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 3rd Quarter 2004

Lynchburg Va., October 21, 2004 ............Bank of the James Financial Group, Inc. (OTCBB:BOJF) (quarterly consolidated results unaudited) reported today total net income after tax of $201,000 or $0.19 per basic share ($0.18 diluted) for the quarter ended September 30, 2004 and $981,000 or $0.96 per basic share ($0.94 diluted) year-to-date compared to net income of $383,000 or $0.41 per basic share ($0.39 diluted) and $1,102,000 or $1.18 per basic share ($1.14 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.

The decline in net income in the third quarter 2004 as compared to third quarter 2003 was due primarily to a loan loss provision of $503,000 in the third quarter 2004 as compared with a loan loss provision of $142,000 in the third quarter 2003. In the course of calculating loan impairment in accordance with FASB 114 for the third quarter of 2004, management determined that certain loans should be downgraded because of deterioration in their credit quality. Of the $503,000 provision made in the third quarter 2004, $199,000 resulted from the reclassification of these loans due to management’s belief that these impaired loans are likely to result in a loss. Although the Bank currently has loans in excess of $900,000 classified as non-performing, management believes the impairment on these loans will be immaterial because the potential losses associated with these loans were charged off against the loan loss reserve in the third quarter. Management does not believe that the amount of non performing loans will increase at an unacceptable rate.

Despite the aforementioned charge associated with the loan loss provision in the third quarter, several positive trends for the quarter and year-to-date were identified. Non-interest income, in large part due to the increase in fees from mortgage origination volume, improved both in the third quarter 2004 and year-to-date 2004. Net interest income for the quarter ended September 30, 2004 was $1,766,000 as compared to net interest income of $1,415,000 in the same quarter of 2003, an increase of 24.8%. The net interest margin, although decreasing to 4.49% in the third quarter of 2004 as compared to 4.69% in the same period a year ago, showed an improvement of 8 basis points from the second quarter 2004. The improvement from the second quarter of 2004 to the third quarter 2004 is attributable to the recent increases in short term rates by the FOMC and the subsequent positive effects on interest income as a result of the Bank’s heavy concentration of adjustable rate loans in the portfolio.

Total assets as of September 30, 2004 were $169,905,000 compared to $145,011,000 at the end of 2003, an increase of $24,894,000 or 17.2%. The increase is attributed to deposit growth and specifically the opening of the Forest, VA branch, as well as the increasing interest rate environment. Deposits grew from $133,486,000 at the period ended December 31, 2003 to $153,509,000 at the end of the third quarter, 2004, for an increase of 15.0%

Loans, net of unearned income and loan loss provision, increased from $114,604,000 as of December 31, 2003 to $132,416,000 as of September 30, 2004, an increase of 15.5%. This

increase can be attributed to the Bank’s increased presence in the market and the Bank’s reputation for service, both of which have resulted in additional opportunities for the Bank to participate in quality credit requests. The loan loss reserve of $1,454,000 represented 1.09% of total loans at the end of the third quarter 2004 as compared with $1,543,000 or 1.23% at the end of the second quarter 2004. The decrease in the loan loss reserve is a result of management’s decision to charge off $631,000 in non-performing loans. Management deems this provision to be adequate.

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. The Bank has received regulatory approval to open an additional branch location at 828 Main Street in the downtown area of the City of Lynchburg in the fourth 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 Sept 30, 2004			Three months ending Sept 30, 2003			Change				Year to date Sept 30, 2004			Year to date Sept 30, 2003			Change
	Interest income						$				2,407						$				1,953			23.25	%		$	6,795		$	5,698			19.25	%
Interest expense			641			538			19.14	%			1,817			1,708			6.38	%
Net Interest income			1,766			1,415			24.81	%			4,978			3,990			24.76	%
Provision for loan losses			503			142			254.23	%			634			434			46.08	%
Noninterest income			528			425			24.24	%			1,306			1,301			0.38	%
Noninterest expense			1,486			1,117			33.03	%			4,164			3,177			31.07	%
Income taxes			104			198			-47.47	%			505			578			-12.63	%
Net income			201			383			-47.52	%			981			1,102			-10.98	%
Weighted Average Shares Outstanding			1,031,218			935,630			10.22	%			1,021,155			935,630			9.14	%
Basic net income per share *		$	0.19		$	0.41		$	(0.22	)		$	0.96		$	1.18		$	(0.22	)
Fully diluted net income per share		$	0.18		$	0.39		$	(0.21	)		$	0.94		$	1.14		$	(0.20	)
Balance Sheet at period end:		Sept 30, 2004			Dec 31, 2003			Change				Sept 30, 2003			Dec 31, 2002			Change
	Loans, net						$				132,416						$				114,604			15.54	%		$	107,830		$	85,750			25.75	%
Total securities			23,716			14,956			58.57	%			10,427			16,478			-36.72	%
Total deposits			153,509			133,486			15.00	%			122,495			103,509			18.34	%
Stockholders’ equity			12,321			11,309			8.95	%			11,009			9,973			10.39	%
Total assets			169,905			145,011			17.17	%			133,741			114,071			17.24	%
Shares Outstanding			1,031,632			935,630			96,002				935,630			935,630			—
Book value per share			11.94			12.09			(0.14	)			11.77			10.66		$	1.11
Daily averages:		Three months ending Sept 30, 2004			Three months ending Sept 30, 2003			Change				Year to date Sept 30, 2004			Year to date Sept 30, 2003			Change
	Loans, net						$				128,752						$				104,672			23.01	%		$	122,360		$	97,699			25.24	%
Total securities			23,216			9,579			142.36	%			19,265			11,140			72.94	%
Total deposits			148,526			115,926			28.12	%			142,071			107,435			32.24	%
Stockholders’ equity			12,336			10,909			13.08	%			11,932			10,555			13.05	%
Interest earning assets			156,170			119,771			30.39	%			148,263			112,472			31.82	%
Interest bearing liabilities			131,085			99,583			31.63	%			126,576			93,656			35.15	%
Total Assets			164,137			127,098			29.14	%			156,329			119,124			31.23	%

Financial Ratios:		Three months ending Sept 30, 2004				Three months ending Sept 30, 2003				Change			Year to date Sept 30, 2004				Year to date Sept 30, 2003				Change
Return on average assets			0.49	%			1.20	%		(0.71	)			0.84	%			1.24	%		(0.40	)
Return on average equity			6.46	%			13.93	%		(7.46	)			10.99	%			13.96	%		(2.97	)
Net Interest Margin			4.49	%			4.69	%		(0.20	)			4.49	%			4.74	%		(0.25	)
Efficiency ratio			64.78	%			60.71	%		4.07				66.26	%			60.05	%		6.22
Average Equity to average assets			7.52	%			8.58	%		(1.07	)			7.63	%			8.86	%		(1.23	)
Allowance for loan losses:		Three months ending Sept 30, 2004				Three months ending Sept 30, 2003				Change			Year to date Sept 30, 2004				Year to date Sept 30, 2003				Change
Beginning balance		$	1,543			$	1,277			20.83	%		$	1,451			$	1,081			34.23	%
Provision for losses			503				142			254.23	%			634				434			46.08	%
Charge-offs			(631	)			(82	)		669.51	%			(725	)			(202	)		258.91	%
Recoveries			39				39			0.00	%			94				63			49.21	%
Ending balance			1,454				1,376			5.67	%			1,454				1,376			5.67	%
Nonperforming assets:		Sept 30, 2004				Dec 31, 2003				Change			Sept 30, 2003				Dec 31, 2002				Change
Nonaccrual loans			902				100			802.00	%			100				42			138.10	%
Restructured loans			none				none			—				none				none			—
Total nonperforming loans			902				100			802.00	%			100				42			138.10	%
Other real estate owned			335				none			—				none				none			—
Total nonperforming assets			1,237				100			1137.00	%			100				42			138.10	%
Asset quality ratios:		Sept 30, 2004				Dec 31, 2003				Change			Sept 30, 2003				Dec 31, 2002				Change
Nonperforming loans to total loans			0.67	%			0.09	%		0.59				0.09	%			0.05	%		0.04
Allowance for loan losses to total loans			1.09	%			1.25	%		(0.16	)			1.26	%			1.24	%		0.02
Allowance for loan losses to nonperforming loans			161.20	%			1451.00	%		(1,289.80	)			1376.00	%			2573.81	%		(1,197.81	)

* 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.