# EDGAR Filing Document

**Accession Number:** 0001275101
**File Stem:** 0001562762-23-000035
**Filing Date:** 2023-2
**Character Count:** 40891
**Document Hash:** f260f40a69e3be6bff4a85d973368bde
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001562762-23-000035.hdr.sgml**: 20230206

**ACCESSION NUMBER**: 0001562762-23-000035

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230206

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Other Events

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230206

**DATE AS OF CHANGE**: 20230206

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BANK OF THE JAMES FINANCIAL GROUP INC
- **CENTRAL INDEX KEY:** 0001275101
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **IRS NUMBER:** 200500300
- **STATE OF INCORPORATION:** VA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-35402
- **FILM NUMBER:** 23591260

**BUSINESS ADDRESS:**
- **STREET 1:** P O BOX 1200
- **CITY:** LYNCHBURG
- **STATE:** VA
- **ZIP:** 24505
- **BUSINESS PHONE:** 4348462000

?xml version="1.0" encoding="utf-8"? botj-20230206x8k

**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): February 6, 2023**

_________________

## BANK OF THE JAMES FINANCIAL GROUP, INC.
**(Exact Name of Registrant as Specified in Its Charter)**

_________________

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| | | |
|:---|:---|:---|
| **Virginia** | **001-35402** | **20-0500300** |
| (State or other jurisdiction of<br>incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
| **828 Main Street, Lynchburg, VA** |  | **24504** |
| (Address of Principal Executive Offices) |  | (Zip code) |
| Registrant's telephone number, including area code |  | **(434) 846-2000** |

---

_________________

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:

    <br> <u>☐</u> <u>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</u>

    <br> <u>☐</u> <u>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</u>

    <br> <u>☐</u> <u>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</u>

    <br> <u>☐</u> <u>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</u>

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

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| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading**<br>**Symbol(s)** | **Name of Each Exchange**<br>**on Which Registered** |
| **Common Stock, $2.14 par value** | **BOTJ** | **The NASDAQ Capital Market** |

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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. ☐

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**Item 2.02 - Results of Operations and Financial Condition**

On Monday, February 6, 2023, Bank of the James Financial Group, Inc. (the "Company") issued a press release announcing financial results for the quarter and year-to-date periods ended December 31, 2022 (the "Press Release"). A copy of the Press Release is attached hereto as <u>Exhibit 99.1</u>.

**Item 8.01 – Other Events**

On February 6, 2023, the Company's board of directors approved a stock repurchase plan to purchase up to $998,000 of the Company's common stock. The plan authorizes the Company to make purchases from March 8, 2023 through March 7, 2024, unless extended or sooner terminated. Purchases may be made in open market transactions or privately negotiated transactions, in accordance with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. In connection with the adoption of this plan, the board terminated any other repurchase plans still in effect. A copy of the Press Release announcing the Stock Repurchase Program is attached hereto as <u>Exhibit 99.1</u>.

**Item 9.01 - Financial Statements and Exhibits**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Financial statements of businesses acquired – not applicable

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Pro forma financial information – not applicable

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Shell company transactions – not applicable

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Exhibits

---

| | |
|:---|:---|
| <u>Exhibit No.</u> | <u>Exhibit Description</u> |
| 99.1 | [<u>Bank of the James Financial Group, Inc. Press Release dated February 6, 2023</u>](botj-20230206xex99_1.htm) |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL |

---

 **‎** 

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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: February 6, 2023 | BANK OF THE JAMES FINANCIAL GROUP, INC. |
|  | &nbsp;&nbsp;&nbsp;&nbsp;By <u>/s/ J. Todd Scruggs</u><br>&nbsp;&nbsp;&nbsp;&nbsp;J. Todd Scruggs<br>Secretary-Treasurer |

---

## Exhibit 99.1

**Exhibit 99.1**

![BOTJ-FG-logo](botj-20230206xex99_1g001.jpg)

**Bank of the James Announces Fourth Quarter, Full Year of 2022**

**Financial Results and Declaration of Dividend**

*Record Annual Earnings, Strong Financial Ratios, Asset Quality*

**LYNCHBURG, VA, February 6, 2023** -- Bank of the James Financial Group, Inc. (the "Company") (NASDAQ:BOTJ), the parent company of Bank of the James (the "Bank"), a full-service commercial and retail bank, and Pettyjohn, Wood & White, Inc. ("PWW"), an SEC-registered investment advisor, today announced unaudited results of operations for the three month and 12 month periods ended December 31, 2022. The Bank serves Region 2000 (the greater Lynchburg MSA), and the Blacksburg, Charlottesville, Harrisonburg, Lexington, Roanoke, and Wytheville, Virginia markets.

Net income for the three months ended December 31, 2022 was a record $1.95 million or $0.42 per basic and diluted share compared with $1.86 million or $0.39 per basic and diluted share for the three months ended December 31, 2021. Net income for the 12 months ended December 31, 2022 was a Company record $8.96 million or $1.91 per basic and diluted share, up 18% compared with $7.59 million or $1.60 per basic and diluted share for the 12 months ended December 31, 2021. Per share amounts have been adjusted to reflect a 10% stock dividend declared in June 2021.

Robert R. Chapman III, CEO, commented: "The Company's solid fourth quarter and full-year earnings highlighted the Company's operational efficiency, exceptionally strong asset quality and capital strength, and prompt adjustments in a rapidly shifting interest rate environment. Throughout the year, the entire Bank of the James team demonstrated a commitment to superior service and operation that enabled us to maximize the value of revenue from a broad range of banking and wealth management capabilities.

"Key performance metrics, including return on average equity and return on average assets improved in 2022. Significantly higher net interest margin and interest spread demonstrated an opportunistic response to changing interest rate scenarios. We anticipate that if and when the rate environment stabilizes during the coming year, we will see increased pressure on margins. We believe our 2022 financial performance demonstrated our ability to effectively address the challenges related to rapidly increasing interest rates.

"Asset quality was a significant highlight, with few nonperforming loans, reduced other real estate owned (OREO), and strong asset quality ratios. We believe the outlook for continuing asset quality is very good, reflecting diligent credit management practices. We have been able to grow commercial, residential mortgage and consumer loan portfolios while at the same time improving already strong loan quality.

"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 2022 – an action that contributed approximately $0.03 to the year's earnings per share (EPS). Our Board of Directors approved an increased quarterly dividend in 2022, reflecting a commitment to building shareholder value.

"Our served communities and customers continue to demonstrate financial and economic strength, and resilience in the face of inflation and uncertainty about recession later in 2023. We anticipate that while lending and deposit activity is likely to be less robust in the coming quarters, we are confident that Bank of the James is well-positioned to continue forward with moderate growth, superior financial solutions for customers, and positive financial performance."

**Highlights**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Net income in the fourth quarter of 2022 increased 5 % from a year earlier, while net income in the 12 months of 2022 rose 18 % compared with the 12 months of 2021. Income growth in 2022 was led by higher interest income from commercial real estate and retained residential mortgage s , wealth management fees , and fee income from debit card transactions and treasury service s .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Total interest income in the full year of 2022 increased 9%, primarily reflecting commercial loan rate adjustments to keep pace with the rising interest rate environment, an increase in the size of the investment portfolio, and growth of retained residential mortgages. Interest income in the fourth quarter of 2022 rose 23 % compared with the f ourth quarter of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Net interest income rose 22% in the fourth quarter of 2022 compared with a year earlier, primarily reflecting increased interest income and ongoing interest expense management . Net interest income in the 12 months of 2022 grew 10 % compared with the 12 months of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Prompt response to the changing interest rate environment led to expanded net interest margin and interest spread in fourth quarter and the full year of 2022 compared with both periods of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Total noninterest income in the full year of 2022 rose 18% compared with 2021. S lowing income in the second half of 202 2 from gain on sale of residential mortgage loans was offset by interchange income on card activity , growth of commercial treasury services income, and wealth management fees generated by PWW, which contributed approximately $0.29 EPS in 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Loans, net of the allowance for loan losses, increased 5 % to $6 05.37 million at December 31, 2022 compared with $576. 47 million at December 31, 2021, primarily reflecting residential mortgage and commercial real estate loan growth .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Asset quality remained strong, reflected in a ratio of nonperforming loans to total loans of 0.1 0 % at December 31 , 2022 compared with 0.16% at December 31, 2021. Total nonperforming loans declined by 34% year-over-year, and the Company significantly trimmed other real estate owned (O REO) during 2022, writing down a significant portion of OREO based on its recently contracted sales price .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Total deposits declined 4% at December 31, 2022 compared with December 31, 2021 . L ower-cost core deposits (noninterest-bearing demand, NOW, savings and money market accounts) continued to comprise approximately 8 5 % of total deposits .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· In both periods of 2022, Return on Average Assets (R OAA) and Return on Average Equity (ROAE) ratios improved significantly from 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The Company's share repurchases during 2022 enhanced shareholder value, contributing approximately $0.03 to EPS.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· On January 17 , 202 3 the Company's board of directors approved a quarterly dividend of $0.0 8 per share to stockholders of record as of March 3, 2023 to be paid on March 17 , 202 3 .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· On February 6, 2023 , the Company's board of directors approved a stock repurchase plan to purchase up to $998 ,000 of the Company's common stock . The plan authorizes the Company to make purchases from March 8, 2023 through March 7, 2024, unless extended or sooner terminated . Purchases may be made in open market transactions or privately negotiated transactions, in accordance with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. In connection with the adoption of this plan, the board terminated any other repurchase plans still in effect.

**Fourth Quarter, 12 Months of 2022 Operational Review**

Net interest income after recovery of loan losses for the quarter ended December 31, 2022 was $8.29 million compared with $7.30 million a year earlier, primarily reflecting higher interest income, moderately higher year-over-year interest expense, and no provision for loan losses in the fourth quarter of 2022 and a $500,000 recovery in the fourth quarter of 2021, as indicated by the Bank's allowance for loan losses methodology.

For the 12 months ended December 31, 2022, net interest income after recovery of loan losses was $30.60 million compared with $27.58 million a year earlier, reflecting increased interest rates and loan growth, higher interest income from the Bank's securities portfolio, and a $900,000 recovery of loan losses, as indicated by the Bank's allowance for loan losses methodology, compared with a $500,000 recovery in 2021.

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Total interest income increased to $8.94 million in the fourth quarter of 2022 compared with $7.27 million a year earlier. The quarterly increase reflected accelerating organic loan growth and interest rate increases. Higher rates have had a positive impact on the yields earned on interest earning assets. The yield on interest earning assets in the fourth quarter of 2022 was 3.95%, up from 3.18% a year earlier. Total interest income for the 12 months of 2022 was $31.85 million compared with $29.18 million for the 12 months of 2021, also reflecting accelerating organic loan growth and interest rate increases. Yield on interest earning assets for the 12 months of 2022 was 3.46% compared with 3.38% for the 12 months of 2021.

Total interest expense in the fourth quarter of 2022 was $652,000 compared with $468,000 a year earlier, while interest expense in the 12 months of 2022 was $2.15 million compared with $2.10 million in the 12 months of 2021.

J. Todd Scruggs, Executive Vice President and CFO, commented: "Throughout 2022, improvements in net interest margin and net interest spread reflected adjustments to our investment strategy based on our expectation that interest rates would be rising. We have made upward adjustments to rates on interest earning assets to match the rate environment and mitigate higher interest expense.

"We've held the line on deposit rates rather than try to compete by offering untenable rates, and are continuing our strong focus on attracting and retaining noninterest-bearing commercial deposits through relationship banking. We are maintaining adequate liquidity by maintaining a stable level of Fed funds and avoiding short-term borrowings, which have become very expensive."

The net interest margin in the fourth quarter of 2022 was 3.67% and the interest spread was 3.60%, up significantly from the margin and spread in the fourth quarter of 2021. For the full year of 2022, the net interest margin was 3.23% and interest spread was 3.18%, also up from the full year of 2021.

Noninterest income in the fourth quarter of 2022 was $2.73 million compared with $2.90 million in the fourth quarter of 2021, with the decline primarily reflecting lower gains on the sale of residential mortgages and partially offset by year-over-year growth in service charges, fees and commissions resulting from increased debit card income. Noninterest income for the full year of 2022 was $13.24 million compared with $11.21 million for the for the full year of 2021.

Because of rising interest rates during the second half of 2022, rates on in-house mortgages became more attractive and resulted in reduced sales of conventional mortgages to the secondary market. This, in combination with a decrease in conventional mortgage originations due to rising mortgage interest rates, resulted in a decrease in the volume and amount of residential mortgages sold in the secondary market. Noninterest income in 2022 was highlighted by year-over-year increased interchange income earned on card activity and overdraft fees. Income from PWW's continuing strong performance contributed approximately $0.29 to earnings in 2022.

Noninterest expense in the fourth quarter of 2022 was $8.62 million compared with $7.91 million in the fourth quarter of 2021. In the full year of 2022, noninterest expense was $32.74 million compared with $29.34 million a year earlier. Both periods of 2022 reflected increased salaries and employee benefits related to the addition of PWW and performance-related cash bonuses paid to employees, increases in professional and outside expenses (specifically data processing fees), and an increase in miscellaneous expenses, primarily related to an isolated check forgery that resulted in a charge of $362,000. The Bank has a filed a proof of loss with its insurance company and is waiting for a coverage determination.

For the three months ended December 31, 2022, ROAE was 16.08 % and ROAA was 0.82%, with both ratios improving significantly from a year earlier. For the 12 months ended December 31, 2022, ROAE was 15.59% and ROAA was 0.91%, also up compared with the 12 months of 2021. Efficiency ratio was unchanged year-over-year at 76%.

**Balance Sheet Reflects Organic Loan Growth, Strong Asset Quality**

Total assets were $928.57 million at December 31, 2022 compared with $987.63 million at December 31, 2021, with the decline primarily reflecting a decline in total deposits, which resulted in a decrease in Fed funds sold, partially offset by an increase in net loans.

Loans, net of allowance for loan losses, increased to $605.37 million at December 31, 2022 from $576.47 million at December 31, 2021. The growth in loans primarily reflected new commercial real estate (CRE) loans and growth in residential mortgages. Commercial real estate loans (owner occupied and non-owner occupied and excluding construction

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loans) were approximately $341.89 million at December 31, 2022, an increase from $307.95 million at December 31, 2021 that reflected CRE loan activity and growth throughout 2022.

Michael A. Syrek, President of the Bank, commented: "It was a positive year for commercial real estate. We have continued to emphasize building full-service relationships with business clients, including deposits, a robust suite of electronic cash and treasury management offerings, and credit card interchange. Service and relationship banking has contributed to customer retention and mitigated rate shopping as rates have risen.

"We have experienced a slowing of loan demand for all commercial loans in light of increasing rates and general economic uncertainty, including inflation, and the threat of recession. Commercial (C&I) lending has continued to be slow as businesses are drawing down on cash reserves and are operating cautiously. Although we anticipate more subdued commercial lending activity than in past years, we are confident we will earn our share of new business and will continue to have high client retention."

Commercial loans (primarily C&I loans) were $95.88 million at December 31, 2022 compared with $105.07 million at December 31, 2021. Both commercial and residential construction lending activity slowed in the second half of 2022, primarily reflecting slowing projects related to commercial expansion.

Residential mortgage loans held by the Bank increased 35% to $43.05 million at December 31, 2022 from $31.92 million a year earlier, reflecting increased retention of mortgage loans as higher rates made it more attractive to originate loans in house. Syrek noted that while overall demand for purchase mortgages is generally softening, Bank of the James Mortgage's well-established reputation for service and loan processing should support continued conventional mortgage activity.

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 December 31, 2021. Asset quality has been consistently strong and stable, with a ratio of nonperforming loans to total loans of 0.10% at December 31, 2022. The allowance for loan losses to total loans was 1.02% at December 31, 2022. As the Company finalizes its allowance for credit losses model in accordance with the current expected credit loss (CECL) standard (which the Bank was required to adopt on January 1, 2023), management believes that the allowance will increase.

Total nonperforming loans of $633,000 declined 34% from December 31, 2021. OREO declined 26% at December 31, 2022 from December 31, 2021, primarily reflecting a third quarter 2022 write-down of a property that went under contract and sale of foreclosed assets throughout the year.

Total deposits at December 31, 2022 were $848.14 million, compared with $887.06 million at December 31, 2021. Total deposits continued to reflect good noninterest demand deposit activity, continued trimming of time deposits, and a high percentage of lower-cost core deposits (noninterest-bearing demand, NOW, savings and money market accounts) as a percent of total deposits.

The Company's total retained earnings increased significantly to $31.03 million at December 31, 2022 from $23.44 million at December 31, 2021. Some measures of shareholder value declined at December 31, 2022, primarily reflecting market value changes of the Company's available-for-sale securities portfolio. Total stockholders' equity was $50.23 million at December 31, 2022 compared with $69.43 million at December 31, 2021. Book value per share was $10.85 at December 31, 2022 compared with $14.65 at December 31, 2021.

These decreases directly resulted from the impact that higher interest rates had on the market value of the Company's available-for-sale securities portfolio. These mark-to-market losses are excluded from the Bank's regulatory capital. The Company does not expect to realize the unrealized losses as it has the intent and ability to hold the securities until their recovery, which may be at maturity. The duration of the Company's overall securities portfolio is approximately 6 years.

**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, Rustburg, and Wytheville. 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

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through Bank of the James Mortgage, a division of Bank of the James. The Company provides investment advisory services through its wholly-owned subsidiary, Pettyjohn, Wood & White, Inc., an SEC-registered investment advisor. 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, changes in the value of real estate securing loans made by the Bank as well as the potential for the resurgence of COVID-19 and geopolitical conditions. 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.

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

tscruggs@bankofthejames.com

**CONSOLIDATED FINANCIAL INFORMATION FOLLOWS**

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**Bank of the James Financial Group, Inc. and Subsidiaries**

**Consolidated Balance Sheets**

**(dollar amounts in thousands, except per share amounts)**

**(unaudited)**

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp; **Assets** | &nbsp;&nbsp; **12/31/2022** | &nbsp;&nbsp; **12/31/2021** |
| &nbsp;&nbsp; Cash and due from banks | $30025 | $29337 |
| &nbsp;&nbsp; Federal funds sold | 31737 | 153816 |
| &nbsp;&nbsp; Total cash and cash equivalents | 61762 | 183153 |
| &nbsp;&nbsp; Securities held-to-maturity (fair value of $3,135 in 2022 and $4,006 in 2021) | 3639 | 3655 |
| &nbsp;&nbsp; Securities available-for-sale, at fair value | 185787 | 161267 |
| &nbsp;&nbsp; Restricted stock, at cost | 1387 | 1324 |
| &nbsp;&nbsp; Loans, net of allowance for loan losses of $6,259 in 2022 and $6,915 in 2021 | 605366 | 576469 |
| &nbsp;&nbsp; Loans held for sale | 2423 | 1628 |
| &nbsp;&nbsp; Premises and equipment, net | 17974 | 18351 |
| &nbsp;&nbsp; Interest receivable  | 2736 | 2064 |
| &nbsp;&nbsp; Cash value - bank owned life insurance | 19237 | 18785 |
| &nbsp;&nbsp; Customer relationship Intangible | 7845 | 8406 |
| &nbsp;&nbsp; Goodwill | 2054 | 3001 |
| &nbsp;&nbsp; Other real estate owned | 566 | 761 |
| &nbsp;&nbsp; Other assets | 17795 | 8770 |
| &nbsp;&nbsp; **Total assets** | $928571 | $987634 |
| &nbsp;&nbsp; **Liabilities and Stockholders' Equity** |  |  |
| &nbsp;&nbsp; Deposits |  |  |
| &nbsp;&nbsp; Noninterest bearing demand | $154884 | $162286 |
| &nbsp;&nbsp; NOW, money market and savings | 560479 | 582000 |
| &nbsp;&nbsp; Time | 132775 | 142770 |
| &nbsp;&nbsp; Total deposits | 848138 | 887056 |
| &nbsp;&nbsp; Capital notes, net | 10037 | 10031 |
| &nbsp;&nbsp; Other borrowings | 10457 | 10985 |
| &nbsp;&nbsp; Interest payable | 89 | 46 |
| &nbsp;&nbsp; Other liabilities | 9624 | 10087 |
| &nbsp;&nbsp; **Total liabilities** | $878345 | $918205 |
| &nbsp;&nbsp; Stockholders' equity |  |  |
| &nbsp;&nbsp; Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding |  |  |
| &nbsp;&nbsp; 4,628,657 as of December 31, 2022 and 4,740,657 as of December 31, 2021 | 9905 | 10145 |
| &nbsp;&nbsp; Additional paid-in-capital | 36068 | 37230 |
| &nbsp;&nbsp; Accumulated other comprehensive (loss) | (26781) | (1386) |
| &nbsp;&nbsp; Retained earnings | 31034 | 23440 |
| &nbsp;&nbsp; **Total stockholders' equity** | $50226 | $69429 |

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp; **Total liabilities and stockholders' equity** | $928571 | $987634 |

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**Bank of the James Financial Group, Inc. and Subsidiaries**

**Consolidated Statements of Income**

**(dollar amounts in thousands, except per share amounts)**

**(unaudited)**

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| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp; **For the Three Months** | &nbsp;&nbsp; **For the Three Months** | &nbsp;&nbsp; **For the Year** | &nbsp;&nbsp; **For the Year** |
|  | &nbsp;&nbsp; **Ended December 31,** | &nbsp;&nbsp; **Ended December 31,** | &nbsp;&nbsp; **Ended December 31,** | &nbsp;&nbsp; **Ended December 31,** |
| &nbsp;&nbsp; **Interest Income** | &nbsp;&nbsp; **2022** | &nbsp;&nbsp; **2021** | &nbsp;&nbsp; **2022** | &nbsp;&nbsp; **2021** |
| &nbsp;&nbsp; Loans | $7266 | $6440 | $26175 | $26529 |
| &nbsp;&nbsp; Securities |  |  |  |  |
| &nbsp;&nbsp; US Government and agency obligations | 324 | 235 | 1235 | 875 |
| &nbsp;&nbsp; Mortgage backed securities | 460 | 163 | 1656 | 462 |
| &nbsp;&nbsp; Municipals | 285 | 266 | 1152 | 865 |
| &nbsp;&nbsp; Dividends | 30 | 28 | 66 | 67 |
| &nbsp;&nbsp; Corporates | 171 | 88 | 566 | 243 |
| &nbsp;&nbsp; Interest bearing deposits | 147 | 7 | 282 | 33 |
| &nbsp;&nbsp; Federal Funds sold | 258 | 40 | 721 | 107 |
| &nbsp;&nbsp; **Total interest income** | 8941 | 7267 | 31853 | 29181 |
| &nbsp;&nbsp; **Interest Expense** |  |  |  |  |
| &nbsp;&nbsp; Deposits |  |  |  |  |
| &nbsp;&nbsp; NOW, money market savings | 181 | 145 | 555 | 564 |
| &nbsp;&nbsp; Time Deposits | 265 | 215 | 732 | 1105 |
| &nbsp;&nbsp; Finance leases | 23 | 26 | 96 | 106 |
| &nbsp;&nbsp; Other borrowings | 101 | &nbsp;&nbsp; - | 440 | &nbsp;&nbsp; - |
| &nbsp;&nbsp; Capital notes | 82 | 82 | 327 | 327 |
| &nbsp;&nbsp; **Total interest expense** | 652 | 468 | 2150 | 2102 |
| &nbsp;&nbsp; **Net interest income** | 8289 | 6799 | 29703 | 27079 |
| &nbsp;&nbsp; Recovery of loan losses | &nbsp;&nbsp; - | (500) | (900) | (500) |
| &nbsp;&nbsp; **Net interest income after recovery of loan losses** | 8289 | 7299 | 30603 | 27579 |
| &nbsp;&nbsp; **Noninterest income** |  |  |  |  |
| &nbsp;&nbsp; Gains on sale of loans held for sale | 581 | 2090 | 5256 | 8265 |
| &nbsp;&nbsp; Service charges, fees and commissions | 1028 | 693 | 3591 | 2496 |
| &nbsp;&nbsp; Wealth management fees | 997 | &nbsp;&nbsp; - | 3932 | &nbsp;&nbsp; - |
| &nbsp;&nbsp; Life insurance income | 114 | 115 | 452 | 430 |
| &nbsp;&nbsp; Other | 8 | 6 | 16 | 18 |
| &nbsp;&nbsp; Lloss on sales of available-for-sale securities | (3) | &nbsp;&nbsp; - | (3) | &nbsp;&nbsp; - |
| &nbsp;&nbsp; **Total noninterest income** | 2725 | 2904 | 13244 | 11209 |
| &nbsp;&nbsp; **Noninterest expenses** |  |  |  |  |
| &nbsp;&nbsp; Salaries and employee benefits | 4631 | 4476 | 17682 | 16377 |
| &nbsp;&nbsp; Occupancy | 466 | 403 | 1814 | 1673 |
| &nbsp;&nbsp; Equipment | 683 | 643 | 2553 | 2526 |

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; Supplies | 141 | 117 | 521 | 471 |
| &nbsp;&nbsp; Professional, data processing, and other outside expense | 1512 | 1116 | 5056 | 4094 |
| &nbsp;&nbsp; Marketing | 259 | 214 | 920 | 934 |
| &nbsp;&nbsp; Credit expense | 158 | 234 | 923 | 1103 |
| &nbsp;&nbsp; Other real estate expenses, net | 7 | 28 | 214 | 102 |
| &nbsp;&nbsp; FDIC insurance expense | 118 | 123 | 500 | 548 |
| &nbsp;&nbsp; Amortization of intangibles | 140 | &nbsp;&nbsp; - | 560 | &nbsp;&nbsp; - |
| &nbsp;&nbsp; Other | 503 | 559 | 1994 | 1509 |
| &nbsp;&nbsp; **Total noninterest expenses** | 8618 | 7913 | 32737 | 29337 |
| &nbsp;&nbsp; **Income before income taxes** | 2396 | 2290 | 11110 | 9451 |
| &nbsp;&nbsp; **Income tax expense** | 442 | 431 | 2151 | 1862 |
| &nbsp;&nbsp; **Net Income** | $1954 | $1859 | $8959 | $7589 |
| &nbsp;&nbsp; Weighted average shares outstanding - basic and diluted (1) | 4628657 | 4740657 | 4698041 | 4747821 |
| &nbsp;&nbsp; Net income per common share - basic and diluted (1) | $0.42 | $0.39 | $1.91 | $1.60 |
| &nbsp;&nbsp; (1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in June 2021. | &nbsp;&nbsp; (1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in June 2021. | &nbsp;&nbsp; (1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in June 2021. | &nbsp;&nbsp; (1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in June 2021. | &nbsp;&nbsp; (1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in June 2021. |

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**Bank of the James Financial Group, Inc. and Subsidiaries**

**Dollar amounts in thousands, except per share data**

**unaudited**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Selected Data:** | &nbsp;&nbsp; **Three**<br> **months**<br> **ending**<br> **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Three**<br> **months**<br> **ending**<br> **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** | &nbsp;&nbsp; **Year**<br> **to**<br> **date**<br> **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Year**<br> **to**<br> **date**<br> **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** |
| &nbsp;&nbsp; Interest income | $8941 | $7267 | 23.04% | $31853 | $29181 | 9.16% |
| &nbsp;&nbsp; Interest expense | 652 | 468 | 39.32% | 2150 | 2102 | 2.28% |
| &nbsp;&nbsp; Net interest income | 8289 | 6799 | 21.91% | 29703 | 27079 | 9.69% |
| &nbsp;&nbsp; Recovery of loan losses | &nbsp;&nbsp; - | (500) | &nbsp;&nbsp; -100.00% | (900) | (500) | 80.00% |
| &nbsp;&nbsp; Noninterest income | 2725 | 2904 | &nbsp;&nbsp; -6.16% | 13244 | 11209 | 18.16% |
| &nbsp;&nbsp; Noninterest expense | 8618 | 7913 | 8.91% | 32737 | 29337 | 11.59% |
| &nbsp;&nbsp; Income taxes | 442 | 431 | 2.55% | 2151 | 1862 | 15.52% |
| &nbsp;&nbsp; Net income | 1954 | 1859 | 5.11% | 8959 | 7589 | 18.05% |
| &nbsp;&nbsp; Weighted average shares outstanding - basic and diluted (1) | 4628657 | 4740657 | (112000) | 4698041 | 4747821 | (49780) |
| &nbsp;&nbsp; Basic and diluted net income per share (1) | $0.42 | $0.39 | $0.03 | $1.91 | $1.60 | $0.31 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Balance Sheet at**<br> **period end:** | &nbsp;&nbsp; **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** | &nbsp;&nbsp; **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Dec 31,**<br> **2020** | &nbsp;&nbsp; **Change** |
| &nbsp;&nbsp; Loans, net | $605366 | $576469 | 5.01% | $576469 | $601934 | &nbsp;&nbsp; -4.23% |
| &nbsp;&nbsp; Loans held for sale | 2423 | 1628 | 48.83% | 1628 | 7102 | &nbsp;&nbsp; -77.08% |
| &nbsp;&nbsp; Total securities | 189426 | 164922 | 14.86% | 164922 | 93856 | 75.72% |
| &nbsp;&nbsp; Total deposits | 848138 | 887056 | &nbsp;&nbsp; -4.39% | 887056 | 764967 | 15.96% |
| &nbsp;&nbsp; Stockholders' equity | 50226 | 69429 | &nbsp;&nbsp; -27.66% | 69429 | 66732 | 4.04% |
| &nbsp;&nbsp; Total assets | 928571 | 987634 | &nbsp;&nbsp; -5.98% | 987634 | 851386 | 16.00% |
| &nbsp;&nbsp; Shares outstanding (1) | 4628657 | 4740657 | (112000) | 4740657 | 4339436 | 401221 |
| &nbsp;&nbsp; Book value per share | $10.85 | $14.65 | $(3.80) | $14.65 | $15.38 | $(0.73) |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Daily averages:** | &nbsp;&nbsp; **Three**<br> **months**<br> **ending**<br> **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Three**<br> **months**<br> **ending**<br> **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** | &nbsp;&nbsp; **Year**<br> **to**<br> **date**<br> **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Year**<br> **to**<br> **date**<br> **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** |
| &nbsp;&nbsp; Loans | $618948 | $589277 | 5.04% | $604990 | $601272 | 0.62% |
| &nbsp;&nbsp; Loans held for sale | 3722 | 5929 | &nbsp;&nbsp; -37.22% | 3913 | 5815 | &nbsp;&nbsp; -32.71% |
| &nbsp;&nbsp; Total securities | 229884 | 159307 | 44.30% | 223137 | 128886 | 73.13% |
| &nbsp;&nbsp; Total deposits | 867569 | 873894 | &nbsp;&nbsp; -0.72% | 888292 | 833216 | 6.61% |
| &nbsp;&nbsp; Stockholders' equity | 48207 | 69173 | &nbsp;&nbsp; -30.31% | 57478 | 66937 | &nbsp;&nbsp; -14.13% |
| &nbsp;&nbsp; Interest earning assets | 897711 | 906409 | &nbsp;&nbsp; -0.96% | 919992 | 862500 | 6.67% |
| &nbsp;&nbsp; Interest bearing liabilities | 737375 | 718714 | 2.60% | 746479 | 682089 | 9.44% |
| &nbsp;&nbsp; Total assets | 950558 | 962006 | &nbsp;&nbsp; -1.19% | 980507 | 920474 | 6.52% |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Financial Ratios:** | &nbsp;&nbsp; **Three**<br> **months**<br> **ending**<br> **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Three**<br> **months**<br> **ending**<br> **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** | &nbsp;&nbsp; **Year**<br> **to**<br> **date**<br> **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Year**<br> **to**<br> **date**<br> **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** |
| &nbsp;&nbsp; Return on average assets | 0.82% | 0.77% | 0.05 | 0.91% | 0.82% | 0.09 |
| &nbsp;&nbsp; Return on average equity | 16.08% | 10.66% | 5.42 | 15.59% | 11.34% | 4.25 |
| &nbsp;&nbsp; Net interest margin | 3.67% | 2.98% | 0.69 | 3.23% | 3.14% | 0.09 |
| &nbsp;&nbsp; Efficiency ratio | 78.25% | 81.55% | (3.30) | 76.23% | 76.62% | (0.39) |
| &nbsp;&nbsp; Average equity to average assets | 5.07% | 7.19% | (2.12) | 5.86% | 7.27% | (1.41) |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Allowance for loan losses:** | &nbsp;&nbsp; **Three**<br> **months**<br> **ending**<br> **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Three**<br> **months**<br> **ending**<br> **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** | &nbsp;&nbsp; **Year**<br> **to**<br> **date**<br> **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Year**<br> **to**<br> **date**<br> **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** |
| &nbsp;&nbsp; Beginning balance | $6394 | $7276 | &nbsp;&nbsp; -12.12% | $6915 | $7156 | &nbsp;&nbsp; -3.37% |
| &nbsp;&nbsp; Recovery of loan losses | &nbsp;&nbsp; - | (500) | &nbsp;&nbsp; -100.00% | (900) | (500) | 80.00% |
| &nbsp;&nbsp; Charge-offs | (152) | (11) | 1281.82% | (162) | (91) | 78.02% |
| &nbsp;&nbsp; Recoveries | 17 | 150 | &nbsp;&nbsp; -88.67% | 406 | 350 | 16.00% |
| &nbsp;&nbsp; Ending balance | 6259 | 6915 | &nbsp;&nbsp; -9.49% | 6259 | 6915 | &nbsp;&nbsp; -9.49% |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Nonperforming assets:** | &nbsp;&nbsp; **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** | &nbsp;&nbsp; **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Dec 31,**<br> **2020** | &nbsp;&nbsp; **Change** |
| &nbsp;&nbsp; Total nonperforming loans | $633 | $954 | &nbsp;&nbsp; -33.65% | $954 | $2064 | &nbsp;&nbsp; -53.78% |
| &nbsp;&nbsp; Other real estate owned | 566 | 761 | &nbsp;&nbsp; -25.62% | 761 | 1105 | &nbsp;&nbsp; -31.13% |
| &nbsp;&nbsp; Total nonperforming assets | 1199 | 1715 | &nbsp;&nbsp; -30.09% | 1715 | 3169 | &nbsp;&nbsp; -45.88% |
| &nbsp;&nbsp; Troubled debt restructurings - (performing portion) | 431 | 372 | 15.86% | 372 | 392 | &nbsp;&nbsp; -5.10% |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Asset quality ratios:** | &nbsp;&nbsp; **Dec 31,**<br> **2022** | &nbsp;&nbsp; **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Change** | &nbsp;&nbsp; **Dec 31,**<br> **2021** | &nbsp;&nbsp; **Dec 31,**<br> **2020** | &nbsp;&nbsp; **Change** |
| &nbsp;&nbsp; Nonperforming loans to total loans | 0.10% | 0.16% | (0.06) | 0.16% | 0.34% | (0.18) |
| &nbsp;&nbsp; Allowance for loan losses to total loans | 1.02% | 1.19% | (0.17) | 1.19% | 1.17% | 0.02 |
| &nbsp;&nbsp; Allowance for loan losses to nonperforming loans | 988.78% | 724.84% | 263.94 | 724.84% | 346.71% | 378.13 |

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(1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in June 2021.

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