SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

Current Report

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 21, 2020

 

 

BANK OF THE JAMES FINANCIAL GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Virginia		001-35402		20-0500300
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

828 Main Street, Lynchburg, VA		24504
(Address of principal executive offices)		(Zip Code)

(434) 846-2000

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, $2.14 par value		BOTJ		The NASDAQ Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

Item 2.02 — Results of Operations and Financial Condition

On Friday, April 24, 2020, Bank of the James Financial Group, Inc. (the “Company”) issued a press release announcing financial results for the quarter March 31, 2020 (the “Press Release”). A copy of the Press Release is attached hereto as Exhibit 99.1.

Item 5.03 — Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

On April 21, 2020, the Board of Directors of the Company adopted Amended and Restated Bylaws of the Company (the “Bylaws”). Article II, Section 2 of the Bylaws has been amended to provide that the Board of Directors may determine that a meeting of the Company’s shareholders may be held solely by means of remote communication as permitted by the Virginia Stock Corporation Act. Additional conforming changes were also made to Article II of the Bylaws.

The full text of the Bylaws, as amended and restated as of April 21, 2020, is attached as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated in this Item 5.03 by reference. The description of the amendments is qualified in its entirety by reference to the attached Bylaws as amended and restated.

Item 8.01 — Other Events

Declaration of Quarterly Cash Dividend

On April 21, 2020, the Board of Directors of the Company declared a quarterly cash dividend of $0.07 per share of common stock. The dividend will be paid on or about June 19, 2020, to stockholders of record as of the close of business on June 5, 2020. The Company announced the declaration of the dividend in its Press Release dated April 24, 2020, a copy of which is attached hereto as Exhibit 99.1.

Temporary Suspension of Stock Repurchase Program

On April 24, 2020, the Company announced that it has temporarily suspended repurchases under its stock repurchase program, the adoption of which was previously announced on January 24, 2020. This announcement was made in the Company’s Press Release dated April 24, 2020, a copy of which is attached hereto as Exhibit 99.1.

Supplement to Company’s Risk Factors – COVID-19

The Company hereby supplements the “Risk Factors” section in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 with following additional risk factor:

The Company’s business, financial condition, liquidity and results of operations have been, and will likely continue to be, adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has negatively impacted the local, state, national, and world economies. The pandemic has created economic and financial disruptions that have adversely affected, and are likely to continue to adversely affect, the Company’s business, financial condition, liquidity and results of operations. The extent to which the COVID-19 pandemic will continue to negatively affect our business, financial condition, liquidity and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the continued effectiveness of the Company’s business continuity plan, the direct and indirect impact of the pandemic on the Company’s employees, customers, clients, and service providers, as well as other market participants, and actions taken by governmental authorities and other third parties in response to the pandemic.

 

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The COVID-19 pandemic has contributed to or resulted in:

 

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Increased unemployment and decreased consumer confidence and business generally.

 

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Temporary closures of many businesses and the institution of social distancing or other measurements.

 

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Ratings downgrades, credit deterioration and defaults in many industries, including natural resources, hospitality, transportation and commercial real estate.

 

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A sudden and significant reduction in the valuation of the equity, fixed-income and commodity markets and the significant increase in the volatility of those markets.

 

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A decrease in the rates and yields on U.S. Treasury securities.

 

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Increased demands on capital and liquidity.

 

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Heightened cybersecurity, information security and operational risks as a result of work-from-home arrangements.

As a result:

 

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The demand for our products and services could be significantly impacted, which could decrease our net interest income and adversely affect our revenue and net income.

 

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We could have an increase in customer delinquencies and loan defaults, including defaults on unsecured loans, and further increases in our allowance for loan losses and foreclosures.

 

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Customers may draw on lines of credit, which could impact our liquidity.

 

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We may take some measures with respect to customer requests, such as a deferral of loan payments and the suspension of foreclosures due to unfavorable market conditions, that may have a negative impact on the Company’s business, financial condition, liquidity and results of operations.

Governmental authorities have taken unprecedented measures to provide economic assistance to individual households and businesses, stabilize the markets and support economic growth. The success of these measures is unknown and they may not be sufficient to fully mitigate the negative impact of the COVID-19 pandemic. The Company also faces an increase in governmental and regulatory scrutiny as a result of the effects of COVID-19 on market and economic conditions and actions governmental authorities take in response to those conditions.

The extent to which the COVID-19 pandemic impacts our business, results of operation, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and the actions taken by governmental authorities and other third parties in response to the pandemic.

 

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The length of the pandemic and the efficacy of the extraordinary measures being put in place to address it are unknown. Even after the pandemic subsides, the U.S. economy may experience a recession, and the Company anticipates the Company’s businesses would be materially and adversely affected by a prolonged recession. To the extent the pandemic adversely affects the Company’s business, financial condition, liquidity or results of operations, it may also have the effect of heightening many of the other risks described in the section entitled “Risk Factors” in our 2019 Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q.

Item 9.01 — Financial Statements and Exhibits.

(a) Financial statements of businesses acquired – not applicable

(b) Pro forma financial information – not applicable

(c) Shell company transactions – not applicable

(d) Exhibits

 

Exhibit No.		Exhibit Description
3.2		Amended and Restated Bylaws of Bank of the James Financial Group, Inc. as of April 21, 2020
99.1		Bank of the James Financial Group, Inc. Press Release dated April 24, 2020

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 24, 2020		BANK OF THE JAMES FINANCIAL GROUP, INC.
		By		/s/ J. Todd Scruggs
				J. Todd Scruggs
				Secretary-Treasurer

 

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Exhibit 3.2

AMENDED AND RESTATED BYLAWS

OF

BANK OF THE JAMES FINANCIAL GROUP, INC.

TABLE OF CONTENTS

 

			Page
ARTICLE I — SHARES			1
Section 1. Certificates			1
Section 2. Signatures			1
Section 3. Duplicate Certificates			1
Section 4. Transfer of Shares			1
Section 5. Restrictions on Transfer			1
ARTICLE II — SHAREHOLDERS			2
Section 1. Holders of Shares			2
Section 2. Meetings Generally			2
Section 3. Annual Meetings			2
Section 4. Special Meetings			3
Section 5. Notice			3
Section 6. Waiver of Notice			3
Section 7. Action Without Meeting			3
Section 8. Determination of Shareholders of Record			4
Section 9. Conduct of Meetings			4
Section 10. Proxies			4
Section 11. Procedure at Meetings			4
Section 12. Quorum and Voting			4
Section 13. Adjournments			4
ARTICLE III — DIRECTORS			5
Section 1. General Powers			5
Section 2. Number and Qualifications			5
Section 3. Regular Meetings			5
Section 4. Special Meetings			5
Section 5. Notice			5
Section 6. Waiver of Notice			6
Section 7. Action Without Meeting			6
Section 8. Conduct of Meetings			6
Section 9. Procedure at Meetings			6
Section 10. Participation by Conference Telephone			6
Section 11. Quorum			6
Section 12. Committees			7
Section 13. Term of Office			7
Section 14. Resignation			7
Section 15. Removal			7
Section 16. Vacancies			7
Section 17. Conflicts of Interest			7

ARTICLE IV — OFFICERS			8
Section 1. Generally			8
Section 2. Chairman			8
Section 3. Vice-Chairman			8
Section 4. Vice-Chairman and Chief Executive Officer			8
Section 5. President			8
Section 6. Vice Presidents			9
Section 7. Secretary			9
Section 8. Treasurer or Controller			9
Section 9. Delegation of Power			9
Section 10. Term of Office			9
Section 11. Resignation			9
Section 12. Removal			9
Section 13. Execution of Instruments			10
Section 14. Proxies			10
Section 15. Regulation O Executive Officers			10
ARTICLE V — INDEMNIFICATION AND ELIMINATION OF LIABILITY			10
Section 1. Indemnification of Directors and Officers			10
Section 2. Indemnification Not Permitted			11
Section 3. Effect of Judgment or Conviction			11
Section 4. Determination and Authorization			11
Section 5. Advance for Expenses			12
Section 6. Indemnification of Employees and Agents			12
Section 7. Elimination of Liability of Directors and Officers			12
Section 8. Liability of Directors and Officers Not Eliminated			12
Section 9. Definitions			12
Section 10. Provisions Not Exclusive			13
Section 11. Insurance			13
Section 12. No Retroactive Effect of Amendment			14
ARTICLE VI — SEAL			14
ARTICLE VII — FISCAL YEAR			14
ARTICLE VIII — AMENDMENTS			14

AMENDED AND RESTATED BYLAWS

OF

BANK OF THE JAMES FINANCIAL GROUP, INC.

ARTICLE I

SHARES

Section 1. Certificates. Unless and until the board of directors adopts a resolution permitting the shares to be uncertificated all shares issued by the Corporation shall, when fully paid, be represented by certificates in such form as may be required by law and approved by the board of directors. Any such resolution shall not apply to shares already represented by a certificate until such certificate is surrendered to the Corporation. Share certificates shall, subject to the provisions of Section 2 of this Article, be signed by the Chairman, the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary or any other officer authorized by resolution of the board of directors. Each share certificate may, but need not, be sealed with the seal of the Corporation or a facsimile thereof.

Section 2. Signatures. The signatures of the officers upon a share certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. If any person who signed, either manually or by facsimile, a share certificate no longer holds office when such certificate is issued, the certificate is nevertheless valid.

Section 3. Duplicate Certificates. In case of the loss, mutilation or destruction of a share certificate, a duplicate may be issued upon such terms, and bearing such legend, if any, as the board of directors may lawfully prescribe.

Section 4. Transfer of Shares. Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws. Transfers of shares shall be made on the books of the Corporation only by the record holder of such shares or by his or her attorney lawfully constituted in writing and, if such shares are certificated, upon the surrender of the certificate therefor, which shall be canceled before a new certificate or other record of ownership shall be issued. The board of directors may from time to time make such reasonable regulations governing the transfer of shares as it may deem necessary or proper.

Section 5. Restrictions on Transfer. A transfer of shares shall be made only in accordance with any provisions of the articles of incorporation or these bylaws or an agreement among the shareholders or between the shareholders and the Corporation that impose restrictions on the transfer of shares.

ARTICLE II

SHAREHOLDERS

Section 1. Holders of Shares. Only shareholders of record on the share transfer books of the Corporation shall be entitled to be treated by the Corporation as the holders of the shares standing in their respective names, and, except to the extent, if any, required by law, the Corporation shall not be obligated to recognize any equitable or other claim to or interest in any share on the part of any other person, whether or not it shall have express or other notice hereof.

Section 2. Meetings Generally. Meetings of shareholder shall be held at any place within or outside the Commonwealth of Virginia designated by the Board of Directors; provided, however, that the Board of Directors may, in its sole discretion, determine that a meeting of members shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 13.1-660.2. of the Code of Virginia or any successor legislation. In the absence of any such designation or determination, meetings of shareholders shall be held at the principal office of the Corporation. A shareholder participating in a meeting by means of remote communications shall be deemed to be attending in person for all purposes. At least ten days before each meeting, the officer or agent having charge of the share transfer books of the Corporation shall prepare a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, with the address and number of shares held by each, arranged by voting group and within each voting group by class or series of shares. For a period of ten days prior to the meeting the list of shareholders kept on file at the registered office or the principal office of the Corporation or at the office of its transfer agent or registrar shall be subject to inspection by any shareholders at any time during usual business hours. Such list shall also be produced and kept open at the time and place, if any, of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof.

Section 3. Annual Meetings. An annual meeting of the shareholders shall be held on the third Tuesday of May of each year (and if such day is a legal holiday, on the next business day) , or on such other day as the board of directors shall set, for the purpose of electing directors and transacting such other business as may properly come before the meeting.

 

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Section 4. Special Meetings. A special meeting of the shareholders shall be held on the call of the Chairman, the Chief Executive Officer, the President, the Secretary or the board of directors or on the written demand, delivered to the Secretary.

Section 5. Notice. Written notice of the date, time and place, if any, of the meeting, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed present in person and vote at such meeting, and, in the case of a special meeting (or if required by law, the articles of incorporation or these bylaws), the purpose or purposes for which the meeting is called shall be given to each shareholder entitled to vote at the meeting. Such notice shall be given either by personal delivery, by mail, or any other means permitted by applicable law by or at the direction of the officer or persons calling the meeting, not more than 60 days nor less than ten days before the date of the meeting (except that such notice shall be given to each shareholder, whether or not entitled to vote, not less than 25 days before a meeting called to act on an amendment to the articles of incorporation, a plan of merger or share exchange, a proposed sale, lease, exchange or other disposition of all, or substantially all, of the property of the Corporation other than in the usual and regular course of business, or the dissolution of the Corporation, which notice shall be accompanied by a copy of the proposed amendment, plan of merger or share exchange, agreement of sale or plan of dissolution, as the case may be). Notice to a shareholder shall be deemed given when mailed postage prepaid, correctly addressed, to the shareholder at his address as shown in the current record of shareholders of the Corporation.

A shareholder’s attendance at a meeting waives objection to: (i) lack of notice or defective notice of the meeting, unless at the beginning of the meeting he objects to holding the meeting or transacting business at the meeting; and (ii) consideration of a particular matter at the meeting that is not within the purpose or purposes described in the notice of the meeting, unless he objects to considering the matter when it is presented.

Section 6. Waiver of Notice. Notice of any meeting may be waived before or after the date and time of the meeting in a writing signed by the shareholder entitled to notice and delivered to the Secretary for inclusion in the minutes of the meeting or filing with the corporate records.

Section 7. Action Without Meeting. Any action required or permitted by law to be taken at a shareholders’ meeting may be taken without a meeting if the action is taken by all of the shareholders entitled to vote on the action. The action shall be evidenced by one or more written consents describing the action taken, signed by all the shareholders entitled to vote thereon and delivered to the Secretary for inclusion in the minutes or filing with the corporate records.

 

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Section 8. Determination of Shareholders of Record. The share transfer books may be closed by order of the board of directors for not more than 70 days for the purpose of determining shareholders entitled to notice of or to vote at any meeting of the shareholders or any adjournment thereof (or entitled to receive any distribution or in order to make a determination of shareholders for any other purpose). In lieu of closing such books, the board of directors may fix in advance as the record date for any such determination a date not more than 70 days before the date on which such meeting is to be held (or such distribution made or other action requiring such determination is to be taken). If the books are not closed or the record date is not fixed, the record date shall be the close of business on the day before the effective date of the notice to shareholders.

Section 9. Conduct of Meetings. The Chairman, or in his absence the officer prescribed by Sections 3 and 4 of Article IV, shall act as chairman of and preside over meetings of the shareholders. If no such officer is present, the meeting shall elect a chairman. The Secretary, or in his absence the Assistant Secretary, shall act as the secretary of such meetings. If no such officer is present, the chairman shall appoint a secretary of the meeting.

Section 10. Proxies. A shareholder may appoint a proxy to vote or otherwise act for him by signing and dating an appointment form, either personally or by his attorney-in-fact. No appointment of proxy shall be valid after the expiration of 11 months from the date of its execution, unless otherwise provided therein. Every appointment of proxy shall be revocable by the shareholder executing it, unless the appointment form conspicuously states that it is irrevocable and that it is coupled with an interest in accordance with law.

Section 11. Procedure at Meetings. The procedure at meetings of the shareholders shall be determined by the chairman, and (subject to the provisions of Section 9 of this Article) the vote on all questions before any meeting shall be taken in such manner as the chairman prescribes. However, upon the demand of the holders in the aggregate of at least twenty percent (20%) of all the votes entitled to be cast on any issue proposed to be considered at the meeting, such vote shall be by ballot.

Section 12. Quorum and Voting. A quorum at any meeting of shareholders shall be a majority of the votes entitled to be cast, represented in person or by proxy. If a quorum exists, action on a matter is approved by a majority of the votes cast within the voting group, unless a greater vote is required by law or the articles of incorporation (except that in elections of directors those receiving the greatest number of votes shall be elected even though less than a majority).

Section 13. Adjournments. A majority of the votes entitled to be cast at any meeting, represented in person or by proxy, even though less than a quorum, may adjourn the meeting to a fixed time and place. If a meeting of the shareholders is adjourned to a date more than 120 days after the date fixed for the original meeting, notice of the adjourned meeting shall be given as in the case of the original meeting. If a meeting is adjourned for less than 120 days, no notice of the date, time or place, if any, thereof, and the means of remote communications, if any, of the adjourned meeting or, in the case of a

 

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special meeting, the purpose or purposes for which the meeting is called, need be given other than by announcement at the meeting at which the adjournment is taken, prior to such adjournment. If a quorum shall be present at any adjourned meeting, any business may be transacted which might have been transacted if a quorum had been present at the meeting as originally called.

ARTICLE III

DIRECTORS

Section 1. General Powers. Except as expressly provided in the articles of incorporation or these bylaws, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation managed under the direction of, the board of directors.

Section 2. Number and Qualifications. The board of directors shall consist of a minimum of five and a maximum of twenty-five individuals. No director may be nominated for election or elected if on the date of his election he has or would have attained the age of 73 years. Directors need not be residents of Virginia, but all directors must be shareholders of the Corporation as required by law. Directors shall be elected at each annual meeting of the shareholders, and may be elected at any special meeting of the shareholders, in accordance with the three groups and staggered terms as described in the articles of incorporation. However, if any one or more of the directors shall resign or fail to be able to serve for any reason, the remaining directors, even if less than the minimum set herein, shall be authorized to appoint replacements as necessary.

Section 3. Regular Meetings. Regular meetings of the board of directors may be held without notice at the registered office or principal office of the Corporation or at such other place, whether in or out of the Commonwealth of Virginia, as the board of directors may designate from time to time. A regular meeting of the board of directors shall be held as soon as practicable after each annual meeting of the shareholders for the purpose of appointing officers and transacting such other business as may properly come before the meeting.

Section 4. Special Meetings. Special meetings of the board of directors may be called at any time by the Chairman, the Chief Executive Officer, the President, the Secretary or any quorum of the directors.

Section 5. Notice. Written notice of the date, time and place of special meetings shall be given to each director either by personal delivery or by mail, by or at the direction of the officer or director calling the meeting, to the address of such director as it appears in the records of the Corporation not less than ten (10) days before the date of the meeting. Neither the business to be transacted at, nor the purpose of, any meeting of the board of directors need be specified in the notice or any waiver of notice of such meeting.

 

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A director’s attendance at or participation in a meeting waives any required notice to him of the meeting unless he at the beginning of the meeting or promptly upon his arrival objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to the action taken at the meeting.

Section 6. Waiver of Notice. Notice of any meeting may be waived before or after the date and time of the meeting in a writing signed by the director entitled to notice and delivered to the Secretary of the Corporation for inclusion in the minutes of the meeting or filing with the corporate records.

Section 7. Action Without Meeting. Any action required or permitted by law to be taken at a meeting of the board of directors may be taken without a meeting if the action is taken by all of the members of the board of directors. The action shall be evidenced by one or more written consents stating the action taken, signed by each director either before or after the action taken, and included in the minutes or filed with the corporate records reflecting the action taken.

Section 8. Conduct of Meetings. The Chairman, or in his absence the officer prescribed by Sections 3 and 4 of Article IV, shall act as chairman of and preside over meetings of the board of directors. If no such officer is present, the meeting shall elect a chairman. The Secretary, or in his absence the Assistant Secretary, shall act as secretary of such meetings. If no such officer is present, the chairman shall appoint a secretary of the meeting.

Section 9. Procedure at Meetings. The procedure at meetings of the board of directors shall be determined by the chairman, and (subject to the provisions of Section 17 of this Article) the vote on all matters before any meeting shall be taken in such manner as the chairman may prescribe.

Section 10. Participation by Conference Telephone. The board of directors may permit any or all directors to participate in a meeting of the directors by, or conduct the meeting through the use of, conference telephone or any other means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by such means shall be deemed to be present in person at the meeting. When a meeting is so conducted, a written record shall be made of the action taken at such meeting.

Section 11. Quorum. A quorum at any meeting of the board of directors shall be a majority of the number of directors fixed or prescribed by these bylaws or, if no number is prescribed, the number of directors in office immediately before the meeting begins. The affirmative vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors.

 

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Section 12. Committees. The board of directors may create one or more committees and appoint two or more members of the board of directors to serve on them at the pleasure of the board of directors. Any such committee, to the extent specified by the board of directors, may exercise the authority that may be exercised by the board of directors except to the extent prohibited or restricted by law, the articles of incorporation or these bylaws.

The provisions of Sections 3 through 11 of this Article, which provide for, among other things, meetings, action without meetings, notice and waiver of notice, quorum and voting requirements of the board of directors, shall apply to committees and their members as well.

Section 13. Term of Office. Each director shall be elected to hold office until the next succeeding annual meeting of the shareholders or until his successor shall have been elected and qualified, or until there is a decrease in the number of directors, or such earlier time as he shall resign, die or be removed. No decrease in the number of directors by amendment to these bylaws shall shorten the term of any incumbent director.

Section 14. Resignation. A director may resign at any time by delivering written notice to the board of directors, the Chairman, the President or the Secretary. A resignation shall be effective when delivered, unless the notice specifies a later effective date.

Section 15. Removal. At a meeting of shareholders called and noticed expressly for such purpose, any director may be removed only with cause, if the number of votes cast to remove him constitutes a majority of the votes entitled to be cast at an election of directors.

Section 16. Vacancies. Any vacancy in the board of directors (including any vacancy resulting from an increase in the number of directors) may be filled by the affirmative vote of a majority of the remaining directors, even though less than a quorum, unless sooner filled by the shareholders.

Section 17. Conflicts of Interest. No transaction with the Corporation in which a director has a direct or indirect personal interest shall be void or voidable solely because of the director’s interest in the transaction if: (i) the material facts of the transaction and the director’s interest are disclosed or known to the board of directors or a committee of the board of directors, and the transaction was authorized, approved, or ratified by the affirmative vote of a majority of the directors on the board of directors, or on the committee, who have no direct or indirect personal interest in the transaction; provided, however, that a transaction shall not be authorized, approved or ratified by a single director; or (ii) the material facts of the transaction and the director’s interest are disclosed to the shareholders entitled to vote, and the transaction is authorized, approved or ratified by the vote of a majority of the shares other than shares owned by or voted under the control of a director who has a direct or indirect interest in the transaction; or (iii) the transaction is fair to the Corporation.

 

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ARTICLE IV

OFFICERS

Section 1. Generally. The officers of the Corporation shall be a Chairman, a Vice-Chairman, Chief Executive Officer, a President, a Secretary and a Treasurer or Controller, each of whom shall be appointed by the board of directors at a regular meeting of the directors held as soon as may be practicable after each annual meeting of the shareholders or, if a vacancy shall exist in any such office, at a special meeting of the directors held as soon as may be practicable after the resignation, death or removal of the officer theretofore holding the same. The board of directors, the Chairman or the President may also, from time to time, appoint one or more Vice Presidents or other officers and assistant officers and fill any vacancy that may exist in any such office as a result of the resignation, death or removal of the officer theretofore holding the same. Any officer may hold more than one office and may, but need not, be a director. Each officer shall have the authority and perform the duties which pertain to the office held by him, or as set forth in these bylaws or, to the extent consistent with these bylaws, such duties as may be prescribed by the board of directors, the Chairman or the President.

Section 2. Chairman. The Chairman shall act as chairman of and preside over meetings of the shareholders and directors and shall perform such duties as may be lawfully required of, or conferred upon, him by the board of directors.

Section 3. Vice-Chairman. The Vice-Chairman shall perform such duties as may be conferred upon him by the board of directors. The Vice-Chairman shall, during the absence, disqualification, or inability to act of the Chairman, exercise all the functions and perform all the duties of the Chairman and shall perform, to the extent consistent with these bylaws, such duties as may be conferred upon him by the board of directors.

Section 4. Chief Executive Officer. The Chief Executive Officer is the chief executive officer of the Corporation and shall have general supervision over, responsibility for and control of the other officers, agents and employees of the Corporation. The Chief Executive Officer shall, during the absence, disqualification or inability to act of the Chairman and Vice-Chairman, exercise all the functions and perform all the duties of the Chairman and shall perform, to the extent consistent with these bylaws, such duties as may be conferred upon him by the board of directors.

Section 5. President. The President shall be the chief operating officer of the Corporation and shall report directly to the Chief Executive Officer of the Corporation.

 

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Section 6. Vice Presidents. Each Vice President shall perform, to the extent consistent with these bylaws, such duties as may be prescribed by the board of directors or the Chief Executive Officer. In the event of and during the absence, disqualification or inability to act of the Chief Executive Officer and President, the Vice Presidents, in the order designated by the board of directors from time to time (and if no such designation is made, in the order of their appointment as Vice Presidents), shall have the authority to perform the duties of the President.

Section 7. Secretary. The Secretary shall have the responsibility for preparing and maintaining custody of minutes of meetings of the shareholders and directors in a book or books kept for that purpose and the responsibility for authenticating records of the Corporation. The Secretary shall maintain a record of shareholders of the Corporation, giving the names and addresses of all shareholders and the numbers, classes and series of the shares held by each and, unless otherwise prescribed by the board of directors, shall maintain the share transfer books of the Corporation.

Section 8. Treasurer or Controller. The Treasurer shall be the chief financial officer of the Corporation. The Treasurer shall have the custody of all moneys and securities of the Corporation and shall deposit the same in the name and to the credit of the Corporation in such depositories as may be designated by the board of directors and, unless otherwise prescribed by the board of directors or the Chief Executive Officer, shall maintain the books of account and financial records.

Section 9. Delegation of Power. In the event of and during the absence, disqualification or inability to act of any officer other than the President, such other officers or employees as may be designated by the board of directors or by the President shall have the authority and perform the duties of such officer.

Section 10. Term of Office. Each officer shall be appointed to hold office until the first regular meeting of the board of directors held after each annual meeting of the shareholders, or for such longer or shorter term as the board of directors may specify, and until his successor shall have been appointed or such earlier time as he shall resign, die or be removed.

Section 11. Resignation. An officer may resign at any time by delivering written notice to the board of directors, the President or the Secretary. A resignation shall be effective when delivered unless the notice specifies a later effective date.

Section 12. Removal. Any officer may be removed, with or without cause, at any time by the board of directors or Chief Executive Officer, and any officer or assistant officer, if appointed by another officer, may likewise be removed by such officer. Notwithstanding the above, an officer assigned by the board of directors with the duties of the Internal Audit Function may only be dismissed by the audit committee (or committee performing similar functions) of the board of directors.

 

9

Section 13. Execution of Instruments. Checks, drafts, notes and orders for the payment of money shall be signed by such officer or officers or such other individual or individuals as the board of directors may from time to time authorize, and any endorsement of such paper in the ordinary course of business shall be similarly made, except that any officer or assistant officer of the Corporation may endorse checks, drafts or notes for collection or deposit to the credits of the Corporation. The signature of any such officer or other individual may be a facsimile when authorized by the board of directors.

Section 14. Proxies. Unless otherwise prescribed by the board of directors, the Chairman or the President may from time to time, by such proxy or proxies, attorney or attorneys, agent or agents of the Corporation as he shall designate in the name and on behalf of the Corporation, cast the votes to which the Corporation may be entitled as a shareholder or otherwise in any other corporation, at meetings, or consent in writing to any action by any such other corporation; and he may instruct the individual or individuals so appointed as to the manner of casting such votes or giving such consent, and execute or cause to be executed on behalf of the Corporation such written proxies, consents, waivers or other instruments as he may deem necessary or desirable.

Section 15. Regulation O Executive Officers. Unless excluded from major policy-making functions of the Corporation (other than in such person’s capacity as a director, if applicable) by resolution of the Board, the following officers shall be “executive officers” for purposes of Regulation O (12 C.F.R. Pt. 215): the Chief Executive Officer, President, each Executive Vice President and any executive officer of the Corporation who, by resolution of the Corporation’s board of directors, has been designated an “executive officer” of the Corporation for purposes of Regulation O. Notwithstanding anything in these Bylaws to the contrary, in accordance with Section 215.2(e) of Regulation O, unless otherwise so designated by resolution, the Chairman, each Vice-Chairman of the Board, and all other employees of the Company or its subsidiaries, including Vice Presidents and others with officer titles, are excluded (other than in such person’s capacity as a director, if applicable) from major policy-making functions of the Corporation and shall not be considered “executive officers” of the Corporation for purposes of Regulation O.

ARTICLE V

INDEMNIFICATION AND ELIMINATION OF LIABILITY

Section 1. Indemnification of Directors and Officers. Except as provided in Section 2 of this Article, the Corporation shall indemnify every individual made a party to a proceeding because he is or was a director or officer against liability incurred in the proceeding if: (i) he conducted himself in good faith; and (ii) he believed, in the case of conduct in his official capacity with the Corporation, that his conduct was in its best interests, and in all other cases, that his conduct was at least not opposed to its best

 

10

interests (or in the case of conduct with respect to an employee benefit plan, that his conduct was for the purpose he believed to be in the interests of the participants of and beneficiaries of the plan); and (iii) he had no reasonable cause to believe, in the case of any criminal proceeding, that his conduct was unlawful.

Section 2. Indemnification Not Permitted. The Corporation shall not indemnify any individual against his willful misconduct or a knowing violation of the criminal law or against any liability incurred by him in any proceeding charging improper personal benefit to him, whether or not by or in the right of the Corporation or involving action in his official capacity, in which he was adjudged liable by a court of competent jurisdiction on the basis that personal benefit was improperly received by him.

Section 3. Effect of Judgment or Conviction. The termination of a proceeding by judgment, order, settlement or conviction is not, of itself, determinative that an individual did not meet the standard of conduct of this Article or that the conduct of such individual constituted willful misconduct or a knowing violation of the criminal law.

Section 4. Determination and Authorization. Unless ordered by a court of competent jurisdiction, any indemnification under Section 1 of this Article shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the individual is permissible in the circumstances because (i) he met the standard of conduct set forth in Section 1 of this Article and, with respect to a proceeding by or in the right of the Corporation in which such individual was adjudged liable to the Corporation, he is fairly and reasonably entitled to indemnification in view of all of the relevant circumstances even though he was adjudged liable; and (ii) the conduct of such individual did not constitute willful misconduct or a knowing violation of the criminal law.

Such determination shall be made: (i) by the board of directors by a majority vote of a quorum consisting of directors not at the time parties to the proceeding; or (ii) if such a quorum cannot be obtained, by a majority vote of a committee duly designated by the board of directors (in which designated directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding, or (iii) by special legal counsel selected by the board of directors or its committee in the manner heretofore provided or, if such a quorum of the board of directors cannot be obtained and such a committee cannot be designated, selected by a majority vote of the board of directors (in which selection directors who are parties may participate); or (iv) by the shareholders, but shares owned by or voted under the control of individuals who are at the time parties to the proceeding may not be voted on the determination. Authorization of indemnification, evaluation as to reasonableness of expenses and determination and authorization of advancements for expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those selecting such counsel.

 

11

Section 5. Advance for Expenses. The Corporation shall pay for or reimburse the reasonable expenses incurred by any individual who is a party to a proceeding in the advance of final disposition of the proceeding if (i) he furnished the Corporation a written statement of his good faith belief that he has met the standard of conduct described in Section 1 of this Article and a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that indemnification of such individual in the specific case is not permissible; and (ii) a determination is made that the facts then known to those making the determination would not preclude indemnification under this Article. A written undertaking furnished to the Corporation in accordance with the provisions of this Section shall be an unlimited general obligation of the individual furnishing the same but need not be secured and may be accepted by the Corporation without reference to financial ability to make repayment.

Section 6. Indemnification of Employees and Agents. The Corporation may, but shall not be required to, indemnify and advance expenses to employees and agents of the Corporation to the same extent as provided in this Article with respect to directors and officers.

Section 7. Elimination of Liability of Directors and Officers. Except as provided in Section 8 of this Article, in any proceeding brought by or in the right of the Corporation or brought by or on behalf of shareholders of the Corporation, a director or officer of the Corporation shall not be liable in any monetary amount for damages arising out of or resulting from a single transaction, occurrence or course of conduct.

Section 8. Liability of Directors and Officers Not Eliminated. The liability of a director or officer shall not be eliminated in accordance with the provisions of Section 7 of this Article if the director or officer engaged in willful misconduct or a knowing violation of the criminal law or of any federal or state securities law, including without limitation, any claim of unlawful insider trading or manipulation of the market for any security.

Section 9. Definitions. In this Article:

“Director” and “officer” mean an individual who is or was a director or officer of the Corporation, as the case may be, or who, while a director or officer of the Corporation is or was serving at the Corporation’s request as a director, officer, member, manager, fiduciary, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise. A director or officer shall be considered to be serving an employee benefit plan at the Corporation’s request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan.

 

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“Individual” means a natural person and also includes, unless the context requires otherwise, the estate, heirs, executors, personal representatives and administrators of an individual.

“Corporation” means the Corporation and any domestic or foreign predecessor entity of the Corporation in a merger or other transaction in which the predecessor’s existence ceased upon the consummation of the transaction.

“Expenses” includes but is not limited to counsel fees.

“Liability” means the obligation to pay a judgment, settlement, penalty, fine, including any excise tax assessed with respect to an employee benefit plan, or reasonable expenses incurred with respect to a proceeding.

“Official capacity” means: (i) when used with respect to a director, the office of director in the Corporation; (ii) when used with respect to an officer, the office in the Corporation held by him; or (iii) when used with respect to an employee or agent, the employment or agency relationship undertaken by him on behalf of the Corporation. “Official capacity” does not include service for any foreign or domestic corporation or other partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise.

“Party” includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding.

“Proceeding” means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal.

Section 10. Provisions Not Exclusive. As authorized by the Virginia Stock Corporation Act, the provisions of this Article are in addition to and not in limitation to the specific powers of a corporation to indemnify directors and officers set forth therein. If any provision of this Article shall be adjudicated invalid and unenforceable by a court of competent jurisdiction, such adjudication shall not be deemed to invalidate or otherwise affect any other provision hereof or any power of indemnify which the Corporation may have under the Virginia Stock Corporation act or other laws of the Commonwealth of Virginia.

Section 11. Insurance. The Corporation may purchase and maintain insurance to indemnify it against the whole or any portion of the liability assumed in accordance with this Article. The Corporation may also procure insurance, in amounts determined by the Directors, on behalf of any person who is either: (i) a director or officer of the Corporation; or (ii) is serving in any other capacity at the request of the Corporation. This insurance may indemnify against any asserted or incurred liability regardless of whether the Corporation has the power to indemnify a person against such liability under the provisions of this Article.

 

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Section 12. No Retroactive Effect of Amendment. No amendment or repeal of this Article or these bylaws shall limit or eliminate the rights to indemnification or elimination of liability provided under this Article with respect to acts or omissions occurring prior to such amendment or repeal.

ARTICLE VI

SEAL

The seal of the Corporation shall be a flatface circular die containing the name of the Corporation, of which there may be any number of counterparts or facsimiles, in such form as the board of directors shall from time to time adopt.

ARTICLE VII

FISCAL YEAR

The fiscal year of the Corporation shall be an annual accounting period ending on December 31 in each calendar year.

ARTICLE VIII

AMENDMENTS

These bylaws may be amended or repealed by the board of directors except to the extent that: (i) this power is reserved exclusively to the shareholders by law or the articles of incorporation; or (ii) the shareholders in adopting or amending particular bylaws provide expressly that the board of directors may not amend or repeal the same. These bylaws may be amended or repealed by the shareholders even though the same also may be amended or repealed by the board of directors.

ADOPTED AND EFFECTIVE: April 21, 2020

 

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Exhibit 99.1

 

Bank of the James Announces First Quarter 2020

Financial Results and Declaration of Dividend

LYNCHBURG, Va., April 24, 2020 — Bank of the James Financial Group, Inc. (the “Company”) (NASDAQ:BOTJ), the parent company of Bank of the James, a full-service commercial and retail bank serving Region 2000 (Greater Lynchburg MSA), and the Blacksburg, Charlottesville, Harrisonburg, Lexington, and Roanoke, Virginia markets, today announced unaudited results for the three months ended March 31, 2020.

First Quarter 2020 Highlights

 

•

Net income for the three months ended March 31, 2020 was $995,000 or $0.23 per diluted share, compared with $1.23 million or $0.28 per diluted share for the three months ended March 31, 2019. This decrease was due primarily to an increase in loan loss provision related to uncertainty surrounding the COVID-19 pandemic.

 

•

Weighted average shares outstanding (diluted) were 4,348,040 at March 31, 2020 compared with 4,380,959 a year earlier, reflecting a repurchase of 39,000 shares of stock since March 31, 2019. The Company has temporarily suspended stock repurchases under its stock repurchase plan.

 

•

Loans receivable, net of allowance for loan losses, were $570.66 million compared with $573.27 million at December 31, 2019 and $535.96 million at March 31, 2019.

 

•

Commercial real estate loans, commercial & industrial loans, construction loans and multi-family mortgage loans increased compared with a year earlier. In light of potential risks to loan quality associated with COVID-19 and associated economic trends, the Company anticipates expanded disclosure related to business sectors and credit quality in its Form 10-Q Quarterly Report for quarter ended March 31, 2020 to be filed with the Securities and Exchange Commission.

 

•

Loans held for sale (primarily closed residential mortgage originations) were $6.13 million at March 31, 2020 compared with $4.22 million at December 31, 2019. Management noted the secondary market that purchases the majority of the Company’s originated conventional mortgages has continued to be strong and active.

 

•

Total assets were $746.06 million at March 31, 2020, up from $725.39 million at December 31, 2019 and $684.39 million at March 31, 2019.

 

•

Asset quality remained strong at March 31, 2020, with a ratio of nonperforming loans to total loans of 0.25%. The Company increased its allowance for loan losses primarily based on our evaluation of qualitative (environmental) factors present and their contribution to our estimate of probable losses inherent in the loan portfolio. At March 31, 2020, the allowance for loan losses to total loans increased to 0.95%, and the allowance for loan losses to nonperforming loans was 376%.

 

•

On April 21, 2020 the Company’s board of directors approved a $0.07 per share dividend payable to stockholders of record on June 5, 2020, to be paid on June 19, 2020.

COVID-19 Update

 

•

The Company has fully implemented its Business Continuity Plan.

•

All branches remain open, with routine banking services offered through online banking, drive-thru, ATMs, and limited lobby access.

 

•

Implemented a number of actions to support a healthy workforce, including:

 

○

Flexible work practices such as work-from-home options, working in shifts and placing greater distances between employees;

 

○

Discontinuation of non-essential business travel and meetings; and

 

○

Use of online meeting platforms.

 

•

Actively addressing customer needs, including loan payment relief where appropriate.

 

•

The Bank has not experienced any unusual pressure on deposit balances or liquidity positions as a result of COVID-19. As of March 31, 2020, the Bank had cash and cash equivalents of approximately $64 million. As of April 24, 2020, the Bank has access to approximately $71 million through existing credit arrangements. In addition, the Bank has been accepted to the Payroll Protection Program Liquidity Facility pursuant to which the Bank may borrow 100% of the face value of PPP loans it has originated.

Robert R. Chapman III, President and CEO, commented: “As our nation, the Commonwealth of Virginia and our communities address the challenges and uncertainties presented by COVID-19, we salute the women and men in our hospitals and first responders and are grateful for their service. We also want to extend our heartfelt thoughts to the families that have been affected by this virus and wish them the very best. We have focused on protecting the health and safety of our employees and the citizens of the communities we serve by positioning daily operations to respond to the needs of our customers with safety and security. We stand ready to serve, as we have throughout the history of our Company, and will do everything in our power to help our region of the Commonwealth.

“We implemented remote work procedures, staffing adjustments and branch bank emphasis on drive-up banking and ATMs to protect customers and employees. Electronic and mobile banking capabilities for individuals and businesses have supported necessary banking activities. Our banking team has maintained a high level of responsiveness, providing personalized attention and financial solutions to customers.

“Our primary focus has been to help customers and communities navigate challenging and ever-changing economic and financial circumstances. We dedicated much of our human capital in April to helping our community’s small businesses, receiving well over 500 applications beginning April 3^rd under the Small Business Administration’s Paycheck Protection Program (PPP) and have received approvals from the SBA impacting more than 6,000 employees in our served markets.

“As a community bank with a traditional focus on meeting the needs of small business both in times of opportunity and challenge, we believe Bank of the James is well-positioned to provide support to our communities. We remain well-capitalized and with the liquidity to meet the needs of our customers. We are prepared to coordinate any additional federal assistance that becomes available.

“Consistent with Bank of the James’ longstanding commitment to support the civic and charitable organizations in our communities, and the many not-for-profit organizations that bank with us, we have accelerated support to organizations that provide critical necessities such as shelter, food and clothing. Although social distancing has limited the usual participation of our employees in charitable activities, we are working hard to provide financial and logistical support wherever and whenever possible.

“I want to thank our total bank team for their steadfast support of our customers and our communities providing the highest level of service in rising to meet their needs. We will meet this latest challenge and get through it together.”

 

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J. Todd Scruggs, Executive Vice President and CFO, stated: “Bank of the James recognizes the future may hold unprecedented challenges for the Company and its customers. We would like to assure customers and shareholders that we are focused on maintaining capital strength, prudently and promptly reserving for credit risk, and working closely with our customers to educate and guide them on options for financial solutions to manage ongoing challenges.”

First Quarter 2020 Operational Review

Net income for the three months ended March 31, 2020 decreased to $995,000 from $1.23 million for the three months ended March 31, 2019. The increase in provision for loan losses in the current year, which includes our evaluation of the COVID-19 pandemic at March 31, 2020, contributed significantly to this decline and is discussed in more detail below.

Total interest income was $7.49 million at March 31, 2020 compared with $7.23 million at March 31, 2019. Interest expense increased to $1.35 million from $1.10 million, which reflected a larger deposit base and rate increases in demand and time deposits. Interest rates paid on total interest-bearing liabilities in the first quarter of 2020 were 0.90% compared with 0.85% in the first quarter of 2019.

“As in past quarters, we funded our loan portfolio with deposits and not through wholesale funding, which has contributed to efficient operation and margin stability,” said Scruggs. “We recognize that while current uncertainty and economic conditions will likely impact demand for growth-oriented borrowing, we are focused on helping commercial clients manage their working capital and helping individuals meet their financial obligations and manage their finances to continue moving forward.”

Net interest income before provision for loan losses in the first quarter of 2020 was $6.14 million compared with $6.13 million a year earlier. The Company increased its provision for loan losses to $888,000 in the first quarter of 2020 compared with $210,000 a year earlier. This increase was due primarily to an increase in the general reserve related to conditions brought on by the COVID-19 pandemic. Specifically, in determining its March 31, 2020 estimate of the allowance for loan losses, the Company considered unemployment trends, market conditions, social distancing, the potential impact on real estate values in our service areas, loans with actual or requested payment deferrals, and loan concentrations within industries most vulnerable to effects of the pandemic.

Net interest margin was 3.63% in the first quarter of 2020 compared with 3.92% in the first quarter of 2019, and net interest spread declined to 3.49% from 3.77% a year earlier.

Noninterest income, including gains from the sale of residential mortgages to the secondary market, gains on sales of available-for-sale securities, revenue contributions from BOTJ Investment Services, and income from the Bank’s line of treasury management services for commercial customers was $2.19 million compared with $1.22 million in the first quarter of 2019, primarily reflecting increased gains on sales of residential mortgage loans and securities available-for-sale.

Noninterest expense for the three months ended March 31, 2020 was $6.20 million compared to $5.60 million a year earlier. The increase primarily reflected increased personnel expenses from variable compensation expenses related to the volume of mortgage loan production, higher occupancy and equipment expenses related to new offices, and an increase in professional expenses.

First Quarter 2020 Balance Sheet Review

Total assets were $746.06 million at March 31, 2020 compared to $725.39 million at December 31, 2019. This increase was due primarily due to an increase in cash caused by an increase in deposits. Cash and cash equivalents increased from $39.11 million on December 31, 2019 to $64.20 million on March 31, 2020. On March 31, 2020 loans held for investment, net of the allowance for loan losses, which totaled $570.66 million, Loans held-for-sale were $6.13 million, and the Fair value of securities available-for-sale was $54.99 million.

 

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The Company’s commercial loan portfolio provided balanced performance and a diversified risk profile. At March 31, 2020, owner occupied commercial real estate (CRE) was $103.37 million, up 3.94% from a year earlier, non-owner occupied CRE was $182.46 million, up 4.67% from a year earlier, commercial construction & land loans rose 3.29 % to $16.73 million, while commercial & industrial loans rose 16.31% to $115.53 million. Retained residential mortgages and consumer construction loans were essentially flat compared with a year earlier, and consumer loans increased to $91.33, an increase of 7.08%. As noted earlier, the Company anticipates providing expanded disclosure regarding specific lending sectors in its upcoming SEC Form 10-Q filing.

Total deposits at March 31, 2020 were a Company-record $668.3 million. During the past year, the majority of deposit growth has been core deposits (noninterest and interest-bearing checking, NOW, money market and savings accounts).

The Bank’s regulatory capital ratios continued to exceed accepted regulatory standards for a well-capitalized institution. The Company’s shareholder value measurements at March 31, 2020 included total stockholders’ equity increasing to $63.3 million from $61.4 million at December 31, 2019, retained earnings of $21.6 million and book value per share of $14.59.

About the Company

Bank of the James, a wholly owned subsidiary of Bank of the James Financial Group, Inc. opened for business in July 1999 and is headquartered in Lynchburg, Virginia. The bank currently services customers in Virginia from offices located in Altavista, Amherst, Appomattox, Bedford, Blacksburg, Charlottesville, Forest, Harrisonburg, Lexington, Lynchburg, Madison Heights, Roanoke, and Rustburg. The bank offers full investment and insurance services through its BOTJ Investment Services division and BOTJ Insurance, Inc. subsidiary. The bank provides mortgage loan origination through Bank of the James Mortgage, a division of Bank of the James. Bank of the James Financial Group, Inc. common stock is listed under the symbol “BOTJ” on the NASDAQ Stock Market, LLC. Additional information on the Company is available at www.bankofthejames.bank.

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. Bank of the James Financial Group, Inc. (the “Company”) undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Such factors include, but are not limited to, competition, general economic conditions, potential changes in interest rates, the effect of the COVID-19 pandemic, and changes in the value of real estate securing loans made by Bank of the James (the “Bank”), a subsidiary of the Company. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company’s filings with the Securities and Exchange Commission and previously filed by the Bank (as predecessor of the Company) with the Federal Reserve Board.

CONTACT: J. Todd Scruggs, Executive Vice President and Chief Financial Officer (434) 846-2000.

tscruggs@bankofthejames.com

 

4

FINANCIAL STATEMENTS FOLLOW

 

5

Bank of the James Financial Group, Inc. and Subsidiaries

Dollar amounts in thousands, except per share data

Unaudited

 

Selected Data:		Three months ending Mar 31, 2020				Three months ending Mar 31, 2019				Change
Interest income		$	7,488			$	7,234				3.51	%
Interest expense			1,352				1,104				22.46	%
Net interest income			6,136				6,130				0.10	%
Provision for loan losses			888				210				322.86	%
Noninterest income			2,186				1,219				79.33	%
Noninterest expense			6,197				5,599				10.68	%
Income taxes			242				306				-20.92	%
Net income			995				1,234				-19.37	%
Weighted average shares outstanding - basic			4,348,040				4,378,436				(30,396	)
Weighted average shares outstanding - diluted			4,348,040				4,380,959				(32,919	)
Basic net income per share		$	0.23			$	0.28			$	(0.05	)
Fully diluted net income per share		$	0.23			$	0.28			$	(0.05	)

 

6

Balance Sheet at period end:		Mar 31, 2020				Dec 31, 2019				Change				Mar 31, 2019				Dec 31, 2018				Change
Loans, net		$	570,659			$	573,274				-0.46	%		$	535,959			$	530,016				1.12	%
Loans held for sale			6,134				4,221				45.32	%			2,604				1,670				55.93	%
Total securities			58,675				63,343				-7.37	%			57,194				56,427				1.36	%
Total deposits			668,270				649,459				2.90	%			616,744				612,043				0.77	%
Stockholders’ equity			63,328				61,445				3.06	%			57,177				55,143				3.69	%
Total assets			746,055				725,394				2.85	%			684,388				674,897				1.41	%
Shares outstanding			4,339,436				4,357,436				(18,000	)			4,378,436				4,378,436				—
Book value per share		$	14.59			$	14.10			$	0.49			$	13.06			$	12.59			$	0.47

 

7

Daily averages:		Three months ending Mar 31, 2020				Three months ending Mar 31, 2019				Change
Loans, net		$	574,185			$	533,314				7.66	%
Loans held for sale			3,653				2,004				82.29	%
Total securities			55,962				58,770				-4.78	%
Total deposits			659,863				614,066				7.46	%
Stockholders’ equity			61,243				57,317				6.85	%
Interest earning assets			677,505				634,995				6.69	%
Interest bearing liabilities			574,060				526,494				9.03	%
Total assets			735,759				678,346				8.46	%

 

8

Financial Ratios:		Three months ending Mar 31, 2020				Three months ending Mar 31, 2019				Change
Return on average assets			0.54	%			0.74	%			(0.20	)
Return on average equity			6.52	%			8.73	%			(2.21	)
Net interest margin			3.63	%			3.92	%			(0.29	)
Efficiency ratio			74.47	%			76.19	%			(1.72	)
Average equity to average assets			8.32	%			8.45	%			(0.13	)

 

9

Allowance for loan losses:		Three months ending Mar 31, 2020				Three months ending Mar 31, 2019				Change
Beginning balance		$	4,829			$	4,581				5.41	%
Provision for losses			888				210				322.86	%
Charge-offs			(260	)			(133	)			95.49	%
Recoveries			17				15				13.33	%
Ending balance			5,474				4,673				17.14	%

 

10

Nonperforming assets:		Mar 31, 2020				Dec 31, 2019				Change				Mar 31, 2019				Dec 31, 2018				Change
Total nonperforming loans		$	1,454			$	1,301				11.76	%		$	3,622			$	2,939				23.24	%
Other real estate owned			1,761				2,339				-24.71	%			2,253				2,431				-7.32	%
Total nonperforming assets			3,215				3,640				-11.68	%			5,875				5,370				9.40	%
Troubled debt restructurings - (performing portion)			409				410				-0.24	%			422				424				-0.47	%

 

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Asset quality ratios:		Mar 31, 2020				Dec 31, 2019				Change				Mar 31, 2019				Dec 31, 2018				Change
Nonperforming loans to total loans			0.25	%			0.23	%			0.03				0.67	%			0.55	%			0.12
Allowance for loan losses to total loans			0.95	%			0.84	%			0.11				0.86	%			0.86	%			0.01
Allowance for loan losses to nonperforming loans			376.48	%			371.18	%			5.30				129.02	%			155.87	%			(26.85	)

 

12

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollar amounts in thousands, except per share amounts)

 

		(unaudited) 3/31/2020				12/31/2019
Assets
Cash and due from banks		$	31,656			$	30,794
Federal funds sold			32,541				8,317
Total cash and cash equivalents			64,197				39,111
Securities held-to-maturity (fair value of $4,223 in 2020 and $3,861 in 2019)			3,683				3,688
Securities available-for-sale, at fair value			54,992				59,655
Restricted stock, at cost			1,506				1,506
Loans, net of allowance for loan losses of $5,474 in 2020 and $4,829 in 2019			570,659				573,274
Loans held for sale			6,134				4,221
Premises and equipment, net			16,054				16,297
Software, net			439				401
Interest receivable			1,922				1,866
Cash value - bank owned life insurance			16,278				13,686
Other real estate owned			1,761				2,339
Deferred tax asset			765				1,177
Other assets			7,665				8,173
Total assets		$	746,055			$	725,394
Liabilities and Stockholders’ Equity
Deposits
Noninterest bearing demand			97,104				93,936
NOW, money market and savings			377,507				362,821
Time			193,659				192,702
Total deposits			668,270				649,459
Capital notes			5,000				5,000
Income taxes payable			347				124
Interest payable			176				173
Other liabilities			8,934				9,193
Total liabilities		$	682,727			$	663,949
Stockholders’ equity
Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,339,436 and 4,357,436 as of March 31, 2020 and December 31, 2019			9,286				9,325
Additional paid-in-capital			30,989				31,225
Accumulated other comprehensive income (loss)			1,462				(5	)
Retained earnings			21,591				20,900
Total stockholders’ equity		$	63,328			$	61,445
Total liabilities and stockholders’ equity		$	746,055			$	725,394

 

13

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Income

(dollar amounts in thousands, except per share amounts)

(unaudited)

 

		For the Three Months Ended March 31,
		2020				2019
Interest Income
Loans		$	7,005			$	6,654
Securities
US Government and agency obligations			187				185
Mortgage backed securities			59				61
Municipals			75				81
Dividends			9				18
Other (Corporates)			23				23
Interest bearing deposits			64				91
Federal Funds sold			66				121
Total interest income			7,488				7,234
Interest Expense
Deposits
NOW, money market savings			326				306
Time Deposits			897				668
Finance leases			30				—
Brokered time deposits			49				80
Capital notes			50				50
Total interest expense			1,352				1,104
Net interest income			6,136				6,130
Provision for loan losses			888				210
Net interest income after provision for loan losses			5,248				5,920
Noninterest income
Gains on sale of loans held for sale			1,177				691
Service charges, fees and commissions			488				439
Life insurance income			78				83
Other			12				6
Gain on sales of available-for-sale securities			431				—
Total noninterest income			2,186				1,219
Noninterest expenses
Salaries and employee benefits			3,354				2,928
Occupancy			436				421
Equipment			609				458
Supplies			127				162

 

14

		For the Three Months Ended March 31,
		2020				2019
Professional, data processing, and other outside expense			924				815
Marketing			136				145
Credit expense			196				127
Other real estate expenses			99				139
FDIC insurance expense			57				94
Other			259				310
Total noninterest expenses			6,197				5,599
Income before income taxes			1,237				1,540
Income tax expense			242				306
Net Income		$	995			$	1,234
Weighted average shares outstanding - basic			4,348,040				4,378,436
Weighted average shares outstanding - diluted			4,348,040				4,380,959
Net income per common share - basic		$	0.23			$	0.28
Net income per common share - diluted		$	0.23			$	0.28

 

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