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

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Bank of the James Financial Group, Inc. (NASDAQ:BOTJ), the parent company of Bank of the James, a full-service commercial and retail bank serving Region 2000 (Greater Lynchburg MSA), and the Charlottesville, Harrisonburg, Roanoke, Blacksburg, and Lexington, Virginia markets, newly stated unaudited results for the three months and nine months finished September 30, 2k19.

Net income for the three months finished September 30, 2k19 was $1.470M or $0.340 for each diluted share, contrast with $1.40M or $0.320 for each diluted share for the three months finished September 30, 2k18. Net income for the nine months finished September 30, 2k19 was $4.090M or $0.930 for each diluted share, contrast with $3.830M or $0.870 for each diluted share for the nine months finished September 30, 2k18.

Highlights

  • Loans, net of the allowance for loan losses, were a Company-record $551.010M on September 30, 2k19, increasing by about $21.00M during the 1st-nine months of 2k19 from $530.020M at December 31, 2k18.
  • Commercial loan growth was highlighted by expanded commercial real estate (CRE) lending throughout the Company’s served markets. Non-owner occupied CRE loans were $177.950M at September 30, 2k19, up 7.80 percent contrast with a year earlier.
  • Total interest income mainly reflected year-over-year commercial loan growth. In the 3rd-quarter of 2k19, total interest income was $7.600M in contrast with $6.980M in the 3rd-quarter of 2k18. For the nine months of 2k19, total interest income rose to $22.220M from $19.860M.
  • Income from gains on sales of residential mortgages to the secondary market and fees from corporate treasury services have generated raised total noninterest income throughout the year. Noninterest income in the 3rd-quarter of 2k19 was $2.160M in contrast with $1.320M in the three months of 2k18. In the nine months of 2k19 noninterest income raised to $5.040M, contrast with $3.950M in the nine months of 2k18.
  • Reflecting the Company’s emphasis on growing its deposit base, total deposits rose to $633.030M at September 30, 2k19, in contrast with $612.040M on December 31, 2k18. Core deposits (noninterest-bearing demand, NOW, savings and money market accounts) comprised about 70.00 percent of the Company’s total deposits.
  • Total assets rose to a Company-record $708.110M at September 30, 2k19, with consistently high asset quality.
  • New full-service facilities are now open in Charlottesville and Roanoke, as the Company recently established its 2nd-full-service branches in both markets. The Company has opened an office in Lexington, and plans to open an office in Rustburg, Virginia in the fall of 2k19.
  • Expansion and growth have generated value. Total stockholders’ equity raised to $61.040M at September 30, 2k19, contrast to $55.140M on December 31, 2k18. Tangible book value for each share rose to $13.940, contrast to $12.590 at December 31, 2k18 and $12.130 on September 30, 2k18.
  • Based on the results achieved in the 3rd-quarter of 2k19, on October 15, 2k19 the Company’s board of directors approved a $0.060 for each share dividend payable to stockholders of record on November 29, 2k19, to be paid on December 13, 2k19.

3rd-Quarter, Nine Months of 2k19 Operational Review

Total interest income was $7.600M in the 3rd-quarter of 2k19, up from $6.980M a year earlier, reflecting loan growth and adjustable-rate loans that repriced to reflect prevailing interest rates. Income from lending represented more than 90.00 percent of total interest income. Interest cost rose year-over-year, mainly reflecting a larger deposit base and rate inclines in demand and time deposits.

Net interest income after provision for loan losses was $6.060M for the three months finished September 30, 2k19, in contrast with $5.800M for a similar duration a year earlier. Commercial lending growth and modest loan yield incline contributed to the net interest margin of 3.750 percent in the 3rd-quarter of 2k19 and an interest spread of 3.640 percent.

For the nine months of 2k19, total interest income rose nearly 12.00 percent to $22.220M at September 30, 2k19 from $19.860M from September 30, 2k18. Total interest cost raised year-over-year, reflecting a larger deposit base and modest rate inclines on interest-bearing deposits. In the 3rd-quarter of 2k19, net interest income was $6.170M contrast with $5.990M in the 3rd-quarter of 2k18. For the nine months of 2k19, net interest income was $18.450M, up 8.0 percent from $17.120M for the nine months of 2k18. The net interest margin was 3.830 percent for the nine months finished September 30, 2k19 and the interest spread was 3.670 percent.

  1. Todd Scruggs, Executive Vice President, and CFO, commented: “We maintained our margin and spread throughout 2k19, even as interest paid on deposits raised. We also practiced some downward pressure on loan yields tied to the prime interest rate as the Federal Reserve lowered rates, and we anticipate that raised cost of liabilities may put further pressure on margins in the 4th-quarter. We continue to exercise discipline in the rates we pay on deposits, which facilitates the Company to minimize costlier borrowings.”

Noninterest income, counting gains from the sale of residential mortgages to the secondary market, revenue contributions from BOTJ Investment Services, and fee income from the Bank’s line of treasury administration services for commercial customers was $2.160M in the 3rd-quarter of 2k19 contrast with $1.320M in the 3rd-quarter of 2k18.  Gains on sales of loans grew mainly because of raised presence in Roanoke and Blacksburg and was also bolstered by the favorable interest rate environment.  In the 3rd-quarter of 2k19, gains on the sale of loans held for sale were $1.34M in contrast with $767,000.00 in the 3rd-quarter of 2k18. In the nine months of 2k19, noninterest income rose to $5.040M in contrast with $3.950M in the nine months of 2k18.

Noninterest cost for the three and nine months finished September 30, 2k19 raised, mainly reflecting raised personnel, marketing, and equipment costs related to market expansion in addition to credit costs associated with origination of residential mortgage loans.

In the 3rd-quarter of 2k19, Return on Average Assets (ROAA) was 0.830 percent and Return on Average Equity (ROAE) was 9.840 percent. In the nine months of 2k19, ROAA was 0.790 percent and ROAE was 9.360 percent. The Company’s efficiency ratio was higher in both durations contrast to a year earlier, mainly reflecting the addition of personnel and facilities and a boost in variable compensation related to raised production in the mortgage and investment divisions.

Balance Sheet Review: Steady Loan and Deposit Growth, Asset Quality

Total assets raised to a Company-record $708.110M at September 30, 2k19, highlighted by loans, net of allowance, of $551.010M, up from $530.020M at December 31, 2k18 and $524.100M at September 30, 2k18. Reflecting strong residential mortgage originations, loans held-for-sale on September 30, 2k19 were $5.630M contrast with $1.670M on December 31, 2k18 and $2.530M at September 30, 2k18. The fair value of securities available-for-sale was $54.400M on September 30, 2k19 contrast to $52.730M on December 31, 2k18.

The loan portfolio continued to provide balanced performance and year-over-year growth.  Although the overall loan portfolio was slightly down from the end of the 2nd-quarter finished June 30, 2k19, the decline was expected because of pay-downs associated with the completion of commercial construction projects.  Commercial lending has led the Company’s loan growth through the 1st-nine months of 2k19.  Non-owner occupied commercial real estate (mainly commercial and investment property), was $177.950M at September 30, 2k19 contrast with $165.010M a year earlier. Owner-occupied commercial real estate was $106.260M on September 30, 2k19, up from $103.650M on September 30, 2k18.

“We continue to build momentum in commercial lending throughout our served markets, and, importantly, have maintained strong asset quality as we have grown,” explained Michael A. Syrek, Executive Vice President and Chief Loan Officer. “Our focus continues to be on establishing and maintaining long-lasting partnerships with clients. We are providing the loan, deposit and electronic treasury products to meet a wide range of our clients’ financial needs, and we have the flexibility to quickly respond to their ongoing requirements.”

Total deposits at September 30, 2k19 were $633.030M, up from $612.040M at December 31, 2k18, led by expanded core deposits, which comprised 70.00 percent of total deposits. Interest-bearing demand deposits were $350.890M at September 30, 2k19 contrast with $331.30M on December 31, 2k18. Noninterest-bearing demand deposits were $90.430M on September 30, 2k19 contrast with $91.360M on December 31, 2k18.

Asset quality remained strong, with a ratio of nonperforming loans to total loans of 0.320 percent at September 30, 2k19, a contrast to 0.550 percent at December 31, 2k18. The allowance for loan losses to total loans was 0.860 percent at September 30, 2k19 contrast with 0.860 percent at December 31, 2k18. Lower levels of nonperforming loans contributed to a 270.00 percent ratio of allowance for loan losses to nonperforming loans contrast with 156.00 percent at December 31, 2k18.

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