Bank of the James Financial (BOTJ) 8-K Results of Operations and Financial Condition

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 2010 Results

Lynchburg, Va., October 22, 2010....Bank of the James Financial Group, Inc. (OTCBB:BOJF) (quarterly consolidated results unaudited) reported today net income after tax of $506,000 or $0.15 per basic and diluted share for the quarter ended September 30, 2010 and net income of $1,642,000 or $0.50 and $0.49 per basic and diluted share respectively year-to-date compared to a net loss of $1,204,000 or $0.37 per basic and diluted share and a net loss of $825,000 or $0.25 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, as well as all previously declared and paid stock dividends.

The increase in net income is attributable to the 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 increased from 3.00% during the three month period ended September 30, 2009 to 4.10% during the same period ended September 30, 2010. The stronger margin translated into net interest income of $3,938,000 during the three month period ended September 30, 2010 as compared to $2,922,000 during the same period a year ago, an increase of $1,016,000 or 34.8%. Interest income increased slightly by 0.5% and interest expense decreased by 40.5% compared to the same three month period a year ago.

J. Todd Scruggs, Executive Vice President of the Bank, commented, “The banking environment both nationally and locally continues to be difficult. Because of the public’s increased demand for safety and liquidity, we anticipate our cost of funds will continue to move downward while our yields on earning assets will remain relatively stable. If this strong net interest margin trend continues, we will be able to continue to strengthen the Bank’s capital position.”

Also contributing to the increase in net income during the quarter was an increase in non-interest income. Non-interest income, net of gain/loss on sale of securities increased to $856,000 for the three month period ended September 30, 2010 from $616,000 during the same three month period a year ago, an increase of 39.0%. A significant portion of this increase is related to mortgage refinance activity handled through our mortgage division.

Deposits decreased slightly from $375,772,000 as of December 31, 2009 to $364,511,000 as of September 30, 2010, a decrease of $11,261,000 or 3.0%. This decrease resulted largely from a decrease in the rates offered on certificates of deposit and the withdrawal of deposits resulting from the decrease in the interest rate paid on the 2010 Savings Account in March 2010.

Loans, net of the allowance for loan loss, have shown slight growth year-to-date. Loans increased from $318,452,000 as of December 31, 2009 to $321,124,000 as of September 30, 2010, an increase of $2,672,000 or 0.8%. Requests for loans continue to be steady and in light of the current environment cautious underwriting standards continue to be applied consistently.

The loan loss provision in the third quarter of 2010 was $600,000 as compared to $2,500,000 during the same period a year ago. Nonperforming assets decreased from $9,896,000 as of June 30, 2010 to $9,731,000 as of September 30, 2010. Nonperforming loans to total loans decreased from 2.49% as of June 30, 2010 to 2.14% as of September 30, 2010. Despite this recent stabilization of noncurrent assets, management recognizes that 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. Management believes that it continues to be 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 1.52% remains adequate.

Bank of the James, a wholly owned subsidiary of Bank of the James Financial Group, Inc., currently operates nine full service locations and one limited service location as well as a mortgage origination office in Forest, 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 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 Sept 30, 2010		Three months ending Sept 30, 2009			Change			Year to date Sept 30, 2010		Year to date Sept 30, 2009			Change
Interest income	$	5,392	$	5,365			0.50	%	$	16,233	$	14,967			8.46	%
Interest expense		1,454		2,443			-40.48	%		5,028		6,747			-25.48	%
Net interest income		3,938		2,922			34.77	%		11,205		8,220			36.31	%
Provision for loan losses		600		2,500			-76.00	%		1,435		3,433			-58.20	%
Noninterest income		954		467			104.28	%		2,666		2,158			23.54	%
Noninterest expense		3,556		2,718			30.83	%		10,021		8,211			22.04	%
Income taxes		230		(625	)		-136.80	%		773		(441	)		-275.28	%
Net income		506		(1,204	)		-142.03	%		1,642		(825	)		-299.03	%
Weighted average shares outstanding		3,301,262		3,249,813			1.58	%		3,295,813		3,248,150			1.47	%
Basic net income per share	$	0.15	$	(0.37	)	$	0.52		$	0.50	$	(0.25	)	$	0.75
Fully diluted net income per share	$	0.15	$	(0.37	)	$	0.52		$	0.49	$	(0.25	)	$	0.74
Balance Sheet at period end:	Sept 30, 2010		Dec 31, 2009			Change			Sept 30, 2009		Dec 31, 2008			Change
Loans, net	$	321,124	$	318,452			0.84	%	$	310,370	$	274,890			12.91	%
Total securities		47,960		60,789			-21.10	%		60,925		22,130			175.31	%
Total deposits		364,511		375,772			-3.00	%		364,291		268,111			35.87	%
Stockholders’ equity		26,320		23,725			10.94	%		23,731		24,635			-3.67	%
Total assets		415,955		437,681			-4.96	%		426,603		328,605			29.82	%
Shares outstanding		3,301,262		3,289,867			11,395			3,250,376		3,245,845			4,531
Book value per share	$	7.97	$	7.21			0.76		$	7.30	$	7.59		$	(0.29	)

Daily averages:	Three months ending Sept 30, 2010			Three months ending Sept 30, 2009			Change			Year to date Sept 30, 2010			Year to date Sept 30, 2009			Change
Loans, net	$	322,566		$	307,928			4.75	%	$	322,737		$	294,970			9.41	%
Total securities		41,913			56,288			-25.54	%		45,879			46,181			-0.65	%
Total deposits		360,645			352,544			2.30	%		360,869			322,759			11.81	%
Stockholders’ equity		25,389			25,074			1.26	%		24,737			24,895			-0.63	%
Interest earning assets		380,944			385,961			-1.30	%		383,124			359,268			6.64	%
Interest bearing liabilities		340,166			349,375			-2.64	%		344,063			321,118			7.15	%
Total assets		411,846			417,354			-1.32	%		413,331			388,144			6.49	%
Financial Ratios:	Three months ending Sept 30, 2010			Three months ending Sept 30, 2009			Change			Year to date Sept 30, 2010			Year to date Sept 30, 2009			Change
Return on average assets		0.49	%		-1.14	%		1.63			0.53	%		-0.28	%		0.81
Return on average equity		7.91	%		-19.05	%		26.96			8.87	%		-4.43	%		13.30
Net interest margin		4.10	%		3.00	%		1.10			3.91	%		3.06	%		0.85
Efficiency ratio		72.69	%		80.20	%		(7.51	)		72.24	%		79.12	%		(6.88	)
Average equity to average assets		6.16	%		6.01	%		0.15			5.98	%		6.41	%		(0.43	)
Allowance for loan losses:	Three months ending Sept 30, 2010			Three months ending Sept 30, 2009			Change			Year to date Sept 30, 2010			Year to date Sept 30, 2009			Change
Beginning balance	$	4,708		$	3,323			41.68	%	$	4,288		$	2,859			49.98	%
Provision for losses		600			2,500			-76.00	%		1,435			3,433			-58.20	%
Charge-offs		(363	)		(555	)		-34.59	%		(1,052	)		(1,055	)		-0.28	%
Recoveries		10			32			-68.75	%		284			63			350.79	%
Ending balance		4,955			5,300			-6.51	%		4,955			5,300			-6.51	%

Nonperforming assets:	Sept 30, 2010			Dec 31, 2009			Change			Sept 30, 2009			Dec 31, 2008			Change
Total nonperforming loans - excludes TDR	$	6,980		$	5,687			22.74	%	$	4,694		$	3,859			21.64	%
Other real estate owned		2,751			666			313.06	%		2,305			81			2745.68	%
Total nonperforming assets		9,731			6,353			53.17	%		6,999			3,940			77.64	%
Asset quality ratios:	Sept 30, 2010			Dec 31, 2009			Change			Sept 30, 2009			Dec 31, 2008			Change
Nonperforming loans to total loans		2.14	%		1.76	%		0.38			1.49	%		1.39	%		0.10
Allowance for loan losses to total loans		1.52	%		1.33	%		0.19			1.68	%		1.03	%		0.65
Allowance for loan losses to nonperforming loans		70.99	%		75.40	%		(4.41	)		112.91	%		74.09	%		38.82