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 2nd Quarter 2010

Lynchburg, Va., July 21, 2010………Bank of the James Financial Group, Inc. (OTCBB:BOJF) (quarterly consolidated results unaudited) reported today total net income after tax of $770,000 or $0.23 per basic and diluted share for the quarter ended June 30, 2010 and $1,136,000 or $0.34 per basic and diluted share year-to-date compared to net income of $185,000 or $0.06 per basic and diluted share and $379,000 or $0.12 per basic and diluted share for the respective periods a year ago. All earnings per share amounts have been adjusted to reflect the 10% stock dividend declared by Bank of the James Financial Group, Inc. (the “Company”) at the annual shareholder’s meeting on May 18, 2010 and payable on July 23, 2010 to shareholders of record as of June 21, 2010, as well as all previously declared and paid stock dividends.

Robert R. Chapman III, President of the Bank commented, “We are pleased with the performance of the Bank, particularly in light of the difficult economic circumstances. Our results are a testament to the hard work of our employees and the leadership of our board of directors and management team.”

The increase in net income is primarily attributable to an improvement in the net interest margin resulting from a decrease in the cost of interest bearing liabilities, primarily certificates of deposit and savings accounts. The net interest margin improved from 3.17% during the three month period ended June 30, 2009 to 4.24% during the same period ended June 30, 2010. The stronger margin translated into net interest income of $3,978,000 during the three month period ended June 30, 2010 as compared to $2,845,000 during the same period a year ago, an increase of $1,133,000 or 39.8%. Interest income increased by 7.3% and interest expense decreased by 33.7% compared to the same three month period a year ago.

Also contributing to the increase in net income during the quarter was an increase in non-interest income. Non-interest income increased to $912,000 for the three month period ended June 30, 2010 from $806,000 during the same three month period a year ago, an increase of 13.2%.

Deposits decreased from $375,772,000 as of December 31, 2009 to $355,355,000 as of June 30, 2010, a decrease of $20,417,000 or 5.4%. This decrease resulted largely from the initial withdrawal of deposits resulting from the decrease in the interest rate paid on the 2010 Savings Account in March 2010.

Bank of the James Financial Group, Inc., Page 2

Loans, net of the allowance for loan loss, also showed slight growth in the second quarter and year-to-date. Loans increased from $318,452,000 as of December 31, 2009 to $324,960,000 as of June 30, 2010, an increase of $6,508,000 or 2.0%. Requests for loans continue to be steady and in light of the current environment underwriting standards remain stringent.

The loan loss provision in the second quarter of 2010 was $448,000 as compared to $611,000 during the same period a year ago. Nonperforming assets increased by $1,573,000 during the quarter ended June 30, 2010. During 2009 and the first six months of 2010, the quality of certain classes of our assets declined. Specifically, as a result of the economic downturn, commercial development loans and residential speculative housing construction loans were impacted by a decline in the value of the collateral supporting those loans. Despite this decline in asset quality, management believes that it has been proactive in quantifying and mitigating the risk including in some cases the successful liquidation of real property serving as collateral for these loans. The overall majority of the increase since December 31, 2009 is related to several loans to one relationship. Management believes the current reserve of 1.43% remains adequate.

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. Bank of the James also offers insurance services and products through its BOTJ Investment Services division, 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.

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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.

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Bank of the James Financial Group, Inc. and Subsidiaries

(000’s) except ratios and percent data

Unaudited

Selected Data:	Three months ending June 30, 2010		Three months ending June 30, 2009		Change			Year to date June 30, 2010		Year to date June 30, 2009		Change
Interest income	$	5,473	$	5,101		7.29	%	$	10,841	$	9,602		12.90	%
Interest expense		1,495		2,256		-33.73	%		3,574		4,304		-16.96	%
Net interest income		3,978		2,845		39.82	%		7,267		5,298		37.16	%
Provision for loan losses		448		611		-26.68	%		835		933		-10.50	%
Noninterest income		912		806		13.15	%		1,712		1,691		1.24	%
Noninterest expense		3,307		2,765		19.60	%		6,465		5,493		17.70	%
Income taxes		365		90		305.56	%		543		184		195.11	%
Net income		770		185		316.22	%		1,136		379		199.74	%
Weighted average shares outstanding		3,296,457		3,248,742		1.47	%		3,293,180		3,247,301		1.41	%
Basic net income per share	$	0.23	$	0.06	$	0.17		$	0.34	$	0.12	$	0.22
Fully diluted net income per share	$	0.23	$	0.06	$	0.17		$	0.34	$	0.12	$	0.22
Balance Sheet at period end:	June 30, 2010		Dec 31, 2009		Change			June 30, 2009		Dec 31, 2008		Change
Loans, net	$	324,960	$	318,452		2.04	%	$	302,423	$	274,890		10.02	%
Total securities		42,006		60,789		-30.90	%		48,328		22,130		118.38	%
Total deposits		355,355		375,772		-5.43	%		332,340		268,111		23.96	%
Stockholders’ equity		25,609		23,725		7.94	%		24,077		24,635		-2.27	%
Total assets		407,234		437,681		-6.96	%		396,965		328,605		20.80	%
Shares outstanding		3,301,399		3,289,867		11,532			3,248,854		3,245,845		3,009
Book value per share	$	7.76	$	7.21		0.55		$	7.41	$	7.59	$	(0.18	)
Daily averages:	Three months ending Jun 30, 2010		Three months ending Jun 30, 2009		Change			Year to date Jun 30, 2010		Year to date Jun 30, 2009		Change
Loans, net	$	324,048	$	296,440		9.31	%	$	322,824	$	288,385		11.94	%
Total securities		43,761		46,708		-6.31	%		47,895		41,044		16.69	%
Total deposits		355,724		319,802		11.23	%		365,140		307,619		18.70	%
Stockholders’ equity		24,597		24,802		-0.83	%		24,401		24,890		-1.96	%
Interest earning assets		376,021		359,701		4.54	%		384,251		345,701		11.15	%
Interest bearing liabilities		337,759		319,605		5.68	%		350,207		306,762		14.16	%
Total assets		407,339		384,501		5.94	%		418,615		369,600		13.26	%

Financial Ratios:	Three months ending Jun 30, 2010			Three months ending Jun 30, 2009			Change		Year to date Jun 30, 2010			Year to date Jun 30, 2009			Change
Return on average assets		0.76	%		0.19	%	0.57			0.55	%		0.21	%	0.34
Return on average equity		12.56	%		3.07	%	9.49			9.39	%		3.13	%	6.26
Net interest margin		4.24	%		3.17	%	1.07			3.81	%		3.09	%	0.72
Efficiency ratio		67.63	%		75.73	%	(8.10	)		72.00	%		78.59	%	(6.59	)
Average equity to average assets		6.04	%		6.45	%	(0.41	)		5.83	%		6.73	%	(0.91	)
Allowance for loan losses:	Three months ending Jun 30, 2010			Three months ending Jun 30, 2009			Change		Year to date Jun 30, 2010			Year to date Jun 30, 2009			Change
Beginning balance	$	4,644		$	3,004		54.59	%	$	4,288		$	2,859		49.98	%
Provision for losses		448			611		-26.68	%		835			933		-10.50	%
Charge-offs		(463	)		(309	)	49.84	%		(689	)		(500	)	37.80	%
Recoveries		79			17		364.71	%		274			31		783.87	%
Ending balance		4,708			3,323		41.68	%		4,708			3,323		41.68	%
Nonperforming assets:	Jun 30, 2010			Dec 31, 2009			Change		Jun 30, 2009			Dec 31, 2008			Change
Total nonperforming loans	$	8,215		$	5,687		44.45	%	$	2,605		$	3,859		-32.50	%
Other real estate owned		1,680			666		N/A			2,359			81		2,812.35	%
Total nonperforming assets		9,895			6,353		55.75	%		4,964			3,940		25.99	%
Asset quality ratios:	Jun 30, 2010			Dec 31, 2009			Change		Jun 30, 2009			Dec 31, 2008			Change
Nonperforming loans to total loans		2.49	%		1.76	%	0.73			0.85	%		1.39	%	(0.54	)
Allowance for loan losses to total loans		1.43	%		1.33	%	0.10			1.09	%		1.03	%	0.06
Allowance for loan losses to nonperforming loans		57.31	%		75.40	%	(18.09	)		127.56	%		74.09	%	53.48