Bank of the James Q3 Net Income Jumps 38% on Strong Net Interest Income

TL;DR

**BOTJ's Q3 earnings surge is a green light, but keep an eye on rising debt costs – still a buy for regional growth.**

AI Summary

BANK OF THE JAMES FINANCIAL GROUP INC (BOTJ) reported a significant increase in net income for the three months ended September 30, 2025, reaching $2.752 million, up 38.3% from $1.990 million in the same period of 2024. This was driven by a 10.5% increase in net interest income to $8.300 million, compared to $7.509 million in Q3 2024, and a 9.0% rise in total noninterest income to $4.169 million. However, net income for the nine months ended September 30, 2025, slightly decreased to $6.299 million from $6.326 million in the prior year. Total assets grew by 4.2% to $1.020 billion as of September 30, 2025, from $979.244 million at December 31, 2024, primarily due to an increase in loans, net, to $653.288 million from $636.552 million. The company successfully repaid $10.050 million in capital notes on June 30, 2025, and modified its $8.8 million NBB Note, extending its maturity to August 31, 2030, but increasing the interest rate from 3.90% to 5.65%. Stockholders' equity improved by 18.7% to $76.972 million from $64.865 million at year-end 2024, largely due to an increase in retained earnings and a reduction in accumulated other comprehensive loss.

Why It Matters

This filing reveals a mixed but generally positive picture for BOTJ. The substantial Q3 net income growth, driven by improved net interest income and noninterest income, suggests operational efficiency and a strong regional banking environment. However, the slight dip in year-to-date net income indicates some headwinds earlier in the year. For investors, the repayment of $10.050 million in capital notes strengthens the balance sheet, while the NBB Note modification, despite a higher interest rate, provides long-term debt stability. This performance positions BOTJ competitively against other regional banks in its expanded market areas like Charlottesville and Roanoke, potentially attracting more customers and talent.

Risk Assessment

Risk Level: medium — The risk level is medium due to the increased interest rate on the NBB Note from 3.90% to 5.65%, which will raise future interest expenses. While the company successfully repaid $10.050 million in capital notes, the higher cost of the remaining $8.8 million debt could impact profitability, especially if interest rates continue to climb or if the company needs to refinance other debt at higher rates.

Analyst Insight

Investors should consider BOTJ's strong Q3 performance and improved balance sheet as a positive indicator. The repayment of capital notes and the extension of the NBB Note's maturity provide financial stability. However, monitor the impact of the increased interest rate on the NBB Note on future net interest margin and overall profitability. This could be a good entry point for investors seeking exposure to a growing regional bank with a solid operational quarter.

Financial Highlights

debt To Equity

12.12

revenue

$12.469M

operating Margin

N/A

total Assets

$1.020B

total Debt

$943.153M

net Income

$2.752M

eps

$0.61

gross Margin

N/A

cash Position

$85.451M

revenue Growth

N/A

Revenue Breakdown

Key Numbers

• $2.752M — Net Income (Q3 2025) (Increased 38.3% from $1.990M in Q3 2024)
• $8.300M — Net Interest Income (Q3 2025) (Increased 10.5% from $7.509M in Q3 2024)
• $1.020B — Total Assets (Sept 30, 2025) (Increased 4.2% from $979.244M at Dec 31, 2024)
• $653.288M — Loans, Net (Sept 30, 2025) (Increased from $636.552M at Dec 31, 2024)
• $10.050M — Capital Notes Repaid (Full repayment on June 30, 2025)
• 5.65% — NBB Note Interest Rate (Increased from 3.90% effective September 1, 2025)
• $76.972M — Stockholders' Equity (Sept 30, 2025) (Increased 18.7% from $64.865M at Dec 31, 2024)
• $0.61 — Net Income Per Common Share (Q3 2025) (Increased from $0.44 in Q3 2024)

Key Players & Entities

• BANK OF THE JAMES FINANCIAL GROUP INC (company) — Registrant
• Pettyjohn, Wood & White, Inc. (company) — Wholly-owned investment advisory subsidiary
• National Bank of Blacksburg (company) — Lender for NBB Note
• $2.752 million (dollar_amount) — Net Income for Q3 2025
• $1.990 million (dollar_amount) — Net Income for Q3 2024
• $8.300 million (dollar_amount) — Net interest income for Q3 2025
• $10.050 million (dollar_amount) — Principal amount of 2020 Notes repaid
• $8.8 million (dollar_amount) — Outstanding principal balance on NBB Note as of September 30, 2025
• 5.65% (dollar_amount) — New interest rate on NBB Note
• 3.90% (dollar_amount) — Previous interest rate on NBB Note

FAQ

Risk Factors

• Interest Rate Sensitivity [medium — financial]: Changes in interest rates can impact net interest income and the fair value of securities. The modification of the NBB Note increased its interest rate from 3.90% to 5.65%, which will affect future interest expenses.
• Credit Risk [medium — financial]: The company holds a significant loan portfolio ($653.288 million as of Sept 30, 2025). While the allowance for credit losses decreased from $7.044 million to $6.298 million, adverse economic conditions could lead to increased loan defaults.
• Intangible Assets Amortization [low — operational]: The company has a customer relationship intangible asset of $6.305 million, subject to amortization over 15 years. While not a direct cash outflow, it impacts reported earnings.
• Compliance and Regulatory Environment [high — regulatory]: As a financial institution, BOTJ is subject to extensive regulation. Changes in regulatory requirements or failure to comply can result in fines, penalties, and reputational damage.

Industry Context

The banking industry is characterized by intense competition, stringent regulatory oversight, and sensitivity to interest rate fluctuations. Regional banks like BOTJ focus on local market penetration and customer relationships. Trends include digital transformation, evolving customer expectations, and the ongoing impact of monetary policy on lending and deposit costs.

Regulatory Implications

As a financial institution, BOTJ operates under the purview of various regulatory bodies, including the Federal Reserve and state banking authorities. Compliance with capital requirements, lending standards, and consumer protection laws is paramount. Any changes in these regulations or enforcement actions could materially impact operations and profitability.

What Investors Should Do

1. Monitor Net Interest Margin (NIM) trends.
2. Analyze the drivers of noninterest income growth.
3. Evaluate the impact of the NBB Note rate increase.
4. Review loan portfolio quality and credit loss provisions.

Key Dates

• 2025-09-30: Quarterly Report Filing — Provides updated financial performance and condition for Q3 2025, including increased net income and asset growth.
• 2025-06-30: Capital Notes Repayment — Successful repayment of $10.050 million in capital notes, reducing leverage and interest expense.
• 2025-09-01: NBB Note Interest Rate Increase — Interest rate on the $8.8 million NBB Note increased from 3.90% to 5.65%, impacting future interest expenses but potentially reflecting market conditions.
• 2024-12-31: Year-End Financials — Baseline for comparison of asset growth, equity changes, and loan portfolio performance in the current filing.

Glossary

Net Interest Income

The difference between the interest income generated by a bank and the interest it pays out to its depositors and lenders. (A primary driver of profitability for banks; BOTJ saw a 10.5% increase in Q3 2025.)

Total Assets

The sum of all assets owned by the company, including cash, loans, securities, and property. (Indicates the overall size and scale of the bank's operations; BOTJ's total assets grew to $1.020 billion.)

Stockholders' Equity

The residual interest in the assets of an entity after deducting all its liabilities. (Represents the owners' stake in the company; BOTJ's equity improved significantly by 18.7%.)

Allowance for Credit Losses (ACL)

An estimate of the amount of uncollectible loans in a bank's portfolio. (Impacts the reported value of loans; BOTJ's ACL decreased from $7.044 million to $6.298 million.)

Capital Notes

A type of debt instrument that can be used to bolster a company's capital base, often with features that resemble equity. (BOTJ successfully repaid $10.050 million of these notes.)

Accumulated Other Comprehensive Loss

A component of equity that includes unrealized gains and losses on certain investments and foreign currency translations. (BOTJ saw a reduction in this loss, contributing to improved stockholders' equity.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, BOTJ's net income has slightly decreased from $6.326 million to $6.299 million. However, the third quarter of 2025 showed a strong rebound with net income up 38.3% to $2.752 million, driven by a 10.5% increase in net interest income and a 9.0% rise in total noninterest income. Total assets have grown by 4.2% to $1.020 billion, and importantly, stockholders' equity has seen a substantial improvement of 18.7% to $76.972 million, reflecting a healthier balance sheet.

Key Financial Figures

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

Filing Documents

• botj-20250930x10q.htm (10-Q) — 6743KB
• botj-20250930xex31_1.htm (EX-31.1) — 13KB
• botj-20250930xex31_2.htm (EX-31.2) — 13KB
• botj-20250930xex32_1.htm (EX-32.1) — 14KB
• 0001275101-25-000007.txt ( ) — 26742KB
• botj-20250930.xsd (EX-101.SCH) — 35KB
• botj-20250930_cal.xml (EX-101.CAL) — 93KB
• botj-20250930_def.xml (EX-101.DEF) — 205KB
• botj-20250930_lab.xml (EX-101.LAB) — 371KB
• botj-20250930_pre.xml (EX-101.PRE) — 389KB
• botj-20250930x10q_htm.xml (XML) — 8744KB

– 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 38

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 55

Controls and Procedures

Item 4. Controls and Procedures 55

– OTHER INFORMATION

PART II – OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 55

Risk Factors

Item 1A. Risk Factors 55

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 56

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 56

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 56

Other Information

Item 5. Other Information 56

Exhibits

Item 6. Exhibits 56

SIGNATURES

SIGNATURES 57 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) Assets September 30, 2025 December 31, 2024 Cash and due from banks $ 28,450 $ 23,287 Federal funds sold 57,001 50,022 Total cash and cash equivalents 85,451 73,309 Securities held-to-maturity, at amortized cost (fair value of $ 3,308 as of September 30, 2025 and $ 3,170 as of December 31, 2024) net of allowance for credit losses of $ 0 as of September 30, 2025 and December 31, 2024 3,594 3,606 Securities available-for-sale, at fair value 202,506 187,916 Restricted stock, at cost 1,828 1,821 Loans, net of allowance for credit losses of $ 6,298 as of September 30, 2025 and $ 7,044 as of December 31, 2024 653,288 636,552 Loans held for sale 3,766 3,616 Premises and equipment, net 18,834 19,313 Interest receivable 3,001 3,065 Cash value - bank owned life insurance 23,480 22,907 Customer relationship intangible 6,305 6,725 Goodwill 2,054 2,054 Other assets 16,018 18,360 Total assets $ 1,020,125 $ 979,244 Liabilities and Stockholders' Equity Deposits Noninterest bearing demand $ 132,848 $ 129,692 NOW, money market and savings 548,110 522,208 Time 238,838 230,504 Total deposits 919,796 882,404 Capital notes, net - 10,048 Other borrowings 8,836 9,300 Interest payable 1,292 722 Other liabilities 13,229 11,905 Total liabilities $ 943,153 $ 914,379 Stockholders' equity Common stock $ 2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,543,338 as of September 30, 2025 and December 31, 2024 9,723 9,723 Additional paid-in-capital 35,253 35,253 Accumulated other comprehensive loss ( 15,743 ) ( 22,915 ) Retained earnings 47,739 42,804 Total stockholders' equity $ 76,972 $ 64,8

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 September 30, 2025 and December 31, 2024 , and for the three and nine months ended September 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 nine-month periods ended September 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 Pettyjohn, Wood & White, Inc. ("PWW"), the Company's wholly-owned investment advisory subsidiary, the Company recorded an in

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View this 10-Q filing on SEC EDGAR