EX-99.1 2 dex991.htm PRESS RELEASE

Press Release

Exhibit 99.1

Contact: J. Todd Scruggs, Executive Vice President and CFO

(434) 846-2000 tscruggs@bankofthejames.com

For Immediate Release

Bank of the James Financial Group, Inc. Announces Results

For 2nd Quarter 2004

Lynchburg Va., July 21, 2004        Bank of the James Financial Group, Inc. (OTCBB:BOJF) (quarterly consolidated results unaudited) reported today total net income after tax of $439,000 or $0.43 per basic share ($0.40 diluted) for the quarter ended June 30, 2004 and $780,000 or $0.77 per basic share ($0.72 diluted) year-to-date compared to net income of $414,000 or $0.44 per basic share ($0.43 diluted) and $719,000 or $0.77 per basic share ($0.75 diluted) for the respective periods a year ago. Earnings per share amounts for 2004 reflect the 10% stock dividend paid by the company during January, 2004.

Despite a decrease in non-interest income, in large part due to a decrease in fees from mortgage origination volume, net income was improved through core earnings consisting of interest income generated on loans and investments. The low interest rate environment assisted in decreasing the average rate paid on interest bearing liabilities which also contributed to improved earnings despite increased non-interest expenses, including one-time expenses associated with the opening of the Forest, VA branch. Net interest income for the quarter ended June 30, 2004 was $1,637,000 as compared to net interest income of $1,343,000 in the same quarter of 2003, an increase of 21.9%. The net interest margin, however, decreased to 4.41% in the second quarter of 2004 from 4.85% in the same period a year ago. This decrease is attributable to the low rate environment and its effect on rates charged on new loans originated during the period. Management believes the bank is well positioned to take advantage of any future rate increases by the FOMC because of its heavy concentration of adjustable rate loans in the portfolio.

Total assets as of June 30, 2004 were $161,213,000 compared to $145,011,000 at the end of 2003, an increase of $16,202,000 or 11.1%. The increase is attributed to deposit growth and specifically the success of a higher yielding savings account product, as well as the opening of the Forest, VA branch. Deposits grew from $133,486,000 at the period ended December 31, 2003 to $145,790,000 at the end of the second quarter, 2004, for an increase of 9.2%

Loans, net of unearned income and loan loss provision, increased from $114,604,000 as of December 31, 2003 to $123,854,000 as of June 30, 2004, an increase of 8.1%. This increase can be attributed to the low interest rate environment that made borrowing attractive to the Bank’s customers, the Bank’s increased presence in the market, and the Bank’s reputation for service. A significant increase in non performing loans is partially the result of the bankruptcy proceedings of several customers. Management does not believe that the amount of non performing loans will continue to increase at an unacceptable rate. The loan loss provision of $1,543,000 represented 1.23% of total loans at the end of the second quarter, 2004. Management deems this provision to be adequate.

Press Release, July 21, 2004, Page 2

Bank of the James Financial Group, Inc.

Bank of the James, a wholly owned subsidiary of Bank of the James Financial Group, Inc., currently operates four full service locations as well as a mortgage division in the Lynchburg, Virginia area. Subject to regulatory and other approval, the Bank plans to open an additional branch location in the downtown area of the City of Lynchburg in the third quarter of 2004. Bank of the James Financial Group, Inc. common stock is quoted on the Over The Counter Bulletin Board under the symbol “BOJF” (some web sites require BOJF.OB to quote).

Selected financial highlights are shown below.

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Cautionary Statement Regarding Forward-Looking Statements

This press release report contains statements that constitute “forward-looking statements” within the meaning of 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. The Bank undertakes 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. Such factors include, but are not limited to competition, general economic conditions, potential changes in interest rates, and changes in the value of real estate securing loans made by the Bank. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in Bank of the James’ filings with the Federal Reserve Board.

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Bank of the James Financial Group, Inc.

(000’s) except ratios and percent data

audited

Selected Data:		Three months ending June 30, 2004			Three months ending June 30, 2003			Change				Year to date June 30, 2004			Year to date June 30, 2003			Change
Interest income		$	2,229		$	1,906			16.95	%		$	4,388		$	3,745			17.17	%
Interest expense			592			563			5.15	%			1,176			1,170			0.51	%
Net Interest income			1,637			1,343			21.89	%			3,212			2,575			24.74	%
Provision for loan losses			54			84			-35.71	%			131			292			-55.14	%
Noninterest income			488			491			-0.61	%			778			876			-11.19	%
Noninterest expense			1,410			1,123			25.56	%			2,678			2,060			30.00	%
Income taxes			222			213			4.23	%			401			380			5.53	%
Net income			439			414			6.04	%			780			719			8.48	%
Weighted Average Shares Outstanding			1,029,624			935,630			10.05	%			1,016,069			935,630			8.60	%
Basic net income Per share *		$	0.43		$	0.44		$	(0.01	)		$	0.77		$	0.77		$	—
Fully diluted net income Per share		$	0.40		$	0.43		$	(0.03	)		$	0.72		$	0.75		$	(0.03	)

Balance Sheet at period end:		June 30, 2004			Dec 31, 2003			Change			June 30, 2003			Dec 31, 2002			Change
Loans, net		$	123,854		$	114,604		8.07	%		$	101,115		$	85,750			17.92	%
Total securities			20,744			14,956		38.70	%			6,633			16,478			-59.75	%
Total deposits			145,790			133,486		9.22	%			108,198			103,509			4.53	%
Stockholders’ equity			12,057			11,309		6.61	%			10,658			9,973			6.87	%
Total assets			161,213			145,011		11.17	%			119,115			114,071			4.42	%
Shares Outstanding			1,029,817			935,630		94,187				935,630			935,630			—
Book value per share			11.71			12.09		(0.38	)			11.39			10.66		$	0.73

Daily averages:		Three months ending June 30, 2004			Three months ending June 30, 2003			Change			Year to date June 30, 2004			Year to date June 30, 2003			Change
Loans, net		$	121,804		$	97,825		24.51	%		$	119,132		$	94,159		26.52	%
Total securities			19,006			8,901		113.53	%			16,715			11,439		46.12	%
Total deposits			142,535			106,225		34.18	%			138,807			103,120		34.61	%
Stockholders’ equity			11,952			10,528		13.53	%			11,728			10,375		13.04	%
Interest earning assets			148,956			111,136		34.03	%			144,263			108,766		32.64	%
Interest bearing liabilities			127,990			92,484		38.39	%			124,293			90,632		37.14	%
Total Assets			157,262			117,635		33.69	%			152,385			115,074		32.42	%

Financial Ratios:		Three months ending June 30, 2004				Three months ending June 30, 2003				Change			Year to date June 30, 2004				Year to date June 30, 2003				Change
Return on average assets			1.12	%			1.41	%		(0.29	)			1.03	%			1.25	%		(0.23	)
Return on average equity			14.73	%			15.77	%		(1.04	)			13.34	%			13.90	%		(0.56	)
Net Interest Margin			4.41	%			4.85	%		(0.44	)			4.47	%			4.75	%		(0.28	)
Efficiency ratio			66.35	%			61.23	%		5.12				67.12	%			59.69	%		7.42
Average Equity to average assets			7.60	%			8.95	%		(1.35	)			7.70	%			9.02	%		(1.32	)
Allowance for loan losses:		Three months ending June 30, 2004				Three months ending June 30, 2003				Change			Year to date June 30, 2004				Year to date June 30, 2003				Change
Beginning balance		$	1,507			$	1,208			24.75	%		$	1,451			$	1,081			34.23	%
Provision for losses			54				84			-35.71	%			131				292			-55.14	%
Charge-offs			(31	)			(28	)		10.71	%			(94	)			(119	)		-21.01	%
Recoveries			13				13			0.00	%			55				23			139.13	%
Ending balance			1,543				1,277			20.83	%			1,543				1,277			20.83	%
Nonperforming assets:		June 30, 2004				Dec 31, 2003				Change			June 30, 2003				Dec 31, 2002				Change
Nonaccrual loans			832				100			732.00	%			12				42			-71.43	%
Restructured loans			none				none			—				none				none			—
Total nonperforming loans			832				100			732.00	%			12				42			-71.43	%
Other real estate owned			none				none			—				none				none			—
Total nonperforming assets			832				100			732.00	%			12				42			-71.43	%
Asset quality ratios:		June 30, 2004				Dec 31, 2003				Change			June 30, 2003				Dec 31, 2002				Change
Nonperforming loans to total loans			0.66	%			0.09	%		0.58				0.01	%			0.05	%		(0.04	)
Allowance for loan losses to total loans			1.23	%			1.25	%		(0.02	)			1.25	%			1.24	%		0.00
Allowance for loan losses to nonperforming loans			185.46	%			1451.00	%		(1,265.54	)			10641.67	%			2573.81	%		8,067.86

* Basic EPS is calculated using the average shares outstanding for the period. Average shares outstanding increased in 2004 due to the effects of the 10% stock dividend paid on 1/27/04.