EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Contact: J. Todd Scruggs, Secretary-Treasurer

(434) 846-2000 tscruggs@bankofthejames.com

For Immediate Release

Bank of the James Financial Group, Inc. Announces Results

For 3rd Quarter 2006

Lynchburg Va., October 20, 2006. Bank of the James Financial Group, Inc. (OTCBB:BOJF) (quarterly consolidated results unaudited) reported today total net income after tax of $416,000 or $0.21 per basic share ($0.19 diluted) for the quarter ended September 30, 2006 and $1,200,000 or $0.60 per basic share ($0.56 diluted) year-to-date compared to net income of $489,000 or $0.24 per basic share ($0.23 diluted) and $1,256,000 or $0.63 per basic share ($0.60 diluted) for the respective periods a year ago. All earnings per share amounts have been adjusted to reflect the 25% stock dividend paid by Bank of the James Financial Group, Inc. (the “Company”) during March, 2006, as well as all previously declared and paid stock dividends.

Despite a challenging environment that included a flat or inverted yield curve throughout most of the third quarter, the Company’s wholly-owned subsidiary, Bank of the James (the “Bank”) was able to maintain a strong net interest margin and continued to grow its balance sheet. The net interest margin for the three month period ended September 30, 2006 was 4.51% as compared to 4.62% during the same period a year ago. “Maintaining a net interest margin that is within our target is one of our fundamental goals” noted Robert R. Chapman III, the Bank’s president. Mr. Chapman further commented that “the strength of the net interest margin during a period featuring a flat or inverted yield curve demonstrates that we have been able to successfully manage our margin in adverse conditions. We continue to price our loans, deposits, and other products based on our long term business plan rather than succumbing to interest rate pressures brought on by increased interest rate competition resulting from an inverted curve. We believe that we remain on track with our strategic plan and our team of employees remains steadfast in their commitment to our shareholders, our customers, and the Region 2000 market.”

Although the net interest margin declined slightly, net interest income for the quarter ended September 30, 2006 was $2,265,000 as compared to net interest income of $2,142,000 in the same quarter of 2005, an increase of 5.7%. This was due in large part to an increase in the balance of our interest earning assets.

Positive balance sheet growth trends continued in the 3rd quarter 2006. Deposits increased from $173,956,000 as of the year ended December 31, 2005 to $188,667,000 as of the period ended September 30, 2006, an increase of 8.4%. Loans, net of unearned income and loan loss provision have increased from $155,480,000 as of the year ended December 31, 2005 to $174,020,000 as of the period ended September 30, 2006, an increase of 11.9%. These increases are the primary reason that total assets increased 9.4% from $195,852,000 as of the year ended December 31, 2005 to $214,349,000 as of the period ended September 30, 2006.

Non-interest income improved through the continued increase in fees generated from mortgage origination volume and sales of investments through the Company’s wholly-owned subsidiary BOTJ Investment Group, Inc. Non-interest income increased to $649,000 for the quarter ended September 30, 2006 as compared to $594,000 in the period ended September 30, 2005, an increase of 9.2%.

The increase in net interest income and non-interest income was offset by an increase in non-interest expense. This increase continues to be associated with costs incurred in expanding our branch network, including costs associated with the Boonsboro Road branch, our most recently opened branch.

Press Release, October 20, 2006, Page 2

Bank of the James Financial Group, Inc.

The above-referenced financial results have produced a year-to-date return on average assets of 0.79% and a year-to-date return on average equity of 10.51% at the end of the 3rd quarter ended September 30, 2006.

Bank of the James, a wholly-owned subsidiary of Bank of the James Financial Group, Inc., currently operates six 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. and Subsidiaries

(000’s) except ratios and percent data

unaudited

 

Selected Data:

    Three months
ending
Sep 30, 2006		   

Three months
ending

Sep 30, 2005

    Change     Year to date
Sep 30, 2006		    Year to date
Sep 30, 2005		    Change  

Interest income

    $ 3,786    $ 3,147      20.31 %   $ 10,675    $ 8,728      22.31 %

Interest expense

      1,521      1,005      51.34 %     4,049      2,655      52.50 %

Net Interest income

      2,265      2,142      5.74 %     6,626      6,073      9.11 %

Provision for loan losses

      184      255      -27.84 %     489      629      -22.26 %

Noninterest income

      649      594      9.26 %     1,637      1,610      1.68 %

Noninterest expense

      2,087      1,743      19.74 %     5,918      5,154      14.82 %

Income taxes

      227      249      -8.84 %     656      644      1.86 %

Net income

      416      489      -14.93 %     1,200      1,256      -4.46 %

Weighted Average Shares Outstanding

      2,016,986      2,000,979      0.80 %     2,009,974      1,983,673      1.33 %

Basic net income per share

    $ 0.21    $ 0.24    $ (0.03 )   $ 0.60    $ 0.63    $ (0.03 )

Fully diluted net income per share

    $ 0.19    $ 0.23    $ (0.04 )   $ 0.56    $ 0.60    $ (0.04 )

 

Balance Sheet at

period end:

    Sep 30, 2006    Dec 31, 2005    Change     Sep 30, 2005    Dec 31, 2004    Change  

Loans, net

    $ 174,020    $ 155,480    11.92 %   $ 153,789    $ 140,272      9.64 %

Total securities

      26,490      23,919    10.75 %     25,264      19,911      26.88 %

Total deposits

      188,667      173,956    8.46 %     170,355      153,834      10.74 %

Stockholders’ equity

      16,161      14,675    10.13 %     14,200      12,786      11.06 %

Total assets

      214,349      195,852    9.44 %     191,173      171,025      11.78 %

Shares Outstanding

      2,019,978      2,001,309    18,669       2,001,309      1,935,824      65,485  

Book value per share

      8.00      7.33    0.67       7.10      6.60    $ 0.49  

 

Daily averages (bank only):

   

Three months
ending

Sep 30, 2006

   

Three months
ending

Sep 30, 2005

    Change    

Year to date

Sep 30, 2006

   

Year to date

Sep 30, 2005

   

Change

  
                

Loans, net

    $ 166,144    $ 149,888    10.85 %   $ 161,545    $ 145,197    11.26 %

Total securities

      27,570      25,363    8.70 %     25,678      22,700    13.12 %

Total deposits

      186,231      167,444    11.22 %     179,192      162,377    10.36 %

Stockholders’ equity

      15,643      14,193    10.22 %     15,261      13,597    12.24 %

Interest earning assets

      199,172      178,998    11.27 %     191,613      171,481    11.74 %

Interest bearing liabilities

      168,344      148,217    13.58 %     161,278      143,704    12.23 %

Total Assets

      211,013      187,941    12.28 %     202,748      180,832    12.12 %

Financial Ratios:

   

Three months
ending

Sep 30, 2006

    

Three months
ending

Sep 30, 2005

     Change     Year to date
Sep 30, 2006		     Year to date
Sep 30, 2005		     Change  

Return on average assets

    0.78 %   1.03 %   (0.25 )   0.79 %   0.93 %   (0.14 )

Return on average equity

    10.55 %   13.67 %   (3.12 )   10.51 %   12.35 %   (1.84 )

Net Interest Margin

    4.51 %   4.75 %   (0.24 )   4.62 %   4.73 %   (0.11 )

Efficiency ratio

    71.62 %   63.71 %   7.91     71.62 %   67.08 %   4.54  

Average Equity to average assets

    7.41 %   7.55 %   (0.14 )   7.53 %   7.52 %   0.01  

 

Allowance for loan losses:

   

Three months
ending

Sep 30, 2006

    

Three months
ending

Sep 30, 2005

     Change     Year to date
Sep 30, 2006		     Year to date
Sep 30, 2005		     Change  

Beginning balance

    $ 2,006     $ 1,526     31.45 %   $ 1,777     $ 1,419     25.23 %

Provision for losses

      184       255     -27.84 %     489       629     -22.26 %

Charge-offs

      (181 )     (114 )   58.77 %     (295 )     (392 )   -24.74 %

Recoveries

      4       17     -76.47 %     42       28     50.00 %

Ending balance

      2,013       1,684     19.54 %     2,013       1,684     19.54 %

 

Nonperforming assets:

    Sep 30, 2006    Dec 31, 2005    Change     Sep 30, 2005    Dec 31, 2004    Change  

Nonaccrual loans

    668    261    155.94 %   242    380    -36.32 %

Restructured loans

    none    none    —       none    none    —    

Total nonperforming loans

    668    261    155.94 %   242    380    -36.32 %

Other real estate owned

    579    none    —       none    85    —    

Total nonperforming assets

    1,247    261    377.78 %   242    465    -47.96 %

 

Asset quality ratios:

    Sep 30, 2006     Dec 31, 2005     Change     Sep 30, 2005     Dec 31, 2004     Change  

Nonperforming loans to total loans

    0.38 %   0.17 %   0.21     0.16 %   0.27 %   (0.11 )

Allowance for loan losses to total loans

    1.14 %   1.13 %   0.01     1.08 %   1.00 %   0.08  

Allowance for loan losses to nonperforming loans

    301.35 %   680.84 %   (379.50 )   695.87 %   373.42 %   322.45