Bank of the James Financial (BOTJ) 8-K Bank of the James Financial Group, Inc. Announces Results

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 2004 & 50% Stock Dividend

Lynchburg Va., January 21, 2005.........Bank of the James Financial Group, Inc. (OTCBB:BOJF) (quarterly consolidated results unaudited) reported today total net income after tax of $491,000 or $0.48 per basic share ($0.45 diluted) for the quarter ended December 31, 2004 and $1,472,000 or $1.44 per basic share ($1.35 diluted) year-to-date compared to net income of $314,000 or $0.34 per basic share ($0.30 diluted) and $1,416,000 or $1.51 per basic share ($1.47 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 56.4% increase in net income in the fourth quarter 2004 is attributed to an increasing net interest margin as a result of the recent FOMC rate increases. A large number of adjustable rate loans in the portfolio were affected by the increase in the prime rate which helped to increase the net interest margin. Also contributing to the increase was strong non-interest income generated by the Bank’s mortgage division. Management believes the Bank’s balance sheet is poised to take advantage of future rate increases in 2005.

Total assets as of December 31, 2004 were $170,986,000 compared to $145,011,000 at the end of 2003, an increase of $25,975,000 or 17.9%. The increase is attributed to deposit growth related to the opening of the Forest, VA and Main Street branches in the spring and fall of 2004 respectively, as well as the increasing interest rate environment. Deposits grew from $133,486,000 at the period ended December 31, 2003 to $153,834,000 at the end of the fourth quarter, 2004, for an increase of 15.2%. A majority of new deposits in 2004 were gathered via the Bank’s signature savings product, “Peaks Savings” which pays an above market interest rate.

Loans, net of unearned income and loan loss provision, increased from $114,604,000 as of December 31, 2003 to $140,272,000 as of December 31, 2004, an increase of 22.4%. 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 $1,419,000 represented 1.00% of total loans at the end of the fourth quarter 2004 as compared with $1,454,000 or 1.09% at the end of the third quarter 2004. The decrease in the loan loss reserve is a result of management’s decision to charge off $206,000 in non-performing loans during the fourth quarter 2004. The loan loss reserve is maintained in accordance with specifically identified impairment as mandated by FASB 114. Management deems this provision to be adequate.

Management also announced the board of director’s approval of a 3 for 2 stock split to be effected as a 50% stock dividend scheduled to be paid on March 4, 2005 for shareholders of record on February 4, 2005.

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 a mortgage division in the Lynchburg,

Virginia area. The Bank’s most recent branch, located at 828 Main Street in the downtown area of the City of Lynchburg, opened in the fourth quarter 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

Unaudited

Selected Data:	Three months ending Dec 31, 2004		Three months ending Dec 31, 2003		Change			Year to date Dec 31, 2004		Year to date Dec 31, 2003		Change
Interest income	$	2,638	$	2,056		28.31	%	$	9,433	$	7,754		21.65	%
Interest expense		694		561		23.71	%		2,511		2,269		10.67	%
Net Interest income		1,944		1,495		30.03	%		6,922		5,485		26.20	%
Provision for loan losses		120		118		1.69	%		754		552		36.59	%
Noninterest income		524		325		61.23	%		1,830		1,626		12.55	%
Noninterest expense		1,604		1,228		30.62	%		5,768		4,405		30.94	%
Income taxes		253		160		58.13	%		758		738		2.71	%
Net income		491		314		56.37	%		1,472		1,416		3.95	%
Weighted Average Shares Outstanding		1,031,991		935,630		10.30	%		1,023,879		935,630		9.43	%
Basic net income per share *	$	0.48	$	0.34	$	0.14		$	1.44	$	1.51	$	(0.07	)
Fully diluted net income per share	$	0.45	$	0.30	$	0.15		$	1.35	$	1.47	$	(0.12	)
Balance Sheet at period end:	Dec 31, 2004		Dec 31, 2003		Change			Dec 31, 2003		Dec 31, 2002		Change
Loans, net	$	140,272	$	114,604		22.40	%	$	114,604	$	85,750		33.65	%
Total securities		19,911		14,956		33.13	%		14,956		16,478		-9.24	%
Total deposits		153,834		133,486		15.24	%		133,486		103,509		28.96	%
Stockholders’ equity		12,786		11,309		13.06	%		11,309		9,973		13.40	%
Total assets		170,986		145,011		17.91	%		145,011		114,071		27.12	%
Shares Outstanding		1,032,182		935,630		96,552			935,630		935,630		—
Book value per share		12.39		12.09		0.30			12.09		10.66	$	1.43
Daily averages:	Three months ending Dec 31, 2004		Three months ending Dec 31, 2003		Change			Year to date Dec 31, 2004		Year to date Dec 31, 2003		Change
Loans, net	$	136,436	$	108,899		25.29	%	$	125,896	$	100,522		25.24	%
Total securities		23,359		12,600		85.39	%		20,294		11,508		76.35	%
Total deposits		153,985		126,813		21.43	%		145,066		112,320		29.15	%
Stockholders’ equity		12,610		11,247		12.12	%		12,101		10,729		12.79	%
Interest earning assets		161,849		130,791		23.75	%		151,677		117,089		29.54	%
Interest bearing liabilities		135,933		110,692		22.80	%		128,926		97,948		31.63	%
Total Assets		170,731		138,286		23.46	%		159,948		123,954		29.04	%

Financial Ratios:	Three months ending Dec 31, 2004			Three months ending Dec 31, 2003			Change		Year to date Dec 31, 2004			Year to date Dec 31, 2003			Change
Return on average assets		1.14	%		0.90	%	0.24			0.92	%		1.14	%	(0.22	)
Return on average equity		15.49	%		11.08	%	4.41			12.16	%		13.20	%	(1.03	)
Net Interest Margin		4.78	%		4.53	%	0.24			4.56	%		4.68	%	(0.12	)
Efficiency ratio		64.99	%		67.47	%	(2.48	)		65.90	%		61.95	%	3.96
Average Equity to average assets		7.39	%		8.13	%	(0.75	)		7.57	%		8.66	%	(1.09	)
Allowance for loan losses:	Three months ending Dec 31, 2004			Three months ending Dec 31, 2003			Change		Year to date Dec 31, 2004			Year to date Dec 31, 2003			Change
Beginning balance	$	1,454		$	1,376		5.67	%	$	1,451		$	1,081		34.23	%
Provision for losses		120			118		1.69	%		754			552		36.59	%
Charge-offs		(206	)		(62	)	232.26	%		(889	)		(263	)	238.02	%
Recoveries		51			19		168.42	%		103			81		27.16	%
Ending balance		1,419			1,451		-2.21	%		1,419			1,451		-2.21	%
Nonperforming assets:	Dec 31, 2004			Dec 31, 2003			Change		Dec 31, 2003			Dec 31, 2002			Change
Nonaccrual loans		380			85		347.06	%		85			42		102.38	%
Restructured loans		none			none		—			none			none		—
Total nonperforming loans		380			85		347.06	%		85			42		102.38	%
Other real estate owned		85			none		—			none			none		—
Total nonperforming assets		465			85		447.06	%		85			42		102.38	%
Asset quality ratios:	Dec 31, 2004			Dec 31, 2003			Change		Dec 31, 2003			Dec 31, 2002			Change
Nonperforming loans to total loans		0.27	%		0.07	%	0.19			0.07	%		0.05	%	0.02
Allowance for loan losses to total loans		1.00	%		1.25	%	(0.25	)		1.25	%		1.24	%	0.01
Allowance for loan losses to nonperforming loans		373.42	%		1707.06	%	(1,333.64	)		1707.06	%		2573.81	%	(866.75	)

* 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.