• Bank of the James Announces Second Quarter, First Half 2017 Financial Results and Declaration of Dividend

    Source: Nasdaq GlobeNewswire / 21 Jul 2017 12:00:16   Eastern Standard Time

    LYNCHBURG, Va., July 21, 2017 (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 the greater Lynchburg area (Region 2000), and the Charlottesville, Harrisonburg, and Roanoke, Virginia markets, today announced unaudited results for the three months and six months ended June 30, 2017.

    Net income for the three months ended June 30, 2017 was $787,000 or $0.18 per diluted share compared with $1.05 million or $0.24 per diluted share for the three months ended June 30, 2016. For the six months ended June 30, 2017, net income was $1.55 million or $0.35 per diluted share compared with $1.94 million or $0.44 per diluted share for the six months ended June 30, 2016.

    Robert R. Chapman III, President and CEO, commented: “As we passed the halfway mark of 2017, the Company’s financial results continued to reflect the positive impact of a strategy to drive steady growth throughout a larger served market. Our team is doing a tremendous job of retaining valued clients and earning new business. We are pleased with the positive reception Bank of the James has received in Charlottesville, Roanoke and Harrisonburg.

    “We believe the positive impact of investments made in experienced, motivated people, technology and leading-edge products is already evident in financial results that reflect steady growth in areas such as lending, net interest income and deposits. The Company’s success in building commercial banking has been rewarding, continuing to exceed expectations. Throughout this period of investment and growth, we have been pleased to deliver increased value to stockholders, whose support has enabled us to invest in the future.”

    Highlights

    • Interest income from earning assets of $5.85 million increased 10.5% in the second quarter of 2017 compared with the second quarter of 2016. Net interest income before provision for loan losses of $5.14 million in the second quarter of 2017 increased 8.4% compared with the second quarter of 2016.
    • In the first half of 2017, interest income from earning assets grew 7.9% compared with the first half of 2016, while net interest income increased 5.8% compared with a year earlier.
    • Led by increasing use of business-related electronic treasury management services, service charges, fees, and commissions increased to $898,000 in the first half of 2017 from $734,000 in the first half of 2016.
    • Strong commercial lending activity and new customer relationships, particularly in the Company’s Charlottesville, Harrisonburg and Roanoke, Virginia markets, led to a Company-record $483.25 million in total loans, net of the allowance for loan losses. Loans increased from $466.24 million at March 31, 2017 and $464.35 million at December 31, 2016, and were up 6.9% from loans, net at June 30, 2016.
    • Commercial and industrial loans (C&I) increased 14% year-over-year, while owner occupied real estate, led by commercial real estate (CRE) portfolio growth, rose 13% at June 30, 2017 compared with June 30, 2016.
    • Total assets rose to $595.64 million at June 30, 2017, the highest in Company history.
    • Asset quality ratios reflected continuing loan portfolio strength.
    • Total stockholders’ equity increased to $51.06 million, up from $49.42 million at December 31, 2016. Book value per share rose to $11.66 at June 30, 2017 from $11.29 at December 31, 2016.
    • Based on the results achieved in the second quarter, on July 18, 2017 the Company’s board of directors approved a $0.06 per share dividend payable to stockholders of record on September 8, 2017, to be paid on September 22, 2017.

    Chapman noted: “A critical aspect of our growth strategy is for productivity and efficiency to continue to improve, which will translate to increased profitability and earnings growth. A critical part of our success is prudent, sustainable growth, with a clear focus on maintaining strong asset quality. We believe our results reflect this commitment to growth and quality.”

    Second Quarter 2017 Operational Review

    Total interest income was $5.85 million in the second quarter of 2017, growing 10.5% compared with total interest income of $5.29 million in the second quarter of 2016, and up more than $300,000 from the first quarter of 2017. The average rate earned on loans, including fees, was 4.57% in the second quarter of 2017, up from 4.50% in the second quarter of 2016, and slightly higher than the average rate in the first quarter of 2017. The average rate earned on total earning assets in the second quarter of 2017 was 4.26%, reflecting relative stability compared with the past several quarters.

    Total interest expense was $711,000 for the three months ended June 30, 2017, compared with $550,000 for the three months ended June 30, 2016. The increase partially reflected interest paid on capital notes issued in February 2017. Addressing the prospect of rising rates on deposit accounts, the Company also has selectively grown certificates of deposit to lock in deposits at current rates.

    The Company continued to grow noninterest bearing demand accounts, primarily reflecting increased commercial banking business throughout the franchise. The average rate paid on interest bearing accounts was 0.63% in the second quarter of 2017, which was consistent with the previous several quarters. For the six months ended June 30, 2017, the Company’s net interest margin for was 3.70% and net interest spread was 3.55%

    Net interest income increased to $5.14 million for the three months ended June 30, 2017 from $4.74 million for the three months ended June 30, 2016, primarily reflecting loan growth, and was up from $4.84 million for the three months ended March 31, 2017. Net interest income after provision for loan losses was $4.70 million for the three months ended June 30, 2017 compared with $4.49 million for the three months ended June 30, 2016.

    Noninterest income, including gains from the sale of residential mortgages to the secondary market, and income from the bank's line of treasury management services for commercial customers was $1.25 million in the second quarter of 2017 compared with $1.32 million in the second quarter of 2016. Income from gains on sale of loans held for sale increased from the first quarter of 2017, and were down modestly from a year earlier when mortgage activity was particularly strong. Continued growth in fee-based treasury services for businesses was partially reflected within the 36% growth in service charges, fees, and commissions in the second quarter of 2017 compared with the second quarter of 2016.

    Noninterest expense for the three months ended June 30, 2017 was $4.81 million compared with $4.25 million a year earlier, with the increase primarily reflecting the Company’s investment in an expanded banking team and market expansion.

    J. Todd Scruggs, Executive Vice President and CFO, noted: “We anticipate personnel and facility-related expenses will level out in the coming quarters, as we have essentially completed our recent expansion strategy. We have already seen growth and accelerating productivity that we expect will be reflected in accelerating earnings going forward.”

    First Half 2017 Operational Overview

    Total interest income of $11.36 million in the first half of 2017 rose 8% compared to $10.53 million in the first half of 2016, led by a 6.7% growth in loan-generated interest income. Net interest income in the first half of 2017 increased to $9.98 million from $9.43 million in the first half of 2016, primarily reflecting increased total interest income, partially offset by increased total interest expense related to capital notes issued and growth in time deposits and related interest. Net interest income after provision for loan losses rose 5% to $9.43 million from $8.98 million. The provision for loan losses was $545,000 in the first six months of 2017 compared with $450,000 in the first six months of 2016, with the increase primarily reflecting appropriate reserving to match loan growth.

    The Company's net interest margin was 3.70% in the six months of 2017 compared with 3.84% a year earlier, and net interest spread was 3.55% compared with 3.71% for the six months ended June 30, 2016. Average rates earned on loans, including fees, was 4.52% in the first half of 2017 and average rates earned on total earning assets was 4.21%.

    Noninterest income was $2.14 million for the six months ended June 30, 2017, compared with $2.32 million for the six months ended June 30, 2016, primarily reflecting lower gains on sale of loans held for sale, partially offset by increases in service charges, fees and commission income. Management noted that tight residential housing inventories have contributed to a general slowing of purchase mortgage originations. Higher noninterest expense in the first half of 2017 compared with the previous year’s six-month period primarily reflected the investments in personnel and infrastructure the Company made during the past year.

    Balance Sheet Reflects Consistent Growth

    Total assets rose to $595.64 million at June 30, 2017 from $574.20 million at December 31, 2016, and were up 9% from $545.73 million a year ago.  The primary driver of asset growth has been loans held for investment, net of the allowance for loan losses, which totaled $483.25 million, up from $464.35 million at December 31, 2016. The loan portfolio grew 7% year-over-year, primarily reflecting consistent growth in commercial lending.

    The Company’s commercial loan portfolio (primarily C&I) increased to $97.37 million at June 30, 2017, a 14% increase compared with commercial loans a year earlier. Owner occupied real estate loans, led by CRE lending, increased 13% to $145.12 million at June 30, 2017 from $128.89 million at June 30, 2016.

    Non-owner occupied real estate (primarily commercial and investment property) increased 5% year-over year. Total construction loans increased 8%, led by new home construction. Consumer lines of credit (primarily home equity) increased slightly, and consumer loans declined modestly.

    Total deposits at June 30, 2017 were $532.86 million compared with $523.11 million at December 31, 2016, and up from $493.54 million at June 30, 2016. The Bank continued to attract noninterest bearing deposits, which increased to $111.68 million at June 30, 2017 from $102.65 million at December 31, 2016. Core deposits (noninterest bearing, NOW, money market and savings deposits) comprised approximately 68% of the Company’s total deposits.

    As the Company has grown assets, quality ratios have remained sound. The 0.54% ratio of nonperforming loans to total loans at June 30, 2017 was unchanged from December 31, 2016. The Company's allowance for loan losses to total loans was 1.25%, and the Company maintained a strong allowance for loan losses as a percent of nonperforming loans. Total nonperforming assets were $5.42 million at June 30, 2017 compared with $4.92 million at December 31, 2016. The increase primarily reflected one classified commercial loan being moved to nonperforming status during the first quarter of 2017. The Bank's regulatory capital ratios continued to exceed accepted regulatory standards for a well-capitalized institution.

    The Company grew measures of stockholder value, including tangible book value per share and total stockholders' equity. Total stockholders' equity increased to $51.06 million at June 30, 2017, compared with $49.42 million at December 31, 2016. Retained earnings rose to $11.18 million at June 30, 2017 from $10.16 million at December 31, 2016.

    Chapman concluded: “We entered the second half of 2017 with good momentum, including robust loan pipelines and new business opportunities. We believe if we continue to execute on our strategy, the Company should deliver positive financial results and value for our stockholders.”

    About the Company

    Bank 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 operates 13 banking offices and two limited services offices in Virginia serving Altavista, Amherst, Appomattox, Bedford, Charlottesville, Forest, Harrisonburg, Lynchburg, Madison Heights, and Roanoke. 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 Statements

    This 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, 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.

    FINANCIAL STATEMENTS FOLLOW

            
    Bank of the James Financial Group, Inc. and Subsidiaries
    (000's) except ratios and percent data
    unaudited
            
    Selected Data: Three
    months
    ending
    Jun 30,
    2017
    Three
    months
    ending
    Jun 30,
    2016
    ChangeYear
    to
    date
    Jun 30,
    2017
    Year
    to
    date
    Jun 30,
    2016
    Change
    Interest income $  5,851 $  5,293  10.54% $  11,360 $  10,528  7.90%
    Interest expense  711  550  29.27%  1,382  1,098  25.87%
    Net interest income  5,140  4,743  8.37%  9,978  9,430  5.81%
    Provision for loan losses  445  250  78.00%  545  450  21.11%
    Noninterest income  1,254  1,316  -4.71%  2,135  2,324  -8.13%
    Noninterest expense  4,806  4,254  12.98%  9,323  8,444  10.41%
    Income taxes  356  504  -29.37%  698  922  -24.30%
    Net income  787  1,051  -25.12%  1,547  1,938  -20.18%
    Weighted average shares outstanding - basic  4,378,436  4,378,436  0.00%  4,378,436  4,378,436  0.00%
    Weighted average shares outstanding - diluted  4,378,519  4,378,436 N/M
       4,378,527  4,378,436 N/M 
    Basic net income per share $  0.18 $  0.24 $  (0.06) $  0.35 $   0.44 $  (0.09)
    Fully diluted net income per share $  0.18 $  0.24 $  (0.06) $  0.35 $  0.44 $  (0.09)


    Balance Sheet at period end: Jun 30,
    2017
    Dec 31,
    2016
    ChangeJun 30,
    2016
    Dec 31,
    2015
    Change
    Loans, net $  483,248 $  464,353 4.07% $  452,044 $  430,445  5.02%
    Loans held for sale  2,514  3,833 -34.41%  4,452  1,964  126.68%
    Total securities  52,603  44,075 19.35%  37,118  38,515  -3.63%
    Total deposits  532,862  523,112 1.86%  493,535  467,610  5.54%
    Stockholders' equity  51,058  49,421 3.31%  50,553  48,196  4.89%
    Total assets  595,637  574,195 3.73%  545,730  527,143  3.53%
    Shares outstanding  4,378,436  4,378,436 -   4,378,436  4,378,436  - 
    Book value per share $  11.66 $  11.29 0.37  $  11.55 $  11.01 $  0.54 


    Daily averages: Three
    months
    ending
    Jun 30,
    2017
    Three
    months
    ending
    Jun 30,
    2016
    ChangeYear
    to
    date
    Jun 30,
    2017
    Year
    to
    date
    Jun 30,
    2016
    Change
    Loans, net $  471,770 $  437,619 7.80% $  468,052 $  434,903 7.62%
    Loans held for sale  2,347  4,457 -47.34%  1,871  3,580 -47.74%
    Total securities  54,130  41,040 31.90%  52,532  40,669 29.17%
    Total deposits  530,487  483,453 9.73%  524,100  476,486 9.99%
    Stockholders' equity  51,483  49,351 4.32%  51,228  49,041 4.46%
    Interest earning assets  551,552  500,942 10.10%  544,693  494,770 10.09%
    Interest bearing liabilities  424,884  385,670 10.17%  420,597  382,104 10.07%
    Total assets  588,167  533,648 10.22%  580,404  527,299 10.07%


    Financial Ratios: Three
    months
    ending
    Jun 30,
    2017
    Three
    months
    ending
    Jun 30,
    2016
    ChangeYear
    to
    date
    Jun 30,
    2017
    Year
    to
    date
    Jun 30,
    2016
    Change
    Return on average assets 0.54% 0.79% (0.25) 0.54% 0.74% (0.20)
    Return on average equity 6.13% 8.54% (2.41) 6.09% 7.93% (1.84)
    Net interest margin 3.74% 3.80% -0.06% 3.70% 3.84% -0.14%
    Efficiency ratio 75.16% 70.21% 4.95  76.97% 71.84% 5.13 
    Average equity to average assets 8.75% 9.25% (0.50) 8.83% 9.30% (0.47)


    Allowance for loan losses: Three
    months
    ending
    Jun 30,
    2017
    Three
    months
    ending
    Jun 30,
    2016
    ChangeYear
    to
    date
    Jun 30,
    2017
    Year
    to
    date
    Jun 30,
    2016
    Change
    Beginning balance $  5,716  $  4,750  20.34% $  5,716  $  4,683  22.06%
    Provision for losses  445   250  78.00%  545   450  21.11%
    Charge-offs  (96)  (127) -24.41%  (226)  (378) -40.21%
    Recoveries  67   14  378.57%  97   132  -26.52%
    Ending balance  6,132   4,887  25.48%  6,132   4,887  25.48%


    Nonperforming assets: Jun 30,
    2017
    Dec 31,
    2016
    ChangeJun 30,
    2016
    Dec 31,
    2015
    Change
    Total nonperforming loans $  2,649 $  2,550 3.88% $  2,540 $  3,406 -25.43%
    Other real estate owned  2,775  2,370 17.09%  2,420  1,965 23.16%
    Total nonperforming assets  5,424  4,920 10.24%  4,960  5,371 -7.65%
    Troubled debt restructurings - (performing portion)  448  455 -1.54%  639  646 -1.08%


    Asset quality ratios: Jun 30,
    2017
    Dec 31,
    2016
    ChangeJun 30,
    2016
    Dec 31,
    2015
    Change
    Nonperforming loans to total loans 0.54% 0.54% (0.00) 0.56% 0.77% (0.21)
    Allowance for loan losses to total loans 1.25% 1.22% 0.03  1.07% 1.08% (0.01)
    Allowance for loan losses to nonperforming loans 231.48% 224.16% 7.32  192.40% 137.49% 54.91 


           
    Bank of the James Financial Group, Inc. and Subsidiaries
    Consolidated Balance Sheets
    (dollar amounts in thousands, except per share amounts)
           
    Assets 6/30/2017   12/31/2016
    Cash and due from banks $18,117    $16,938 
    Federal funds sold  5,115     11,745 
    Total cash and cash equivalents  23,232     28,683 
           
    Securities held-to-maturity (fair value of $3,284 in 2017 and $3,273 in 2016)  3,288     3,299 
    Securities available-for-sale, at fair value  49,315     40,776 
    Restricted stock, at cost  1,505     1,373 
    Loans, net of allowance for loan losses of $6,132 in 2017 and $5,716 2016  483,248     464,353 
    Loans held for sale  2,514     3,833 
    Premises and equipment, net  11,191     10,771 
    Software, net  225     176 
    Interest receivable  1,298     1,378 
    Cash value - bank owned life insurance  12,846     12,673 
    Other real estate owned  2,775     2,370 
    Income taxes receivable  1,291     1,214 
    Deferred tax asset  2,057     2,374 
    Other assets  852     922 
    Total assets $595,637    $574,195 
           
    Liabilities and Stockholders' Equity      
    Deposits      
    Noninterest bearing demand  111,678     102,654 
    NOW, money market and savings  249,594     255,429 
    Time  171,590     165,029 
    Total deposits  532,862     523,112 
           
    Repurchase agreements  5,000     - 
    Capital notes 4% due 1/24/2022  5,000     - 
    Interest payable  78     88 
    Other liabilities  1,639     1,574 
    Total liabilities $544,579    $524,774 
           
    Stockholders' equity      
    Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding      
    4,378,436 as of June 30, 2017 and December 31, 2016  9,370     9,370 
    Additional paid-in-capital  31,495     31,495 
    Accumulated other comprehensive (loss)  (985)    (1,600)
    Retained earnings  11,178     10,156 
    Total stockholders' equity $51,058    $49,421 
           
    Total liabilities and stockholders' equity $595,637    $574,195 


           
    Bank of the James Financial Group, Inc. and Subsidiaries
    Consolidated Statements of Income (unaudited)
    (dollar amounts in thousands, except per share amounts)
           
      For the Three Months   For the Six Months
      Ended June 30,   Ended June 30,
       2017  2016    2017  2016
    Interest Income          
    Loans $5,465 $5,007   $10,653 $9,985
    Securities          
    US Government and agency obligations  121  125    234  264
    Mortgage backed securities  77  68    143  120
    Municipals  90  46    170  90
    Dividends  28  27    35  33
    Other (Corporates)  30  3    57  9
    Interest bearing deposits  17  9    32  15
    Federal Funds sold  23  8    36  12
    Total interest income  5,851  5,293    11,360  10,528
               
    Interest Expense          
    Deposits          
    NOW, money market savings  175  139    344  275
    Time Deposits  425  373    827  742
    Federal Funds purchased  -  -    -  4
    Brokered time deposits  61  38    124  69
    Capital notes  50  -    87  8
    Total interest expense  711  550    1,382  1,098
               
    Net interest income  5,140  4,743    9,978  9,430
               
    Provision for loan losses  445  250    545  450
               
    Net interest income after provision for loan losses  4,695  4,493    9,433  8,980
               
    Noninterest income          
    Gains on sale of loans held for sale  598  681    969  1,172
    Service charges, fees and commissions  493  362    898  734
    Increase in cash value of life insurance  87  65    173  130
    Other  24  45    33  60
    Gain on sales of available-for-sale securities  52  163    62  228
               
    Total noninterest income  1,254  1,316    2,135  2,324
               
    Noninterest expenses          
    Salaries and employee benefits  2,396  2,162    4,776  4,399
    Occupancy  365  305    737  637
    Equipment  438  314    786  633
    Supplies  123  108    257  227
    Professional, data processing, and other outside expense  697  701    1,377  1,363
    Marketing  236  201    384  320
    Credit expense  187  106    301  189
    Other real estate expenses  24  4    36  5
    FDIC insurance expense  88  91    191  183
    Other  252  262    478  488
    Total noninterest expenses  4,806  4,254    9,323  8,444
               
    Income before income taxes  1,143  1,555    2,245  2,860
               
    Income tax expense  356  504    698  922
               
    Net Income $787 $1,051   $1,547 $1,938
               
    Weighted average shares outstanding - basic  4,378,436  4,378,436    4,378,436  4,378,436
               
    Weighted average shares outstanding - diluted  4,378,519  4,378,436    4,378,527  4,378,436
               
    Net Income per common share - basic $0.18 $0.24   $0.35 $0.44
               
    Net Income per common share - diluted $0.18 $0.24   $0.35 $0.44

     

    CONTACT:
    J. Todd Scruggs, Executive Vice President and Chief Financial Officer (434) 846-2000
    tscruggs@bankofthejames.com

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