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 (Date of Earliest Event Reported): April 23, 2012

BANK OF THE JAMES FINANCIAL

GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Virginia	001-35402	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 Monday, April 23, 2012, Bank of the James Financial Group, Inc. (the “Company”) issued a press release announcing its earnings for the fiscal quarter ended March 31, 2012, the Company’s first fiscal quarter (the “Press Release”). A copy of the Press Release is attached hereto as Exhibit 99.1.

The information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be considered “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act.

Item 9.01 – Financial Statements and Exhibits

(a) Financial statements of businesses acquired – not applicable

(b) Pro forma financial information – not applicable

(c) Shell company transactions – not applicable

(d) Exhibits

Exhibit No.	Exhibit Description
99.1	Bank of the James Financial Group, Inc. Press Release dated April 23, 2012

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: April 24, 2012	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 Financial Group, Inc. Press Release dated April 23, 2012

EX-99.1

Exhibit 99.1

Bank of The James Financial Group Reports First Quarter 2012 Earnings, Financial Results

Financial Highlights

• Total assets increased to $433.4 million at March 31, 2012 compared with $427.4 million at December 31, 2011 and $430.9 million at March 31, 2011.

• Total deposits, reflecting growth in demand deposit accounts, grew to $386.6 million in first quarter 2012 compared with $374.2 million at year-end 2011 and $379.2 million in first quarter 2011.

• The ratio of allowance for loan losses to nonperforming loans improved to 61.42% at March 31, 2012 from 54.09% at December 31, 2011, which resulted from a continued focus on asset quality and an increased reserve for problem loans.

• Interest expense declined 34% in first quarter 2012 compared with first quarter 2011, reflecting disciplined interest rate management in a flat interest-rate environment and an improved year-over-year net interest margin.

• Book value per share increased to $8.09 per share in first quarter 2012 compared with $7.90 in first quarter 2011.

Lynchburg, VA., April 23, 2012 – Bank of the James Financial Group, Inc. (NASDAQ: BOTJ), the parent company of Bank of the James, a full-service commercial and retail lender, today announced unaudited results for the quarter ended March 31, 2012. Net income in first quarter 2012 was $360,000 or $0.11 per share (basic and diluted), compared with net income of $435,000 or $0.13 per share (basic and diluted) in first quarter 2011.

“The first three months of this year demonstrated the continuing progress we have made to execute a strategic plan established in mid-2011 that includes improving asset quality, reducing loan delinquencies and managing interest and noninterest expense while re-establishing our historical ability to grow loans and deposits,” said Robert R. Chapman III, President and CEO. “We’re proud of the hard work our entire Bank of the James team has done to address challenges and hold the line on expenses while providing a superior customer experience, which has enabled us to retain and expand relationships with customers, and earn the confidence of new customers.

“Although the past several years have presented challenges, the company invested in new technology and service capabilities such as expanded small business banking products and mobile banking technology. We have the banking capabilities and capacity to create opportunities to increase revenue through our existing infrastructure without significant additional investment. We believe this puts us in a very good position to effectively compete with the products offered by even our largest competitors, while providing personalized financial solutions delivered by experienced representatives.

“A key initiative in 2012 is to spend even more time face to face with our customers, enabling our relationship managers to listen to their needs and help them deliver effective, personalized financial solutions.”

Net interest income before provision for loan losses was $3.9 million in first quarter 2012, up 4% compared with $3.7 million in first quarter 2011, reflecting a 34% reduction in interest expense from last year’s first quarter. First quarter 2012 noninterest income, which includes fees from mortgage origination and gain on sales from securities, was $671,000 compared with $672,000 in the prior year’s first quarter. Chapman noted the bank may pursue additional opportunities in the future to identify new sources of noninterest income.

Total loans, net of allowance for loan loss, were $312.2 million at March 31, 2012 compared with $318.8 million at December 31, 2011 and $323.0 million at March 31, 2011. J. Todd Scruggs, CFO, explained: “Despite a slow but potentially improving economic climate, we have established new lending relationships during the past several months.

While these have not taken our focus off of our nonperforming loans, we are very encouraged by a growing lending pipeline. Loans that are 30 days or more past due can be an indicator of potential future problem loans and we are extremely pleased that less than 1% of our performing loans are in this category.”

Total deposits at March 31, 2012 increased to $386.6 million compared with $374.2 million at December 31, 2011 and $379.2 million at March 31, 2011. Chapman said these reflect the bank’s ability to attract new small business customers and growth in demand interest bearing, savings and time deposit accounts. “We have offered competitive rates but have really earned new business with outstanding service and banking convenience,” noted Chapman. The bank had a net interest margin of 3.95% in first quarter of 2012, a slight increase from the net interest margin of 3.83% in first quarter 2011.

Total assets at March 31, 2012 were $433.4 million, up 1.39% compared with $427.4 million at December 31, 2011. This growth reflects year-over-year stability in the company’s loan portfolio along with increases in the bank’s investment securities and total deposits.

“We continue to see an increase in loan inquiries which could translate into increased home equity lending, residential mortgages, and commercial real estate loans,” explained Chapman. “We have the capital strength to lend, while some institutions have pulled back because of capital constraints.”

At March 31, 2012, the bank’s tier 1 leverage ratio was 7.95%, tier 1 risk-based capital ratio was 10.74%, and total risk-based capital was 12.00%, all ratios exceeding regulatory standards for a well-capitalized institution.

About the Company

Bank of the James, a wholly owned subsidiary of Bank of the James Financial Group, Inc., serves the greater Lynchburg, Virginia SMA, often referred to as Region 2000, which was ranked by Forbes magazine among the top 50 places in the United States for business and careers. The bank operates nine full service locations and one limited service location as well as a mortgage origination office in Forest, Virginia and an investment services division in downtown Lynchburg. The company celebrated its 12th anniversary this year. As of January 25, 2012, Bank of the James Financial Group, Inc. common stock is listed on the NASDAQ Stock Market, LLC under the symbol “BOTJ.”

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.

Contact: J. Todd Scruggs, Executive Vice President and CFO

(434) 846-2000

tscruggs@bankofthejames.com

2

Bank of the James Financial Group, Inc. and Subsidiaries

(000’s) except ratios and percent data

unaudited

Selected Data:	Three months ending Mar 31, 2012		Three months ending Mar 31, 2011		Change			Year to date Mar 31, 2012		Year to date Mar 31, 2011		Change
Interest income	$	4,686	$	4,942		-5.18	%	$	4,686	$	4,942		-5.18	%
Interest expense		820		1,235		-33.60	%		820		1,235		-33.60	%
Net interest income		3,866		3,707		4.29	%		3,866		3,707		4.29	%
Provision for loan losses		750		579		29.53	%		750		579		29.53	%
Noninterest income		671		672		-0.15	%		671		672		-0.15	%
Noninterest expense		3,284		3,170		3.60	%		3,284		3,170		3.60	%
Income taxes		143		195		-26.67	%		143		195		-26.67	%
Net income		360		435		-17.24	%		360		435		-17.24	%
Weighted average shares outstanding		3,342,415		3,323,743		0.56	%		3,342,415		3,323,743		0.56	%
Basic net income per share	$	0.11	$	0.13	$	(0.02	)	$	0.11	$	0.13	$	(0.02	)
Fully diluted net income per share	$	0.11	$	0.13	$	(0.02	)	$	0.11	$	0.13	$	(0.02	)
Balance Sheet at period end:	Mar 31, 2012		Dec 31, 2011		Change			Mar 31, 2011		Dec 31, 2010		Change
Loans, net	$	312,185	$	318,754		-2.06	%	$	322,966	$	320,715		0.70	%
Loans held for sale		1,005		434		131.57	%		—		—		—
Total securities		65,260		56,471		15.56	%		57,288		52,883		8.33	%
Total deposits		386,591		374,234		3.30	%		379,207		368,390		2.94	%
Stockholders’ equity		27,035		26,805		0.86	%		26,271		25,495		3.04	%
Total assets		433,372		427,436		1.39	%		430,903		418,928		2.86	%
Shares outstanding		3,342,415		3,323,743		18,672			3,323,743		3,323,743		—
Book value per share	$	8.09	$	8.06	$	0.02		$	7.90	$	7.67	$	0.23

3

Daily averages:	Three months ending Mar 31, 2012			Three months ending Mar 31, 2011			Change			Year to date Mar 31, 2012			Year to date Mar 31, 2011			Change
Loans, net	$	16,253		$	320,637			-1.37	%	$	316,253		$	320,637			-1.37	%
Loans held for sale		774			—			—			—			—			—
Total securities		61,017			55,888			9.18	%		61,017			55,888			9.18	%
Total deposits		375,435			372,736			0.72	%		375,435			372,736			0.72	%
Stockholders’ equity		26,818			26,159			2.52	%		26,818			26,159			2.52	%
Interest earning assets		392,421			392,494			-0.02	%		392,421			392,494			-0.02	%
Interest bearing liabilities		344,208			349,847			-1.61	%		344,208			349,847			-1.61	%
Total assets		426,030			423,432			0.61	%		426,030			423,432			0.61	%
Financial Ratios:	Three months ending Mar 31, 2012			Three months ending Mar 31, 2011			Change			Year to date Mar 31, 2012			Year to date Mar 31, 2011			Change
Return on average assets		0.34	%		0.42	%		(0.08	)		0.34	%		0.42	%		(0.08	)
Return on average equity		5.38	%		6.74	%		(1.36	)		5.38	%		6.74	%		(1.36	)
Net interest margin		3.95	%		3.83	%		0.12			3.95	%		3.83	%		0.12
Efficiency ratio		72.38	%		72.39	%		(0.01	)		72.38	%		72.39	%		(0.01	)
Average equity to average assets		6.29	%		6.18	%		0.11			6.29	%		6.18	%		0.12
Allowance for loan losses:	Three months ending Mar 31, 2012			Three months ending Mar 31, 2011			Change			Year to date Mar 31, 2012			Year to date Mar 31, 2011			Change
Beginning balance	$	5,612		$	5,467			2.65	%	$	5,612		$	5,467			2.65	%
Provision for losses		750			579			29.53	%		750			579			29.53	%
Charge-offs		(384	)		(739	)		-48.04	%		(384	)		(739	)		-48.04	%
Recoveries		28			11			154.55	%		28			11			154.55	%
Ending balance		6,006			5,318			12.94	%		6,006			5,318			12.94	%

4

Nonperforming assets:	Mar 31, 2012			Dec 31, 2011			Change			Mar 31, 2011			Dec 31, 2010			Change
Total nonperforming loans	$	9,779		$	10,376			-5.75	%	$	6,985		$	8,366			-16.51	%
Other real estate owned		3,566			3,253			9.62	%		3,931			3,440			14.27	%
Total nonperforming assets		13,345			13,629			-2.08	%		10,916			11,806			-7.54	%
Troubled debt restructurings – (performing portion)		187			783			-76.12	%		5,064			4,987			1.54	%
Asset quality ratios:	Mar 31, 2012			Dec 31, 2011			Change			Mar 31, 2011			Dec 31, 2010			Change
Nonperforming loans to total loans		3.07	%		3.20	%		(0.13	)		2.13	%		2.56	%		(0.44	)
Allowance for loan losses to total loans		1.89	%		1.73	%		0.16			1.62	%		1.68	%		(0.06	)
Allowance for loan losses to nonperforming loans		61.42	%		54.09	%		7.33			76.13	%		65.35	%		10.79

5