of social distancing and working from home.“Margins, returns and interest income were impacted by expected business slowdowns and the issuance of low-interest PPP loans. Importantly, the Bank did not experience any unusual pressure on deposit balances or liquidity positions as a result of COVID-19. We believe the Company’s fundamentals are strong. We have prepared for this period by increasing capital resources, expanding reserves and provisioning for potential loan losses, building cash reserves, and more.“Our second quarter financial performance was encouraging, and we were able to build shareholder value and pay a dividend to shareholders. We believe the Company is positioned to meet the financial challenges and uncertainty ahead.”Second Quarter, First Half of 2020 Operational ReviewTotal interest income was $7.1 million in the second quarter of 2020 compared with $7.4 million a year earlier. Interest expense was $1.2 million in the second quarter of 2020 compared with $1.2 million a year earlier.  Although interest rates declined, interest expense remained constant because of a larger deposit base and increased core deposits. The rate paid on liabilities in the second quarter of 2020 was 0.76% compared with 0.93% a year earlier.Net interest income after provision for loan losses was $5.2 million for the three months ended June 30, 2020 compared with $6.0 million the previous year.  The average rate earned on loans was 4.33% in the second quarter of 2020 compared with 4.97% a year earlier, and the net interest margin was 3.13% compared with 3.82%, primarily reflecting the impact of the lower-yielding PPP loans.For the six months of 2020, total interest income was $14.6 million compared with $14.6 million in the first six months of 2019. Total interest expense was $2.5 million in the first half of 2020 compared with $2.3 million a year earlier. For the first six months of 2020, net interest income after provision for loan losses was $10.4 million compared with $12.0 million a year earlier, primarily reflecting slower commercial loan activity and an increased loan loss provision. The net interest margin was 3.37% in the first half of 2020 compared with 3.87% a year earlier.The provision for loan losses was $760,000 and $1,648,000 in the three and six months ended June 30, 2020 compared with $116,000 and $326,000 for the same period a year earlier.  The increase primarily reflects increased qualitative allocations related to the COVID-19 pandemic as well as a $300,000 specific reserve for the large loan relationship previously mentioned as migrating to a nonperforming status during the quarter. Of the $1,648,000 in provision in the first six months of 2020, approximately $1,048,000 is attributed to qualitative factors related to the COVID-19 pandemic and its effect on economic conditions, loan concentrations in sectors adversely affected by the pandemic, and loans that have been granted payment deferrals or have been granted interest only payment status in the short term.J. Todd Scruggs, Executive Vice President and CFO, commented: “The impact of carrying $68 million in PPP loans while also carrying additional contingent liquidity in the form of Fed funds, and a Fed rate cut in the second quarter was clearly evident in our net interest margin and interest rate spread. In general, rates on non-PPP loans have been relatively stable. We don’t anticipate carrying PPP loans for an extended period, so we expect to return to more normalized margins as the PPP program begins to wind down and loan forgiveness begins.”Noninterest income, including gains from the sale of residential mortgages to the secondary market, revenue contributions from BOTJ Investment Services, and income from the Bank’s line of treasury management services for commercial customers was $2.8 million in the second quarter of 2020, up from $1.7 million in the second quarter of 2019. In the first half of 2020, total noninterest income was $5.0 million compared with $2.9 million in the first half of 2019.  The increase in noninterest income was also driven by gains on sales of available-for-sale securities of $213,000 and $644,000 respectively for the three and six months of 2020.Noninterest expense for the three months and six months ended June 30, 2020 increased compared with the previous year, reflecting personnel expenses that included performance-based compensation and the one-time early retirement expense. Employee salaries of approximately $400,000 were deferred in the current quarter related to PPP loan originations which partially offset the additional expenses.  These deferred costs are being recognized over the remaining lives of the PPP loans as a component of interest income along with the related origination fees.  This level of deferred origination costs is not expected  for future quarters and the recognition of the deferred fees  and costs in income will be accelerated upon forgiveness or repayment of the PPP loans.  Occupancy, supplies and marketing costs were lower year-over-year.In the second quarter of 2020, Return on Average Assets (ROAA) was 0.41% compared with 0.80% a year earlier and Return on Average Equity (ROAE) of 5.33% compared with 9.47% a year earlier. In the first half of 2020, ROAA was 0.47% compared with 0.77% a year earlier and ROAE was 5.95% compared with 9.11% a year earlier. The Company’s ROAA decline in the 2020 periods primarily reflected the growth of assets and the higher loan loss provision.Balance Sheet Review: Sound Asset Quality, LiquidityTotal assets were $827.1 million at June 30, 2020 compared with $725.4 million at December 31, 2019 and $690.1 million at June 30, 2019. While the addition of PPP loans in the second quarter of 2020 resulted in increased assets, a leading driver of year-over-year balance sheet growth was commercial, construction and non-residential loan growth. Loans, net of provision for loan losses were $623.6 million at June 30, 2020, compared with $573.3 million at December 31, 2019 and $552.0 million at June 30, 2019.Michael A. Syrek, Executive Vice President and Chief Loan Officer, commented: “Understandably, new commercial lending activity slowed in the second quarter of 2020. Beginning in February, we have focused on communicating with clients to help them prepare for the potential impact of COVID-19 and economic slowdowns on their businesses.“While economic conditions have impacted clients, most have maintained stability in their operations. We have worked remotely and maintained strong relationships to continue providing financial solutions. A number of clients have utilized PPP loans to meet operating cash and payroll requirements as an alternative to utilizing lines of credit, and in our eyes that has been a very appropriate use of the PPP funding we helped provide.“We are cautiously optimistic about the economic health of our served markets and clients. We serve markets that include several major colleges and universities, so we are closely monitoring decisions regarding fall attendance and the potential impact on clients. We remain flexible and responsive to client needs in what continues to be a fluid situation.”Loans held-for-sale were $6.1 million at June 30, 2020, up from $4.2 million at December 31, 2019 and $4.4 million at June 30, 2019, primarily reflecting strong residential mortgage origination activity and placement of residential mortgages in the secondary market.Brian Cash, President of Bank of the James’ Mortgage Division, explained: “Despite remarkable volatility, uncertainty and change in both the mortgage and housing industries, our growth accelerated. I credit the amazing dedication, determination and heart of our team to serve regardless of the circumstances. The majority of mortgage originations have been purchase mortgages as housing markets have been relatively active in light of COVID-19 impact. Well-established processes, a commitment to service and strong technological capabilities have enabled us to meet the residential mortgage needs of our markets in a time that demands social distancing and increased electronic operation.”Loans, net of allowance for loan losses of $6.2 million, were $623.56 million at June 30, 2020. At December 31, 2019 loans, net of allowance of $4.8 million, were $573.27 million.  The company increased its loan allowance in the first and second quarters of 2020, primarily reflecting the Company’s ongoing consideration of the pandemic in the development of the allowance estimate as mentioned above.Total deposits at June 30, 2020 were $746.00 million, compared with $649.50 million at December 31, 2019. Increased demand deposits accounted for the growth attributed in part to retention of PPP funds not yet deployed by businesses, which now have approximately 24 months to utilize the funds.Asset quality remained strong, with a ratio of nonperforming loans to total loans of 0.82% at June 30, 2020. The allowance for loan losses to total loans was 0.98% at June 30, 2020, representing an increase from prior quarters as the Company added to its loan loss reserve. The ratio of the allowance to total loans, excluding the guaranteed PPP loans was approximately 1.11% at June 30, 2020.  The Company’s allowance for loan losses to nonperforming loans was 119% at June 30, 2020.Chapman concluded: “As we continue to navigate a changing and uncertain environment, we are focused on maintaining liquidity, continued capital strength, and diligent credit quality monitoring. We are committed to partnering with clients to provide the services and financial solutions to meet the future with confidence.  We are also committed to our served communities and are grateful to have been able to donate this quarter approximately $50,000 to various non-profits that focus on providing food, clothing and shelter.About the CompanyBank 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, Charlottesville, Forest, Harrisonburg, Lexington, Lynchburg, Madison Heights, Roanoke, and Rustburg. 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. 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 StatementsThis 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, the effect of the COVID-19 pandemic, and changes in the value of real estate securing loans made by Bank of the James (the "Bank"), a subsidiary of the Company. 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 and previously filed by the Bank (as predecessor of the Company) with the Federal Reserve Board.CONTACT: J. Todd Scruggs, Executive Vice President and Chief Financial Officer (434) 846-2000. tscruggs@bankofthejames.comFINANCIAL STATEMENTS FOLLOW Bank of the James Financial Group, Inc. and Subsidiaries Dollar amounts in thousands, except per share data unaudited                                          Selected Data:Three months ending Jun 30, 2020Three months ending Jun 30, 2019ChangeYear to date Jun 30, 2020Year to date Jun 30, 2019Change Interest income$7,081$7,390 -4.18%$14,569$14,624 -0.38% Interest expense 1,163 1,238 -6.06% 2,515 2,342 7.39% Net interest income 5,918 6,152 -3.80% 12,054 12,282 -1.86% Provision for loan losses 760 116 555.17% 1,648 326 405.52% Noninterest income 2,789 1,659 68.11% 4,975 2,878 72.86% Noninterest expense 6,935 5,975 16.07% 13,132 11,574 13.46% Income taxes 191 343 -44.31% 433 649 -33.28% Net income 821 1,377 -40.38% 1,816 2,611 -30.45% Weighted average shares outstanding - basic 4,339,436 4,378,436 (39,000) 4,343,738 4,378,436 (34,698) Weighted average shares outstanding – diluted 4,339,436 4,383,021 (43,585) 4,343,738 4,381,994 (38,256) Basic net income per share$0.19$0.31$(0.12)$0.42$0.60$(0.18) Fully diluted net income per share$0.19$0.31$(0.12)$0.42$0.60$(0.18) Balance Sheet at period end:Jun 30, 2020Dec 31, 2019ChangeJun 30, 2019Dec 31, 2018Change Loans, net$  623,564$573,274 8.77%$  551,974$  530,016 4.14% Loans held for sale 6,098 4,221 44.47% 4,443 1,670 166.05% Total securities 58,751 63,343 -7.25% 57,512 56,427 1.92% Total deposits 745,986 649,459 14.86% 617,184 612,043 0.84% Stockholders' equity 64,465 61,445 4.91% 59,249 55,143 7.45% Total assets 827,098 725,394 14.02% 690,095 674,897 2.25% Shares outstanding 4,339,436 4,357,436 (18,000) 4,378,436 4,378,436 -  Book value per share$  14.86$  14.10$  0.76 $  13.53$  12.59$  0.94  Daily averages:Three months ending Jun 30, 2020Three months ending Jun 30, 2019ChangeYear to date Jun 30, 2020Year to date Jun 30, 2019Change Loans, net$  620,572$  546,16213.62%$  597,378$  537,76311.09% Loans held for sale 5,653 3,94843.19% 4,563 2,98153.07% Total securities 56,647 58,214-2.69% 58,296 58,624-0.56% Total deposits 731,009 622,39017.45% 695,436 618,24012.49% Stockholders' equity 61,776 58,2955.97% 61,509 57,8096.40% Interest earning assets 759,306 645,40617.65% 720,305 640,36212.48% Interest bearing liabilities 614,343 535,36414.75% 594,207 530,95311.91% Total assets 808,602 690,63717.08% 772,170 684,41912.82% Financial Ratios:Three months ending Jun 30, 2020Three months ending Jun 30, 2019ChangeYear to date Jun 30, 2020Year to date Jun 30, 2019Change Return on average assets0.41%0.80%(0.39)0.47%0.77%(0.30) Return on average equity5.33%9.47%(4.14)5.95%9.11%(3.16) Net interest margin3.13%3.82%(0.69)3.37%3.87%(0.50) Efficiency ratio79.65%76.49%3.16 77.12%76.35%0.77  Average equity to average assets7.64%8.44%(0.80)7.97%8.45%(0.48) Allowance for loan losses:Three months ending Jun 30, 2020Three months ending Jun 30, 2019ChangeYear to date Jun 30, 2020Year to date Jun 30, 2019Change Beginning balance$5,474 $4,673 17.14%$4,829 $4,581 5.41% Provision for losses 760  116 555.17% 1,648  326 405.52% Charge-offs (79) (86)-8.14% (339) (219)54.79% Recoveries 38  21 80.95% 55  36 52.78% Ending balance 6,193  4,724 31.10% 6,193  4,724 31.10% Nonperforming assets:Jun 30, 2020Dec 31, 2019ChangeJun 30, 2019Dec 31, 2018Change Total nonperforming loans$5,186$1,301298.62%$3,485$2,93918.58% Other real estate owned 1,616 2,339-30.91% 2,413 2,431-0.74% Total nonperforming assets 6,802 3,64086.87% 5,898 5,3709.83% Troubled debt restructurings - (performing portion) 402 410-1.95% 418 424-1.42%  Jun 30,Dec 31, Jun 30,Dec 31,  Asset quality ratios:2020 2019 Change2019 2018 Change Nonperforming loans to total loans0.82% 0.23%0.60 0.63%0.55%0.08  Allowance for loan losses to total loans0.98%*0.84%  0.15 0.85%0.86%  (0.01) Allowance for loan losses to nonperforming loans119.42%371.18%  (251.76)135.55%155.87%  (20.32) *The allowance for loan losses to total loans ratio excluding the SBA guaranteed PPP loans is approximately 1.11%. Bank of the James Financial Group, Inc. and Subsidiaries Consolidated Balance Sheets (dollar amounts in thousands, except per share amounts) (unaudited)   Assets6/30/2020 12/31/2019 Cash and due from banks$30,669 $30,794  Federal funds sold 60,131  8,317  Total cash and cash equivalents 90,800  39,111       Securities held-to-maturity (fair value of $4,283 in 2020 and $3,861 in 2019) 3,679  3,688  Securities available-for-sale, at fair value 55,072  59,655  Restricted stock, at cost 1,551  1,506  Loans, net of allowance for loan losses of $6,193 in 2020 and $4,829 in 2019 623,564  573,274  Loans held for sale 6,098  4,221  Premises and equipment, net 16,193  16,297  Software, net 429  401  Interest receivable 2,505  1,866  Cash value - bank owned life insurance 16,387  13,686  Other real estate owned 1,616  2,339  Deferred tax asset 601  1,177  Other assets 8,603  8,173  Total assets$827,098 $725,394       Liabilities and Stockholders' Equity    Deposits    Noninterest bearing demand 134,523  93,936  NOW, money market and savings 424,842  362,821  Time 186,621  192,702  Total deposits 745,986  649,459       Capital notes 7,275  5,000  Income taxes payable 107  124  Interest payable 172  173  Other liabilities 9,093  9,193  Total liabilities$762,633 $663,949       Stockholders' equity    Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding    4,339,436 and 4,357,436 as of June 30, 2020 and December 31, 2019 9,286  9,325  Additional paid-in-capital 30,989  31,225  Accumulated other comprehensive income (loss) 2,081  (5) Retained earnings 22,109  20,900  Total stockholders' equity$64,465 $61,445       Total liabilities and stockholders' equity$827,098 $725,394          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 For the Six Months  Ended June 30, Ended June 30, Interest Income 2020  2019  2020  2019 Loans$6,732 $6,816 $13,737 $13,470 Securities        US Government and agency obligations 151  184  338  369 Mortgage backed securities 55  56  114  117 Municipals 80  81  155  162 Dividends 24  33  33  51 Other (Corporates) 23  24  46  47 Interest bearing deposits 6  74  70  165 Federal Funds sold 10  122  76  243  Total interest income 7,081  7,390  14,569  14,624          Interest Expense        Deposits        NOW, money market savings 166  362  492  668 Time Deposits 864  750  1,761  1,418 Finance leases 28  -  58  - Brokered time deposits 48  76  97  156 Capital notes 57  50  107  100  Total interest expense 1,163  1,238  2,515  2,342           Net interest income 5,918  6,152  12,054  12,282          Provision for loan losses 760  116  1,648  326           Net interest income after provision for loan losses 5,158  6,036  10,406  11,956          Noninterest income        Gains on sale of loans held for sale 1,950  1,075  3,127  1,766 Service charges, fees and commissions 514  461  1,002  900 Life insurance income 110  84  188  167 Other 2  39  14  45 Gain on sales of available-for-sale securities 213  -  644  -           Total noninterest income 2,789  1,659  4,975  2,878          Noninterest expenses        Salaries and employee benefits 3,973  3,153  7,327  6,081 Occupancy 382  417  818  838 Equipment 569  536  1,178  994 Supplies 106  142  233  304 Professional, data processing, and other outside expense 970  859  1,894  1,674 Marketing 179  276  315  421 Credit expense 276  156  472  283 Other real estate expenses 21  1  120  140 FDIC insurance expense 87  94  144  188 Other 372  341  631  651  Total noninterest expenses 6,935  5,975  13,132  11,574           Income before income taxes 1,012  1,720  2,249  3,260           Income tax expense 191  343  433  649          Net Income$821 $1,377 $1,816 $2,611          Weighted average shares outstanding - basic 4,339,436  4,378,436  4,343,738  4,378,436          Weighted average shares outstanding - diluted 4,339,436  4,383,021  4,343,738  4,381,994          Net income per common share - basic$0.19 $0.31 $0.42 $0.60          Net income per common share - diluted$0.19 $0.31 $0.42 $0.60

  • Key Things To Consider Before Buying Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) For Its Dividend
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    Key Things To Consider Before Buying Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) For Its Dividend

    Is Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) a good dividend stock? How can we tell? Dividend paying...