Press Release

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

3rd Quarter 2009 Results

Lynchburg, Va., October 26, 2009.…Bank of the James Financial Group, Inc. (OTCBB:BOJF) (quarterly consolidated results unaudited) reported today a total net loss after tax of $1,204,000 or $0.41 per basic and diluted share for the quarter ended September 30, 2009 and a loss of $825,000 or $0.28 per basic and diluted share year-to-date compared to a net loss of $1,305,000 or $0.44 per basic and diluted share and a loss of $277,000 or $0.09 per basic and diluted share for the respective periods a year ago. All earnings per share amounts have been adjusted to reflect the 5% stock dividend declared by Bank of the James Financial Group, Inc. (the “Company”) at the annual shareholder’s meeting on May 19, 2009, as well as all previously declared and paid stock dividends.

The loss for the Company’s 2009 third quarter and year-to-date resulted solely from a noncash charge to increase the allowance for loan loss reserve. Management increased the allowance for loan loss reserve from $2,859,000 (or 1.03% of total loans) as of December 31, 2008 to $5,300,000 (or 1.68% of total loans) as of September 30, 2009, an increase of 85.4%. The allowance for loan loss reserve has been increased to a level that management deems appropriate to absorb any potential future losses and known impairment within the loan portfolio whether or not the losses are actually ever realized.

Several factors contributed to the decision to increase the loan loss reserve. The timeline for the national economy’s short-term recovery prospects remain uncertain. While the local economy has shown resilience during the national economic downturn, it has not been immune from the effects of the recession. For these reasons management has continued to take an aggressive approach in evaluating the Bank’s collateral position on performing and non-performing loans (FAS 114), evaluating the overall local and national economic data and conditions (FAS 5) and has adjusted the reserve accordingly based on this ongoing evaluation. The Bank’s non-performing loans increased from $3,859,000 (1.39% of total outstanding loans) as of December 31, 2008 to $4,694,000 (1.49% of total outstanding loans) as of September 30, 2009. The increase in the loan loss reserve cushions any potential loss resulting from these non-performing loans.

J. Todd Scruggs, the Bank’s Executive Vice President and Chief Financial Officer commented, “Our ability to increase the reserve without jeopardizing our well-capitalized status is a testament to the leadership of our board of directors and our strategic planning process. We raised additional capital in the spring in the form of capital notes both to fund the growth of our balance sheet and for general business purposes, including unforeseen losses. While we cannot predict all future loan losses, we feel that it is prudent to take a cautious approach in the event that economic conditions remain difficult. Unless economic conditions worsen, we believe the Bank is positioned to return to more normalized results for the coming quarters.”

Despite the charge to fund the loan loss reserve, there were several positive trends for the quarter and year-to-date:

•

Net interest income increased to $2,922,000 and $8,220,000 for the three and nine months ended September 30, 2009 from $2,697,000 and $7,891,000 for the same periods in 2008. This increase was due primarily to the growth in deposits that were invested in interest earning assets.

•

Total assets increased to $424,991,000 as of September 30, 2009 from $328,605,000 as of December 31, 2008, an increase of $96,386,000 or 29.3%.

•

Loans, net of unearned income and loan loss provision, increased from $274,890,000 as of December 31, 2008 to $310,370,000 as of September 30, 2009, an increase of $35,480,000 or 12.9%.

•

Deposits increased from $268,111,000 as of December 31, 2008 to $364,291,000 as of September 30, 2009, an increase of $96,180,000 or 35.9%.

Robert R. Chapman III, the Company’s President, commented, “The move this quarter to strengthen our balance sheet with an increased loan loss provision reflects our emphasis on continued risk management and caution in the current environment. I am encouraged by the continued opportunities in the region, by the support of our loyal customer base, and the outlook for our company’s future.”

As set forth in the attached financial highlights, the Company’s return on average assets and return on average equity in the 3^rd quarter 2009 were negative solely because of the noncash charge to the allowance for loan loss reserve.

Bank of the James, a wholly owned subsidiary of Bank of the James Financial Group, Inc., currently operates nine full service locations as well as mortgage origination offices in Forest and Moneta, Virginia. BOTJ Investment Group, Inc., also a wholly owned subsidiary of Bank of the James Financial Group, Inc. operates one investment services office within the Bank’s Church Street office. Bank of the James also offers insurance services and products through its wholly owned subsidiary, BOTJ Insurance, Inc., also located in the Church Street office. 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 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”), a 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 Sept 30, 2009			Three months ending Sept 30, 2008			Change			Year-to-date Sept 30, 2009			Year-to-date Sept 30, 2008			Change
Interest income	$	5,365		$	4,724			13.57	%	$	14,967		$	13,901			7.67	%
Interest expense		2,443			2,027			20.52	%		6,747			6,010			12.26	%
Net interest income		2,922			2,697			8.34	%		8,220			7,891			4.17	%
Provision for loan losses		2,500			218			1046.79	%		3,433			473			625.79	%
Noninterest income		467			606			-22.94	%		2,158			2,146			0.56	%
Noninterest expense		2,718			2,454			10.76	%		8,211			7,405			10.88	%
Other than temporary impairment on securities		—			1,723			-100.00	%		—			1,723			-100.00	%

Income taxes		(625	)		213			-393.43	%		(441	)		713			-161.85	%
Net income		(1,204	)		(1,305	)		-7.74	%		(825	)		(277	)		197.83	%

Weighted average shares outstanding		2,954,375			2,950,212			0.14	%		2,952,864			2,949,621			0.11	%

Basic net income per share	$	(0.41	)	$	(0.44	)	$	0.03		$	(0.28	)	$	(0.09	)	$	(0.19	)

Fully diluted net income per share	$	(0.41	)	$	(0.44	)	$	0.03		$	(0.28	)	$	(0.09	)	$	(0.19	)

Balance Sheet at period end:	Sept 30, 2009			Dec 31, 2008			Change			Sept 30, 2008			Dec 31, 2007			Change
Loans, net	$	310,370		$	274,890			12.91	%	$	258,993		$	224,022			15.61	%
Total securities		60,925			22,130			175.31	%		35,876			32,227			11.32	%
Total deposits		364,291			268,111			35.87	%		249,352			228,723			9.02	%
Stockholders’ equity		23,731			24,635			-3.67	%		23,367			24,524			-4.72	%
Total assets		424,991			328,605			29.33	%		320,131			270,060			18.54	%
Shares outstanding		2,954,887			2,950,768			4,119			3,091,281			3,093,847			(2,566	)
Book value per share	$	8.03		$	8.35			(0.32	)	$	7.56		$	7.93		$	(0.37	)


Daily averages:	Three months ending Sept 30, 2009			Three months ending Sept 30, 2008			Change		Year to date Sept 30, 2009			Year to date Sept 30, 2008			Change
Loans, net	$	307,928		$	250,753		22.80	%	$	294,970		$	238,187		23.84	%
Total securities		56,288			39,776		41.51	%		46,181			35,113		31.52	%
Total deposits		352,544			244,280		44.32	%		322,759			235,185		37.24	%
Stockholders’ equity		25,935			24,803		4.56	%		25,571			24,725		3.42	%
Interest earning assets		385,961			294,864		30.89	%		359,268			278,238		29.12	%
Interest bearing liabilities		349,375			249,776		39.88	%		323,375			232,878		38.86	%
Total assets		410,354			310,571		32.13	%		388,144			292,587		32.66	%

Financial Ratios:	Three months ending Sept 30, 2009			Three months ending Sept 30, 2008			Change		Year-to-date Sept 30, 2009			Year-to-date Sept 30, 2008			Change
Return on average assets		-1.16	%		-1.67	%	0.51			-0.28	%		-0.13	%	(0.15	)
Return on average equity		-18.42	%		-20.93	%	2.51			-4.31	%		-1.50	%	(2.81	)
Net interest margin		3.00	%		3.63	%	(0.63	)		3.06	%		3.79	%	(0.73	)
Efficiency ratio		80.20	%		74.30	%	5.90			79.12	%		73.78	%	5.34
Average equity to average assets		6.32	%		7.99	%	(1.67	)		6.59	%		8.45	%	(1.86	)

Allowance for loan losses:	Three months ending Sept 30, 2009			Three months ending Sept 30, 2008			Change		Year-to-date Sept 30, 2009			Year-to-date Sept 30, 2008			Change
Beginning balance	$	3,323		$	2,275		46.07	%	$	2,859		$	2,146		33.22	%
Provision for losses		2,500			218		1046.79	%		3,433			473		625.79	%
Charge-offs		(555	)		(97	)	472.16	%		(1,055	)		(246	)	328.86	%
Recoveries		32			10		220.00	%		63			33		90.91	%
Ending balance		5,300			2,406		120.28	%		5,300			2,406		120.28	%

Nonperforming assets:	Sept 30, 2009			Dec 31, 2008			Change		Sept 30, 2008			Dec 31, 2007			Change
Total nonperforming loans	$	4,694		$	3,859		21.64	%	$	3,257		$	1,246		161.40	%
Other real estate owned		2,305			81		N/A			187			—		N/A
Total nonperforming assets		6,999			3,940		77.64	%		3,444			1,246		176.40	%


Asset quality ratios:	Sept 30, 2009		Dec 31, 2008		Change	Sept 30, 2008		Dec 31, 2007		Change
Nonperforming loans to total loans	1.49	%	1.39	%	0.10	1.25	%	0.55	%	0.70
Allowance for loan losses to total loans	1.68	%	1.03	%	0.65	0.92	%	0.95	%	(0.03	)
Allowance for loan losses to nonperforming loans	112.91	%	74.09	%	38.82	73.87	%	172.23	%	(98.36	)