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 4th Quarter 2005 & 25% Stock Dividend

Lynchburg, Va., January 20, 2006......... Bank of the James Financial Group, Inc. (OTCBB:BOJF) (the “Company”) (quarterly consolidated results unaudited) reported today total net income after tax of $535,000 or $0.27 per basic share ($0.26 diluted) for the quarter ended December 31, 2005 and $1,791,000 or $0.90 per basic share ($0.86 diluted) year-to-date compared to net income of $491,000 or $0.25 per basic share ($0.24 diluted) and $1,472,000 or $0.77 per basic share ($0.75 diluted) for the respective periods a year ago. Management also announced the board of director’s approval of a 5 for 4 stock split to be effected as a 25% stock dividend scheduled to be paid on March 10, 2006 for shareholders of record on February 10, 2006. All earnings per share amounts have been retroactively adjusted to reflect all dividends declared and paid to date including the aforementioned 25% dividend to be paid in March 2006.

The 9.0% increase in net income in the fourth quarter 2005 as compared to the same period a year ago is attributable to an increase in loan and deposit balances at Bank of the James (the “Bank”), a wholly owned subsidiary of the Company, and a stable net interest margin. The Bank was able to maintain a stable net interest margin despite the recent flattened shape of the yield curve. The Bank holds a large number of adjustable rate loans in its portfolio. The interest rates charged on these adjustable rate loans increased in conjunction with the recent increases in the prime rate, which increases helped to maintain the net interest margin as time deposit rates increased both within the Bank and throughout the marketplace. Robert R. Chapman, III, the Bank’s President and CEO, added, “Our earnings growth is a direct result of our loyal customer base and our dedicated team of employees who support this region economically through local banking.” Also contributing to the increase was strong non-interest income generated by the Bank’s mortgage division.

Total assets as of December 31, 2005 were $195,852,000 compared to $171,025,000 at the end of 2004, an increase of $24,827,000 or 14.5%. The increase is attributable to continued strong deposit growth at the Bank’s newest branches - Forest, VA and Main Street, which opened in the spring and fall of 2004 respectively, as well as the increasing interest rate environment. Deposits grew from $153,834,000 at the period ended December 31, 2004 to $173,956,000 at the end of the fourth quarter, 2005, for an increase of 13.1%. The deposit mix shifted slightly from core deposits to time deposits as the Bank increased the interest rates paid on its certificates in response to the FOMC’s recent steps to increase short term rates in the marketplace.

Loans, net of unearned income and loan loss provision, increased from $140,272,000 as of December 31, 2004 to $155,480,000 as of December 31, 2005, an increase of 10.8%. 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 $1,777,000 represented 1.13% of total loans at the end of the fourth quarter 2005 as compared with $1,419,000 or 1.00% at the end of the fourth quarter 2004. In calculating the loan loss reserve, management, to the best of its ability, attempts to identify all impaired loans in the Bank’s portfolio and maintain the reserve

for all known and expected losses. Based on the results of this process, the Bank increased its loan loss reserve as set forth above. The provision charged to the Bank’s earnings in 2005 was $803,000 as compared to $754,000 for the same period a year ago. Management deems the current reserve of 1.13% of loans to be adequate.

Bank of the James, a wholly owned subsidiary of Bank of the James Financial Group, Inc., currently operates five full service locations as well as mortgage origination offices in Forest and Moneta, Virginia. 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.

# # #

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. Bank of the James Financial Group (the “Company”) 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 Bank of the James (the “Bank”), the sole subsidiary of Bank of the James Financial Group, Inc. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company’s filings with the Securities and Exchange Commission and previously filed by the Bank (as predecessor of the Company) with the Federal Reserve Board.

# # #

Bank of the James Financial Group, Inc.

(000’s) except ratios and percent data

unaudited

Selected Data:		Three months ending Dec 31, 2005			Three months ending Dec 31, 2004			Change				Year to date Dec 31, 2005			Year to date Dec 31, 2004			Change
Interest income		$	3,300		$	2,638			25.09	%		$	12,028		$	9,433			27.51	%
Interest expense			1,124			694			61.96	%			3,779			2,511			50.50	%
Net Interest income			2,176			1,944			11.93	%			8,249			6,922			19.17	%
Provision for loan losses			174			120			45.00	%			803			754			6.50	%
Noninterest income			481			524			-8.21	%			2,091			1,830			14.26	%
Noninterest expense			1,672			1,604			4.24	%			6,826			5,768			18.34	%
Income taxes			276			253			9.09	%			920			758			21.37	%
Net income			535			491			8.96	%			1,791			1,472			21.67	%
Weighted Average Shares Outstanding			2,001,309			1,933,534			3.51	%			1,988,118			1,914,666			3.84	%
Basic net income per share		$	0.27		$	0.25		$	0.02			$	0.90		$	0.77		$	0.13
Fully diluted net income per share		$	0.26		$	0.24		$	0.02			$	0.86		$	0.75		$	0.11
Balance Sheet at period end:		Dec 31, 2005			Dec 31, 2004			Change				Dec 31, 2004			Dec 31, 2003			Change
Loans, net		$	155,480		$	140,272			10.84	%		$	140,272		$	114,604			22.40	%
Total securities			23,919			19,911			20.13	%			19,911			14,956			33.13	%
Total deposits			173,956			153,834			13.08	%			153,834			133,486			15.24	%
Stockholders’ equity			14,675			12,786			14.77	%			12,786			11,309			13.06	%
Total assets			195,852			171,025			14.52	%			171,025			145,011			17.94	%
Shares Outstanding			2,001,309			1,935,824			65,485				1,935,824			1,930,358			5,466
Book value per share			7.33			6.60			0.73				6.60			5.86		$	0.75
Daily averages:		Three months ending Dec 31, 2005			Three months ending Dec 31, 2004			Change				Year to date Dec 31, 2005			Year to date Dec 31, 2004			Change
Loans, net		$	155,574		$	136,436			14.03	%		$	147,813		$	125,896			17.41	%
Total securities			25,010			23,359			7.07	%			23,282			20,294			14.72	%
Total deposits			169,489			153,985			10.07	%			164,169			145,066			13.17	%
Stockholders’ equity			14,520			12,610			15.15	%			13,830			12,101			14.29	%
Interest earning assets			183,645			161,849			13.47	%			174,547			151,677			15.08	%
Interest bearing liabilities			152,025			135,933			11.84	%			145,838			128,926			13.12	%
Total Assets			192,498			170,731			12.75	%			183,770			159,948			14.89	%

Financial Ratios:		Three months ending Dec 31, 2005				Three months ending Dec 31, 2004				Change			Year to date Dec 31, 2005				Year to date Dec 31, 2004				Change
Return on average assets			1.10	%			1.14	%		(0.04	)			0.97	%			0.92	%		0.05
Return on average equity			14.62	%			15.49	%		(0.87	)			12.95	%			12.16	%		0.79
Net Interest Margin			4.70	%			4.78	%		(0.08	)			4.73	%			4.56	%		0.16
Efficiency ratio			62.93	%			64.99	%		(2.06	)			66.02	%			65.90	%		0.11
Average Equity to average assets			7.54	%			7.39	%		0.16				7.53	%			7.57	%		(0.04	)
Allowance for loan losses:		Three months ending Dec 31, 2005				Three months ending Dec 31, 2004				Change			Year to date Dec 31, 2005				Year To date Dec 31, 2004				Change
Beginning balance		$	1,684			$	1,454			15.82	%		$	1,419			$	1,451			-2.21	%
Provision for losses			174				120			45.00	%			803				754			6.50	%
Charge-offs			(93	)			(206	)		-54.85	%			(485	)			(889	)		-45.44	%
Recoveries			12				51			-76.47	%			40				103			-61.17	%
Ending balance			1,777				1,419			25.23	%			1,777				1,419			25.23	%

Nonperforming assets:		Dec 31, 2005			Dec 31, 2004			Change			Dec 31, 2004			Dec 31, 2003			Change
Nonaccrual loans		261			380			-31.32	%		380			85			347.06	%
Restructured loans		none			none			—			none			none			—
Total nonperforming loans		261			380			-31.32	%		380			85			347.06	%
Other real estate owned		none			85			—			85			none			—
Total nonperforming assets		261			465			-43.87	%		465			85			447.06	%
Asset quality ratios:		Dec 31, 2005			Dec 31, 2004			Change			Dec 31, 2004			Dec 31, 2003			Change
Nonperforming loans to total loans		0.17	%		0.27	%		(0.10	)		0.27	%		0.07	%		0.19
Allowance for loan losses to total loans		1.13	%		1.00	%		0.13			1.00	%		1.25	%		(0.25	)
Allowance for loan losses to nonperforming loans		680.84	%		373.42	%		307.42			373.42	%		1707.06	%		(1,333.64	)