Bank of the James Announces Third Quarter, Nine Months of 2020 Financial Results and Declaration of Dividend

Rhea-AI Summary

Bank of the James Financial Group (NASDAQ: BOTJ) reported its unaudited financial results for the third quarter and nine months ending September 30, 2020. Net income decreased to $1.45 million ($0.34 per diluted share) for Q3 2020, down from $1.47 million a year earlier. For the first nine months, net income was $3.27 million ($0.75 per diluted share), down from $4.09 million in 2019. Noninterest income rose significantly to $3.06 million in Q3 2020, largely driven by residential mortgage origination. Total deposits increased to $763.9 million, and the Company declared a $0.07 per share dividend.

Positive

• Noninterest income increased to $3.06 million in Q3 2020 from $2.16 million YoY.
• Loans receivable increased by 8% to $616.58 million compared to December 31, 2019.
• Nonperforming loans declined to $2.54 million from $5.19 million in the previous quarter.
• Total deposits rose to $763.9 million, up from $746.0 million in Q2 2020.

Negative

• Net income for Q3 2020 decreased compared to Q3 2019.
• Net income for the nine months of 2020 dropped to $3.27 million from $4.09 million YoY.
• Interest income declined due to pressure on commercial lending and low-interest environment.

Commercial Banking Stability, Active Mortgage Origination, Strong Asset Quality

LYNCHBURG, Va., Oct. 23, 2020 (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 months and nine months ended September 30, 2020.

Net income for the three months ended September 30, 2020 was $1.45 million or $0.34 per diluted share, compared with $1.47 million or $0.34 per diluted share for the three months ended September 30, 2019. Net income for the nine months ended September 30, 2020 was $3.27 million or $0.75 per diluted share, compared with $4.09 million or $0.93 per diluted share for the nine months ended September 30, 2019.

Highlights

• Net income in the third quarter and nine months of 2020 reflected strong noninterest income. Residential mortgage origination, which generates noninterest income from gains on loan sales to the secondary market, contributed significantly to increased total noninterest income, which was $3.06 million in the third quarter of 2020 compared with $2.16 million a year earlier. In the nine months of 2020, total noninterest income was $8.04 million, up from $5.04 million a year earlier, reflecting increased gains on sales of available-for-sale securities, residential mortgage origination income, fee income from corporate treasury services and other fees.
• Net interest income was $6.20 million in the third quarter of 2020, up from with $6.17 million a year earlier, primarily reflecting reduced interest expense which was offset by a modest decline in interest income from commercial lending.
• Loans receivable, net of the allowance for loan losses, were $616.58 million at September 30, 2020, up 8% from $573.27 million at December 31, 2019. The increase primarily reflects the addition of government-guaranteed Payroll Protection Plan (PPP) loans, relative stability in commercial real estate lending, and continued strength in commercial construction lending.
• On a consecutive quarter comparison, nonperforming loans declined sharply to $2.54 million at September 30, 2020 from $5.19 million at June 30, 2020, primarily reflecting recovery of a previously reported nonaccrual loan and property sale.
• Asset quality remained strong at 0.41% of nonperforming loans to total loans. Allowance for loan losses to total loans increased to 1.12% at September 30, 2020 (approximately 1.25% excluding government-guaranteed PPP loans) from 0.84% at December 31, 2019, primarily reflecting reserves related to the impact of COVID-19.
• Total deposits were $763.9 million at September 30, 2020, up from $746.0 million at June 30, 2020 and $649.5 million at December 31, 2019. The increase reflects increased core deposits (noninterest-bearing demand, NOW, savings and money market accounts) as customers maintained higher balances, attributable in part to PPP loan funds not yet to be deployed, increased deposit relationships, and growth generated by offices opened over the last several years.
• Total stockholders’ equity was $65.8 million at September 30, 2020 compared with $61.4 million at December 31, 2019. Book value per share rose to $15.16 per share at September 30, 2020.
• On October 20, 2020 the Company’s board of directors approved a $0.07 per share dividend payable to stockholders of record on November 27, 2020, to be paid on December 11, 2020.
• In the third quarter of 2020, the Company completed a private placement of unregistered debt securities totaling $10.05 million at a 3.25% interest rate. Of that amount, $5 million was used to retire an earlier private placement carrying a higher rate.
• Consistent with the previously filed Form 10-Q Quarterly Reports, the Company anticipates expanded disclosure to be filed with the Securities and Exchange Commission related to business sectors and credit quality covering the three and nine month periods ended September 30, 2020.

Robert R. Chapman III, President and CEO, commented: “The markets we serve throughout the region have proven resilient despite the challenges and uncertainties presented by the pandemic. Bank of the James has focused on ensuring the health and safety of our customers, our employees and the community while continuing to provide the highest levels of customer service and a personal approach to retail and business banking that has been our hallmark for more than 20 years.

“We have seen the positive impact of making PPP loans to small and medium-sized businesses throughout the region, providing businesses with financial security and the ability to continue operating and supporting their employees. We recognize challenges are still ahead, however, based on our Company’s financial performance and the general economic stability of our served markets, we are cautiously optimistic. The majority of the businesses we serve have been adaptable and shown much grit and determination. We have worked with them to manage their businesses and financial challenges.

“Margins, returns and interest income continue to be impacted by expected business slowdowns and the issuance of low-interest PPP loans. Importantly, the Bank has not experienced any unusual pressure on deposit balances or liquidity positions as a result of COVID-19. We believe the Company’s fundamentals are strong. We have prepared for this period by increasing capital resources, expanding reserves and provisioning for potential loan losses, building cash reserves, and more.

“The Company continued to build value, with increased shareholder equity and increased book value that provided the confidence to declare another quarterly cash dividend to shareholders. The Company’s strong financial performance, prudent provisioning for loan losses, and continued focus on problem-solving and seeking out opportunities support our confidence in the future.”

Third Quarter, Nine Months of 2020 Operational Review

Total interest income was $7.3 million in the third quarter of 2020 compared with $7.6 million a year earlier and $7.1 million in the second quarter of 2020, primarily reflecting moderate declines in commercial lending and continuing pressure on interest rates. Interest expense was $1.1 million in the third quarter of 2020 compared with $1.4 million a year earlier. The Company trimmed deposit rates slightly in the third quarter of 2020 to reflect the exceptionally low interest rate environment. A larger deposit base and increased core deposits (noninterest bearing demand and interest-bearing demand accounts) contributed to the rate paid on liabilities in the third quarter of 2020 of 0.65% compared with 0.99% a year earlier.

Net interest income after provision for loan losses was $5.5 mil

FAQ

What were Bank of the James' earnings for Q3 2020?

Bank of the James reported a net income of $1.45 million or $0.34 per diluted share for Q3 2020.

How did total deposits change for Bank of the James?

Total deposits increased to $763.9 million at September 30, 2020, up from $746.0 million at the end of Q2 2020.

What is the dividend declared by Bank of the James?

Bank of the James declared a $0.07 per share dividend payable on December 11, 2020.

How did the net income for the nine months ended September 30, 2020 compare to 2019?

Net income for the nine months ended September 30, 2020 was $3.27 million, down from $4.09 million in the same period of 2019.