Bank Of The James Financial Group (BOTJ 3.56%), a regional banking company operating primarily in Virginia, reported its second quarter earnings results on August 4, 2025. The most important news was a notable rise in profitability over the same quarter last year, with earnings per share (GAAP) increased to $0.60 from $0.47, and revenue (GAAP) grew to $12.33 million in Q2 2025. There were no analyst estimates set in advance for the period. The company’s net interest margin expanded to 3.45% in Q2 2025, and Net income (GAAP) climbed 25.9% in Q2 2025 relative to the prior year period, assisted by a one-time $528,000 recovery on credit losses. Despite a stronger Q2, overall net income (GAAP) for the first half of 2025 is still behind the prior year. The quarter was marked by improved core earnings but also higher costs and ongoing flatness in noninterest income.
| Metric | Q2 2025 | Q2 2024 | Y/Y Change |
|---|---|---|---|
| EPS – Diluted | $0.60 | $0.47 | 27.7 % |
| Revenue | $12.33 million | N/A | N/A |
| Net Interest Margin | 3.45 % | 3.02 % | 0.43 pp |
| Net Interest Income | $8.25 million | $7.09 million | 16.3 % |
| Total Deposits | $910.53 million | $884.90 million | 2.9 % |
| Book Value per Share | $15.77 | $13.58 | 16.1 % |
About the Company and Recent Focus
Bank Of The James Financial Group focuses on community banking, offering retail and commercial banking, residential mortgage origination, wealth management, and some insurance and brokerage services. It serves individuals and businesses in central and western Virginia, with a strategy anchored in building deep local relationships and providing personalized service through a growing network of branches and business lines.
In recent years, the company has invested in geographic expansion, opening new locations beyond its core region. Its key areas of focus include maintaining robust capital levels, managing regulatory compliance, responding to changes in interest rates, and diversifying its mix of loan and fee-based services. Success factors include stable deposit growth, prudent loan underwriting, operational efficiency, and effective risk management.
Quarterly Developments and Financial Highlights
During Q2 2025, the company achieved higher net income and stronger earnings per share (GAAP), mainly due to expanded net interest income and a loan loss reserve recovery. Net income (GAAP) reached $2.70 million in Q2 2025, a 25.9% increase from the same period last year. This was partially driven by a $528,000 nonrecurring benefit as the company recorded a recovery in its allowance for credit losses, a provision that banks set aside to cover potential loan defaults.
The net interest margin, which measures the profitability of lending activities, rose to 3.45% in Q2 2025. Management noted this was the highest level in several quarters, with net interest margin reaching 3.45%. The improvement reflects better pricing on loans and disciplined control over the cost of funds. Net interest income, the difference between the income received from loans and the cost paid on deposits, climbed 16.3% in Q2 2025, driven by higher commercial real estate lending and prudent interest rate management.
The company’s loan book grew to $649.09 million at the end of Q2 2025, up 5.4% year-over-year as of June 30, 2025. Commercial real estate loans, which include both owner-occupied and investor properties, increased to $355.68 million as of Q2 2025. Nonperforming loans, which are loans in default or close to being in default, rose to 0.28% of total loans in Q2 2025, up from 0.13% in Q2 2024, but the company's allowance for loan losses relative to total loans (GAAP) dropped to 0.96% in Q2 2025 as a result of the reserve release. This means coverage of potential problem loans has lessened, a factor worth tracking in future reporting periods.
The company continued to build its deposit base, with total deposits rising to $910.53 million as of Q2 2025. It emphasized a lack of brokered deposits -- wholesale funds that banks sometimes use to supplement traditional deposit sources -- signaling a focus on stable funding from its core customer base. In addition, the parent company retired approximately $10 million in capital notes in Q2 2025, which is expected to lower ongoing interest costs by about $327,000 per year. Noninterest expenses, covering everything from salaries to occupancy and technology, increased by 8.2% in Q2 2025 (GAAP), influenced by consulting fees, additions of revenue-generating employees, and new facility openings. Despite cost efforts, the year-to-date efficiency ratio (a measure of expense as a percent of revenue) rose to 82.7% for the six months ended June 30, 2025, highlighting growing pressure on expense management.
Business Mix and Service Updates
The bank’s revenue base remains concentrated in traditional banking products, with commercial and retail loans, residential mortgage lending, and business checking as the core offerings. Treasury services provide fee income for handling cash management tasks for businesses, while mortgage origination brings in additional gains through loan sales. The wealth management division, Persinger & Williams Wealth (PWW), continued to generate stable fees in Q2 2025, though areas like insurance and securities brokerage remain small.
Noninterest income was slightly lower in Q2 2025, with $4.08 million recognized—a 2.8% decline compared to Q2 2024. Main contributors within this category included service fees, treasury and commercial banking services, mortgage fee income, and wealth management activities. Gains on the sale of mortgage loans helped support noninterest income. Management described these sources as “relatively stable.”
The bank maintained a focus on strong asset quality and regulatory compliance. Its Tier 1 leverage ratio, a capital adequacy measure monitored by regulators, was 8.85% as of Q2 2025, well above minimum requirements. Book value per share, an indicator of net worth per share, increased by 16.1% year-over-year from $13.58 at June 30, 2024, to $15.77 at June 30, 2025. However, unrealized losses on securities held for sale remain sizable at $18.75 million as of Q2 2025, showing the continued impact of higher market interest rates on the value of bond holdings.
No material new product launches or major geographic expansions were disclosed in the quarter, but remarks about new revenue-generating employees and additional banking facilities point to ongoing efforts to grow organically. There were also no large one-time gains outside of the loan loss recovery. The quarterly dividend was declared at $0.10 per share on July 12, 2025, matching its previous payout.
Looking Ahead
Management did not provide any formal financial forecasts or quantified guidance for the second half of fiscal 2025. Instead, it highlighted that the second quarter’s solid earnings form a foundation for expected continued performance, with cost savings from the capital notes extinguishment expected to provide a benefit to interest expenses going forward.
Key issues for investors in future quarters include monitoring the trajectory of noninterest income -- which has been flat to down -- as well as any changes in dividend policy, capital levels, or loan growth remains important. The quarterly dividend was declared at $0.10 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
