-
Bank of the James Announces Third Quarter, Nine Months of 2021 Financial Results and Declaration of Dividend
Источник: Nasdaq GlobeNewswire / 22 окт 2021 11:00:01 America/Chicago
LYNCHBURG, Va., Oct. 22, 2021 (GLOBE NEWSWIRE) -- Bank of the James Financial Group, Inc. (the “Company”) (NASDAQ:BOTJ), the parent company of Bank of the James (the “Bank”), 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 nine month periods ended September 30, 2021.
Net income for the three months ended September 30, 2021 was $1.88 million or $0.40 per diluted share compared with $1.45 million or $0.30 per diluted share for the three months ended September 30, 2020. For the nine months ended September 30, 2021, net income was $5.73 million or $1.21 per diluted share compared with $3.27 million or $0.68 per diluted share for the nine months ended September 30, 2020. The outstanding shares used to calculate earnings per share for both the 2020 and 2021 periods have been adjusted to include a 10% stock dividend declared in June 2021.
Robert R. Chapman III, CEO, Bank of the James and President of the Holding Company, commented: “The Company’s quarterly and year-to-date financial performance reflected continued success in providing efficient and effective service to customers which again resulted in solid earnings. A focus on interest expense management and maintaining strong asset quality have supported the Company’s positive financial performance.
“Working closely with customers to meet their banking needs, manage their finances and maintain credit quality during challenging times has contributed to low levels of nonperforming loans. The Company has not needed to make any provision for loan losses in 2021, which has had a positive impact on net interest income after provision for loan losses and reflects the continuing financial and economic health of our customer base.
“We actively participated in the Payroll Protection Program (PPP), which has been a significant element of our 2021 operations as our team dedicated considerable time and energy to working with customers to secure loans, and processing and managing these loans. As the program is in the final stages of winding down, we believe it has provided meaningful support for the hundreds of commercial customers who participated. We assisted existing customers and welcomed many businesses who were working with Bank of the James for the first time. We look forward to retaining many of these businesses as clients.
“Throughout the communities we serve, the signs of economic recovery are very encouraging. While it is too early to declare victory over COVID-19, the Delta variant and the lingering impact of the pandemic, all signs point to continuing normalization of life and activities. Consistent with our Company’s safe, secure operating philosophy, we are maintaining significant cash reserves and an adequate allowance for loan loss given the risks and uncertainties in the current environment. While we maintain a prudent, cautious stance, we are moving forward with confidence.”
Highlights
- Net income in the third quarter and nine months of 2021 reflected significant noninterest income contributions from mortgage loan processing fees, gains on the sale of originated residential mortgages to the secondary market and continuing growth in the Bank’s fee-based corporate electronic treasury services.
- Total interest income was $7.32 million in the third quarter of 2021 compared with $7.34 million a year earlier, and $21.91 million in the nine months of 2021 compared with $21.91 million a year earlier. Interest income from loans in the third quarter of 2021 reflected increasing organic commercial loan activity offset by declining income related to PPP loans as the program continues to wind down.
- Net interest income after provision for loan losses was $6.82 million in the third quarter of 2021 and $20.28 million in the nine months of 2021, up 24% and 28%, respectively, compared with the 2020 periods. Net interest income in the three and nine-month periods ended September 30, 2021 reflected 57% and 55% year-over-year reductions respectively of interest expense and no provision for loan losses in both periods of 2021.
- Noninterest income in the third quarter and nine months of 2021 primarily reflected income from residential mortgage loan processing fees and gains on the sale of originated mortgage loans as the Bank’s mortgage lending maintained brisk activity.
- Loans, net of the allowance for loan losses, were $583.6 million at September 30, 2021, compared with $601.9 million at December 31, 2020, primarily reflecting ongoing paydowns of PPP loans.
- Commercial real estate loans (owner occupied and non-owner occupied) increased in the third quarter of 2021 from the second quarter of 2021 and have grown by $24.3 million since September 30, 2020.
- Asset quality was sound with a 0.32% ratio of nonperforming loans to total loans, reflecting customers’ strong credit quality, and nonperforming loans remained at low levels. The allowance for loan losses to total loans was 1.23% at September 30, 2021 (approximately 1.27% excluding government-guaranteed PPP loans).
- Total deposits increased to $853.8 million at September 30, 2021 compared with $765.0 million at December 31, 2020, reflecting continued core deposit growth (noninterest-bearing demand, NOW, savings and money market accounts) and continued trimming of time deposits. Growth has reflected factors including increased market presence and new and expanded commercial and retail banking relationships.
- Total stockholders’ equity was $68.9 million at September 30, 2021 compared with $66.7 million at December 31, 2020. Book value per share was $14.53 at September 30, 2021 compared with $15.38 per share at December 31, 2020, primarily reflecting the 10% stock dividend declared in the second quarter of 2021.
- On October 19, 2021 the Company’s board of directors approved a quarterly $0.07 per share dividend payable to stockholders of record on November 26, 2021, to be paid on December 10, 2021.
- The Company’s current stock repurchase plan remains in effect through January 20, 2022. Although the Company did not repurchase any stock pursuant to this program during the third quarter of 2021, the Company continues to look for opportunities to repurchase shares within the safe harbor and when consistent with the Company’s goals.
- In October 2021 Michael A. Syrek was named President of the Bank. He has served as Executive Vice President and Chief Loan Officer since joining the Bank in 2012 and continues to head commercial banking operations and a growing team of bankers. Robert Chapman continues to serve as the CEO of the Bank and President of the Company.
Third Quarter, Nine Months of 2021 Operational Review
Net interest income after provision for loan losses in the third quarter of 2021 was $6.8 million compared with $5.5 million in the third quarter of 2020, with growth reflecting stable interest income, sharply reduced interest expense and no loan loss provision in the 2021 period versus a $700,000 provision in the third quarter of 2020.
Total interest income was $7.3 million in the third quarter of both 2021 and 2020. Total interest income reflected accreted fees from PPP loan processing, offset by flat organic loan growth and continued downward pressure on interest rates. The return on interest earning assets during the third quarter of 2021 was 3.33% compared with 3.71% a year earlier.
In the nine months of 2021, net interest income after provision for loan losses was $20.3 million, up 27% from $15.9 million in the nine months of 2020. The year-over-year increase during the 2021 period primarily reflected stable interest income, a 55% reduction of interest expense, and no provision for loan losses compared with a $2.3 million provision in the nine months of 2020. Total interest income in the nine months of 2021 reflected relatively flat commercial lending activity (exclusive of PPP lending), accretion of PPP loan processing fees, and pressure on interest rates. The return on interest earning assets was 3.44% compared with 3.92% a year earlier.
Lower interest expense in both periods of 2021 reflected reduced costs of time deposits and borrowings, a retirement of higher-cost debt in 2020, and continued growth of lower-cost core deposits (noninterest-bearing demand, NOW, savings and money market accounts). The rate paid on total interest-bearing liabilities was 0.28% in the third quarter of 2021, down from 0.71% a year earlier. The net interest margin was 3.11% and interest spread was 3.05% in the third quarter of 2021. The margin and interest spread in the third quarter and nine months of 2021 were relatively consistent with the margin and interest spread in the comparable 2020 periods.
In the third 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 $2.8 million compared with $3.1 million in the third quarter of 2020. Fees generated by brisk residential mortgage origination activity and subsequent gains on sale of residential mortgage loans have made important income contributions throughout 2021.
For the nine months of 2021, noninterest income was $8.3 million compared with $8.0 million in the comparable period of 2020. Noninterest expense in the third quarter and nine months of 2021 increased slightly compared with both periods in 2020, primarily reflecting increased personnel expenses that included performance-based compensation for residential mortgage production and employee work on PPP loans. The Company’s Return on Average Assets and Return on Average Equity in the third quarter and nine months of 2021 trended positively in the quarterly and nine-month comparisons.
Balance Sheet Review: Asset Quality, Positive Commercial Lending Outlook
Total assets were $942.6 million at September 30, 2021 compared with $851.4 million at December 31, 2020, with the increase primarily reflecting an increase in cash, cash equivalents, and securities available-for-sale resulting from an increase in deposits.
Loans, net of allowance for loan losses of $7.3 million, were $583.6 million at September 30, 2021 compared with loans, net of allowance for loan losses of $7.2 million of $601.9 million at December 31, 2020. On a consecutive quarter basis, the decline in net loans primarily reflected the ongoing paydowns and forgiveness of PPP loans as the program continues to wind down. At September 30, 2021, the Company had approximately $19.0 million of government-guaranteed PPP loans which should decline significantly in the fourth quarter of 2021.
Commercial loans, including outstanding PPP loans, were $116.9 million at September 30, 2021 compared with $145.1 million at December 31, 2020. As noted, this decline primarily reflects paydowns of PPP loans. Slower business activity and conservative borrowing during the pandemic has slowed normal commercial & industrial lending; however, management notes as business conditions improve there are positive signs of increasingly normalized banking activity and growing full-service relationships.
Michael A. Syrek, President of the Bank, commented: “Even during the pandemic, we have been very successful generating CRE and construction lending. In particular, the Lynchburg and Harrisonburg markets have been especially active for lending and commercial banking.
“Importantly, we continue to expand banking relationships with a host of customers in our served markets, and are earning new business because of our extensive product capabilities and services that we believe exceed those of our competitors. Electronic commercial treasury services, cash management, and depository products complement lending. We have continued to approve and close a large volume of new commercial loans, although not at a sufficient pace to offset significant PPP forgiveness payoffs combined with normal amortization.
“As a regional community bank with significant scope and scale, our wide range of sophisticated products combined with expertise and personalized financial solutions give us a significant competitive advantage. As a result, we can look beyond transactional banking and focus on establishing and growing full-service banking relationships with business customers. Our commercial loan pipeline is robust, and we are regularly earning new customers. We believe that as the climate for businesses continues to normalize, we will experience even greater momentum.”
Commercial real estate and commercial construction lending have increased modestly during the past year despite the pandemic and economic uncertainties. At September 30, 2021, owner-occupied commercial mortgages were $123.0 million compared with $102.7 million a year earlier. Non-owner occupied commercial mortgages were $178.1 million at September 30, 2021 compared with $174.2 million at September 30, 2020. Commercial construction loans were $26.5 million compared with $21.6 million a year earlier.
Consumer loans increased slightly year-over-year. Retained residential mortgage totals declined to $34.7 million at September 30, 2021 from $48.5 million at September 30, 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 increased by 38% year-over-year, reflecting the active demand for new homes in several of the Company’s markets.
Asset quality has remained strong, with a ratio of nonperforming loans to total loans of 0.32% at September 30, 2021. The ratio has remained consistently low throughout the first three quarters of 2021. The allowance for loan losses to total loans was 1.23% at September 30, 2021 compared with 1.17% at December 31, 2020 (approximately 1.27% excluding PPP loans for both periods). Total nonperforming loans were $1.9 million at September 30, 2021 compared with $2.1 million at December 31, 2020. Other real estate owned was $806,000 at September 30, 2021 compared with $1.1 million at December 31, 2020.
The Company maintained a 382% allowance for loan losses to nonperforming loans ratio. While loan and asset quality have remained sound throughout the pandemic period, management has maintained adequate reserves against continued loan portfolio risk primarily attributable to the continuing economic uncertainties arising from COVID-19 and the Delta variant.
Total deposits at September 30, 2021 were $853.8 million, compared with $765.0 million at December 31, 2020. As in the past several quarters, increased demand deposits accounted for the growth, in part due to increased balances held by businesses, organic growth in the Bank’s markets and also new customer deposits. The Bank continued to trim time deposits, which have declined to $140.3 million at September 30, 2021 from $158.1 million at December 31, 2020. Core deposits (noninterest bearing demand, NOW, money market and savings) were approximately 84% of total deposits at September 30, 2021.
The Company’s measures of shareholder value included total stockholders’ equity of $68.9 million at September 30, 2021, compared with $66.7 million at December 31, 2020, and book value per share of $14.53 compared with $15.38 at December 31, 2020, primarily reflecting a 10% stock dividend declared in the second quarter of 2021.
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.comFINANCIAL STATEMENTS FOLLOW
Bank of the James Financial Group, Inc. and Subsidiaries
Dollar amounts in thousands, except per share data
unauditedSelected Data: Three
months
ending
Sep 30,
2021Three
months
ending
Sep 30,
2020Change Year
to
date
Sep 30,
2021Year
to
date
Sep 30,
2020Change Interest income $ 7,315 $ 7,338 -0.31 % $ 21,914 $ 21,907 0.03 % Interest expense 493 1,135 -56.56 % 1,634 3,650 -55.23 % Net interest income 6,822 6,203 9.98 % 20,280 18,257 11.08 % Provision for loan losses - 700 -100.00 % - 2,348 -100.00 % Noninterest income 2,822 3,064 -7.90 % 8,305 8,039 3.31 % Noninterest expense 7,298 6,744 8.21 % 21,424 19,876 7.79 % Income taxes 465 369 26.02 % 1,431 802 78.43 % Net income 1,881 1,454 29.37 % 5,730 3,270 75.23 % Weighted average shares outstanding - basic (1) 4,740,657 4,773,380 (32,723 ) 4,750,235 4,776,523 (26,288 ) Weighted average shares outstanding - diluted (1) 4,740,657 4,773,380 (32,723 ) 4,750,235 4,776,523 (26,288 ) Basic net income per share (1) $ 0.40 $ 0.30 $ 0.10 $ 1.21 $ 0.68 $ 0.53 Fully diluted net income per share (1) $ 0.40 $ 0.30 $ 0.10 $ 1.21 $ 0.68 $ 0.53 (1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in June 2021.
Balance Sheet at
period end:Sep 30,
2021Dec 31,
2020Change Sep 30,
2020Dec 31,
2019Change Loans, net $ 583,572 $ 601,934 -3.05 % $ 616,581 $ 573,274 7.55 % Loans held for sale 6,462 7,102 -9.01 % 10,232 4,221 142.41 % Total securities 155,957 93,856 66.17 % 79,303 63,343 25.20 % Total deposits 853,829 764,967 11.62 % 763,933 649,459 17.63 % Stockholders' equity 68,902 66,732 3.25 % 65,782 61,445 7.06 % Total assets 942,631 851,386 10.72 % 849,129 725,394 17.06 % Shares outstanding 4,740,657 4,339,436 401,221 4,339,436 4,357,436 (18,000 ) Book value per share $ 14.53 $ 15.38 $ (0.85 ) $ 15.16 $ 14.10 $ 1.06 Daily averages: Three
months
ending
Sep 30,
2021Three
months
ending
Sep 30,
2020Change Year
to
date
Sep 30,
2021Year
to
date
Sep 30,
2020Change Loans, net $ 587,129 $ 619,574 -5.24 % $ 598,135 $ 601,382 -0.54 % Loans held for sale 5,638 8,881 -36.52 % 5,777 6,072 -4.86 % Total securities 142,670 63,743 123.82 % 118,662 59,358 99.91 % Total deposits 843,452 768,618 9.74 % 820,517 720,009 13.96 % Stockholders' equity 67,657 62,309 8.58 % 66,183 61,778 7.13 % Interest earning assets 869,899 793,709 9.60 % 847,730 744,246 13.90 % Interest bearing liabilities 692,709 638,166 8.55 % 669,535 608,968 9.95 % Total assets 930,846 849,820 9.53 % 906,389 798,106 13.57 % Financial Ratios: Three
months
ending
Sep 30,
2021Three
months
ending
Sep 30,
2020Change Year
to
date
Sep 30,
2021Year
to
date
Sep 30,
2020Change Return on average assets 0.80 % 0.68 % 0.12 0.85 % 0.55 % 0.30 Return on average equity 11.03 % 9.26 % 1.77 11.58 % 7.05 % 4.53 Net interest margin 3.11 % 3.10 % 0.01 3.20 % 3.27 % (0.07 ) Efficiency ratio 75.67 % 72.77 % 2.90 74.95 % 75.59 % (0.64 ) Average equity to average assets 7.27 % 7.33 % (0.06 ) 7.30 % 7.74 % (0.44 ) Allowance for loan losses: Three
months
ending
Sep 30,
2021Three
months
ending
Sep 30,
2020Change Year
to
date
Sep 30,
2021Year
to
date
Sep 30,
2020Change Beginning balance $ 7,212 $ 6,193 16.45 % $ 7,156 $ 4,829 48.19 % Provision for losses - 700 -100.00 % - 2,348 -100.00 % Charge-offs (16 ) (57 ) -71.93 % (80 ) (396 ) -79.80 % Recoveries 80 130 -38.46 % 200 185 8.11 % Ending balance 7,276 6,966 4.45 % 7,276 6,966 4.45 % Nonperforming assets: Sep 30,
2021Dec 31,
2020Change Sep 30,
2020Dec 31,
2019Change Total nonperforming loans $ 1,904 $ 2,064 -7.75 % $ 2,538 $ 1,301 95.08 % Other real estate owned 806 1,105 -27.06 % 1,405 2,339 -39.93 % Total nonperforming assets 2,710 3,169 -14.48 % 3,943 3,640 8.32 % Troubled debt restructurings - (performing portion) 376 392 -4.08 % 397 410 -3.17 % Asset quality ratios: Sep 30,
2021Dec 31,
2020Change Sep 30,
2020Dec 31,
2019Change Nonperforming loans to total loans 0.32 % 0.34 % (0.02 ) 0.41 % 0.23 % 0.18 Allowance for loan losses to total loans 1.23 % 1.17 % 0.06 1.12 % 0.84 % 0.28 Allowance for loan losses to nonperforming loans 382.14 % 346.71 % 35.43 274.47 % 371.18 % (96.71 ) Bank of the James Financial Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollar amounts in thousands, except per share amounts)(unaudited) Assets 9/30/2021 12/31/2020 Cash and due from banks $ 30,340 $ 31,683 Federal funds sold 116,956 69,203 Total cash and cash equivalents 147,296 100,886 Securities held-to-maturity (fair value of $4,028 in 2021 and $4,192 in 2020) 3,659 3,671 Securities available-for-sale, at fair value 152,298 90,185 Restricted stock, at cost 1,324 1,551 Loans, net of allowance for loan losses of $7,276 in 2021 and $7,156 in 2020 583,572 601,934 Loans held for sale 6,462 7,102 Premises and equipment, net 17,030 16,621 Software, net 208 361 Interest receivable 2,106 2,350 Cash value - bank owned life insurance 18,670 16,355 Other real estate owned 806 1,105 Income taxes receivable 312 - Deferred tax asset 1,798 1,219 Other assets 7,090 8,046 Total assets $ 942,631 $ 851,386 Liabilities and Stockholders' Equity Deposits Noninterest bearing demand 163,510 143,345 NOW, money market and savings 549,989 463,506 Time 140,330 158,116 Total deposits 853,829 764,967 Capital notes 10,031 10,027 Income taxes payable - 286 Interest payable 49 85 Other liabilities 9,820 9,289 Total liabilities $ 873,729 $ 784,654 Stockholders' equity Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,740,657 and 4,339,436 as of September 30, 2021 and December 31, 2020 10,145 9,286 Additional paid-in-capital 37,230 30,989 Accumulated other comprehensive (loss) income (386 ) 1,792 Retained earnings 21,913 24,665 Total stockholders' equity $ 68,902 $ 66,732 Total liabilities and stockholders' equity $ 942,631 $ 851,386 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 For the Nine Months Ended September 30, Ended September 30, Interest Income 2021 2020 2021 2020 Loans $ 6,605 $ 6,958 $ 20,089 $ 20,695 Securities US Government and agency obligations 230 168 640 506 Mortgage backed securities 138 50 299 164 Municipals 243 94 599 249 Dividends 4 15 39 48 Other (Corporates) 55 25 155 71 Interest bearing deposits 7 15 26 85 Federal Funds sold 33 13 67 89 Total interest income 7,315 7,338 21,914 21,907 Interest Expense Deposits NOW, money market savings 146 177 419 669 Time Deposits 239 798 890 2,559 Finance leases 26 29 80 87 Brokered time deposits - 46 - 143 Capital notes 82 85 245 192 Total interest expense 493 1,135 1,634 3,650 Net interest income 6,822 6,203 20,280 18,257 Provision for loan losses - 700 - 2,348 Net interest income after provision for loan losses 6,822 5,503 20,280 15,909 Noninterest income Gains on sale of loans held for sale 2,091 2,459 6,175 5,586 Service charges, fees and commissions 612 498 1,803 1,500 Life insurance income 117 101 315 289 Other 2 6 12 20 Gain on sales of available-for-sale securities - - - 644 Total noninterest income 2,822 3,064 8,305 8,039 Noninterest expenses Salaries and employee benefits 4,093 3,713 11,901 11,040 Occupancy 437 419 1,270 1,237 Equipment 626 560 1,883 1,738 Supplies 120 120 354 353 Professional, data processing, and other outside expense 1,029 990 2,978 2,884 Marketing 209 185 720 500 Credit expense 309 359 869 831 Other real estate expenses 1 15 74 135 FDIC insurance expense 137 76 425 220 Other 337 307 950 938 Total noninterest expenses 7,298 6,744 21,424 19,876 Income before income taxes 2,346 1,823 7,161 4,072 Income tax expense 465 369 1,431 802 Net Income $ 1,881 $ 1,454 $ 5,730 $ 3,270 Weighted average shares outstanding - basic (1) 4,740,657 4,773,380 4,750,235 4,776,523 Weighted average shares outstanding - diluted (1) 4,740,657 4,773,380 4,750,235 4,776,523 Net income per common share - basic (1) $ 0.40 $ 0.30 $ 1.21 $ 0.68 Net income per common share - diluted (1) $ 0.40 $ 0.30 $ 1.21 $ 0.68 (1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in June 2021.
