UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

Form 10-Q

______________________

(Mark one)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2024

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

BANK OF THE JAMES FINANCIAL GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

______________________

Virginia	001-35402	20-0500300
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(I.R.S. Employer Identification No.)
828 Main Street, Lynchburg, VA		24504
(Address of principal executive offices)		(Zip Code)

(434) 846-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

______________________

Securities registered or to be registered pursuant to Section 12(b) of the Act

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $2.14 per share par value	BOTJ	The NASDAQ Stock Market LLC

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 4,543,338 shares of Common Stock, par value $2.14 per share, were outstanding at November 12, 2024.
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TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1.    Consolidated Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3. Quantitative and Qualitative Disclosures About Market Risk	49
Item 4. Controls and Procedures	49
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	49
Item 1A. Risk Factors	49
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	49
Item 3. Defaults Upon Senior Securities	49
Item 4. Mine Safety Disclosures	49
Item 5. Other Information	49
Item 6. Exhibits	50
SIGNATURES	50

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollar amounts in thousands, except per share amounts) (2024 unaudited)

	September 30,	December 31,
Assets	2024	2023
Cash and due from banks	$                 22,692	$                 25,613
Federal funds sold	86,515	49,225
Total cash and cash equivalents	109,207	74,838
Securities held-to-maturity, at amortized cost (fair value of $3,328 as of September 30, 2024 and $3,231 as of December 31, 2023) net of allowance for credit loss of $0 as of September 30, 2024 and December 31, 2023	3,610	3,622
Securities available-for-sale, at fair value	192,469	216,510
Restricted stock, at cost	1,821	1,541
Loans held for sale	3,239	1,258
Loans, net of allowance for credit losses of $7,078 as of September 30, 2024 and $7,412 as of December 31, 2023	627,112	601,921
Premises and equipment, net	19,378	18,141
Interest receivable	2,697	2,835
Cash value - bank owned life insurance	22,716	21,586
Customer relationship intangibles	6,865	7,285
Goodwill	2,054	2,054
Other assets	16,895	17,780
Total assets	$            1,008,063	$               969,371
Liabilities and Stockholders' Equity
Deposits
Noninterest bearing demand	$               132,223	$               134,275
NOW, money market and savings	540,966	538,229
Time deposits	234,421	205,955
Total deposits	907,610	878,459
Capital notes, net	10,046	10,042
Other borrowings	9,444	9,890
Interest payable	758	480
Other liabilities	11,371	10,461
Total liabilities	$               939,229	$               909,332
Commitments and Contingencies
Stockholders' equity
Preferred stock; authorized 1,000,000 shares; none issued and outstanding	$                           -	$                           -
Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,543,338 as of September 30, 2024 and December 31, 2023	9,723	9,723
Additional paid-in-capital	35,253	35,253
Retained earnings	41,640	36,678
Accumulated other comprehensive loss	(17,782)	(21,615)
Total stockholders' equity	$                 68,834	$                 60,039
Total liabilities and stockholders' equity	$            1,008,063	$               969,371

1

See accompanying notes to these consolidated financial statements

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 Ended		For the Nine Months Ended
	September 30,		September 30,
Interest Income	2024	2023	2024	2023
Loans	$                   9,004	$                   7,990	$                 25,375	$                 23,251
Securities
US Government and agency obligations	369	321	1,068	962
Mortgage backed securities	442	435	1,974	1,255
Municipals - taxable	298	286	872	853
Municipals - tax exempt	18	18	55	55
Dividends	12	8	59	49
Corporates	136	139	407	423
Interest bearing deposits	303	134	628	375
Federal Funds sold	981	812	2,569	1,601
Total interest income	11,563	10,143	33,007	28,824
Interest Expense
Deposits
NOW, money market savings	1,487	894	4,145	1,916
Time deposits	2,375	1,683	6,731	3,918
FHLB borrowings	-	-	-	31
Finance leases	18	22	58	66
Other borrowings	92	98	278	297
Capital notes	82	82	245	245
Total interest expense	4,054	2,779	11,457	6,473
Net interest income	7,509	7,364	21,550	22,351
Provison for (recovery of) credit losses	92	(164)	(584)	(278)
Net interest income after recovery of provision for credit losses	7,417	7,528	22,134	22,629
Noninterest income
Gain on sales of loans held for sale	1,326	989	3,526	3,065
Service charges, fees and commissions	991	1,004	2,930	2,942
Wealth management fees	1,244	1,050	3,583	3,098
Life insurance income	189	139	531	405
Gain on sales and calls of securities, net	42	-	82	-
Other	31	19	669	179
Total noninterest income	3,823	3,201	11,321	9,689
Noninterest expenses
Salaries and employee benefits	4,920	4,683	14,256	13,296
Occupancy	514	458	1,493	1,389
Equipment	640	501	1,879	1,813
Supplies	131	118	397	399
Professional	718	682	2,214	2,075
Data processing	764	689	2,263	2,079
Marketing	220	204	481	683
Credit	190	218	612	623
Other real estate, net	-	3	-	36
FDIC insurance	94	126	329	321
Amortization of intangibles	140	46	420	420
Other	445	412	1,258	957
Total noninterest expenses	8,776	8,140	25,602	24,091

2

See accompanying notes to these consolidated financial statements

Income before income taxes	2,464	2,589	7,853	8,227
Income tax expense	474	511	1,527	1,631
Net Income	$                   1,990	$                   2,078	$                   6,326	$                   6,596
Weighted average shares outstanding - basic and diluted	4,543,338	4,543,338	4,543,338	4,568,789
Earnings per common share - basic and diluted	$                     0.44	$                     0.46	$                     1.39	$                     1.44

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3

See accompanying notes to these consolidated financial statements

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(dollar amounts in thousands) (unaudited)

	For the Three Months		For the Nine Months
	Ended September 30,		Ended September 30,
	2024	2023	2024	2023
Net Income	$            1,990	$            2,078	$            6,326	$            6,596
Other comprehensive income (loss):
Unrealized gain (loss) on securities available-for-sale	7,120	(5,462)	4,934	(3,794)
Tax effect	(1,496)	1,147	(1,036)	797
Reclassification adjustment for net gains included in net income	(42)	-	(82)	-
Tax effect	9	-	17	-
Other comprehensive income (loss), net of tax	5,591	(4,315)	3,833	(2,997)
Comprehensive income (loss)	$            7,581	$          (2,237)	$          10,159	$            3,599

‎

4

See accompanying notes to these consolidated financial statements

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(dollar amounts in thousands) (unaudited)

	For the Nine Months Ended September 30,
	2024	2023
Cash flows from operating activities
Net Income	$                    6,326	$                    6,596
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	972	1,079
Net amortization and accretion of premiums and discounts on securities	506	(579)
Amortization of debt issuance costs	4	10
Net gain on sales of available-for-sale securities	(82)	-
Gain on sales of loans held for sale	(3,526)	(3,065)
Proceeds from sales of loans held for sale	146,880	126,245
Origination of loans held for sale	(145,335)	(124,082)
Recovery of provision for credit losses	(584)	(278)
Loss on sale of other real estate owned	-	3
Impairment of other real estate owned	-	23
Amortization of intangibles	420	420
Bank owned life insurance income	(531)	(405)
Loss on disposition of equipment	-	2
Decrease in interest receivable	138	29
Decrease (increase) in other assets	(134)	(154)
Increase in interest payable	278	292
Increase (decrease) in other liabilities	1,291	(167)
Net cash provided by operating activities	$                    6,623	$                    5,969
Cash flows from investing activities
Purchases of securities available-for-sale	$                 (15,122)	$                   (8,166)
Proceeds from maturities, calls and paydowns of securities available-for-sale	13,305	8,775
Proceeds from sale of securities available-for-sale	30,298	-
Purchase of bank owned life insurance	(599)	(1,800)
Purchase of Federal Home Loan Bank stock	(29)	(154)
Purchase of correspondent bank stock	(251)	-
Proceeds from sale of other real estate owned	-	540
Origination of loans, net of principal collected	(24,697)	4,814
Purchases of premises and equipment	(2,209)	(1,478)
Net cash provided by investing activities	$                       696	$                    2,531
Cash flows from financing activities
Net increase in deposits	$                  29,151	$                  32,065
Principal payments on finance lease obligations	(291)	(274)
Principal payments on other borrowings	(446)	(427)
Repurchase of common stock	-	(997)
Dividends paid to common stockholders	(1,364)	(1,100)
Net cash provided by financing activities	$                  27,050