Executive Summary

Q1 2025 EPS fell to $0.19, down from $0.36 in Q4 2024 and $0.48 in Q1 2024, driven by a one-time ~$1.0M consulting expense tied to renegotiating the core banking platform contract; underlying NIM and interest spread improved sequentially and year-over-year .
Net interest margin expanded to 3.25% (vs. 3.18% in Q4 2024; 3.02% in Q1 2024), with interest expense declining YoY and loan yields rising; efficiency ratio spiked to 89.31% on the non-recurring expense .
Balance sheet momentum continued: loans, net reached $642.39M, deposits grew to $911.68M, and total assets surpassed $1.01B; asset quality remained strong with NPLs/loans at 0.28% and no OREO .
Management plans to retire ~$10M capital notes in June using holding company cash, targeting ~$327k annual interest expense reduction—a visible near-term earnings tailwind; quarterly dividend of $0.10 was declared for payment in June .
Near-term stock reaction catalysts: clarity on cost saves from the core banking contract (up to $5M over 65 months), note payoff execution, and continued NIM improvement against stabilizing rates; absence of Street EPS/revenue estimates limits “beat/miss” framing .

What Went Well and What Went Wrong

What Went Well

Margin expansion despite rate backdrop: NIM rose to 3.25% and interest spread to 2.95%, supported by higher loan yields and disciplined deposit pricing .
Balance sheet growth and quality: deposits climbed to $911.68M, loans, net to $642.39M, and NPLs/loans remained low at 0.28% with zero OREO .
Strategic investment for long-term efficiency: renegotiated core banking contract expected to deliver up to $5M savings over 65 months; CEO emphasized strong liquidity and “steady interest income growth” positioning the bank for sustained performance .

What Went Wrong

Non-recurring consulting expense (~$1.0M) elevated noninterest expense to $9.83M, compressing EPS to $0.19 and lifting the efficiency ratio to 89.31% .
Noninterest income softened modestly to $3.28M due to mortgage division revenue decline, partially offset by treasury services and wealth management .
NPLs ticked up sequentially from 0.25% to 0.28% and nonperforming loans increased to $1.80M; while still low, trend warrants monitoring .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Total Interest Income ($USD Millions)	$10.51	$11.64	$11.23
Net Interest Income ($USD Millions)	$6.95	$7.69	$7.72
Noninterest Income ($USD Millions)	$3.31	$3.82	$3.28
Total Net Revenue (NII + Noninterest) ($USD Millions)	$10.26 (=6.95+3.31)	$11.50 (=7.69+3.82)	$11.00 (=7.72+3.28)
Diluted EPS ($)	$0.48	$0.36	$0.19
Net Interest Margin (%)	3.02%	3.18%	3.25%
Efficiency Ratio (%)	78.85%	82.62%	89.31%
ROAA (%)	0.90%	0.63%	0.33%
ROAE (%)	14.69%	9.39%	5.27%

Segment/portfolio breakdown (loans):

Loan Category ($USD Millions)	Sep 30, 2024	Dec 31, 2024	Mar 31, 2025
CRE – Non-Owner Occupied	~$189.98	~$195.09	$205.13
CRE – Owner Occupied	~$143.79	~$140.44	$154.63
Construction/Land (Combined)	$50.00	$50.04	$37.90 (=11.54+26.36)
Commercial & Industrial	$60.34	$66.42	$59.98
Residential Mortgage (Retained)	$114.99	$113.30	$111.65
Consumer (Open/Closed)	$75.09	$78.31	$80.12

KPIs and balance sheet:

KPI	Sep 30, 2024	Dec 31, 2024	Mar 31, 2025
Total Assets ($USD Millions)	$1,008.06	$979.24	$1,011.73
Total Deposits ($USD Millions)	$907.61	$882.40	$911.68
Noninterest Demand Deposits ($USD Millions)	$132.22	$129.69	$138.62
NOW/Money Market/Savings ($USD Millions)	$540.97	$522.21	$560.30
Time Deposits ($USD Millions)	$234.42	$230.50	$212.76
Loans, Net ($USD Millions)	$627.11	$636.55	$642.39
Stockholders’ Equity ($USD Millions)	$68.83	$64.87	$68.35
Book Value Per Share ($)	$15.15	$14.28	$15.04
NPLs/Total Loans (%)	0.20%	0.25%	0.28%
ACL/Total Loans (%)	1.12%	1.09%	1.08%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend ($/share)	Q2 2025 Payment	$0.10 (approved Jan 21, 2025)	$0.10 (declared Apr 15, 2025; payable Jun 20, 2025)	Maintained
Capital Notes Repayment	June 2025	Not previously specified	Plan to retire ~$10M notes from holding company cash; reduce interest expense by ~$327k annually	Lowered interest expense
Core Banking Contract Savings	65 months from Apr 1, 2025	Prior contract baseline	Up to $5M savings vs prior contract; following one-time consulting expense in Q1	Raised long-term cost savings
Margin Outlook	2025	Expect gradual improvement (Q3 CFO commentary)	NIM and spread improved in Q1; management anticipates continued margin relief with stable rates	Positive trajectory

Earnings Call Themes & Trends

Note: No Q1 2025 earnings call transcript was available in our document set.

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Interest Rates & Margins	CFO flagged stabilizing rates; NIM improved to 3.16% in Q3; continued sequential expansion to 3.18% in Q4	NIM 3.25%; spread 2.95%; interest expense down YoY	Improving
Deposit Growth	Deposits up to $907.61M (Q3); up to $882.40M (Q4)	Deposits reached $911.68M; core deposits strengthened	Positive
Noninterest Income Mix	Q3/Q4 growth from wealth mgmt, mortgage gains, treasury services	Stable $3.28M; mortgage revenue softer; PWW contribution noted	Mixed
Loan Portfolio	CRE led growth; retained residential modest; C&I stable	CRE up; retained mortgages flat; C&I lower; construction/land down	Balanced; selective
Asset Quality	NPLs/loans low (0.20% Q3; 0.25% Q4)	NPLs/loans 0.28%; no OREO	Strong, slight uptick
Technology/Operations	Debit card processor contract savings (Q4)	Core banking platform contract renegotiation; projected multi-year savings	Cost optimization focus

Management Commentary

CEO: “Appropriate adjustments to loan rates and optimizing the performance of the Bank’s investments continued to generate steady interest income growth. As a result, net interest margin and interest spread continued to trend positively… Strong, quality earnings… supported our ability to build and maintain a strong cash position and exceptional liquidity.”
CEO on Q1 earnings impact: “Our earnings were negatively impacted by a non-recurring expense… to successfully negotiate a contract with our core service provider. We anticipate that this contract will result in significant long-term cost savings.”
CFO (prior quarter) on margin trend: “We anticipated that a stabilizing rate environment would gradually lessen the pressure on margins… our third quarter net interest margin of 3.16% improved from the 3.02% margin in the second quarter of 2024.”
President on growth hires: “We are very excited to announce the addition of… commercial relationship managers… [who] will further strengthen and grow our regional markets… illustrates our focus on growth and obtaining additional market share.”

Q&A Highlights

No Q1 2025 earnings call transcript was available; thus, Q&A details, guidance clarifications, and tone changes cannot be assessed from call content in this period.

Estimates Context

S&P Global shows no active consensus for Q1 2025 EPS or revenue; EPS estimates and revenue consensus count were unavailable. Values retrieved from S&P Global.*
S&P Global “Revenue Consensus Mean” field carried the reported actual revenue of $10.865M for Q1 2025, but no consensus estimates to benchmark a beat/miss.*
Implication: With absent Street coverage, estimate revisions are unlikely to be a catalyst; focus turns to company-specific drivers (NIM trajectory, cost saves, note payoff).

Metric	Q1 2025 Consensus	Q1 2025 Actual
EPS ($)	N/A*	$0.19
Revenue ($USD Millions)	N/A*	$10.87*

*Values retrieved from S&P Global.

Key Takeaways for Investors

EPS compression was non-core: the one-time consulting charge masked underlying margin improvements; expect EPS normalization as the ~$1.0M cost does not repeat and as ~$327k annual interest savings from note retirement accrue .
Margin trajectory is constructive: NIM and spread improved on higher loan yields and disciplined deposit costs; watch for further relief if rates remain stable .
Balance sheet growth with quality: deposits and loans increased; core deposits strengthened; asset quality remains robust with low NPLs and no OREO .
Strategic cost actions are a catalyst: multi-year savings from the core banking contract (up to $5M over 65 months) and capital note payoff support operating leverage and ROA/ROE recovery .
Fee income diversification persists: PWW wealth management and treasury services provide stable noninterest income even as mortgage revenue fluctuates .
Near-term trading setup: potential relief rally as investors look through the one-time expense; confirmation of note payoff and quantified contract savings could re-rate earnings power .
Medium-term thesis: steady growth in CRE (with monitored concentration), improving NIM, and disciplined credit culture position BOTJ to compound book value; monitor NPL uptick and mortgage fee trends .

BANK OF THE JAMES FINANCIAL GROUP INC (BOTJ)·Q1 2025 Earnings Summary