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

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  • Bank of the James Announces First Quarter 2021 Financial Results and Declaration of Dividend
    GlobeNewswire

    Bank of the James Announces First Quarter 2021 Financial Results and Declaration of Dividend

    Asset Quality, Stable Commercial Lending, Strong Residential Mortgage ActivityLYNCHBURG, Va., April 23, 2021 (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 Region 2000 (the greater Lynchburg MSA), and the Blacksburg, Charlottesville, Harrisonburg, Lexington, and Roanoke, Virginia markets, today announced unaudited results for the three month period ended March 31, 2021. Net income for the three months ended March 31, 2021 was $1.84 million or $0.42 per diluted share, which was the highest quarterly earnings in Company history, compared with $995,000 or $0.23 per diluted share for the three months ended March 31, 2020. Robert R. Chapman III, President and CEO, commented: “The Company delivered strong earnings in the first quarter by capitalizing on market opportunities, particularly in residential mortgage originations as well as commercial lending under the Payroll Protection Plan (PPP). We maximized the value of revenue generated through disciplined interest expense management and by maintaining a strong balance sheet and high loan quality. As in past quarters, brisk residential mortgage activity contributed significant fee income and gains from the sale of mortgages to noninterest income, and fee revenue from ongoing PPP lending and forgiveness made meaningful contributions to interest income. “As pandemic conditions and economic uncertainties remain, we have continued our watchfulness, maintaining the strong cash position, liquidity and reserves built in 2020. We have continued to operate with a commitment to ensuring customer and employee health and safety. Technological capabilities and digital communications have enabled us to provide superior customer service and effectively manage operations.” Highlights Net income in the first quarter of 2021 was highlighted by noninterest income of $2.43 million, up 11% from $2.19 million in the first quarter of 2020, primarily reflecting mortgage loan processing fees and gains on the sale of originated residential mortgages to the secondary market, fees from electronic corporate treasury services, and mortgage loan processing.Total interest income was $7.37 million in the first quarter of 2021 compared with $7.49 million a year earlier. Other than PPP lending, commercial lending demand remained flat, primarily reflecting the impact of the pandemic and economic conditions on commercial loan demand, and pressure on interest rates.The Company lowered interest expense by 54% year-over-year, partially offsetting lower interest income and contributing to net interest income stability. For the three months ended March 31, 2021 net interest income was $6.75 million, up 10% from $6.14 million for the three months ended March 31, 2020.Net interest income after the provision for loan losses increased to $6.7 million at March 31, 2021 compared with $5.2 million at March 31, 2020, reflecting lower year-over-year interest expense and no provision for loan losses in the first quarter of 2021.Loans, net of the allowance for loan losses, were $606.5 million at March 31, 2021, compared with $601.9 million at December 31, 2020 and $570.7 million at March 31, 2020. Loan growth primarily reflected the addition of government-guaranteed PPP loans.Asset quality remained sound with a 0.32% ratio of nonperforming loans to total loans, reflecting strong credit quality and fewer nonperforming loans. The allowance for loan losses to total loans was 1.16% at March 31, 2021 (approximately 1.25% excluding government-guaranteed PPP loans).Total deposits increased to $801.2 million at March 31, 2021 from $765.0 million at December 31, 2020, reflecting continued core deposit growth (noninterest-bearing demand, NOW, savings and money market accounts) as customers maintained higher balances, attributable in part to government economic stimulus funds and additional PPP lending, and organic growth from increased retail and commercial deposit relationships.Total stockholders’ equity was $65.3 million at March 31, 2021 compared with $63.3 million at March 31, 2020, and book value per share was $15.11 compared with $14.59 a year earlier.On April 20, 2021 the Company’s board of directors approved a $0.07 per share dividend payable to stockholders of record on June 4, 2021, to be paid on June 18, 2021.During the first quarter of 2021, the Company' repurchased 14,600 shares of its common stock under conditions the Company deemed favorable and in compliance with Rule 10b-18 of the Securities Exchange Act of 1934. “While pandemic-related challenges and uncertainties have slowed normal business activity, we continue to position the Bank for an eventual return to normal activity. We have a strong loan pipeline in place. Meanwhile, we are strengthening commercial and retail banking relationships, providing treasury services to help customers efficiently manage their businesses, and providing service and capabilities that we expect will lead to long-term customer retention. “Our investment group, retail mortgage team and commercial bankers continue to provide exceptional service and support to customers. Their dedication and commitment is the main reason Bank of the James has been able to post strong financial results and continue delivering value to shareholders. Although COVID-19 conditions have interrupted our employees’ usual enthusiastic personal charitable and volunteer support of civic and charitable organizations, the Company has maintained its financial support for community outreach organizations during difficult times. We are grateful for the services they provide.” First 2021 Operational Review Total interest income was $7.4 million in the first quarter of 2021 compared with $7.5 million a year earlier, primarily reflecting declines in commercial lending demand (exclusive of PPP lending) and continuing downward pressure on interest rates. The Company’s interest expense was $617,000 in the first quarter of 2021, down 54% from $1.4 million a year earlier as the Company’s higher-cost time deposits continued to roll off and lower-cost core deposits (noninterest-bearing demand, NOW, savings and money market accounts) continued to grow. The Company trimmed rates on interest bearing liabilities to 0.39% in the first quarter of 2021, compared with 0.94% in the first quarter of 2020, and 0.55% in the fourth quarter of 2020. This decrease in rates paid on interest-bearing liabilities reflected the ongoing positive impact of reduced costs of time deposits and borrowings. In addition, in 2020 the Company took advantage of the lower rate environment to use the proceeds of a private placement of unregistered debt securities to retire existing, higher costing debt. Net interest income was $6.7 million for the three months ended March 31, 2021 compared with $6.1 million at March 31, 2020. The Company had no provision for loan losses in the first quarter of 2021.The return on interest earning assets was 3.66% in the first quarter of 2021 compared with 4.43% a year earlier. The net interest margin was 3.35% for the quarter ended March 31, 2021 and the interest spread was 3.27% compared with 3.63% and 3.49%, respectively, a year earlier. J. Todd Scruggs, Executive Vice President and CFO, commented: “We continue to address the challenges of a low interest rate environment, which has put pressure on yields from interest earning assets, including loans and investments. Although the substantial number of PPP loans we have made carry low rates, accreting some of the PPP fees into interest income has provided support for interest income. “Disciplined management of interest expense on deposits, no brokered borrowings, and strong loan quality leading to no loan loss provision in the first quarter of 2021 contributed to a year-over-year growth in net interest income after provision for loan losses.” In the coming quarters, the Company anticipates additional accretion of fees related to PPP loans as loans are forgiven or repaid. Scruggs noted in the near term these fees should have a positive impact on the margin. In the first quarter of 2021, 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 $2.4 million compared with $2.2 million in the first quarter of 2020. Strong residential mortgage originations generated $1.8 million in gains from the sale of loans held-for-sale in the first quarter of 2021 compared with $1.2 million in the first quarter of 2020. Noninterest expense for the three months ended March 31, 2021 increased compared with a year earlier, primarily reflecting increased personnel expenses that included performance-based compensation for residential mortgage production and employee work on PPP loans. For the three months ended March 31, 2021, Return on Average Assets (ROAA) was 0.85% compared with 0.54% a year earlier, primarily reflecting asset growth and increased earnings. Return on Average Equity (ROAE) increased to 11.49% compared with 6.52% a year earlier. The Company’s efficiency ratio was stable at 75.03% in the three months ended March 31, 2021 compared with 74.47% in the prior year, reflecting a continued companywide focus on operating expense management and increased digital operations. Balance Sheet Review: Loan Quality, Maintaining Liquidity, Strong Reserving Total assets were $886.4 million at March 31, 2021 compared with $851.4 million at December 31, 2020 and $746.1 million at March 31, 2020. Asset growth primarily reflected increased loans, net of allowance for loan losses, driven by PPP loans. Compared with totals at December 31, 2020, loans held-for-sale declined while cash reserves and securities available-for-sale increased. The Company continued to maintain higher levels of cash and liquid assets consistent with economic conditions and the potential impact of COVID-19 on customers. Loans, net of allowance for loan losses of $7.1 million, were $606.5 million at March 31, 2021 compared with loans, net of allowance for loan losses of $7.2 million, of $602.0 million at December 31, 2020 and $570.7 million at March 31, 2020. Commercial loans were $155.2 million at March 31, 2021 compared with $115.5 million at March 31, 2020, with growth primarily reflecting the addition of PPP loans. Slower business activity and conservative borrowing during the pandemic has depressed commercial lending. Although the Company has approved and closed new commercial loans, activity has not been at a sufficient pace to offset payoffs and normal amortization. Management noted some businesses have used higher cash reserves to pay down lines of credit balances. Commercial real estate lending remained relatively stable year-over-year. At March 31, 2021, commercial mortgages-owner occupied were $109.7 million compared with $103.4 million a year earlier, while commercial mortgages-non-owner occupied were $170.5 million at March 31, 2021 compared with $182.5 million a year earlier. Commercial construction loans continued to demonstrate strength, rising to $31.7 million at March 31, 2021 from $16.7 million a year earlier. Consumer loans were relatively stable year-over-year. Retained residential mortgage totals declined to $42.9 million at March 31, 2021 from $53.0 million at March 31, 2020, reflecting the Company’s ongoing practice of selling originated residential mortgages to the secondary market and judicious management of retained mortgage loans. Residential construction loans were flat year-over-year. Asset quality has remained strong, with a ratio of nonperforming loans to total loans of 0.32% at March 31, 2021 compared with 0.34% at December 31, 2020. The allowance for loan losses to total loans was 1.16% (approximately 1.25%, excluding guaranteed PPP loans) at March 31, 2021 and 0.95% at March 31, 2020. Total nonperforming loans were $2.0 million at March 31, 2021 compared with $2.1 million at December 31, 2020. Other real estate owned declined to $761,000 at March 31, 2021 compared with $1.1 million at December 31, 2020. Chapman noted that while asset quality has been strong and nonperforming loans to total loans ratios have been low during the past year, the Company’s allowance for loan losses has remained at a level that is reflective of management’s estimate of probable losses inherent in the portfolio, which is primarily attributable to the economic uncertainties arising from the ongoing COVID-19 pandemic. Total deposits at March 31, 2021 were $801.2 million, compared with $765.0 million at December 31, 2020 and $668.3 million at March 31, 2020. As in the past several quarters, increased demand deposits accounted for the growth, in part due to increased balances held by businesses and organic growth in the Bank’s markets. Time deposits declined during the quarter as the Bank continued to allow higher interest time deposits to roll off. Core deposits (noninterest bearing demand, NOW, money market and savings) were approximately 80% of total deposits at March 31, 2021. The Company measures of shareholder value included total stockholder’s equity of $65.3 million at March 31, 2021, compared with $63.3 million at March 31, 2020, retained earnings of $26.2 million and book value per share of $15.11, down $0.27 from December 31, 2020 and up considerably compared with $14.59 per share at March 31, 2020. Strong quarterly earnings enabled the Company to repurchase 14,600 shares under its stock repurchase plan, and pay a $0.07 dividend per share. The Company intends to continue to take advantage of opportunities to repurchase shares at or below book value. 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 currently services customers in Virginia from offices located in Altavista, Amherst, Appomattox, Bedford, Blacksburg, Charlottesville, Forest, Harrisonburg, Lexington, Lynchburg, Madison Heights, Roanoke, and Rustburg. 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, the effect of the COVID-19 pandemic, 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. CONTACT: J. Todd Scruggs, Executive Vice President and Chief Financial Officer (434) 846-2000.tscruggs@bankofthejames.com FINANCIAL STATEMENTS FOLLOW Bank of the James Financial Group, Inc. and SubsidiariesDollar amounts in thousands, except per share data unaudited Selected Data:Three months endingMar 31, 2021Three months endingMar 31, 2020ChangeInterest income$7,365$7,488 -1.64%Interest expense 617 1,352 -54.36%Net interest income 6,748 6,136 9.97%Provision for loan losses - 888 -100.00%Noninterest income 2,434 2,186 11.34%Noninterest expense 6,889 6,197 11.17%Income taxes 458 242 89.26%Net income 1,835 995 84.42%Weighted average shares outstanding - basic 4,333,274 4,348,040 (14,766)Weighted average shares outstanding - diluted 4,333,274 4,348,040 (14,766)Basic net income per share$0.42$0.23$0.19 Fully diluted net income per share$0.42$0.23$0.19 Balance Sheet atperiod end:Mar 31,2021Dec 31,2020ChangeMar 31,2020Dec 31,2019ChangeLoans, net$606,485$601,934 0.76%$570,659$573,274 -0.46%Loans held for sale 4,150 7,102 -41.57% 6,134 4,221 45.32%Total securities 103,499 93,856 10.27% 58,675 63,343 -7.37%Total deposits 801,190 764,967 4.74% 668,270 649,459 2.90%Stockholders' equity 65,334 66,732 -2.09% 63,328 61,445 3.06%Total assets 886,360 851,386 4.11% 746,055 725,394 2.85%Shares outstanding 4,324,836 4,339,436 (14,600) 4,339,436 4,357,436 (18,000)Book value per share$15.11$15.38$(0.27)$14.59$14.10$0.49 Daily averages:Three months endingMar 31, 2021Three months endingMar 31, 2020ChangeLoans, net$604,264$574,1855.24%Loans held for sale 6,158 3,65368.57%Total securities 96,246 55,96271.98%Total deposits 788,308 659,86319.47%Stockholders' equity 64,794 61,2435.80%Interest earning assets 816,611 677,50520.53%Interest bearing liabilities 643,736 574,06012.14%Total assets 873,358 735,75918.70% Financial Ratios:Three months endingMar 31, 2021Three months endingMar 31, 2020ChangeReturn on average assets0.85%0.54%0.31 Return on average equity11.49%6.52%4.97 Net interest margin3.35%3.63%(0.31)Efficiency ratio75.03%74.47%0.56 Average equity to average assets7.42%8.32%(0.90) Allowance for loan losses:Three months endingMar 31, 2021Three months endingMar 31, 2020ChangeBeginning balance$7,156 $4,829 48.19%Provision for losses - 888 -100.00%Charge-offs (64) (260)-75.38%Recoveries 14 17 -17.65%Ending balance 7,106 5,474 29.81% Nonperforming assets:Mar 31,2021Dec 31,2020ChangeMar 31,2020Dec 31,2019ChangeTotal nonperforming loans$1,963$2,064-4.89%$1,454$1,30111.76%Other real estate owned 761 1,105-31.13% 1,761 2,339-24.71%Total nonperforming assets 2,724 3,169-14.04% 3,215 3,640-11.68%Troubled debt restructurings - (performing portion) 384 392-2.04% 409 410-0.24% Asset quality ratios:Mar 31,2021Dec 31,2020ChangeMar 31,2020Dec 31,2019ChangeNonperforming loans to total loans0.32%0.34%(0.02)0.25%0.23%0.02Allowance for loan losses to total loans1.16%1.17%(0.01)0.95%0.84%0.11Allowance for loan losses to nonperforming loans362.00%346.71%15.29 376.48%371.18%5.30 Bank of the James Financial Group, Inc. and SubsidiariesConsolidated Balance Sheets(dollar amounts in thousands, except per share amounts) (unaudited) Assets3/31/2021 12/31/2020Cash and due from banks$33,725 $31,683Federal funds sold 90,325 69,203Total cash and cash equivalents 124,050 100,886 Securities held-to-maturity (fair value of $3,948 in 2021 and $4,192 in 2020) 3,667 3,671Securities available-for-sale, at fair value 99,832 90,185Restricted stock, at cost 1,551 1,551Loans, net of allowance for loan losses of $7,106 in 2021 and $7,156 in 2020 606,485 601,934Loans held for sale 4,150 7,102Premises and equipment, net 16,925 16,621Software, net 303 361Interest receivable 2,256 2,350Cash value - bank owned life insurance 16,453 16,355Other real estate owned 761 1,105Other assets 9,927 9,265Total assets$886,360 $851,386 Liabilities and Stockholders' Equity Deposits Noninterest bearing demand 158,469 143,345NOW, money market and savings 497,191 463,506Time 145,530 158,116Total deposits 801,190 764,967 Capital notes 10,029 10,027Interest payable 64 85Other liabilities 9,743 9,575Total liabilities$821,026 $784,654 Stockholders' equity Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,324,836 and 4,339,436 as of March 31, 2021 and December 31, 2020 9,255 9,286Additional paid-in-capital 30,808 30,989Accumulated other comprehensive (loss) income (925) 1,792Retained earnings 26,196 24,665Total stockholders' equity$65,334 $66,732 Total liabilities and stockholders' equity$886,360 $851,386 Bank of the James Financial Group, Inc. and SubsidiariesConsolidated Statements of Income(dollar amounts in thousands, except per share amounts)(unaudited) For the Three Months Ended March 31,Interest Income2021 2020Loans$6,860 $7,005Securities US Government and agency obligations 191 187Mortgage backed securities 77 59Municipals 153 75Dividends 6 9Other (Corporates) 50 23Interest bearing deposits 14 64Federal Funds sold 14 66Total interest income 7,365 7,488 Interest Expense Deposits NOW, money market savings 135 326Time Deposits 373 897Finance leases 27 30Brokered time deposits - 49Capital notes 82 50Total interest expense 617 1,352 Net interest income 6,748 6,136 Provision for loan losses - 888 Net interest income after provision for loan losses 6,748 5,248 Noninterest income Gains on sale of loans held for sale 1,774 1,177Service charges, fees and commissions 554 488Life insurance income 98 78Other 8 12Gain (loss) on sales of available-for-sale securities - 431Total noninterest income 2,434 2,186 Noninterest expenses Salaries and employee benefits 3,732 3,354Occupancy 428 436Equipment 626 609Supplies 118 127Professional, data processing, and other outside expense 914 924Marketing 273 136Credit expense 276 196Other real estate expenses 66 99FDIC insurance expense 165 57Other 291 259Total noninterest expenses 6,889 6,197 Income before income taxes 2,293 1,237 Income tax expense 458 242 Net Income$1,835 $995 Weighted average shares outstanding - basic 4,333,274 4,348,040Weighted average shares outstanding - diluted 4,333,274 4,348,040Net income per common share - basic$0.42 $0.23Net income per common share - diluted$0.42 $0.23

  • Bank of the James Financial Group (NASDAQ:BOTJ) Could Be A Buy For Its Upcoming Dividend
    Simply Wall St.

    Bank of the James Financial Group (NASDAQ:BOTJ) Could Be A Buy For Its Upcoming Dividend

    Readers hoping to buy Bank of the James Financial Group, Inc. ( NASDAQ:BOTJ ) for its dividend will need to make their...

  • GlobeNewswire

    Bank of the James Announces Fourth Quarter, Full Year 2020 Financial Results and Declaration of Dividend

    Preserving Asset Quality, Maintaining Safe Operations, Strong Residential Mortgage ActivityLYNCHBURG, Va., Jan. 22, 2021 (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 Region 2000 (the greater Lynchburg MSA), and the Blacksburg, Charlottesville, Harrisonburg, Lexington, and Roanoke, Virginia markets, today announced unaudited results for the three and 12 month periods ended December 31, 2020. Net income for the three months ended December 31, 2020 was $1.71 million or $0.39 per diluted share, compared with $1.52 million or $0.35 per diluted share for the three months ended December 31, 2019. Net income for the 12 months ended December 31, 2020 was $4.98 million or $1.15 per diluted share, compared with $5.61 million or $1.28 per diluted share for the 12 months ended December 31, 2019. Robert R. Chapman III, President and CEO, commented: “In 2020, our Company’s primary areas of focus were ensuring the health and safety of our employees and our customers, providing responsive service and operating efficiently with robust technological capabilities, and maintaining asset quality and liquidity in a fast-changing and challenging marketplace. While adapting to a more digital and socially distanced environment, our experienced bankers demonstrated flexibility and dedication as they met the challenges and provided the financial guidance, services and products customers needed. “Our Company’s response to unprecedented economic and operating conditions enabled Bank of the James to deliver a positive financial performance, which included the best fourth quarter earnings in the Company’s history. We strengthened the balance sheet by enhancing liquidity, increasing the allowance for loan losses, lowering total nonperforming assets, and increasing total assets compared with a year earlier. Our financial performance continued a longstanding history of building shareholder value, including the continuation of a quarterly cash dividend. As we enter 2021, we continue to be on alert in a still-evolving and challenging economic environment.” Highlights Net income in 2020 reflected strong noninterest income, which included record revenue from the gain on sale of originated residential mortgages to the secondary market. For the year ended December 31, 2020, total noninterest income was $11.0 million, up 53% compared with $7.2 million a year earlier. In addition to gains on sales of residential mortgages, noninterest income also reflected increased year-over-year income from gains on sales of available-for-sale securities, higher revenue from corporate treasury services, and loan processing and other fees.Net interest income was $6.9 million in the fourth quarter of 2020, up from $6.1 million a year earlier. For the year ended December 31, 2020, net interest income was $25.1 million compared with $24.6 million a year earlier. As a result of reduced commercial loan demand and activity due to the pandemic, interest income for the twelve months ended December 31, 2020 was slightly lower than 2019. The decrease was more than offset by lower interest expense during the same period.Loans, net of the allowance for loan losses, were $601.9 million at December 31, 2020, compared with $573.3 million at December 31, 2019. The increase primarily reflects the addition of government-guaranteed Payroll Protection Program (PPP) loans. Net loans declined from the end of the third quarter of 2020 as government PPP loans were forgiven.Asset quality remained sound at 0.34% of nonperforming loans to total loans. The allowance for loan losses to total loans increased to 1.17% at December 31, 2020 (approximately 1.27% excluding government-guaranteed PPP loans) from 0.84% at December 31, 2019, primarily reflecting increased reserves related to the impact of COVID-19.Total deposits increased sharply to $765.0 million at December 31, 2020 from $649.5 million at December 31, 2019. The increase reflects core deposit growth (noninterest-bearing demand, NOW, savings and money market accounts) as customers maintained higher balances, attributable in part to government economic stimulus funds not yet deployed, and also organic growth from increased deposit relationships.Total stockholders’ equity was $66.7 million at December 31, 2020 compared with $61.4 million at December 31, 2019. Book value per share rose to $15.38 per share from $14.10 the prior year.On January 19, 2021 the Company’s board of directors approved a $0.07 per share dividend payable to stockholders of record on March 5, 2021, to be paid on March 19, 2021.The Company's board of directors has also authorized a share repurchase program extending through January 18, 2022, which authorizes the Company to buy back up to 47,000 shares on such terms and conditions as the Company deems favorable and in compliance with Rule 10b-18 of the Securities Exchange Act of 1934. “The pandemic and economic uncertainty in 2020 impacted our normal commercial lending activity and growth; however, we did earn new customers and help meet the capital needs of business customers with our wide variety of lending products and capabilities. Driven in part by PPP lending, commercial lending was up significantly year-over year. Both residential and commercial construction lending continued at a brisk pace. Our participation in the PPP was a positive experience, helping many small and medium-sized businesses throughout the region. We are ready to provide further assistance as a subsequent round of government-backed financing has just become available. “Our mortgage business had an exceptional year as demand for homes throughout our served region was very strong. Our mortgage team, working with advanced technology, credit analysis and loan processing tools, were able to communicate and work with customers quickly and efficiently in a digitally driven environment. Residential mortgage origination activity drove significant noninterest income growth. “While we remain cautious and watchful, we were last year, and continue to be encouraged by the relative economic strength of our region despite the appropriately cautious approach taken by businesses and individuals. Unemployment rates in the markets we serve have trended below national averages, housing demand has been strong, in part caused by low home inventories, and there continues to be generally stable business activity. “We continue to focus on protecting the health and safety of employees and customers while effectively conducting business. We have continued our tradition of supporting the community through financial support of charitable and civic organizations, and we express unwavering gratitude for the services being provided by community outreach organizations, healthcare professionals, first-responders, and essential workers.” Fourth Quarter, Full Year 2020 Operational Review Total interest income was $7.8 million in the fourth quarter of 2020 compared with $7.6 million a year earlier, despite moderate declines in commercial lending activity and continuing pressure on interest rates. Interest expense declined sharply to $890,000 in the fourth quarter of 2020 from $1.5 million a year earlier. Despite a larger deposit base and increased core deposits (noninterest-bearing demand, NOW, savings and money market accounts) interest expense during the quarter and year ended December 31, 2020 decreased as compared to the same periods last year due to a decrease in rates paid on interest-bearing liabilities from 1.04% in the fourth quarter of 2019 down to 0.55% in the fourth quarter of 2020. This decrease in rates paid on interest-bearing liabilities also reflected a private placement of unregistered debt securities used to retire an earlier private placement at a higher rate. Net interest income after the provision for loan losses was $6.7 million for the three months ended December 31, 2020 compared with $6.0 million for the three months ended December 31, 2019. The loan loss provision for the fourth quarter 2020 was $200,000 compared with $89,000 a year earlier. For the full year of 2020, net interest income after the provision for loan losses was $22.6 million compared with $24.0 million a year earlier, primarily reflecting an increase in the provision as the Company adjusted qualitative allocations related to uncertainties surrounding the COVID-19 pandemic and the effect on economic conditions, loan concentrations in sectors adversely affected by the pandemic, and loans granted payment deferrals or interest-only payment status in the short term. At year-end 2020, four loans were in payment deferral and/or interest-only status and the total principal amount of these four loans was approximately $7 million. The average rate earned on loans was 4.68% in the fourth quarter of 2020, compared with 4.92% in the fourth quarter of 2019. The net interest margin was 3.42% in the fourth quarter of 2020 and the interest rate spread was 3.35%. For the year ended December 31, 2020, the average rate on loans was 4.57% compared with 4.97% a year earlier. The net interest margin for the year ended December 31, 2020 was 3.32% and the interest rate spread was 3.17%. J. Todd Scruggs, Executive Vice President and CFO, commented: “While the reduction in the year-over-year margin and spread was disappointing, because of the challenges presented by the operating environment, we consider the reduction acceptable. Throughout the year, pressure on interest rates, the addition of low-interest PPP loans, which had a negative impact on rates earned, and carrying additional contingent liquidity in the form of Fed funds contributed to net interest margin compression. “We received some PPP forgiveness payments in the fourth quarter of 2020, and while some PPP fees were accreted into interest income, the fees did not offset a decline in loan yields. In 2021 we anticipate that we will realize additional fees related to the PPP loans of approximately $850,000, which should have a positive impact on the margin. Our primary focus continues to be preserving margins and managing credit quality as the environment has stabilized somewhat but remains far from normalized.” In the fourth quarter of 2020, 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 $2.9 million, up from $2.1 million in the fourth quarter of 2019. The Company recorded $2.2 million in gains from the sale of loans held-for-sale in the fourth quarter of 2020 compared with $1.2 million in the fourth quarter of 2019. Noninterest income growth was a major factor in the Company’s full year 2020 financial results. Noninterest income for the year ended December 31, 2020 was $11.0 million compared with $7.2 million for the year ended December 31, 2019. The growth primarily reflected gains on sale of loans held-for-sale, which were $7.8 million in 2020 compared with $4.3 million a year earlier, driven primarily by brisk residential mortgage originations and mortgage refinancings. Noninterest expense for the three months and full year ended December 31, 2020 increased compared with a year earlier, reflecting increased personnel expenses that included performance-based compensation for residential mortgage production and costs related to an early retirement program. Noninterest expense in the full year of 2020 included approximately $750,000 in one-time costs related to the early retirement program and additional employee compensation of approximately $245,000 related to PPP loan originations. The recognition of the origination fees and costs related to the PPP loans will be accelerated and recognized upon forgiveness or repayment of the PPP loans. For the year ended December 31, 2020, Return on Average Assets (ROAA) was 0.62% compared with 0.80% a year earlier, primarily reflecting asset growth and lower earnings, impacted by a higher provision for loan losses. Return on Average Equity (ROAE) was 8.01% compared with 9.52% a year earlier. The Company’s efficiency ratio was 75.84% in the year ended December 31, 2020 compared with 76.51% in the prior year, reflecting a continued companywide focus on operating expense management and an effort to shift resources towards additional digital operations. Balance Sheet Review: Asset Quality, Prudent Reserves, Liquidity Total assets were $851.4 million at December 31, 2020 compared with $725.4 million at December 31, 2019. Asset growth primarily reflected increased loans, net of allowance for loan losses, including PPP loans, increased loans held-for-sale related to the Company’s mortgage originations, higher cash reserves, and an increase in the securities available-for-sale portfolio. The Company has maintained higher levels of cash and liquid assets consistent with economic conditions and the potential impact of COVID-19 on customers. Loans, net of allowance for loan losses of $7.2 million, were $601.9 million at December 31, 2020 compared with loans, net of allowance for loan losses of $4.8 million, of $573.3 million at December 31, 2019. Of the $68 million in PPP loans originally made, approximately $46 million remained on the balance sheet at year-end 2020. Commercial lending, excluding PPP lending, decreased in 2020. The Company approved and closed new loans, but not at a sufficient pace to offset payoffs and normal amortization. The Company has increased the allowance for loan and lease losses (ALLL) throughout 2020 to reflect the Company’s ongoing consideration of the pandemic in the development of the allowance estimate. Residential mortgage origination was strong throughout 2020, generating fee income and gains from sale to the secondary market. The Company maintained a relatively stable portfolio of retained residential mortgages, which was $46.9 million at December 31, 2020, down slightly from 2019. Total commercial loans were $145.1 million at December 31, 2020 compared with $114.3 million at December 31, 2019 and down from $174.8 million at September 30, 2020, which primarily reflected forgiven PPP loans. At December 31, 2020, commercial mortgages (owner occupied) were $108.2 million and commercial mortgages (non-owner occupied) were $171.1 million compared with $104.8 million and $182.2 million, respectively, at December 31, 2019. Commercial construction loans rose to $30.3 million from $16.9 million a year earlier. Residential mortgages and residential construction were essentially flat compared with a year earlier. Consumer lending was relatively stable in 2020 compared with 2019. Asset quality has remained strong, with a ratio of nonperforming loans to total loans of 0.34% at December 31, 2020. The allowance for loan losses to total loans was 1.17% (approximately 1.27%, excluding guaranteed PPP loans) at December 31, 2020. Total nonperforming loans at December 31, 2020 were $2.1 million compared with $1.3 million at December 31, 2019. Chapman noted that diligently managing credit quality and promptly working with customers to address credit issues contributed to what management believes was a relatively modest increase in nonperforming loans given the economic conditions. The Company’s allowance for loan losses to nonperforming loans increased to 347% at December 31, 2020, reflecting current economic uncertainties. Other real estate owned declined sharply year-over-year, reflecting sales and a partial write-down of a foreclosed commercial property. Total deposits at December 31, 2020 were $765.0, compared with $649.5 at December 31, 2019. Increased demand deposits accounted for a significant portion of the growth, in part due to increased balances held by businesses during the pandemic, but also reflecting organic growth in the Bank’s markets. Core deposits (noninterest bearing demand, NOW, money market and savings) were 78% of total deposits at December 31, 2020. The Company continued to build measures of shareholder value, with total stockholders’ equity of $66.7 million at December 31, 2020, up from $61.4 million at December 31, 2019 and retained earnings of $24.7 million compared with $20.9 million in the same periods respectively. Book value per share was $15.38 as compared to $14.10 at December 31, 2019. 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 currently services customers in Virginia from offices located in Altavista, Amherst, Appomattox, Bedford, Blacksburg, Charlottesville, Forest, Harrisonburg, Lexington, Lynchburg, Madison Heights, Roanoke, and Rustburg. 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, the effect of the COVID-19 pandemic, 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. CONTACT: J. Todd Scruggs, Executive Vice President and Chief Financial Officer (434) 846-2000.tscruggs@bankofthejames.com FINANCIAL STATEMENTS FOLLOW Bank of the James Financial Group, Inc. and SubsidiariesDollar amounts in thousands, except per share dataUnauditedSelected Data Selected Data:ThreemonthsendingDec 31,2020ThreemonthsendingDec 31,2019ChangeYeartodateDec 31,2020YeartodateDec 31,2019ChangeInterest income$7,779$7,596 2.41%$29,686$29,816 -0.44%Interest expense 890 1,491 -40.31% 4,540 5,264 -13.75%Net interest income 6,889 6,105 12.84% 25,146 24,552 2.42%Provision for loan losses 200 89 124.72% 2,548 523 387.19%Noninterest income 2,936 2,149 36.62% 10,975 7,188 52.69%Noninterest expense 7,518 6,336 18.66% 27,394 24,283 12.81%Income taxes 397 309 28.48% 1,199 1,329 -9.78%Net income 1,710 1,520 12.50% 4,980 5,605 -11.15%Weighted average shares outstanding - basic 4,339,436 4,368,034 (28,598) 4,341,575 4,375,814 (34,239)Weighted average shares outstanding - diluted 4,339,436 4,376,985 (37,549) 4,341,575 4,381,597 (40,022)Basic net income per share$0.39$0.35$0.04 $1.15$1.28$(0.13)Fully diluted net income per share$0.39$0.35$0.04 $1.15$1.28$(0.13) Balance Sheet atperiod end:Dec 31,2020Dec 31,2019ChangeDec 31,2019Dec 31,2018ChangeLoans, net$601,934$573,274 5.00%$573,274$530,016 8.16%Loans held-for-sale 7,102 4,221 68.25% 4,221 1,670 152.75%Total securities 93,856 63,343 48.17% 63,343 56,427 12.26%Total deposits 764,967 649,459 17.79% 649,459 612,043 6.11%Stockholders' equity 66,732 61,445 8.60% 61,445 55,143 11.43%Total assets 851,386 725,394 17.37% 725,394 674,897 7.48%Shares outstanding 4,339,436 4,357,436 (18,000) 4,357,436 4,378,436 (21,000)Book value per share$15.38$14.10$1.28 $14.10$12.59$1.51 Daily averages:ThreemonthsendingDec 31,2020ThreemonthsendingDec 31,2019ChangeYeartodateDec 31,2020YeartodateDec 31,2019ChangeLoans, net$614,472 $531,836 15.54%$608,831 $551,362 10.42%Loans held-for-sale 9,269 3,821 142.58% 6,876 3,559 93.20%Total securities 82,520 61,230 34.77% 65,458 58,584 11.73%Total deposits 772,437 649,769 18.88% 725,878 628,680 15.46%Stockholders' equity 63,429 60,416 4.99% 62,193 58,871 5.64%Interest earning assets 799,604 666,410 19.99% 758,439 651,770 16.37%Interest bearing liabilities 636,901 567,112 12.31% 608,680 544,038 11.88%Total assets 854,729 724,495 17.98% 805,120 698,655 15.24%Financial Ratios:ThreemonthsendingDec 31,2020ThreemonthsendingDec 31,2019ChangeYeartodateDec 31,2020YeartodateDec 31,2019ChangeReturn on average assets 0.79% 0.83%(0.04) 0.62% 0.80%(0.18)Return on average equity 10.70% 9.98%0.72 8.01% 9.52%(1.51)Net interest margin 3.42% 3.63%(0.21) 3.32% 3.77%(0.45)Efficiency ratio 76.52% 76.76%(0.24) 75.84% 76.51%(0.67)Average equity to average assets 7.42% 8.34%(0.92) 7.72% 8.43%(0.71) Allowance for loan losses:ThreemonthsendingDec 31,2020ThreemonthsendingDec 31,2019ChangeYeartodateDec 31,2020YeartodateDec 31,2019ChangeBeginning balance$6,966 $4,773 45.95%$4,829 $4,581 5.41%Provision for losses 200 89 124.72% 2,548 523 387.19%Charge-offs (52) (44)18.18% (448) (363)23.42%Recoveries 42 11 281.82% 227 88 157.95%Ending balance 7,156 4,829 48.19% 7,156 4,829 48.19% Nonperforming assets:Dec 31,2020Dec 31,2019ChangeDec 31,2019Dec 31,2018ChangeTotal nonperforming loans$2,064$1,30158.65%$1,301$2,939-55.73%Other real estate owned 1,105 2,339-52.76% 2,339 2,430-3.74%Total nonperforming assets 3,169 3,640-12.94% 3,640 5,369-32.20%Troubled debt restructurings - (performing portion) 392 410-4.39% 410 424-3.30% Asset quality ratios:Dec 31,2020Dec 31,2019ChangeDec 31,2019Dec 31,2018ChangeNonperforming loans to total loans0.34%0.23%0.11 0.23%0.55%(0.32)Allowance for loan losses to total loans1.17%0.84%0.33 0.84%0.86%(0.02)Allowance for loan losses to nonperforming loans346.71%371.18%(24.47)371.18%155.87%215.31 Bank of the James Financial Group, Inc. and SubsidiariesConsolidated Balance Sheets(dollar amounts in thousands, except per share amounts) (unaudited) Assets12/31/2020 12/31/2019Cash and due from banks$31,683 $30,794 Federal funds sold 69,203 8,317 Total cash and cash equivalents 100,886 39,111 Securities held-to-maturity (fair value of $4,192 in 2020 and $3,861 in 2019) 3,671 3,688 Securities available-for-sale, at fair value 90,185 59,655 Restricted stock, at cost 1,551 1,506 Loans, net of allowance for loan losses of $7,157 in 2020 and $4,829 in 2019 601,934 573,274 Loans held-for-sale 7,102 4,221 Premises and equipment, net 16,621 16,297 Software, net 361 401 Interest receivable 2,350 1,866 Cash value - bank owned life insurance 16,355 13,686 Other real estate owned 1,105 2,339 Deferred tax asset 1,219 1,177 Other assets 8,046 8,173 Total assets$851,386 $725,394 Liabilities and Stockholders' Equity Deposits Noninterest bearing demand$143,345 $93,936 NOW, money market and savings 463,506 362,821 Time 158,116 192,702 Total deposits 764,967 649,459 Capital notes 10,027 5,000 Income taxes payable 286 124 Interest payable 85 173 Other liabilities 9,289 9,193 Total liabilities$784,654 $663,949 Stockholders' equity Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,339,436 and 4,357,436 as of December 31, 2020 and 2019$9,286 $9,325 Additional paid-in-capital 30,989 31,225 Accumulated other comprehensive income (loss) 1,792 (5)Retained earnings 24,665 20,900 Total stockholders' equity$66,732 $61,445 Total liabilities and stockholders' equity$851,386 $725,394 Bank of the James Financial Group, Inc. and SubsidiariesConsolidated Statements of Income(dollar amounts in thousands, except per share amounts)(unaudited) (unaudited)For the Three Months For the Year Ended December 31, Ended December 31,Interest Income 2020 2019 2020 2019Loans$7,326 $7,009 $28,021 $27,559Securities US Government and agency obligations 184 210 690 755Mortgage backed securities 53 49 217 220Municipals 123 76 372 315Dividends 30 33 78 93Other (Corporates) 46 24 117 94Interest bearing deposits 4 73 89 326Federal Funds sold 13 122 102 454 Total interest income 7,779 7,596 29,686 29,816 Interest Expense Deposits NOW, money market savings 135 455 804 1,537Time Deposits 646 907 3,205 3,201Finance leases 28 30 115 71Brokered time deposits - 49 143 255Capital notes 81 50 273 200 Total interest expense 890 1,491 4,540 5,264 Net interest income 6,889 6,105 25,146 24,552 Provision for loan losses 200 89 2,548 523 Net interest income after provision for loan losses 6,689 6,016 22,598 24,029 Noninterest income Gains on sale of loans held-for-sale 2,226 1,151 7,812 4,254Service charges, fees and commissions 533 437 2,033 1,785Life insurance income 147 431 436 679Other 30 27 50 76Gain on sales of available-for-sale securities - 103 644 394 Total noninterest income 2,936 2,149 10,975 7,188 Noninterest expenses Salaries and employee benefits 4,390 3,655 15,430 13,092Occupancy 401 403 1,638 1,655Equipment 612 586 2,350 2,107Supplies 126 130 479 597Professional, data processing, and other outside expense 807 871 3,691 3,432Marketing 167 217 667 866Credit expense 281 175 1,112 653Other real estate expenses 308 26 443 366FDIC insurance expense 116 (49) 336 226Other 310 322 1,248 1,289 Total noninterest expenses 7,518 6,336 27,394 24,283 Income before income taxes 2,107 1,829 6,179 6,934 Income tax expense 397 309 1,199 1,329 Net Income$1,710 $1,520 $4,980 $5,605 Weighted average shares outstanding - basic 4,339,436 4,368,034 4,341,575 4,375,814 Weighted average shares outstanding - diluted 4,339,436 4,376,985 4,341,575 4,381,597 Net income per common share - basic$0.39 $0.35 $1.15 $1.28 Net income per common share - diluted$0.39 $0.35 $1.15 $1.28