BANK OF THE JAMES FINANCIAL GROUP INC
For the period ended Mar 31, 2025. Filed May 15, 2025.
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.
Mar 31, 2025 · Filed May 15, 2025
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 2024-09-30; filed 2024-11-12.
0001562762-24-000273
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001562762-25-000129
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 171 previous paragraphs and 170 current paragraphs.
96 unchanged; 65 reworded; 7 added; 6 removed; 4 previous and 2 current paragraphs rearranged.
Tables are not compared: 8 previous and 6 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 (7)
Current report
the potential impact of tariffs, trade restrictions, or changes in U.S. trade policy on businesses in our market area and our business and agricultural borrowers, which could indirectly affect credit quality, loan demand, or overall economic conditions in its market area; and
Current report
A branch located at 20795 Timberlake Road, Lynchburg, Virginia (the “Timberlake Branch”).
Current report
Total deposits increased from $882,404,000 as of December 31, 2024 to $911,683,000 on March 31, 2025, an increase of 3.32%. This growth was due in large part to a strategic change in our use of the Insured Cash Sweep (ICS) program at the beginning of 2025. In December 2024, we initiated participation in the ICS one-way (non-reciprocal) deposit sweep program to manage our balance sheet size. Under the one-way ICS option, certain customer deposit balances were placed with other banks through the ICS network (providing those customers full FDIC insurance coverage) instead of being held on our balance sheet. This temporary off-loading of deposits via ICS resulted in lower reported deposits at year-end 2024. At the start of 2025, we reversed the transactions, which resulted in the return of funds back onto our balance sheet. The return of these funds accounted for the majority of the first quarter deposit increase. We continue to utilize the reciprocal portion of the ICS program (which we had participated in prior to late 2024) for customers requiring full insurance coverage, as reciprocal ICS deposits remain on our balance sheet (though they are classified as brokered deposits for regulatory purposes) and may use the non-reciprocal program again in the future.
Current report
The decrease in net income for the three months ended March 31, 2025, as compared to the prior year period, was primarily driven by a significant increase in noninterest expense and along with a notable change in the provision for credit losses. Noninterest expense rose by $1,738,000, or 21.5%, from the prior year period, largely due to a non-recurring fee paid to a consultant we engaged to help negotiate a contract with our core provider of approximately $1,000,000 in the first quarter of 2025. Furthermore, the Company recorded a provision for credit losses of $137,000 in the first quarter of 2025, as compared to a recovery of credit losses of $553,000 that was recorded in the first quarter of 2024. A slight decrease in noninterest income also contributed to the overall decline in net income.
Current report
These negative factors were partially offset by an increase in net interest income. Net interest income increased by $769,000, or 11.1%, to $7,719,000 for the three months ended March 31, 2025, from $6,950,000 in the comparable 2024 period. This increase was the result of higher interest income, primarily from growth in the loan portfolio and increased yields on earning assets, combined with a slight decrease in total interest expense.
Current report
Noninterest income totaled $3,283,000 for the three months ended March 31, 2025, compared to $3,307,000 for the same period in 2024. The slight decrease was primarily the result of lower gains on sales ofmortgage loans held for sale and a decrease in other income. These decreases were partially offset by increases in wealth management fees, life insurance income, and service charges and fees.
Current report
Noninterest expense for the three months ended March 31, 2025, increased to $9,826,000 from $8,088,000 for the same period in 2024, a 21.5% increase. This increase primarily resulted from higher salaries and employee benefits, along with a significant rise in professional, data processing, and other outside services compared to prior periods. Total personnel expense was $4,777,000 for the three months ended March 31, 2025, compared to $4,445,000 for the same period in 2024. The increase in personnel expense was largely due to increases in salaries, compensation-related accruals, and additional personnel hired in connection with the opening of new branches. The increase in professional, data processing and other outside services was due to a non-recurring expense for a fee paid to a consultant that assisted the Bank with the negotiation of an amendment to and extension of a contract with our core service provider—the platform we use for processing transactions, maintaining customer accounts, and supporting other critical banking functions. The expense incurred in the first quarter was approximately $1,000,000. Management anticipates that the amended contract with our core provider, which was effective April 1, 2025, will generate significant savings over the 65-month term of the contract as compared to our previous contract.
Removed paragraphs (6)
Previous report
Real property located in the Timberlake Road area of Campbell County (Lynchburg), Virginia. In September 2024, the Bank purchased real property commonly known as 20795 Timberlake Road, Lynchburg, Virginia. The building on the property previously served as a bank branch for another financial institution. The Bank anticipates that the cost to upfit the building will be minimal. Subject to regulatory approval, the Bank anticipates opening a branch at this location in 2025. Following acquisition of this property, the Bank decided to sell the undeveloped property it owns on Timberlake Road, which the Bank previously was holding for possible branch expansion. This property has been listed for sale and is currently being marketed.
Previous report
In addition to the facilities set forth above, the Bank owns the following property which is being held for possible expansion:
Previous report
Total deposits increased from $878,459,000 as of December 31, 2023 to $907,610,000 on September 30, 2024, an increase of 3.32%. The increase resulted in large part from increases in time deposits, NOW, money market and savings deposits and was offset in part by a decrease in noninterest-bearing demand. The increase in time deposits generally was driven by our customers’ desire to lock in higher interest rates while still possible. The increase in NOW, money market and savings deposits was driven by customers’ desire to earn interest while still maintaining liquidity.
Previous report
The decrease in net income for the three and nine months ended September 30, 2024, as compared to the prior year periods was due primarily to an increase in interest expense of $1,275,000 and $4,984,000 in the three and nine months ended September 30, 2024 from the comparable periods in 2024. The decrease was offset in part by increases in interest income and noninterest income.
Previous report
Noninterest income increased to $3,823,000 and $11,321,000 for the three and nine month periods ended September 30, 2024 from $3,201,000 and $9,689,000 for same periods in 2023. The overall increases primarily were due to increases in wealth management fees, life insurance income, gains on sales of loans, and income received from an investment in a Small Business Investment Company fund, which is reflected in other income.
Previous report
Noninterest expense for the three and nine months ended September 30, 2024 increased to $8,776,000 and $25,602,000 from $8,140,000 and $24,091,000 for the same periods in 2023, increases of 7.81% and 6.27%, respectively. These increases resulted primarily from increases in salaries and employee benefits and to a lesser extent in the nine month period, professional, data processing and other outside expenses. While other expenses increased for the three and nine month periods in 2024, the increase for the nine months was due large part because we had a recovery in 2023 related to a previous fraud loss, which had the effect of reducing other expense for the nine month period in 2023. Total personnel expense was $4,920,000 and $14,256,000 for the three and nine month periods ended September 30, 2024 as compared to $4,683,000 and $13,296,000 for the same periods in 2023. Personnel expense increased largely because of increases in salaries, compensation related accruals, and additional personnel hired in connection with the opening of new branches.
Reworded paragraphs (65)
Previous wording
operating, legal and regulatory risks, including the effects of legislative or regulatory developments affecting the financial industry generally or Financial specifically;
Current wording
operating, legal and regulatory risks, including the effects of legislative or regulatory developments affecting thefinancial industry generally or Financial specifically;
Previous wording
competition for our customers from other providers of financial services; government legislation and regulation relating to the banking industry (which changes from time to time and over which we have no control) including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act;
Current wording
competition for our customers from other providers offinancial services; government legislation and regulation relating to the banking industry (which changes from time to time and over which we have no control) including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act;
Previous wording
the risk that Financial’s analysis of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful;
Current wording
the risk that Financial’s analysis of these risks and forces is incorrect or that the strategies developed to address them are unsuccessful;
Previous wording
economic and political tensions with China, the ongoing war between Russia and Ukraine and potential expansion of combatants, and the sanctions imposed on Russia by numerous countries and private companies, all of which may have a destabilizing effect on financial markets and economic activity; and
Current wording
economic and political tensions with China, the ongoing war between Russia and Ukraine and potential expansion of combatants, and the sanctions imposed on Russia by numerous countries and private companies, all of which may have a destabilizing effect onfinancial markets and economic activity;
Previous wording
These factors should be considered in evaluating the forward-looking statements, and you should not place undue reliance on such statements. Financial specifically disclaims any obligation to update factors or to publicly announce the results of revisions to any of the forward-looking statements or comments included herein to reflect future events or developments. This discussion and analysis should be read in conjunction with the description of our “Risk Factors” in Item 1A of the most recently filed Form 10-K.
Current wording
These factors should be considered when evaluating the forward-looking statements, and you should not place undue reliance on such statements. Financial specifically disclaims any obligation to update factors or to publicly announce the results of revisions to any of the forward-looking statements or comments included herein to reflect future events or developments. This discussion and analysis should be read in conjunction with the description of our “Risk Factors” in Item 1A of the most recently filed Form 10-K.
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). 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. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset or relieving a liability. In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of our transactions would be the same, the timing of events that would impact our transactions could change.
Current 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). Thefinancial information contained within our statements is, to a significant extent, based on measures of thefinancial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset or relieving a liability. In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of our transactions would be the same, the timing of events that would impact our transactions could change.
Previous wording
The allowance for credit losses (ACLL) is management’s estimate of the probable losses expected in our loan portfolio and held-to-maturity securities portfolio. With the exception of loans related to agriculture, the Company is utilizing a discounted cash flow model to estimate its current expected credit losses in our loan 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 ACLL please refer to Note 2 – “Allowance for Credit Losses - Loans” in the Company’s Form 10-K for the year ended December 31, 2023. See “Management 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 ACLL is management’s estimate of the probable losses expected 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 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 ACLL, please refer to Note 2 – “Allowance for Credit Losses - Loans” in the Company’s Form 10-K for the year ended December 31, 2024. See “Management Discussion and Analysis Results of Operations – Allowance and Provision for Credit losses” below for further discussion of the allowance for credit losses.
Previous wording
Financial is a bank holding company headquartered in Lynchburg, Virginia. Our primary business is retail banking which we conduct through our wholly-owned subsidiary, Bank of the James (which we refer to as the “Bank”). We conduct four other business activities: mortgage banking through the Bank’s Mortgage Division (which we refer to as “Mortgage”), investment services through the Bank’s Investment division (which we refer to as “Investment Division”), insurance activities through BOTJ Insurance, Inc., a subsidiary of the Bank, (which we refer to as “Insurance business”), and as of December 31, 2021, investment advisory services through the Company’s wholly-owned subsidiary, Pettyjohn, Wood & White, Inc. (which we refer to as “PWW”).
Current wording
Financial is abank holding company headquartered in Lynchburg, Virginia. Our primary business is retail banking which we conduct through our wholly-owned subsidiary, Bank of the James (which we refer to as the “Bank”). We conduct four other business activities: mortgage banking through the Bank’s Mortgage Division (which we refer to as “Mortgage”), investment services through the Bank’s Investment division (which we refer to as “Investment Division”), insurance activities through BOTJ Insurance, Inc., a subsidiary of the Bank, (which we refer to as “Insurance business”), and as of December 31, 2021, investment advisory services through the Company’s wholly-owned subsidiary, Pettyjohn, Wood & White, Inc. (which we refer to as “PWW”).
Previous wording
We conduct our investment advisory business through PWW, which Financial acquired on December 31, 2021. PWW is a Lynchburg, Virginia-based investment advisory firm that has approximately $789 million in assets under management and advisement as of September 30, 2024. PWW generates revenue primarily through investment advisory fees.
Current wording
We conduct our investment advisory business through PWW, which Financial acquired on December 31, 2021. PWW is a Lynchburg, Virginia-based investment advisory firm that has approximately $843 million in assets under management and advisement as of March 31, 2025. PWW generates revenue primarily through investment advisory fees.
Previous wording
Our operating results depend primarily upon the Bank’s net interest income, which is determined by the difference between (i) interest and dividend income on earning assets, which consist primarily of loans, investment securities and other investments, and (ii) interest expense on interest-bearing liabilities, which consist principally of deposits and other borrowings. The Bank’s net income also is affected by its provision for credit losses, as well as the level of its noninterest income, including gains on sales of loans held for sale and service charges, and investment advisory fees, and its noninterest expenses, including salaries and employee benefits, occupancy expense, data processing expenses, Federal Deposit Insurance Corporation premiums, expense in complying with regulatory requirements, miscellaneous other expenses, franchise taxes, and income taxes.
Current wording
(ii) interest expense on interest-bearing liabilities, consisting principally of deposits and other borrowings. The Bank’s net income is also affected by its provision for credit losses, as well as the level of itsnoninterest income (including gains on sales of loans held for sale, service charges, and investment advisory fees) and its noninterest expenses (including salaries and employee benefits, occupancy expense, data processing expenses, Federal Deposit Insurance Corporation premiums, expenses in complying with regulatory requirements, miscellaneous other expenses, franchise taxes, and income taxes).
Previous wording
The Bank intends to enhance its profitability by increasing its market share in our service areas, providing additional services to its customers, and controlling costs.
Current wording
The Bank intends to enhance its profitability by increasing its market share in its service areas, providing additional services to customers, and controlling costs.
Previous wording
A branch located at 19792 Main Street, Buchanan, Virginia (the “Buchanan Branch”); and
Current wording
A branch located at 19792 Main Street, Buchanan, Virginia (the “Buchanan Branch”);
Previous wording
A temporary branch located at 2773 Rockfish Valley Highway, Nellysford, Virginia (the “Temporary Nellysford Branch”).
Current wording
A temporary branch located at 2773 Rockfish Valley Highway, Nellysford, Virginia (the “Temporary Nellysford Branch”); and
Previous wording
The Bank continuously evaluates areas located within our service areas to identify additional viable branch locations. Based on this ongoing evaluation, the Bank may acquire one or more additional suitable sites.
Current wording
The Bank continuously evaluates areas within our service areas to identify viable branch locations. Based on this evaluation, the Bank may acquire additional suitable sites.
Previous wording
Subject to regulatory approval, the Bank may open additional branches during the next two fiscal years. Although numerous factors could influence the Bank’s expansion plans, the following discussion provides a general overview of the additional branch locations that the Bank currently is considering, including the following properties that we own and are holding for expansion:
Current wording
Subject to regulatory approval, the Bank may open additional branches during the next two fiscal years. Although numerous factors could influence the Bank’s expansion plans, the following discussion provides a general overview of the additional branch locations that the Bank currently is considering, including the following propertiy that we own and are holding for expansion:
Previous wording
Real Property located at 2935 Rockfish Valley Highway, Nellysford, Virginia. On September 18, 2023, the Bank purchased real property located at 2935 Rockfish Valley Highway, Nellysford, Virginia. The building on the property previously served as a bank branch for another financial institution. The Bank anticipates that the cost to upfit the building will be minimal. The property is subject to a restrictive covenant that prohibits the Bank from using the property for any banking-related activity until the covenant expires in September 2025. Following the expiration of this restrictive covenant, the Bank intends to use this property as a permanent branch in Nellysford, Virginia We anticipate that we will relocate the Temporary Nellysford Branch to this location in the fall of 2025.
Current wording
Real Property located at 2935 Rockfish Valley Highway, Nellysford, Virginia. On September 18, 2023, the Bank purchased real property located at 2935 Rockfish Valley Highway, Nellysford, Virginia. The building on the property previously served as abank branch for another financial institution. The Bank anticipates that the cost to upfit the building will be minimal. The property is subject to a restrictive covenant that prohibits the Bank from using the property for any banking-related activity until the covenant expires in September 2025. Following the expiration of this restrictive covenant, the Bank intends to use this property as a permanent branch in Nellysford, Virginia We anticipate relocating the Temporary Nellysford Branch to this location in the fall of 2025.
Previous wording
Although the Bank cannot predict with certainty the financial impact of each new branch, management generally anticipates that each new branch will become profitable within 12 to 18 months of operation.
Current wording
Although the Bank cannot predict the financial impact of each new branch with certainty, management generally anticipates that each new branch will become profitable within 12 to 18 months of operation.
Previous wording
The Bank continues to evaluate suitable branch locations and may acquire one or more properties for expansion in the next 12 months. Future branch openings are subject to regulatory approval.
Current wording
The Bank continues to evaluate suitable branch locations and may acquire properties for expansion in the next 12 months. Future branch openings are subject to regulatory approval.
Previous wording
The Bank is a party to various financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the balance sheets and could impact the overall liquidity and capital resources to the extent customers accept and/or use these commitments.
Current wording
The Bank is party to various financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit risk and interest rate risk exceeding the amount recognized in the balance sheets and could impact the overall liquidity and capital resources to the extent customers accept or use these commitments.
Previous wording
The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. A summary of the Bank’s commitments is as follows:
Current wording
The Bank’s exposure to credit loss in the event of nonperformance by the other party to thefinancial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. A summary of the Bank’s commitments follows:
Previous wording
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on the Bank’s credit evaluation of the customer.
Current wording
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. These letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on the Bank’s credit evaluation of the customer.
Previous wording
The following discussion represents management’s discussion and analysis of the financial condition of Financial as of September 30, 2024 and December 31, 2023 and the results of operations of Financial for the three and nine month periods ended September 30, 2024 and 2023. This discussion should be read in conjunction with the financial statements included elsewhere herein.
Current wording
The following discussion represents management’s discussion and analysis of thefinancial condition of Financial as of March 31, 2025 and December 31, 2024 and the results of operations of Financial for the three-month periods ended March 31, 2025 and 2024. This discussion should be read in conjunction with thefinancial statements included elsewhere herein.Allfinancial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Previous wording
Total assets were $1,008,063,000 on September 30, 2024 compared with $969,371,000 at December 31, 2023, an increase of 3.99%. The increase in total assets was primarily due to increases in cash, Fed funds sold, loans, net of the allowance for credit losses, loans held for sale, and the cash value of bank-owned life insurance. The increase was offset in part by a decrease in the value of securities available-for-sale.
Current wording
Total assets were $1,011,726,000 on March 31, 2025 compared with $979,244,000 at December 31, 2024, an increase of 3.32%. The increase in total assets was primarily due to increases in cash, Fed funds sold, securities available-for-sale, loans, net of the allowance for credit losses, loans held for sale, and, to a lesser extent, the cash value of bank-owned life insurance.
Previous wording
Total loans, excluding loans held for sale, increased to $634,190,000 on September 30, 2024 from $609,333,000 on December 31, 2023. The increase was primarily due to increases in commercial real estate and residential loans and was offset in part by a decrease in commercial and consumer loans, which decreased due to payoffs and normal amortization of loans. Loans, excluding loans held for sale and net of deferred fees and costs and including the allowance for credit losses, increased to $627,112,000 on September 30, 2024 from $601,921,000 on December 31, 2023, an increase of 4.19%. The following summarizes the position of the Bank’s loan portfolio as of the dates indicated by dollar amount and percentages (dollar amounts in thousands):
Current wording
Total loans, excluding loans held for sale, increased to $649,409,000 on March 31, 2025 from $643,596,000 on December 31, 2024. The increase was primarily due to increases in commercial real estate and consumer loans, and was offset in part by a decrease in commercial, and to a lesser extent, residential loans. These decrease were due to payoffs and normal amortization of loans. Loans, excluding loans held for sale and net of deferred fees and costs and including the allowance for credit losses, increased to $642,388,000 on March 31, 2025 from $636,552,000 on December 31, 2024, an increase of 0.92%. The following summarizes the position of the Bank’s loan portfolio as of the dates indicated by dollar amount and percentages (dollar amounts in thousands):
Previous wording
The subsegments of the loan portfolio of the segments shown above are set forth in Note 8.
Current wording
The subsegments of the loan portfolio of the segments shown above are set forth in Note 8 of our financial statements.
Previous wording
As a community bank, the Bank remains committed to growing assets through quality loan growth by providing credit to small and mid-size businesses and individuals within the markets we serve. Based on our loan portfolio as of September 30, 2024, the non-owner occupied commercial real estate loans and the construction and land development loans were approximately 218.30% and 30.34% (based on interagency CRE guidelines) of total risk-based capital, respectively.
Current wording
As a community bank, the Bank is committed to growing assets through quality loan growth by providing credit to small and mid-size businesses and individuals within the markets it serves. Based on the loan portfolio as of March 31, 2025, the non-owner occupied commercial real estate loans and the construction and land development loans were approximately 228% and 19% (based on interagency commercial real estate guidelines) of total risk-based capital, respectively.
Previous wording
We have expertise and a long history in originating and managing commercial real estate loans. We have a strong credit underwriting process, which includes management and board oversight. We perform rigorous monitoring, stress testing, and reporting of these portfolios at the management and board levels, and we continue to monitor the level of the concentration in commercial real estate loans within our loan portfolio monthly.
Current wording
We have expertise and a long history of originating and managing commercial real estate loans. Our strong credit underwriting process includes management and board oversight. We perform rigorous monitoring, stress testing, and reporting of these portfolios at the management and board levels, and we continue to monitor the concentration level in commercial real estate loans within our loan portfolio monthly.
Previous wording
The Bank closely monitors concentrations within its commercial real estate loan portfolio. As of September 30, 2024, non-owner occupied commercial real estate loans totaled $189,977,000, or 29.96% of total loans. The Bank has minimal exposure to loans secured by large office buildings or shopping centers, which comprise less than 5% of the non-owner occupied commercial real estate portfolio. The majority of the Bank's non-owner occupied commercial loans are secured by smaller, multi-tenant properties diversified across various industries and geographies within our market areas.
Current wording
The Bank closely monitors concentrations within its commercial real estate loan portfolio. As of March 31, 2025, non-owner occupied commercial real estate loans totaled$156,852,000, or 24.07% of total loans. This amount was calculated by purpose code and it is consistent with the Call Report that the Bank files with the Federal Deposit Insurance Corporation. The Bank has minimal exposure to loans secured by large office buildings or shopping centers, which comprise less than 5% of the non-owner occupied commercial real estate portfolio. The majority of the Bank’s non-owner occupied commercial loans are secured by smaller, multi-tenant properties diversified across various industries and geographies within our market areas.
Previous wording
In addition, to help manage risk we actively manage and monitor our commercial real estate risk through, when appropriate, the following:
Current wording
In addition, to help manage risk, we actively manage andmonitor our commercial real estate risk through the following, when appropriate:
Previous wording
We have a thorough loan origination process. For all CRE loans secured by real estate collateral, we require an appraisal or valuation at the time that we originate the loan. We generally do not approve loans that have a loan-to-value ratio in excess of 80%. We perform an individual property cashflow analysis and, if appropriate, a global cash flow analysis at origination and generally require a debt service coverage ratio of at least 1.2x.
Current wording
We have a thorough loan origination process. For all CRE loans secured by real estate collateral, we require an appraisal or valuation at the time we originate the loan. We generally do not approve loans that have a loan-to-value ratio exceeding 80%. We perform an individual property cash flow analysis and, if appropriate, a global cash flow analysis at origination and generally require a debt service coverage ratio of at least 1.2x.
Previous wording
Obtaining regular third-party loan reviews of the CRE portfolio;
Current wording
Obtaining regular third-party loan reviewsof the CRE portfolio;
Previous wording
Total nonperforming assets, which consist of nonaccrual loans, loans past due 90 days or more and still accruing, and OREO increased to$1,295,000 on September 30, 2024 from $391,000 on December 31, 2023. Because we had no OREO on either September 30, 2024 or December 31, 2023, the nonperforming assets consist entirely of nonperforming loans.
Current wording
Total nonperforming assets, which consist of nonaccrual loans, loans past due 90 days or more and still accruing, and OREO, were $1,798,000 on March 31, 2025 compared with$1,640,000 on December 31, 2024. Because we had no OREO on either March 31, 2025 or December 31, 2024, the nonperforming assets consist entirely of nonperforming loans.
Previous wording
OREO represents real property acquired by the Bank for debts previously contracted, including through foreclosure or deeds in lieu of foreclosure. We had no OREO on September 30, 2024 and December 31, 2023. The Bank neither acquired nor disposed of any OREO during the three and nine months ended September 30, 2024. As a result, the OREO balance remained $0 as of September 30, 2024
Current wording
OREO represents real property acquired by the Bank for debts previously contracted, including through foreclosure or deeds in lieu of foreclosure. We had no OREO on March 31, 2025 or December 31, 2024. The Bank neither acquired nor disposed of any OREO during the three months ended March 31, 2025. As a result, the OREO balance remained $0 as of March 31, 2025.
Previous wording
Cash and cash equivalents increased to $109,207,000 on September 30, 2024 from $74,838,000 on December 31, 2023. Cash and cash equivalents consist of cash due from correspondents, cash in vault, and overnight investments (including Federal funds sold). This increase was due in large part to the Bank’s sale of securities available-for-sale during the first nine months of 2024, as discussed in more detail below. Cash and cash equivalents are subject to routine fluctuations in deposits, including fluctuations in transactional accounts and professional settlement accounts.
Current wording
Cash and cash equivalents increased to$94,966,000 on March 31, 2025 from$73,309,000 on December 31, 2024. Cash and cash equivalents consist of cash due from correspondents, cash in vault, and overnight investments (including Federal funds sold). Deposit inflows allowed management to deploy excess liquidity into overnight Fed funds. Cash and cash equivalents are subject to routine fluctuations in deposits, including fluctuations in transactional accounts and professional settlement accounts.
Previous wording
Securities held-to-maturity were essentially flat, decreasing slightly to $3,610,000 on September 30, 2024 from $3,622,000 on December 31, 2023. This decrease is a result of normal net amortization of premiums within the held-to-maturity portfolio.
Current wording
Securities held-to-maturity were essentially flat, decreasing slightly to$3,602,000 on March 31, 2025 from$3,606,000 on December 31, 2024. This decrease is a result of normal net amortization of premiums within the held-to-maturity portfolio.
Previous wording
Securities available-for-sale, which are carried on the balance sheet at fair market value, decreased to $192,469,000 on September 30, 2024, from $216,510,000 on December 31, 2023. During the nine months ended September 30, 2024, the Bank purchased $15,122,000 in available-for-sale securities. During the same period the Bank sold $30,298,000 and received $13,305,000 in proceeds from calls, maturities, and paydowns of securities available-for-sale. The market value of the securities available-for-sale increased. As of September 30, 2024, we have an unrealized tax-effected loss of $17,782,000 (or $22,509,000 prior to the tax benefit). Financial does not expect to realize the losses as it has the intent and ability to hold the securities until their recovery, which may be at maturity.
Current wording
Securities available-for-sale, which are carried on the balance sheet at fair market value, increased by $4,864,000 to$192,780,000 on March 31, 2025 from$187,916,000 on December 31, 2024. During the three months ended March 31, 2025, the Bank purchased $16,482,000 in available-for-sale securities. During the same period the Bank sold no available-for-sale securities and received $10,000,000 in proceeds from calls, maturities, and paydowns of securities available-for-sale. As of March 31, 2025, we have an unrealized tax-effected loss of$19,819,000 (or$25,248,000 prior to the tax benefit). Financial does not expect to realize the losses as it has the intent and ability to hold the securities until their recovery, which may be at maturity.
Previous wording
Financial’s investment in Federal Home Loan Bank of Atlanta (FHLBA) stock totaled $672,000 at September 30, 2024 as compared to $643,000 at December 31, 2023. FHLBA stock is generally viewed as a long-term investment and because there is no market for the stock other than other Federal Home Loan Banks or member institutions, FHLBA stock is viewed as a restricted security. Therefore, when evaluating FHLBA stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value.
Current wording
Financial’s investment in Federal Home Loan Bank of Atlanta (FHLBA) stock totaled$671,900 as of March 31, 2025, compared to$671,800 as of December 31, 2024. FHLBA stock is generally viewed as a long-term investment. Because there is no market for the stock other than other Federal Home Loan Banks or member institutions, FHLBA stock is considered a restricted security. Therefore, when evaluating FHLBA stock for impairment, its value is based on the ultimate recoverability of the par value rather than recognizing temporary declines in value.
Previous wording
At September 30, 2024, Financial, on a consolidated basis, had liquid assets of $301,676,000 in the form of cash, interest-bearing and noninterest-bearing deposits with banks, and available-for-sale investments. The Bank has pledged (market values):
Current wording
At March 31, 2025, Financial, on a consolidated basis, had liquid assets of$287,746,000 in the form of cash, interest-bearing and noninterest-bearing deposits with banks, federal funds sold and available-for-sale investments. The Bank has pledged (market values):
Previous wording
approximately $37,000,000 of our available-for-sale securities as collateral with correspondent banks, including the FHLBA, for collateralized lines of credit;
Current wording
approximately $38,000,000 of our available-for-sale securities as collateral with correspondent banks, including the FHLBA, for collateralized lines of credit;
Previous wording
approximately $44,000,000 of our available-for-sale securities as security for public deposits; and
Current wording
approximately $46,000,000 of our available-for-sale securities as security for public deposits; and
Showing the first 40 of 65 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Our operating results depend primarily upon the Bank’s net interest income, which is determined by the difference between (i) interest and dividend income on earning assets—consisting primarily of loans, investment securities, and other investments—and
Current report — wording carried from elsewhere
Based on the application of the credit loss calculation, the Bank recorded a provision of $137,000 for the three months ended March 31, 2025, compared to a recovery of $553,000 for the same period in 2024. The provision attributable to unfunded commitments was$109,000 for the three months ended March 31, 2025, and was not included in the allowance. Despite an increase in loan balances, the additional provision needed to reflect loan growth was partially offset by principal recoveries of loans previously charged-off of approximately$11,000 for the three months ended March 31, 2025.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
All financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Previous report — wording carried elsewhere
(1)Net accretion or amortization of deferred loan fees and costs are included in interest income.
Previous report — wording carried elsewhere
(2)Nonperforming loans are included in the average balances. However, interest income and yields calculated do not reflect any accrued interest associated with nonaccrual loans.
Previous report — wording carried elsewhere
(3)The interest income and yields calculated on securities have been tax affected to reflect any tax-exempt interest on municipal securities. Assumed income tax rates of 21% were used for the periods presented.