What the changes say
- The bank added specific risks regarding cybersecurity, digital deposit competition, and internal controls.
- Credit metrics shifted as the allowance as a percentage of total loans dropped from 1.22% to 0.97% and nonperforming loans coverage fell from 1,895% to 379%.
- Commercial and industrial lending expansion remains a strategic focus despite elevated risks.
What changed since the prior 10-K
New
- NewRISKS RELATED TO OUR BUSINESS
Credit losses could adversely affect our earnings and financial condition
Inaccurate assumptions regarding borrower creditworthiness and collateral values could render our allowance for credit losses insufficient, forcing unexpected provisions.
- NewRISKS RELATED TO OUR BUSINESS
We face substantial competition in our markets
We compete against larger regional and national institutions with greater resources and lower deposit costs in Virginia localities.
- NewRISKS RELATED TO OUR BUSINESS
We have increased and plan to continue to increase our levels of commercial and industrial loans. We may not be successful in continuing to penetrate this market segment, which has helped to drive some of our recent earnings
Expanding commercial and industrial loans exposes us to larger balances and greater default risks dependent on business performance.
- NewRISKS RELATED TO OUR BUSINESS
Foreclosed properties could lead to increased operating expenses and losses
Foreclosed real estate properties increase operating expenses and vulnerability to declines in residential and commercial real estate markets.
- NewRISKS RELATED TO OUR BUSINESS
We may need to raise additional capital in the future, which may not be available on acceptable terms
We may fail to raise additional capital on acceptable terms to support future growth or meet regulatory requirements.
- NewRISKS RELATED TO OUR BUSINESS
Loss of key employees could adversely affect our business
The loss of executive management and key personnel without non-compete agreements could harm our community banking strategy.
- NewRISKS RELATED TO OUR BUSINESS
Cybersecurity threats, including attacks on us or our third-party service providers, and operational system failures could disrupt our business, result in financial losses, increase compliance and remediation costs, and harm our reputation
Cyberattacks, including ransomware and deepfake fraud against us or our third-party vendors, could disrupt operations and cause financial losses.
- NewRISKS RELATED TO OUR BUSINESS
damage our reputation and adversely affect customer relationships
Past and future cybersecurity incidents could damage our reputation and materially affect the Bank despite our preventive controls.
- NewRISKS RELATED TO OUR BUSINESS
Alternative financial products, digital banking trends, and technological change could affect our deposit base and competitive position
Alternative financial products, cryptocurrencies, and fintech platforms could increase deposit volatility and challenge our traditional banking model.
- NewRISKS RELATED TO OUR BUSINESS
Failure to maintain effective internal and disclosure controls could adversely affect our financial reporting and stock price
Failures in internal or disclosure controls could result in inaccurate financial reporting or jeopardize our NASDAQ listing.
- NewRISKS RELATED TO OUR BUSINESS
Declines in assets under management could adversely affect our investment advisory business
Declines in market values or client withdrawals in our investment advisory subsidiary, PWW, reduce fee revenue based on assets under management.
- NewRISKS RELATED TO OUR BUSINESS
PWW’s success is highly dependent on its executive management team and other key personnel who make investment decisions for PWW clients and manage client relations. Although they are subject to non-compete agreements, there is no assurance that these key personnel will remain employees of PWW
PWW's success depends on key personnel making investment decisions, and their departure would harm our wealth management business.
- NewREGULATORY AND LEGAL RISKS
Consumer financial protection regulations could impact our compliance obligations and business practices
- NewREGULATORY AND LEGAL RISKS
Regulatory capital requirements could adversely affect our operations and profitability
Dropped
- DroppedRISKS RELATED TO OUR BUSINESS
If we suffer credit losses from a decline in credit quality, our earnings will decrease
- DroppedRISKS RELATED TO OUR BUSINESS
The markets for our deposit and lending products and services are highly competitive, and we face substantial competition
- DroppedRISKS RELATED TO OUR BUSINESS
A 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
- DroppedRISKS RELATED TO OUR BUSINESS
We 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
- DroppedRISKS RELATED TO OUR BUSINESS
Additional 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
- DroppedRISKS RELATED TO OUR BUSINESS
If we fail to retain our key employees, our growth and profitability could be adversely affected
- DroppedRISKS RELATED TO OUR BUSINESS
Digital Banking and Cryptocurrency Exposure
- DroppedRISKS RELATED TO OUR BUSINESS
Digital Banking Trends and Deposit Volatility
- DroppedRISKS RELATED TO OUR BUSINESS
Failure to implement new technologies in our operations may adversely affect our growth or profits
Credit loss risks and allowance policies.
- DroppedRISKS RELATED TO OUR BUSINESS
Effective 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
- DroppedRISKS RELATED TO OUR BUSINESS
Revenues and profitability from our investment advisory business may be adversely affected by any reduction in assets under management, which could reduce fees earned
Competition in deposit and lending markets.
- DroppedRISKS RELATED TO OUR BUSINESS
If we fail to retain PWW’s key employees, the growth and profitability of our investment advisory business could be adversely affected
Commercial and industrial loan risk exposure.
- DroppedRISKS RELATED TO OUR BUSINESS
managing 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
- DroppedREGULATORY AND LEGAL RISKS
Consumer Financial Protection Bureau Oversight
Other real estate owned (OREO) property risks.
- DroppedREGULATORY AND LEGAL RISKS
Qualified Mortgage Provisions (2025)
Capital raising needs and regulatory requirements.
- DroppedREGULATORY AND LEGAL RISKS
Compliance 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
- DroppedREGULATORY AND LEGAL RISKS
The short-term and long-term impact of regulatory capital requirements and capital rules is uncertain
Key employee retention and community ties.
Reworded
- 100% rewrittenRISKS RELATED TO OUR BUSINESS
Future public health emergencies could adversely affect our business, financial condition, and results of operations
Expanded to detail specific economic impacts of a pandemic or epidemic on loan delinquencies, collateral values, and operations.
Was: The Company’s business, financial condition, liquidity and results of operations may be, adversely affected by future public health emergencies
- 100% rewrittenRISKS RELATED TO OUR BUSINESS
Emerging Technological Threats
Renamed to emerging technological threats, adding specific mentions of artificial intelligence, voice spoofing, and business email compromise.
- 97% rewrittenRISKS RELATED TO OUR BUSINESS
Inflation could adversely impact our customers’ ability to repay loans
Removed quantum computing references from prior year text and streamlined inflation impacts on borrower repayment abilities.
Was: Inflation can have an adverse impact on our customers and their ability to repay
- 71% rewrittenRISKS RELATED TO OUR BUSINESS
The investment advisory industry is subject to extensive regulation, and any enforcement action or adverse regulatory changes could decrease our revenues and profitability
Added regulatory additions regarding potential new legislation costs impacting investment advisory profitability at PWW.
Was: The 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
- 70% rewrittenRISKS RELATED TO OUR BUSINESS
Our 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
Streamlined branch expansion and acquisition risks by removing bullet points and clarifying local management retention needs.
- 69% rewrittenRISKS RELATED TO OUR BUSINESS
Commercial real estate loans increase our exposure to credit risk
Condensed commercial real estate default risk language while retaining core concerns about borrower income streams and valuations.
- 69% rewrittenRISKS RELATED TO OUR BUSINESS
Our allowance for credit losses may not be adequate to cover actual losses
Updated allowance figures: total loan coverage dropped from 1.22% to 0.97% and nonperforming loan coverage fell from 1,895% to 379%.
Was: Our allowance may not be adequate to cover actual credit losses
- 69% rewrittenRISKS RELATED TO OUR BUSINESS
Our loan portfolio contains a number of real estate loans with relatively large balances
Tightened phrasing around real estate loans with balances exceeding $1,000,000 causing charge-offs and provision increases.
- 68% rewrittenRISKS RELATED TO OUR BUSINESS
We may lose lower-cost funding sources
- 67% rewrittenRISKS RELATED TO OUR BUSINESS
As 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
- 63% rewrittenRISKS RELATED TO OUR BUSINESS
Our profitability depends significantly on local economic conditions
- 60% rewrittenRISKS RELATED TO OUR BUSINESS
A percentage of the loans in our portfolio currently include exceptions to our loan policies and supervisory guidelines
- 59% rewrittenRISKS RELATED TO OUR BUSINESS
Our profitability is vulnerable to interest rate fluctuations and changes in monetary policies
- 58% rewrittenRISKS RELATED TO OUR BUSINESS
A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt our business
- 57% rewrittenRISKS RELATED TO OUR BUSINESS
Our deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings
- 51% rewrittenREGULATORY AND LEGAL RISKS
The laws and regulations applicable to the banking industry could change at any time, and these changes may adversely affect our business and profitability
Was: The 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
- 51% rewrittenRISKS RELATED TO OUR BUSINESS
We depend on the accuracy of information provided by clients and counterparties
Was: We 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
- 47% rewrittenREGULATORY AND LEGAL RISKS
We are subject to extensive regulation that could limit or restrict our activities and adversely affect our profitability
Was: We 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
- 47% rewrittenRISKS RELATED TO OUR BUSINESS
Liquidity risk could adversely affect our business and financial condition
Was: We are subject to liquidity risk
- 46% rewrittenRISKS RELATED TO OUR BUSINESS
We may not be able to attract and retain investment advisory clients
- 42% rewrittenRISKS RELATED TO OUR BUSINESS
As a community bank, we have different lending risks than larger banks due to our focus on individuals and small to medium-sized businesses
Was: As 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
- 38% rewrittenRISKS RELATED TO OUR BUSINESS
Severe weather, natural disasters, acts of war or terrorism or other adverse external events could significantly impact our business
- 35% rewrittenRISKS RELATED TO OUR STOCK
Our stockholders may experience dilution due to issuances of additional securities
Was: Our stockholders may experience dilution due to our issuance(s) of additional securities in the future
- 35% rewrittenRISKS RELATED TO OUR STOCK
Our ability to pay cash dividends is limited, and we may be unable to pay future dividends even if we desire to do so
- 29% rewrittenRISKS RELATED TO OUR STOCK
A limited market exists for our common stock
- 27% rewrittenRISKS RELATED TO OUR BUSINESS
Changes in the financial markets could impair the value of our investment portfolio
- 22% rewrittenRISKS RELATED TO OUR STOCK
Virginia law and the provisions of our articles of incorporation and bylaws could deter or prevent takeover attempts
Was: Virginia 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
All 47 risk factors
Headings as the filing states them, in filing order.
RISKS RELATED TO OUR BUSINESS
- 01Our profitability depends significantly on local economic conditions63% rewritten
- 02Future public health emergencies could adversely affect our business, financial condition, and results of operations100% rewritten
- 03A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt our business58% rewritten
- 04Our loan portfolio contains a number of real estate loans with relatively large balances69% rewritten
- 05Commercial real estate loans increase our exposure to credit risk69% rewritten
- 06A percentage of the loans in our portfolio currently include exceptions to our loan policies and supervisory guidelines60% rewritten
- 07As a community bank, we have different lending risks than larger banks due to our focus on individuals and small to medium-sized businesses42% rewritten
- 08We depend on the accuracy of information provided by clients and counterparties51% rewritten
- 09Credit losses could adversely affect our earnings and financial conditionNew
- 10Our allowance for credit losses may not be adequate to cover actual losses69% rewritten
- 11We face substantial competition in our marketsNew
- 12We have increased and plan to continue to increase our levels of commercial and industrial loans. We may not be successful in continuing to penetrate this market segment, which has helped to drive some of our recent earningsNew
- 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 prospects70% rewritten
- 14Foreclosed properties could lead to increased operating expenses and lossesNew
- 15We may need to raise additional capital in the future, which may not be available on acceptable termsNew
- 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
- 17Loss of key employees could adversely affect our businessNew
- 18Severe weather, natural disasters, acts of war or terrorism or other adverse external events could significantly impact our business38% rewritten
- 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 performance67% rewritten
- 20Our decisions regarding how we manage our credit exposure may materially and adversely affect our business
- 21Our profitability is vulnerable to interest rate fluctuations and changes in monetary policies59% rewritten
- 22Inflation could adversely impact our customers’ ability to repay loans97% rewritten
- 23Cybersecurity threats, including attacks on us or our third-party service providers, and operational system failures could disrupt our business, result in financial losses, increase compliance and remediation costs, and harm our reputationNew
- 24damage our reputation and adversely affect customer relationshipsNew
- 25Emerging Technological Threats100% rewritten
- 26Alternative financial products, digital banking trends, and technological change could affect our deposit base and competitive positionNew
- 27Changes in consumers’ use of banks and changes in consumers’ spending and saving habits could adversely affect our financial results
- 28We are subject to operational risks
- 29Liquidity risk could adversely affect our business and financial condition47% rewritten
- 30We may lose lower-cost funding sources68% rewritten
- 31Failure to maintain effective internal and disclosure controls could adversely affect our financial reporting and stock priceNew
- 32Changes in the financial markets could impair the value of our investment portfolio27% rewritten
- 33Our deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings57% rewritten
- 34Declines in assets under management could adversely affect our investment advisory businessNew
- 35We may not be able to attract and retain investment advisory clients46% rewritten
- 36The investment advisory industry is subject to extensive regulation, and any enforcement action or adverse regulatory changes could decrease our revenues and profitability71% rewritten
- 37PWW’s success is highly dependent on its executive management team and other key personnel who make investment decisions for PWW clients and manage client relations. Although they are subject to non-compete agreements, there is no assurance that these key personnel will remain employees of PWWNew
REGULATORY AND LEGAL RISKS
- 38We are subject to extensive regulation that could limit or restrict our activities and adversely affect our profitability47% rewritten
- 39The laws and regulations applicable to the banking industry could change at any time, and these changes may adversely affect our business and profitability51% rewritten
- 40Consumer financial protection regulations could impact our compliance obligations and business practicesNew
- 41Regulatory capital requirements could adversely affect our operations and profitabilityNew
RISKS RELATED TO OUR STOCK
- 42Our ability to pay cash dividends is limited, and we may be unable to pay future dividends even if we desire to do so35% rewritten
- 43In 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
- 44A limited market exists for our common stock29% rewritten
- 45Future offerings of debt or other securities may adversely affect the market price of our stock
- 46Our stockholders may experience dilution due to issuances of additional securities35% rewritten
- 47Virginia law and the provisions of our articles of incorporation and bylaws could deter or prevent takeover attempts22% rewritten
Other Bank of the James Financial Group 10-Ks
- FY2024 10-K risk factors50 risks
Local economic conditions in Virginia and commercial real estate loan concentrations drive the majority of our operational risks.
Filed Mar 26, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.