Bank of the James Sees Q2 Net Income Jump 25.8%, Assets Top $1B

TL;DR

**BOTJ's Q2 earnings pop and asset growth are solid, but watch those rising professional expenses; it's a buy for now.**

AI Summary

BANK OF THE JAMES FINANCIAL GROUP INC (BOTJ) reported a net income of $2.704 million for the three months ended June 30, 2025, a significant increase from $2.148 million in the same period of 2024, representing a 25.8% rise. For the six months ended June 30, 2025, net income decreased to $3.546 million from $4.335 million in 2024, a 18.2% decline. Total assets grew to $1.004 billion as of June 30, 2025, up from $979.244 million at December 31, 2024. Loans, net of allowance for credit losses, increased to $649.089 million from $636.552 million. The company successfully repaid $10.050 million in capital notes on June 30, 2025, using parent company cash. Deposits saw a healthy increase to $910.527 million from $882.404 million, driven by noninterest-bearing demand and NOW, money market, and savings accounts. A notable recovery of credit losses of $528 thousand for the three months ended June 30, 2025, positively impacted net interest income. Strategic outlook includes continued expansion into new markets like Charlottesville and Roanoke, and managing interest rate risk through its securities portfolio, which saw a $4.162 million increase in other comprehensive income, net of tax, for the six months ended June 30, 2025.

Why It Matters

This filing reveals a mixed but generally positive picture for BOTJ. The strong Q2 net income growth and asset expansion to over $1 billion indicate operational strength and effective balance sheet management, which is crucial for investor confidence in regional banks. The successful repayment of $10.050 million in capital notes demonstrates financial prudence and reduces leverage, potentially improving the bank's credit profile. However, the six-month net income decline suggests some underlying pressures, possibly from increased noninterest expenses like professional fees, which surged to $2.533 million from $1.496 million. In a competitive banking landscape, BOTJ's expansion into new markets and growth in wealth management fees (up to $2.555 million for six months) are key differentiators, but investors should monitor expense control and sustained loan growth.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in professional noninterest expenses, which jumped to $2.533 million for the six months ended June 30, 2025, from $1.496 million in the prior year, representing a 69.3% increase. While the company saw a recovery of credit losses, the overall net income for the six-month period decreased by 18.2% to $3.546 million, indicating potential profitability pressures despite strong Q2 performance.

Analyst Insight

Investors should consider BOTJ's strong Q2 performance and asset growth as positive indicators, but closely monitor the trend in noninterest expenses, particularly professional fees. The successful repayment of capital notes is a positive sign of financial health. A 'hold' rating is appropriate, with a watchful eye on future expense management and sustained net interest income growth.

Financial Highlights

debt To Equity

12.99

revenue

$22,872K

operating Margin

N/A

total Assets

$1,004,242K

total Debt

$9,984K

net Income

$3,546K

eps

$0.60

gross Margin

N/A

cash Position

$77,907K

revenue Growth

+6.65%

Revenue Breakdown

Key Numbers

• $2.704M — Net Income (Q2 2025) (Increased 25.8% from $2.148M in Q2 2024)
• $3.546M — Net Income (YTD Q2 2025) (Decreased 18.2% from $4.335M in YTD Q2 2024)
• $1.004B — Total Assets (Increased from $979.244M at Dec 31, 2024)
• $649.089M — Loans, net (Increased from $636.552M at Dec 31, 2024)
• $910.527M — Total Deposits (Increased from $882.404M at Dec 31, 2024)
• $10.050M — Capital Notes Repaid (Full repayment on June 30, 2025)
• $528K — Recovery of Credit Losses (Q2 2025) (Positive impact on net interest income)
• $2.533M — Professional Expenses (YTD Q2 2025) (Increased 69.3% from $1.496M in YTD Q2 2024)
• $71.665M — Total Stockholders' Equity (Increased from $64.865M at Dec 31, 2024)
• $0.60 — Net Income Per Common Share (Q2 2025) (Increased from $0.47 in Q2 2024)

Key Players & Entities

• BANK OF THE JAMES FINANCIAL GROUP INC (company) — Registrant
• PWW (company) — Acquired investment advisory subsidiary
• National Bank of Blacksburg (company) — Lender for NBB Note
• Securities and Exchange Commission (regulator) — Regulatory body for filing
• $1.004 billion (dollar_amount) — Total assets as of June 30, 2025
• $10.050 million (dollar_amount) — Principal amount of 2020 Notes repaid
• $2.704 million (dollar_amount) — Net income for three months ended June 30, 2025
• $3.546 million (dollar_amount) — Net income for six months ended June 30, 2025
• $910.527 million (dollar_amount) — Total deposits as of June 30, 2025
• $2.533 million (dollar_amount) — Professional noninterest expenses for six months ended June 30, 2025

FAQ

Risk Factors

• Interest Rate Sensitivity [medium — financial]: The company's profitability is sensitive to changes in interest rates. Fluctuations in interest rates can impact net interest income and the fair value of its securities portfolio. The company manages this risk through its securities portfolio, which saw a $4.162 million increase in other comprehensive income, net of tax, for the six months ended June 30, 2025.
• Credit Risk and Loan Portfolio Quality [medium — financial]: The company is exposed to credit risk through its loan portfolio. The allowance for credit losses was $6.308 million as of June 30, 2025, down from $7.044 million at December 31, 2024. A recovery of credit losses of $528 thousand positively impacted net interest income in Q2 2025, indicating improved loan quality or reduced expected losses.
• Intangible Assets and Amortization [low — operational]: The company has intangible assets, such as customer relationships, with a net value of $6.445 million as of June 30, 2025. These assets are amortized over 15 years, impacting net income. Changes in the valuation or useful life of these intangibles could affect financial results.
• Economic Conditions and Market Expansion [medium — market]: The company's performance is tied to the economic conditions of its primary market area and new expansion markets like Charlottesville and Roanoke. Economic downturns or challenges in integrating into new markets could negatively impact growth and profitability.
• Capital Structure and Debt Repayment [low — financial]: The company successfully repaid $10.050 million in capital notes on June 30, 2025, using parent company cash. While this reduces leverage, it also reduces cash available for other purposes. The absence of capital notes in the current balance sheet compared to $10.048 million in the prior period reflects this repayment.

Industry Context

The banking industry is characterized by intense competition, stringent regulatory oversight, and sensitivity to macroeconomic factors, particularly interest rate movements. Banks are increasingly focused on digital transformation, expanding into new geographic markets, and managing credit risk. Community banks like BOTJ often differentiate themselves through personalized service and deep local market knowledge, while also facing pressure from larger institutions and fintech competitors.

Regulatory Implications

As a financial institution, BOTJ is subject to extensive regulation by federal and state authorities, including capital requirements, liquidity standards, and consumer protection laws. Compliance with these regulations is critical to maintaining operational stability and avoiding penalties. Changes in regulatory frameworks, such as those related to capital adequacy or cybersecurity, can necessitate adjustments in business strategy and operations.

What Investors Should Do

1. Monitor loan growth and credit quality trends.
2. Analyze the impact of interest rate changes on net interest margin.
3. Evaluate the success of market expansion strategies.
4. Assess the drivers of the significant increase in professional expenses.

Key Dates

• 2025-06-30: Repayment of Capital Notes — The company fully repaid $10.050 million in capital notes using parent company cash, strengthening its balance sheet by reducing debt.
• 2025-06-30: End of Q2 2025 — Reported net income of $2.704 million for the quarter, a 25.8% increase year-over-year, driven by a recovery in credit losses.
• 2025-06-30: End of H1 2025 — Reported net income of $3.546 million for the six months, a 18.2% decrease year-over-year, despite asset and deposit growth.
• 2025-06-30: Securities Portfolio OCI Impact — Other comprehensive income, net of tax, related to the securities portfolio increased by $4.162 million for the six months, indicating positive unrealized gains.

Glossary

Allowance for credit losses

An estimate of the amount of uncollectible loans in a company's loan portfolio. (A decrease in the allowance for credit losses from $7.044 million to $6.308 million suggests improved loan quality or reduced expected future losses.)

Other comprehensive income (OCI)

Unrealized gains or losses on investments that are not included in net income but are reported separately in equity. (A $4.162 million increase in OCI for the securities portfolio indicates positive market performance of these investments, impacting the company's equity.)

Capital notes

A type of subordinated debt that can be treated as equity for regulatory capital purposes. (The repayment of $10.050 million in capital notes signifies a reduction in the company's debt obligations.)

Noninterest-bearing demand accounts

Customer deposit accounts that do not earn interest, such as checking accounts. (An increase in these accounts indicates strong customer demand for transactional banking services, providing low-cost funding for the bank.)

NOW, money market and savings accounts

Interest-bearing deposit accounts that offer varying levels of liquidity and interest rates. (Growth in these accounts, alongside noninterest-bearing demand accounts, shows an overall increase in customer deposits, a key funding source for banks.)

Customer relationship intangible

An intangible asset representing the value derived from customer relationships, often acquired in business combinations. (This asset is being amortized over 15 years, impacting the company's net income. Its net value was $6.445 million as of June 30, 2025.)

Year-Over-Year Comparison

Compared to the prior year's filing (presumably for the period ending December 31, 2024, or Q2 2024), Bank of the James Financial Group Inc. has seen a significant increase in total assets to $1.004 billion, up from $979.244 million. While net income for the six-month period declined by 18.2% to $3.546 million, the second quarter showed strong sequential growth with net income up 25.8% to $2.704 million. The company has also strengthened its balance sheet by repaying $10.050 million in capital notes and experienced a positive recovery in credit losses, contributing to improved net interest income.

Key Financial Figures

• $2.14 — e on which registered Common Stock, $2.14 per share par value BOTJ The NASDAQ

Filing Documents

• botj-20250630x10q.htm (10-Q) — 6870KB
• botj-20250630xex31_1.htm (EX-31.1) — 13KB
• botj-20250630xex31_2.htm (EX-31.2) — 13KB
• botj-20250630xex32_1.htm (EX-32.1) — 14KB
• 0001562762-25-000212.txt ( ) — 27787KB
• botj-20250630.xsd (EX-101.SCH) — 34KB
• botj-20250630_cal.xml (EX-101.CAL) — 91KB
• botj-20250630_def.xml (EX-101.DEF) — 204KB
• botj-20250630_lab.xml (EX-101.LAB) — 362KB
• botj-20250630_pre.xml (EX-101.PRE) — 383KB
• botj-20250630x10q_htm.xml (XML) — 9248KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements 1

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 40

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 57

Controls and Procedures

Item 4. Controls and Procedures 57

– OTHER INFORMATION

PART II – OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 57

Risk Factors

Item 1A. Risk Factors 57

Unregistered Sales of Equity Securities, Use of Proceeds , and Issuer Purchases of Equity Securities

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds , and Issuer Purchases of Equity Securities 58

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 58

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 58

Other Information

Item 5. Other Information 58

Exhibits

Item 6. Exhibits 58

SIGNATURES

SIGNATURES 59 Table of Contents

– FINANCIAL INFORMAT ION

PART I – FINANCIAL INFORMAT ION

Consolidated Financial Statem ents

Item 1. Consolidated Financial Statem ents Bank of the James Financial Group, Inc. and Subsidiaries Consolidated Balance Sheets (dollar amounts in thousands, except per share amounts) (2025 unaudited) (unaudited) Assets June 30, 2025 December 31, 2024 Cash and due from banks $ 22,587 $ 23,287 Federal funds sold 55,320 50,022 Total cash and cash equivalents 77,907 73,309 Securities held-to-maturity, at amortized cost 3,598 3,606 Securities available-for-sale, at fair value 196,585 187,916 Restricted stock, at cost 1,828 1,821 Loans, net of allowance for credit losses of $ 6,308 as of June 30, 2025 and $ 7,044 as of December 31, 2024 649,089 636,552 Loans held for sale 4,226 3,616 Premises and equipment, net 19,044 19,313 Interest receivable 3,148 3,065 Cash value - bank owned life insurance 23,285 22,907 Customer relationship intangible 6,445 6,725 Goodwill 2,054 2,054 Deferred tax asset, net 7,774 8,936 Other assets 9,259 9,424 Total assets $ 1,004,242 $ 979,244 Liabilities and Stockholders' Equity Deposits Noninterest bearing demand $ 137,801 $ 129,692 NOW, money market and savings 543,555 522,208 Time 229,171 230,504 Total deposits 910,527 882,404 Capital notes, net - 10,048 Other borrowings 8,992 9,300 Income taxes payable 310 86 Interest payable 856 722 Other liabilities 11,892 11,819 Total liabilities $ 932,577 $ 914,379 Stockholders' equity Common stock $ 2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,543,338 as of June 30, 2025 and December 31, 2024 9,723 9,723 Additional paid-in-capital 35,253 35,253 Accumulated other comprehensive loss ( 18,753 ) ( 22,915 ) Retained earnings 45,442 42,804 Total stockholders' equity $ 71,665 $ 64,865 Total liabilities and stockholders' equity $ 1,004,242 $ 979,244 1 See accompanying note

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Note 1 – Basis of Presentation Bank of the James Financial Group, Inc.'s ("Financial" or the "Company") primary market area consists of the area commonly referred to as Region 2000 which encompasses the seven jurisdictions of the Town of Altavista, Amherst County, Appomattox County, the Town of Bedford, Bedford County, Campbell County, and the City of Lynchburg. Within the last several years, the Company expanded into Charlottesville, Roanoke, Blacksburg, Harrisonburg, Lexington, Rustburg, Wytheville, Buchanan, and Nellysford. The unaudited consolidated financial statements have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission. In management's opinion, the accompanying financial statements, which unless otherwise noted are unaudited, reflect all adjustments, consisting solely of normal recurring accruals, necessary for a fair presentation of the financial information as of June 30, 2025 and December 31, 2024, and for the three and six months ended June 30, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America. Additional information concerning the organization and business of Financial, accounting policies followed, and other related information is contained in Financial's Annual Report on Form 10-K for the year ended December 31, 2024. These financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes for the year ended December 31, 2024 included in Financial's Annual Report on Form 10-K. Results for the three and six-month periods ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. In connection with the acquisition of PWW, the Company recorded an intangible asset for customer relationships in the amount of $ 8,406,000 . The Company is using straight line amorti

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View this 10-Q filing on SEC EDGAR