Net income for the three months ended
Robert R. Chapman III, CEO, commented: “The Company’s record third quarter earnings and continued strong financial performance underscored the importance of balanced income contributions from a broad range of commercial and retail banking products and expanded wealth management services. Maintaining high asset quality, focusing on operational efficiency and interest rate management supported strong bottom-line performance.
“In the third quarter, productivity as measured by return on average assets exceeded 1%, reaching its highest level in several years. Following several years of navigating an extremely low interest rate environment, our net interest margin improved rapidly in the quarter, as did interest rate spread. These improvements were reflected in net income expansion in the third quarter and nine months of 2022.
“Asset quality remained strong, with few nonperforming loans, further reduction of the Company’s Other Real Estate Owned (OREO), and strong asset quality ratios. As in the past two quarters, we recorded a recovery of loan losses as there was no requirement to provide for loan losses. Productivity, efficiency and asset quality have greatly contributed to record earnings.
“Loan growth and the Company’s prompt response to rising interest rates led to 16% year-over-year growth in net interest income in the third quarter, and 6% growth in the nine-month period compared with a year earlier. In both periods of 2022, we saw double-digit growth of noninterest income compared with a year earlier. Expanded use of fee-based electronic corporate cash management services and income from PWW strengthened noninterest income.
“The Company’s consistent earnings and capital strength positioned us to enhance shareholder value by repurchasing approximately 2% of the Company’s outstanding common stock during the quarter. Our Board of Directors also approved an increased quarterly dividend of
“The communities and customers we serve continue to demonstrate financial strength and stability. Rising interest rates and concerns about inflation and the economy have understandably slowed activity in commercial lending. Our residential mortgage origination business, which has been exceptionally brisk in the past several years, also experienced the impact of rising interest rates on demand – particularly mortgage refinancings. We expect Bank of the James’ reputation for loan processing, service and pricing will support our continued leadership in purchase mortgage originations.
“As we progress toward year-end, we look forward to providing superior financial solutions for customers and growth in value which shareholders expect.”
Highlights
- Net income in the third quarter of 2022 increased 37% from a year earlier, while net income in the nine months of 2022 rose 22% compared with the nine months of 2021. Income growth in both periods of 2022 reflected balanced contributions from commercial and retail banking, residential mortgage originations, wealth management, and loan loss recoveries.
- Total interest income in the third quarter of 2022 increased 15% from the prior year’s third quarter as commercial real estate lending continued to grow and rate-adjusted loans reflected the rising interest rate environment.
- Net interest income was
$7.9 million in the third quarter of 2022, up 16% from a year earlier, primarily reflecting increased interest income and continuing low interest expense. Net interest income in the nine months of 2022 grew 6% compared with the nine months of 2021. - Total noninterest income in the third quarter of 2022 rose 37% compared with a year earlier as slowing income from gain on sale of residential mortgage loans was more than offset by wealth management fees and interchange income on card activity. Noninterest income in the nine months of 2022 increased 27% compared with the same period of 2021.
- Loans, net of the allowance for loan losses, increased 7% to
$614.11 million atSeptember 30, 2022 compared with$576.50 million atDecember 31, 2021 , primarily reflecting commercial loan growth. - Asset quality remained strong, reflected in a ratio of nonperforming loans to total loans of 0.13% at
September 30, 2022 compared with 0.16% atDecember 31, 2021 . The Company continued to trim OREO, writing down a significant portion of OREO based on its recently contracted sales price. - Total deposits declined marginally at
September 30, 2022 compared withDecember 31, 2021 and reflected continued strength of lower-cost core deposits (noninterest-bearing demand, NOW, savings and money market accounts), which were 85% of total deposits. - In both periods of 2022, Return on Average Assets (ROAA) and Return on Average Equity (ROAE) ratios improved significantly from 2021.
- The Company repurchased 112,000 shares of its common stock during the quarter for an aggregate of
$1,402,000 , which equates to an average price of approximately$12.51 per share. - On
October 18, 2022 the Company’s board of directors approved a quarterly dividend of$0.08 per share (up from$0.07 last quarter) to stockholders of record as ofNovember 25, 2022 , to be paid onDecember 9, 2022 .
Third Quarter, Nine Months of 2022 Operational Review
Net interest income after recovery of loan losses for the quarter ended
For the nine months ended
Total interest income increased to
Total interest expense in the third quarter of 2022 was
“Earlier in the year, the Company’s actions included shifting a significant amount of investment funds from Fed Funds into its fixed income portfolio as yields became more attractive. We have also adjusted loan rates upward to be consistent with the rising interest rate environment with the expectation it might lead to somewhat slower commercial loan activity. Although some borrowers have sought lower-rate loans from other lenders or delayed borrowing decisions, most of our clients continue to appreciate the value of their full-service relationship with
The net interest margin in the third quarter of 2022 was 3.43% and the interest spread was 3.38%, up significantly from the margin and spread in both the third quarter of 2021 and the second quarter of 2022. For the first nine months of 2022, the net interest margin was 3.09% and interest spread was 3.04%.
Noninterest income in the third quarter of 2022 was
Growth in fee income in the third quarter of 2022 primarily reflected increased interchange income earned on card activity and overdraft fees, as well as a
Noninterest expense in the third quarter of 2022 was
For the three months ended
Balance Sheet Reflects Organic Loan Growth, Strong Asset Quality
Total assets were
“As expected, we did experience a slowing of loan demand in the third quarter. In light of interest rate increases and economic uncertainties, we anticipate continuing softening in commercial loan demand, although we continue to have an attractive loan pipeline and good loan activity. Importantly, the quality of our loan portfolio has remained exceptionally high – a very positive indication of customers’ continued financial strength.”
Commercial loans (primarily C&I loans) were
A decline in historical loss experience, improved delinquency trends, and other net improvements in qualitative factors resulted in a reduction of the Company’s allowance for loan losses since
Total nonperforming loans of
Total deposits at
The Company’s total retained earnings increased to
For the nine months ended
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)
(unaudited) | |||||||
Assets | |||||||
Cash and due from banks | $ | 38,622 | $ | 29,337 | |||
Federal funds sold | 42,398 | 153,816 | |||||
Total cash and cash equivalents | 81,020 | 183,153 | |||||
Securities held-to-maturity (fair value of | 3,643 | 3,655 | |||||
Securities available-for-sale, at fair value | 191,131 | 161,267 | |||||
Restricted stock, at cost | 1,387 | 1,324 | |||||
Loans, net of allowance for loan losses of | 614,117 | 576,469 | |||||
Loans held for sale | 3,239 | 1,628 | |||||
Premises and equipment, net | 18,250 | 18,351 | |||||
Interest receivable | 2,382 | 2,064 | |||||
Cash value - bank owned life insurance | 19,123 | 18,785 | |||||
Customer relationship Intangible | 7,986 | 8,406 | |||||
3,819 | 3,001 | ||||||
Other real estate owned | 566 | 761 | |||||
Income taxes receivable | - | 77 | |||||
Deferred tax asset | 7,431 | 1,371 | |||||
Other assets | 8,476 | 7,322 | |||||
Total assets | $ | 962,570 | $ | 987,634 | |||
Liabilities and Stockholders' Equity | |||||||
Deposits | |||||||
Noninterest bearing demand | $ | 155,984 | $ | 162,286 | |||
NOW, money market and savings | 598,964 | 582,000 | |||||
Time | 128,121 | 142,770 | |||||
Total deposits | 883,069 | 887,056 | |||||
Capital notes, net | 10,037 | 10,031 | |||||
Other borrowings | 10,596 | 10,985 | |||||
Income taxes payable | 374 | - | |||||
Interest payable | 37 | 46 | |||||
Other liabilities | 10,118 | 10,087 | |||||
Total liabilities | $ | 914,231 | $ | 918,205 | |||
Stockholders' equity | |||||||
Common stock | |||||||
9,905 | 10,145 | ||||||
Additional paid-in-capital | 36,068 | 37,230 | |||||
Accumulated other comprehensive loss | (27,084 | ) | (1,386 | ) | |||
Retained earnings | 29,450 | 23,440 | |||||
Total stockholders' equity | $ | 48,339 | $ | 69,429 | |||
Total liabilities and stockholders' equity | $ | 962,570 | $ | 987,634 | |||
Consolidated Statements of Income
(dollar amounts in thousands, except per share amounts)
(unaudited)
For the Three Months | For the Nine Months | ||||||||||||
Ended | Ended | ||||||||||||
Interest Income | 2022 | 2021 | 2022 | 2021 | |||||||||
Loans | $ | 6,830 | $ | 6,605 | $ | 18,909 | $ | 20,089 | |||||
Securities | |||||||||||||
331 | 230 | 911 | 640 | ||||||||||
Mortgage backed securities | 437 | 138 | 1,196 | 299 | |||||||||
Municipals | 289 | 243 | 867 | 599 | |||||||||
Dividends | 5 | 4 | 36 | 39 | |||||||||
Other (Corporates) | 144 | 55 | 395 | 155 | |||||||||
Interest bearing deposits | 101 | 7 | 135 | 26 | |||||||||
Federal Funds sold | 262 | 33 | 463 | 67 | |||||||||
Total interest income | 8,399 | 7,315 | 22,912 | 21,914 | |||||||||
Interest Expense | |||||||||||||
Deposits | |||||||||||||
NOW, money market savings | 133 | 146 | 374 | 419 | |||||||||
Time Deposits | 143 | 239 | 467 | 890 | |||||||||
Finance leases | 24 | 26 | 73 | 80 | |||||||||
Other borrowings | 117 | - | 339 | - | |||||||||
Capital notes | 82 | 82 | 245 | 245 | |||||||||
Total interest expense | 499 | 493 | 1,498 | 1,634 | |||||||||
Net interest income | 7,900 | 6,822 | 21,414 | 20,280 | |||||||||
Recovery of loan losses | (300 | ) | - | (900 | ) | - | |||||||
Net interest income after provision for recovery of loan losses | 8,200 | 6,822 | 22,314 | 20,280 | |||||||||
Noninterest income | |||||||||||||
Gains on sale of loans held for sale | 1,472 | 2,091 | 4,675 | 6,175 | |||||||||
Service charges, fees and commissions | 1,313 | 612 | 2,563 | 1,803 | |||||||||
Wealth management fees | 959 | - | 2,935 | - | |||||||||
Life insurance income | 113 | 117 | 338 | 315 | |||||||||
Other income (loss) | (3 | ) | 2 | 8 | 12 | ||||||||
Total noninterest income | 3,854 | 2,822 | 10,519 | 8,305 | |||||||||
Noninterest expenses | |||||||||||||
Salaries and employee benefits | 4,529 | 4,093 | 13,051 | 11,901 | |||||||||
Occupancy | 445 | 437 | 1,348 | 1,270 | |||||||||
Equipment | 647 | 626 | 1,870 | 1,883 | |||||||||
Supplies | 116 | 120 | 380 | 354 | |||||||||
Professional, data processing, and other outside expense | 1,619 | 1,029 | 3,544 | 2,978 | |||||||||
Marketing | 222 | 209 | 661 | 720 | |||||||||
Credit expense | 244 | 309 | 765 | 869 | |||||||||
Other real estate expenses, net | 195 | 1 | 207 | 74 | |||||||||
121 | 137 | 382 | 425 | ||||||||||
Amortization of intangibles | 140 | - | 420 | - | |||||||||
Other | 601 | 337 | 1,491 | 950 | |||||||||
Total noninterest expenses | 8,879 | 7,298 | 24,119 | 21,424 | |||||||||
Income before income taxes | 3,175 | 2,346 | 8,714 | 7,161 | |||||||||
Income tax expense | 601 | 465 | 1,709 | 1,431 | |||||||||
Net Income | $ | 2,574 | $ | 1,881 | $ | 7,005 | $ | 5,730 | |||||
Weighted average shares outstanding - basic and diluted (1) | 4,683,581 | 4,740,657 | 4,721,423 | 4,750,235 | |||||||||
Net income per common share - basic and diluted (1) | $ | 0.55 | $ | 0.40 | $ | 1.48 | $ | 1.21 |
(1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in
Dollar amounts in thousands, except per share data
(unaudited)
Selected Data: | Three months ending 2022 | Three months ending 2021 | Change | Year to date 2022 | Year to date 2021 | Change | ||||||||||
Interest income | 14.82 | % | 4.55 | % | ||||||||||||
Interest expense | 499 | 493 | 1.22 | % | 1,498 | 1,634 | -8.32 | % | ||||||||
Net interest income | 7,900 | 6,822 | 15.80 | % | 21,414 | 20,280 | 5.59 | % | ||||||||
Recovery of loan losses | (300 | ) | - | N/A | (900 | ) | - | N/A | ||||||||
Noninterest income | 3,854 | 2,822 | 36.57 | % | 10,519 | 8,305 | 26.66 | % | ||||||||
Noninterest expense | 8,879 | 7,298 | 21.66 | % | 24,119 | 21,424 | 12.58 | % | ||||||||
Income taxes | 601 | 465 | 29.25 | % | 1,709 | 1,431 | 19.43 | % | ||||||||
Net income | 2,574 | 1,881 | 36.84 | % | 7,005 | 5,730 | 22.25 | % | ||||||||
Weighted average shares outstanding - basic (1) | 4,683,581 | 4,740,657 | (57,076 | ) | 4,721,423 | 4,750,235 | (28,812 | ) | ||||||||
Weighted average shares outstanding - diluted (1) | 4,683,581 | 4,740,657 | (57,076 | ) | 4,721,423 | 4,750,235 | (28,812 | ) | ||||||||
Basic net income per share (1) | ||||||||||||||||
Fully diluted net income per share (1) |
(1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in
Balance Sheet at period end: | 2022 | 2021 | Change | 2021 | 2020 | Change | ||||||||
Loans, net | 6.53 | % | -3.05 | % | ||||||||||
Loans held for sale | 3,239 | 1,628 | 98.96 | % | 6,462 | 7,102 | -9.01 | % | ||||||
Total securities | 194,774 | 164,922 | 18.10 | % | 155,957 | 93,856 | 66.17 | % | ||||||
Total deposits | 883,069 | 887,056 | -0.45 | % | 853,829 | 764,967 | 11.62 | % | ||||||
Stockholders' equity | 48,339 | 69,429 | -30.38 | % | 68,902 | 66,732 | 3.25 | % | ||||||
Total assets | 962,570 | 987,634 | -2.54 | % | 942,631 | 851,386 | 10.72 | % | ||||||
Shares outstanding | 4,628,657 | 4,740,657 | (112,000 | ) | 4,740,657 | 4,339,436 | 401,221 | |||||||
Book value per share | $(4.21 | ) | $(0.85 | ) |
Daily averages: | Three months ending 2022 | Three months ending 2021 | Change | Year to date 2022 | Year to date 2021 | Change | ||||||
Loans | 4.78 | % | 0.36 | % | ||||||||
Loans held for sale | 4,217 | 5,638 | -25.20 | % | 3,978 | 5,777 | -31.14 | % | ||||
Total securities | 230,986 | 142,670 | 61.90 | % | 220,863 | 118,662 | 86.13 | % | ||||
Total deposits | 885,602 | 843,452 | 5.00 | % | 895,274 | 820,517 | 9.11 | % | ||||
Stockholders' equity | 52,451 | 67,657 | -22.48 | % | 60,603 | 66,183 | -8.43 | % | ||||
Interest earning assets | 916,798 | 869,899 | 5.39 | % | 927,482 | 847,730 | 9.41 | % | ||||
Interest bearing liabilities | 752,909 | 692,709 | 8.69 | % | 749,545 | 669,535 | 11.95 | % | ||||
Total assets | 968,985 | 930,846 | 4.10 | % | 986,867 | 906,389 | 8.88 | % |
Financial Ratios: | Three months ending 2022 | Three months ending 2021 | Change | Year to date 2022 | Year to date 2021 | Change | ||||||
Return on average assets | 1.05 | % | 0.80 | % | 0.25 | 0.95 | % | 0.85 | % | 0.10 | ||
Return on average equity | 19.47 | % | 11.03 | % | 8.44 | 15.45 | % | 11.58 | % | 3.87 | ||
Net interest margin | 3.43 | % | 3.11 | % | 0.32 | 3.09 | % | 3.20 | % | (0.11 | ) | |
Efficiency ratio | 75.54 | % | 75.67 | % | (0.13 | ) | 75.53 | % | 74.95 | % | 0.58 | |
Average equity to average assets | 5.41 | % | 7.27 | % | (1.86 | ) | 6.14 | % | 7.30 | % | (1.16 | ) |
Allowance for loan losses: | Three months ending 2022 | Three months ending 2021 | Change | Year to date 2022 | Year to date 2021 | Change | ||||||||||
Beginning balance | -8.26 | % | -3.37 | % | ||||||||||||
Recovery of loan losses | (300 | ) | - | N/A | (900 | ) | - | N/A | ||||||||
Charge-offs | (1 | ) | (16 | ) | -93.75 | % | (10 | ) | (80 | ) | -87.50 | % | ||||
Recoveries | 79 | 80 | -1.25 | % | 389 | 200 | 94.50 | % | ||||||||
Ending balance | 6,394 | 7,276 | -12.12 | % | 6,394 | 7,276 | -12.12 | % |
Nonperforming assets: | 2022 | 2021 | Change | 2021 | 2020 | Change | ||||||
Total nonperforming loans | -17.40 | % | -7.75 | % | ||||||||
Other real estate owned | 566 | 761 | -25.62 | % | 806 | 1,105 | -27.06 | % | ||||
Total nonperforming assets | 1,354 | 1,715 | -21.05 | % | 2,710 | 3,169 | -14.48 | % | ||||
Troubled debt restructurings - (performing portion) | 431 | 372 | 15.86 | % | 376 | 392 | -4.08 | % |
Asset quality ratios: | 2022 | 2021 | Change | 2021 | 2020 | Change | ||||||
Nonperforming loans to total loans | 0.13 | % | 0.16 | % | (0.03 | ) | 0.32 | % | 0.34 | % | (0.02 | ) |
Allowance for loan losses to total loans | 1.03 | % | 1.19 | % | (0.16 | ) | 1.23 | % | 1.17 | % | 0.06 | |
Allowance for loan losses to nonperforming loans | 811.42 | % | 724.84 | % | 86.58 | 382.14 | % | 346.71 | % | 35.43 |
Source:
2022 GlobeNewswire, Inc., source