Bank of the James posts smaller profit than previous years

By: Craig Davison | The News & Advance
Published: February 07, 2012

The Lynchburg-based parent company of Bank of the James saw its 2011 income drop to a third of what it earned the previous year as it dealt with bad loans connected to the recession.

Bank of the James Financial Group recorded a profit of $600,000, or 18 cents per share, in 2011, down from $1.82 million, or 55 cents per share, in 2010. In the last quarter of 2011, it lost $218,000, or 7 cents per share.

Todd Scruggs, executive vice president and chief financial officer, said the bank set aside $4.8 million in 2011 to handle troubled loans, up from $2.7 million in 2010.

He said it was a positive sign the bank was able to put so much in the reserve fund and still make a profit for the year.

“We’re proud we made a profit, but we believe we would like to do better than that,” he said.

Like many banks across the U.S., Bank of the James saw its balance sheet take a hit from loan losses as struggling homeowners failed to pay mortgages and construction projects slowed down or dried up completely.

But despite weathering the effects of an economic downtown, Scruggs said bank officials see “some light at the end of the tunnel.”

Assets and deposits increased in 2011, and without the provision for loan losses, net interest income was $15.3 million, about $100,000 more than in 2010.

The bank's growth is paying off — last month, the bank announced it would move its stock to the NASDAQ exchange, a more prestigious home than the less regulated over-the-counter market generally used by smaller companies.

Meanwhile, the money put away for loan losses isn't lost for good. It could be recovered from liquidating the collateral on the loans or by changing the borrower’s payment plan to something more affordable, Scruggs said.

He said the bank will continue to reserve money for troubled loans, but as the economy continues out of the recession, how much reserves the bank needs could change.

“We’re taking steps to be able to move toward the day we won’t have to reserve as much,” he said.

Bank of the James has nine full-service locations, one limited-service branch, a mortgage office in Forest and an investment division in downtown Lynchburg.

The stock, which trades under the symbol BOTJ, closed Tuesday at $4.99, down 0.2 percent.