8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report: July 22, 2005

BANK OF THE JAMES FINANCIAL GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Virginia	000-50548	20-0500300
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

828 Main Street, Lynchburg, VA	24504
(Address of principal executive offices)	(Zip Code)

(434) 846-2000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 - Results of Operations and Financial Condition

On Friday, July 22, 2005, Bank of the James Financial Group, Inc.(the “Company”) issued a press release announcing its earnings for the fiscal quarter ended June 30, 2005, the Company’s second fiscal quarter. A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01 - Financial Statements and Exhibits.

(a) Financial statements of businesses acquired – not applicable

(b) Pro forma financial information – not applicable

(c) Exhibits

Exhibit No.	Exhibit Description
99.1	Press Release dated July 22, 2005

SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: July 22, 2005	BANK OF THE JAMES FINANCIAL GROUP, INC.
	By	/s/ J. Todd Scruggs
		J. Todd Scruggs Secretary-Treasurer

EXHIBIT INDEX

Exhibit No.	Exhibit Description
99.1	Bank of the James press release dated July 22, 2005

EX-99.1

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 2005

Lynchburg Va., July 22, 2005.........Bank of the James Financial Group, Inc. (OTCBB:BOJF) (quarterly consolidated results unaudited) reported today total net income after tax of $424,000 or $0.26 per basic share ($0.25 diluted) for the quarter ended June 30, 2005 and $767,000 or $0.49 per basic share ($0.46 diluted) year-to-date compared to net income of $439,000 or $0.28 per basic share ($0.27 diluted) and $780,000 or $0.51 per basic share ($0.48 diluted) for the respective periods a year ago. All earnings per share amounts have been adjusted to reflect the 10% stock dividend paid by the company during January, 2004 and the 50% stock split effected in the form of a dividend paid by the company in March, 2005.

Robert R. Chapman, III, the Bank’s President and CEO, stated “We are pleased with the results that we achieved both in the second quarter and for the year to date.” Chapman further noted that management believes the company’s financial performance continues to be strong, particularly in light of the increased expenses the company has incurred in 2005, including expenses related to the continued investment in infrastructure and personnel to accommodate the Bank’s growth and as well as the added expense of regulatory compliance, particularly Sarbanes-Oxley Section 404.

Several positive highlights for 2005 were identified despite the aforementioned increased expenses. Return on assets increased from 0.81% at the end of the 1^st quarter ended March 31, 2005, to 0.94% at the end of the 2^nd quarter ended June 30, 2005. Return on equity in the 2^nd quarter 2005 also improved as compared to the 1^st quarter 2005 increasing to 12.56% from 10.66% respectively.

Bank of the James, the company’s sole subsidiary, continues to attract deposits and experience strong demand for loans. Deposits increased from $153,834,000 at the year ended December 31, 2004 to $166,352,000 in the period ended June 30, 2005, an increase of 8.1%. The majority of this growth has been associated with the Main Street (downtown Lynchburg, Virginia) and Madison Heights (Amherst County, Virginia) locations. Loans, net of unearned income and loan loss provision have also increased from $140,272,000 at the year ended December 31, 2004 to $151,115,000 in the period ended June 30, 2005, an increase of 7.7%. These increases are directly responsible for the increase in total assets from $171,025,000 at the year ended December 31, 2004 to $185,507,000 in the period ended June 30, 2005, an increase of 8.4%.

Net interest income for the quarter ended June 30, 2005 was $2,022,000 as compared to net interest income of $1,637,000 in the same quarter of 2004, an increase of 23.5%. The net interest margin also increased to 4.72% in the second quarter of 2005 from 4.41% in the same period a year ago. This increase is attributable to the large number of adjustable rate loans in the loan portfolio, the interest rates on which have increased as the FOMC has increased the discount rate. Management believes the Bank continues to be well positioned to take advantage of any future rate increases by the FOMC because of its percentage of adjustable rate loans in the portfolio.

Non-interest income was improved through an increase in fees generated from mortgage origination volume. Non-interest income increased to $555,000 for the quarter ended June 30, 2005 as compared to $488,000 in the period ended June 30, 2004, an increase of 13.7%.

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. 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.

(000’s) except ratios and percent data

unaudited

Selected Data:	Three Months Ending Jun 30, 2005		Three months ending Jun 30, 2004		Change			Year to date Jun 30, 2005		Year to date Jun 30, 2004		Change
Interest income	$	2,911	$	2,229		30.60	%	$	5,581	$	4,388		27.19	%
Interest expense		889		592		50.17	%		1,650		1,176		40.31	%
Net Interest income		2,022		1,637		23.52	%		3,931		3,212		22.38	%
Provision for loan losses		199		54		268.52	%		374		131		185.50	%
Noninterest income		555		488		13.73	%		1,016		778		30.59	%
Noninterest expense		1,735		1,410		23.05	%		3,411		2,678		27.37	%
Income taxes		219		222		-1.35	%		395		401		-1.50	%
Net income		424		439		-3.42	%		767		780		-1.67	%
Weighted Average Shares Outstanding		1,600,468		1,544,436		3.63	%		1,579,900		1,524,104		3.66	%
Basic net income per share	$	0.26	$	0.28	$	(0.02	)	$	0.49	$	0.51	$	(0.02	)
Fully diluted net income per share	$	0.25	$	0.27	$	(0.02	)	$	0.46	$	0.48	$	(0.02	)
Balance Sheet at period end:	Jun 30, 2005		Dec 31, 2004		Change			Jun 30, 2004		Dec 31, 2003		Change
Loans, net	$	151,115	$	140,272		7.73	%	$	123,854	$	114,604		8.07	%
Total securities		22,596		19,911		13.49	%		20,744		14,956		38.70	%
Total deposits		166,352		153,834		8.14	%		145,790		133,486		9.22	%
Stockholders’ equity		13,865		12,786		8.44	%		12,057		11,309		6.61	%
Total assets		185,507		171,025		8.47	%		161,213		145,011		11.17	%
Shares Outstanding		1,600,468		1,548,658		51,810			1,544,726		1,543,790		936
Book value per share		8.66		8.26		0.41			7.81		7.33	$	0.48
Daily averages:	Three Months Ending Jun 30, 2005		Three months ending Jun 30, 2004		Change			Year to date Jun 30, 2005		Year to date Jun 30, 2004		Change
Loans, net	$	145,035	$	121,804		19.07	%	$	142,817	$	119,132		19.88	%
Total securities		23,103		19,006		21.56	%		20,693		16,715		23.80	%
Total deposits		163,576		142,535		14.76	%		159,801		138,807		15.12	%
Stockholders’ equity		13,544		11,952		13.32	%		13,295		11,728		13.36	%
Interest earning assets		171,991		148,956		15.46	%		167,664		144,263		16.22	%
Interest bearing liabilities		144,386		127,990		12.81	%		141,480		124,293		13.83	%
Total Assets		181,791		157,262		15.60	%		177,230		152,385		16.30	%

Financial Ratios:	Three months ending Jun 30, 2005			Three months ending Jun 30, 2004			Change		Year to date Jun 30, 2005			Year to date Jun 30, 2004			Change
Return on average assets		0.94	%		1.12	%	(0.19	)		0.87	%		1.04	%	(0.16	)
Return on average equity		12.56	%		14.73	%	(2.18	)		11.63	%		13.41	%	(1.78	)
Net Interest Margin		4.72	%		4.41	%	0.31			4.73	%		4.49	%	0.24
Efficiency ratio		67.33	%		66.35	%	0.97			68.95	%		67.12	%	1.83
Average Equity to average assets		7.45	%		7.60	%	(0.15	)		7.50	%		7.70	%	(0.19	)
Allowance for loan losses:	Three months ending Jun 30, 2005			Three months ending Jun 30, 2005			Changes		Year to date Jun 30, 2005			Year to date Jun 30, 2004			Changes
Beginning balance	$	1,492		$	1,507		-1.00	%	$	1,419		$	1,451		-2.21	%
Provision for losses		199			54		268.52	%		374			131		185.50	%
Charge-offs		(170	)		(31	)	448.39	%		(278	)		(94	)	195.74	%
Recoveries		5			13		-61.54	%		11			55		-80.00	%
Ending balance		1,526			1,543		-1.10	%		1,526			1,543		-1.10	%
Nonperforming assets:	Jun 30, 2005			Dec 31, 2004			Change		Jun 30, 2004			Dec 31, 2003			Change
Nonaccrual loans		418			380		10.00	%		832			100		732.00	%
Restructured loans		none			none		—			none			none		—
Total nonperforming loans		418			380		10.00	%		832			100		732.00	%
Other real estate owned		618			85		—			none			none		—
Total nonperforming assets		1,036			465		122.80	%		832			100		732.00	%
Asset quality ratios:	Jun 30, 2005			Dec 31, 2004			Change		Jun 30, 2004			Dec 31, 2003			Change
Nonperforming loans to total loans		0.27	%		0.27	%	0.01			0.66	%		0.09	%	0.58
Allowance for loan losses to total loans		1.00	%		1.00	%	(0.00	)		1.23	%		1.25	%	(0.02	)
Allowance for loan losses to nonperforming loans		365.07	%		373.42	%	(8.35	)		185.46	%		1451.00	%	(1,265.54	)