Bank of the James Financial Group reported higher earnings for the third quarter and first nine months of 2026, supported by stronger net interest income and growth in noninterest revenue. The Lynchburg-based bank holding company also raised its quarterly cash dividend by 50%.
Key details
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Earnings increased year over year. Third-quarter net income was $3.32 million, up from $2.75 million a year earlier. Earnings per share rose to 73 cents from 61 cents. For the first nine months, net income climbed to $9.34 million from $6.30 million, while earnings per share increased to $2.05 from $1.39.
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Net interest performance improved. Net interest income after credit-loss provisions was $9.69 million in the third quarter, up about 18% from $8.21 million. For the first nine months, it rose 11.8% to $27.47 million. The tax-equivalent net interest margin increased to 3.81% for the quarter, from 3.44% a year earlier, and to 3.70% for the nine-month period, from 3.37%.
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Lower funding costs helped. Interest expense fell 8.9% to $3.16 million in the third quarter and 10.3% to $9.31 million over the first nine months. The company attributed the decline to lower deposit costs; the year-to-date comparison also reflects the retirement of about $10 million in capital notes during the second quarter of 2025.
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Fee income grew, particularly in wealth management. Noninterest income edged up 0.24% to $4.18 million in the quarter and rose 9.47% to $12.62 million for the first nine months. Fees from its wealth-management subsidiary, Pettyjohn, Wood & White, increased 10.43% to $1.50 million in the quarter and 11.90% to $4.38 million year to date.
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Expenses were mixed across the periods. Noninterest expense rose 5.85% to $9.70 million in the third quarter, but was down 0.24% for the first nine months, at $28.37 million. The efficiency ratio improved to 69.76% for the quarter from 73.46% a year earlier, and to 70.35% for the nine-month period from 79.45%. A lower ratio indicates that less of the company’s revenue was consumed by operating expenses.
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Loans, deposits and assets expanded. Total assets were $1.065 billion at Sept. 30, compared with $1.039 billion at the end of 2025 and $1.020 billion a year earlier. Loans, net of the allowance for credit losses, were $694.03 million, up from $661.36 million at year-end 2025. Deposits reached $963.60 million, compared with $937.13 million at year-end and $919.80 million a year earlier.
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Reported problem loans declined. Nonperforming loans were $548,000 at Sept. 30, down from $1.09 million at the end of June and $1.70 million at year-end 2025. The company said the decline was primarily due to selected nonaccrual relationships returning to accrual status. Its $6.55 million allowance for credit losses equaled about 1,196% of nonperforming loans, versus about 379% at year-end 2025.
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Equity fell despite year-to-date profits. Stockholders’ equity declined 2% to $78.45 million from $80.05 million at the end of 2025, and book value per share decreased to $17.27 from $17.62. Retained earnings rose by $7.97 million as earnings were partly offset by dividends, but an increase in accumulated other comprehensive loss more than offset that gain. The company attributed the larger loss to unrealized declines in the value of available-for-sale securities as market interest rates rose, particularly in the third quarter.
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The quarterly dividend is now 15 cents per share, a 50% increase. Shareholders of record at the close of business on Nov. 20 are scheduled to receive the dividend on or about Dec. 4.
What changes for investors: The dividend increase raises the company’s regular cash payout, while the results show stronger earnings and a wider net interest margin alongside growth in loans and deposits. The reported drop in nonperforming loans was largely tied to loans returning to accrual status; meanwhile, unrealized securities losses weighed on equity and book value.