BANK OF THE JAMES FINANCIAL GROUP INC
For the period ended Jun 30, 2026. Filed Aug 12, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 12, 2026
BOTJ$24.44+2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-12.
0001275101-26-000019
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-12.
0001275101-26-000025
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 195 previous paragraphs and 196 current paragraphs.
116 unchanged; 47 reworded; 30 added; 29 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (30)
Current report
During the quarter ended June 30, 2026, the Bank provided regulatory notice, dated May 26, 2026, of its intent to close two full-service branches, effective August 24, 2026: the Buchanan Branch, located at 19792 Main Street, Buchanan, Virginia, and the Water Street Branch, located at 550 Water St., Charlottesville, Virginia (the “Water Street Branch”), which will transition to a loan production office. On June 8, 2026, the Federal Reserve Bank of Richmond confirmed that the Bank had satisfied the applicable regulatory notice requirements for both closures. As of June 30, 2026, both branches remained open. These branch closures are not expected to have a material impact on the Company’s financial position, results of operations, or cash flows. The Bank is transferring the deposit accounts at the Buchanan branch primarily to the Lexington Branch. On June 30, 2026, the Buchanan branch had approximately, $1,664,000 in deposits.
Current report
Total loans, excluding loans held for sale, increased to $692,681,000 at June 30, 2026, from $667,807,000 at December 31, 2025, an increase of $24,874,000, or 3.7%. The increase was driven primarily by growth in commercial and commercial real estate lending, including commercial construction and land development loans, partially offset by a decline in non-owner occupied commercial real estate loans and modestly lower residential loan balances. See Note 8 to the consolidated financial statements for additional detail on the composition of the loan portfolio.
Current report
Total loans, excluding loans held for sale and net of the allowance for credit losses, increased to $686,084,000 at June 30, 2026 from $661,357,000 at December 31, 2025, an increase of 3.7%. The six-month increase reflects a decline in the first quarter of 2026, attributable to elevated payoff activity, more than offset by strong loan production during the second quarter of 2026. On a sequential quarter basis, total loans grew $37,347,000, or 5.7%, from March 31, 2026, with growth across the commercial, commercial real estate, and consumer portfolios, partially offset by a decline in the residential portfolio. The largest contributor to sequential quarter growth was the commercial real estate portfolio, driven by growth in commercial construction/land loans and owner occupied commercial mortgages, partially offset by a decline in non-owner-occupied commercial mortgages. The commercial and consumer portfolios also increased, reflecting continued loan production from new and existing customer relationships within the Bank’s market areas, with consumer growth led by consumer open-end loans partially offset by a decline in consumer closed-end loans. These increases were partially offset by a decline in the residential portfolio, as a decrease in residential mortgages was partially offset by growth in residential consumer construction/land loans.
Current report
The Bank closely monitors concentrations within its commercial real estate loan portfolio. As of June 30, 2026, non-owner occupied commercial real estate loans totaled $200,497,000, or approximately 28.95% of total loans. The largest property-type concentrations within the non-owner occupied commercial real estate portfolio were multi-family properties (5 or more units) at $50,769,000, or 25.3% of the non-owner occupied commercial real estate portfolio, office buildings at $40,771,000, or 20.3% of the non-owner occupied commercial real estate portfolio, and hotel/motel properties at $39,489,000, or 19.7% of the non-owner occupied commercial real estate portfolio. These loans are secured primarily by properties within the Bank’s market footprint and are diversified across borrower industries, with a weighted average loan-to-value ratio on the Bank’s largest loans in each category ranging from approximately 53% to 58%. The Bank has limited exposure to properties located in major metropolitan areas. There were no nonaccrual loans within the commercial real estate segment at June 30, 2026, including within the non-owner occupied and owner occupied commercial mortgage segments. At December 31, 2025, nonaccrual loans within the commercial real estate segment totaled $346,000, consisting of $30,000 of owner occupied commercial mortgages and $316,000 of commercial construction/land loans and there were no nonaccrual loans within the non-owner occupied commercial mortgage segment at that date.
Current report
Securities available-for-sale, carried at fair value, increased to $236,832,000 at June 30, 2026 from $214,128,000 at December 31, 2025, an increase of $22,704,000. The increase primarily reflected $34,639,000 of securities purchases, partially offset by $3,830,000 of maturities, calls, and paydowns, $5,588,000 of sales, and changes in the fair value of the portfolio. The pre-tax fair value of the portfolio declined by $1,159,000 and $2,531,000 during the three and six months ended June 30, 2026, respectively, primarily as a result of changes in market interest rates. After giving effect to the applicable 21% income tax rate and the $1,000 reclassification adjustment for gains included in net income, these declines resulted in increases of $917,000 and $2,000,000 in after-tax accumulated other comprehensive loss for the three- and six-month periods, respectively. As of June 30, 2026, the portfolio had a net unrealized loss position of approximately $21,438,000 pre-tax and $16,937,000 after tax. These unrealized losses were primarily attributable to changes in market interest rates. Management does not intend to sell these securities and does not believe it is more likely than not that the Company will be required to sell them before recovery of their amortized cost basis.
Current report
Restricted stock, consisting of stock in the Federal Reserve and the Federal Home Loan Bank of Atlanta (FHLBA), totaled $1,505,000 at June 30, 2026, compared with $1,461,000 at December 31, 2025. Both Federal Reserve and FHLBA stock are restricted securities; their value for impairment evaluation is based on ultimate par value recoverability rather than temporary market declines. In addition, the bank held stock in First National Bankers Bank and Community Banker’s Bank totaling $367,000 at both June 30, 2026 and December 31, 2025. These totals are reported in aggregate under restricted stock on the Consolidated Balance Sheets.
Current report
The Tier 1 capital to average total assets ratio increased to 9.38% at June 30, 2026 from 9.05% at December 31, 2025, as growth in Tier 1 capital outpaced growth in average total assets. Tier 1 capital increased to $98,577,000 from $93,748,000, primarily due to net income of $6,014,000 for the six months ended June 30, 2026, partially offset by the $909,000 dividend paid to common stockholders, while average total assets grew to $1,050,767,000 from $1,035,821,000.
Current report
(1)As of June 30, 2026 and December 31, 2025, allowances for credit losses includes allowance for unfunded commitments of $559 and $673, respectively.
Current report
For the three and six months ended June 30, 2026, noninterest expense decreased to $9,311,000 and $18,676,000, respectively, from $9,455,000 and $19,281,000 for the corresponding periods in 2025. The decrease for the three-month period was primarily attributable to lower data processing expense resulting from the Bank’s renegotiated core processing contract. The decrease for the six-month period also reflected lower professional and other outside expense due to the absence of a one-time consulting fee incurred during the first quarter of 2025 in connection with the core processing contract renegotiation. These decreases were partially offset by higher salaries and employee benefits, primarily reflecting increased production-based and other incentive compensation.
Current report
For the three months ended June 30, 2026, noninterest income increased to $4,476,000 from $4,075,000 for the same period in 2025, primarily due to growth in wealth management fees and service charges, fees and commissions. For the six months ended June 30, 2026, noninterest income increased to $8,440,000 from $7,358,000 for the same period in 2025, primarily due to growth in wealth management fees and gains on sales of loans held for sale (LHFS), which increased at comparable rates and outpaced the growth in service charges, fees and commissions, as well as income from the Bank’s small business investment company (SBIC) fund investment, for which there was no comparable income in the prior-year period.
Current report
These operating results represent an annualized return on average stockholders’ equity of 15.8% and 14.8% for the three and six-month periods ended June 30, 2026, compared with 15.89% and 10.81% for the three and six-month periods ended June 30, 2025. The three-month return was essentially unchanged from the comparable 2025 period, as growth in net income was offset by a proportional increase in average stockholders’ equity resulting from higher retained earnings. The increase for the six-month period reflected net income growth that substantially outpaced the growth in average stockholders’ equity. The Company had an annualized return on average assets of 1.23% and 1.15% for the three and six-month periods ended June 30, 2026, compared with 1.06% and 0.70% for the three and six-month periods ended June 30, 2025. The increase in return on average assets for both periods was driven by higher net income, which grew at a faster rate than average total assets, most notably for the six-month period.
Current report
For the three and six months ended June 30, 2026, interest income increased to $12,287,000 and $24,136,000 from $11,638,000 and $22,872,000 for the same periods in 2025, primarily due to growth in loan interest income and higher income across the securities portfolio, partially offset by a decline in federal funds sold income resulting from lower average balances of overnight investments. The average rate on loans was approximately 5.77% and 5.75% for the three and six months ended June 30, 2026, compared with 5.70% and 5.63% for the same periods in 2025. The rate on total average earning assets increased to 4.92% and 4.88%, up from 4.86% and 4.79% for the same periods in 2025. These changes were driven by higher yields on loans and securities, as well as a favorable shift in earning-asset mix toward higher-yielding loans and away from lower-yielding overnight investments.
Current report
For the three and six months ended June 30, 2026, interest expense was $3,033,000 and $6,148,000, respectively, compared with $3,388,000 and $6,903,000 for the corresponding periods in 2025. The decreases resulted primarily from lower rates paid on interest-bearing deposits and the repayment of the Company’s capital notes at maturity on June 30, 2025, on which no interest expense was recorded in 2026. These decreases were partially offset by higher average balances of interest-bearing deposits and increased interest expense on other borrowings. The Company’s average rate paid on interest-bearing deposits was approximately 1.44% and 1.46% for the three and six months ended June 30, 2026, respectively, compared with 1.66% and 1.70% for the corresponding periods in 2025. The Company’s average rate paid on total interest-bearing liabilities was approximately 1.49% and 1.51% for the three and six months ended June 30, 2026, respectively, compared with 1.71% and 1.74% for the corresponding periods in 2025.
Current report
Net interest income for the three months ended June 30, 2026, was $9,254,000, compared to $8,250,000 for the same period in 2025. For the six months ended June 30, 2026, net interest income was $17,988,000, compared to $15,969,000 for the same period in 2025. The net interest margin was 3.71% for the quarter ended June 30, 2026, versus 3.45% for the comparable period in 2025, and 3.64% for the six months ended June 30, 2026, versus 3.34% for the same period in 2025. The increase in net interest income for both periods reflected growth in the loan portfolio and higher yields on earning assets, combined with a decline in the cost of interest-bearing liabilities. The margin expansion was primarily attributable to a decline in the cost of interest-bearing liabilities, to approximately 1.49% from 1.71% for the three-month period and to approximately 1.51% from 1.74% for the six-month period, reflecting continued repricing of maturing deposits into a lower-rate environment, with the remainder of the improvement attributable to higher yields on earning assets.
Current report
The effect of future changes in market interest rates on net interest margin will depend on the relative timing and magnitude of repricing across the Company’s interest-earning assets and interest-bearing liabilities.
Current report
Noninterest income totaled $4,476,000 and $8,440,000 for the three and six months ended June 30, 2026, compared to $4,075,000 and $7,358,000 for the same periods in 2025. The increase for both periods was primarily attributable to growth across several noninterest income categories, as detailed below.
Current report
Service charges, fees, and commissions were $1,149,000 and $2,143,000, compared with $975,000 and $1,956,000 for the same periods in 2025, reflecting growth in debit card and merchant services income and higher NSF/return-check fee income, consistent with increased transactional deposit account activity, with similar drivers evident in both the three and six-month periods.
Current report
Income from an SBIC fund investment totaled $70,000 and $201,000 for the three and six months ended June 30, 2026, compared with $0 for the same periods in 2025.
Current report
Other noninterest income was $47,000 and $66,000, compared with $21,000 and $43,000 for the same periods in 2025.
Current report
Gains on sales of securities available-for-sale totaled $1,000 for the three and six months ended June 30, 2026, compared with $0 for the same periods in 2025.
Current report
Purchase mortgage originations totaled approximately $54,037,000 and $83,665,000, or 85.78% and 87.38%, respectively, of total mortgage loans originated in the three and six months ended June 30, 2026, as compared to $52,794,000, and $81,117,000, or 87.30% and 86.12%, respectively, of the total mortgage loans originated in the same periods in 2025.
Current report
Mortgage rates increased dramatically in 2022 and 2023 and remain elevated compared with recent history. While rates have generally stabilized since then, these higher levels continue to negatively impact mortgage origination volume. Due to the uncertainty surrounding current and near-term economic conditions—arising from inflation, as well as geopolitical and economic concerns—management cannot predict future mortgage rates. Management also believes that relatively high interest rates may continue to put pressure on revenue from the mortgage segment.
Current report
Noninterest expense for the three and six months ended June 30, 2026, decreased to $9,311,000 and $18,676,000, respectively, from $9,455,000 and $19,281,000 for the corresponding periods in 2025, representing decreases of 1.5% and 3.1%, respectively. The decrease for the three-month period was primarily attributable to lower data processing expense, reflecting the benefit of the Bank’s core processing contract renegotiated in 2025. Professional and other outside services expense was essentially unchanged for the three-month period. The decrease for the six-month period also reflected lower professional and other outside services expense due to the absence of a one-time consulting fee incurred during the first quarter of 2025 in connection with the contract renegotiation. These decreases were partially offset by higher salaries and employee benefits attributable to cost-of-living and merit increases, other compensation adjustments, and higher incentive compensation associated with increased production volumes. The Company anticipates that data processing expense may increase in future periods as additional services are implemented under its core processing arrangement.
Current report
Data processing expense was $519,000 for the three months ended June 30, 2026, compared with $782,000 for the corresponding period in 2025, a decrease of $263,000, or 33.6%, reflecting lower ongoing costs under the Bank’s amended core processing contract. Professional and other outside services expense was $756,000 for the three months ended June 30, 2026, compared with $755,000 for the corresponding period in 2025, an increase of $1,000, or 0.1%.
Current report
Occupancy expense was $523,000 and $1,131,000 for the three and six months ended June 30, 2026, compared to $497,000 and $1,067,000 for the same periods in 2025. Equipment expense was $706,000 and $1,453,000 for the three and six months ended June 30, 2026, compared to $654,000 and $1,324,000 for the same periods in 2025.
Current report
Allowances and Provision for Credit Losses
Current report
The Company recorded a provision for credit losses of $350,000 and $204,000 for the three and six months ended June 30, 2026, compared with a recovery of credit losses of $528,000 and $391,000 for the same periods in 2025. The provision attributable to the loan portfolio was $410,000 and $318,000 for the three and six months ended June 30, 2026, respectively, reflecting growth in the loan portfolio during the period, partially offset by a recovery attributable to the allowance for unfunded loan commitments of $60,000 and $114,000 for the three and six months ended June 30, 2026 (not included in the allowance).
Current report
Charged-off loans, which are loans that management deems uncollectible, are charged against the allowance for credit losses and constitute a realized loss. We had charged-off loans of approximately $90,000 for the three months ended June 30, 2026, primarily in the consumer segment, as compared to $160,000 for the same period in 2025. For the six months ended June 30, 2026, we had charged-off loans of approximately $312,000, primarily in the consumer segment, as compared to $222,000 for the same period in 2025, also primarily in the consumer segment. While a charged-off loan may subsequently be collected, such recoveries generally are realized over an extended period of time. We had principal recoveries of approximately $76,000 for the three months ended June 30, 2026, as compared to $1,000 for the same period in 2025. For the six months ended June 30, 2026, we had principal recoveries of approximately $141,000, as compared to $13,000 for the same period in 2025.
Current report
At June 30, 2026, the allowance for credit losses was $6,597,000, or 0.95% of total loans, compared with $6,450,000, or 0.97%, at December 31, 2025, and $6,308,000, or 0.96% of total loans, at June 30, 2025. The allowance for credit losses for individually evaluated loans was $72,000 at both June 30, 2026 and December 31, 2025 (see Note 8 for detail). Separately, the allowance for credit losses on unfunded commitments, which is recorded in other liabilities rather than as a reduction of loans, was $559,000 at June 30, 2026 and $673,000 at December 31, 2025 (see Note 8 for detail).
Current report
For the six months ended June 30, 2026, the Company recorded income tax expense of $1,534,000, compared to $891,000 for the same period in 2025. This represents an effective tax rate of approximately 20.32% for the six months ended June 30, 2026, compared with 20.08% for the same period in 2025.
Removed paragraphs (29)
Previous report
Total loans, excluding loans held for sale, decreased to $655,334,000 at March 31, 2026, from $667,807,000 at December 31, 2025, a decrease of $12,473,000, or 1.85%. The decline was concentrated in the commercial portfolio, which decreased $4,363,000 (primarily reflecting loan payoffs), and in the consumer portfolio, where consumer open-end and closed-end balances declined $3,192,000 and $1,020,000, respectively. Residential mortgage balances were essentially flat, while residential consumer construction/land balances declined $2,499,000 as construction loans converted to permanent financing or paid off. Within commercial real estate, modest growth in commercial construction/land (an increase of $1,279,000) was more than offset by declines in owner-occupied and non-owner-occupied commercial mortgages, resulting in a net decrease of $1,448,000 in the commercial real estate portfolio.
Previous report
Total loans, excluding loans held for sale and net of the allowance for credit losses, decreased to $649,133,000 at March 31, 2026 from $661,357,000 at December 31, 2025, a decrease of 1.85%. The decline was primarily attributable to loan payoffs. While the Company experienced growth in certain commercial and commercial real estate portfolios, these increases were more than offset by the aforementioned paydowns, and residential and consumer lending levels remained relatively stable.
Previous report
The Bank closely monitors concentrations within its commercial real estate loan portfolio. As of March 31, 2026, non-owner occupied commercial real estate loans totaled $213,638,000, or approximately 32.6% of total loans. The Bank’s exposure to higher-risk property types remains limited, with loans secured by large office buildings or shopping centers comprising less than 5% of the non-owner occupied commercial real estate portfolio. The portfolio is primarily secured by smaller, multi-tenant properties that are diversified across industries and geographic markets within the Bank’s footprint. The Bank does not have material exposure to loans secured by properties in major metropolitan central business districts, and delinquency levels within the commercial real estate portfolio remained stable during the period.
Previous report
Securities available-for-sale, carried at fair value, increased to $244,699,000 at March 31, 2026 from $214,128,000 at December 31, 2025, an increase of $30,571,000. The increase reflects $33,628,000 of securities purchases funded by the reinvestment of excess liquidity from deposit inflows, partially offset by $1,686,000 of maturities, calls, and paydowns and a $1,371,000 decline in the pre-tax fair value of the portfolio resulting from changes in market interest rates during the quarter, which contributed to a $1,083,000 increase in after-tax accumulated other comprehensive loss. As of March 31, 2026, unrealized losses on securities available-for-sale totaled $20,278,000 pre-tax and $16,020,000 after tax. These unrealized losses are primarily attributable to changes in market interest rates, and management does not expect to realize such losses, as the Bank has the intent and ability to hold these securities until recovery of fair value or maturity.
Previous report
Restricted stock, consisting of stock in the Federal Reserve, the Federal Home Loan Bank of Atlanta (FHLBA), and correspondent banks, totaled $1,828,000 at March 31, 2026 and December 31, 2025. These holdings are carried at cost and evaluated for impairment based on par value recoverability.
Previous report
The Tier 1 risk-based capital ratio increased from December 31, 2025, primarily due to net income of $2,774,000 for the three months ended March 31, 2026, partially offset by the $455,000 dividend paid to common stockholders.
Previous report
For the three months ended March 31, 2026, the Company reported net income of $2,774,000, compared with net income of $842,000 for the same period in 2025, an increase of $1,932,000, or 229.5%.
Previous report
Noninterest income increased to $3,964,000 for the three months ended March 31, 2026, compared with $3,283,000 for the same period in 2025, driven by higher wealth management fees, increased gains on sales of loans held for sale, and income from an SBIC fund investment.
Previous report
Noninterest expense decreased to $9,365,000 for the three months ended March 31, 2026, from $9,826,000 for the same period in 2025, primarily reflecting decreases in data processing and professional services expenses associated with the renegotiation of the Bank’s core processing contract, partially offset by increases in salaries and employee benefits related to higher production volumes and incentive compensation.
Previous report
These operating results produced an annualized return on average stockholders’ equity of 13.87% for the three-month period ended March 31, 2026, compared with 5.27% for the same period in 2025. The annualized return on average assets was 1.07% for the three-month period ended March 31, 2026, compared with 0.33% for the same period in 2025.
Previous report
For the three months ended March 31, 2026, total interest income was $11,849,000, compared with $11,234,000 for the same period in 2025, an increase of 5.5%. The increase was primarily attributable to higher yields on earning assets, partially offset by lower average balances of, and yields on, federal funds sold. The yield on average earning assets increased to 4.84% for the three months ended March 31, 2026, from 4.73% for the same period in 2025, primarily reflecting higher yields on loans (5.73% compared with 5.56%) and on the taxable securities portfolio (2.81% compared with 2.41%), as proceeds from lower-yielding maturities and paydowns were reinvested at current market rates. Average earning assets grew to $994,286,000 from $963,688,000, supported by deposit inflows that funded growth in the securities portfolio.
Previous report
For the three months ended March 31, 2026, interest expense was $3,115,000, compared with $3,515,000 for the same period in 2025, a decline of 11.4%. The decrease was driven by a lower cost of interest-bearing liabilities, which declined to 1.54% for the three months ended March 31, 2026, from 1.78% for the same period in 2025, a reduction of 24 basis points. The decline was attributable to (i) lower rates paid on interest-bearing deposits, with the average rate on total interest-bearing deposits decreasing to 1.49% from 1.73%, reflecting the repricing of NOW, money market, and savings accounts (0.66% and 0.90% for the three months ended March 31, 2026, compared with 0.75% and 1.36% for the same period in 2025) and the repricing of maturing time deposits (3.37% compared with 3.82%); and (ii) the elimination of interest expense on the Company’s $10,050,000 of capital notes, which were retired at maturity in the second quarter of 2025. These benefits were partially offset by a higher rate paid on other borrowings (5.50% compared with 3.91%) following the Second Allonge to the NBB Note effective September 30, 2025.
Previous report
Net interest income for the three months ended March 31, 2026, was $8,734,000, compared with $7,719,000 for the same period in 2025, an increase of 13.2%.
Previous report
The net interest margin was 3.57% for the three months ended March 31, 2026, compared with 3.25% for the same period in 2025, an increase of 32 basis points. The expansion in net interest margin was primarily attributable to the 24 basis point reduction in the cost of interest-bearing liabilities described above, with the balance reflecting the 11 basis point increase in the yield on earning assets. Although short-term interest rates have stabilized, future rate movements could continue to influence the margin depending on loan repricing and deposit rate competition. For example,
Previous report
In the event of declining interest rates, net interest margin could come under pressure, particularly in the short term, as earning asset yields may reprice more quickly than funding costs given the Company’s asset-sensitive position.
Previous report
Noninterest income totaled $3,964,000 for the three months ended March 31, 2026, compared to $3,283,000 for the same period in 2025, representing an increase of 20.8%. The increase for the quarter was primarily attributable to higher gains on sales of loans held for sale, increased wealth management fees, and income from an SBIC fund investment, while service fee income remained relatively stable.
Previous report
Service charges, fees, and commissions were $994,000, compared with $981,000 for the same period in 2025, reflecting relatively stable transactional and deposit account activity.
Previous report
Income from an SBIC fund investment totaled $131,000 for the three months ended March 31, 2026, with nocomparable income in the prior year period.
Previous report
There were no gains on sales of available-for-sale securities for the three months ended March 31, 2026 or March 31, 2025.
Previous report
Purchase mortgage originations totaled approximately $29,323,336, or 58.90%, of total mortgage loans originated in the three months ended March 31, 2026, as compared to approximately $28,323,336, or 83.99%, of the total mortgage loans originated in the same period in 2025. The decrease in the purchase share reflects a modest increase in refinance activity in the first quarter of 2026 relative to the prior-year period, consistent with the moderation in mortgage interest rates that has occurred since the highs reached during 2022 and 2023.
Previous report
Mortgage interest rates remain elevated relative to the historic lows that prevailed during 2020 and 2021, and overall mortgage origination volume remains below pre-2022 levels. As a result, a substantial portion of existing residential mortgages carries a rate below current market rates, which management believes will continue to constrain the population of borrowers with an economic incentive to refinance. Due to the uncertainty surrounding current and near-term economic conditions, including inflation, geopolitical developments, and other macroeconomic factors, management cannot predict the future direction of mortgage rates. Management anticipates that, in the near term, purchase originations will continue to represent a significant portion of total mortgage activity, and that elevated interest rates relative to pre-2022 levels may continue to put pressure on revenue from the mortgage segment. Future levels of mortgage origination and refinance activity will depend on prevailing interest rates, housing market conditions, and other factors, many of which are outside the Company’s control.
Previous report
Noninterest expense for the three months ended March 31, 2026, decreased to $9,365,000 from $9,826,000 for the same period in 2025, representing a decrease of 4.7%. The decrease primarily resulted from lower professional and outside services and data processing expenses associated with the renegotiation of the Company’s core processing contract, partially offset by higher salaries and employee benefits.
Previous report
Total personnel expense (salaries and employee benefits) was $5,500,000 for the three months ended March 31, 2026, compared to $4,777,000 for the same period in 2025. The increase reflects higher commission expense associated with increased production volumes, performance-based incentive compensation accruals, and market compensation adjustments.
Previous report
Professional and other outside expenses totaled $770,000 for the three months ended March 31, 2026, compared to $1,715,000 for the same period in 2025. The decrease was primarily attributable to consulting fees incurred in the prior year period in connection with the renegotiation of the Company’s core processing contract, which were concentrated in that period.
Previous report
Data processing expense totaled $475,000 for the three months ended March 31, 2026, compared to $820,000 for the same period in 2025. The decrease reflects lower ongoing costs under the Company’s amended core processing contract.
Previous report
Occupancy and equipment expenses were $608,000 for the three months ended March 31, 2026, compared to $570,000 for the same period in 2025, reflecting modest increases associated with facility maintenance and operational needs.
Previous report
At March 31, 2026, the allowance for credit losses was $6,201,000, or 0.95% of total loans, compared with $6,450,000, or 0.97%, at December 31, 2025, and $7,021,000, or 1.08%, at March 31, 2025. The decrease from year-end reflects the decline in loan balances, continued favorable credit quality, and limited net charge-offs (see Note 8 for additional detail).
Previous report
Net charge-offs totaled $158,000 for the three months ended March 31, 2026, compared with $51,000 for the same period in 2025.
Previous report
At March 31, 2026, nonperforming loans totaled $1,450,000, compared with $1,704,000 at December 31, 2025 and $1,799,000 at March 31, 2025. Nonperforming loans represented 0.22% of total loans at March 31, 2026, compared with 0.26% at December 31, 2025.
Reworded paragraphs (47)
Previous wording
Bank of the James Financial Group, Inc.’s (“Financial” or the “Company”) financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). As a community bank primarily serving central Virginia, the financial information contained within our statements is, to a significant extent, based on measures of the financial effects of transactions and events that have already occurred, such as lending activities tied to local real estate markets and small business operations. A variety of factors, particularly regional economic conditions, fluctuations in interest rates, and changes in real estate values in our market area, could affect the ultimate value obtained when earning income, recognizing an expense, recovering an asset, or relieving a liability. In addition, GAAP itself may evolve from one previously acceptable method to another, potentially altering the timing of how these events impact our transactions, even if the underlying economics remain unchanged.
Current wording
Bank of the James Financial Group, Inc.’s (the “Company”) financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). As a community bank primarily serving central Virginia, the financial information contained within our statements is, to a significant extent, based on measures of the financial effects of transactions and events that have already occurred, such as lending activities tied to local real estate markets and small business operations. A variety of factors, particularly regional economic conditions, fluctuations in interest rates, and changes in real estate values in our market area, could affect the ultimate value obtained when earning income, recognizing an expense, recovering an asset, or relieving a liability. In addition, GAAP itself may evolve from one previously acceptable method to another, potentially altering the timing of how these events impact our transactions, even if the underlying economics remain unchanged.
Previous wording
The Allowance for Credit Losses on Loans (“ACL”) is management’s estimate of the current expected credit losses in our loan portfolio and held-to-maturity securities portfolio. With the exception of loans related to agriculture, the Company uses a discounted cash flow model to estimate its current expected credit losses in our loan portfolioand held-to-maturity securities portfolio. Actual losses could differ significantly from the historical factors that we use in estimating risk. For information on the Company’s policies on the ACL, please refer to Note 2 – “Allowance for Credit Losses - Loans” in the Company’s Form 10-K for the year ended December 31, 2025. See “Management’s Discussion and Analysis Results of Operations – Allowance and Provision for Credit losses”below for further discussion of the allowance for credit losses.
Current wording
The Allowance for Credit Losses on Loans (“ACL”) is management’s estimate of the current expected credit losses in our loan portfolio. With the exception of loans related to agriculture (for which we use the remaining life method), the Company uses a discounted cash flow model to estimate its current expected credit losses in our loan portfolioand held-to-maturity securities portfolio. Actual losses could differ significantly from the historical factors that we use in estimating risk. For information on the Company’s policies on the ACL, please refer to Note 2 – “Allowance for Credit Losses - Loans” in the Company’s Form 10-K for the year ended December 31, 2025. See “Management’s Discussion and Analysis Results of Operations – Allowance and Provision for Credit losses”below for further discussion of the allowance for credit losses.
Previous wording
PWW is a Lynchburg, Virginia-based investment advisory firm that generates revenue primarily through investment advisory fees and had approximately $1,010,000,000 in assets under management and advisement as of March 31, 2026.
Current wording
PWW is a Lynchburg, Virginia-based investment advisory firm that generates revenue primarily through investment advisory fees and had approximately $1,091,000,000 in assets under management and advisement as of June 30, 2026.
Previous wording
The following discussion and analysis presents management’s assessment of the financial condition of the Company as of March 31, 2026 and December 31, 2025, and the results of operations for the three-month periods ended March 31, 2026 and 2025. This discussion should be read in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this report. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Current wording
The following discussion represents management’s discussion and analysis of the financial condition of the Company as of June 30, 2026 and December 31, 2025, and the results of operations for the three and six-month periods ended June 30, 2026 and 2025. This discussion should be read in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this report. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Previous wording
Total assets were $1,061,189,000 on March 31, 2026, compared with $1,039,024,000 at December 31, 2025, an increase of 2.13%. The increase in total assets was primarily due to growth in federal funds sold and securities available-for-sale, reflecting deployment of available liquidity, partially offset by a decline in loans (net of the allowance for credit losses).
Current wording
Total assets were $1,041,307,000 on June 30, 2026, compared with $1,039,024,000 at December 31, 2025, an increase of 0.2%. The increase in total assets was primarily due to growth in the loan portfolio and available-for-sale securities, which were largely funded by a reduction in cash and cash equivalents, primarily within federal funds sold.
Previous wording
Total deposits increased from $937,129,000 at December 31, 2025, to $956,552,000 at March 31, 2026, an increase of $19,423,000, or 2.07%. The growth was driven primarily by an increase in noninterest-bearing demand deposits of $13,306,000 and an increase in NOW, money market, and savings deposits of $6,554,000, while time deposit balances declined modestly by $437,000. The Company continues to utilize the reciprocal portion of the Insured Cash Sweep (ICS) program for customers requiring full FDIC insurance, and may redeploy the non-reciprocal option as market and liquidity conditions warrant.
Current wording
Total deposits decreased from $937,129,000 at December 31, 2025, to $935,184,000 at June 30, 2026, a decrease of $1,945,000, or 0.2%. The decline was driven primarily by a decrease in NOW, money market, and savings deposits of $6,920,000, partially offset by growth in noninterest-bearing demand deposits of $4,934,000, while time deposits remained largely stable, increasing $41,000. The decrease was primarily attributable to the timing of withdrawals by certain customers, including foundations and similar organizations, in connection with their fiscal year-end, along with normal seasonal fluctuations in deposit balances. The Company continues to utilize the reciprocal portion of the Insured Cash Sweep (ICS) program for customers requiring full FDIC insurance, and may redeploy the non-reciprocal option as market and liquidity conditions warrant.
Previous wording
The following summarizes the position of the Bank’s loan portfolio as of the dates indicated by dollar amounts and percentages (dollar in thousands):
Current wording
The following summarizes the position of the Bank’s loan portfolio as of the dates indicated by dollar amounts and percentages (dollars in thousands):
Previous wording
Loans held for sale totaled $2,877,000 at March 31, 2026 compared to $3,472,000 at December 31, 2025, a decrease of 17.14%, due primarily to normal quarterly fluctuations in mortgage production and secondary market sales.
Current wording
Loans held for sale totaled $5,651,000 at June 30, 2026 compared to $3,472,000 at December 31, 2025, an increase of 62.8%, due primarily to increased mortgage production and secondary market sales activity within the Bank’s mortgage division.
Previous wording
Subsegments of the loan portfolio are set forth in Note 8 to the consolidated financial statements. As of March 31, 2026, non-owner occupied commercial real estate loans and commercial construction and land development loans totaled $231,256,000 representing approximately 35.3% of total loans.
Current wording
Subsegments of the loan portfolio are set forth in Note 8 to the consolidated financial statements. As of June 30, 2026, non-owner occupied commercial real estate loans and commercial construction and land development loans totaled $235,952,000, representing approximately 34.06% of total loans.
Previous wording
Total nonperforming assets, which consist of nonperforming loans and other real estate owned, were $1,450,000 at March 31, 2026, compared with $1,704,000 at December 31, 2025. As discussed under “Results of Operations—Allowance and Provision for Credit Losses,” management believes the allowance for credit losses is adequate to absorb estimated losses inherent in the loan portfolio.
Current wording
Total nonperforming assets, which consist of nonperforming loans and other real estate owned, were $1,091,000 at June 30, 2026, compared with $1,704,000 at December 31, 2025. As discussed under “Results of Operations—Allowance and Provision for Credit Losses,” management believes the allowance for credit losses is adequate to absorb estimated losses inherent in the loan portfolio.
Previous wording
Other real estate owned (“OREO”) represents real property acquired by the Bank for debts previously contracted, including through foreclosure or deeds in lieu of foreclosure. The Company had no OREO at March 31, 2026 or December 31, 2025, and did not acquire or dispose of any OREO during the three months ended March 31, 2026.
Current wording
Other real estate owned (“OREO”) represents real property acquired by the Bank for debts previously contracted, including through foreclosure or deeds in lieu of foreclosure. The Company had no OREO at June 30, 2026 or December 31, 2025, and did not acquire or dispose of any OREO during the six months ended June 30, 2026.
Previous wording
Cash and cash equivalents increased to $87,991,000 at March 31, 2026 from $84,475,000 at December 31, 2025. Cash and cash equivalents consist of cash due from correspondents, cash in vault, and overnight investments, including federal funds sold. The increase was primarily attributable to higher federal funds sold balances, which rose to $62,894,000 at March 31, 2026 compared to $55,937,000 at December 31, 2025, reflecting the deployment of excess liquidity generated from deposit inflows and loan payoffs.
Current wording
Cash and cash equivalents decreased to $35,545,000 at June 30, 2026, from $84,475,000 at December 31, 2025. Cash and cash equivalents consist of cash due from correspondent banks, cash in vault, and overnight investments, including federal funds sold. The decrease was primarily attributable to federal funds sold, which declined $45,067,000, or 80.6%, to $10,870,000 at June 30, 2026, from $55,937,000 at December 31, 2025. During the first quarter of 2026, federal funds sold increased $6,957,000 to $62,894,000, as deposit inflows and lower loan balances generated liquidity even after securities available-for-sale increased $30,571,000 to $244,699,000. During the second quarter of 2026, federal funds sold declined $52,024,000, as overnight liquidity was used primarily to fund strong loan growth, with the decline in total deposits discussed above further reducing federal funds sold.
Previous wording
Securities held-to-maturity decreased slightly to $3,586,000 at March 31, 2026 from $3,590,000 at December 31, 2025, due to normal amortization of premiums.
Current wording
Securities held-to-maturity decreased to $3,581,000 at June 30, 2026 from $3,590,000 at December 31, 2025, due to normal amortization.
Previous wording
Liquid assets, on a consolidated basis, totaled $332,690,000 at March 31, 2026, consisting of cash, interest-bearing and noninterest-bearing deposits with banks, federal funds sold, and available-for-sale securities. This represents an increase from $298,603,000 at December 31, 2025, primarily reflecting higher balances in federal funds sold and securities available-for-sale due to the deployment of excess liquidity generated from deposit inflows.
Current wording
Total liquid assets, on a consolidated basis, totaled $272,377,000 at June 30, 2026, consisting of cash, interest-bearing and noninterest-bearing deposits with banks, federal funds sold, and available-for-sale securities. Of this amount, approximately $113,093,000 of available-for-sale securities was pledged as collateral as described below, leaving approximately $159,284,000 of unencumbered liquid assets. This compares to total liquid assets of $298,603,000 at December 31, 2025, of which approximately $115,735,000 was pledged, leaving approximately $182,868,000 unencumbered. Total liquid assets decreased $26,226,000, or 8.8%, and unencumbered liquid assets decreased $23,584,000, or 12.9%, primarily reflecting the decline in cash and cash equivalents (driven by lower federal funds sold), partially offset by growth in the available-for-sale securities portfolio.
Previous wording
approximately $38,697,000 of our available-for-sale securities as collateral with correspondent banks, including the FHLBA, for collateralized lines of credit;
Current wording
approximately $38,578,000 of our available-for-sale securities as collateral with correspondent banks, including the FHLBA, for collateralized lines of credit;
Previous wording
approximately $50,086,000 of our available-for-sale securities as security for public deposits; and
Current wording
approximately $49,810,000 of our available-for-sale securities as security for public deposits; and
Previous wording
approximately $25,626,000 of our available-for-sale securities as collateral for advances at the Federal Reserve Bank’s discount window.
Current wording
approximately $24,705,000 of our available-for-sale securities as collateral for advances at the Federal Reserve Bank’s discount window.
Previous wording
If additional liquidity is needed, the Bank can purchase up to $58,000,000 of Fed funds through correspondent relationships. In addition, the Bank has total borrowing capacity with the Federal Home Loan Bank of Atlanta (“FHLBA”) of approximately $46,593,000 based on pledged collateral, consisting of approximately $16,893,000 supported by pledged loans and approximately $29,700,000 supported by pledged investment securities. The Bank may obtain additional FHLBA capacity by pledging additional eligible loans or investment securities. As of March 31, 2026, the Bank had no borrowings from any of these sources. Management believes that liquid assets were adequate at March 31, 2026 and anticipates additional liquidity from deposit growth and loan repayments.
Current wording
If additional liquidity is needed, the Bank can purchase up to $69,000,000 of Fed funds through correspondent relationships. In addition, the Bank has total borrowing capacity with the Federal Home Loan Bank of Atlanta (“FHLBA”) of approximately $45,655,000 based on pledged collateral, consisting of approximately $15,683,000 supported by pledged loans and approximately $29,971,000 supported by pledged investment securities. The Bank may obtain additional FHLBA capacity by pledging additional eligible loans or investment securities. As of June 30, 2026, the Bank had no borrowings from any of these sources. Management believes that liquid assets were adequate at June 30, 2026 and anticipates additional liquidity from deposit growth and loan repayments.
Previous wording
Stockholders’ equity totaled $81,284,000 at March 31, 2026, compared with $80,048,000 at December 31, 2025, an increase of 1.54%. The increase primarily reflected net income of $2,774,000, partially offset by dividends paid to common stockholders of $455,000 and a $1,083,00 increase in accumulated other comprehensive loss related to unrealized losses on available-for-sale securities during the period.
Current wording
Stockholders’ equity totaled $83,153,000 at June 30, 2026, compared with $80,048,000 at December 31, 2025, an increase of 3.9%. The increase primarily reflected net income of $6,014,000 for the six months ended June 30, 2026, partially offset by dividends paid to common stockholders of $909,000 and a $2,000,000 increase in accumulated other comprehensive loss related to unrealized losses on available-for-sale securities during the period.
Previous wording
At March 31, 2026, deposits in accounts with balances exceeding the FDIC insurance limit of $250,000 totaled approximately $299,728,000 (31.34% of total deposits), compared with $289,069,000 (30.85% of total deposits) at December 31, 2025. Excluding collateralized public deposits, uninsured deposits totaled approximately $259,615,000 (27.14% of total deposits) at March 31, 2026, compared with $252,818,000 (26.98% of total deposits) at December 31, 2025. These amounts are based on account balances without applying FDIC aggregation rules across accounts or ownership capacities and may differ from the actual uninsured portion. The Bank had no brokered deposits or other uninsured deposit-like instruments at March 31, 2026 or December 31, 2025.
Current wording
At June 30, 2026, deposits in accounts with balances exceeding the FDIC insurance limit of $250,000 totaled approximately $286,760,000 (30.66% of total deposits), compared with $289,069,000 (30.85% of total deposits) at December 31, 2025. Excluding collateralized public deposits, uninsured deposits totaled approximately $251,128,000 (26.85% of total deposits) at June 30, 2026, compared with $252,818,000 (26.98% of total deposits) at December 31, 2025. These amounts are based on account balances without applying FDIC aggregation rules across accounts or ownership capacities and may differ from the actual uninsured portion. The Bank had no brokered deposits or other uninsured deposit-like instruments at June 30, 2026 or December 31, 2025.
Previous wording
(1)Includes the capital conservation buffer of 2.50% for all ratios, excluding the Tier 1 capital to average total assets ratio.
Current wording
(2)Includes the capital conservation buffer of 2.50% for all ratios, excluding the Tier 1 capital to average total assets ratio.
Previous wording
The above tables set forth the capital position and analysis for the Bank only. Because total assets on a consolidated basis are less than $3,000,000,000, The Company is not subject to the capital requirements imposed by the Bank Holding Company Act. Consequently, The Company does not calculate its financial ratios on a consolidated basis. If calculated, management expects that the capital ratios for the Company on a consolidated basis at March 31, 2026 would be substantially equivalent to those of the Bank.
Current wording
The above tables set forth the capital position and analysis for the Bank only. Because total assets on a consolidated basis are less than $3,000,000,000, the Company is not subject to the capital requirements imposed by the Bank Holding Company Act. Consequently, the Company does not calculate its financial ratios on a consolidated basis. If calculated, management expects that the capital ratios for the Company on a consolidated basis at June 30, 2026 would be modestly lower than those of the Bank, primarily due to the impact of goodwill and intangible assets recorded in connection with the PWW acquisition.
Previous wording
On April 23, 2026, the federal banking agencies jointly adopted a final rule modifying the community bank leverage ratio (“CBLR”) framework, effective July 1, 2026, as further described in Note 10 to the consolidated financial statements. The Bank has not elected to use the CBLR framework and continues to calculate its regulatory capital ratios under the generally applicable risk-based capital rules described above. Management is evaluating whether to opt into the CBLR framework when the final rule becomes effective.
Current wording
On April 23, 2026, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation jointly adopted a final rule modifying the community bank leverage ratio (“CBLR”) framework. The final rule lowers the CBLR requirement from greater than 9% to greater than 8% and extends the grace period during which a qualifying community banking organization that temporarily fails to satisfy the qualifying criteria may continue to use the CBLR framework from two consecutive quarters to four consecutive quarters, subject to a limit of eight quarters in any rolling five-year period and provided the institution maintains a leverage ratio greater than 7%. The final rule does not change existing eligibility criteria. The final rule became effective July 1, 2026. The Bank has not elected to use the CBLR framework and continues to calculate its regulatory capital ratios under the generally applicable risk-based capital rules described above. Management continues to evaluate whether to opt into the CBLR framework.
Previous wording
Comparison of the Three Months Ended March 31, 2026 and 2025
Current wording
Comparison of the Three and Six Months Ended June 30, 2026 and 2025
Previous wording
Basic and diluted earnings per common share were each $0.61 for the three months ended March 31, 2026, compared with $0.19 for the same period in 2025.
Current wording
For the three and six months ended June 30, 2026, the Company reported net income of $3,240,000 and $6,014,000, respectively, compared with net income of $2,704,000 and $3,546,000 for the same periods in 2025. This represents an increase of $536,000, or 19.8%, for the three-month period and an increase of $2,468,000, or 69.6%, for the six-month period. Basic and diluted earnings per common share were each $0.71 and $1.32 for the three and six months ended June 30, 2026, compared with $0.60 and $0.78 for the same periods ended June 30, 2025.
Previous wording
The increase in net income for the three months ended March 31, 2026, compared with the same period in 2025, was primarily attributable to higher net interest income, growth in noninterest income, a reduction in noninterest expense, and a recovery of credit losses in the current period compared to a provision for credit losses in the prior year period.
Current wording
The increase in net income in the three months ended June 30, 2026 from the three months ended June 30, 2025 was primarily driven by growth in net interest income and noninterest income, partially offset by a provision for credit losses in the current period compared with a recovery in the prior-year period. The increase for the six months ended June 30, 2026 from the six months ended June 30, 2025 was driven primarily by the same factors, along with a decline in noninterest expense. The following provides a more detailed analysis of the components that impacted net income for the three and six-month periods ended June 30, 2026, as compared with the same periods in 2025:
Previous wording
Net interest income increased to $8,734,000 for the three months ended March 31, 2026, from $7,719,000 for the same period in 2025, reflecting higher yields on earning assets and a lower cost of interest-bearing liabilities, including the impact of deposit repricing and the elimination of interest expense on capital notes following their retirement in the second quarter of 2025.
Current wording
For the three and six months ended June 30, 2026, net interest income increased to $9,254,000 and $17,988,000 from $8,250,000 and $15,969,000 for the same periods in 2025, reflecting growth in the loan portfolio, higher yields on earning assets, and a 10.5% and 10.9% decline in total interest expense for the three and six month periods, respectively, driven in part by the elimination of interest expense on capital notes following their retirement in the second quarter of 2025.
Previous wording
The Company recorded a recovery of credit losses of $146,000 for the three months ended March 31, 2026, compared with a provision for credit losses of $137,000 for the same period in 2025.
Current wording
For the three months ended June 30, 2026, the Company recorded a provision for credit losses of $350,000, compared to a credit loss recovery of $528,000 for the same period in 2025. For the six months ended June 30, 2026, the Company recorded a provision for credit losses of $204,000, compared with a recovery of $391,000 for the same period in 2025.
Previous wording
The annualized return on average assets was 1.07% for the three months ended March 31, 2026, compared with 0.33% for the same period in 2025. The improvement reflects the increase in net income driven by higher net interest income, growth in noninterest income, lower noninterest expense, and a recovery of credit losses in the current period.
Current wording
The annualized return on average assets was 1.23% and 1.15% for the three and six months ended June 30, 2026, compared with 1.06% and 0.70% for the same periods in 2025. The improvement reflects growth in net income, which outpaced a modest increase in average total assets over the same periods.
Previous wording
While management does not currently anticipate a need to increase deposit rates, increases in market interest rates or competitive pressures could result in higher deposit costs, which would adversely impact net interest margin and profitability.
Current wording
While management has recently offered a limited-time certificate of deposit special in response to rising market interest rates and continued deposit competition, and may consider similar targeted rate actions in the future, sustained increases in market interest rates or competitive pressures could result in higher overall deposit costs, which would adversely impact net interest margin and profitability.
Previous wording
The major components of noninterest income for the three months ended March 31, 2026, as compared to the comparable period in 2025, were as follows:
Current wording
The major components of noninterest income for the three and six months ended June 30, 2026, as compared to the comparable periods in 2025, were as follows:
Previous wording
Gains on sale of loans held for sale, primarily through the Mortgage Division, totaled $1,196,000, compared with $837,000 for the same period in 2025.
Current wording
Gains on sale of loans held for sale, primarily through the Mortgage Division, totaled $1,529,000 and $2,725,000, compared with $1,589,000 and $2,426,000 for the same periods in 2025.
Previous wording
Wealth management fees increased to $1,413,000, compared with $1,255,000 for the same period in 2025, reflecting continued growth in client assets under management.
Current wording
Wealth management fees increased to $1,466,000 and $2,879,000, compared with $1,300,000 and $2,555,000 for the same periods in 2025, reflecting growth in client assets under management, driven by both net asset inflows and favorable market performance.
Previous wording
Life insurance income increased to $211,000 from $188,000, reflecting continued growth in the cash surrender value of bank-owned life insurance policies.
Current wording
Life insurance income increased to $214,000 and $425,000 for the three and six months ended June 30, 2026, from $190,000 and $378,000 for the same periods in 2025, reflecting continued growth in the cash surrender value of bank-owned life insurance policies.
Previous wording
Management believes the growth in noninterest income for the first quarter of 2026, particularly in wealth management and mortgage banking, reflects the diversification of the Company’s revenue sources. Future levels of noninterest income will depend on a number of factors, including market conditions affecting wealth management assets under management, mortgage origination and sales volumes, and other items that may not recur in future periods.
Current wording
Management believes the growth in noninterest income for the second quarter and first six months of 2026 reflects the diversification of the Company’s revenue sources. For the second quarter, growth was primarily in wealth management fees and service charges, fees, and commissions. For the six-month period, growth also reflected an increase in gains on sales of loans held for sale, which were recognized in both quarters of 2026 but whose year-over-year increase was concentrated in the first quarter. Future levels of noninterest income will depend on a number of factors, including market conditions affecting wealth management assets under management, mortgage origination and sales volumes, and other items that may not recur in future periods.
Previous wording
We conduct our investment advisory business through PWW, which The Company acquired on December 31, 2021. PWW, based in Lynchburg, Virginia, had approximately $1,010,000,000 in assets under management and advisement as of March 31, 2026, as compared to $886,882,000 on March 31, 2025. This increase was due to both the inflow of new assets during the period and investment returns on the assets under management. PWW operates as a subsidiary of The Company and generates revenue primarily through investment advisory fees, which vary based on the value of assets under management. These assets may fluctuate due to client action and market conditions. Despite potential fluctuations, we anticipate that PWW will continue to contribute meaningfully to the Company’s consolidated net income.
Current wording
We conduct our investment advisory business through PWW, which the Company acquired on December 31, 2021. PWW, based in Lynchburg, Virginia, had approximately $1,091,367,000 in assets under management and advisement as of June 30, 2026, as compared to $929,957,000 on June 30, 2025. This increase of approximately $161,410,000, or 17.4%, was due to a net inflow of assets under management and favorable market conditions during the period. PWW operates as a subsidiary of the Company and generates revenue primarily through investment advisory fees, which vary based on the value of assets under management. These assets may fluctuate due to client action and market conditions. Despite potential fluctuations, we anticipate that PWW will continue to contribute meaningfully to the Company’s consolidated net income.
Previous wording
The Bank provides insurance and annuity products to its customers and others through its Insurance subsidiary. The Bank has two employees licensed to sell insurance products through Insurance. Insurance generates minimal revenue, and its financial impact on our consolidated revenue has been immaterial. Management anticipates that Insurance’s impact on noninterest income will remain immaterial for the remainder of 2026.
Current wording
The Bank provides insurance and annuity products to its customers and others through its Insurance subsidiary. Insurance generates minimal revenue, and its financial impact on our consolidated revenue has been immaterial. Management anticipates that Insurance’s impact on noninterest income will remain immaterial for the remainder of 2026.
Previous wording
The Company expects that the amended core processing contract, which commenced April 1, 2025 and has a 65-month term, will continue to result in lower ongoing data processing and related costs compared to the prior arrangement.
Current wording
For the six months ended June 30, 2026, data processing expense decreased to $994,000 from $1,602,000 for the corresponding period in 2025, a decrease of $608,000, or 38.0%, also reflecting lower ongoing costs under the amended core processing contract. Professional and other outside services expense decreased to $1,526,000 from $2,470,000, a decrease of $944,000, or 38.2%, primarily attributable to a nonrecurring consulting fee of approximately $1,000,000 incurred during the first quarter of 2025 in connection with the negotiation of the amended core processing contract, which did not recur in 2026. The Company expects that the amended core processing contract, which commenced April 1, 2025 and has a 65-month term, will continue to result in lower ongoing data processing and related costs compared to the prior arrangement.
Previous wording
Other noninterest expenses, including supplies, marketing, credit-related costs, FDIC insurance, and amortization of intangibles, totaled $1,265,000 for the three months ended March 31, 2026, compared to $1,274,000 for the same period in 2025, reflecting generally stable operating costs across these categories.
Current wording
Other noninterest expenses, including supplies, marketing, credit-related costs, FDIC insurance, and amortization of intangibles, totaled $1,297,000 for the three months ended June 30, 2026, compared to $1,410,000 for the same period in 2025. For the six months ended June 30, 2026, other noninterest expenses totaled $2,562,000, compared to $2,685,000 for the same period in 2025, reflecting lower costs across several of these categories.
Previous wording
The allowance for credit losses represents management’s estimate of expected credit losses inherent in the loan portfolio. The provision for (or recovery of) credit losses adjusts the allowance to a level deemed appropriate by management, while net charge-offs reduce the allowance. The determination of the allowance considers historical loss experience, current conditions, and reasonable and supportable forecasts, as well as loan-specific factors for individually evaluated loans.
Current wording
The allowances for credit losses represents management’s estimate of expected credit losses inherent in the loan portfolio. The provision for (or recovery of) credit losses adjusts the allowances to a level deemed appropriate by management, while net charge-offs reduce the allowance. The determination of the allowances considers historical loss experience, current conditions, and reasonable and supportable forecasts, as well as loan-specific factors for individually evaluated loans.
Showing the first 40 of 47 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
(1)Nonaccrual loans are included in the average balances of loans.
Current report — wording carried from elsewhere
(2)Interest income on loans includes loan fees.
Current report — wording carried from elsewhere
(3)The interest income and yields calculated on securities have been tax affected to reflect any tax-exempt interest on municipal securities using the Company’s applicable federal tax rate of 21% for each year.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
A more detailed analysis of the components that impacted net income for the three-month period ended March 31, 2026, compared with the same period in 2025, follows:
Previous report — wording carried elsewhere
Allowance and Provision for Credit Losses
Previous report — wording carried elsewhere
The allowance for credit losses to total loans ratio was 0.95% at March 31, 2026, and the allowance for credit losses to nonperforming loans ratio was 427.66%, indicating a strong coverage position.