10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2019

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  ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 4,372,436 shares of Common Stock, par value $2.14 per share, were outstanding at November 8, 2019.

Table of Contents

PART I – FINANCIAL INFORMATION	1
Item 1. Consolidated Financial Statements	1
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3. Quantitative and Qualitative Disclosures About Market Risk	56
Item 4. Controls and Procedures	56
PART II – OTHER INFORMATION	57
Item 1. Legal Proceedings	57
Item 1A. Risk Factors	57
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3. Defaults Upon Senior Securities	57
Item 4. Mine Safety Disclosures	57
Item 5. Other Information	58
Item 6. Exhibits	58
SIGNATURES	59

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) (2019 unaudited)

	September 30,		December 31,
	2019		2018
Assets
Cash and due from banks	$	27,315	$	26,725
Federal funds sold		22,141		23,600
Total cash and cash equivalents		49,456		50,325
Securities held-to-maturity (fair value of $3,938 in 2019 and $3,515 in 2018)		3,690		3,700
Securities available-for-sale, at fair value		54,400		52,727
Restricted stock, at cost		1,506		1,462
Loans, net of allowance for loan losses of $4,773 in 2019 and $4,581 in 2018		551,005		530,016
Loans held for sale		5,630		1,670
Premises and equipment, net		16,578		13,426
Interest receivable		1,755		1,742
Cash value - bank owned life insurance		13,606		13,359
Other real estate owned		2,242		2,430
Income taxes receivable		83		1,102
Deferred tax asset, net		1,085		1,755
Other assets		7,078		1,183
Total assets	$	708,114	$	674,897
Liabilities and Stockholders’ Equity
Deposits
Noninterest bearing demand	$	90,426	$	91,356
NOW, money market and savings		350,885		331,298
Time		191,722		189,389
Total deposits		633,033		612,043
Capital notes		5,000		5,000
Interest payable		167		127
Other liabilities		8,875		2,584
Total liabilities	$	647,075	$	619,754
Commitments and Contingencies
Stockholders’ equity
Preferred stock; authorized 1,000,000 shares; none issued and outstanding	$	—	$	—
Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,378,436 as of September 30, 2019 and December 31, 2018		9,370		9,370
Additional paid-in-capital		31,575		31,495
Retained earnings		19,817		16,521
Accumulated other comprehensive income (loss)		277		(2,243	)
Total stockholders’ equity	$	61,039	$	55,143
Total liabilities and stockholders’ equity	$	708,114	$	674,897

1

See accompanying notes to these consolidated financial statements

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 Ended				For the Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Interest Income
Loans	$	7,080	$	6,460	$	20,550	$	18,329
Securities
US Government and agency obligations		176		187		545		571
Mortgage backed securities		54		62		171		196
Municipals - taxable		77		81		237		243
Municipals - tax exempt		—		2		2		5
Dividends		9		9		60		40
Other (Corporates)		23		23		70		70
Interest bearing deposits		88		60		253		151
Federal Funds sold		89		96		332		255
Total interest income		7,596		6,980		22,220		19,860
Interest Expense
Deposits
NOW, money market savings		414		261		1,082		684
Time Deposits		926		679		2,500		1,885
FHLB borrowings		—		—		—		17
Finance leases		41		—		41		—
Capital notes		50		50		150		150
Total interest expense		1,431		990		3,773		2,736
Net interest income		6,165		5,990		18,447		17,124
Provision for loan losses		108		190		434		527
Net interest income after		6,057		5,800		18,013		16,597
Noninterest income
Gain on sales of loans held for sale		1,337		767		3,103		2,260
Service charges, fees and commissions		448		446		1,348		1,375
Increase in cash value of life insurance		81		86		248		256
Other		4		20		49		55
Gain on sales and calls of securities, net		291		—		291		—
Total noninterest income		2,161		1,319		5,039		3,946
Noninterest expenses
Salaries and employee benefits		3,356		2,853		9,437		8,398
Occupancy		414		388		1,252		1,143
Equipment		527		414		1,521		1,191
Supplies		163		124		467		413
Professional, data processing, and other outside expense		887		761		2,561		2,413
Marketing		228		165		649		492
Credit expense		195		140		478		377
Other real estate expenses		200		110		340		236
FDIC insurance expense		87		99		275		299
Other		316		310		967		805
Total noninterest expenses		6,373		5,364		17,947		15,767
Income before income taxes		1,845		1,755		5,105		4,776
Income tax expense		371		351		1,020		949
Net Income	$	1,474	$	1,404	$	4,085	$	3,827
Weighted average shares outstanding - basic		4,378,436		4,378,436		4,378,436		4,378,436
Weighted average shares outstanding - diluted		4,385,331		4,378,436		4,383,128		4,378,466
Earnings per common share - basic	$	0.34	$	0.32	$	0.93	$	0.87
Earnings per common share - diluted	$	0.34	$	0.32	$	0.93	$	0.87

2

See accompanying notes to these consolidated financial statements

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 September 30,						Ended September 30,
	2019			2018			2019			2018
Net Income	$	1,474		$	1,404		$	4,085		$	3,827
Other comprehensive income (loss):
Unrealized gains (losses) on securities available-for-sale		990			(693	)		3,481			(2,009	)
Tax effect		(208	)		144			(731	)		421
Reclassification adjustment for gains included in net income (1)		(291	)		—			(291	)		—
Tax effect (2)		61			—			61			—
Other comprehensive income (loss), net of tax		552			(549	)		2,520			(1,588	)
Comprehensive income	$	2,026		$	855		$	6,605		$	2,239

3

See accompanying notes to these consolidated financial statements

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2019 and 2018

(dollar amounts in thousands) (unaudited)

	For the Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities
Net Income	$	4,085		$	3,827
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		983			679
Stock based compensation expense		80			—
Net amortization and accretion of premiums and discounts on securities		298			312
(Gain) on sales of available-for-sale securities		(291	)		—
(Gain) on sales of loans held for sale		(3,103	)		(2,260	)
Proceeds from sales of loans held for sale		114,119			89,949
Origination of loans held for sale		(114,976	)		(87,592	)
Provision for loan losses		434			527
Loss on sale of other real estate owned		13			39
Impairment of other real estate owned		286			160
(Increase) in cash value of life insurance		(248	)		(256	)
(Increase) in interest receivable		(13	)		(163	)
Decrease (increase) in other assets		234			(79	)
Decrease in income taxes receivable		1,019			51
Increase in interest payable		40			20
(Decrease) increase in other liabilities		(1	)		671
Net cash provided by operating activities	$	2,959		$	5,885
Cash flows from investing activities
Proceeds from calls of securities held-to-maturity	$	—		$	2,000
Purchases of securities available-for-sale		(6,369	)		(998	)
Proceeds from maturities, calls and paydowns of securities available-for-sale		1,462			1,666
Proceeds from sale of securities available-for-sale		6,427			—
(Purchase) redemption of Federal Home Loan Bank stock		(44	)		43
Proceeds from sale of other real estate owned		349			846
Origination of loans, net of principal collected		(21,883	)		(34,459	)
Purchases of premises and equipment		(3,890	)		(704	)
Net cash (used in) investing activities	$	(23,948	)	$	(31,606	)

4

See accompanying notes to these consolidated financial statements

	2019			2018
Cash flows from financing activities
Net increase in deposits	$	20,990		$	39,954
Principal payments on finance lease obligations		(81	)		—
Dividends paid to common stockholders		(789	)		(787	)
Net cash provided by financing activities	$	20,120		$	39,167
(Decrease) increase in cash and cash equivalents		(869	)		13,446
Cash and cash equivalents at beginning of period	$	50,325		$	37,018
Cash and cash equivalents at end of period	$	49,456		$	50,464
Non cash transactions
Transfer of loans to other real estate owned	$	460		$	850
Fair value adjustment for securities available-for-sale		3,190			(2,009	)
Lease liabilities arising from right-of-use assets		6,373			—
Cash transactions
Cash paid for interest	$	3,733		$	2,716
Cash paid for income taxes		—			975

5

See accompanying notes to these consolidated financial statements

Bank of the James Financial Group, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2019 and 2018

(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, 2017		4,378,436	$	9,370	$	31,495	$	12,269		$	(1,469	)	$	51,665
Net Income		—		—		—		1,123			—			1,123
Dividends paid on common stock ($0.06 per share)		—		—		—		(263	)		—			(263	)
Other comprehensive loss		—		—		—		—			(850	)		(850	)
Balance at March 31, 2018		4,378,436	$	9,370	$	31,495	$	13,129		$	(2,319	)	$	51,675
Net Income		—		—		—		1,300			—			1,300
Dividends paid on common stock ($0.06 per share)		—		—		—		(262	)		—			(262	)
Other comprehensive loss		—		—		—		—			(189	)		(189	)
Balance at June 30, 2018		4,378,436	$	9,370	$	31,495	$	14,167		$	(2,508	)	$	52,524
Net Income		—		—		—		1,404			—			1,404
Dividends paid on common stock ($0.06 per share)		—		—		—		(262	)					(262	)
Other comprehensive loss		—		—		—		—			(549	)		(549	)
Balance at September 30, 2018		4,378,436	$	9,370	$	31,495	$	15,309		$	(3,057	)	$	53,117

6

See accompanying notes to these consolidated financial statements

										Accumulated
					Additional					Other
	Shares		Common		Paid-in		Retained			Comprehensive
	Outstanding		Stock		Capital		Earnings			Income (Loss)			Total
Balance at December 31, 2018		4,378,436	$	9,370	$	31,495	$	16,521		$	(2,243	)	$	55,143
Net Income		—		—		—		1,234			—			1,234
Dividends paid on common stock ($0.06 per share)		—		—		—		(263	)		—			(263	)
Stock-based compensation expense		—		—		27		—			—			27
Other comprehensive income		—		—		—		—			1,036			1,036
Balance at March 31, 2019		4,378,436	$	9,370	$	31,522	$	17,492		$	(1,207	)	$	57,177
Net Income		—		—		—		1,377			—			1,377
Dividends paid on common stock ($0.06 per share)		—		—		—		(263	)		—			(263	)
Stock-based compensation expense		—		—		26		—			—			26
Other comprehensive income		—		—		—		—			932			932
Balance at June 30, 2019		4,378,436	$	9,370	$	31,548	$	18,606		$	(275	)	$	59,249
Net Income		—		—		—		1,474			—			1,474
Dividends paid on common stock ($0.06 per share)		—		—		—		(263	)		—			(263	)
Stock-based compensation expense		—		—		27		—			—			27
Other comprehensive income		—		—		—		—			552			552
Balance at September 30, 2019		4,378,436	$	9,370	$	31,575	$	19,817		$	277		$	61,039

7

See accompanying notes to these consolidated financial statements

Notes to Consolidated Financial Statements

Note 1 – Basis of Presentation

The unaudited consolidated financial statements have been prepared by Bank of the James Financial Group, Inc. (“Financial” or the “Company”) pursuant to 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, 2019 and for the three and nine months ended September 30, 2019 and 2018 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, 2018. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes for the year ended December 31, 2018 included in Financial’s Annual Report on Form 10-K. Results for the three and nine month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

Certain immaterial reclassifications have been made to prior period balances to conform to the current period presentation. Reclassifications had no effect on prior year net income or stockholders’ equity.

The Company’s 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. Recently, the Company has expanded into Charlottesville, Roanoke, Blacksburg, Harrisonburg, and Lexington.

Financial’s critical accounting policies include the evaluation of the allowance for loan losses which is based on management’s estimate of an amount that is adequate to absorb probable losses inherent in the loan portfolio of Bank of the James (the “Bank”), Financial’s wholly-owned subsidiary. The allowance for loan losses is established through a provision for loan losses based on available information including the composition of the loan portfolio, historical loan losses, specific impaired loans, availability and quality of collateral, age of the various portfolios, changes in local economic conditions, and loan performance and quality of the portfolio. Different assumptions used in evaluating the adequacy of the Bank’s allowance for loan losses could result in material changes in Financial’s financial condition and results of operations. The Bank’s policy with respect to the methodology for determining the allowance for loan losses involves a higher degree of complexity and requires management to make subjective judgments that often require assumptions or estimates about uncertain matters. This critical policy and its assumptions are periodically reviewed with the Board of Directors.

Financial also considers valuation of other real estate owned (OREO) a critical accounting policy. OREO consists of properties acquired through foreclosure or deed in lieu of foreclosure. These properties are carried at fair value less estimated costs to sell at the date of foreclosure. Losses from the acquisition of property in full or partial satisfaction of loans are charged against the allowance for loan losses. Subsequent write-downs, if any, are charged against expense. Gains and losses on the sales of foreclosed properties are included in determining net income in the year of the sale. Operating costs after acquisition are expensed.

8

Note 2 – Use of 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.

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, 2019 and 2018.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Net income	$	1,474,000	$	1,404,000	$	4,085,000	$	3,827,000
Weighted average number of shares		4,378,436		4,378,436		4,378,436		4,378,436
Restricted stock units/stock options affect of incremental shares		6,895		—		4,692		30
Weighted average diluted shares		4,385,331		4,378,436		4,383,128		4,378,466
Basic EPS (weighted avg shares)	$	0.34	$	0.32	$	0.93	$	0.87
Diluted EPS (Including incremental shares)	$	0.34	$	0.32	$	0.93	$	0.87

No restricted stock units or stock options were excluded in calculating diluted earnings per share for any of the periods presented.

Note 4 – Stock Based Compensation

Accounting standards require companies to recognize the cost of employee services received in exchange for awards of equity instruments, such as stock options and restricted stock, based on the fair value of those awards at the date of grant.

9

Note 4 – Stock Based Compensation (continued)

At December 31, 2018, there were no stock-based compensation awards outstanding that were issued under the Company’s 1999 Stock Option Plan. The final stock-based compensation issued under this plan consisting solely of employee stock options which expired during the second quarter of 2018.

At the annual meeting of shareholders held on May 15, 2018, the shareholders approved the Bank of the James Financial Group, Inc. 2018 Equity Incentive Plan (the “2018 Incentive Plan”). The 2018 Incentive Plan permits the issuance of up to 250,000 shares of common stock for awards to key employees of the Company and its subsidiaries in the form of stock options, restricted stock, restricted stock units, stock awards and performance units.

On January 2, 2019, the Company granted its first block of equity compensation under the 2018 Incentive Plan consisting of 24,500 restricted stock units. The recipients of restricted stock units do not receive shares of the Company’s stock immediately, but instead receive shares upon satisfying the requisite service period specified by the terms and conditions of the grant. Additionally, the recipients of restricted stock units do not enjoy the rights of holder of the Company’s common stock until the units have vested and as such, they do not have voting rights or rights to nonforfeitable dividends. The related compensation expense is based on the grant date fair value of the Company’s stock of $13.00 per share. Shares vest over 3 years in thirds with the first one-third vesting one year from the grant date. The total expense recognized for the three and nine months ended September 30, 2019, in connection with the restricted stock unit awards was approximately $27,000 and $80,000, respectively. There were no forfeitures during the three and nine month periods ending September 30, 2019.

At September 30, 2019, the unrecognized stock-based compensation expense related to unvested restricted stock awards amounted to approximately $239,000. The unrecognized expense will be recognized ratably over the remaining vesting period of 2.25 years. The Company accounts for forfeitures as they occur.

Note 5 – Fair Value Measurements

Determination of Fair Value

The Company uses fair value measurements to record fair value 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, the fair value of a financial instrument is 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 and in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the 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, which focuses on exit price in the principal or most advantageous market and in an orderly transaction (that is, not a forced

10

Note 5 – Fair Value Measurements (continued)

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 the 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 at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is 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 would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow.

Level 2 securities would 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 to be Level 2 securities.

The following table summarizes the Company’s financial assets that were measured at fair value on a recurring basis during the period.

11

Note 5 – Fair Value Measurements (continued)

			Carrying Value at September 30, 2019 (in thousands)
Description	Balance as of September 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
US Treasuries	$	1,980	$	—	$	1,980	$	—
US agency obligations		26,235		—		26,235		—
Mortgage-backed securities		10,808		—		10,808		—
Municipals		11,304		—		11,304		—
Corporates		4,073		—		4,073		—
Total available-for-sale securities	$	54,400	$	—	$	54,400	$	—
			Carrying Value at December 31, 2018 (in thousands)
Description	Balance as of December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
US Treasuries	$	1,845	$		$	1,845	$
US agency obligations		23,267		—		23,267		—
Mortgage-backed securities		11,876		—		11,876		—
Municipals		12,009		—		12,009		—
Corporates		3,730		—		3,730		—
Total available-for-sale securities	$	52,727	$	—	$	52,727	$	—

Fair Value on a Non-recurring Basis

Impaired loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected when due. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair value of the collateral. Fair value is measured based on the value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Bank using observable market data (Level 2). However, in situations where the collateral is a house or building in the process of construction, the appraisal is more than 12 months old, management has determined the fair value of the collateral is further impaired below the appraised value, or the appraisal is not based solely on market comparables adjusted for observable inputs, the value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Consolidated Statements of Income.

12

Note 5 – Fair Value Measurements (continued)

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 the price secondary markets are currently offering for similar loans using observable market data which is not materially different than cost due to the short duration between origination and sale (Level 2). As such, the Company records fair value adjustments on a nonrecurring basis. No nonrecurring fair value adjustments were recorded on loans held for sale during the period ended September 30, 2019. Gains and losses on the sale of loans are recorded within gains on sales of loans held for sale, net on the Consolidated Statements of Income.

Other real estate owned

Certain assets such as other real estate owned (OREO) are measured at fair value less cost to sell. We believe that the fair value component in its valuation follows the provisions of ASC 820.

Real estate acquired through foreclosure is transferred to OREO. The measurement of loss associated with OREO is based on the fair value of the collateral compared to the unpaid loan balance and anticipated costs to sell the property. The value of OREO property is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Bank using observable market data (Level 2).

Any fair value adjustments are recorded in the period incurred and expensed against current earnings. However, in situations where the collateral is a house or building in the process of construction, the appraisal is more than 12 months old, management has determined the fair value of the collateral is further impaired below the appraised value, or the appraisal is not based solely on market comparables adjusted for observable inputs, the value is considered Level 3.

13

Note 5 – Fair Value Measurements (continued)

The following table summarizes the Company’s impaired loans and OREO measured at fair value on a nonrecurring basis during the period (in thousands):

			Carrying Value at September 30, 2019
Description	Balance as of September 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans*	$	1,010	$	—	$	—	$	1,010
Other real estate owned		2,242		—		—		2,242

* Includes loans charged down to the net realizable value of the collateral.

			Carrying Value at December 31, 2018
Description	Balance as of December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans*	$	1,587	$	—	$	—	$	1,587
Other real estate owned		2,430		—		—		2,430

* Includes loans charged down to the net realizable value of the collateral.

14

Note 5 – Fair Value Measurements (continued)

The following table sets forth information regarding the quantitative inputs used to value assets classified as Level 3:

	Quantitative information about Level 3 Fair Value Measurements for September 30, 2019 (dollars in thousands)
	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$	1,010	Discounted appraised value	Selling cost		0% - 10% (8%)
				Discount for lack of marketability and age of appraisal		0% - 20% (6%)
OREO		2,242	Discounted appraised value	Selling cost		0% - 10% (6%)
				Discount for lack of marketability and age of appraisal		0% - 25% (15%)
	Quantitative information about Level 3 Fair Value Measurements for December 31,  2018 (dollars in thousands)
	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$	1,587	Discounted appraised value	Selling cost		0% - 10% (8%)
				Discount for lack of marketability and age of appraisal		0% - 20% (6%)
OREO		2,430	Discounted appraised value	Selling cost		0% - 10% (6%)
				Discount for lack of marketability and age of appraisal		0% - 25% (15%)

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.

15

Note 5 – Fair Value Measurements (continued)

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, 2019 and December 31, 2018 was as follows (in thousands):

			Fair Value Measurements at September 30, 2019 using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
	Amounts		(Level 1)		(Level 2)		(Level 3)		Balance
Assets
Cash and due from banks	$	27,315	$	27,315	$	—	$	—	$	27,315
Fed funds sold		22,141		22,141		—		—		22,141
Securities
Available-for-sale		54,400		—		54,400		—		54,400
Held-to-maturity		3,690		—		3,938		—		3,938
Restricted stock		1,506				1,506		—		1,506
Loans, net (1)		551,005		—		—		551,540		551,540
Loans held for sale		5,630		—		5,630		—		5,630
Interest receivable		1,755		—		1,755		—		1,755
BOLI		13,606		—		13,606		—		13,606
Liabilities
Deposits	$	633,033	$	—	$	634,750	$	—	$	634,750
Capital notes		5,000		—		4,773		—		4,773
Interest payable		167		—		167		—		167
			Fair Value Measurements at December 31, 2018 using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
	Amounts		(Level 1)		(Level 2)		(Level 3)		Balance
Assets
Cash and due from banks	$	26,725	$	26,725	$	—	$	—	$	26,725
Fed funds sold		23,600		23,600						23,600
Securities
Available-for-sale		52,727		—		52,727		—		52,727
Held-to-maturity		3,700		—		3,515		—		3,515
Restricted stock		1,462		—		1,462				1,462
Loans, net (1)		530,016		—		—		522,782		522,782
Loans held for sale		1,670		—		1,670		—		1,670
Interest receivable		1,742		—		1,742		—		1,742
BOLI		13,359		—		13,359		—		13,359
Liabilities
Deposits	$	612,043	$	—	$	612,532	$	—	$	612,532
Capital notes		5,000		—		4,710				4,710
Interest payable		127		—		127		—		127

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

16

Note 6 – Leases

On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842. The Company also elected certain practical expedients within the standard and consistent with such elections did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases, and did not reassess any initial direct costs for existing leases. As stated in the Company’s 2018 Form 10-K, the implementation of the new standard resulted in recognition of right-of-use assets and lease liabilities of $3.0 million at the date of adoption, which is related to the Company’s lease of premises used in operations. The right-of-use assets and lease liabilities are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

The Company leases six of its operating locations under long-term leases (greater than 12 months). Leases for four of these locations are classified as operating leases. One new lease which commenced near the end of the current period was classified as a finance lease upon management’s assessment of the lease. Also near the end of the current period, another lease which was classified as operating upon adoption of ASU 2016-02 was modified, and upon reassessment of the modified lease, was transitioned to the finance lease classification. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably certain of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

17

Note 6 – Leases (continued)

The following tables present information about the Company’s operating leases:

(Dollars in thousands)	September 30, 2019
Lease liabilities	$	1,557
Right-of-use assets	$	1,544
Weighted average remaining lease term		14.8 years
Weighted average discount rate		3.39	%

The following tables present information about the Company’s finance leases:

(Dollars in thousands)	September 30, 2019
Lease liabilities	$	4,492
Right-of-use assets	$	4,420
Weighted average remaining lease term		11.3 years
Weighted average discount rate		2.70	%
Lease cost (in thousands)	For the Three Months Ended September 30, 2019
Operating lease cost	$	147
Finance lease cost:
Amortization of right-of-use assets		138
Interest on lease liabilities		41
Total lease cost	$	326
Cash paid for amounts included in the measurement of operating lease liabilities	$	240
Cash paid for amounts included in the measurement of finance lease liabilities	$	106
Lease cost (in thousands)	For the Nine Months Ended September 30, 2019
Operating lease cost	$	433
Finance lease cost:
Amortization of right-of-use assets		138
Interest on lease liabilities		41
Total lease cost	$	612
Cash paid for amounts included in the measurement of operating lease liabilities	$	518
Cash paid for amounts included in the measurement of finance lease liabilities	$	106

18

Note 6 – Leases (continued)

A maturity analysis of operating and finance lease liabilities and reconciliation of the undiscounted cash flows to the total of lease liabilities is as follows:

	Operating Lease			Finance Lease
	Liabilities			Liabilities
	As of			As of
Lease payments due (in thousands)	September 30, 2019			September 30, 2019
Three months ending December 31, 2019	$	45		$	101
Twelve months ending December 31, 2020		184			445
Twelve months ending December 31, 2021		111			454
Twelve months ending December 31, 2022		110			454
Twelve months ending December 31, 2023		110			454
Twelve months ending December 31, 2024		110			479
Thereafter		1,352			2,881
Total undiscounted cash flows	$	2,022		$	5,268
Discount		(465	)		(776	)
Lease liabilities	$	1,557		$	4,492

19

Note 7 – Securities

The following tables summarize the Bank’s holdings for both securities held-to-maturity and securities available-for-sale as of September 30, 2019 and December 31, 2018 (amounts in thousands):

	September 30, 2019
	Amortized		Gross Unrealized
	Costs		Gains		(Losses)			Fair Value
Held-to-Maturity
US agency obligations	$	3,690	$	248	$	—		$	3, 938
Available-for-Sale
US Treasuries		1,964		16		—			1,980
US agency obligations		25,963		374		(102	)		26,235
Mortgage-backed securities		10,887		40		(119	)		10,808
Municipals		11,145		167		(8	)		11,304
Corporates		4,090		28		(45	)		4,073
	$	54,049	$	625	$	(274	)	$	54,400
	December 31, 2018
	Amortized		Gross Unrealized
	Costs		Gains		(Losses)			Fair Value
Held-to-Maturity
US agency obligations	$	3,700	$	3	$	(185	)	$	3,515
Available-for-Sale
US Treasuries		1,961		—		(116	)		1,845
US agency obligations		24,701		—		(1,434	)		23,267
Mortgage-backed securities		12,390		—		(514	)		11,876
Municipals		12,412		3		(406	)		12,009
Corporates		4,102		—		(372	)		3,730
	$	55,566	$	3	$	(2,842	)	$	52,727

20

Note 7 – Securities (continued)

The following tables show the gross unrealized losses and fair value of the Bank’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2019 and December 31, 2018 (amounts in thousands):

	Less than 12 months				More than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
September 30, 2019	Value		Losses		Value		Losses		Value		Losses
Description of securities
Held-to-maturity
US agency obligations	$	—	$	—	$	—	$	—	$	—	$	—
Available-for-sale
US Treasuries		—		—		—		—		—		—
US agency obligations		5,252		54		10,990		48		16,242		102
Mortgage-backed securities		—		—		9,078		119		9,078		119
Municipals		—		—		1,332		8		1,332		8
Corporates		—		—		2,024		45		2,024		45
Total	$	5,252	$	54	$	23,424	$	220	$	28,676	$	274
	Less than 12 months				More than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2018	Value		Losses		Value		Losses		Value		Losses
Description of securities
Held-to-maturity
US agency obligations	$	—	$	—	$	3,515	$	185	$	3,515	$	185
Available-for-sale
US Treasuries		—		—		1,845		116		1,845		116
US agency obligations		—		—		23,267		1,434		23,267		1,434
Mortgage-backed securities		966		20		10,910		494		11,876		514
Municipals		—		—		10,994		406		10,994		406
Corporates		—		—		3,730		372		3,730		372
Total	$	966	$	20	$	50,746	$	2,822	$	51,712	$	2,842

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and may do so more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) the intent of Financial, if any, to sell the security; (4) whether Financial more likely than not will be required to sell the security before recovering its cost; and (5) whether Financial does not expect to recover the security’s entire amortized cost basis (even if Financial does not intend to sell the security).

21

Note 7 – Securities (continued)

At September 30, 2019, the Company did not consider the unrealized losses as other-than-temporary losses due to the nature of the securities involved. As of September 30, 2019, the Bank owned 25 securities in an unrealized loss position that were being evaluated for other than temporary impairment. Two of these securities were S&P rated AAA, 22 were rated AA, and one was rated BBB+. As of September 30, 2019, 21 of these securities were direct obligations of the U.S. government or government sponsored entities, two were municipal issues, and two were investments in domestic corporate issued securities.

Based on the analysis performed by management as mandated by the Bank’s investment policy, management believes the default risk to be minimal. Because management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to change in interest rates and other market conditions, no declines currently are deemed to be other-than-temporary.

Gross gains on sales of available-for-sale securities were $291 during the three and nine months ended September 30, 2019 as compared to $0 during the same periods in 2018. There were no gross losses on sales of available-for-sale securities during the three and nine month periods ended September 30, 2019 and 2018. There were no sales of held-to-maturity securities during the three and nine month periods ended September 30, 2019 and 2018.

Note 8 – Business Segments

The Company has two reportable business segments: (i) a traditional full-service community banking segment and, (ii) a mortgage loan origination business. The community banking business segment includes Bank of the James which provides loans, deposits, investments and insurance to retail and commercial customers throughout Region 2000 and other areas within Central Virginia. The mortgage segment provides a variety of mortgage loan products principally within Region 2000. Mortgage loans are originated and sold in the secondary market through purchase commitments from investors with servicing released. Because of the pre-arranged purchase commitments, there is minimal risk to the Company.

Both of the Company’s reportable segments are service based. The mortgage business is a gain on sale business while the Bank’s primary source of revenue is net interest income. The Bank also provides a referral network for the mortgage origination business. The mortgage business may also be in a position to refer its customers to the Bank for banking services when appropriate.

22

Note 8 – Business Segments (continued)

Information about reportable business segments and reconciliation of such information to the consolidated financial statements for the three and nine months ended September 30, 2019 and 2018 was as follows (dollars in thousands):

Business Segments

	Community
	Banking		Mortgage		Total
Nine months ended September 30, 2019
Net interest income	$	18,447	$	—	$	18,447
Provision for loan losses		434		—		434
Net interest income after provision for loan losses		18,013		—		18,013
Noninterest income		1,936		3,103		5,039
Noninterest expenses		15,700		2,247		17,947
Income before income taxes		4,249		856		5,105
Income tax expense		840		180		1,020
Net income	$	3,409	$	676	$	4,085
Total assets	$	702,215	$	5,899	$	708,114
Nine months ended September 30, 2018
Net interest income	$	17,124	$	—	$	17,124
Provision for loan losses		527		—		527
Net interest income after provision for loan losses		16,597		—		16,597
Noninterest income		1,684		2,262		3,946
Noninterest expenses		13,922		1,845		15,767
Income before income taxes		4,359		417		4,776
Income tax expense		891		58		949
Net income	$	3,468	$	359	$	3,827
Total assets	$	665,698	$	2,740	$	668,438
	Community
	Banking		Mortgage		Total
Three months ended September 30, 2019
Net interest income	$	6,165	$	—	$	6,165
Provision for loan losses		108		—		108
Net interest income after provision for loan losses		6,057		—		6,057
Noninterest income		824		1,337		2,161
Noninterest expenses		5,453		920		6,373
Income before income taxes		1,428		417		1,845
Income tax expense		283		88		371
Net income	$	1,145	$	329	$	1,474
Total assets	$	702,215	$	5,899	$	708,114
Three months ended September 30, 2018
Net interest income	$	5,990	$	—	$	5,990
Provision for loan losses		190		—		190
Net interest income after provision for loan losses		5,800		—		5,800
Noninterest income		552		767		1,319
Noninterest expenses		4,715		649		5,364
Income before income taxes		1,637		118		1,755
Income tax expense		345		6		351
Net income	$	1,292	$	112	$	1,404
Total assets	$	665,698	$	2,740	$	668,438

23

Note 9 – Loans, allowance for loan losses and OREO

Management has an established methodology used to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Bank has segmented certain loans in the portfolio by product type. Within these segments, the Bank has sub-segmented its portfolio into classes, based on the associated risks. The classifications set forth below do not correspond directly to the classifications set forth in the call report (Form FFIEC 041). Management has determined that the classifications set forth below are more appropriate for use in identifying and managing risk in the loan portfolio.

Loan Segments:		Loan Classes:
	Commercial		Commercial and industrial loans
	Commercial real estate		Commercial mortgages – owner occupied
			Commercial mortgages – non-owner occupied
			Commercial construction
	Consumer		Consumer unsecured
			Consumer secured
	Residential		Residential mortgages
			Residential consumer construction

A summary of loans, net is as follows (dollars in thousands):

	As of:
	September 30,		December 31,
	2019		2018
Commercial	$	102,191	$	92,877
Commercial real estate		301,016		289,171
Consumer		83,271		86,191
Residential		69,300		66,358
Total loans (1)		555,778		534,597
Less allowance for loan losses		4,773		4,581
Net loans	$	551,005	$	530,016

(1) Includes net deferred costs and premiums of $299 and $457 as of September 30, 2019 and December 31, 2018, respectively.

The Bank’s internal risk rating system is in place to grade commercial and commercial real estate loans. Category ratings are reviewed periodically by lenders and the credit review area of the Bank based on the borrower’s individual situation. Additionally, internal and external monitoring and review of credits are conducted on an annual basis.

24

Note 9 – Loans, allowance for loan losses and OREO (continued)

Below is a summary and definition of the Bank’s risk rating categories:

RATING 1	Excellent
RATING 2	Above Average
RATING 3	Satisfactory
RATING 4	Acceptable / Low Satisfactory
RATING 5	Monitor
RATING 6	Special Mention
RATING 7	Substandard
RATING 8	Doubtful
RATING 9	Loss

We segregate loans into the above categories based on the following criteria and we review the characteristics of each rating at least annually, generally during the first quarter. The characteristics of these ratings are as follows:

• “Pass.” These are loans having risk ratings of 1 through 4. Pass loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio. The borrower has paid all obligations as agreed and it is expected that this type of payment history will continue. When necessary, acceptable personal guarantors support the loan.

• “Monitor.” These are loans having a risk rating of 5. Monitor loans have currently acceptable risk but may have the potential for a specific defined weakness in the borrower’s operations and the borrower’s ability to generate positive cash flow on a sustained basis. The borrower’s recent payment history may currently or in the future be characterized by late payments. The Bank’s risk exposure is mitigated by collateral supporting the loan. The collateral is considered to be well-margined, well maintained, accessible and readily marketable.

• “Special Mention.” These are loans having a risk rating of 6. Special Mention loans have weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the bank’s credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. These loans do warrant more than routine monitoring due to a weakness caused by adverse events.

• “Substandard.” These are loans having a risk rating of 7. Substandard loans are considered to have specific and well-defined weaknesses that jeopardize the viability of the Bank’s credit extension. The payment history for the loan has been inconsistent and the expected or projected primary repayment source may be inadequate to service the loan. The estimated net liquidation value of the collateral pledged and/or ability of the personal guarantor(s) to pay the loan may not adequately protect the Bank. There is a distinct possibility that the Bank will sustain some loss if the deficiencies associated with the loan are not corrected in the near term. A substandard loan would not automatically meet our definition of impaired unless the loan is significantly past due and the borrower’s performance and financial condition provides evidence that it is probable that the Bank will be unable to collect all amounts due.

25

Note 9 – Loans, allowance for loan losses and OREO (continued)

• “Doubtful.” These are loans having a risk rating of 8. Doubtful rated loans have all the weaknesses inherent in a loan that is classified substandard but with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high.

• “Loss.” These are loans having a risk rating of 9. Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off.

26

Note 9 – Loans, allowance for loan losses and OREO (continued)

Loans on Non-Accrual Status
(dollars in thousands)
	As of
	September 30, 2019		December 31, 2018
Commercial	$	285	$	973
Commercial Real Estate:
Commercial Mortgages-Owner Occupied		405		317
Commercial Mortgages-Non-Owner Occupied		503		173
Commercial Construction		—		—
Consumer
Consumer Unsecured		—		—
Consumer Secured		28		84
Residential:
Residential Mortgages		550		1,391
Residential Consumer Construction		—		—
Totals	$	1,771	$	2,939

We also classify other real estate owned (OREO) as a nonperforming asset. OREO represents real property owned by the Bank which was acquired through purchase at foreclosure or from the borrower through a deed in lieu of foreclosure. OREO decreased to $2,242 on September 30, 2019 from $2,430 on December 31, 2018. The following table represents the changes in OREO balance during the nine months ended September 30, 2019 and year ended December 31, 2018.

OREO Changes
(dollars in thousands)
	Nine Months Ended September 30, 2019			Year Ended December 31, 2018
Balance at the beginning of the year (net)	$	2,430		$	2,650
Transfers from loans		460			850
Capitalized costs		—			—
Valuation adjustments		(286	)		(185	)
Sales proceeds		(349	)		(846	)
Loss on disposition		(13	)		(39	)
Balance at the end of the period (net)	$	2,242		$	2,430

At September 30, 2019 and December 31, 2018, the Company had no consumer mortgage loans secured by residential real estate for which foreclosure was in process. The Company held two residential real estate properties carried on the books in other real estate owned at a value of $228 as of September 30, 2019 and four residential real estate properties carried on the books at a value of $156 in other real estate owned as of December 31, 2018.

27

Note 9 – Loans, allowance for loan losses and OREO (continued)

	Impaired Loans
	(dollars in thousands)
	As of and For the the Nine Months Ended September 30, 2019
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
2019	Investment		Balance		Allowance		Investment		Recognized
With No Related Allowance Recorded:
Commercial	$	488	$	1,041	$	—	$	959	$	29
Commercial Real Estate
Commercial Mortgages-Owner Occupied		2,258		2,448		—		2,336		132
Commercial Mortgage Non-Owner Occupied		671		696		—		401		23
Commercial Construction		—		—		—		—		—
Consumer
Consumer Unsecured		—		—		—		—		—
Consumer Secured		109		109		—		99		5
Residential
Residential Mortgages		1,499		1,513		—		1,688		51
Residential Consumer Construction		—		—		—		—		—
With an Allowance Recorded:
Commercial	$	8	$	8	$	8	$	20	$	1
Commercial Real Estate
Commercial Mortgages-Owner Occupied		15		15		15		27		1
Commercial Mortgage Non-Owner Occupied		15		15		6		53		1
Commercial Construction		—		—		—		—		—
Consumer
Consumer Unsecured		—		—		—		1		—
Consumer Secured		—		—		—		53		—
Residential
Residential Mortgages		140		156		34		258		3
Residential Consumer Construction		—		—		—		—		—
Totals:
Commercial	$	496	$	1,049	$	8	$	979	$	30
Commercial Real Estate
Commercial Mortgages-Owner Occupied		2,273		2,463		15		2,363		133
Commercial Mortgage Non-Owner Occupied		686		711		6		454		24
Commercial Construction		—		—		—		—		—
Consumer
Consumer Unsecured		—		—		—		1		—
Consumer Secured		109		109		—		152		5
Residential
Residential Mortgages		1,639		1,669		34		1,946		54
Residential Consumer Construction		—		—		—		—		—
	$	5,203	$	6,001	$	63	$	5,895	$	246

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Note 9 – Loans, allowance for loan losses and OREO (continued)

	Impaired Loans
	(dollars in thousands)
	As of and For the the Year Ended December 31, 2018
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
2018	Investment		Balance		Allowance		Investment		Recognized
With No Related Allowance Recorded:
Commercial	$	1,430	$	1,922	$	—	$	1,178	$	24
Commercial Real Estate
Commercial Mortgages-Owner Occupied		2,414		2,511		—		2,421		167
Commercial Mortgage Non-Owner Occupied		131		132		—		403		8
Commercial Construction		—		—		—		—		—
Consumer
Consumer Unsecured		—		—		—		—		—
Consumer Secured		88		88		—		184		6
Residential
Residential Mortgages		1,876		1,953		—		1,728		89
Residential Consumer Construction		—		—		—		—		—
With an Allowance Recorded:
Commercial	$	31	$	31	$	15	$	174	$	3
Commercial Real Estate
Commercial Mortgages-Owner Occupied		39		132		36		352		3
Commercial Mortgage Non-Owner Occupied		90		90		20		82		6
Commercial Construction		—		—		—		85		—
Consumer
Consumer Unsecured		1		1		1		2		—
Consumer Secured		105		105		105		266		7
Residential
Residential Mortgages		375		390		61		263		11
Residential Consumer Construction		—		—		—		—		—
Totals:
Commercial	$	1,461	$	1,953	$	15	$	1,352	$	27
Commercial Real Estate
Commercial Mortgages-Owner Occupied		2,453		2,643		36		2,773		170
Commercial Mortgage Non-Owner Occupied		221		222		20		485		14
Commercial Construction		—		—		—		85		—
Consumer
Consumer Unsecured		1		1		1		2		—
Consumer Secured		193		193		105		450		13
Residential
Residential Mortgages		2,251		2,343		61		1,991		100
Residential Consumer Construction		—		—		—		—		—
	$	6,580	$	7,355	$	238	$	7,138	$	324

29

Note 9 – Loans, allowance for loan losses and OREO (continued)

	Allowance for Loan Losses and Recorded Investment in Loans
	(dollars in thousands)
	As of and For the Nine Months Ended September 30, 2019
				Commercial
2019	Commercial			Real Estate			Consumer			Residential			Total
Allowance for Credit Losses:
Beginning Balance	$	1,136		$	1,831		$	956		$	658		$	4,581
Charge-Offs		(104	)		(6	)		(188	)		(21	)		(319	)
Recoveries		34			5			34			4			77
Provision		222			89			56			67			434
Ending Balance		1,288			1,919			858			708			4,773
Ending Balance: Individually evaluated for impairment		8			21			—			34			63
Ending Balance: Collectively evaluated for impairment		1,280			1,898			858			674			4,710
Totals:	$	1,288		$	1,919		$	858		$	708		$	4,773
Financing Receivables:
Ending Balance: Individually evaluated for impairment		496			2,959			109			1,639			5,203
Ending Balance: Collectively evaluated for impairment		101,695			298,057			83,162			67,661			550,575
Totals:	$	102,191		$	301,016		$	83,271		$	69,300		$	555,778

30

Note 9 – Loans, allowance for loan losses and OREO (continued)

	Allowance for Loan Losses and Recorded Investment in Loans
	(dollars in thousands)
	As of and For the Year Ended December 31, 2018
				Commercial
2018	Commercial			Real Estate			Consumer			Residential			Total
Allowance for Credit Losses:
Beginning Balance	$	1,264		$	1,738		$	1,172		$	578		$	4,752
Charge-Offs		(395	)		(230	)		(405	)		(34	)		(1,064	)
Recoveries		113			4			60			—			177
Provision		154			319			129			114			716
Ending Balance		1,136			1,831			956			658			4,581
Ending Balance: Individually evaluated for impairment		15			56			106			61			238
Ending Balance: Collectively evaluated for impairment		1,121			1,775			850			597			4,343
Totals:	$	1,136		$	1,831		$	956		$	658		$	4,581
Financing Receivables:
Ending Balance: Individually evaluated for impairment		1,461			2,674			194			2,251			6,580
Ending Balance: Collectively evaluated for impairment		91,416			286,497			85,997			64,107			528,017
Totals:	$	92,877		$	289,171		$	86,191		$	66,358		$	534,597

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Note 9 – Loans, allowance for loan losses and OREO (continued)

	Age Analysis of Past Due Loans as of
	September 30, 2019
	(dollars in thousands)
					Greater								Recorded Investment
	30-59 Days		60-89 Days		than		Total Past				Total		> 90 Days &
2019	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing
Commercial	$	2	$	—	$	134	$	136	$	102,055	$	102,191	$	—
Commercial Real Estate:
Commercial Mortgages- Owner Occupied		674		19		405		1,098		105,162		106,260		—
Commercial Mortgages-Non-Owner Occupied		126		706		503		1,335		176,611		177,946		—
Commercial Construction		—		—		—		—		16,810		16,810		—
Consumer:
Consumer Unsecured		7		—		—		7		8,218		8,225		—
Consumer Secured		498		153		—		651		74,395		75,046		—
Residential:
Residential Mortgages		994		94		478		1,556		54,215		55,781		—
Residential Consumer Construction		—		—		—		—		13,519		13,519		—
Total	$	2,301	$	972	$	1,520	$	4,793	$	550,985	$	555,778	$	—
	Age Analysis of Past Due Loans as of
	December 31, 2018
	(dollars in thousands)
					Greater								Recorded Investment
	30-59 Days		60-89 Days		than		Total Past				Total		> 90 Days &
2018	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing
Commercial	$	54	$	56	$	220	$	330	$	92,547	$	92,877	$	—
Commercial Real Estate:
Commercial Mortgages-Owner Occupied		209		—		307		516		97,910		98,426		—
Commercial Mortgages-Non-Owner Occupied		149		468		—		617		174,657		175,274		—
Commercial Construction		—		—		—		—		15,471		15,471		—
Consumer:
Consumer Unsecured		8		1		—		9		8,745		8,754		—
Consumer Secured		369		44		—		413		77,024		77,437		—
Residential:
Residential Mortgages		882		164		567		1,613		56,559		58,172		—
Residential Consumer Construction		—		—		—		—		8,186		8,186		—
Total	$	1,671	$	733	$	1,094	$	3,498	$	531,099	$	534,597	$	—

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Note 9 – Loans, allowance for loan losses and OREO (continued)

	Credit Quality Information - by Class
	September 30, 2019
	(dollars in thousands)
2019	Pass		Monitor		Special Mention		Substandard		Doubtful		Totals
Commercial	$	96,753	$	352	$	4,546	$	540	$	—	$	102,191
Commercial Real Estate:
Commercial Mortgages-Owner Occupied		95,133		452		8,402		2,273		—		106,260
Commercial Mortgages-Non-Owner Occupied		170,699		6,156		348		743		—		177,946
Commercial Construction		16,520		290		—		—		—		16,810
Consumer
Consumer Unsecured		8,225		—		—		—		—		8,225
Consumer Secured		74,825		—		—		221		—		75,046
Residential:
Residential Mortgages		53,611		329		—		1,841		—		55,781
Residential Consumer Construction		13,278		241		—		—		—		13,519
Totals	$	529,044	$	7,820	$	13,296	$	5,618	$	—	$	555,778
	Credit Quality Information - by Class
	December 31, 2018
	(dollars in thousands)
2018	Pass		Monitor		Special Mention		Substandard		Doubtful		Totals
Commercial	$	90,142	$	818	$	374	$	1,543	$	—	$	92,877
Commercial Real Estate:
Commercial Mortgages-Owner Occupied		90,995		1,461		3,517		2,453		—		98,426
Commercial Mortgages-Non -Owner Occupied		172,342		2,285		332		315		—		175,274
Commercial Construction		14,892		579		—		—		—		15,471
Consumer
Consumer Unsecured		8,747		—		6		1		—		8,754
Consumer Secured		77,092		—		88		257		—		77,437
Residential:
Residential Mortgages		55,336		334		—		2,502		—		58,172
Residential Consumer Construction		8,186		—		—		—		—		8,186
Totals	$	517,732	$	5,477	$	4,317	$	7,071	$	—	$	534,597

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Note 9 – Loans, allowance for loan losses and OREO (continued)

Troubled Debt Restructurings (TDR)

There were no loan modifications that would have been classified as TDRs during the three and nine months ended September 30, 2019 and 2018.

There were no loan modifications classified as TDRs within the last twelve months that defaulted during the three and nine months ended September 30, 2019 and 2018.

At September 30, 2019 and December 31, 2018, the Bank had no outstanding commitments to disburse additional funds on loans classified as TDRs.

Note 10 – Revenue Recognition

On January 1, 2018, the Company adopted ASU No. 2014-09 “Revenue from Contracts with Customers” (Topic 606) and all subsequent ASUs that modified Topic 606. The implementation of the new standard did not have a material impact on the measurement or recognition of revenue; as such, a cumulative effect adjustment to opening retained earnings was not deemed necessary. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.

Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, interchange fees, merchant income, and annuity and insurance commissions. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams in-scope of Topic 606 are discussed below.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or at the end of the month through a direct charge to customers’ accounts.

Fees, Exchange, and Other Service Charges

Fees, exchange, and other service charges are primarily comprised of debit and credit card income, ATM fees, merchant services income, treasury services income and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income

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Note 10 – Revenue Recognition (continued)

mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Treasury services income primarily represents fees charged to customers for sweep, positive pay and lockbox services. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or at the end of the month.

Other

Other noninterest income consists of other recurring revenue streams such as commissions from sales of mutual funds and other investments, safety deposit box rental fees, and other miscellaneous revenue streams. Commissions from the sale of mutual funds and other investments are recognized on trade date, which is when the Company has satisfied its performance obligation. The Company also receives periodic service fees (i.e., trailers) from mutual fund companies typically based on a percentage of net asset value. Trailer revenue is recorded over time, usually monthly or quarterly, as net asset value is determined. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation.

Note 11 – Recent accounting pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. At the FASB’s October 16, 2019 meeting, the Board affirmed its decision to amend the effective date of this ASU for many companies. Public business entities that are SEC filers, excluding those meeting the smaller reporting company definition, will retain the initial required implementation date of fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. All other entities will be required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently assessing the impact that ASU 2016-13 will have on its consolidated financial statements The Company has been in discussions with its core processor to coordinate its plans for implementation and has contracted with an additional vendor to begin implementation.

35

Note 11 – Recent accounting pronouncements (continued)

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments modify the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty. Certain disclosure requirements in Topic 820 are also removed or modified. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Certain of the amendments are to be applied prospectively while others are to be applied retrospectively. Early adoption is permitted. The Company does not expect the adoption of ASU 2018-13 to have a material impact on its consolidated financial statements.

In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This ASU clarifies and improves areas of guidance related to the recently issued standards on credit losses, hedging, and recognition and measurement including improvements resulting from various TRG Meetings. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact that ASU 2019-04 will have on its consolidated financial statements.

In May 2019, the FASB issued ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.” The amendments in this ASU provide entities that have certain instruments within the scope of Subtopic 326-20 with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments, upon the adoption of Topic 326. The fair value option election does not apply to held-to-maturity debt securities. An entity that elects the fair value option should subsequently measure those instruments at fair value with changes in fair value flowing through earnings. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments should be applied on a modified-retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings balance in the balance sheet. Early adoption is permitted. The Company is currently assessing the impact that ASU 2019-05 will have on its consolidated financial statements.

36

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan” and similar expressions and variations thereof identify certain of such forward-looking statements which speak only as of the dates on which they were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Factors that could cause actual results to differ from the results discussed in the forward-looking statements include, but are not limited to: economic conditions (both generally and more specifically in the markets in which we operate); competition for our customers from other providers of financial services; government legislation and regulation relating to the banking industry (which changes from time to time and over which we have no control) including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act; changes in the value of real estate securing loans made by the Bank; changes in interest rates; and material unforeseen changes in the liquidity, results of operations, or financial condition of our customers. Other risks, uncertainties and factors could cause our actual results to differ materially from those projected in any forward-looking statements we make.

GENERAL

Critical Accounting Policies

Bank of the James Financial Group, Inc.’s (“Financial”) financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The financial information contained within our statements is, to a significant extent, based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset or relieving a liability. We use historical loss ratios as one factor in determining the inherent loss that may be present in our loan portfolio. Actual losses could differ significantly from the historical factors that we use in estimating risk. In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of our transactions would be the same, the timing of events that would impact our transactions could change.

Financial’s critical accounting policies include the evaluation of the allowance for loan losses which is based on management’s estimate of an amount that is adequate to absorb probable losses inherent in the loan portfolio of the Bank. The allowance for loan losses is established through a provision for loan loss based on available information including the composition of the loan portfolio, historical loan losses, specific impaired loans, availability and quality of collateral, age of the various portfolios, changes in local economic conditions, and loan performance and quality of the portfolio. Different assumptions used in evaluating the adequacy of the Bank’s allowance for loan losses could result in material changes in Financial’s financial condition and results of operations.

37

The allowance is based on two basic principles of accounting: (i) ASC 450 “Contingencies”, which requires that losses be accrued when they are probable of occurring and are reasonably estimable and (ii) ASC 310 “Impairment of a Loan”, which requires that losses on impaired loans be accrued based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance. Guidelines for determining allowances for loan losses are also provided in the SEC Staff Accounting Bulletin No. 102 – “Selected Loan Loss Allowance Methodology and Documentation Issues” and the Federal Financial Institutions Examination Council’s interagency guidance, “Interagency Policy Statement on the Allowance for Loan and Lease Losses” (the “FFIEC Policy Statement”).

The Bank’s policy with respect to the methodology for determining the allowance for loan losses involves a higher degree of complexity and requires management to make subjective judgments that often require assumptions or estimates about uncertain matters. This critical policy and its assumptions are periodically reviewed with the Board of Directors.

See “Management Discussion and Analysis Results of Operations – Allowance for Loan Losses and Loan Loss Reserve” below for further discussion of the allowance for loan losses.

Financial also considers valuation of other real estate owned (OREO) a critical accounting policy. OREO consists of properties acquired through foreclosure or deed in lieu of foreclosure. These properties are carried at fair value less estimated costs to sell at the date of foreclosure. Losses from the acquisition of property in full or partial satisfaction of loans are charged against the allowance for loan losses. Subsequent write-downs, if any, are charged against expense. Gains and losses on the sales of foreclosed properties are included in determining net income in the year of the sale. Operating costs after acquisition are expensed.

Overview

Financial is a bank holding company headquartered in Lynchburg, Virginia. Our primary business is retail banking which we conduct through our wholly-owned subsidiary, Bank of the James (which we refer to as the “Bank”). We conduct three other business activities: mortgage banking through the Bank’s Mortgage division (which we refer to as “Mortgage division”), investment services through the Bank’s Investment division (which we refer to as “Investment division”), and insurance activities through BOTJ Insurance, Inc., a subsidiary of the Bank, (which we refer to as “Insurance business”). Of these three other business activities, only the Mortgage division is material to the Bank’s results and operations.

The Bank is a Virginia banking corporation headquartered in Lynchburg, Virginia. The Bank was incorporated under the laws of the Commonwealth of Virginia as a state-chartered bank in 1998 and began banking operations in July 1999. The Bank was organized to engage in general retail and commercial banking business. The Bank is a community-oriented financial institution that provides varied banking services to individuals, small and medium-sized businesses, and professional concerns. Historically, our primary market area has been the Central Virginia, Region 2000 area, 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. Recently the Bank has begun to expand to other

38

areas in Virginia, specifically Roanoke, Charlottesville, Harrisonburg, Blacksburg, and Lexington. The Bank strives to provide its customers with products comparable to statewide regional banks located in its market area, while maintaining the prompt response time and level of service of a community bank. Management believes this operating strategy has particular appeal in the Bank’s market areas.

The Bank’s principal office is located at 828 Main Street, Lynchburg, Virginia 24504 and its telephone number is (434) 846-2000. The Bank also maintains a website at www.bankofthejames.bank.

Our operating results depend primarily upon the Bank’s net interest income, which is determined by the difference between (i) interest and dividend income on earning assets, which consist primarily of loans, investment securities and other investments, and (ii) interest expense on interest-bearing liabilities, which consist principally of deposits and other borrowings. The Bank’s net income also is affected by its provision for loan losses, as well as the level of its non-interest income, including gains on sales of loans held for sale and service charges, and its non-interest expenses, including salaries and employee benefits, occupancy expense, data processing expenses, Federal Deposit Insurance Corporation premiums, expense in complying with the Sarbanes-Oxley Act of 2002, miscellaneous other expenses, franchise taxes, and income taxes.

The Bank intends to enhance its profitability by increasing its market share in our service areas, providing additional services to its customers, and controlling costs.

The Bank services its banking customers through the following locations in Virginia:

Full-Service Branches

• The main office located at 828 Main Street in Lynchburg (the “Main Street Office”),

• A branch located at 5204 Fort Avenue in Lynchburg (the “Fort Avenue Branch”),

• A branch located at 4698 South Amherst Highway in Amherst County (the “Madison Heights Branch”),

• A branch located at 17000 Forest Road in Forest (the “Forest Branch”),

• A branch located at 4935 Boonsboro Road, Suites C and D in Lynchburg (the “Boonsboro Branch”),

• A branch located at 164 South Main Street, Amherst, Virginia (the “Amherst Branch”),

• A branch located at 1405 Ole Dominion Boulevard in the Town of Bedford, Virginia, located off of Independence Boulevard (the “Bedford Branch”),

• A branch located at 1110 Main Street, Altavista, Virginia (the “Altavista Branch”),

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• A branch located at 1391 South High Street, Harrisonburg, VA (the “Harrisonburg Branch”),

• A branch located at 1745 Confederate Blvd, Appomattox, VA (the “Appomattox Branch”),

• A branch located at 225 Merchant Walk Avenue, Charlottesville, VA (the “5^th Street Station Branch”),

• A branch located at 3562 Electric Road, Roanoke, VA (the “Roanoke Branch”),

• A branch located at 45 South Main St., Lexington, VA (the “Lexington Branch”),

• A branch located at 550 Water St., Charlottesville, VA (the “Water Street Branch”), and

• A branch located at 2101 Electric Rd, Roanoke, VA (the “Oak Grove Branch”).

Limited Service Branches

• Westminster-Canterbury facilities located at 501 VES Road, Lynchburg, Virginia, and

• Westminster-Canterbury facilities located at 250 Pantops Mountain Road, Charlottesville, Virginia.

Loan Production Offices

• Residential mortgage loan production office located at the Forest Branch,

• Residential mortgage loan production office located at 2001 South Main Street, Blacksburg, Virginia, and

• Commercial, consumer and residential mortgage loan production office located at the Water Street Branch.

The Investment division and the Insurance business operate primarily out of offices located at the Main Street Office.

The Bank recently closed its location formerly located at 615 Church Street, Lynchburg, Virginia and is consolidating its operations into an expanded Main Street Office.

The Bank has applied and received approval to open a branch location at 5 Village Highway (near the intersection of Routes 501 and 24) in Rustburg, Virginia (the “Rustburg Branch”). This location will open in the fourth quarter of 2019.

The Bank continuously evaluates areas located within our service areas to identify additional viable branch locations. Based on this ongoing evaluation, the Bank may acquire one or more additional suitable sites.

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Subject to regulatory approval, the Bank anticipates may open additional branches during the next two fiscal years. Although numerous factors could influence the Bank’s expansion plans, the following discussion provides a general overview of the additional branch locations that the Bank currently is considering, including the following properties that we own and are holding for expansion:

• Real property located in the Timberlake Road area of Campbell County (Lynchburg), Virginia. The Timberlake property is not suitable for its intended use as a branch bank. Management anticipates that it will be necessary to raze the current structures and replace it with appropriate new construction.

The Bank estimates that the cost of improvements, furniture, fixtures, and equipment necessary to upfit and construct a branch at this location could be between $900,000 and $1,500,000.

Although the Bank cannot predict with certainty the financial impact of each new branch, management generally anticipates that each new branch will become profitable within 12 to 18 months of operation.

Except as set forth herein, the Bank does not expect to purchase any significant property or equipment in the upcoming 12 months. Future branch openings are subject to regulatory approval.

OFF-BALANCE SHEET ARRANGEMENTS

The Bank is a party to various financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the balance sheets and could impact the overall liquidity and capital resources to the extent customers accept and/or use these commitments.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. A summary of the Bank’s commitments is as follows:

	September 30, 2019 (in thousands)
Commitments to extend credit	$	131,589
Letters of Credit		3,469
Total	$	135,058

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on the Bank’s credit evaluation of the customer.

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Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on the Bank’s credit evaluation of the customer.

The Bank has rate lock commitments to originate mortgage loans through its Mortgage Division. The Bank has entered into corresponding commitments with third party investors to sell each of these loans that close. No other obligation exists. As a result of these contractual relationships with these investors, the Bank is not exposed to losses nor will it realize gains related to its rate lock commitments due to changes in interest rates.

SUMMARY OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion represents management’s discussion and analysis of the financial condition of Financial as of September 30, 2019 and December 31, 2018 and the results of operations of Financial for the three and nine-month periods ended September 30, 2019 and 2018. This discussion should be read in conjunction with the financial statements included elsewhere herein.

All financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Financial Condition Summary

September 30, 2019 as Compared to December 31, 2018

Total assets were $708,114,000 on September 30, 2019 compared with $674,897,000 at December 31, 2018, an increase of 4.92%. The increase in total assets was funded from the growth in deposits. In addition, total assets increased because of an increase in right of use assets pursuant to ASC 842, which is discussed in the Note 6 to the Financial Statements filed herewith.

Total deposits increased from $612,043,000 as of December 31, 2018 to $633,033,000 on September 30, 2019, an increase of 3.43%. The increase resulted in large part from increases in NOW, money market, savings accounts, and time deposits and was partially offset by a decrease in non-interest-bearing demand deposits. Noninterest bearing demand deposits decreased slightly from $91,356,000 on December 31, 2018 to $90,426,000 on September 30, 2019.

Total loans, excluding loans held for sale, increased to $555,778,000 on September 30, 2019 from $534,597,000 on December 31, 2018. Loans, excluding loans held for sale and net of deferred fees and costs and the allowance for loan losses, increased to $551,005,000 on September 30, 2019 from $530,016,000 on December 31, 2018, an increase of 3.96%. The

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following summarizes the position of the Bank’s loan portfolio as of the dates indicated by dollar amount and percentages (dollar amounts in thousands):

	September 30, 2019					December 31, 2018
	Amount		Percentage			Amount		Percentage
Commercial	$	102,191		18,39	%	$	92,877		17.37	%
Commercial Real Estate		301,016		54.16	%		289,171		54.10	%
Consumer		83,271		14.98	%		86,191		16.12	%
Residential		69,300		12.47	%		66,358		12.41	%
Total loans	$	555,778		100.00	%	$	534,597		100.00	%

Total nonperforming assets, which consist of non-accrual loans, loans past due 90 days or more and still accruing, and other real estate owned (“OREO”) decreased to $4,013,000 on September 30, 2019 from $5,369,000 on December 31, 2018. OREO decreased to $2,242,000 on September 30, 2019 from $2,430,000 on December 31, 2018. This slight decrease was due in large part to a downward adjustment of the carrying value of certain OREO resulting from a change in appraised value and the Bank’s ability to sell OREO properties during the nine months ended September 30, 2019 and was offset in part by new foreclosures during the period. Non-performing loans decreased from $2,939,000 at December 31, 2018 to $1,771,000 at September 30, 2019. As discussed in more detail below under “Results of Operations—Allowance for Loan Losses,” management has provided for the anticipated losses on these loans in the allowance for loan losses. Loan payments received on non-accrual loans are first applied to principal. When a loan is placed on non-accrual status there are several negative implications. First, all interest accrued but unpaid at the time of the classification is reversed and deducted from the interest income totals for the Bank. Second, accruals of interest are discontinued until it becomes certain that both principal and interest can be repaid. Third, there may be actual losses that necessitate additional provisions for loan losses charged against earnings.

OREO represents real property acquired by the Bank for debts previously contracted, including through foreclosure or deeds in lieu of foreclosure. On December 31, 2018, the Bank was carrying ten OREO properties on its books at a value of $2,430,000. During the nine months ended September 30, 2019, the Bank acquired four additional OREO properties and disposed of six OREO properties, and as of September 30, 2019 the Bank is carrying eight OREO properties at a value of $2,242,000. The OREO properties are available for sale and are being actively marketed.

The Bank had loans in the amount of $413,000 at September 30, 2019 classified as performing Troubled Debt Restructurings (“TDRs”) as compared to $424,000 at December 31, 2018. None of these TDRs were included in non-accrual loans. These loans have had their original terms modified to facilitate payment by the borrower. The loans have been classified as TDRs primarily due to a change to interest only payments and the maturity of these modified loans is primarily less than one year.

Cash and cash equivalents decreased slightly to $49,456,000 on September 30, 2019 from $50,325,000 on December 31, 2018. Cash and cash equivalents consist of cash due from correspondents, cash in vault, and overnight investments (including federal funds sold). Cash and cash equivalents are subject to routine fluctuations in deposits, including fluctuations in transactional accounts and professional settlement accounts.

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Securities held-to-maturity were flat, decreasing to $3,690,000 on September 30, 2019 from $3,700,000 on December 31, 2018. This slight decrease is a result of normal amortization of premiums within the held-to-maturity portfolio.

Securities available-for-sale which are carried on the balance sheet at fair market value, increased to $54,400,000 on September 30, 2019, from $52,727,000 on December 31, 2018. The increase resulted from an increase in fair value related to a decrease in market interest rates. During the nine months ended September 30, 2019 the Bank received $1,462,000 in proceeds from calls, maturities, and paydowns of securities available-for-sale. During the nine months ended September 30, 2019 the Bank received $6,427,000 from the sale of securities available-for-sale. During the same period, the Bank purchased $6,369,000 in available-for-sale securities.

Financial’s investment in Federal Home Loan Bank of Atlanta (FHLBA) stock totaled $608,000 at September 30, 2019 as compared to $564,000 at December 31, 2018. FHLBA stock is generally viewed as a long-term investment and because there is no market for the stock other than other Federal Home Loan Banks or member institutions, FHLBA stock is viewed as a restricted security. Therefore, when evaluating FHLBA stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value.

Liquidity and Capital

At September 30, 2019, Financial, on a consolidated basis, had liquid assets of $103,856,000 in the form of cash, interest-bearing and noninterest-bearing deposits with banks, and available-for-sale investments. Of this amount, approximately $20,193,000 (representing current book value) of the available-for-sale securities are pledged as collateral with $11,802,000 pledged as security for public deposits, and $8,391,000 pledged as security on a line of credit the Bank may draw on from time to time to meet liquidity needs. This line of credit currently has a zero balance. Management believes that liquid assets were adequate at September 30, 2019. Management anticipates that additional liquidity will be provided by the growth in deposit accounts and loan repayments at the Bank. In addition, if additional liquidity is needed, the Bank has the ability to purchase federal funds on the open market, borrow from the FHLBA using loans or investments within the Bank’s portfolio as collateral, and to borrow from the Federal Reserve Bank’s discount window.

Management is not aware of any trends, events or uncertainties that are reasonably likely to have a material negative impact on Financial’s short-term or long-term liquidity. Based in part on recent loan growth, the Bank is monitoring liquidity to ensure it is able to fund future loans.

At September 30, 2019, the Bank had a leverage ratio of approximately 9.30%, a Tier 1 risk-based capital ratio and a CET1 ratio of approximately 11.03% and a total risk-based capital ratio of approximately 11.84%. As of September 30, 2019 and December 31, 2018 the Bank’s regulatory capital levels exceeded those established for well-capitalized institutions. The

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following table sets forth the minimum capital requirements and the Bank’s capital position as of September 30, 2019 and December 31, 2018:

Bank Level Only Capital Ratios

	September 30,		December 31,
Analysis of Capital (in 000’s)	2019		2018
Tier 1 capital
Common Stock	$	3,742	$	3,742
Surplus		22,325		22,325
Retained earnings		39,161		35,985
Total Tier 1 capital	$	65,228	$	62,052
Tier 2 capital
Allowance for loan losses	$	4,773	$	4,581
Total Tier 2 capital:	$	4,773	$	4,581
Total risk-based capital	$	70,001	$	66,633
Risk weighted assets	$	591,365	$	564,184
Average total assets	$	701,389	$	670,879

	Actual						Regulatory Benchmarks
							For Capital			For Well
	September 30,			December 31,			Adequacy			Capitalized
	2019			2018			Purposes (1)			Purposes
Capital Ratios:
Tier 1 capital to average total assets		9.30	%		9.25	%		4.000	%		5.000	%
Common Equity Tier 1 capital		11.03	%		11.00	%		7.000	%		6.500	%
Tier 1 risk-based capital ratio		11.03	%		11.00	%		8.500	%		8.000	%
Total risk-based capital ratio		11.84	%		11.81	%		10.500	%		10.000	%

(1) Includes the capital conservation buffer of 2.50% for all ratios, excluding the Tier 1 capital to average total assets ratio.

The above tables set forth the capital position and analysis for the Bank only. Because total assets on a consolidated basis are less than $3,000,000,000, Financial is not subject to the consolidated capital requirements imposed by the Bank Holding Company Act. Consequently, Financial does not calculate its financial ratios on a consolidated basis. If calculated, the capital ratios for the Company on a consolidated basis at September 30, 2019 would be slightly lower than those of the Bank because proceeds from the sale of the capital notes were contributed to the Bank and counted as equity at the Bank level.

In July 2013, the Federal Reserve Board approved a final rule establishing a regulatory capital framework for smaller, less complex financial institutions. The rule was fully implemented on January 1, 2019 and implemented a capital conservation buffer of 2.5%. As result, the Bank is requited to have a minimum ratio of common equity Tier 1 capital to risk-weighted assets of 7.0% (inclusive of the capital conservation buffer) and a Tier 1 capital ratio of 8.5% (inclusive of the capital conservation buffer). The capital conservation buffer will limit capital distributions, stock redemptions, and certain discretionary bonuses. Failure to maintain the capital conservation buffer will limit the ability of the Bank and Financial to pay dividends, repurchase shares or pay discretionary bonuses. The rule also raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and includes a minimum leverage ratio of 4% for all banking organizations.

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On September 17, 2019 the Federal Deposit Insurance Corporation finalized a rule that introduces an optional simplified measure of capital adequacy for qualifying community banking organizations (i.e., the community bank leverage ratio (CBLR) framework), as required by the Economic Growth, Regulatory Relief and Consumer Protection Act. The CBLR framework is designed to reduce burden by removing the requirements for calculating and reporting risk-based capital ratios for qualifying community banking organizations that opt into the framework.

In order to qualify for the CBLR framework, a community banking organization must have a tier 1 leverage ratio of greater than 9 percent, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. A qualifying community banking organization that opts into the CBLR framework and meets all requirements under the framework will be considered to have met the well-capitalized ratio requirements under the Prompt Corrective Action regulations and will not be required to report or calculate risk-based capital.

The CBLR framework will be available for banks to use in their March 31, 2020, Call Report. The Company is currently evaluating whether to opt into the CBLR framework.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2019 and 2018

Earnings Summary

Financial had net income including all operating segments of $1,474,000 and $4,085,000 for the three and nine months ended September 30, 2019, compared to $1,404,000 and $3,827,000 for the comparable periods in 2018. Basic and diluted earnings per common share for the three and nine months ended September 30, 2019 was $0.34 and $0.93, compared to basic and diluted earnings per share of $0.32 and $0.87 for the three and nine months ended September 30, 2018.

The increase in net income for the three and nine months ended September 30, 2019, as compared to the prior year was due primarily to an increase in interest income and non-interest income and was partially offset by an increase in interest expense and non-interest expense. Non-interest expense increased in large part because of the Bank’s continued emphasis on growth in Charlottesville, Harrisonburg, Roanoke, and, most recently, Lexington. These efforts resulted primarily in increases in personnel, occupancy, equipment, marketing, and other outside expenses. In addition, variable expenses, such as credit expenses and some personnel expenses, increased due to an increase in the volume of residential mortgage originations (which is discussed in more detail below).

These operating results represent an annualized return on average stockholders’ equity of 9.84% and 9.36% for the three and nine months ended September 30, 2019, compared with 10.13% and 9.49% for the three and nine months ended September 30, 2018. This decrease for the three and nine months ended September 30, 2019 was due to an increase in total average equity resulting from an increase in the market value of the securities available-for-sale portfolio. The increase in the market value of the securities-available-for sale portfolio resulted from a decrease in market interest rates. The Company had an annualized return on average assets of 0.83% and 0.79% for the three and nine months ended September 30, 2019 compared with 0.84% and 0.79% for the same periods in 2018. The decrease for the three months ended September 30, 2019 largely resulted from an increase in the Bank’s assets.

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See “Non-Interest Income” below for mortgage business segment discussion.

Interest Income, Interest Expense, and Net Interest Income

Interest income increased to $7,596,000 and $22,220,000 for the three and nine months ended September 30, 2019 from $6,980,000 and $19,860,000 for the same periods in 2018, increases of 8.83% and 11.88%, respectively. Interest income increased because of increased balances in the loan portfolio and an increase in loan yields. The average rate received on loans increased from 4.83% and 4.72% to 5.00% and 4.99% for the three and nine months ended September 30, 2019 from the comparable period in 2018. The rate on total average earning assets increased for the three and nine months ended September 30, 2019 as compared to the three and nine months ended September 30, 2018 primarily because an increase in the rates paid by borrowers on loans.

Interest expense increased to $1,431,000 and $3,773,000 for the three and nine months ended September 30, 2019 from $990,000 and $2,736,000 for the same periods in 2018, increases of 44.55% and 37.90%, respectively. The increase in interest expense resulted primarily from increases in both the rates paid on and balances of deposits. The Bank’s average rate paid on interest bearing deposits was 0.99% and 0.90% during the three and nine months ended September 30, 2019 as compared to 0.73% and 0.71% for the same periods in 2018.

The fundamental source of the Bank’s net revenue is net interest income, which is determined by the difference between (i) interest and dividend income on interest earning assets, which consist primarily of loans, investment securities and other investments, and (ii) interest expense on interest-bearing liabilities, which consist principally of deposits and other borrowings. Net interest income for the three and nine months ended September 30, 2019 was $6,165,000 and $18,447,000 as compared to $5,990,000 and $17,124,000 for the same periods in 2018, increases of 2.92% and 7.73%. The increases in net interest income for the three and nine months ended September 30, 2019 as compared with the comparable period in 2018 primarily is attributable to the increase in interest income resulting from increased loan balances. The net interest margin was 3.75% and 3.83% for the three and nine months ended September 30, 2019 as compared with 3.80% and 3.73% for the same periods in 2018.

Financial’s net interest margin analysis and average balance sheets are shown in Schedule I below.

Non-Interest Income

Non-interest income is comprised primarily of fees and charges on transactional deposit accounts, gains on sales of mortgage loans held for sale, commissions on sales of investments, fees generated from treasury management services, and the Bank’s ownership interest in a title insurance agency. Non-interest income increased to $2,161,000 and $5,039,000 for the three and nine months ended September 30, 2019 from $1,319,000 and $3,946,000 for the three and nine months ended September 30, 2018.

These increases for the three and nine months ended September 30, 2019 as compared to the same period last year were due primarily due to an increase in gains on sales of loans held for sale from $767,000 and $2,260,000 for the three and nine months ended September 30, 2018 to $1,337,000 and $3,103,000 for the same periods ended September 30, 2019. In addition, gains on sales of available-for-sale securities increased from $0 for both the three and nine-month periods ended September 30, 2018 to $291,000 for the same periods in 2019.

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The Bank, through its Mortgage division, originates both conforming and non-conforming consumer residential mortgage loans in the markets we serve. As part of the Bank’s overall risk management strategy, all of the loans originated and closed by the Mortgage division are presold to major national mortgage banking or financial institutions. The Mortgage division assumes, except in limited circumstances such as first payment default, no credit or interest rate risk on these mortgages.

Purchase mortgage originations totaled $34,750,000 and $83,524,000, or 69.63% and 72.64%, respectively, of the total mortgage loans originated in the three and nine months ended September 30, 2019 as compared to $23,785,000 and $65,271,000, or 83.02% and 74.52%, respectively of the total mortgage loans originated in the same periods in 2018. Management anticipates that in the short term purchase mortgage originations will continue to represent a majority of mortgage originations as they have in the recent past. However, management also believes that further decreases in long term market interest rates could trigger increased refinancing activity.

Despite slight decreases in the first nine months of 2019, management anticipates that residential mortgage rates will remain flat or trend slightly downward during the remainder of 2019. Management expects that the Mortgage division’s reputation in Region 2000, steady residential real estate inventory and the recent hiring of additional mortgage loan originators in Roanoke, Harrisonburg and Charlottesville, and Blacksburg, will result in strong mortgage originations through the remainder of 2019. Management also believes that in the event that interest rates rise, revenue from the mortgage segment could be under pressure.

Our Investment division provides brokerage services through an agreement with a third-party broker-dealer. Pursuant to this arrangement, the third-party broker-dealer operates a service center adjacent to one of the branches of the Bank. The center is staffed by two dual employees of the Bank and the broker-dealer. Investment receives commissions on transactions generated and in some cases ongoing management fees such as mutual fund 12b-1 fees. The Investment division’s financial impact on our consolidated revenue has been immaterial. Although management cannot predict the financial impact of Investment with certainty, management anticipates the Investment division’s impact on noninterest income will remain immaterial in 2019.

The Bank provides insurance and annuity products to Bank customers and others, through the Bank’s Insurance subsidiary. The Bank has three employees that are licensed to sell insurance products through Insurance. Insurance generates minimal revenue and its financial impact on our consolidated revenue has been immaterial. Management anticipates that Insurance’s impact on noninterest income will remain immaterial in 2019.

Non-Interest Expense

Non-interest expense for the three and nine months ended September 30, 2019 increased to $6,373,000 and $17,947,000 from $5,364,000 and $15,767,000, increases of 18.81% and 13.83% from the comparable periods in 2018. These increases resulted from increases for personnel expense primarily related to the expansion into Lexington and Roanoke, as well as increases in occupancy, equipment, marketing and credit expense. Total personnel expense was $3,356,000 and $9,437,000 for the three and nine-month periods ended September 30, 2019 as compared to $2,853,000 and $8,398,000 for the same periods in 2018.

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Allowance and Provision for Loan Losses

The allowance for loan losses represents an amount that, in our judgment, will be adequate to absorb probable losses inherent in the loan portfolio. The provision for loan losses increases the allowance, and loans charged off, net of recoveries, reduce the allowance. The provision for the allowance for loan losses is charged to earnings to bring the total allowance to a level deemed appropriate by management and is based upon two components – specific impairment and general reserves. As discussed below, loans having a risk rating of 7 or below that are significantly past due, and the borrower’s performance and financial condition provide evidence that it is probable that the Bank will be unable to collect all amounts when due as well as all TDRs, are evaluated for specific impairment. The general reserve component is based on an evaluation of general economic conditions, actual and expected credit losses, and loan performance measures. Based on the application of the loan loss calculation, the Bank provided $108,000 and $434,000 to the allowance for loan losses for the three and nine-month periods ended September 30, 2019. This compares to a provision of $190,000 and $527,000 for the comparable periods in 2018, representing decreases of 43.16% and 17.65%, respectively.

Charged-off loans, which are loans that management deems uncollectible, are charged against the allowance for loan losses and constitute a realized loss. Charged-off loans were $100,000 and $319,000 for the three and nine months ended September 30, 2019 as compared to $324,000 and $879,000 for the comparable periods in 2018. While a charged-off loan may subsequently be collected, such recoveries generally are realized over an extended period of time. In the three and nine months ended September 30, 2019, the Bank had recoveries of charged-off loans of $41,000 and $77,000 as compared with $7,000 and $161,000 for the comparable periods in 2018.

In light of the current economic environment, management continues its ongoing assessment of specific impairment in the Bank’s loan portfolio. As set forth in the tables below, the Bank’s allowance arising from the specific impairment evaluation as of September 30, 2019 decreased as compared to December 31, 2018.

As shown in the table below, the total balance in the allowance increased, from $4,581,000 as of December 31, 2018 to $4,773,000 on September 30, 2019. The allowance for loan losses as a percent of loans remained flat at 0.86% as of September 30, 2019 and 0.86% as of December 31, 2018. Increased loan balances during the three months led to an increase in the balance of the general reserve as of September 30, 2019 as compared to December 31, 2018, but this increase was offset primarily by a decrease in specific reserves and the allocation of updated historical loss rates when comparing the same periods. The allowance for loan losses as a percent of unimpaired loans was 0.87% as of both September 30, 2019 and December 31, 2018. The general reserve as a percentage of unimpaired loan balances increased slightly to 0.86% as of September 30, 2019 as compared to 0.82% as of December 31, 2018. This increase was primarily due to a slight increase in the rate of qualitative factors assessed in the general reserve based on management’s evaluation of those factors at September 30, 2019. Management believes that the current allowance for loan losses is adequate.

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The following tables summarize the allowance activity for the periods indicated:

	Allowance for Loan Losses and Recorded Investment in Loans
	(dollars in thousands)
	As of and For the Nine Months Ended September 30, 2019
				Commercial
2019	Commercial			Real Estate			Consumer			Residential			Total
Allowance for Credit Losses:
Beginning Balance	$	1,136		$	1,831		$	956		$	658		$	4,581
Charge-Offs		(104	)		(6	)		(188	)		(21	)		(319	)
Recoveries		34			5			34			4			77
Provision		222			89			56			67			434
Ending Balance		1,288			1,919			858			708			4,773
Ending Balance: Individually evaluated for impairment		8			21			—			34			63
Ending Balance: Collectively evaluated for impairment		1,280			1,898			858			674			4,710
Totals:	$	1,288		$	1,919		$	858		$	708		$	4,773
Financing Receivables:
Ending Balance: Individually evaluated for impairment		496			2,959			109			1,639			5,203
Ending Balance: Collectively evaluated for impairment		101,695			298,057			83,162			67,661			550,575
Totals:	$	102,191		$	301,016		$	83,271		$	69,300		$	555,778

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	Allowance for Loan Losses and Recorded Investment in Loans
	(dollars in thousands)
	As of and For the Year Ended December 31, 2018
				Commercial
2018	Commercial			Real Estate			Consumer			Residential			Total
Allowance for Credit Losses:
Beginning Balance	$	1,264		$	1,738		$	1,172		$	578		$	4,752
Charge-Offs		(395	)		(230	)		(405	)		(34	)		(1,064	)
Recoveries		113			4			60			—			177
Provision		154			319			129			114			716
Ending Balance		1,136			1,831			956			658			4,581
Ending Balance: Individually evaluated for impairment		15			56			106			61			238
Ending Balance: Collectively evaluated for impairment		1,121			1,775			850			597			4,343
Totals:	$	1,136		$	1,831		$	956		$	658		$	4,581
Financing Receivables:
Ending Balance: Individually evaluated for impairment		1,461			2,674			194			2,251			6,580
Ending Balance: Collectively evaluated for impairment		91,416			286,497			85,997			64,107			528,017
Totals:	$	92,877		$	289,171		$	86,191		$	66,358		$	534,597

The following sets forth the reconciliation of the allowance for loan loss:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	(in thousands)						(in thousands)
	2019			2018			2019			2018
Balance, beginning of period	$	4,724		$	4,688		$	4,581		$	4,752
Provision for loan losses		108			190			434			527
Loans charged off		(100	)		(324	)		(319	)		(879	)
Recoveries of loans charged off		41			7			77			161
Net (charge offs)		(59	)		(317	)		(242	)		(718	)
Balance, end of period	$	4,773		$	4,561		$	4,773		$	4,561

No nonaccrual loans were excluded from the impaired loan disclosures at September 30, 2019 and December 31, 2018. If interest on these loans had been accrued, such income

51

cumulatively would have approximated $216,000 and $198,000 on September 30, 2019 and December 31, 2018, respectively. Loan payments received on nonaccrual loans are applied to principal. When a loan is placed on nonaccrual status there are several negative implications. First, all interest accrued but unpaid at the time of the classification is deducted from the interest income totals for the Bank. Second, accruals of interest are discontinued until it becomes certain that both principal and interest can be repaid. Third, there may be actual losses that necessitate additional provisions for credit losses charged against earnings.

The Bank’s internal risk rating system is in place to grade commercial and commercial real estate loans. Category ratings are reviewed periodically by lenders and the credit review area of the Bank based on the borrower’s individual situation. Additionally, internal and external monitoring and review of credits are conducted on an annual basis.

Below is a summary and definition of the Bank’s risk rating categories:

RATING 1	Excellent
RATING 2	Above Average
RATING 3	Satisfactory
RATING 4	Acceptable / Low Satisfactory
RATING 5	Monitor
RATING 6	Special Mention
RATING 7	Substandard
RATING 8	Doubtful
RATING 9	Loss

We segregate loans into the above categories based on the following criteria and we review the characteristics of each rating at least annually, generally during the first quarter. The characteristics of these ratings are as follows:

• “Pass.” These are loans having risk ratings of 1 through 4. Pass loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio. The borrower has paid all obligations as agreed and it is expected that this type of payment history will continue. When necessary, acceptable personal guarantors support the loan.

• “Monitor.” These are loans having a risk rating of 5. Monitor loans have currently acceptable risk but may have the potential for a specific defined weakness in the borrower’s operations and the borrower’s ability to generate positive cash flow on a sustained basis. The borrower’s recent payment history may currently or in the future be characterized by late payments. The Bank’s risk exposure is mitigated by collateral supporting the loan. The collateral is considered to be well-margined, well maintained, accessible and readily marketable.

• “Special Mention.” These are loans having a risk rating of 6. Special Mention loans have weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the bank’s credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. These loans do warrant more than routine monitoring due to a weakness caused by adverse events.

52

• “Substandard.” These are loans having a risk rating of 7. Substandard loans are considered to have specific and well-defined weaknesses that jeopardize the viability of the Bank’s credit extension. The payment history for the loan has been inconsistent and the expected or projected primary repayment source may be inadequate to service the loan. The estimated net liquidation value of the collateral pledged and/or ability of the personal guarantor(s) to pay the loan may not adequately protect the Bank. There is a distinct possibility that the Bank will sustain some loss if the deficiencies associated with the loan are not corrected in the near term. A substandard loan would not automatically meet our definition of impaired unless the loan is significantly past due and the borrower’s performance and financial condition provides evidence that it is probable that the Bank will be unable to collect all amounts due.

• “Doubtful.” These are loans having a risk rating of 8. Doubtful rated loans have all the weaknesses inherent in a loan that is classified substandard but with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high.

• “Loss.” These are loans having a risk rating of 9. Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off.

Income Taxes

For the three and nine months ended September 30, 2019, Financial had an income tax expense of $371,000 and $1,020,000 as compared to $351,000 and $949,000 for the three and nine months ended September 30, 2018. This represents an effective tax rate of 20.11% and 19.98% for the three and nine months ended September 30, 2019 as compared with 20.00% and 19.87% for the three and nine months ended September 30, 2018. Our effective rate was lower than the statutory corporate tax rate in all periods because of federal income tax benefits resulting from the tax treatment of earnings on bank owned life insurance and certain tax free municipal securities.

53

Schedule I

Net Interest Margin Analysis

Average Balance Sheets

For the Quarter Ended September 30, 2019 and 2018

(dollars in thousands)

	2019								2018
	Average Balance Sheet			Interest Income/ Expense		Average Rates Earned/ Paid			Average Balance Sheet			Interest Income/ Expense		Average Rates Earned/ Paid
ASSETS
Loans, including fees (1) (2)	$	558,483		$	7,037		5.00	%	$	527,566		$	6,424		4.83	%
Loans held for sale		4,435			43		3.85	%		3,134			36		4.56	%
Fed funds sold		17,056			89		2.07	%		20,148			96		1.89	%
Interest bearing bank balances		14,636			88		2.39	%		13,102			60		1.82	%
Securities (3)		55,528			330		2.36	%		60,281			355		2.36	%
Federal agency equities		1,390			9		2.57	%		1,346			9		2.65	%
CBB equity		116			—		—			116			—		—
Total earning assets		651,644			7,596		4.68	%		625,693			6,980		4.43	%
Allowance for loan losses		(4,768	)							(4,622	)
Non-earning assets		54,131								42,614
Total assets	$	701,007							$	663,685
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand interest bearing	$	257,407		$	357		0.55	%	$	226,880		$	211		0.37	%
Savings		90,483			57		0.25	%		102,557			50		0.19	%
Time deposits		189,225			926		1.94	%		184,798			679		1.46	%
Total interest bearing deposits		537,115			1,340		0.99	%		514,235			940		0.73	%
Other borrowed funds
Financing leases		4,542			41		3.58	%		—			—		—
Capital Notes		5,000			50		4.00	%		5,000			50		4.00	%
Total interest-bearing liabilities		546,657			1,431		1.04	%		519,235			990		0.73	%
Non-interest bearing deposits		90,995								88,314
Other liabilities		3,940								1,169
Total liabilities		641,592								608,718
Stockholders’ equity		59,415								54,967
Total liabilities and Stockholders’ equity	$	701,007							$	663,685
Net interest income				$	6,165							$	5,990
Net interest margin							3.75	%							3.80	%
Interest spread							3.64	%							3.67	%

(1) Net accretion or amortization of deferred loan fees and costs are included in interest income.

(2) Nonperforming loans are included in the average balances. However, interest income and yields calculated do not reflect any accrued interest associated with non-accrual loans.

(3) The interest income and yields calculated on securities have been tax affected to reflect any tax exempt interest on municipal securities. Assumed income tax rates of 21% were used for the periods presented.

54

Net Interest Margin Analysis

Average Balance Sheets

For the Nine Months Ended September 30, 2019 and 2018

(dollars in thousands)

	2019								2018
	Average Balance Sheet			Interest Income/ Expense		Average Rates Earned/ Paid			Average Balance Sheet			Interest Income/ Expense		Average Rates Earned/ Paid
ASSETS
Loans, including fees (1) (2)	$	547,833		$	20,439		4.99	%	$	516,237		$	18,231		4.72	%
Loans held for sale		3,471			111		4.28	%		3,096			98		4.23	%
Federal funds sold		19,303			332		2.30	%		19,701			255		1.73	%
Interest bearing bank balances		14,487			253		2.33	%		12,418			151		1.63	%
Securities (3)		57,779			1,026		2.37	%		61,302			1,086		2.37	%
Federal agency equities		1,374			60		5.84	%		1,420			40		3.77	%
CBB equity		116			—		—			116			—		—
Total earning assets		644,363			22,221		4.61	%		614,290			19,861		4.32	%
Allowance for loan losses		(4,694	)							(4,664	)
Non-earning assets		50,346								41,863
Total assets	$	690,015							$	651,489
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand interest bearing	$	245,590		$	917		0.50	%	$	198,319		$	537		0.36	%
Savings		93,992			165		0.23	%		103,032			147		0.19	%
Time deposits		190,132			2,500		1.76	%		183,460			1,885		1.37	%
Total interest bearing deposits		529,714			3,582		0.90	%		484,811			2,569		0.71	%
Other borrowed funds
FHLB borrowings		—			—		—			1,136			17		2.00	%
Financing leases		1,547			41		3.54	%		—			—		—
Capital Notes		5,000			150		4.00	%		5,000			150		4.00	%
Total interest-bearing liabilities		536,261			3,773		0.94	%		490,947			2,736		0.75	%
Non-interest bearing deposits		91,858								105,508
Other liabilities		3,546								1,117
Total liabilities		631,655								597,572
Stockholders’ equity		58,350								53,917
Total liabilities and Stockholders’ equity	$	690,015							$	651,489
Net interest income				$	18,448							$	17,125
Net interest margin							3.83	%							3.73	%
Interest spread							3.67	%							3.57	%

(1) Net deferred loan fees and costs are included in interest income.

(2) Nonperforming loans are included in the average balances. However, interest income and yields calculated do not reflect any accrued interest associated with non-accrual loans.

(3) The interest income and yields calculated on securities have been tax affected to reflect any tax exempt interest on municipal securities. Assumed income tax rate of 21% was used for the periods presented.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable

Item 4. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Financial’s management, including Financial’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, Financial’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that Financial files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

There have been no significant changes during the quarter ended September 30, 2019, in the Company’s internal controls over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) or in other factors that could have significantly affected those controls subsequent to the date of our most recent evaluation of internal controls over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The Company is not involved in any pending legal proceedings at this time, other than routine litigation incidental to its business.

Item 1A. Risk Factors

For information regarding the Company’s risk factors, see Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission on March 22, 2019. There have been no material changes from risk factors as previously disclosed in Part 1 Item 1A of the Company’s Form 10-K for the year ended December 31, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)    Not applicable.

(b)    To date, the Company has made no purchases under the stock repurchase plan adopted on December 19, 2018. Consequently, up to 75,000 shares of common stock may yet be repurchased under this plan.

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

57

Item 5. Other Information

Not applicable

Item 6. Exhibits

Exhibit No.	Description of Exhibit
31.1	Certification of Robert R. Chapman III Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated November 8, 2019
31.2	Certification of J. Todd Scruggs Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated November 8, 2019
32.1	Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002, dated November 8, 2019
101	The following materials from Bank of the James Financial Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets (unaudited) as of September 30, 2019 and December 31, 2018; (ii) Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2019 and 2018; (iii) Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2019 and 2018 (iv) Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2019 and 2018 (v) Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2019 and 2018; (vi) Notes to Unaudited Consolidated Financial Statements.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BANK OF THE JAMES FINANCIAL GROUP, INC.
Date: November 8, 2019	By	/S/ Robert R. Chapman III
		Robert R. Chapman III, President
		(Principal Executive Officer)
Date: November 8, 2019	By	/S/ J. Todd Scruggs
		J. Todd Scruggs, Secretary and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

59

EX-31.1

Exhibit 31.1

Certification—Principal Executive Officer

I, Robert R. Chapman III, President of Bank of the James Financial Group, Inc. certify that: (1) I have reviewed this Form 10-Q of Bank of the James Financial Group, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

(4) The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and;

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

(5) The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: November 8, 2019	By	/S/ Robert R. Chapman III
		Robert R. Chapman III, President
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification—Principal Financial Officer and Principal Accounting Officer

I, J. Todd Scruggs, Secretary and Treasurer of Bank of the James Financial Group, Inc., certify that: (1) I have reviewed this Form 10-Q of Bank of the James Financial Group, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

(4) The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and;

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

(5) The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: November 8, 2019	By	/S/ J. Todd Scruggs
		J. Todd Scruggs, Secretary and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies that this Quarterly Report on Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Bank of the James Financial Group, Inc.

	BANK OF THE JAMES FINANCIAL GROUP, INC.
Date: November 8, 2019	By	/S/ Robert R. Chapman III
		Robert R. Chapman III, President
		(Principal Executive Officer)
Date: November 8, 2019	By	/S/ J. Todd Scruggs
		J. Todd Scruggs, Secretary and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

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Securities

9 Months Ended

Sep. 30, 2019

Securities [Abstract]

Securities

Note 7 - Securities

The following tables summarize the Bank’s holdings for both securities held-to-maturity and securities available-for-sale as of September 30, 2019 and December 31, 2018 (amounts in thousands):

		September 30, 2019
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$3,690	$248	$       -	$3,938
Available-for-Sale
US Treasuries	1,964	16	-	1,980
US agency obligations	25,963	374	(102)	26,235
Mortgage-backed securities	10,887	40	(119)	10,808
Municipals	11,145	167	(8)	11,304
Corporates	4,090	28	(45)	4,073
	$54,049	$625	$(274)	$54,400
		December 31, 2018
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$3,700	$3	$(185)	$3,515
Available-for-Sale
US Treasuries	1,961	-	(116)	1,845
US agency obligations	24,701	-	(1,434)	23,267
Mortgage-backed securities	12,390	-	(514)	11,876
Municipals	12,412	3	(406)	12,009
Corporates	4,102	-	(372)	3,730
	$55,566	$3	$(2,842)	$52,727

Note 7 – Securities (continued)

The following tables show the gross unrealized losses and fair value of the Bank’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2019 and December 31, 2018 (amounts in thousands):

	Less than 12 months		More than 12 months			Total
	Fair	Unrealized	Fair	Unrealized	Fair		Unrealized
September 30, 2019	Value	Losses	Value	Losses	Value		Losses
Description of securities
Held-to-maturity
US agency obligations	$   -	$     -	$     -	$     -	$     -		$     -
Available-for-sale
US Treasuries	-	-	-	-	-		-
US agency obligations	5,252	54	10,990	48	16,242		102
Mortgage-backed securities	-	-	9,078	119	9,078		119
Municipals	-	-	1,332	8	1,332		8
Corporates	-	-	2,024	45	2,024		45
Total	$5,252	$54	$23,424	$220	$28,676		$274
	Less than 12 months		More than 12 months			Total
	Fair	Unrealized	Fair	Unrealized	Fair		Unrealized
December 31, 2018	Value	Losses	Value	Losses	Value		Losses
Description of securities
Held-to-maturity
US agency obligations	$       -	$      -	$3,515	$185	$3,515		$185
Available-for-sale
US Treasuries	-	-	1,845	116	1,845		116
US agency obligations	-	-	23,267	1,434	23,267		1,434
Mortgage-backed securities	966	20	10,910	494	11,876		514
Municipals	-	-	10,994	406	10,994		406
Corporates	-	-	3,730	372	3,730		372
Total	$966	$20	$50,746	$2,822	$51,712		$2,842

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and may do so more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) the intent of Financial, if any, to sell the security; (4) whether Financial more likely than not will be

Note 7 – Securities (continued)

required to sell the security before recovering its cost; and (5) whether Financial does not expect to recover the security’s entire amortized cost basis (even if Financial does not intend to sell the security).

At September 30, 2019, the Company did not consider the unrealized losses as other-than-temporary losses due to the nature of the securities involved.  As of September 30, 2019, the Bank owned 25securities in an unrealized loss position that were being evaluated for other than temporary impairment.  Two of these securities were S&P rated AAA, 22 were rated AA, and one was rated BBB+.  As of September 30, 2019, 21 of these securities were direct obligations of the U.S. government or government sponsored entities, two were municipal issues, and two were investments in domestic corporate issued securities.

Based on the analysis performed by management as mandated by the Bank’s investment policy, management believes the default risk to be minimal.  Because management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to change in interest rates and other market conditions, no declines currently are deemed to be other-than-temporary.

Gross gains on sales of available-for-sale securities were $291 during the three and nine months ended September 30, 2019 as compared to $0 during the same periods in 2018.  There were no gross losses on sales of available-for-sale securities during the three and nine month periods ended September 30, 2019 and 2018. There were no sales of held-to-maturity securities during the three and nine month periods ended September 30, 2019 and 2018.

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Earnings Per Common Share (EPS)

9 Months Ended

Sep. 30, 2019

Earnings Per Common Share (EPS) [Abstract]

Earnings Per Common Share (EPS)

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, 2019 and 2018.

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2019	2018	2019	2018
Net income	$      1,474,000	$      1,404,000	$      4,085,000	$      3,827,000
Weighted average number of shares	4,378,436	4,378,436	4,378,436	4,378,436
Restricted stock units/stock options affect of incremental shares	6,895	-	4,692	30
Weighted average diluted shares	4,385,331	4,378,436	4,383,128	4,378,466
Basic EPS (weighted avg shares)	$               0.34	$               0.32	$               0.93	$               0.87
Diluted EPS (Including incremental shares)	$               0.34	$               0.32	$               0.93	$               0.87

No restricted stock units or stock options were excluded in calculating diluted earnings per share for any of the periods presented.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2019

Recent Accounting Pronoucements [Abstract]

Recent Accounting Pronouncements

Note 11 – Recent accounting pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”  The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. At the FASB’s October 16, 2019 meeting, the Board affirmed its decision to amend the effective date of this ASU for many companies.   Public business entities that are SEC filers, excluding those meeting the smaller reporting company definition, will retain the initial required implementation date of fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  All other entities will be required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently assessing the impact that ASU 2016-13 will have on its consolidated financial statements The Company has been in discussions with its core processor to coordinate its plans for implementation and has contracted with an additional vendor to begin implementation.

Note 11 – Recent accounting pronouncements (continued)

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.”  The amendments modify the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty. Certain disclosure requirements in Topic 820 are also removed or modified. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  Certain of the amendments are to be applied prospectively while others are to be applied retrospectively.  Early adoption is permitted.  The Company does not expect the adoption of ASU 2018-13 to have a material impact on its consolidated financial statements.

In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.”  This ASU clarifies and improves areas of guidance related to the recently issued standards on credit losses, hedging, and recognition and measurement including improvements resulting from various TRG Meetings.  The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption is permitted.    The Company is currently assessing the impact that ASU 2019-04 will have on its consolidated financial statements.

In May 2019, the FASB issued ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.”  The amendments in this ASU provide entities that have certain instruments within the scope of Subtopic 326-20 with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments, upon the adoption of Topic 326.  The fair value option election does not apply to held-to-maturity debt securities.  An entity that elects the fair value option should subsequently measure those instruments at fair value with changes in fair value flowing through earnings.  The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  The amendments should be applied on a modified-retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings balance in the balance sheet.  Early adoption is permitted.  The Company is currently assessing the impact that ASU 2019-05 will have on its consolidated financial statements.

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Fair Value Measurements (Impaired Loans And Other Real Estate Owned Measured At Fair Value On A Nonrecurring Basis) (Details) - USD ($) $ in Thousands		Sep. 30, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	[1]	$ 1,010	$ 1,587
Other real estate owned		2,242	2,430
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	[1]
Other real estate owned
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	[1]	1,010	1,587
Other real estate owned		$ 2,242	$ 2,430

[1] Includes loans charged down to the net realizable value of the collateral.

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Leases (Operating Leases Information) (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Lease liabilities	$ 1,557
Right-of-use assets	$ 1,544
Weighted average remaining lease term	14 years 9 months 18 days
Weighted average discount rate	3.39%

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Securities (Gross Unrealized Losses And Fair Value Of The Bank's Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 months	$ 5,252	$ 966
Unrealized Losses, Less than 12 months	54	20
Fair Value, More than 12 months	23,424	50,746
Unrealized Losses, More than 12 months	220	2,822
Fair Value, Total	28,676	51,712
Unrealized Losses, Total	274	2,842
US Treasuries [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, More than 12 months		1,845
Unrealized Losses, More than 12 months		116
Fair Value, Total		1,845
Unrealized Losses, Total		116
US Agency Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, More than 12 months, Held-to-maturity		3,515
Unrealized Losses, More than 12 months, Held-to-maturity		185
Fair Value, Total, Held-to-maturity		3,515
Unrealized Losses, Total, Held-to-maturity		185
Fair Value, Less than 12 months	5,252
Unrealized Losses, Less than 12 months	54
Fair Value, More than 12 months	10,990	23,267
Unrealized Losses, More than 12 months	48	1,434
Fair Value, Total	16,242	23,267
Unrealized Losses, Total	102	1,434
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 months		966
Unrealized Losses, Less than 12 months		20
Fair Value, More than 12 months	9,078	10,910
Unrealized Losses, More than 12 months	119	494
Fair Value, Total	9,078	11,876
Unrealized Losses, Total	119	514
Municipals [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 months
Unrealized Losses, Less than 12 months
Fair Value, More than 12 months	1,332	10,994
Unrealized Losses, More than 12 months	8	406
Fair Value, Total	1,332	10,994
Unrealized Losses, Total	8	406
Corporates [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 months
Unrealized Losses, Less than 12 months
Fair Value, More than 12 months	2,024	3,730
Unrealized Losses, More than 12 months	45	372
Fair Value, Total	2,024	3,730
Unrealized Losses, Total	$ 45	$ 372

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Loans, Allowance For Loan Losses And OREO (Summary Of Loans, Net) (Details) - USD ($) $ in Thousands		Sep. 30, 2019	Dec. 31, 2018
Loans and Leases Receivable Disclosure [Line Items]
Total loans	[1]	$ 555,778	$ 534,597
Less allowance for loan losses		4,773	4,581
Net loans		551,005	530,016
Deferred loan costs		299	457
Commercial [Member]
Loans and Leases Receivable Disclosure [Line Items]
Total loans		102,191	92,877
Less allowance for loan losses		1,288	1,136
Commercial Real Estate [Member]
Loans and Leases Receivable Disclosure [Line Items]
Total loans		301,016	289,171
Less allowance for loan losses		1,919	1,831
Consumer [Member]
Loans and Leases Receivable Disclosure [Line Items]
Total loans		83,271	86,191
Less allowance for loan losses		858	956
Residential [Member]
Loans and Leases Receivable Disclosure [Line Items]
Total loans		69,300	66,358
Less allowance for loan losses		$ 708	$ 658

[1] Includes net deferred costs and premiums of $299 and $457 as of September 30, 2019 and December 31, 2018, respectively.

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Consolidated Statements Of Changes In Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018
Consolidated Statements Of Changes In Stockholders' Equity [Abstract]
Dividend on common stock, per share	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.06

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Consolidated Statements Of Income - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Interest Income
Loans	$ 7,080,000	$ 6,460,000	$ 20,550,000	$ 18,329,000
Securities
US Government and agency obligations	176,000	187,000	545,000	571,000
Mortgage backed securities	54,000	62,000	171,000	196,000
Municipals - taxable	77,000	81,000	237,000	243,000
Municipals - tax exempt		2,000	2,000	5,000
Dividends	9,000	9,000	60,000	40,000
Other (Corporates)	23,000	23,000	70,000	70,000
Interest bearing deposits	88,000	60,000	253,000	151,000
Federal Funds sold	89,000	96,000	332,000	255,000
Total interest income	7,596,000	6,980,000	22,220,000	19,860,000
Deposits
NOW, money market savings	414,000	261,000	1,082,000	684,000
Time Deposits	926,000	679,000	2,500,000	1,885,000
FHLB borrowings				17,000
Finance leases	41,000		41,000
Capital notes	50,000	50,000	150,000	150,000
Total interest expense	1,431,000	990,000	3,773,000	2,736,000
Net interest income	6,165,000	5,990,000	18,447,000	17,124,000
Provision for loan losses	108,000	190,000	434,000	527,000
Net interest income after provision for loan losses	6,057,000	5,800,000	18,013,000	16,597,000
Noninterest income
Gain on sales of loans held for sale	1,337,000	767,000	3,103,000	2,260,000
Service charges, fees and commissions	448,000	446,000	1,348,000	1,375,000
Increase in cash value of life insurance	81,000	86,000	248,000	256,000
Other	4,000	20,000	49,000	55,000
Gain on sales and calls of securities, net	291,000		291,000
Total noninterest income	2,161,000	1,319,000	5,039,000	3,946,000
Noninterest expenses
Salaries and employee benefits	3,356,000	2,853,000	9,437,000	8,398,000
Occupancy	414,000	388,000	1,252,000	1,143,000
Equipment	527,000	414,000	1,521,000	1,191,000
Supplies	163,000	124,000	467,000	413,000
Professional, data processing, and other outside expense	887,000	761,000	2,561,000	2,413,000
Marketing	228,000	165,000	649,000	492,000
Credit expense	195,000	140,000	478,000	377,000
Other real estate expenses	200,000	110,000	340,000	236,000
FDIC insurance expense	87,000	99,000	275,000	299,000
Other	316,000	310,000	967,000	805,000
Total noninterest expenses	6,373,000	5,364,000	17,947,000	15,767,000
Income before income taxes	1,845,000	1,755,000	5,105,000	4,776,000
Income tax expense	371,000	351,000	1,020,000	949,000
Net Income	$ 1,474,000	$ 1,404,000	$ 4,085,000	$ 3,827,000
Weighted average shares outstanding - basic	4,378,436	4,378,436	4,378,436	4,378,436
Weighted average shares outstanding- diluted	4,385,331	4,378,436	4,383,128	4,378,466
Earnings per common share - basic	$ 0.34	$ 0.32	$ 0.93	$ 0.87
Earnings per common share - diluted	$ 0.34	$ 0.32	$ 0.93	$ 0.87

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Earnings Per Common Share (EPS) (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Common Share (EPS) [Abstract]
Options excluded from calculating diluted EPS because their effect was anti-dilutive	0	0	0	0

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Securities (Tables)

9 Months Ended

Sep. 30, 2019

Securities [Abstract]

Summary Of Securities Held-To-Maturity And Securities Available-For-Sale

		September 30, 2019
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$3,690	$248	$       -	$3,938
Available-for-Sale
US Treasuries	1,964	16	-	1,980
US agency obligations	25,963	374	(102)	26,235
Mortgage-backed securities	10,887	40	(119)	10,808
Municipals	11,145	167	(8)	11,304
Corporates	4,090	28	(45)	4,073
	$54,049	$625	$(274)	$54,400
		December 31, 2018
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$3,700	$3	$(185)	$3,515
Available-for-Sale
US Treasuries	1,961	-	(116)	1,845
US agency obligations	24,701	-	(1,434)	23,267
Mortgage-backed securities	12,390	-	(514)	11,876
Municipals	12,412	3	(406)	12,009
Corporates	4,102	-	(372)	3,730
	$55,566	$3	$(2,842)	$52,727

Gross Unrealized Losses And Fair Value Of The Bank's Investments

	Less than 12 months		More than 12 months			Total
	Fair	Unrealized	Fair	Unrealized	Fair		Unrealized
September 30, 2019	Value	Losses	Value	Losses	Value		Losses
Description of securities
Held-to-maturity
US agency obligations	$   -	$     -	$     -	$     -	$     -		$     -
Available-for-sale
US Treasuries	-	-	-	-	-		-
US agency obligations	5,252	54	10,990	48	16,242		102
Mortgage-backed securities	-	-	9,078	119	9,078		119
Municipals	-	-	1,332	8	1,332		8
Corporates	-	-	2,024	45	2,024		45
Total	$5,252	$54	$23,424	$220	$28,676		$274
	Less than 12 months		More than 12 months			Total
	Fair	Unrealized	Fair	Unrealized	Fair		Unrealized
December 31, 2018	Value	Losses	Value	Losses	Value		Losses
Description of securities
Held-to-maturity
US agency obligations	$       -	$      -	$3,515	$185	$3,515		$185
Available-for-sale
US Treasuries	-	-	1,845	116	1,845		116
US agency obligations	-	-	23,267	1,434	23,267		1,434
Mortgage-backed securities	966	20	10,910	494	11,876		514
Municipals	-	-	10,994	406	10,994		406
Corporates	-	-	3,730	372	3,730		372
Total	$966	$20	$50,746	$2,822	$51,712		$2,842

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Business Segments (Narrative) (Details)	9 Months Ended
	Sep. 30, 2019 segment
Business Segments [Abstract]
Number of reportable segments	2

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Loans, Allowance For Loan Losses And OREO (Loans On Non-Accrual Status) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables on Non-Accrual Status	$ 1,771	$ 2,939
Commercial [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables on Non-Accrual Status	285	973
Commercial Real Estate [Member] | Commercial Mortgages-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables on Non-Accrual Status	405	317
Commercial Real Estate [Member] | Commercial Mortgages-Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables on Non-Accrual Status	503	173
Commercial Real Estate [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables on Non-Accrual Status
Consumer [Member] | Consumer Unsecured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables on Non-Accrual Status
Consumer [Member] | Consumer Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables on Non-Accrual Status	28	84
Residential [Member] | Residential Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables on Non-Accrual Status	550	1,391
Residential [Member] | Residential Consumer Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivables on Non-Accrual Status

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Consolidated Statements Of Comprehensive Income - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Consolidated Statements Of Comprehensive Income [Abstract]
Net Income	$ 1,474,000	$ 1,404,000	$ 4,085,000	$ 3,827,000
Other comprehensive income (loss):
Unrealized gains (losses) on securities available-for-sale	990,000	(693,000)	3,481,000	(2,009,000)
Unrealized gains (losses) on securities available-for-sale, Tax effect	(208,000)	144,000	(731,000)	421,000
Reclassification adjustment for gains included in net income	(291,000)		(291,000)
Reclassification adjustment for gains included in net income, Tax effect	61,000		61,000
Other comprehensive income (loss), net of tax	552,000	(549,000)	2,520,000	(1,588,000)
Comprehensive income	$ 2,026,000	$ 855,000	$ 6,605,000	$ 2,239,000

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 08, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019
Entity Registrant Name	BANK OF THE JAMES FINANCIAL GROUP INC
Entity Central Index Key	0001275101
Entity Small Business	true
Entity Emerging Growth Company	false
Title of 12(b) Security	Common Stock, 2.14 per share par value
Trading Symbol	BOTJ
Security Exchange Name	NASDAQ
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		4,372,436
Entity Shell Company	false

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Basis Of Presentation

9 Months Ended

Sep. 30, 2019

Basis Of Presentation [Abstract]

Basis Of Presentation

Note 1 – Basis of Presentation

The unaudited consolidated financial statements have been prepared by Bank of the James Financial Group, Inc. (“Financial” or the “Company”) pursuant to 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, 2019 and for the three and nine months ended September 30, 2019 and 2018 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, 2018.  These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes for the year ended December 31, 2018 included in Financial’s Annual Report on Form 10-K.  Results for the three and nine month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

Certain immaterial reclassifications have been made to prior period balances to conform to the current period presentation.  Reclassifications had no effect on prior year net income or stockholders’ equity.

The Company’s 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.  Recently, the Company has expanded into Charlottesville, Roanoke, Blacksburg, Harrisonburg, and Lexington.

Financial’s critical accounting policies include the evaluation of the allowance for loan losses which is based on management’s estimate of an amount that is adequate to absorb probable losses inherent in the loan portfolio of Bank of the James (the “Bank”), Financial’s wholly-owned subsidiary. The allowance for loan losses is established through a provision for loan losses based on available information including the composition of the loan portfolio, historical loan losses, specific impaired loans, availability and quality of collateral, age of the various portfolios, changes in local economic conditions, and loan performance and quality of the portfolio. Different assumptions used in evaluating the adequacy of the Bank’s allowance for loan losses could result in material changes in Financial’s financial condition and results of operations. The Bank’s policy with respect to the methodology for determining the allowance for loan losses involves a higher degree of complexity and requires management to make subjective judgments that often require assumptions or estimates about uncertain matters. This critical policy and its assumptions are periodically reviewed with the Board of Directors.

Financial also considers valuation of other real estate owned (OREO) a critical accounting policy.  OREO consists of properties acquired through foreclosure or deed in lieu of foreclosure.  These properties are carried at fair value less estimated costs to sell at the date of foreclosure.  Losses from the acquisition of property in full or partial satisfaction of loans are charged against the allowance for loan losses.  Subsequent write-downs, if any, are charged against expense.  Gains and losses on the sales of foreclosed properties are included in determining net income in the year of the sale.  Operating costs after acquisition are expensed.

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Basis Of Presentation (Narrative) (Details)	9 Months Ended
	Sep. 30, 2019 item
Basis Of Presentation [Abstract]
Number of jurisdictions	7

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Operating Leases Information

(Dollars in thousands)	September 30, 2019
Lease liabilities	$1,557
Right-of-use assets	$1,544
Weighted average remaining lease term	14.8 years
Weighted average discount rate	3.39%

Finance Leases Information

(Dollars in thousands)	September 30, 2019
Lease liabilities	$4,492
Right-of-use assets	$4,420
Weighted average remaining lease term	11.3 years
Weighted average discount rate	2.70%

Schedule Of Lease Cost

Lease cost (in thousands)	For the Three Months Ended September 30, 2019
Operating lease cost	$147
Finance lease cost:
Amortization of right-of-use assets	138
Interest on lease liabilities	41
Total lease cost	$326

Cash paid for amounts included in the measurement of operating lease liabilities $240 

Cash paid for amounts included in the measurement of finance lease liabilities $106 

Lease cost (in thousands)	For the Nine Months Ended September 30, 2019
Operating lease cost	$433
Finance lease cost:
Amortization of right-of-use assets	138
Interest on lease liabilities	41
Total lease cost	$612

Cash paid for amounts included in the measurement of operating lease liabilities $518 

Maturity Analysis For Operating And Financing Lease Liabilities And Reconciliation Of Undiscounted Cash Flows

	Operating Lease	Finance Lease
	Liabilities	Liabilities
	As of	As of
Lease payments due (in thousands)	September 30, 2019	September 30, 2019
Three months ending December 31, 2019	$45	$101
Twelve months ending December 31, 2020	184	445
Twelve months ending December 31, 2021	111	454
Twelve months ending December 31, 2022	110	454
Twelve months ending December 31, 2023	110	454
Twelve months ending December 31, 2024	110	479
Thereafter	1,352	2,881
Total undiscounted cash flows	$2,022	$5,268
Discount	(465)	(776)
Lease liabilities	$1,557	$4,492

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Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue Recognition [Abstract]

Revenue Recognition

Note 10 – Revenue Recognition

On January 1, 2018, the Company adopted ASU No. 2014-09 “Revenue from Contracts with Customers” (Topic 606) and all subsequent ASUs that modified Topic 606. The implementation of the new standard did not have a material impact on the measurement or recognition of revenue; as such, a cumulative effect adjustment to opening retained earnings was not deemed necessary. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.

Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, interchange fees, merchant income, and annuity and insurance commissions. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams in-scope of Topic 606 are discussed below.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or at the end of the month through a direct charge to customers’ accounts.

Fees, Exchange, and Other Service Charges

Fees, exchange, and other service charges are primarily comprised of debit and credit card income, ATM fees, merchant services income, treasury services income and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income

Note 10 – Revenue Recognition (continued)

mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Treasury services income primarily represents fees charged to customers for sweep, positive pay and lockbox services.  Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or at the end of the month.

Other

Other noninterest income consists of other recurring revenue streams such as commissions from sales of mutual funds and other investments, safety deposit box rental fees, and other miscellaneous revenue streams. Commissions from the sale of mutual funds and other investments are recognized on trade date, which is when the Company has satisfied its performance obligation. The Company also receives periodic service fees (i.e., trailers) from mutual fund companies typically based on a percentage of net asset value. Trailer revenue is recorded over time, usually monthly or quarterly, as net asset value is determined. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation.

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Note 6 – Leases

On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842.  The Company also elected certain practical expedients within the standard and consistent with such elections did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases, and did not reassess any initial direct costs for existing leases.  As stated in the Company’s 2018 Form 10-K, the implementation of the new standard resulted in recognition of right-of-use assets and lease liabilities of $3.0 million at the date of adoption, which is related to the Company’s lease of premises used in operations. The right-of-use assets and lease liabilities are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows.  Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease.  Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

The Company leases six of its operating locations under long-term leases (greater than 12 months).  Leases for four of these locations are classified as operating leases.  One new lease which commenced near the end of the current period was classified as a finance lease upon management’s assessment of the lease.  Also near the end of the current period, another lease which was classified as operating upon adoption of ASU 2016-02 was modified, and upon reassessment of the modified lease, was transitioned to the finance lease classification.  Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably certain of being exercised.  The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

Note 6 – Leases (continued)

The following tables present information about the Company’s operating leases:

(Dollars in thousands)	September 30, 2019
Lease liabilities	$1,557
Right-of-use assets	$1,544
Weighted average remaining lease term	14.8 years
Weighted average discount rate	3.39%

The following tables present information about the Company’s finance leases:

(Dollars in thousands)	September 30, 2019
Lease liabilities	$4,492
Right-of-use assets	$4,420
Weighted average remaining lease term	11.3 years
Weighted average discount rate	2.70%

Lease cost (in thousands)	For the Three Months Ended September 30, 2019
Operating lease cost	$147
Finance lease cost:
Amortization of right-of-use assets	138
Interest on lease liabilities	41
Total lease cost	$326

Cash paid for amounts included in the measurement of operating lease liabilities $240 

Cash paid for amounts included in the measurement of finance lease liabilities $106 

Lease cost (in thousands)	For the Nine Months Ended September 30, 2019
Operating lease cost	$433
Finance lease cost:
Amortization of right-of-use assets	138
Interest on lease liabilities	41
Total lease cost	$612

Cash paid for amounts included in the measurement of operating lease liabilities $518 

Cash paid for amounts included in the measurement of finance lease liabilities $106 

Note 6 – Leases (continued)

A maturity analysis of operating and finance lease liabilities and reconciliation of the undiscounted cash flows to the total of lease liabilities is as follows:

	Operating Lease	Finance Lease
	Liabilities	Liabilities
	As of	As of
Lease payments due (in thousands)	September 30, 2019	September 30, 2019
Three months ending December 31, 2019	$45	$101
Twelve months ending December 31, 2020	184	445
Twelve months ending December 31, 2021	111	454
Twelve months ending December 31, 2022	110	454
Twelve months ending December 31, 2023	110	454
Twelve months ending December 31, 2024	110	479
Thereafter	1,352	2,881
Total undiscounted cash flows	$2,022	$5,268
Discount	(465)	(776)
Lease liabilities	$1,557	$4,492

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Use Of Estimates

9 Months Ended

Sep. 30, 2019

Use Of Estimates [Abstract]

Use Of Estimates

Note 2 – Use of 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.

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Fair Value Measurements (Information Regarding Quantitative Inputs Used To Value Assets Classified As Level 3) (Details) - Significant Unobservable Inputs (Level 3) [Member] $ in Thousands	Sep. 30, 2019 item	Dec. 31, 2018 USD ($) item
Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value | $		$ 1,587
Impaired Loans [Member] | Minimum [Member] | Discounted Appraised Value [Member] | Selling Cost [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impaired loans	0.0	0.0
Impaired Loans [Member] | Minimum [Member] | Discounted Appraised Value [Member] | Discount For Lack Of Marketability And Age Of Appraisal [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impaired loans	0.0	0.0
Impaired Loans [Member] | Maximum [Member] | Discounted Appraised Value [Member] | Selling Cost [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impaired loans	10.0	10.0
Impaired Loans [Member] | Maximum [Member] | Discounted Appraised Value [Member] | Discount For Lack Of Marketability And Age Of Appraisal [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impaired loans	20.0	20.0
Impaired Loans [Member] | Weighted Average [Member] | Discounted Appraised Value [Member] | Selling Cost [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impaired loans	8.0	8.0
Impaired Loans [Member] | Weighted Average [Member] | Discounted Appraised Value [Member] | Discount For Lack Of Marketability And Age Of Appraisal [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impaired loans	6.0	6.0
OREO [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value | $		$ 2,430
OREO [Member] | Minimum [Member] | Discounted Appraised Value [Member] | Selling Cost [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
OREO	0.0	0.0
OREO [Member] | Minimum [Member] | Discounted Appraised Value [Member] | Discount For Lack Of Marketability And Age Of Appraisal [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
OREO	0.0	0.0
OREO [Member] | Maximum [Member] | Discounted Appraised Value [Member] | Selling Cost [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
OREO	10.0	10.0
OREO [Member] | Maximum [Member] | Discounted Appraised Value [Member] | Discount For Lack Of Marketability And Age Of Appraisal [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
OREO	25.0	25.0
OREO [Member] | Weighted Average [Member] | Discounted Appraised Value [Member] | Selling Cost [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
OREO	6.0	6.0
OREO [Member] | Weighted Average [Member] | Discounted Appraised Value [Member] | Discount For Lack Of Marketability And Age Of Appraisal [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
OREO	15.0	15.0

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Leases (Finance Leases Information) (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Lease liabilities	$ 4,492
Right-of-use assets	$ 4,420
Weighted average remaining lease term	11 years 3 months 18 days
Weighted average discount rate	2.70%

XML

Loans, And Allowance For Loan Losses (Credit Quality Information-By Class) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	$ 555,778	$ 534,597
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	529,044	517,732
Monitor [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	7,820	5,477
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	13,296	4,317
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	5,618	7,071
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	102,191	92,877
Commercial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	96,753	90,142
Commercial [Member] | Monitor [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	352	818
Commercial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	4,546	374
Commercial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	540	1,543
Commercial [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables
Commercial Real Estate [Member] | Commercial Mortgages-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	106,260	98,426
Commercial Real Estate [Member] | Commercial Mortgages-Owner Occupied [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	95,133	90,995
Commercial Real Estate [Member] | Commercial Mortgages-Owner Occupied [Member] | Monitor [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	452	1,461
Commercial Real Estate [Member] | Commercial Mortgages-Owner Occupied [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	8,402	3,517
Commercial Real Estate [Member] | Commercial Mortgages-Owner Occupied [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	2,273	2,453
Commercial Real Estate [Member] | Commercial Mortgages-Owner Occupied [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables
Commercial Real Estate [Member] | Commercial Mortgages-Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	177,946	175,274
Commercial Real Estate [Member] | Commercial Mortgages-Non-Owner Occupied [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	170,699	172,342
Commercial Real Estate [Member] | Commercial Mortgages-Non-Owner Occupied [Member] | Monitor [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	6,156	2,285
Commercial Real Estate [Member] | Commercial Mortgages-Non-Owner Occupied [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	348	332
Commercial Real Estate [Member] | Commercial Mortgages-Non-Owner Occupied [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	743	315
Commercial Real Estate [Member] | Commercial Mortgages-Non-Owner Occupied [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables
Commercial Real Estate [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	16,810	15,471
Commercial Real Estate [Member] | Commercial Construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	16,520	14,892
Commercial Real Estate [Member] | Commercial Construction [Member] | Monitor [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	290	579
Commercial Real Estate [Member] | Commercial Construction [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables
Consumer [Member] | Consumer Unsecured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	8,225	8,754
Consumer [Member] | Consumer Unsecured [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	8,225	8,747
Consumer [Member] | Consumer Unsecured [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables		6
Consumer [Member] | Consumer Unsecured [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables		1
Consumer [Member] | Consumer Unsecured [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables
Consumer [Member] | Consumer Secured [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	75,046	77,437
Consumer [Member] | Consumer Secured [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	74,825	77,092
Consumer [Member] | Consumer Secured [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables		88
Consumer [Member] | Consumer Secured [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	221	257
Consumer [Member] | Consumer Secured [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables
Residential [Member] | Residential Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	55,781	58,172
Residential [Member] | Residential Mortgages [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	53,611	55,336
Residential [Member] | Residential Mortgages [Member] | Monitor [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	329	334
Residential [Member] | Residential Mortgages [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	1,841	2,502
Residential [Member] | Residential Mortgages [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables
Residential [Member] | Residential Consumer Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	13,519	8,186
Residential [Member] | Residential Consumer Construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	13,278	8,186
Residential [Member] | Residential Consumer Construction [Member] | Monitor [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables	$ 241
Residential [Member] | Residential Consumer Construction [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivables

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Consolidated Statements Of Changes In Stockholders' Equity - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2017	$ 9,370,000	$ 31,495,000	$ 12,269,000	$ (1,469,000)	$ 51,665,000
Balance, shares at Dec. 31, 2017	4,378,436
Net Income			1,123,000		1,123,000
Dividends paid on common stock			(263,000)		(263,000)
Other comprehensive income (loss)				(850,000)	(850,000)
Balance at Mar. 31, 2018	$ 9,370,000	31,495,000	13,129,000	(2,319,000)	51,675,000
Balance, shares at Mar. 31, 2018	4,378,436
Balance at Dec. 31, 2017	$ 9,370,000	31,495,000	12,269,000	(1,469,000)	51,665,000
Balance, shares at Dec. 31, 2017	4,378,436
Net Income					3,827,000
Other comprehensive income (loss)					(1,588,000)
Balance at Sep. 30, 2018	$ 9,370,000	31,495,000	15,309,000	(3,057,000)	53,117,000
Balance, shares at Sep. 30, 2018	4,378,436
Balance at Mar. 31, 2018	$ 9,370,000	31,495,000	13,129,000	(2,319,000)	51,675,000
Balance, shares at Mar. 31, 2018	4,378,436
Net Income			1,300,000		1,300,000
Dividends paid on common stock			(262,000)		(262,000)
Other comprehensive income (loss)				(189,000)	(189,000)
Balance at Jun. 30, 2018	$ 9,370,000	31,495,000	14,167,000	(2,508,000)	52,524,000
Balance, shares at Jun. 30, 2018	4,378,436
Net Income			1,404,000		1,404,000
Dividends paid on common stock			(262,000)		(262,000)
Other comprehensive income (loss)				(549,000)	(549,000)
Balance at Sep. 30, 2018	$ 9,370,000	31,495,000	15,309,000	(3,057,000)	53,117,000
Balance, shares at Sep. 30, 2018	4,378,436
Balance at Dec. 31, 2018	$ 9,370,000	31,495,000	16,521,000	(2,243,000)	55,143,000
Balance, shares at Dec. 31, 2018	4,378,436
Net Income			1,234,000		1,234,000
Dividends paid on common stock			(263,000)		(263,000)
Stock-based compensation expense		27,000			27,000
Other comprehensive income (loss)				1,036,000	1,036,000
Balance at Mar. 31, 2019	$ 9,370,000	31,522,000	17,492,000	(1,207,000)	57,177,000
Balance, shares at Mar. 31, 2019	4,378,436
Balance at Dec. 31, 2018	$ 9,370,000	31,495,000	16,521,000	(2,243,000)	55,143,000
Balance, shares at Dec. 31, 2018	4,378,436
Net Income					4,085,000
Other comprehensive income (loss)					2,520,000
Balance at Sep. 30, 2019	$ 9,370,000	31,575,000	19,817,000	277,000	61,039,000
Balance, shares at Sep. 30, 2019	4,378,436
Balance at Mar. 31, 2019	$ 9,370,000	31,522,000	17,492,000	(1,207,000)	57,177,000
Balance, shares at Mar. 31, 2019	4,378,436
Net Income			1,377,000		1,377,000
Dividends paid on common stock			(263,000)		(263,000)
Stock-based compensation expense		26,000			26,000
Other comprehensive income (loss)				932,000	932,000
Balance at Jun. 30, 2019	$ 9,370,000	31,548,000	18,606,000	(275,000)	59,249,000
Balance, shares at Jun. 30, 2019	4,378,436
Net Income			1,474,000		1,474,000
Dividends paid on common stock			(263,000)		(263,000)
Stock-based compensation expense		27,000			27,000
Other comprehensive income (loss)				552,000	552,000
Balance at Sep. 30, 2019	$ 9,370,000	$ 31,575,000	$ 19,817,000	$ 277,000	$ 61,039,000
Balance, shares at Sep. 30, 2019	4,378,436

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Consolidated Balance Sheets [Abstract]
Securities held-to-maturity, fair value	$ 3,938	$ 3,515
Loans, allowance for loan losses	$ 4,773	$ 4,581
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 2.14	$ 2.14
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	4,378,436	4,378,436
Common stock, shares outstanding	4,378,436	4,378,436

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Loans, And Allowance For Loan Losses (Impaired Loans) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable, Impaired [Line Items]
Totals: Recorded Investment	$ 5,203	$ 6,580
Totals: Unpaid Principal Balance	6,001	7,355
Totals: Related Allowance	63	238
Totals: Average Recorded Investment	5,895	7,138
Totals: Interest Income Recognized	246	324
Commercial [Member]
Financing Receivable, Impaired [Line Items]
With No Related Allowance Recorded: Recorded Investment	488	1,430
With No Related Allowance Recorded: Unpaid Principal Balance	1,041	1,922
With No Related Allowance Recorded: Average Recorded Investment	959	1,178
With No Related Allowance Recorded: Interest Income Recognized	29	24
With An Allowance Recorded: Recorded Investment	8	31
With An Allowance Recorded: Unpaid Principal Balance	8	31
With An Allowance Recorded: Average Recorded Investment	20	174
With An Allowance Recorded: Interest Income Recognized	1	3
Totals: Recorded Investment	496	1,461
Totals: Unpaid Principal Balance	1,049	1,953
Totals: Related Allowance	8	15
Totals: Average Recorded Investment	979	1,352
Totals: Interest Income Recognized	30	27
Commercial Real Estate [Member] | Commercial Mortgages-Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
With No Related Allowance Recorded: Recorded Investment	2,258	2,414
With No Related Allowance Recorded: Unpaid Principal Balance	2,448	2,511
With No Related Allowance Recorded: Average Recorded Investment	2,336	2,421
With No Related Allowance Recorded: Interest Income Recognized	132	167
With An Allowance Recorded: Recorded Investment	15	39
With An Allowance Recorded: Unpaid Principal Balance	15	132
With An Allowance Recorded: Average Recorded Investment	27	352
With An Allowance Recorded: Interest Income Recognized	1	3
Totals: Recorded Investment	2,273	2,453
Totals: Unpaid Principal Balance	2,463	2,643
Totals: Related Allowance	15	36
Totals: Average Recorded Investment	2,363	2,773
Totals: Interest Income Recognized	133	170
Commercial Real Estate [Member] | Commercial Mortgages-Non-Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
With No Related Allowance Recorded: Recorded Investment	671	131
With No Related Allowance Recorded: Unpaid Principal Balance	696	132
With No Related Allowance Recorded: Average Recorded Investment	401	403
With No Related Allowance Recorded: Interest Income Recognized	23	8
With An Allowance Recorded: Recorded Investment	15	90
With An Allowance Recorded: Unpaid Principal Balance	15	90
With An Allowance Recorded: Average Recorded Investment	53	82
With An Allowance Recorded: Interest Income Recognized	1	6
Totals: Recorded Investment	686	221
Totals: Unpaid Principal Balance	711	222
Totals: Related Allowance	6	20
Totals: Average Recorded Investment	454	485
Totals: Interest Income Recognized	24	14
Commercial Real Estate [Member] | Commercial Construction [Member]
Financing Receivable, Impaired [Line Items]
With An Allowance Recorded: Average Recorded Investment		85
Totals: Average Recorded Investment		85
Consumer [Member] | Consumer Unsecured [Member]
Financing Receivable, Impaired [Line Items]
With An Allowance Recorded: Recorded Investment		1
With An Allowance Recorded: Unpaid Principal Balance		1
With An Allowance Recorded: Average Recorded Investment	1	2
Totals: Recorded Investment		1
Totals: Unpaid Principal Balance		1
Totals: Related Allowance		1
Totals: Average Recorded Investment	1	2
Consumer [Member] | Consumer Secured [Member]
Financing Receivable, Impaired [Line Items]
With No Related Allowance Recorded: Recorded Investment	109	88
With No Related Allowance Recorded: Unpaid Principal Balance	109	88
With No Related Allowance Recorded: Average Recorded Investment	99	184
With No Related Allowance Recorded: Interest Income Recognized	5	6
With An Allowance Recorded: Recorded Investment		105
With An Allowance Recorded: Unpaid Principal Balance		105
With An Allowance Recorded: Average Recorded Investment	53	266
With An Allowance Recorded: Interest Income Recognized		7
Totals: Recorded Investment	109	193
Totals: Unpaid Principal Balance	109	193
Totals: Related Allowance		105
Totals: Average Recorded Investment	152	450
Totals: Interest Income Recognized	5	13
Residential [Member] | Residential Mortgages [Member]
Financing Receivable, Impaired [Line Items]
With No Related Allowance Recorded: Recorded Investment	1,499	1,876
With No Related Allowance Recorded: Unpaid Principal Balance	1,513	1,953
With No Related Allowance Recorded: Average Recorded Investment	1,688	1,728
With No Related Allowance Recorded: Interest Income Recognized	51	89
With An Allowance Recorded: Recorded Investment	140	375
With An Allowance Recorded: Unpaid Principal Balance	156	390
With An Allowance Recorded: Average Recorded Investment	258	263
With An Allowance Recorded: Interest Income Recognized	3	11
Totals: Recorded Investment	1,639	2,251
Totals: Unpaid Principal Balance	1,669	2,343
Totals: Related Allowance	34	61
Totals: Average Recorded Investment	1,946	1,991
Totals: Interest Income Recognized	$ 54	$ 100

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Securities (Summary Of Securities Held-To-Maturity And Securities Available-For-Sale) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule Of Available-For-Sale Securities And Held-To-Maturity Securities [Line Items]
Held-to-Maturity	$ 3,690	$ 3,700
Held-to-Maturity, Fair Value	3,938	3,515
Available-for-Sale, Amortized Costs	54,049	55,566
Available-for-Sale, Gross Unrealized Gains	625	3
Available-for-Sale, Gross Unrealized Losses	(274)	(2,842)
Available-for-sale, Fair Value	54,400	52,727
US Treasuries [Member]
Schedule Of Available-For-Sale Securities And Held-To-Maturity Securities [Line Items]
Available-for-Sale, Amortized Costs	1,964	1,961
Available-for-Sale, Gross Unrealized Gains	16
Available-for-Sale, Gross Unrealized Losses		(116)
Available-for-sale, Fair Value	1,980	1,845
US Agency Obligations [Member]
Schedule Of Available-For-Sale Securities And Held-To-Maturity Securities [Line Items]
Held-to-Maturity	3,690	3,700
Held-to-maturity, Gross Unrealized Gains	248	3
Held-to-maturity, Gross Unrealized Losses		(185)
Held-to-Maturity, Fair Value		3,515
Available-for-Sale, Amortized Costs	25,963	24,701
Available-for-Sale, Gross Unrealized Gains	374
Available-for-Sale, Gross Unrealized Losses	(102)	(1,434)
Available-for-sale, Fair Value	26,235	23,267
Mortgage-Backed Securities [Member]
Schedule Of Available-For-Sale Securities And Held-To-Maturity Securities [Line Items]
Available-for-Sale, Amortized Costs	10,887	12,390
Available-for-Sale, Gross Unrealized Gains	40
Available-for-Sale, Gross Unrealized Losses	(119)	(514)
Available-for-sale, Fair Value	10,808	11,876
Municipals [Member]
Schedule Of Available-For-Sale Securities And Held-To-Maturity Securities [Line Items]
Available-for-Sale, Amortized Costs	11,145	12,412
Available-for-Sale, Gross Unrealized Gains	167	3
Available-for-Sale, Gross Unrealized Losses	(8)	(406)
Available-for-sale, Fair Value	11,304	12,009
Corporates [Member]
Schedule Of Available-For-Sale Securities And Held-To-Maturity Securities [Line Items]
Available-for-Sale, Amortized Costs	4,090	4,102
Available-for-Sale, Gross Unrealized Gains	28
Available-for-Sale, Gross Unrealized Losses	(45)	(372)
Available-for-sale, Fair Value	$ 4,073	$ 3,730

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Loans, Allowance For Loan Losses And OREO (Narrative) (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($) contract item	Sep. 30, 2018 contract	Sep. 30, 2019 USD ($) contract item	Sep. 30, 2018 contract	Dec. 31, 2018 USD ($) contract item
Financing Receivable, Modifications [Line Items]
Loan modifications that would have been classified as TDRs	0	0	0	0
Loan modifications classified as TDRs	0	0	0	0
Outstanding commitments to disburse additional funds on TDR's			0		0
Other real estate owned | $	$ 2,242		$ 2,242		$ 2,430
Residential [Member]
Financing Receivable, Modifications [Line Items]
Number of real estate properties held | item	2		2		4
Other real estate owned | $	$ 228		$ 228		$ 156

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Business Segments (Tables)

9 Months Ended

Sep. 30, 2019

Business Segments [Abstract]

Schedule Of Segment Reporting Information, By Segment

Business Segments
	Community
	Banking	Mortgage	Total
Nine months ended September 30, 2019
Net interest income	$       18,447	$            -	$      18,447
Provision for loan losses	434	-	434
Net interest income after provision for loan losses	18,013	-	18,013
Noninterest income	1,936	3,103	5,039
Noninterest expenses	15,700	2,247	17,947
Income before income taxes	4,249	856	5,105
Income tax expense	840	180	1,020
Net income	$         3,409	$        676	$        4,085
Total assets	$     702,215	$     5,899	$    708,114
Nine months ended September 30, 2018
Net interest income	$       17,124	$            -	$      17,124
Provision for loan losses	527	-	527
Net interest income after provision for loan losses	16,597	-	16,597
Noninterest income	1,684	2,262	3,946
Noninterest expenses	13,922	1,845	15,767
Income before income taxes	4,359	417	4,776
Income tax expense	891	58	949
Net income	$         3,468	$        359	$        3,827
Total assets	$     665,698	$     2,740	$    668,438
	Community
	Banking	Mortgage	Total
Three months ended September 30, 2019
Net interest income	$         6,165	$            -	$        6,165
Provision for loan losses	108	-	108
Net interest income after provision for loan losses	6,057	-	6,057
Noninterest income	824	1,337	2,161
Noninterest expenses	5,453	920	6,373
Income before income taxes	1,428	417	1,845
Income tax expense	283	88	371
Net income	$         1,145	$        329	$        1,474
Total assets	$     702,215	$     5,899	$    708,114
Three months ended September 30, 2018
Net interest income	$         5,990	$            -	$        5,990
Provision for loan losses	190	-	190
Net interest income after provision for loan losses	5,800	-	5,800
Noninterest income	552	767	1,319
Noninterest expenses	4,715	649	5,364
Income before income taxes	1,637	118	1,755
Income tax expense	345	6	351
Net income	$         1,292	$        112	$        1,404
Total assets	$     665,698	$     2,740	$    668,438

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Earnings Per Common Share (EPS) (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Common Share (EPS) [Abstract]

Earnings Per Share

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2019	2018	2019	2018
Net income	$      1,474,000	$      1,404,000	$      4,085,000	$      3,827,000
Weighted average number of shares	4,378,436	4,378,436	4,378,436	4,378,436
Restricted stock units/stock options affect of incremental shares	6,895	-	4,692	30
Weighted average diluted shares	4,385,331	4,378,436	4,383,128	4,378,466
Basic EPS (weighted avg shares)	$               0.34	$               0.32	$               0.93	$               0.87
Diluted EPS (Including incremental shares)	$               0.34	$               0.32	$               0.93	$               0.87

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Earnings Per Common Share (EPS) (Earnings Per Share) (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Common Share (EPS) [Abstract]
Net Income	$ 1,474,000	$ 1,377,000	$ 1,234,000	$ 1,404,000	$ 1,300,000	$ 1,123,000	$ 4,085,000	$ 3,827,000
Weighted average number of shares	4,378,436			4,378,436			4,378,436	4,378,436
Restricted stock units/stock options affect of incremental shares	6,895						4,692	30
Weighted average diluted shares	4,385,331			4,378,436			4,383,128	4,378,466
Basic EPS (weighted avg shares)	$ 0.34			$ 0.32			$ 0.93	$ 0.87
Diluted EPS (Including incremental shares)	$ 0.34			$ 0.32			$ 0.93	$ 0.87

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Leases (Maturity Analysis For Operating And Financing Lease Liabilities And Reconciliation Of Undiscounted Cash Flows) (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Operating Lease Liabilities, Three months ending December 31, 2019	$ 45
Operating Lease Liabilities,Twelve months ending December 31, 2020	184
Operating Lease Liabilities,Twelve months ending December 31, 2021	111
Operating Lease Liabilities, Twelve months ending December 31, 2022	110
Operating Lease Liabilities, Twelve months ending December 31, 2023	110
Operating Lease Liabilities, Twelve months ending December 31, 2024	110
Operating Lease Liabilities, Thereafter	1,352
Operating Lease Liabilities, Total undiscounted cash flows	2,022
Operating Lease Liabilities, Discount	(465)
Operating Lease Liabilities, Lease liabilities	1,557
Finance Lease Liabilities, Three months ending December 31, 2019	101
Finance Lease Liabilities, Twelve months ending December 31, 2020	445
Finance Lease Liabilities, Twelve months ending December 31, 2021	454
Finance Lease Liabilities, Twelve months ending December 31, 2022	454
Finance Lease Liabilities, Twelve months ending December 31, 2023	454
Finance Lease Liabilities, Twelve months ending December 31, 2024	479
Finance Lease Liabilities, Thereafter	2,881
Finance Lease Liabilities, Total undiscounted cash flows	5,268
Finance Lease Liabilities, Discount	(776)
Finance Lease Liabilities, Lease liabilities	$ 4,492

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Fair Value Measurements (Fair Value Assets Measured On Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	$ 54,400	$ 52,727
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	54,400	52,727
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
US Treasuries [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	1,980	1,845
US Treasuries [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
US Treasuries [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	1,980	1,845
US Treasuries [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
US Agency Obligations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	26,235	23,267
US Agency Obligations [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
US Agency Obligations [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	26,235	23,267
US Agency Obligations [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
Mortgage-Backed Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	10,808	11,876
Mortgage-Backed Securities [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
Mortgage-Backed Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	10,808	11,876
Mortgage-Backed Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
Municipals [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	11,304	12,009
Municipals [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
Municipals [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	11,304	12,009
Municipals [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
Corporates [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	4,073	3,730
Corporates [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value
Corporates [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value	4,073	3,730
Corporates [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale, at fair value

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Leases (Narrative) (Details) $ in Millions	Jan. 01, 2019 USD ($)
Accounting Standards Update 2016-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Effect of change in assets and liabilities	$ 3.0

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Business Segments

9 Months Ended

Sep. 30, 2019

Business Segments [Abstract]

Business Segments

Note 8  – Business Segments

The Company has two reportable business segments: (i) a traditional full-service community banking segment and, (ii) a mortgage loan origination business.  The community banking business segment includes Bank of the James which provides loans, deposits, investments and insurance to retail and commercial customers throughout Region 2000 and other areas within Central Virginia.  The mortgage segment provides a variety of mortgage loan products principally within Region 2000.  Mortgage loans are originated and sold in the secondary market through purchase commitments from investors with servicing released.  Because of the pre-arranged purchase commitments, there is minimal risk to the Company.

Both of the Company’s reportable segments are service based.  The mortgage business is a gain on sale business while the Bank’s primary source of revenue is net interest income.  The Bank also provides a referral network for the mortgage origination business.  The mortgage business may also be in a position to refer its customers to the Bank for banking services when appropriate.

Information about reportable business segments and reconciliation of such information to the consolidated financial statements for the three and nine months ended September 30, 2019 and 2018 was as follows (dollars in thousands):

Note 8 – Business Segments (continued)

Business Segments
	Community
	Banking	Mortgage	Total
Nine months ended September 30, 2019
Net interest income	$       18,447	$            -	$      18,447
Provision for loan losses	434	-	434
Net interest income after provision for loan losses	18,013	-	18,013
Noninterest income	1,936	3,103	5,039
Noninterest expenses	15,700	2,247	17,947
Income before income taxes	4,249	856	5,105
Income tax expense	840	180	1,020
Net income	$         3,409	$        676	$        4,085
Total assets	$     702,215	$     5,899	$    708,114
Nine months ended September 30, 2018
Net interest income	$       17,124	$            -	$      17,124
Provision for loan losses	527	-	527
Net interest income after provision for loan losses	16,597	-	16,597
Noninterest income	1,684	2,262	3,946
Noninterest expenses	13,922	1,845	15,767
Income before income taxes	4,359	417	4,776
Income tax expense	891	58	949
Net income	$         3,468	$        359	$        3,827
Total assets	$     665,698	$     2,740	$    668,438
	Community
	Banking	Mortgage	Total
Three months ended September 30, 2019
Net interest income	$         6,165	$            -	$        6,165
Provision for loan losses	108	-	108
Net interest income after provision for loan losses	6,057	-	6,057
Noninterest income	824	1,337	2,161
Noninterest expenses	5,453	920	6,373
Income before income taxes	1,428	417	1,845
Income tax expense	283	88	371
Net income	$         1,145	$        329	$        1,474
Total assets	$     702,215	$     5,899	$    708,114
Three months ended September 30, 2018
Net interest income	$         5,990	$            -	$        5,990
Provision for loan losses	190	-	190
Net interest income after provision for loan losses	5,800	-	5,800
Noninterest income	552	767	1,319
Noninterest expenses	4,715	649	5,364
Income before income taxes	1,637	118	1,755
Income tax expense	345	6	351
Net income	$         1,292	$        112	$        1,404
Total assets	$     665,698	$     2,740	$    668,438

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Stock Based Compensation

9 Months Ended

Sep. 30, 2019

Stock Based Compensation [Abstract]

Stock Based Compensation

Note 4 – Stock Based Compensation

Accounting standards require companies to recognize the cost of employee services received in exchange for awards of equity instruments, such as stock options and restricted stock, based on the fair value of those awards at the date of grant.

Note 4 – Stock Based Compensation (continued)

At December 31, 2018, there were no stock-based compensation awards outstanding that were issued under the Company’s 1999 Stock Option Plan.  The final stock-based compensation issued under this plan consisting solely of employee stock options which expired during the second quarter of 2018.

At the annual meeting of shareholders held on May 15, 2018, the shareholders approved the Bank of the James Financial Group, Inc. 2018 Equity Incentive Plan (the “2018 Incentive Plan”).  The 2018 Incentive Plan permits the issuance of up to 250,000 shares of common stock for awards to key employees of the Company and its subsidiaries in the form of stock options, restricted stock, restricted stock units, stock awards and performance units.

On January 2, 2019, the Company granted its first block of equity compensation under the 2018 Incentive Plan consisting of 24,500 restricted stock units.  The recipients of restricted stock units do not receive shares of the Company’s stock immediately, but instead receive shares upon satisfying the requisite service period specified by the terms and conditions of the grant.  Additionally, the recipients of restricted stock units do not enjoy the rights of holder of the Company’s common stock until the units have vested and as such, they do not have voting rights or rights to nonforfeitable dividends. The related compensation expense is based on the grant date fair value of the Company’s stock of $13.00 per share.  Shares vest over 3 years in thirds with the first one-third vesting one year from the grant date. The total expense recognized for the three and nine months ended September 30, 2019, in connection with the restricted stock unit awards was approximately $27,000 and $80,000, respectively. There were no forfeitures during the three and nine month periods ending September 30, 2019. 

At September 30, 2019, the unrecognized stock-based compensation expense related to unvested restricted stock awards amounted to approximately $239,000. The unrecognized expense will be recognized ratably over the remaining vesting period of 2.25 years.  The Company accounts for forfeitures as they occur.

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Loans, And Allowance For Loan Losses (Allowance For Loan Losses And Recorded Investment In Loans) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Credit Losses: Beginning Balance				$ 4,581	$ 4,752	$ 4,752
Allowance for Credit Losses: Charge-offs				(319)		(1,064)
Allowance for Credit Losses: Recoveries				77		177
Allowance for credit losses: Provision		$ 108	$ 190	434	527	716
Allowance for Credit Losses: Ending Balance		4,773		4,773		4,581
Allowance for Credit Losses: Ending Balance: Individually evaluated for impairment		63		63		238
Allowance for Credit Losses: Ending Balance: Collectively evaluated for impairment		4,710		4,710		4,343
Allowance for Credit Losses: Totals		4,773		4,773		4,581
Financing Receivables: Ending Balance: Individually evaluated for impairment		5,203		5,203		6,580
Financing Receivables: Ending Balance: Collectively evaluated for impairment		550,575		550,575		528,017
Total loans	[1]	555,778		555,778		534,597
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Credit Losses: Beginning Balance				1,136	1,264	1,264
Allowance for Credit Losses: Charge-offs				(104)		(395)
Allowance for Credit Losses: Recoveries				34		113
Allowance for credit losses: Provision				222		154
Allowance for Credit Losses: Ending Balance		1,288		1,288		1,136
Allowance for Credit Losses: Ending Balance: Individually evaluated for impairment		8		8		15
Allowance for Credit Losses: Ending Balance: Collectively evaluated for impairment		1,280		1,280		1,121
Allowance for Credit Losses: Totals		1,288		1,288		1,136
Financing Receivables: Ending Balance: Individually evaluated for impairment		496		496		1,461
Financing Receivables: Ending Balance: Collectively evaluated for impairment		101,695		101,695		91,416
Total loans		102,191		102,191		92,877
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Credit Losses: Beginning Balance				1,831	1,738	1,738
Allowance for Credit Losses: Charge-offs				(6)		(230)
Allowance for Credit Losses: Recoveries				5		4
Allowance for credit losses: Provision				89		319
Allowance for Credit Losses: Ending Balance		1,919		1,919		1,831
Allowance for Credit Losses: Ending Balance: Individually evaluated for impairment		21		21		56
Allowance for Credit Losses: Ending Balance: Collectively evaluated for impairment		1,898		1,898		1,775
Allowance for Credit Losses: Totals		1,919		1,919		1,831
Financing Receivables: Ending Balance: Individually evaluated for impairment		2,959		2,959		2,674
Financing Receivables: Ending Balance: Collectively evaluated for impairment		298,057		298,057		286,497
Total loans		301,016		301,016		289,171
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Credit Losses: Beginning Balance				956	1,172	1,172
Allowance for Credit Losses: Charge-offs				(188)		(405)
Allowance for Credit Losses: Recoveries				34		60
Allowance for credit losses: Provision				56		129
Allowance for Credit Losses: Ending Balance		858		858		956
Allowance for Credit Losses: Ending Balance: Individually evaluated for impairment						106
Allowance for Credit Losses: Ending Balance: Collectively evaluated for impairment		858		858		850
Allowance for Credit Losses: Totals		858		858		956
Financing Receivables: Ending Balance: Individually evaluated for impairment		109		109		194
Financing Receivables: Ending Balance: Collectively evaluated for impairment		83,162		83,162		85,997
Total loans		83,271		83,271		86,191
Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Credit Losses: Beginning Balance				658	$ 578	578
Allowance for Credit Losses: Charge-offs				(21)		(34)
Allowance for Credit Losses: Recoveries				4
Allowance for credit losses: Provision				67		114
Allowance for Credit Losses: Ending Balance		708		708		658
Allowance for Credit Losses: Ending Balance: Individually evaluated for impairment		34		34		61
Allowance for Credit Losses: Ending Balance: Collectively evaluated for impairment		674		674		597
Allowance for Credit Losses: Totals		708		708		658
Financing Receivables: Ending Balance: Individually evaluated for impairment		1,639		1,639		2,251
Financing Receivables: Ending Balance: Collectively evaluated for impairment		67,661		67,661		64,107
Total loans		$ 69,300		$ 69,300		$ 66,358

[1] Includes net deferred costs and premiums of $299 and $457 as of September 30, 2019 and December 31, 2018, respectively.

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Fair Value Measurements (Narrative) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale, fair value adjustment	$ 0

XML

Fair Value Measurements (Fair Value Carrying And Notional Amounts) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	$ 27,315	$ 26,725
Fed funds sold	22,141	23,600
Available-for-sale Securities	54,400	52,727
Held-to-maturity Securities	3,690	3,700
Restricted stock	1,506	1,462
Loans held for sale	5,630	1,670
Interest receivable	1,755	1,742
BOLI	13,606	13,359
Interest payable	167	127
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	27,315	26,725
Fed funds sold	22,141	23,600
Available-for-sale Securities
Held-to-maturity Securities
Restricted stock
Loans, net
Loans held for sale
Interest receivable
BOLI
Deposits
Capital notes
Interest payable
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks
Fed funds sold
Available-for-sale Securities	54,400	52,727
Held-to-maturity Securities	3,938	3,515
Restricted stock	1,506	1,462
Loans, net
Loans held for sale	5,630	1,670
Interest receivable	1,755	1,742
BOLI	13,606	13,359
Deposits	634,750	612,532
Capital notes	4,773	4,710
Interest payable	167	127
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks
Fed funds sold
Available-for-sale Securities
Held-to-maturity Securities
Restricted stock
Loans, net	551,540	522,782	[1]
Loans held for sale
Interest receivable
BOLI
Deposits
Capital notes
Interest payable
Carrying Amounts [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	27,315	26,725
Fed funds sold	22,141	23,600
Available-for-sale Securities	54,400	52,727
Held-to-maturity Securities	3,690	3,700
Restricted stock	1,506	1,462
Loans, net	551,005	530,016	[1]
Loans held for sale	5,630	1,670
Interest receivable	1,755	1,742
BOLI	13,606	13,359
Deposits	633,033	612,043
Capital notes	5,000	5,000
Interest payable	167	127
Fair Values [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	27,315	26,725
Fed funds sold	22,141	23,600
Available-for-sale Securities	54,400	52,727
Held-to-maturity Securities	3,938	3,515
Restricted stock	1,506	1,462
Loans, net	551,540	522,782	[1]
Loans held for sale	5,630	1,670
Interest receivable	1,755	1,742
BOLI	13,606	13,359
Deposits	634,750	612,532
Capital notes	4,773	4,710
Interest payable	$ 167	$ 127

[1] Carrying amount is net of unearned income and the Allowance.

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Leases (Schedule Of Lease Cost) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Leases [Abstract]
Operating lease cost	$ 147	$ 433
Amortization of right-of-use assets	138	138
Interest on lease liabilities	41	41
Total lease cost	326	612
Cash paid for amounts included in the measurement of operating lease liabilities	240	518
Cash paid for amounts included in the measurement of finance lease liabilities	$ 106	$ 106

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Loans, Allowance For Loan Losses And OREO

9 Months Ended

Sep. 30, 2019

Loans, Allowance For Loan Losses And OREO [Abstract]

Loans, Allowance For Loan Losses And OREO

Note 9 – Loans, allowance for loan losses and OREO

Management has an established methodology used to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio.  For purposes of determining the allowance for loan losses, the Bank has segmented certain loans in the portfolio by product type.  Within these segments, the Bank has sub-segmented its portfolio into classes, based on the associated risks.  The classifications set forth below do not correspond directly to the classifications set forth in the call report (Form FFIEC 041).  Management has determined that the classifications set forth below are more appropriate for use in identifying and managing risk in the loan portfolio.

Loan Segments:	Loan Classes:
Commercial	Commercial and industrial loans
Commercial real estate	Commercial mortgages – owner occupied
	Commercial mortgages – non-owner occupied
	Commercial construction
Consumer	Consumer unsecured
	Consumer secured
Residential	Residential mortgages
	Residential consumer construction

A summary of loans, net is as follows (dollars in thousands):

	As of:
	September 30,	December 31,
	2019	2018
Commercial	$102,191	$92,877
Commercial real estate	301,016	289,171
Consumer	83,271	86,191
Residential	69,300	66,358
Total loans (1)	555,778	534,597
Less allowance for loan losses	4,773	4,581
Net loans	$551,005	$530,016

(1) Includes net deferred costs and premiums of $299 and $457 as of September 30, 2019 and December 31, 2018, respectively.

The Bank’s internal risk rating system is in place to grade commercial and commercial real estate loans.  Category ratings are reviewed periodically by lenders and the credit review area of the Bank based on the borrower’s individual situation.  Additionally, internal and external monitoring and review of credits are conducted on an annual basis. 

Note 9 – Loans, allowance for loan losses and OREO (continued)

Below is a summary and definition of the Bank’s risk rating categories:

RATING 1	Excellent
RATING 2	Above Average
RATING 3	Satisfactory
RATING 4	Acceptable / Low Satisfactory
RATING 5	Monitor
RATING 6	Special Mention
RATING 7	Substandard
RATING 8	Doubtful
RATING 9	Loss

We segregate loans into the above categories based on the following criteria and we review the characteristics of each rating at least annually, generally during the first quarter.  The characteristics of these ratings are as follows:

· “Pass.”  These are loans having risk ratings of 1 through 4.  Pass loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio.  The borrower has paid all obligations as agreed and it is expected that this type of payment history will continue.  When necessary, acceptable personal guarantors support the loan.

· “Monitor.”  These are loans having a risk rating of 5.  Monitor loans have currently acceptable risk but may have the potential for a specific defined weakness in the borrower’s operations and the borrower’s ability to generate positive cash flow on a sustained basis. The borrower’s recent payment history may currently or in the future be characterized by late payments. The Bank’s risk exposure is mitigated by collateral supporting the loan. The collateral is considered to be well-margined, well maintained, accessible and readily marketable.

· “Special Mention.”  These are loans having a risk rating of 6.  Special Mention loans have weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the bank’s credit position at some future date.  Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.  These loans do warrant more than routine monitoring due to a weakness caused by adverse events.

· “Substandard.”  These are loans having a risk rating of 7.  Substandard loans are considered to have specific and well-defined weaknesses that jeopardize the viability of the Bank’s credit extension. The payment history for the loan has been inconsistent and the expected or projected primary repayment source may be inadequate to service the loan. The estimated net liquidation value of the collateral pledged and/or ability of the personal guarantor(s) to pay the loan may not adequately protect the Bank. There is a distinct possibility that the Bank will sustain some loss if the deficiencies associated with the loan are not corrected in the near term. A substandard loan would not automatically meet our definition of impaired unless the loan is significantly past due and the borrower’s performance and financial condition provides evidence that it is probable that the Bank will be unable to collect all amounts due.

Note 9 – Loans, allowance for loan losses and OREO (continued)

· “Doubtful.”  These are loans having a risk rating of 8.  Doubtful rated loans have all the weaknesses inherent in a loan that is classified substandard but with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high.

· “Loss.” These are loans having a risk rating of 9. Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off.

Note 9 – Loans, allowance for loan losses and OREO (continued)

Loans on Non-Accrual Status
(dollars in thousands)
	As of
	September 30, 2019	December 31, 2018
Commercial	$285	$973
Commercial Real Estate:
Commercial Mortgages-Owner Occupied	405	317
Commercial Mortgages-Non-Owner Occupied	503	173
Commercial Construction	-	-
Consumer
Consumer Unsecured	-	-
Consumer Secured	28	84
Residential:
Residential Mortgages	550	1,391
Residential Consumer Construction	-	-
Totals	$1,771	$2,939

We also classify other real estate owned (OREO) as a nonperforming asset.  OREO represents real property owned by the Bank which was acquired through purchase at foreclosure or from the borrower through a deed in lieu of foreclosure. OREO decreased to $2,242 on September 30, 2019 from $2,430 on December 31, 2018.  The following table represents the changes in OREO balance during the nine months ended September 30, 2019 and year ended December 31, 2018.

OREO Changes
(dollars in thousands)
	Nine Months Ended September 30, 2019	Year Ended December 31, 2018
Balance at the beginning of the year (net)	$2,430	$2,650
Transfers from loans	460	850
Capitalized costs	-	-
Valuation adjustments	(286)	(185)
Sales proceeds	(349)	(846)
Loss on disposition	(13)	(39)
Balance at the end of the period (net)	$2,242	$2,430

At September 30, 2019 and December 31, 2018, the Company had no consumer mortgage loans secured by residential real estate for which foreclosure was in process.  The Company held two residential real estate properties carried on the books in other real estate owned at a value of $228 as of September 30, 2019 and four residential real estate properties carried on the books at a value of $156 in other real estate owned as of December 31, 2018.

Note 9 – Loans, allowance for loan losses and OREO (continued)

		Impaired Loans
		(dollars in thousands)
		As of and For the the Nine Months Ended September 30, 2019
			Unpaid		Average	Interest
		Recorded	Principal	Related	Recorded	Income
2019		Investment	Balance	Allowance	Investment	Recognized
With No Related Allowance Recorded:
	Commercial	$                  488	$                1,041	$                    -	$            959	$               29
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	2,258	2,448	-	2,336	132
	Commercial Mortgage Non-Owner Occupied	671	696	-	401	23
	Commercial Construction	-	-	-	-	-
	Consumer
	Consumer Unsecured	-	-	-	-	-
	Consumer Secured	109	109	-	99	5
	Residential
	Residential Mortgages	1,499	1,513	-	1,688	51
	Residential Consumer Construction	-	-	-	-	-
With an Allowance Recorded:
	Commercial	$                      8	$                       8	$                    8	$              20	$                 1
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	15	15	15	27	1
	Commercial Mortgage Non-Owner Occupied	15	15	6	53	1
	Commercial Construction	-	-	-	-	-
	Consumer
	Consumer Unsecured	-	-	-	1	-
	Consumer Secured	-	-	-	53	-
	Residential
	Residential Mortgages	140	156	34	258	3
	Residential Consumer Construction	-	-	-	-	-
Totals:
	Commercial	$                  496	$                1,049	$                    8	$            979	$               30
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	2,273	2,463	15	2,363	133
	Commercial Mortgage Non-Owner Occupied	686	711	6	454	24
	Commercial Construction	-	-	-	-	-
	Consumer
	Consumer Unsecured	-	-	-	1	-
	Consumer Secured	109	109	-	152	5
	Residential
	Residential Mortgages	1,639	1,669	34	1,946	54
	Residential Consumer Construction	-	-	-	-	-
		$               5,203	$                6,001	$                  63	$         5,895	$             246

Note 9 – Loans, allowance for loan losses and OREO (continued)

		Impaired Loans
		(dollars in thousands)
		As of and For the the Year Ended December 31, 2018
			Unpaid		Average	Interest
		Recorded	Principal	Related	Recorded	Income
2018		Investment	Balance	Allowance	Investment	Recognized
With No Related Allowance Recorded:
	Commercial	$                1,430	$                1,922	$                    -	$         1,178	$               24
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	2,414	2,511	-	2,421	167
	Commercial Mortgage Non-Owner Occupied	131	132	-	403	8
	Commercial Construction	-	-	-	-	-
	Consumer
	Consumer Unsecured	-	-	-	-	-
	Consumer Secured	88	88	-	184	6
	Residential
	Residential Mortgages	1,876	1,953	-	1,728	89
	Residential Consumer Construction	-	-	-	-	-
With an Allowance Recorded:
	Commercial	$                     31	$                     31	$                  15	$            174	$                 3
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	39	132	36	352	3
	Commercial Mortgage Non-Owner Occupied	90	90	20	82	6
	Commercial Construction	-	-	-	85	-
	Consumer
	Consumer Unsecured	1	1	1	2	-
	Consumer Secured	105	105	105	266	7
	Residential
	Residential Mortgages	375	390	61	263	11
	Residential Consumer Construction	-	-	-	-	-
Totals:
	Commercial	$                1,461	$                1,953	$                  15	$         1,352	$               27
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	2,453	2,643	36	2,773	170
	Commercial Mortgage Non-Owner Occupied	221	222	20	485	14
	Commercial Construction	-	-	-	85	-
	Consumer
	Consumer Unsecured	1	1	1	2	-
	Consumer Secured	193	193	105	450	13
	Residential
	Residential Mortgages	2,251	2,343	61	1,991	100
	Residential Consumer Construction	-	-	-	-	-
		$                6,580	$                7,355	$                238	$         7,138	$             324

Note 9 – Loans, allowance for loan losses and OREO (continued)

	Allowance for Loan Losses and Recorded Investment in Loans
	(dollars in thousands)
	As of and For the Nine Months Ended September 30, 2019
		Commercial
2019	Commercial	Real Estate	Consumer	Residential	Total
Allowance for Credit Losses:
Beginning Balance	$          1,136	$                 1,831	$            956	$              658	$         4,581
Charge-Offs	(104)	(6)	(188)	(21)	(319)
Recoveries	34	5	34	4	77
Provision	222	89	56	67	434
Ending Balance	1,288	1,919	858	708	4,773
Ending Balance: Individually evaluated for impairment	8	21	-	34	63
Ending Balance: Collectively evaluated for impairment	1,280	1,898	858	674	4,710
Totals:	$          1,288	$                 1,919	$            858	$              708	$         4,773
Financing Receivables:
Ending Balance: Individually evaluated for impairment	496	2,959	109	1,639	5,203
Ending Balance: Collectively evaluated for impairment	101,695	298,057	83,162	67,661	550,575
Totals:	$      102,191	$             301,016	$       83,271	$         69,300	$     555,778

Note 9 – Loans, allowance for loan losses and OREO (continued)

	Allowance for Loan Losses and Recorded Investment in Loans
	(dollars in thousands)
	As of and For the Year Ended December 31, 2018
		Commercial
2018	Commercial	Real Estate	Consumer	Residential	Total
Allowance for Credit Losses:
Beginning Balance	$          1,264	$                 1,738	$          1,172	$              578	$         4,752
Charge-Offs	(395)	(230)	(405)	(34)	(1,064)
Recoveries	113	4	60	-	177
Provision	154	319	129	114	716
Ending Balance	1,136	1,831	956	658	4,581
Ending Balance: Individually evaluated for impairment	15	56	106	61	238
Ending Balance: Collectively evaluated for impairment	1,121	1,775	850	597	4,343
Totals:	$          1,136	$                 1,831	$             956	$              658	$         4,581
Financing Receivables:
Ending Balance: Individually evaluated for impairment	1,461	2,674	194	2,251	6,580
Ending Balance: Collectively evaluated for impairment	91,416	286,497	85,997	64,107	528,017
Totals:	$        92,877	$             289,171	$        86,191	$         66,358	$     534,597

Note 9 – Loans, allowance for loan losses and OREO (continued)

	Age Analysis of Past Due Loans as of
	September 30, 2019
	(dollars in thousands)
			Greater				Recorded Investment
	30-59 Days	60-89 Days	than	Total Past		Total	> 90 Days &
2019	Past Due	Past Due	90 Days	Due	Current	Loans	Accruing
Commercial	$2	$    -	$134	$136	$102,055	$102,191	$     -
Commercial Real Estate:
Commercial Mortgages-   Owner Occupied	674	19	405	1,098	105,162	106,260	-
Commercial Mortgages-Non-Owner Occupied	126	706	503	1,335	176,611	177,946	-
Commercial Construction	-	-	-	-	16,810	16,810	-
Consumer:
Consumer Unsecured	7	-	-	7	8,218	8,225	-
Consumer Secured	498	153	-	651	74,395	75,046	-
Residential:
Residential Mortgages	994	94	478	1,556	54,215	55,781	-
Residential Consumer Construction	-	-	-	-	13,519	13,519	-
Total	$2,301	$972	$1,520	$4,793	$550,985	$555,778	$  -

	Age Analysis of Past Due Loans as of
	December 31, 2018
	(dollars in thousands)
			Greater				Recorded Investment
	30-59 Days	60-89 Days	than	Total Past		Total	> 90 Days &
2018	Past Due	Past Due	90 Days	Due	Current	Loans	Accruing
Commercial	$54	$56	$220	$330	$92,547	$92,877	$             -
Commercial Real Estate:
Commercial Mortgages-Owner Occupied	209	-	307	516	97,910	98,426	-
Commercial Mortgages-Non-Owner Occupied	149	468	-	617	174,657	175,274	-
Commercial Construction	-	-	-	-	15,471	15,471	-
Consumer:
Consumer Unsecured	8	1	-	9	8,745	8,754	-
Consumer Secured	369	44	-	413	77,024	77,437	-
Residential:
Residential Mortgages	882	164	567	1,613	56,559	58,172	-
Residential Consumer Construction	-	-	-	-	8,186	8,186	-
Total	$1,671	$733	$1,094	$3,498	$531,099	$534,597	$            -

Note 9 – Loans, allowance for loan losses and OREO (continued)

	Credit Quality Information - by Class
	September 30, 2019
	(dollars in thousands)
2019	Pass	Monitor	Special	Substandard	Doubtful	Totals
			Mention
Commercial	$96,753	$352	$4,546	$540	$   -	$102,191
Commercial Real Estate:
Commercial Mortgages-Owner Occupied	95,133	452	8,402	2,273	-	106,260
Commercial Mortgages-Non-Owner Occupied	170,699	6,156	348	743	-	177,946
Commercial Construction	16,520	290	-	-	-	16,810
Consumer
Consumer Unsecured	8,225	-	-	-	-	8,225
Consumer Secured	74,825	-	-	221	-	75,046
Residential:
Residential Mortgages	53,611	329	-	1,841	-	55,781
Residential Consumer Construction	13,278	241	-	-	-	13,519
Totals	$529,044	$7,820	$13,296	$5,618	$   -	$555,778

	Credit Quality Information - by Class
	December 31, 2018
	(dollars in thousands)
2018	Pass	Monitor	Special	Substandard	Doubtful	Totals
			Mention
Commercial	$90,142	$818	$374	$1,543	$    -	$92,877
Commercial Real Estate:
Commercial Mortgages-Owner Occupied	90,995	1,461	3,517	2,453	-	98,426
Commercial Mortgages-Non -Owner Occupied	172,342	2,285	332	315	-	175,274
Commercial Construction	14,892	579	-	-	-	15,471
Consumer
Consumer Unsecured	8,747	-	6	1	-	8,754
Consumer Secured	77,092	-	88	257	-	77,437
Residential:
Residential Mortgages	55,336	334	-	2,502	-	58,172
Residential Consumer Construction	8,186	-	-	-	-	8,186
Totals	$517,732	$5,477	$4,317	$7,071	$-	$534,597

Note 9 – Loans, allowance for loan losses and OREO (continued)

Troubled Debt Restructurings (TDR)

There were no loan modifications that would have been classified as TDRs during the three and nine months ended September 30, 2019 and 2018.

There were no loan modifications classified as TDRs within the last twelve months that defaulted during the three and nine months ended September 30, 2019 and 2018.

At September 30, 2019 and December 31, 2018, the Bank had no outstanding commitments to disburse additional funds on loans classified as TDRs.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 5 – Fair Value Measurements

Determination of Fair Value

The Company uses fair value measurements to record fair value 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, the fair value of a financial instrument is 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 and in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the 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, which focuses on exit price in the principal or most advantageous market and in an orderly transaction (that is, not a forced

Note 5 – Fair Value Measurements (continued)

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 the 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 at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is 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 would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow.

Level 2 securities would 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 to be Level 2 securities.

The following table summarizes the Company’s financial assets that were measured at fair value on a recurring basis during the period.

Note 5 – Fair Value Measurements (continued)

		Carrying Value at September 30, 2019 (in thousands)
Description	Balance as of September 30, 2019	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
US Treasuries	$1,980	$        -	$1,980	$       -
US agency obligations	26,235	-	26,235	-
Mortgage-backed securities	10,808	-	10,808	-
Municipals	11,304	-	11,304	-
Corporates	4,073	-	4,073	-
Total available-for-sale securities	$54,400	$       -	$54,400	$       -
		Carrying Value at December 31, 2018 (in thousands)
Description	Balance as of December 31, 2018	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
US Treasuries	$1,845	$	$1,845	$
US agency obligations	23,267	-	23,267	-
Mortgage-backed securities	11,876	-	11,876	-
Municipals	12,009	-	12,009	-
Corporates	3,730	-	3,730	-
Total available-for-sale securities	$52,727	$       -	$52,727	$       -

Fair Value on a Non-recurring Basis

Impaired loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected when due. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair value of the collateral. Fair value is measured based on the value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Bank using observable market data (Level 2). However, in situations where the collateral is a house or building in the process of construction, the appraisal is more than 12 months old, management has determined the fair value of the collateral is further impaired below the appraised value, or the appraisal is not based solely on market comparables adjusted for observable inputs, the value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Any fair value adjustments

Note 5 – Fair Value Measurements (continued)

are recorded in the period incurred as provision for loan losses on the Consolidated Statements of Income.

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 the price secondary markets are currently offering for similar loans using observable market data which is not materially different than cost due to the short duration between origination and sale (Level 2).  As such, the Company records fair value adjustments on a nonrecurring basis.  No nonrecurring fair value adjustments were recorded on loans held for sale during the period ended September 30, 2019.  Gains and losses on the sale of loans are recorded within gains on sales of loans held for sale, net on the Consolidated Statements of Income.

Other real estate owned

Certain assets such as other real estate owned (OREO) are measured at fair value less cost to sell.  We believe that the fair value component in its valuation follows the provisions of ASC 820.

Real estate acquired through foreclosure is transferred to OREO. The measurement of loss associated with OREO is based on the fair value of the collateral compared to the unpaid loan balance and anticipated costs to sell the property. The value of OREO property is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Bank using observable market data (Level 2). 

Any fair value adjustments are recorded in the period incurred and expensed against current earnings.  However, in situations where the collateral is a house or building in the process of construction, the appraisal is more than 12 months old, management has determined the fair value of the collateral is further impaired below the appraised value, or the appraisal is not based solely on market comparables adjusted for observable inputs, the value is considered Level 3.

The following table summarizes the Company’s impaired loans and OREO measured at fair value on a nonrecurring basis during the period (in thousands):

Note 5 – Fair Value Measurements (continued)

		Carrying Value at September 30, 2019
Description	Balance as of September 30, 2019	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired loans*	$1,010	$     -	$          -	$1,010
Other real estate owned	2,242	-	-	2,242

*  Includes loans charged down to the net realizable value of the collateral.

		Carrying Value at December 31, 2018
Description	Balance as of December 31, 2018	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired loans*	$1,587	$      -	$       -	$1,587
Other real estate owned	2,430	-	-	2,430

*  Includes loans charged down to the net realizable value of the collateral.

Note 5 – Fair Value Measurements (continued)

The following table sets forth information regarding the quantitative inputs used to value assets classified as Level 3:

	Quantitative information about Level 3 Fair Value Measurements for September 30, 2019 (dollars in thousands)
	Fair Value	Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$1,010	Discounted appraised value	Selling cost	0% - 10% (8%)
			Discount for lack of marketability and age of appraisal	0% - 20% (6%)
OREO	2,242	Discounted appraised value	Selling cost	0% - 10% (6%)
			Discount for lack of marketability and age of appraisal	0% - 25% (15%)

	Quantitative information about Level 3 Fair Value Measurements for December 31, 2018 (dollars in thousands)
	Fair Value	Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$1,587	Discounted appraised value	Selling cost	0% - 10%  (8%)
			Discount for lack of marketability and age of appraisal	0% - 20%  (6%)
OREO	2,430	Discounted appraised value	Selling cost	0% - 10%  (6%)
			Discount for lack of marketability and age of appraisal	0% - 25%  (15%)

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.

Note 5 – Fair Value Measurements (continued)

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, 2019 and December 31, 2018 was as follows (in thousands):

		Fair Value Measurements at September 30, 2019 using
			Quoted Prices	Significant
			in Active	Other	Significant
			Markets for	Observable	Unobservable
	Carrying		Identical Assets	Inputs	Inputs
Assets	Amounts		(Level 1)	(Level 2)	(Level 3)	Balance
Cash and due from banks	$27,315		$27,315	$      -	$      -	$27,315
Fed funds sold	22,141		22,141	-	-	22,141
Securities
Available-for-sale	54,400		-	54,400	-	54,400
Held-to-maturity	3,690		-	3,938	-	3,938
Restricted stock	1,506			1,506	-	1,506
Loans, net (1)	551,005		-	-	551,540	551,540
Loans held for sale	5,630		-	5,630	-	5,630
Interest receivable	1,755		-	1,755	-	1,755
BOLI	13,606		-	13,606	-	13,606
Liabilities
Deposits	$633,033		$      -	$634,750	$      -	$634,750
Capital notes	5,000		-	4,773	-	4,773
Interest payable	167		-	167	-	167

		Fair Value Measurements at December 31, 2018 using
		Quoted Prices	Significant
		in Active	Other	Significant
		Markets for	Observable	Unobservable
	Carrying	Identical Assets	Inputs	Inputs
Assets	Amounts	(Level 1)	(Level 2)	(Level 3)	Balance
Cash and due from banks	$26,725	$26,725	$      -	$      -	$26,725
Fed funds sold	23,600	23,600			23,600
Securities
Available-for-sale	52,727	-	52,727	-	52,727
Held-to-maturity	3,700	-	3,515	-	3,515
Restricted stock	1,462	-	1,462		1,462
Loans, net (1)	530,016	-	-	522,782	522,782
Loans held for sale	1,670	-	1,670	-	1,670
Interest receivable	1,742	-	1,742	-	1,742
BOLI	13,359	-	13,359	-	13,359
Liabilities
Deposits	$612,043	$      -	$612,532	$      -	$612,532
Capital notes	5,000	-	4,710		4,710
Interest payable	127	-	127	-	127

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

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Loans, And Allowance For Loan Losses (Age Analysis Of Past Due Financing Receivables) (Details) - USD ($) $ in Thousands		Sep. 30, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		$ 4,793	$ 3,498
Current		550,985	531,099
Total loans	[1]	555,778	534,597
Recorded Investment > 90 Days & Accruing
30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2,301	1,671
60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		972	733
Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,520	1,094
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		136	330
Current		102,055	92,547
Total loans		102,191	92,877
Recorded Investment > 90 Days & Accruing
Commercial [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2	54
Commercial [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due			56
Commercial [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		134	220
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		301,016	289,171
Commercial Real Estate [Member] | Commercial Mortgages-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,098	516
Current		105,162	97,910
Total loans		106,260	98,426
Recorded Investment > 90 Days & Accruing
Commercial Real Estate [Member] | Commercial Mortgages-Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,335	617
Current		176,611	174,657
Total loans		177,946	175,274
Recorded Investment > 90 Days & Accruing
Commercial Real Estate [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		16,810	15,471
Total loans		16,810	15,471
Recorded Investment > 90 Days & Accruing
Commercial Real Estate [Member] | 30 to 59 Days Past Due [Member] | Commercial Mortgages-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		674	209
Commercial Real Estate [Member] | 30 to 59 Days Past Due [Member] | Commercial Mortgages-Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		126	149
Commercial Real Estate [Member] | 60 to 89 Days Past Due [Member] | Commercial Mortgages-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		19
Commercial Real Estate [Member] | 60 to 89 Days Past Due [Member] | Commercial Mortgages-Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		706	468
Commercial Real Estate [Member] | Greater than 90 Days Past Due [Member] | Commercial Mortgages-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		405	307
Commercial Real Estate [Member] | Greater than 90 Days Past Due [Member] | Commercial Mortgages-Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		503
Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		69,300	66,358
Residential [Member] | Residential Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,556	1,613
Current		54,215	56,559
Total loans		55,781	58,172
Recorded Investment > 90 Days & Accruing
Residential [Member] | Residential Consumer Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		13,519	8,186
Total loans		13,519	8,186
Recorded Investment > 90 Days & Accruing
Residential [Member] | 30 to 59 Days Past Due [Member] | Residential Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		994	882
Residential [Member] | 60 to 89 Days Past Due [Member] | Residential Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		94	164
Residential [Member] | Greater than 90 Days Past Due [Member] | Residential Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		478	567
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans		83,271	86,191
Consumer [Member] | Consumer Unsecured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		7	9
Current		8,218	8,745
Total loans		8,225	8,754
Recorded Investment > 90 Days & Accruing
Consumer [Member] | Consumer Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		651	413
Current		74,395	77,024
Total loans		75,046	77,437
Recorded Investment > 90 Days & Accruing
Consumer [Member] | 30 to 59 Days Past Due [Member] | Consumer Unsecured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		7	8
Consumer [Member] | 30 to 59 Days Past Due [Member] | Consumer Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		498	369
Consumer [Member] | 60 to 89 Days Past Due [Member] | Consumer Unsecured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due			1
Consumer [Member] | 60 to 89 Days Past Due [Member] | Consumer Secured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		$ 153	$ 44

[1] Includes net deferred costs and premiums of $299 and $457 as of September 30, 2019 and December 31, 2018, respectively.

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Consolidated Statements Of Cash Flows - USD ($)	3 Months Ended				9 Months Ended		12 Months Ended
	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Cash flows from operating activities
Net Income	$ 1,474,000	$ 1,234,000	$ 1,404,000	$ 1,123,000	$ 4,085,000	$ 3,827,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization					983,000	679,000
Stock based compensation expense					80,000
Net amortization and accretion of premiums and discounts on securities					298,000	312,000
(Gain) on sales of available-for-sale securities					(291,000)
(Gain) on sales of loans held for sale	(1,337,000)		(767,000)		(3,103,000)	(2,260,000)
Proceeds from sales of loans held for sale					114,119,000	89,949,000
Origination of loans held for sale					(114,976,000)	(87,592,000)
Provision for loan losses	108,000		190,000		434,000	527,000	$ 716,000
Loss on sale of other real estate owned					13,000	39,000
Impairment of other real estate owned					286,000	160,000
(Increase) in cash value of life insurance	(81,000)		(86,000)		(248,000)	(256,000)
(Increase) in interest receivable					(13,000)	(163,000)
Decrease (increase) in other assets					234,000	(79,000)
Decrease in income taxes receivable					1,019,000	51,000
Increase in interest payable					40,000	20,000
(Decrease) increase in other liabilities					(1,000)	671,000
Net cash provided by operating activities					2,959,000	5,885,000
Cash flows from investing activities
Proceeds from calls of securities held-to-maturity						2,000,000
Purchases of securities available-for-sale					(6,369,000)	(998,000)
Proceeds from maturities, calls and paydowns of securities available-for-sale					1,462,000	1,666,000
Proceeds from sale of securities available-for-sale					6,427,000
(Purchase) redemption of Federal Home Loan Bank stock					(44,000)	43,000
Proceeds from sale of other real estate owned					349,000	846,000
Origination of loans, net of principal collected					(21,883,000)	(34,459,000)
Purchases of premises and equipment					(3,890,000)	(704,000)
Net cash (used in) investing activities					(23,948,000)	(31,606,000)
Cash flows from financing activities
Net increase in deposits					20,990,000	39,954,000
Principal payments on finance lease obligations					(81,000)
Dividends paid to common stockholders					(789,000)	(787,000)
Net cash provided by financing activities					20,120,000	39,167,000
(Decrease) increase in cash and cash equivalents					(869,000)	13,446,000
Cash and cash equivalents at beginning of period		$ 50,325,000		$ 37,018,000	50,325,000	37,018,000	37,018,000
Cash and cash equivalents at end of period	$ 49,456,000		$ 50,464,000		49,456,000	50,464,000	$ 50,325,000
Non cash transactions
Transfer of loans to other real estate owned					460,000	850,000
Fair value adjustment for securities available-for-sale					3,190,000	(2,009,000)
Lease liabilities arising from right-of-use assets					6,373,000
Cash transactions
Cash paid for interest					3,733,000	2,716,000
Cash paid for income taxes						$ 975,000

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets
Cash and due from banks	$ 27,315	$ 26,725
Federal funds sold	22,141	23,600
Total cash and cash equivalents	49,456	50,325
Securities held-to-maturity (fair value of $3,938 in 2019 and $3,515 in 2018)	3,690	3,700
Securities available-for-sale, at fair value	54,400	52,727
Restricted stock, at cost	1,506	1,462
Loans, net of allowance for loan losses of $4,773 in 2019 and $4,581 in 2018	551,005	530,016
Loans held for sale	5,630	1,670
Premises and equipment, net	16,578	13,426
Interest receivable	1,755	1,742
Cash value - bank owned life insurance	13,606	13,359
Other real estate owned	2,242	2,430
Income taxes receivable	83	1,102
Deferred tax asset, net	1,085	1,755
Other assets	7,078	1,183
Total assets	708,114	674,897
Deposits
Noninterest bearing demand	90,426	91,356
NOW, money market and savings	350,885	331,298
Time	191,722	189,389
Total deposits	633,033	612,043
Capital notes	5,000	5,000
Interest payable	167	127
Other liabilities	8,875	2,584
Total liabilities	647,075	619,754
Commitments and Contingencies
Stockholders' equity
Preferred stock; authorized 1,000,000 shares; none issued and outstanding
Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,378,436 as of September 30, 2019 and December 31, 2018	9,370	9,370
Additional paid-in-capital	31,575	31,495
Retained earnings	19,817	16,521
Accumulated other comprehensive income (loss)	277	(2,243)
Total stockholders' equity	61,039	55,143
Total liabilities and stockholders' equity	$ 708,114	$ 674,897

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Securities (Narrative) (Details) $ in Millions	3 Months Ended		9 Months Ended		21 Months Ended
	Sep. 30, 2019 USD ($) security	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) security	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) security
Number Of Securities Evaluated For Other Than Temporary Impairment [Line Items]
Securities evaluated for other than temporary impairment	25		25		25
Available-for-sale Securities, Gross Realized Gains | $	$ 291	$ 0	$ 291	$ 0
Available-for-sale Securities, Gross Realized Losses | $					$ 0
Held-to-maturity securities sales | $	$ 0	$ 0	$ 0	$ 0	$ 0
US Agency Obligations [Member]
Number Of Securities Evaluated For Other Than Temporary Impairment [Line Items]
Securities evaluated for other than temporary impairment	21		21		21
Municipals [Member]
Number Of Securities Evaluated For Other Than Temporary Impairment [Line Items]
Securities evaluated for other than temporary impairment	2		2		2
Corporates [Member]
Number Of Securities Evaluated For Other Than Temporary Impairment [Line Items]
Securities evaluated for other than temporary impairment	2		2		2
S&P Rated AAA [Member]
Number Of Securities Evaluated For Other Than Temporary Impairment [Line Items]
Securities evaluated for other than temporary impairment	2		2		2
S&P Rated AA [Member]
Number Of Securities Evaluated For Other Than Temporary Impairment [Line Items]
Securities evaluated for other than temporary impairment	22		22		22
S&P Rated BBB+ [Member]
Number Of Securities Evaluated For Other Than Temporary Impairment [Line Items]
Securities evaluated for other than temporary impairment	1		1		1

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Business Segments (Schedule Of Segment Reporting Information, By Segment) (Details) - USD ($)	3 Months Ended						9 Months Ended		12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Net interest income	$ 6,165,000			$ 5,990,000			$ 18,447,000	$ 17,124,000
Provision for loan losses	108,000			190,000			434,000	527,000	$ 716,000
Net interest income after provision for loan losses	6,057,000			5,800,000			18,013,000	16,597,000
Noninterest income	2,161,000			1,319,000			5,039,000	3,946,000
Noninterest expenses	6,373,000			5,364,000			17,947,000	15,767,000
Income before income taxes	1,845,000			1,755,000			5,105,000	4,776,000
Income tax expense	371,000			351,000			1,020,000	949,000
Net income	1,474,000	$ 1,377,000	$ 1,234,000	1,404,000	$ 1,300,000	$ 1,123,000	4,085,000	3,827,000
Total assets	708,114,000			668,438,000			708,114,000	668,438,000	$ 674,897,000
Community Banking [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net interest income	6,165,000			5,990,000			18,447,000	17,124,000
Provision for loan losses	108,000			190,000			434,000	527,000
Net interest income after provision for loan losses	6,057,000			5,800,000			18,013,000	16,597,000
Noninterest income	824,000			552,000			1,936,000	1,684,000
Noninterest expenses	5,453,000			4,715,000			15,700,000	13,922,000
Income before income taxes	1,428,000			1,637,000			4,249,000	4,359,000
Income tax expense	283,000			345,000			840,000	891,000
Net income	1,145,000			1,292,000			3,409,000	3,468,000
Total assets	702,215,000			665,698,000			702,215,000	665,698,000
Mortgage [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Noninterest income	1,337,000			767,000			3,103,000	2,262,000
Noninterest expenses	920,000			649,000			2,247,000	1,845,000
Income before income taxes	417,000			118,000			856,000	417,000
Income tax expense	88,000			6,000			180,000	58,000
Net income	329,000			112,000			676,000	359,000
Total assets	$ 5,899,000			$ 2,740,000			$ 5,899,000	$ 2,740,000

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Loans, Allowance For Loan Losses And OREO (Changes In OREO Balance) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Loans, Allowance For Loan Losses And OREO [Abstract]
Balance at the beginning of the year (net)	$ 2,430
Transfers from loans	460	$ 850
Loss on disposition	(13)	$ (39)
Balance at the end of the period (net)	$ 2,242

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Stock Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended	9 Months Ended
	Jan. 01, 2019	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018	May 15, 2018
1999 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding options				0
The 2018 Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized					250,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted	24,500
Shares forfeited		0	0
Price per share	$ 13.00
Vested period			3 years
Stock based compensation expense		$ 27,000	$ 80,000
Unrecognized stock basd compensation expense		$ 239,000	$ 239,000
Unrecognized expense period			2 years 3 months
Year One [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested			0.333%

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Loans, Allowance For Loan Losses And OREO (Tables)

9 Months Ended

Sep. 30, 2019

Loans, Allowance For Loan Losses And OREO [Abstract]

Summary Of Loans, Net

	As of:
	September 30,	December 31,
	2019	2018
Commercial	$102,191	$92,877
Commercial real estate	301,016	289,171
Consumer	83,271	86,191
Residential	69,300	66,358
Total loans (1)	555,778	534,597
Less allowance for loan losses	4,773	4,581
Net loans	$551,005	$530,016

(1) Includes net deferred costs and premiums of $299 and $457 as of September 30, 2019 and December 31, 2018, respectively.

Loans On Non-Accrual Status

Loans on Non-Accrual Status
(dollars in thousands)
	As of
	September 30, 2019	December 31, 2018
Commercial	$285	$973
Commercial Real Estate:
Commercial Mortgages-Owner Occupied	405	317
Commercial Mortgages-Non-Owner Occupied	503	173
Commercial Construction	-	-
Consumer
Consumer Unsecured	-	-
Consumer Secured	28	84
Residential:
Residential Mortgages	550	1,391
Residential Consumer Construction	-	-
Totals	$1,771	$2,939

Changes In OREO Balance

OREO Changes
(dollars in thousands)
	Nine Months Ended September 30, 2019	Year Ended December 31, 2018
Balance at the beginning of the year (net)	$2,430	$2,650
Transfers from loans	460	850
Capitalized costs	-	-
Valuation adjustments	(286)	(185)
Sales proceeds	(349)	(846)
Loss on disposition	(13)	(39)
Balance at the end of the period (net)	$2,242	$2,430

Impaired Loans

		Impaired Loans
		(dollars in thousands)
		As of and For the the Nine Months Ended September 30, 2019
			Unpaid		Average	Interest
		Recorded	Principal	Related	Recorded	Income
2019		Investment	Balance	Allowance	Investment	Recognized
With No Related Allowance Recorded:
	Commercial	$                  488	$                1,041	$                    -	$            959	$               29
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	2,258	2,448	-	2,336	132
	Commercial Mortgage Non-Owner Occupied	671	696	-	401	23
	Commercial Construction	-	-	-	-	-
	Consumer
	Consumer Unsecured	-	-	-	-	-
	Consumer Secured	109	109	-	99	5
	Residential
	Residential Mortgages	1,499	1,513	-	1,688	51
	Residential Consumer Construction	-	-	-	-	-
With an Allowance Recorded:
	Commercial	$                      8	$                       8	$                    8	$              20	$                 1
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	15	15	15	27	1
	Commercial Mortgage Non-Owner Occupied	15	15	6	53	1
	Commercial Construction	-	-	-	-	-
	Consumer
	Consumer Unsecured	-	-	-	1	-
	Consumer Secured	-	-	-	53	-
	Residential
	Residential Mortgages	140	156	34	258	3
	Residential Consumer Construction	-	-	-	-	-
Totals:
	Commercial	$                  496	$                1,049	$                    8	$            979	$               30
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	2,273	2,463	15	2,363	133
	Commercial Mortgage Non-Owner Occupied	686	711	6	454	24
	Commercial Construction	-	-	-	-	-
	Consumer
	Consumer Unsecured	-	-	-	1	-
	Consumer Secured	109	109	-	152	5
	Residential
	Residential Mortgages	1,639	1,669	34	1,946	54
	Residential Consumer Construction	-	-	-	-	-
		$               5,203	$                6,001	$                  63	$         5,895	$             246

Note 9 – Loans, allowance for loan losses and OREO (continued)

		Impaired Loans
		(dollars in thousands)
		As of and For the the Year Ended December 31, 2018
			Unpaid		Average	Interest
		Recorded	Principal	Related	Recorded	Income
2018		Investment	Balance	Allowance	Investment	Recognized
With No Related Allowance Recorded:
	Commercial	$                1,430	$                1,922	$                    -	$         1,178	$               24
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	2,414	2,511	-	2,421	167
	Commercial Mortgage Non-Owner Occupied	131	132	-	403	8
	Commercial Construction	-	-	-	-	-
	Consumer
	Consumer Unsecured	-	-	-	-	-
	Consumer Secured	88	88	-	184	6
	Residential
	Residential Mortgages	1,876	1,953	-	1,728	89
	Residential Consumer Construction	-	-	-	-	-
With an Allowance Recorded:
	Commercial	$                     31	$                     31	$                  15	$            174	$                 3
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	39	132	36	352	3
	Commercial Mortgage Non-Owner Occupied	90	90	20	82	6
	Commercial Construction	-	-	-	85	-
	Consumer
	Consumer Unsecured	1	1	1	2	-
	Consumer Secured	105	105	105	266	7
	Residential
	Residential Mortgages	375	390	61	263	11
	Residential Consumer Construction	-	-	-	-	-
Totals:
	Commercial	$                1,461	$                1,953	$                  15	$         1,352	$               27
	Commercial Real Estate
	Commercial Mortgages-Owner Occupied	2,453	2,643	36	2,773	170
	Commercial Mortgage Non-Owner Occupied	221	222	20	485	14
	Commercial Construction	-	-	-	85	-
	Consumer
	Consumer Unsecured	1	1	1	2	-
	Consumer Secured	193	193	105	450	13
	Residential
	Residential Mortgages	2,251	2,343	61	1,991	100
	Residential Consumer Construction	-	-	-	-	-
		$                6,580	$                7,355	$                238	$         7,138	$             324

Allowance For Loan Losses And Recorded Investment In Loans

	Allowance for Loan Losses and Recorded Investment in Loans
	(dollars in thousands)
	As of and For the Nine Months Ended September 30, 2019
		Commercial
2019	Commercial	Real Estate	Consumer	Residential	Total
Allowance for Credit Losses:
Beginning Balance	$          1,136	$                 1,831	$            956	$              658	$         4,581
Charge-Offs	(104)	(6)	(188)	(21)	(319)
Recoveries	34	5	34	4	77
Provision	222	89	56	67	434
Ending Balance	1,288	1,919	858	708	4,773
Ending Balance: Individually evaluated for impairment	8	21	-	34	63
Ending Balance: Collectively evaluated for impairment	1,280	1,898	858	674	4,710
Totals:	$          1,288	$                 1,919	$            858	$              708	$         4,773
Financing Receivables:
Ending Balance: Individually evaluated for impairment	496	2,959	109	1,639	5,203
Ending Balance: Collectively evaluated for impairment	101,695	298,057	83,162	67,661	550,575
Totals:	$      102,191	$             301,016	$       83,271	$         69,300	$     555,778

Note 9 – Loans, allowance for loan losses and OREO (continued)

	Allowance for Loan Losses and Recorded Investment in Loans
	(dollars in thousands)
	As of and For the Year Ended December 31, 2018
		Commercial
2018	Commercial	Real Estate	Consumer	Residential	Total
Allowance for Credit Losses:
Beginning Balance	$          1,264	$                 1,738	$          1,172	$              578	$         4,752
Charge-Offs	(395)	(230)	(405)	(34)	(1,064)
Recoveries	113	4	60	-	177
Provision	154	319	129	114	716
Ending Balance	1,136	1,831	956	658	4,581
Ending Balance: Individually evaluated for impairment	15	56	106	61	238
Ending Balance: Collectively evaluated for impairment	1,121	1,775	850	597	4,343
Totals:	$          1,136	$                 1,831	$             956	$              658	$         4,581
Financing Receivables:
Ending Balance: Individually evaluated for impairment	1,461	2,674	194	2,251	6,580
Ending Balance: Collectively evaluated for impairment	91,416	286,497	85,997	64,107	528,017
Totals:	$        92,877	$             289,171	$        86,191	$         66,358	$     534,597

Age Analysis Of Past Due Financing Receivables

	Age Analysis of Past Due Loans as of
	September 30, 2019
	(dollars in thousands)
			Greater				Recorded Investment
	30-59 Days	60-89 Days	than	Total Past		Total	> 90 Days &
2019	Past Due	Past Due	90 Days	Due	Current	Loans	Accruing
Commercial	$2	$    -	$134	$136	$102,055	$102,191	$     -
Commercial Real Estate:
Commercial Mortgages-   Owner Occupied	674	19	405	1,098	105,162	106,260	-
Commercial Mortgages-Non-Owner Occupied	126	706	503	1,335	176,611	177,946	-
Commercial Construction	-	-	-	-	16,810	16,810	-
Consumer:
Consumer Unsecured	7	-	-	7	8,218	8,225	-
Consumer Secured	498	153	-	651	74,395	75,046	-
Residential:
Residential Mortgages	994	94	478	1,556	54,215	55,781	-
Residential Consumer Construction	-	-	-	-	13,519	13,519	-
Total	$2,301	$972	$1,520	$4,793	$550,985	$555,778	$  -

	Age Analysis of Past Due Loans as of
	December 31, 2018
	(dollars in thousands)
			Greater				Recorded Investment
	30-59 Days	60-89 Days	than	Total Past		Total	> 90 Days &
2018	Past Due	Past Due	90 Days	Due	Current	Loans	Accruing
Commercial	$54	$56	$220	$330	$92,547	$92,877	$             -
Commercial Real Estate:
Commercial Mortgages-Owner Occupied	209	-	307	516	97,910	98,426	-
Commercial Mortgages-Non-Owner Occupied	149	468	-	617	174,657	175,274	-
Commercial Construction	-	-	-	-	15,471	15,471	-
Consumer:
Consumer Unsecured	8	1	-	9	8,745	8,754	-
Consumer Secured	369	44	-	413	77,024	77,437	-
Residential:
Residential Mortgages	882	164	567	1,613	56,559	58,172	-
Residential Consumer Construction	-	-	-	-	8,186	8,186	-
Total	$1,671	$733	$1,094	$3,498	$531,099	$534,597	$            -

Credit Quality Information-By Class

	Credit Quality Information - by Class
	September 30, 2019
	(dollars in thousands)
2019	Pass	Monitor	Special	Substandard	Doubtful	Totals
			Mention
Commercial	$96,753	$352	$4,546	$540	$   -	$102,191
Commercial Real Estate:
Commercial Mortgages-Owner Occupied	95,133	452	8,402	2,273	-	106,260
Commercial Mortgages-Non-Owner Occupied	170,699	6,156	348	743	-	177,946
Commercial Construction	16,520	290	-	-	-	16,810
Consumer
Consumer Unsecured	8,225	-	-	-	-	8,225
Consumer Secured	74,825	-	-	221	-	75,046
Residential:
Residential Mortgages	53,611	329	-	1,841	-	55,781
Residential Consumer Construction	13,278	241	-	-	-	13,519
Totals	$529,044	$7,820	$13,296	$5,618	$   -	$555,778

	Credit Quality Information - by Class
	December 31, 2018
	(dollars in thousands)
2018	Pass	Monitor	Special	Substandard	Doubtful	Totals
			Mention
Commercial	$90,142	$818	$374	$1,543	$    -	$92,877
Commercial Real Estate:
Commercial Mortgages-Owner Occupied	90,995	1,461	3,517	2,453	-	98,426
Commercial Mortgages-Non -Owner Occupied	172,342	2,285	332	315	-	175,274
Commercial Construction	14,892	579	-	-	-	15,471
Consumer
Consumer Unsecured	8,747	-	6	1	-	8,754
Consumer Secured	77,092	-	88	257	-	77,437
Residential:
Residential Mortgages	55,336	334	-	2,502	-	58,172
Residential Consumer Construction	8,186	-	-	-	-	8,186
Totals	$517,732	$5,477	$4,317	$7,071	$-	$534,597

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Measurements [Abstract]

Fair Value Assets Measured On Recurring Basis

		Carrying Value at September 30, 2019 (in thousands)
Description	Balance as of September 30, 2019	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
US Treasuries	$1,980	$        -	$1,980	$       -
US agency obligations	26,235	-	26,235	-
Mortgage-backed securities	10,808	-	10,808	-
Municipals	11,304	-	11,304	-
Corporates	4,073	-	4,073	-
Total available-for-sale securities	$54,400	$       -	$54,400	$       -
		Carrying Value at December 31, 2018 (in thousands)
Description	Balance as of December 31, 2018	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
US Treasuries	$1,845	$	$1,845	$
US agency obligations	23,267	-	23,267	-
Mortgage-backed securities	11,876	-	11,876	-
Municipals	12,009	-	12,009	-
Corporates	3,730	-	3,730	-
Total available-for-sale securities	$52,727	$       -	$52,727	$       -

Impaired Loans And Other Real Estate Owned Measured At Fair Value On A Nonrecurring Basis

		Carrying Value at September 30, 2019
Description	Balance as of September 30, 2019	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired loans*	$1,010	$     -	$          -	$1,010
Other real estate owned	2,242	-	-	2,242

*  Includes loans charged down to the net realizable value of the collateral.

		Carrying Value at December 31, 2018
Description	Balance as of December 31, 2018	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired loans*	$1,587	$      -	$       -	$1,587
Other real estate owned	2,430	-	-	2,430

*  Includes loans charged down to the net realizable value of the collateral.

Information Regarding Quantitative Inputs Used To Value Assets Classified As Level 3

	Quantitative information about Level 3 Fair Value Measurements for September 30, 2019 (dollars in thousands)
	Fair Value	Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$1,010	Discounted appraised value	Selling cost	0% - 10% (8%)
			Discount for lack of marketability and age of appraisal	0% - 20% (6%)
OREO	2,242	Discounted appraised value	Selling cost	0% - 10% (6%)
			Discount for lack of marketability and age of appraisal	0% - 25% (15%)

	Quantitative information about Level 3 Fair Value Measurements for December 31, 2018 (dollars in thousands)
	Fair Value	Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$1,587	Discounted appraised value	Selling cost	0% - 10%  (8%)
			Discount for lack of marketability and age of appraisal	0% - 20%  (6%)
OREO	2,430	Discounted appraised value	Selling cost	0% - 10%  (6%)
			Discount for lack of marketability and age of appraisal	0% - 25%  (15%)

Fair Value Carrying And Notional Amounts

		Fair Value Measurements at September 30, 2019 using
			Quoted Prices	Significant
			in Active	Other	Significant
			Markets for	Observable	Unobservable
	Carrying		Identical Assets	Inputs	Inputs
Assets	Amounts		(Level 1)	(Level 2)	(Level 3)	Balance
Cash and due from banks	$27,315		$27,315	$      -	$      -	$27,315
Fed funds sold	22,141		22,141	-	-	22,141
Securities
Available-for-sale	54,400		-	54,400	-	54,400
Held-to-maturity	3,690		-	3,938	-	3,938
Restricted stock	1,506			1,506	-	1,506
Loans, net (1)	551,005		-	-	551,540	551,540
Loans held for sale	5,630		-	5,630	-	5,630
Interest receivable	1,755		-	1,755	-	1,755
BOLI	13,606		-	13,606	-	13,606
Liabilities
Deposits	$633,033		$      -	$634,750	$      -	$634,750
Capital notes	5,000		-	4,773	-	4,773
Interest payable	167		-	167	-	167

		Fair Value Measurements at December 31, 2018 using
		Quoted Prices	Significant
		in Active	Other	Significant
		Markets for	Observable	Unobservable
	Carrying	Identical Assets	Inputs	Inputs
Assets	Amounts	(Level 1)	(Level 2)	(Level 3)	Balance
Cash and due from banks	$26,725	$26,725	$      -	$      -	$26,725
Fed funds sold	23,600	23,600			23,600
Securities
Available-for-sale	52,727	-	52,727	-	52,727
Held-to-maturity	3,700	-	3,515	-	3,515
Restricted stock	1,462	-	1,462		1,462
Loans, net (1)	530,016	-	-	522,782	522,782
Loans held for sale	1,670	-	1,670	-	1,670
Interest receivable	1,742	-	1,742	-	1,742
BOLI	13,359	-	13,359	-	13,359
Liabilities
Deposits	$612,043	$      -	$612,532	$      -	$612,532
Capital notes	5,000	-	4,710		4,710
Interest payable	127	-	127	-	127

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