Net income for the three months ended
Robert R. Chapman III, CEO, commented: “Our Company’s focus on service excellence, strong banking relationships and financial solutions for individuals and businesses were keys to a strong financial performance in the second quarter and first half. While interest rates have had an impact on banking activity, our robust capabilities combined with our team’s commitment to ‘going the extra mile’ for clients has supported strong client retention and generated a diverse revenue stream.
“Our residential mortgage lending group turned in an exceptional performance, particularly given low home inventories and the interest rate environment. The reputation the Bank has built over the years for professional service, loan origination and timely processing has positioned the Bank as a lender of choice in our markets.
“Positive financial contributions from commercial banking reflected the strength of our relationship management and attention to providing value for clients. Integrated banking solutions that incorporate deposits, card services, and sophisticated electronic cash management products create value for clients and provide the Company with a variety of revenue sources. With sophisticated capabilities backed by experienced, responsive commercial bankers, we believe
“A primary focus throughout the organization is continuous improvement in productivity and efficiency through reduced expenses to maximize the value of the revenues we generate. This focus was reflected in the second quarter of 2023 as the efficiency ratio improved to 73.0% from 74.7% a year earlier. Return on average assets increased to 1.08% from 0.89% a year earlier and return on average equity rose to 19.7% from 12.7% a year earlier.
“Maintaining strong asset quality through diligent credit management and monitoring processes has contributed to quality earnings. We believe that our asset quality and liquidity have positioned us to continue to operate safely and soundly in the current environment.
“As always, the Company and its Board of Directors pay close attention to growing shareholder value. Results in the first half of 2023 reflected increased retained earnings, total stockholders’ equity and book value. Our historical practice of issuing quarterly cash dividends to shareholders, and the completion of two share buyback programs in the past year that enhanced earnings per share by
Second Quarter, First Half of 2023 Highlights
- Total interest income of
$9.58 million in the second quarter and$18.68 million in the first half of 2023 increased 26% and 29% compared with the respective periods of 2022. The year-over-year growth primarily reflected commercial loan rate adjustments to keep pace with the rising interest rate environment, an increase in the size of the investment portfolio, and growth of retained residential mortgages. - Net interest income increased 3% in the second quarter of 2023 and 11% in the first half of 2023 compared to the respective periods in 2022, primarily reflecting higher interest income partially offset by significantly higher interest expense in the rising rate environment.
- Net interest margin and net interest spread increased in the second quarter and first half of 2023 compared with the comparable periods of 2022.
- Total noninterest income increased to
$3.44 million in the second quarter of 2023, up from$3.03 million a year earlier, primarily reflecting continuing commercial treasury services income growth and wealth management fee contributions from PWW. Noninterest income in the first half of 2023 declined slightly compared with the first half of 2022, primarily reflecting lower gains on sale of residential mortgages as the Company has retained a greater number of originated purchase mortgages. - Loans, net of the allowance for credit losses, were
$610.42 million compared with$605.37 million atDecember 31, 2022 , highlighted by an increase in the Company’s residential mortgage loan portfolio sinceDecember 31, 2022 . - Asset quality remained strong, with a ratio of nonperforming loans to total loans of 0.07% at
June 30, 2023 and minimal levels of nonperforming loans and other real estate owned (OREO). - Total deposits grew to
$867.09 million atJune 30, 2023 compared with$848.14 million atDecember 31, 2022 . - On
July 18, 2023 the Company’s board of directors approved a quarterly dividend of$0.08 per share to stockholders of record as ofSeptember 1, 2023 to be paid onSeptember 15, 2023 . - Measures of shareholder value increased, with book value per share rising to
$11.61 atJune 30, 3023 from$10.85 atDecember 31, 2022 and total stockholders’ equity rising to$52.73 million from$50.23 million . The Company’s most recent repurchase plan was completed in the second quarter of 2023. In conjunction with a previous repurchase plan, the Company repurchased just under 4% of its outstanding common stock sinceAugust 2022 .
Second Quarter, First Half of 2023 Operational Review
Net interest income after a
Total interest income increased to
The interest rate adjustment related to variable rate loans along with an increase in the Fed Funds rate continued to have a significant positive impact on the yields earned on interest earning assets and margins. The yield on interest earning assets in the second quarter of 2023 was 4.31%, up from 3.19% a year earlier. The interest spread was 3.08% compared with 2.93% a year earlier. Net interest margin was 3.30% in the second quarter of 2023 compared with 2.99% in the second quarter of 2022.
For the six months of 2023, the yield on interest earning assets was 4.24% compared with 3.14% for the six months of 2022. The interest spread was 3.22% compared with 2.87% for the six months of 2023 and 2022, respectively. Net interest margin was 3.40% compared with 2.92% for the six months of 2023 and 2022, respectively.
Total interest expense in the second quarter and first half of 2023 increased significantly compared with the 2022 periods, reflecting increased levels of interest-paying deposits and higher deposit rates commensurate with the prevailing interest rate environment. Total interest expense in the second quarter of 2023 was
Noninterest income in the second quarter of 2023 rose 14% to
Noninterest expense in the second quarter of 2023 was
The Company continued to demonstrate positive productivity trends, with return on average equity (ROAE) improving to 19.65% in the second quarter of 2023 compared with 12.68% in the second quarter of 2022, while return on average assets (ROAA) was 1.08%, compared with 0.89% a year earlier. ROAE and ROAA in the first half of 2023 demonstrated similar improvement from a year earlier. The efficiency ratio improved in both periods of 2023 compared with the 2022 periods.
Balance Sheet: Liquidity, Asset Quality
Total assets were
Loans, net of allowance for credit losses, were
Commercial real estate loans (owner occupied and non-owner occupied and excluding construction loans) were approximately
“Emphasizing our integrated approach to commercial banking, which includes depository options and a wide range of electronic treasury and cash management services to support customers’ financial activities, has broadened customer relationships. Our sophisticated capabilities and our bankers’ expertise and commitment to service allow us to meet the banking requirements of larger corporate customers, which is an exciting development.”
Asset quality has remained strong and stable, with a ratio of nonperforming loans to total loans of 0.07% at
Total nonperforming loans were
Total deposits at
Maintaining strong liquidity continues to be a focus, with the addition of cash and cash equivalents in the second quarter of 2023 and the continuance of off-balance sheet options.
The Company grew measures of shareholder value. Some of these, including book value per share and stockholders’ equity, continue to be negatively impacted by market value changes in our available-for-sale securities portfolio, reflecting the impact of higher interest rates. These mark-to-market losses are excluded when calculating the Bank’s regulatory capital. The available-for-sale securities portfolio is composed primarily of securities with implicit government guarantees, including
Total retained earnings were
About the Company
Cautionary Statement Regarding Forward-Looking Statements
This press release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan” and similar expressions and variations thereof identify certain of such forward-looking statements which speak only as of the dates on which they were made.
CONTACT:
tscruggs@bankofthejames.com
CONSOLIDATED FINANCIAL INFORMATION FOLLOWS
Consolidated Balance Sheets
(dollar amounts in thousands, except per share amounts)
Assets | (unaudited) | ||||||
Cash and due from banks | $ | 22,389 | $ | 30,025 | |||
Federal funds sold | 51,140 | 31,737 | |||||
Total cash and cash equivalents | 73,529 | 61,762 | |||||
Securities held-to-maturity, at amortized cost (fair value of | 3,630 | 3,639 | |||||
Securities available-for-sale, at fair value | 186,625 | 185,787 | |||||
Restricted stock, at cost | 1,357 | 1,387 | |||||
Loans, net of allowance for credit losses of | 610,418 | 605,366 | |||||
Loans held for sale | 6,160 | 2,423 | |||||
Premises and equipment, net | 17,561 | 17,974 | |||||
Interest receivable | 2,525 | 2,736 | |||||
Cash value - bank owned life insurance | 21,304 | 19,237 | |||||
Customer relationship Intangible | 7,472 | 7,845 | |||||
2,054 | 2,054 | ||||||
Other real estate owned | 500 | 566 | |||||
Other assets | 17,761 | 17,795 | |||||
Total assets | $ | 950,896 | $ | 928,571 | |||
Liabilities and Stockholders' Equity | |||||||
Deposits | |||||||
Noninterest bearing demand | $ | 151,261 | $ | 154,884 | |||
NOW, money market and savings | 525,765 | 560,479 | |||||
Time | 190,066 | 132,775 | |||||
Total deposits | 867,092 | 848,138 | |||||
Capital notes, net | 10,040 | 10,037 | |||||
Other borrowings | 10,173 | 10,457 | |||||
Interest payable | 269 | 89 | |||||
Other liabilities | 10,590 | 9,624 | |||||
Total liabilities | $ | 898,164 | $ | 878,345 | |||
Stockholders' equity | |||||||
Common stock | 9,723 | 9,905 | |||||
Additional paid-in-capital | 35,253 | 36,068 | |||||
Accumulated other comprehensive (loss) | (25,463 | ) | (26,781 | ) | |||
Retained earnings | 33,219 | 31,034 | |||||
Total stockholders' equity | $ | 2,732 | $ | 50,226 | |||
Total liabilities and stockholders' equity | $ | 950,896 | $ | 928,571 | |||
Consolidated Statements of Income
(dollar amounts in thousands, except per share amounts)
(unaudited)
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
Interest Income | 2023 | 2022 | 2023 | 2022 | |||||||||||
Loans | $ | 7,835 | $ | 6,174 | $ | 15,261 | $ | 12,079 | |||||||
Securities | |||||||||||||||
321 | 322 | 641 | 580 | ||||||||||||
Mortgage backed securities | 406 | 452 | 820 | 759 | |||||||||||
Municipals | 304 | 289 | 604 | 578 | |||||||||||
Dividends | 33 | 27 | 41 | 31 | |||||||||||
Corporates | 141 | 143 | 284 | 251 | |||||||||||
Interest bearing deposits | 93 | 27 | 241 | 34 | |||||||||||
Federal Funds sold | 450 | 164 | 789 | 201 | |||||||||||
Total interest income | 9,583 | 7,598 | 18,681 | 14,513 | |||||||||||
Interest Expense | |||||||||||||||
Deposits | |||||||||||||||
NOW, money market savings | 662 | 115 | 1,022 | 241 | |||||||||||
Time Deposits | 1,374 | 146 | 2,235 | 324 | |||||||||||
FHLB borrowings | - | - | 31 | - | |||||||||||
Finance leases | 21 | 24 | 44 | 49 | |||||||||||
Other borrowings | 100 | 108 | 199 | 222 | |||||||||||
Capital notes | 81 | 81 | 163 | 163 | |||||||||||
Total interest expense | 2,238 | 474 | 3,694 | 999 | |||||||||||
Net interest income | 7,345 | 7,124 | 14,987 | 13,514 | |||||||||||
Recovery of credit losses | (254 | ) | (300 | ) | (114 | ) | (600 | ) | |||||||
Net interest income after recovery of credit losses | 7,599 | 7,424 | 15,101 | 14,114 | |||||||||||
Noninterest income | |||||||||||||||
Gains on sale of loans held for sale | 1,153 | 1,299 | 2,076 | 3,203 | |||||||||||
Service charges, fees and commissions | 955 | 658 | 1,938 | 1,250 | |||||||||||
Wealth management fees | 1,042 | 961 | 2,048 | 1,976 | |||||||||||
Life insurance income | 134 | 112 | 266 | 225 | |||||||||||
Other | 160 | 4 | 160 | 11 | |||||||||||
Total noninterest income | 3,444 | 3,034 | 6,488 | 6,665 | |||||||||||
Noninterest expenses | |||||||||||||||
Salaries and employee benefits | 4,345 | 4,533 | 8,613 | 8,522 | |||||||||||
Occupancy | 459 | 432 | 931 | 903 | |||||||||||
Equipment | 636 | 617 | 1,312 | 1,223 | |||||||||||
Supplies | 133 | 122 | 281 | 264 | |||||||||||
Professional, data processing, and other outside expense | 1,412 | 871 | 2,783 | 1,925 | |||||||||||
Marketing | 285 | 247 | 479 | 439 | |||||||||||
Credit expense | 209 | 259 | 405 | 521 | |||||||||||
Other real estate expenses, net | 7 | 6 | 33 | 12 | |||||||||||
91 | 131 | 195 | 261 | ||||||||||||
Amortization of intangibles | 234 | 140 | 374 | 280 | |||||||||||
Other | 65 | 234 | 545 | 890 | |||||||||||
Total noninterest expenses | 7,876 | 7,592 | 15,951 | 15,240 | |||||||||||
Income before income taxes | 3,167 | 2,866 | 5,638 | 5,539 | |||||||||||
Income tax expense | 633 | 574 | 1,120 | 1,108 | |||||||||||
Net Income | $ | 2,534 | $ | 2,292 | $ | 4,518 | $ | 4,431 | |||||||
Weighted average shares outstanding - basic and diluted | 4,545,173 | 4,740,657 | 4,581,726 | 4,740,657 | |||||||||||
Net income per common share - basic and diluted | $ | 0.56 | $ | 0.48 | $ | 0.99 | $ | 0.93 | |||||||
(dollar amounts in thousands, except per share amounts)
(unaudited)
Selected Data: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||||||||
Interest income | $ | 9,583 | $ | 7,598 | 26.13 | % | $ | 18,681 | $ | 14,513 | 28.72 | % | ||||||
Interest expense | 2,238 | 474 | 372.15 | % | 3,694 | 999 | 269.77 | % | ||||||||||
Net interest income | 7,345 | 7,124 | 3.10 | % | 14,987 | 13,514 | 10.90 | % | ||||||||||
Recovery of credit losses | (254 | ) | (300 | ) | -15.33 | % | (114 | ) | (600 | ) | -81.00 | % | ||||||
Noninterest income | 3,444 | 3,034 | 13.51 | % | 6,488 | 6,665 | -2.66 | % | ||||||||||
Noninterest expense | 7,876 | 7,592 | 3.74 | % | 15,951 | 15,240 | 4.67 | % | ||||||||||
Income taxes | 633 | 574 | 10.28 | % | 1,120 | 1,108 | 1.08 | % | ||||||||||
Net income | 2,534 | 2,292 | 10.56 | % | 4,518 | 4,431 | 1.96 | % | ||||||||||
Weighted average shares outstanding - basic and diluted | 4,545,173 | 4,740,657 | (195,484 | ) | 4,581,726 | 4,740,657 | (158,931 | ) | ||||||||||
Basic and diluted net income per share | $ | 0.56 | $ | 0.48 | $ | 0.08 | $ | 0.99 | $ | 0.93 | $ | 0.06 |
Balance Sheet at period end: | 2023 | 2022 | Change | 2022 | 2021 | Change | ||||||||
Loans, net | $ | 610,418 | $ | 605,366 | 0.83 | % | $ | 607,322 | $ | 576,469 | 5.35 | % | ||
Loans held for sale | 6,160 | 2,423 | 154.23 | % | 4,460 | 1,628 | 173.96 | % | ||||||
Total securities | 190,255 | 189,426 | 0.44 | % | 205,076 | 164,922 | 24.35 | % | ||||||
Total deposits | 867,092 | 848,138 | 2.23 | % | 875,346 | 887,056 | -1.32 | % | ||||||
Stockholders' equity | 52,732 | 50,226 | 4.99 | % | 53,318 | 69,429 | -23.21 | % | ||||||
Total assets | 950,896 | 928,571 | 2.40 | % | 959,577 | 987,634 | -2.84 | % | ||||||
Shares outstanding | 4,543,338 | 4,628,657 | (85,319 | ) | 4,740,657 | 4,740,657 | - | |||||||
Book value per share | $ | 11.61 | $ | 10.85 | $ | 0.76 | $ | 11.25 | $ | 14.65 | $ | (3.40 | ) |
Daily averages: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||
Loans | $ | 624,947 | $ | 596,775 | 4.72 | % | $ | 621,268 | $ | 592,702 | 4.82 | % |
Loans held for sale | 3,766 | 4,074 | -7.56 | % | 3,104 | 3,856 | -19.50 | % | ||||
Total securities | 222,680 | 232,697 | -4.30 | % | 223,605 | 215,718 | 3.66 | % | ||||
Total deposits | 861,928 | 924,094 | -6.73 | % | 858,429 | 900,192 | -4.64 | % | ||||
Stockholders' equity | 51,712 | 72,489 | -28.66 | % | 50,618 | 71,600 | -29.30 | % | ||||
Interest earning assets | 892,900 | 957,353 | -6.73 | % | 889,540 | 932,943 | -4.65 | % | ||||
Interest bearing liabilities | 733,998 | 753,863 | -2.64 | % | 729,698 | 747,567 | -2.39 | % | ||||
Total assets | 944,883 | 1,030,984 | -8.35 | % | 941,593 | 1,006,321 | -6.43 | % |
Financial Ratios: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||
Return on average assets (1) | 1.08 | % | 0.89 | % | 0.19 | 0.97 | % | 0.89 | % | 0.08 | ||
Return on average equity (1) | 19.65 | % | 12.68 | % | 6.97 | 18.00 | % | 12.48 | % | 5.52 | ||
Net interest margin | 3.30 | % | 2.99 | % | 0.31 | 3.40 | % | 2.92 | % | 0.48 | ||
Efficiency ratio (2) | 73.00 | % | 74.74 | % | (1.74 | ) | 74.28 | % | 75.52 | % | (1.24 | ) |
Average equity to average assets | 5.47 | % | 7.03 | % | (1.56 | ) | 5.38 | % | 7.12 | % | (1.74 | ) |
(1) annualized | ||||||||||||
(2) noninterest expense / (net interest income + noninterest income) | ||||||||||||
Allowance for credit losses: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||||||
Beginning balance | $ | 7,715 | $ | 6,870 | 12.30 | % | $ | 6,259 | $ | 6,915 | -9.49 | % | ||||
Retained earnings adjustment related to impact of adoption of ASU 2016-13 | - | - | 0.00 | % | 1,245 | - | N/A | |||||||||
Recovery of credit losses | (198 | ) | (300 | ) | -34.00 | % | (58 | ) | (600 | ) | -90.33 | % | ||||
Charge-offs | (19 | ) | (1 | ) | 1800.00 | % | (52 | ) | (9 | ) | 477.78 | % | ||||
Recoveries | 88 | 47 | 87.23 | % | 192 | 310 | -38.06 | % | ||||||||
Ending balance | 7,586 | 6,616 | 14.66 | % | 7,586 | 6,616 | 14.66 | % |
Nonperforming assets: | 2023 | 2022 | Change | 2022 | 2021 | Change | ||||||
Total nonperforming loans | $ | 415 | $ | 633 | -34.44 | % | $ | 855 | $ | 954 | -10.38 | % |
Other real estate owned | 500 | 566 | -11.66 | % | 761 | 761 | 0.00 | % | ||||
Total nonperforming assets | 915 | 1,199 | -23.69 | % | 1,616 | 1,715 | -5.77 | % |
Asset quality ratios: | 2023 | 2022 | Change | 2022 | 2021 | Change | ||||||
Nonperforming loans to total loans | 0.07 | % | 0.10 | % | (0.03 | ) | 0.14 | % | 0.16 | % | (0.02 | ) |
Allowance for credit losses to total loans | 1.23 | % | 1.22 | % | 0.00 | 1.08 | % | 1.19 | % | (0.11 | ) | |
Allowance for credit losses to nonperforming loans | 1827.95 | % | 1185.47 | % | 642.49 | 773.80 | % | 724.84 | % | 48.96 |
Source:
2023 GlobeNewswire, Inc., source