Bank of the James Financial Group (BOTJ) risk factors, FY2024 10-K

RISKS RELATED TO OUR BUSINESS

1. 01Our profitability depends significantly on local economic conditions
2. 02The Company’s business, financial condition, liquidity and results of operations may be, adversely affected by future public health emergencies
3. 03A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt our business
4. 04Our loan portfolio contains a number of real estate loans with relatively large balances
5. 05Commercial real estate loans increase our exposure to credit risk
6. 06A percentage of the loans in our portfolio currently include exceptions to our loan policies and supervisory guidelines
7. 07As a community bank, we have different lending risks than larger banks. We provide services to individuals and small to medium-sized businesses in our local markets who may have fewer financial resources to weather a downturn in the economy
8. 08We depend on the accuracy and completeness of information about clients and counterparties, and our financial condition could be adversely affected if we rely on misleading information
9. 09If we suffer credit losses from a decline in credit quality, our earnings will decrease
10. 10Our allowance may not be adequate to cover actual credit losses
11. 11The markets for our deposit and lending products and services are highly competitive, and we face substantial competition
12. 12A significant percentage of our loans are commercial and industrial loans. Although our portfolio of commercial and industrial loans has decreased during the past year, that category has generally increased over the past several years and we continue to focus on commercial and industrial loans
13. 13Our plans for future expansion depend, in some instances, on factors beyond our control, and an unsuccessful attempt to achieve growth could have a material adverse effect on our business, financial condition, results of operations and future prospects
14. 14We may acquire and hold other real estate owned (OREO) properties, which could lead to increased operating expenses and vulnerability to declines in the market value of real estate in our areas of operations
15. 15Additional growth and regulatory requirements may require us to raise additional capital in the future, and capital may not be available when it is needed or may have unfavorable terms, which could adversely affect our financial condition and results of operations
16. 16Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the teamwork and increased productivity fostered by our culture, which could harm our business
17. 17If we fail to retain our key employees, our growth and profitability could be adversely affected
18. 18Severe weather, natural disasters, acts of war or terrorism or other adverse external events could significantly impact our business
19. 19As a community bank, our ability to maintain our reputation is critical to the success of our business, and our failure to do so may materially adversely affect our performance
20. 20Our decisions regarding how we manage our credit exposure may materially and adversely affect our business
21. 21Our profitability is vulnerable to interest rate fluctuations and changes in monetary policies
22. 22Inflation can have an adverse impact on our customers and their ability to repay
23. 23Emerging Technological Threats
24. 24Digital Banking and Cryptocurrency Exposure
25. 25Digital Banking Trends and Deposit Volatility
26. 26Changes in consumers’ use of banks and changes in consumers’ spending and saving habits could adversely affect our financial results
27. 27Failure to implement new technologies in our operations may adversely affect our growth or profits
28. 28We are subject to operational risks
29. 29We are subject to liquidity risk
30. 30We may lose lower-cost funding sources
31. 31Effective internal control over financial reporting and disclosure controls and procedures are necessary for us to provide reliable financial reports and effectively prevent or detect fraud and to operate successfully as a public company
32. 32Changes in the financial markets could impair the value of our investment portfolio
33. 33Our deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings
34. 34Revenues and profitability from our investment advisory business may be adversely affected by any reduction in assets under management, which could reduce fees earned
35. 35We may not be able to attract and retain investment advisory clients
36. 36The investment advisory industry is subject to extensive regulation, supervision and examination by regulators, and any enforcement action or adverse changes in the laws or regulations governing our business could decrease our revenues and profitability
37. 37If we fail to retain PWW’s key employees, the growth and profitability of our investment advisory business could be adversely affected
38. 38managing client relations. Although each of the foregoing are subject to non-compete agreements, there are no assurances that these key personnel will remain employees of PWW

REGULATORY AND LEGAL RISKS

1. 39We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business, which limitations or restrictions could adversely affect our profitability
2. 40The laws and regulations, including the Dodd-Frank Reform Act, applicable to the banking industry could change at any time, and these changes may adversely affect our business and profitability
3. 41Consumer Financial Protection Bureau Oversight
4. 42Qualified Mortgage Provisions (2025)
5. 43Compliance with the Dodd-Frank Reform Act will increase our regulatory compliance burdens, and may increase our operating costs and may adversely impact our earnings or capital ratios, or both
6. 44The short-term and long-term impact of regulatory capital requirements and capital rules is uncertain

RISKS RELATED TO OUR STOCK

1. 45Our ability to pay cash dividends is limited, and we may be unable to pay future dividends even if we desire to do so
2. 46In addition, the Bank’s ability to pay dividends will be limited if the Bank does not have the capital conservation buffer required by the capital rules, which may limit the Company’s ability to pay dividends to stockholders
3. 47A limited market exists for our common stock
4. 48Future offerings of debt or other securities may adversely affect the market price of our stock
5. 49Our stockholders may experience dilution due to our issuance(s) of additional securities in the future
6. 50Virginia law and the provisions of our articles of incorporation and bylaws could deter or prevent takeover attempts by a potential purchaser of our common stock that would be willing to pay holders a premium for their shares of our common stock