21/04/2017 18:00:00

Bank of the James Announces First Quarter 2017 Financial Results and Declaration of Dividend

LYNCHBURG, Va., April 21, 2017 (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 the greater Lynchburg area (Region 2000), and the Charlottesville, Harrisonburg, and Roanoke, Virginia markets, today announced unaudited results for the three months ended March 31, 2017.

Net income for the three months ended March 31, 2017 was $760,000 or $0.17 per diluted share compared with $887,000 or $0.20 per diluted share for the three months ended March 31, 2016.

Robert R. Chapman III, President and CEO, stated: “Our financial performance in the first quarter continued to demonstrate the Company’s focus on steady, long-term growth of our balance sheet, which reflected meaningful year-over-year growth of loans, deposits and assets. An emphasis on growing commercial banking was evident.

“Year-over-year net income comparison reflected higher noninterest expense related to investments to expand our market reach, including building our banking teams in several markets. We are seeing positive results from our investment in growth, and anticipate that increased productivity and accelerating revenue will enhance profitability.”

Highlights

  • Interest income from earning assets increased 5.2% in the first quarter of 2017 compared with the first quarter of 2016.
  • Net interest income before the provision for loan losses for the three months ended March 31, 2017 was $4.84 million, up 3.2% from $4.69 million for the three months ended March 31, 2016.
  • Driven primarily by increased commercial lending, total loans, net of the allowance for loan losses, were a Company record $466.24 million at March 31, 2017, up from $464.35 million at December 31, 2016, and $433.70 million a year earlier.
  • Commercial loans (primarily C&I) increased 12% year-over-year, while owner occupied real estate, led by commercial real estate (CRE) portfolio growth, rose 13% at March 31, 2017 compared with March 31, 2016.
  • Total assets rose to $578.43 million at March 31, 2017, the highest in Company history.
  • Asset quality ratios reflected continuing loan portfolio strength, with a 0.67% ratio of nonperforming loans to total loans.
  • Total stockholders’ equity was $50.19 million, up from $49.42 million at December 31, 2016 and $49.46 million at March 31, 2016. Book value per share rose to $11.46 at March 31, 2017 from $11.29 at December 31, 2016.
  • Based on the results achieved in the first quarter, on April 18, 2017 the Company’s board of directors approved a $0.06 per share dividend payable to shareholders of record on June 9, 2017, to be paid on June 23, 2017.

Chapman noted: “Additional loans drove year-over-year net interest income growth, although both commercial and residential loan demand in the first quarter of 2017 was somewhat slower than anticipated. In particular, slower residential mortgage activity – perhaps partially related to the area’s current lean housing inventory – impacted originations and subsequent noninterest income from gains on mortgage sales to the secondary market. We entered the second quarter with good pipelines in commercial and residential lending, and feel confident about ongoing lending activity.”

First Quarter 2017 Operational Review

Total interest income was $5.51 million in the first quarter of 2017, growing 5.2% compared with total interest income of $5.24 million in the first quarter of 2016. Average rates earned on loans, including fees, was 4.46% in the first quarter of 2017, down slightly from 4.60% in the first quarter of 2016, and consistent with 4.48% in the fourth quarter of 2016. The average rate earned on total earning assets in the first quarter of 2017 was 4.16%, consistent with the fourth quarter of 2016 and down slightly from 4.35% in the first quarter of 2016.

“Considering the competitive lending market and continued pricing pressure in a low interest rate environment, we have been pleased with our ability to lend while maintaining relatively stable pricing and attracting quality loans,” commented J. Todd Scruggs, Executive Vice President and CFO. “We believe our ability to add value through excellent service and customized financial solutions remains a strong selling point for us.”

Total interest expense was $671,000 for the three months ended March 31, 2017, compared with $548,000 for the three months ended March 31, 2016. The increase partially reflected interest paid on capital notes issued in February 2017. Year-over-year growth in lower-interest bearing demand deposits and rate reductions in time deposits contributed to an average rate paid on interest bearing accounts of 0.62% in the first quarter of 2017. The Company’s net interest margin was 3.65% and net interest spread was 3.50%, consistent with the fourth quarter of 2016.

Net interest income was $4.84 million for the three months ended March 31, 2017, a 3.2% increase from $4.69 million for the three months ended March 31, 2016. Net interest income after provision for loan losses was $4.74 million for the three months ended March 31, 2017 compared with $4.49 million for the three months ended March 31, 2016.

Noninterest income from fees, service charges and commissions, 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 $881,000 in the first quarter of 2017 compared with $1.01 million in the first quarter of 2016. Fee income increased year-over-year, however, slower residential mortgage origination resulted in lower gains from the sale of loans in the first quarter of 2017 compared with a year earlier.

Noninterest expense for the three months ended March 31, 2017 was $4.52 million, an increase of 7.8% from the same period a year earlier. Higher expenses primarily reflected costs related to the Company's market expansion, including increased employee compensation, an expanded commercial banking team, and additional staff and management in the bank’s served markets. Occupancy costs increased moderately year-over-year, primarily reflecting additional facilities. The Company increased marketing expenditures to build brand visibility throughout an expanded geographic market.

Balance Sheet Reflects Consistent Growth

Loans held for investment, net of the allowance for loan losses, were a Company record $466.24 million at March 31, 2017, compared with $464.35 million at December 31, 2016, and up 7.5% compared with $433.70 million at March 31, 2016. The Company’s commercial loan portfolio was $89.00 million at March 31, 2017, up $9.51 million from March 31, 2016. Owner occupied real estate loans, led by CRE, increased to $142.39 million in the first quarter of 2017, up $16.39 million from $126.01 million a year earlier. Non-owner occupied real estate (primarily commercial and investment property) increased to $144.68 million, up 7.2% from $135.00 million a year ago. Total construction loans were down 16.8%, while consumer lines of credit (primarily home equity) grew 4.9% year-over-year.

Total deposits at March 31, 2017 were $521.20 million compared with $523.11 million at December 31, 2016, and up from $473.45 million at March 31, 2016. The Bank continued to attract noninterest bearing deposits, which increased to $105.28 million at March 31, 2017 from $102.65 million at December 31, 2016. Core deposits (noninterest bearing, NOW, money market and savings deposits) of $356.19 million comprised approximately 68% of the Company’s total deposits.

“Continuing growth of core deposits has been a meaningful highlight for the Company, providing attractive funding for loans, and reflecting new banking relationships and growth in Harrisonburg, Charlottesville and Roanoke,” Chapman said. “An expanding presence in Appomattox should further support deposit growth and new banking relationships.”

Total assets were a record $578.43 million at March 31, 2017, up from $574.20 million at December 31, 2016 and $524.61 million at March 31, 2016. Asset growth primarily reflected increased retained loans and increased securities available-for-sale.

The Company's asset quality remained sound, with a 0.67% ratio of nonperforming loans to total loans at March 31, 2017. The Company's allowance for loan losses to total loans was 1.21%, and the Company's allowance for loan losses as a percent of nonperforming loans was 182%.

Total nonperforming loans were $3.15 million at March 31, 2017, compared with $2.55 million at December 31, 2016. The increase primarily reflected one classified commercial loan being moved to nonperforming status during the first quarter of 2017. Total nonperforming assets were $5.90 million and other real estate owned was $2.75 million. The Bank's regulatory capital ratios continued to exceed accepted regulatory standards for a well-capitalized institution.

The Company grew measures of shareholder value, including tangible book value per share and total stockholders' equity. Total stockholders' equity increased to $50.19 million at March 31, 2017, compared with $49.42 million at December 31, 2016 and $49.46 million at March 31, 2016. Retained earnings rose to $10.65 million at March 31, 2017 from $10.16 million at December 31, 2016.

About the Company

Bank of the James, a wholly owned subsidiary of Bank of the James Financial Group, Inc., serves Lynchburg, Charlottesville, Harrisonburg, Roanoke, Appomattox and other markets in Virginia. The bank operates 13 full service locations, two limited service branches, two loan production offices, and an investment/insurance services division. Bank of the James Financial Group, Inc. common stock is listed under the symbol "BOTJ" on the NASDAQ Stock Market, LLC.

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, 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.com

FINANCIAL STATEMENTS FOLLOW

Bank of the James Financial Group, Inc. and Subsidiaries

(000's) except ratios and percent data

unaudited

Selected Data:

Three

months

ending

Mar 31,

2017

Three

months

ending

Mar 31,

2016

Change

Interest income$5,509$5,235 5.23%
Interest expense 671 548 22.45%
Net interest income 4,838 4,687 3.22%
Provision for loan losses 100 200 -50.00%
Noninterest income 881 1,008 -12.60%
Noninterest expense 4,517 4,190 7.80%
Income taxes 342 418 -18.18%
Net income 760 887 -14.32%
Weighted average shares outstanding   4,378,436 4,378,436 0.00%
Basic net income per share$0.17$0.20$(0.03)
Fully diluted net income per share  $0.17  $0.20  $(0.03)

Balance Sheet at

period end:

Mar 31,

2017

Dec 31,

2016

Change

Mar 31,

2016

Dec 31,

2015

Change

Loans, net$466,244$464,3530.41%  $433,701  $430,445 0.76%
Loans held for sale 1,633 3,833  -57.40% 3,706 1,964 88.70%
Total securities 51,513 44,07516.88% 40,280 38,515 4.58%
Total deposits 521,199 523,112-0.37% 473,451 467,610 1.25%
Stockholders' equity 50,191 49,4211.56% 49,456 48,196 2.61%
Total assets 578,433 574,1950.74% 524,611 527,143 -0.48%
Shares outstanding 4,378,436 4,378,436-  4,378,436 4,378,436 - 
Book value per share    $11.46  $11.290.17 $11.30$11.01  $0.29 

Daily averages:

Three

months

ending

Mar 31,

2017

Three

months

ending

Mar 31,

2016

Change

Loans, net  $464,293  $432,1887.43%
Loans held for sale 1,390 2,302  -39.62%
Total securities 50,916 40,18226.71%
Total deposits 520,881 455,65014.32%
Stockholders' equity 50,970 48,7314.59%
Interest earning assets 537,758 488,59810.06%
Interest bearing liabilities   416,261 378,5399.97%
Total assets 576,567 519,39611.01%

Financial Ratios:

Three

months

ending

Mar 31,

2017

Three

months

ending

Mar 31,

2016

Change

Return on average assets0.53%0.68%(0.15)
Return on average equity6.05%7.30%(1.25)
Net interest margin3.65%3.89%  (0.24)
Efficiency ratio  78.98%  73.57%5.41 
Average equity to average assets  8.84%9.38%(0.54)

Allowance for loan losses:  

Three

months

ending

Mar 31,

2017

Three

months

ending

Mar 31,

2016

Change

Beginning balance  $5,716   $4,683 22.06%
Provision for losses 100  200 -50.00%
Charge-offs (130) (251)  -48.21%
Recoveries 30  118 -74.58%
Ending balance 5,716  4,750 20.34%

Nonperforming assets:

Mar 31,

2017

 Dec 31, 

2016

Change

Mar 31,

2016

Dec 31,

2015

Change

Total nonperforming loans  $3,147  $2,550  23.41%  $2,587  $3,406  -24.05%
Other real estate owned 2,750 2,37016.03% 2,355 1,96519.85%
Total nonperforming assets 5,897 4,92019.86% 4,942 5,371-7.99%
Troubled debt restructurings - (performing portion)   452 455-0.66% 642 646-0.62%

Asset quality ratios:

Mar 31,

2017

Dec 31,

2016

Change

Mar 31,

2016

Dec 31,

2015

  Change

Nonperforming loans to total loans0.67%0.54%0.13 0.59%0.78%(0.19)
Allowance for loan losses to total loans1.21%1.22%(0.01)1.08%1.08%0.00 
Allowance for loan losses to nonperforming loans    181.63%  224.16%  (42.53)  183.61%  137.49%46.12 
             

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollar amounts in thousands, except per share amounts)

Assets

(unaudited)

3/31/2017

   

12/31/2016

   
Cash and due from banks$19,751    $16,938 
Federal funds sold 5,508     11,745 
Total cash and cash equivalents 25,259     28,683 
      
Securities held-to-maturity (fair value of $3,272 in 2017 and $3,273 in 2016) 3,293     3,299 
Securities available-for-sale, at fair value 48,220     40,776 
Restricted stock, at cost 1,415     1,373 
Loans, net of allowance for loan losses of $5,716 in 2017 and 2016 466,244     464,353 
Loans held for sale 1,633     3,833 
Premises and equipment, net 11,034     10,771 
Software, net 209     176 
Interest receivable 1,365     1,378 
Cash value - bank owned life insurance 12,759     12,673 
Other real estate owned 2,750     2,370 
Income taxes receivable 872     1,214 
Deferred tax asset 2,234     2,374 
Other assets 1,146     922 

Total assets

$578,433    $574,195 
      

Liabilities and Stockholders' Equity

     
Deposits     
Noninterest bearing demand 105,276     102,654 
NOW, money market and savings 250,911     255,429 
Time 165,012     165,029 
Total deposits 521,199     523,112 
      
Capital notes 5,000     - 
Interest payable 77     88 
Other liabilities 1,966     1,574 

Total liabilities

$528,242    $524,774 
      
Stockholders' equity     
Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding     
  4,378,436 as of March 31, 2017 and December 31, 2016 9,370     9,370 
Additional paid-in-capital 31,495     31,495 
Accumulated other comprehensive (loss) (1,327)    (1,600)
Retained earnings 10,653     10,156 

Total stockholders' equity

$50,191    $49,421 
      

Total liabilities and stockholders' equity

$578,433    $574,195 
          

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Income

(dollar amounts in thousands, except per share amounts)

 

For the Three Months

Ended March 31,

 

Interest Income

 

2017

  

2016

Loans$5,188 $4,978
Securities   
US Government and agency obligations 113  139
Mortgage backed securities 66  52
Municipals 80  44
Dividends 7  6
Other (Corporates) 27  6
Interest bearing deposits 15  6
Federal Funds sold 13  4

Total interest income

 5,509  5,235
    

Interest Expense

   
Deposits   
NOW, money market savings 169  136
Time Deposits 402  369
Federal Funds purchased -  4
Brokered time deposits 63  31
Capital notes 6% due 4/1/2017 -  8
Capital notes 4% due 1/24/2022 37  -

Total interest expense

 671  548
    

Net interest income

 4,838  4,687
    
Provision for loan losses 100  200
    

Net interest income after provision for loan losses

 4,738  4,487
    

Noninterest income

   
Gains on sale of loans held for sale 371  491
Service charges, fees and commissions 405  372
Increase in cash value of life insurance 86  65
Other 9  15
Gain on sales of available-for-sale securities 10  65
    

Total noninterest income

 881  1,008
    

Noninterest expenses

   
Salaries and employee benefits 2,380  2,237
Occupancy 372  332
Equipment 348  319
Supplies 134  119
Professional, data processing, and other outside expense 680  662
Marketing 148  119
Credit expense 114  83
Other real estate expenses 12  1
FDIC insurance expense 103  92
Other 226  226

Total noninterest expenses

 4,517  4,190
    

Income before income taxes

 1,102  1,305
    

Income tax expense

 342  418
    

Net Income

$760 $887
    
Weighted average shares outstanding - basic 4,378,436  4,378,436
    
Weighted average shares outstanding - diluted 4,378,535  4,378,436
    
Income per common share - basic$0.17 $0.20
    
Income per common share - diluted$0.17 $0.20

 

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