Bank of the James Q3 Earnings Rise Y/Y on Higher Interest Income

Shares of Bank of the James Financial Group, Inc. BOTJ have inched up 0.5% since reporting third-quarter 2026 results, outperforming the S&P 500 index's 1.8% decline. However, over the past month, the stock has lost 13% compared with the S&P 500's 3.4% fall.

Bank of the James reported third-quarter 2026 earnings of 73 cents per share, up 19.7% from 61 cents in the year-ago quarter. Net income increased 20.7% to $3.32 million from $2.75 million in the prior-year quarter. Total revenues, comprising net interest income and non-interest income, increased 11.5% to $13.90 million from $12.47 million in the prior-year quarter. The improvement reflected stronger net interest income, supported by higher interest income and lower funding costs, while non-interest income remained relatively stable.

Bank of the James Financial Group, Inc. price-consensus-eps-surprise-chart | Bank of the James Financial Group, Inc. Quote

Net interest income increased 17.1% year over year to $9.72 million from $8.30 million in the prior-year quarter. Total interest income rose 9.5% to $12.88 million, reflecting higher earnings from loans and investment securities.

Interest expenses declined 8.9% to $3.16 million from $3.47 million, primarily reflecting lower deposit costs.

The tax-equivalent net interest margin expanded to 3.81% from 3.44% a year earlier, indicating improved profitability from interest-earning assets.

Net interest income after the provision for credit losses increased approximately 18% to $9.69 million from $8.21 million in the prior-year quarter.

Total assets were $1.065 billion as of Sept. 30, 2026, compared with $1.020 billion a year earlier.

Net loans increased to $694.03 million from $653.29 million as of Sept. 30, 2025. Sequentially, net loans grew $7.95 million despite the repayment of a $10.07-million loan during the quarter.

Total deposits increased to $963.60 million from $919.80 million a year earlier, reflecting continued expansion in the bank's deposit base.

Non-performing loans declined to $548,000 from $1.70 million as of Dec. 31, 2025, primarily because certain non-accrual loans returned to accrual status.

The allowance for credit losses stood at $6.55 million, representing 1,195.99% coverage of non-performing loans.

Non-interest income increased 0.2% to $4.18 million from $4.17 million in the year-ago quarter.

Wealth management fees from Pettyjohn, Wood & White increased 10.4% to $1.50 million, supporting fee-based revenues.

However, non-interest expenses rose 5.9% to $9.70 million from $9.16 million, reflecting higher salaries, employee benefits, equipment and data-processing expenses.

Despite increased expenses, the efficiency ratio improved to 69.76% from 73.46%, reflecting stronger revenue generation relative to operating costs.

Return on average assets increased to 1.23% from 1.07%, while return on average equity improved to 15.56% from 15.24%.

Stockholders' equity declined 2% to $78.45 million from $80.05 million at Dec. 31, 2025. Book value per share decreased to $17.27 from $17.62.

Although retained earnings increased, accumulated other comprehensive loss widened to $24.51 million from $14.94 million.

The deterioration reflected unrealized losses on available-for-sale securities resulting from higher market interest rates, particularly during the third quarter.

CEO Robert R. Chapman III highlighted record quarterly profits and sustained operating momentum during 2026. He attributed the performance to the company's customer relationships and continued execution.

President Mike Syrek emphasized that both loan and deposit portfolios reached record levels. Management intends to maintain its focus on strengthening customer relationships and expanding lending and deposit activities.

On Oct. 27, 2026, the company's board approved a quarterly cash dividend of 15 cents per share, representing a 50% increase from the previous dividend of 10 cents.

The dividend is payable on Dec. 4, 2026, to shareholders of record as of Nov. 20, 2026, reflecting management's decision to increase shareholder distributions amid improved profitability.

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This article originally published on Zacks Investment Research (zacks.com).