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BANK OF THE JAMES FINANCIAL GROUP INC (BOTJ)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarterly profitability: EPS $0.61 (+38% YoY) on stronger net interest income, lower interest expense, and improved operating efficiency; net interest margin (NIM) of 3.44% vs 3.16% a year ago .
  • Funding costs eased and deposit growth continued: interest expense fell 14% YoY and total deposits rose to $919.80M (+4% YTD) while core deposits increased, supporting margin expansion .
  • Asset quality remained exceptional: NPLs/total loans at 0.29%, ACL/loans at 0.95%, and Tier 1 leverage ratio improved to 9.02% after debt retirement in Q2 .
  • Dividend maintained: $0.10 per share declared for payment on Dec 5, 2025; ongoing returns amid rising book value (BV/share $16.94) .
  • Near-term narrative drivers: margin trajectory, sustainable funding cost relief (post $10M capital notes retirement), and one-time tax overpayment benefit in Q3; watch for normalization of tax rate and expense discipline .

What Went Well and What Went Wrong

What Went Well

  • Record earnings and margin expansion: “highest quarterly earnings in company history … expanded our net interest margin to 3.44%,” underscoring pricing discipline and debt retirement .
  • Funding cost management: interest expense declined to $3.47M (-14.3% YoY), aided by time-deposit pricing and the Q2 retirement of ~$10.05M capital notes .
  • Asset quality and capital: NPLs/loans at 0.29% with no OREO, ACL/loans at 0.95%, Tier 1 leverage ratio at 9.02%, enabling confident loan growth without diluting shareholders .

What Went Wrong

  • Operating expense pressure: noninterest expense rose to $9.16M (+4.4% YoY) on compensation accruals, vendor consulting fees, new revenue-generating hires, and facility investments, keeping efficiency ratio elevated vs pre-2024 levels .
  • One-time tax tailwind: amended tax returns created a tax overpayment applied in Q3, lowering the effective tax rate; this boosts EPS but is not recurring .
  • Disclosure inconsistency: press release claims Q3 NIM “increased from both the first and second quarters,” but reported Q2 NIM was 3.45% vs 3.44% in Q3, suggesting a slight sequential downtick despite YoY strength .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$11.24M*$10.87M*$12.85M*$12.38M*
EPS ($USD)$0.44 $0.19 $0.60 $0.61
Net Interest Income ($USD Millions)$7.51 $7.72 $8.25 $8.30
Noninterest Income ($USD Millions)$3.82 $3.28 $4.08 $4.17
Net Interest Margin %3.16% 3.25% 3.45% 3.44%
Efficiency Ratio %77.44% 89.31% 76.71% 73.46%
Return on Avg Assets %0.80% 0.33% 1.06% 1.07%
  • Values retrieved from S&P Global

Segment (Noninterest Income) Breakdown

Component ($USD Millions)Q3 2024Q2 2025Q3 2025
Gains on sale of loans$1.33 $1.59 $1.24
Service charges, fees, commissions$0.99 $0.98 $1.05
Wealth management fees (PWW)$1.24 $1.30 $1.36
Life insurance income$0.19 $0.19 $0.20
Other$0.03 $0.02 $0.30
Gains on AFS securities$0.04 $0.00 $0.03

KPIs and Balance Sheet

KPIQ1 2025Q2 2025Q3 2025
Deposits ($USD Millions)$911.68 $910.53 $919.80
Loans, net ($USD Millions)$642.39 $649.09 $653.29
Total Assets ($USD Billions)$1.01 $1.00 $1.02
NPLs/Total Loans %0.28% 0.28% 0.29%
ACL/Loans %1.08% 0.96% 0.95%
Tier 1 Leverage %—8.85% 9.02%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ4 2025$0.10 declared July 12, 2025; record Sep 12; pay Sep 26 $0.10 declared Oct 28, 2025; record Nov 21; pay Dec 5 Maintained
Interest expense run-rateFY 2025 onward—Expected annual reduction of ~$0.327M from retirement of ~$10M capital notes (Q2 2025) Lowered
Effective tax rateQ3 2025—Lower in Q3 due to application of tax overpayment from amended returns One-time lower
Brokered depositsQ3 2025—None outstanding at Q2 and Q3; focus on core deposits Maintained (none)

Note: Company does not provide formal revenue/EPS guidance.

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript found; themes below reflect management commentary from press releases and 8-Ks.

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Net interest margin and spreadNIM improved to 3.25% (Q1) and 3.45% (Q2) via pricing discipline, asset mix; spread up materially YoY NIM 3.44%; margin relief from easing rates and loan repricing; spread up YoY Improving YoY; broadly stable QoQ
Funding costs/deposit strategyInterest expense down in Q1/Q2; core deposits grew; no brokered deposits Interest expense down YoY; deposits up to $919.80M; continued focus on core deposits Improving
Asset qualityNPLs ~0.28% in Q1/Q2; ACL/loans 1.08%→0.96%; no OREO NPLs 0.29%; ACL/loans 0.95%; no OREO Stable/strong
Capital and leverageTier 1 leverage 8.85% in Q2 post debt retirement Tier 1 leverage 9.02%; above 9% ahead of timeline Improving
Expense managementQ1 consulting fee (~$1M) raised noninterest expense; Q2 spend on new facilities and hires Q3 noninterest expense up (comp accruals, vendor consulting, new hires/facilities) Mixed (pressure persists)
Tax rate—Q3 effective tax rate positively impacted by tax overpayment One-time benefit
Mortgage/secondary marketBalanced strategy; gains on sale supported fees in Q1/Q2 Gains on sale $1.24M; continued fee contribution Stable
CRE exposureGrowth in CRE; no loans secured by large metro office towers (Q2) CRE growth continues; still no large metro office tower exposure Stable/prudent

Management Commentary

  • “We are extremely proud to report our highest quarterly earnings in company history… By strategically managing loan yields, controlling interest expense, and retiring $10 million in capital notes, we successfully expanded our net interest margin to 3.44%, driving high-quality, sustainable earnings” — Robert R. Chapman III, CEO .
  • “A balanced revenue stream from commercial banking, wealth management, cash management services, and mortgage originations has provided financial stability and consistently strong performance, even through economic uncertainty” — Robert R. Chapman III .
  • “Our exceptional asset quality, with a nonperforming loan ratio of just 0.29%, provides a solid foundation for continued, profitable growth” — Mike Syrek, President .
  • “Following the retirement of our private placement notes… our Tier 1 capital ratio dropped below 9% to 8.85%. With solid earnings, we moved back above 9% ahead of our timeline… without diluting our shareholders” — Mike Syrek .

Q&A Highlights

  • No public Q3 2025 earnings call transcript found; no Q&A details available.

Estimates Context

  • S&P Global consensus for Q3 2025 EPS and Revenue was not available; we therefore compare actuals only. Revenue (defined as net interest income after provision plus total noninterest income) was $12.38M*, vs $12.85M* in Q2 2025 and $11.24M* in Q3 2024; EPS was $0.61 (vs $0.60 in Q2 and $0.44 in Q3 2024) .
  • Values retrieved from S&P Global
  • Implications for models: incorporate structurally lower interest expense from capital notes retirement, monitor normalization of the effective tax rate post one-time benefit, and reflect ongoing efficiency improvements .

Key Takeaways for Investors

  • EPS inflection: $0.61 (+38% YoY) with NIM at 3.44% signals improved earnings power despite a high-rate backdrop .
  • Funding discipline: interest expense -14% YoY; deposit growth and core mix support sustained margin relief .
  • Strong credit profile: NPLs/loans 0.29% and ACL/loans 0.95% with no OREO underpin resilient asset quality .
  • Capital trajectory: Tier 1 leverage back above 9% after debt retirement, reducing interest costs without equity dilution .
  • Efficiency improving: ratio down to 73.46% from 77.44% YoY, partly offset by strategic spend on talent and facilities; watch expense trend .
  • Dividend continuity: $0.10/sh declared for Dec 5 payout; BV/share rose to $16.94 (+$2.66 vs YE 2024) .
  • Near-term trading lens: positive catalysts include margin sustainability and capital strength; monitor for any reversion in tax rate and whether noninterest expense growth moderates to preserve efficiency gains .