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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

Form 10-Q

______________________

(Mark one)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2025

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

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)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

______________________

Securities registered or to be 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 per share par value

BOTJ

The NASDAQ Stock Market LLC

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 4,543,338 shares of Common Stock, par value $2.14 per share, were outstanding at November 13, 2025.
‎

Table of Contents

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3. Quantitative and Qualitative Disclosures About Market Risk	55
Item 4. Controls and Procedures	55
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	55
Item 1A. Risk Factors	55
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	56
Item 3. Defaults Upon Senior Securities	56
Item 4. Mine Safety Disclosures	56
Item 5. Other Information	56
Item 6. Exhibits	56
SIGNATURES	57

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollar amounts in thousands, except per share amounts) (2025 unaudited)


Assets	September 30, 2025	December 31, 2024

Cash and due from banks	$ 28,450	$ 23,287
Federal funds sold	57,001	50,022
Total cash and cash equivalents	85,451	73,309

Securities held-to-maturity, at amortized cost (fair value of $3,308 as of September 30, 2025 and $3,170 as of December 31, 2024) net of allowance for credit losses of $0 as of September 30, 2025 and December 31, 2024	3,594	3,606
Securities available-for-sale, at fair value	202,506	187,916
Restricted stock, at cost	1,828	1,821
Loans, net of allowance for credit losses of $6,298 as of September 30, 2025 and $7,044 as of December 31, 2024	653,288	636,552
Loans held for sale	3,766	3,616
Premises and equipment, net	18,834	19,313
Interest receivable	3,001	3,065
Cash value - bank owned life insurance	23,480	22,907
Customer relationship intangible	6,305	6,725
Goodwill	2,054	2,054
Other assets	16,018	18,360
Total assets	$ 1,020,125	$ 979,244


Liabilities and Stockholders' Equity

Deposits
Noninterest bearing demand	$ 132,848	$ 129,692
NOW, money market and savings	548,110	522,208
Time	238,838	230,504
Total deposits	919,796	882,404

Capital notes, net	-	10,048
Other borrowings	8,836	9,300
Interest payable	1,292	722
Other liabilities	13,229	11,905
Total liabilities	$ 943,153	$ 914,379

Stockholders' equity
Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,543,338 as of September 30, 2025 and December 31, 2024	9,723	9,723
Additional paid-in-capital	35,253	35,253
Accumulated other comprehensive loss	(15,743)	(22,915)
Retained earnings	47,739	42,804
Total stockholders' equity	$ 76,972	$ 64,865

Total liabilities and stockholders' equity	$ 1,020,125	$ 979,244

See accompanying notes to these consolidated financial statements

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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)


	For the Three Months		For the Nine Months
	Ended September 30,		Ended September 30,
Interest Income	2025	2024	2025	2024
Loans	$ 9,492	$ 9,004	$ 27,739	$ 25,375
Securities
US Government and agency obligations	540	369	1,542	1,068
Mortgage backed securities	386	442	1,150	1,974
Municipals	395	316	1,078	927
Dividends	15	12	63	59
Corporates	136	136	407	407
Interest bearing deposits	150	303	400	628
Federal Funds sold	657	981	2,264	2,569
Total interest income	11,771	11,563	34,643	33,007


Interest Expense
Deposits
NOW, money market and savings	1,273	1,487	3,779	4,145
Time Deposits	2,114	2,375	6,138	6,731
Finance leases	16	18	50	58
Capital notes	-	92	163	278
Other borrowings	68	82	244	245
Total interest expense	3,471	4,054	10,374	11,457

Net interest income	8,300	7,509	24,269	21,550

Provison for (recovery of) credit losses	91	92	(301)	(584)

Net interest income after provision for ‎ (recovery of) credit losses	8,209	7,417	24,570	22,134


Noninterest income
Gains on sale of loans held for sale	1,242	1,326	3,668	3,526
Service charges, fees and commissions	1,046	991	3,002	2,930
Wealth management fees	1,362	1,244	3,917	3,583
Life insurance income	195	189	573	531
Other	297	31	340	669
Gain on sales of available-for-sale securities, net	27	42	27	82

Total noninterest income	4,169	3,823	11,527	11,321

Noninterest expenses
Salaries and employee benefits	5,516	4,920	15,650	14,256
Occupancy	523	514	1,590	1,493
Equipment	697	640	2,021	1,879
Supplies	153	131	463	397
Professional and other outside expense	725	688	3,194	2,125
Data processing	381	794	1,984	2,352
Marketing	249	220	684	481
Credit expense	216	190	665	612
FDIC insurance expense	132	94	394	329
Amortization of intangibles	140	140	420	420
Other	428	445	1,376	1,258
Total noninterest expenses	9,160	8,776	28,441	25,602

Income before income taxes	3,218	2,464	7,656	7,853

See accompanying notes to these consolidated financial statements

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Income tax expense	466	474	1,357	1,527

Net Income	$ 2,752	$ 1,990	$ 6,299	$ 6,326

Weighted average shares outstanding - basic and diluted	4,543,338	4,543,338	4,543,338	4,543,338

Net income per common share - basic and diluted	$ 0.61	$ 0.44	$ 1.39	$ 1.39

‎

See accompanying notes to these consolidated financial statements

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Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(dollar amounts in thousands) (unaudited)


	For the Three Months		For the Nine Months Ended
	Ended September 30,		Ended September 30,
	2025	2024	2025	2024
Net Income	$ 2,752	$ 1,990	$ 6,299	$ 6,326
Other comprehensive income:
Unrealized gain on securities available-for-sale, net	3,837	7,120	9,105	4,934
Tax effect	(806)	(1,496)	(1,912)	(1,036)
Reclassification adjustment for gains included in net income	(28)	(42)	(28)	(82)
Tax effect	7	9	7	17
Other comprehensive income, net of tax	3,010	5,591	7,172	3,833

Comprehensive income	$ 5,762	$ 7,581	$ 13,471	$ 10,159

‎

See accompanying notes to these consolidated financial statements

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Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(dollar amounts in thousands) (unaudited)


	For the Nine Months Ended September 30,
	2025	2024
Cash flows from operating activities
Net Income	$ 6,299	$ 6,326

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	993	972
Net amortization and accretion of premiums and discounts on securities	187	506
Amortization of debt issuance costs	2	4
Gain on sales of available-for-sale securities, net	(27)	(82)
Gain on sale of equipment	(28)	-
Gain on sales of loans held for sale	(3,668)	(3,526)
Proceeds from sales of loans held for sale	150,446	146,880
Origination of loans held for sale	(146,928)	(145,335)
Recovery of provision for credit losses	(301)	(584)
Amortization of intangibles	420	420
Bank owned life insurance income	(573)	(531)
Decrease in interest receivable	64	138
Decrease (increase) in other assets	786	(134)
Increase in interest payable	570	278
Increase in other liabilities	1,444	1,291

Net cash provided by operating activities	$ 9,686	$ 6,623

Cash flows from investing activities
Purchases of securities available-for-sale	$ (29,411)	$ (15,122)
Proceeds from maturities, calls and paydowns of securities available-for-sale	19,524	13,305
Proceeds from sales of securities available-for-sale	4,227	30,298
Purchases of bank owned life insurance	-	(599)
Purchases of restricted stock	(7)	(280)
Origination of loans, net of principal collected	(16,218)	(24,697)
Purchases of premises and equipment	(532)	(2,209)
Proceeds from sales of equipment	46	-
Purchase of SBIC fund	(350)	-

Net cash provided by (used in) investing activities	$ (22,721)	$ 696

Cash flows from financing activities
Net increase in deposits	$ 37,392	$ 29,151
Principal payments on finance lease obligations	(337)	(291)
Repayment of capital notes	(10,050)	-
Repayment of other borrowings	(464)	(446)
Dividends paid to common stockholders	(1,364)	(1,364)

Net cash provided by financing activities	$ 25,177	$ 27,050

Increase in cash and cash equivalents	12,142	34,369

Cash and cash equivalents at beginning of period	$ 73,309	$ 74,838

Cash and cash equivalents at end of period	$ 85,451	$ 109,207

Supplemental schedule of noncash investing and financing activities
Noncash transactions
Unrealized gains on securities available-for-sale	$ 9,077	$ 4,852

Supplemental disclosures of cash flow information
Cash transactions
Cash paid for interest	$ 9,804	$ 11,179
Cash paid for income taxes	1,040	1,300

See accompanying notes to these consolidated financial statements

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Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the Nine Months Ended September 30, 2025 and 2024

(dollars in thousands, except per share amounts) (unaudited)


					Accumulated
			Additional		Other
	Shares	Common	Paid-in	Retained	Comprehensive
	Outstanding	Stock	Capital	Earnings	(Loss)	Total

Balance at December 31, 2023	4,543,338	$ 9,723	$ 35,253	$ 36,678	$ (21,615)	$ 60,039

Net Income	-	-	-	2,188	-	2,188

Dividends paid on common stock ($0.10 per share)	-	-	-	(453)	-	(453)

Other comprehensive loss	-	-	-	-	(1,336)	(1,336)

Balance at March 31, 2024	4,543,338	$ 9,723	$ 35,253	$ 38,413	$ (22,951)	$ 60,438

Net Income	-	-	-	2,148	-	2,148

Dividends paid on common stock ($0.10 per share)	-	-	-	(457)	-	(457)

Repurchase of common stock

Other comprehensive loss	-	-	-	-	(422)	(422)

Balance at June 30, 2024	4,543,338	$ 9,723	$ 35,253	$ 40,104	$ (23,373)	$ 61,707

Net Income	-			1,990		1,990

Dividends paid on common stock ($0.10 per share)	-			(454)		(454)

Other comprehensive income	-				5,591	5,591

Balance at September 30, 2024	4,543,338	$ 9,723	$ 35,253	$ 41,640	$ (17,782)	$ 68,834


Balance at December 31, 2024	4,543,338	$ 9,723	$ 35,253	$ 42,804	$ (22,915)	$ 64,865

Net Income	-	-	-	842	-	842

Dividends paid on common stock ($0.10 per share)	-	-	-	(455)	-	(455)

Other comprehensive income	-	-	-	-	3,096	3,096

Balance at March 31, 2025	4,543,338	$ 9,723	$ 35,253	$ 43,191	$ (19,819)	$ 68,348

Net Income	-	-	-	2,705	-	2,705

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Dividends paid on common stock ($0.10 per share)	-	-	-	(454)	-	(454)

Other comprehensive income	-	-	-	-	1,066	1,066

Balance at June 30, 2025	4,543,338	$ 9,723	$ 35,253	$ 45,442	$ (18,753)	$ 71,665

Net Income	-	-	-	2,752	-	2,752

Dividends paid on common stock ($0.10 per share)	-	-	-	(455)	-	(455)

Other comprehensive income	-	-	-	-	3,010	3,010

Balance at September 30, 2025	4,543,338	$ 9,723	$ 35,253	$ 47,739	$ (15,743)	$ 76,972

‎

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Notes to Consolidated Financial Statements

Note 1 – Basis of Presentation

Bank of the James Financial Group, Inc.’s (“Financial” or the “Company”) primary market area consists of the area commonly referred to as Region 2000 which encompasses the seven jurisdictions of the Town of Altavista, Amherst County, Appomattox County, the Town of Bedford, Bedford County, Campbell County, and the City of Lynchburg. Within the last several years, the Company expanded into Charlottesville, Roanoke, Blacksburg, Harrisonburg, Lexington, Rustburg, Wytheville, Buchanan, and Nellysford.

The unaudited consolidated financial statements have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission. In management’s opinion, the accompanying financial statements, which unless otherwise noted are unaudited, reflect all adjustments, consisting solely of normal recurring accruals, necessary for a fair presentation of the financial information as of September 30, 2025 and December 31, 2024, and for the three and nine months ended September 30, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America.

Additional information concerning the organization and business of Financial, accounting policies followed, and other related information is contained in Financial’s Annual Report on Form 10-K for the year ended December 31, 2024. These financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes for the year ended December 31, 2024 included in Financial’s Annual Report on Form 10-K. Results for the three and nine-month periods ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

In connection with the acquisition of Pettyjohn, Wood & White, Inc. (“PWW”), the Company’s wholly-owned investment advisory subsidiary, the Company recorded an intangible asset for customer relationships in the amount of $8,406,000. The Company is using straight-line amortization over a period of 15 years, resulting in annual amortization of approximately $560,000. As of September 30, 2025 and December 31, 2024, the intangible asset, net of amortization, was $6,305,000 and $6,725,000, respectively.

Note 2 – Significant Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for credit losses on loans (“ACL”).

Significant Accounting Policies and Estimates

Application of the principles of GAAP and practices within the banking industry requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements may reflect different estimates, assumptions, and judgments. Certain policies inherently rely more extensively on the use of estimates, assumptions, and judgments and as such may have a greater possibility of producing results that could be materially different than originally reported.

The Company’s significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in Note 2 of the audited financial statements and notes for the year ended December 31, 2024 and are contained in the Company’s 2024 Annual Report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2024.

‎

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Note 3 – Earnings Per Common Share (EPS)

The following is a summary of the earnings per share calculation for the three and nine months ended September 30, 2025 and 2024 (dollars in thousands except per share data):



	Three Months Ended		Nine Months Ended
	Sept 30,		Sept 30,
	2025	2024	2025	2024

Net income	$ 2,752	$ 1,990	$ 6,299	$ 6,326

Weighted average number of shares outstanding - basic and diluted	4,543,338	4,543,338	4,543,338	4,543,338

Earnings per common share - basic and diluted	$ 0.61	$ 0.44	$ 1.39	$ 1.39

There were no potentially dilutive shares outstanding as of September 30, 2025 and 2024. Consequently, the weighted average shares and weighted average diluted shares were identical.

Note 4 – Debt

Capital Notes

On April 13, 2020, the Company commenced a private placement of unregistered, unsecured subordinated notes (the “2020 Offering”). Between April 13, 2020 and July 8, 2020, the Company issued an aggregate principal amount of $10,050,000 of 3.25% fixed-rate notes (the “2020 Notes”). Interest was payable quarterly in arrears.

The 2020 Notes matured and were payable in full on June 30, 2025. On the maturity date, the Company repaid the entire $10,050,000 principal plus accrued interest of approximately $82,000. The $10,050,000 cash outflow is presented in the financing activities section of the Consolidated Statement of Cash Flows.

As of September 30, 2025, there was no remaining balance outstanding under the 2020 Notes. At December 31, 2024, the balance of the 2020 Notes was $10,050,000, presented net of unamortized issuance costs on the Consolidated Balance Sheet.

Other Long Term Debt

On December 29, 2021, Financial borrowed $11,000,000 from National Bank of Blacksburg (“NBB”) pursuant to a secured promissory note (the “NBB Note”). Prior to the modifications described below, the NBB Note bore interest at a rate of 4.00% and was being amortized over a fifteen-year period, with a balloon payment of approximately $9,375,000 due on December 31, 2024. The note is secured by a first-priority lien on approximately 4.95% of the Bank’s common stock. A portion of the proceeds was used to purchase 100% of the capital stock of PWW, the Company’s wholly-owned investment advisory subsidiary.

On June 30, 2022, NBB agreed to modify the terms of the NBB Note, effective July 1, 2022. Pursuant to that modification, the balloon payment date was extended to December 31, 2026, from December 31, 2024, and the interest rate was reduced to 3.90% from 4.00%.

On August 18, 2025, the Company entered into a Second Note Modification Agreement and Allonge (the “Second Allonge”) with NBB, effective September 1, 2025. Under the Second Allonge, the maturity date of the NBB Note was extended to August 31, 2030, the interest rate was increased to 5.65% per annum (from 3.90%), and the repayment terms were re-amortized to require 60 equal monthly installments of principal and interest of approximately $61,800, beginning September 30, 2025, with a final balloon payment of approximately $7,410,000 due at maturity. The Second Allonge also provides the Company with an option, upon any prepayment of principal of $1,000,000 or more, to request a one-time recast of the amortization schedule over the remaining term of the loan without altering the maturity date or interest rate.

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Note 4 – Debt (continued)

As of September 30, 2025, the outstanding principal balance on the NBB Note was approximately $8.8 million. The note remains secured by a first-priority lien on approximately 4.95% of the Bank’s common stock.

Management evaluated the Second Allonge in accordance with the applicable guidance and determined that the changes represent a modification rather than an extinguishment of the existing debt. Accordingly, the carrying amount of the NBB Note continues to be presented on the Consolidated Balance Sheets under “other borrowings,” net of unamortized issuance costs.

Note 5 – Fair Value Measurements

Determination of Fair Value

The Company uses fair value measurements to record adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures topic of FASB ASC 820, the fair value of a financial instrument is defined as the price that would be received to sell an asset or paid to transfer a liability (an “exit price”) in the principal or most advantageous market, in an orderly transaction between market participants at the measurement date.

Fair value is best determined based on quoted market prices. However, in many instances, quoted market prices are not available for the Company’s various financial instruments. In such cases, fair values are estimated using present value or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, emphasizing exit price in the principal or most advantageous market, and in an orderly transaction (not a forced liquidation or distressed sale) between market participants at the measurement date, under current market conditions. If there has been a significant decrease in the volume and level of activity for an asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact depends on the facts and circumstances and requires significant judgment. The fair value selected should be a reasonable point within the range most representative of fair value under current market conditions.

Fair Value Hierarchy

In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Fair Value on a Recurring Basis

Securities Available-for-Sale

Fair values of securities available-for-sale are based on quoted prices available in an active market. If quoted prices are available, these securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government bonds, mortgage products, and exchange-traded equities. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow.

Level 2 securities include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions, and certain corporate, asset-backed, and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of the Company’s securities are considered Level 2 securities.

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Note 5 – Fair Value Measurements (continued)

Derivatives Assets/Liabilities – Interest Rate Lock Commitments (IRLCs)

The Company recognizes IRLCs at fair value based on the price of the underlying loans obtained from an investor for loans that will be delivered on a best efforts basis while taking into consideration the probability that the rate lock commitments will close. All of the Company’s IRLCs are classified as Level 3.

The below tables summarize the Company’s financial assets that were measured at fair value on a recurring basis during the period presented.


		Carrying Value at September 30, 2025
		Quoted Prices	Significant
		in Active	Other	Significant
	Balance as of	Markets for	Observable	Unobservable
(dollars in thousands)	September 30,	Identical Assets	Inputs	Inputs
Description	2025	(Level 1)	(Level 2)	(Level 3)
U.S. agency obligations	$ 76,200	$ -	$ 76,200	$ -
Mortgage-backed securities	58,309	-	58,309	-
Municipals	53,145	-	53,145	-
Corporates	14,852	-	14,852	-

Total available-for-sale securities	$ 202,506	$ -	$ 202,506	$ -
IRLCs - asset	136	-	-	136
Total assets at fair value	$ 202,642	$ -	$ 202,506	$ 136


		Carrying Value at December 31, 2024
		Quoted Prices	Significant
		in Active	Other	Significant
	Balance as of	Markets for	Observable	Unobservable
(dollars in thousands)	December 31,	Identical Assets	Inputs	Inputs
Description	2024	(Level 1)	(Level 2)	(Level 3)
U.S. agency obligations	$ 73,060	$ -	$ 73,060	$ -
Mortgage-backed securities	58,973	-	58,973	-
Municipals	41,561	-	41,561	-
Corporates	14,322	-	14,322	-

Total available-for-sale securities	$ 187,916	$ -	$ 187,916	$ -
IRLCs - asset	42	-	-	42
Total assets at fair value	$ 187,958	$ -	$ 187,916	$ 42

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Note 5 – Fair Value Measurements (continued)

The following table provides additional quantitative information about assets measured at fair value on a recurring basis and for which we utilize Level 3 inputs to determine fair value:


Quantitative information about Level 3 Fair Value Measurements for September 30, 2025
(dollars in thousands)
	Fair Value		Valuation Technique(s)	Unobservable Input	Range
Assets
IRLCs – asset	$	136	Market approach	Range of pull through rate	70% - 100% (85%)

(1) Weighted based on the relative value of the instruments


Quantitative information about Level 3 Fair Value Measurements for December 31, 2024
(dollars in thousands)
	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average) (1)
Assets
IRLCs - asset	$	42	Market approach	Range of pull through rate	70% - 100% (85%)

There were no transfers of financial assets between hierarchy levels during the three and nine month period ending September 30, 2025.

Fair Value on a Non-recurring Basis

Collateral Dependent Loans with an ACL

In accordance with ASC 326, the Company may determine that an individual loan exhibits unique risk characteristics which differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay, collateral deficiencies, the relative risk grade of the loan, and economic conditions affecting the borrower’s industry, among other factors.

A loan is considered collateral dependent when, based on management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In these cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The Company reevaluates the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting such loans is evaluated by appraisal services using methodologies consistent with the Uniform Standards of Professional Appraisal Practice. Based the review of management, no nonrecurring fair value adjustments were needed on collateral dependent loans at September 30, 2025 or December 31, 2024.

Loans Held for Sale

Loans held for sale are carried at cost, which approximates estimated fair value. These loans currently consist of one-to-four family residential loans originated for sale in the secondary market. Fair value is based on prices currently offered by secondary markets for similar loans using observable market data, which is not materially different from cost due to the short duration between origination and sale (Level 2). As such, the Company records fair value adjustments on a nonrecurring basis. At September 31, 2025 and December 31, 2024 the Company held $3,766 and $3,616 at fair value, respectively. No nonrecurring fair value adjustments were recorded on loans held for sale at September 30, 2025 or December 31, 2024. Gains and losses on the sale of loans are recorded within “Gain on sales of loans held for sale” on the Consolidated Statements of Income.

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Note 5 – Fair Value Measurements (continued)

Financial Instruments

FASB ASC 825, Financial Instruments, requires disclosure about fair value of financial instruments, including those financial assets and financial liabilities that are not required to be measured and reported at fair value on a recurring or nonrecurring basis. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. The carrying amounts and estimated fair values of the Company’s financial instruments are presented in the following tables whether or not recognized on the Consolidated Balance Sheets at fair value.

The estimated fair values, and related carrying or notional amounts, of Financial’s financial instruments and their placement in the fair value hierarchy at September 30, 2025, and December 31, 2024, were as follows (dollars in thousands):


		Fair Value Measurements at September 30, 2025 using
	Carrying
Assets	Amounts	(Level 1)	(Level 2)	(Level 3)	Balance
Cash and due from banks	$ 28,450	$ 28,450	$ -	$ -	$ 28,450
Federal funds sold	57,001	57,001	-	-	57,001
Securities
Available-for-sale	202,506	-	202,506	-	202,506
Held-to-maturity, net	3,594	-	3,308	-	3,308
Restricted stock	1,828	-	1,828	-	1,828
Loans, net (1)	653,288	-	-	640,567	640,567
Loans held for sale	3,766	-	3,766	-	3,766
Interest receivable	3,001	-	3,001	-	3,001
BOLI	23,480	-	23,480	-	23,480
Derivatives - IRLCs	136	-	-	-	136

Liabilities
Checking, money market, savings and NOW	$ 680,958	$ -	$ 680,958	$ -	$ 680,958
Time deposits	238,838	-	238,884	-	238,884
Other borrowings	8,836	-	8,437	-	8,437
Interest payable	1,292	-	1,292	-	1,292

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Table of Contents

Note 5 – Fair Value Measurements (continued)


		Fair Value Measurements at December 31, 2024 using
	Carrying
Assets	Amounts	(Level 1)	(Level 2)	(Level 3)	Balance
Cash and due from banks	$ 23,287	$ 23,827	$ -	$ -	$ 23,827
Federal funds sold	50,022	50,022	-	-	50,022
Securities					-
Available-for-sale	187,916	-	187,916	-	187,916
Held-to-maturity	3,606	-	3,170	-	3,170
Restricted stock	1,821	-	1,821	-	1,821
Loans, net (1)	636,552	-	-	613,984	613,984
Loans held for sale	3,616	-	3,616	-	3,616
Interest receivable	3,065	-	3,065	-	3,065
Cash value - bank owned life insurance	22,907	-	22,907	-	22,907
Derivatives - IRLCs	42	-	-	42	42

Liabilities
Checking, money market, savings and NOW	$ 651,895	$ -	$ 651,895	$ -	$ 651,895
Time deposits	230,509		230,027		$ 230,027
Capital notes	10,048	-	9,836	-	9,836
Other borrowings	9,300	-	8,929	-	8,929
Interest payable	722	-	722	-	722

(1) Carrying amount is net of unearned income and the ACL.

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Table of Contents

Note 6 – Securities

The following tables summarize the Bank’s holdings for securities held-to-maturity and available-for-sale as of September 30, 2025 and December 31, 2024 (dollars in thousands) are summarized below:


		September 30, 2025
	Amortized	Gross Unrealized
	Costs	Gains	(Losses)	Fair Value
Held-to-Maturity
U.S. agency obligations	$ 3,594	$ -	$ (286)	$ 3,308

Available-for-sale
U.S. agency obligations	$ 80,044	$ 475	$ (4,319)	$ 76,200
Mortgage-backed securities	65,558	69	(7,318)	58,309
Municipals	61,331	192	(8,378)	53,145
Corporates	15,501	2	(651)	14,852
	$ 222,434	$ 738	$ (20,666)

BANK OF THE JAMES FINANCIAL GROUP INC 10-Q