Business Context and Reporting Period
Company: Bank of the James Financial Group, Inc. (BOTJ)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Headquarters: Lynchburg, Virginia
Business Overview: BOTJ is a bank holding company operating primarily through its subsidiary, Bank of the James. The company focuses on retail and commercial banking, mortgage origination, and investment advisory services (via subsidiary Pettyjohn, Wood & White, Inc.). As of December 31, 2025, the company exceeded $1 billion in total assets for the first time.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Total Assets | $1,039,024,000 | $979,244,000 |
| Net Income | $9,022,000 | $7,944,000 |
| Earnings Per Share (Basic & Diluted) | $1.99 | $1.75 |
| Net Interest Income | $32,807,000 | $29,236,000 |
| Noninterest Income | $15,852,000 | $15,137,000 |
| Total Deposits | $937,129,000 | $882,404,000 |
| Net Loans (Net of Allowance) | $661,357,000 | $636,552,000 |
| Net Interest Margin | 3.39% | 3.11% |
| Return on Average Equity | 12.68% | 12.70% |
| Return on Average Assets | 0.88% | 0.80% |
| Efficiency Ratio | 77.17% | 79.11% |
| Allowance for Credit Losses (ACL) | $6,450,000 (0.97% of loans) | $7,044,000 (1.09% of loans) |
| Stockholders' Equity | $80,048,000 | $64,865,000 |
Material Changes vs. Prior Period
- Profitability Growth: Net income increased by $1.078 million (13.6%) driven primarily by a $3.571 million increase in net interest income. This was fueled by a 28 basis point expansion in net interest margin and reduced interest expense following the retirement of $10.05 million in capital notes in June 2025.
- Asset Expansion: Total assets grew 6.1% to over $1 billion. Loan growth was 3.9%, while deposits grew 6.2%, enhancing liquidity.
- Noninterest Income: Increased 4.7% to $15.852 million. Wealth management fees rose 10.4% to $5.347 million as Assets Under Management (AUM) at the PWW subsidiary grew to approximately $1.03 billion.
- Expense Management: The efficiency ratio improved to 77.17% as revenue growth (9.7%) outpaced expense growth (7.0%). Data processing expenses were reduced through vendor renegotiations.
- Asset Quality: Nonaccrual loans increased slightly to $1.704 million (0.26% of total loans). The ACL decreased as a percentage of loans due to model updates and loan growth, though total charge-offs increased to $447,000 from $84,000 in 2024.
Guidance, Outlook, and Risks
Management Commentary & Outlook: Management anticipates continued growth in wealth management fees and core deposit expansion. The company successfully managed deposit pricing downward in 2025 as the Federal Reserve cut rates. The company does not have specific numerical guidance for 2026 but expects to maintain disciplined underwriting and expense management. The company declared a Q4 2025 dividend of $0.11 per share.
Key Risks & Contingencies:
- Interest Rate Risk: The company is asset-sensitive; further rate cuts could negatively impact net interest income, while rising rates could increase funding costs.
- Credit Risk: A significant portion of the loan portfolio is secured by commercial real estate (CRE). Deterioration in local economic conditions or the CRE market could increase nonperforming loans and charge-offs.
- Cybersecurity: The company faces evolving threats including AI-enabled fraud and ransomware. While no material losses were incurred in 2025, operational disruptions remain a risk.
- Regulatory Environment: Changes in capital requirements, FDIC assessments, and consumer protection laws could increase compliance costs.
Investor Verification Checklist
- Capital Note Retirement: Verify the impact of the June 2025 repayment of $10.05 million in capital notes on future interest expense and net interest margin sustainability.
- CECL Model Updates: Review the specific parameters of the CECL model updates implemented in Q2 2025 that reduced the allowance for credit losses, ensuring they remain appropriate for current economic forecasts.
- Commercial Real Estate Concentration: Assess the exposure to non-owner occupied CRE ($215.3 million, or 32.24% of total loans) and the quality of collateral in the local Virginia markets.
- Uninsured Deposits: Monitor the level of uninsured deposits ($252.8 million excluding public deposits), which represents approximately 27% of total deposits, for potential liquidity volatility.
- Securities Portfolio: Review the $14.9 million unrealized loss (net of tax) in the available-for-sale securities portfolio and the company's intent to hold these to maturity.