SCHEDULE 14A

(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

BANK OF THE JAMES FINANCIAL GROUP, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (check the appropriate box):

Dear Shareholders:

You are cordially invited to attend the 20182019 Annual Meeting of Shareholders of Bank of the James Financial Group, Inc. (“Financial”), which will be held on May 15, 201821, 2019 at 4:00 p.m. local time, at Boonsboro Country Club, 1709 BCC Drive, Lynchburg, Virginia 24503 (the “Meeting”).

The attached Notice of 20182019 Annual Meeting of Shareholders describes the formal business to be transacted at the Meeting. In addition to the formal business, management will provide a report on the operations of Financial. You will have an opportunity to ask questions of management, the board of directors, and Financial’s independent auditors.

Your vote is important. Whether or not you plan to attend in person, it is important that your shares be represented at the Meeting. You may vote your shares via a toll-free telephone number, via the internet, or you may complete, sign, date, and mail the enclosed proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. A postage-paid return envelope is enclosed for your convenience. Instructions for all three methods of voting are contained with the proxy card. If you decide to attend the Meeting and vote in person, or if you wish to revoke your proxy for any reason prior to the vote at the Meeting, you may do so, and your proxy will have no further effect. We began mailing these proxy materials to you on or about April 9, 2018.12, 2019.

The directors and management of Financial appreciate your continued support and look forward to seeing you at the Meeting.

Sincerely,

Lynchburg, Virginia

April 12, 2019

RECENT REGULATORY CHANGES HAVE MADE OBTAINING A QUORUM MORE

DIFFICULT. PLEASE VOTE YOUR SHARES.

BANK OF THE JAMES FINANCIAL GROUP, INC.

828 Main Street

Lynchburg, VA 24504

NOTICE OF 20182019 ANNUAL MEETING OF SHAREHOLDERS

To Be Held On May 15, 201821, 2019 at 4:00 p.m.

NOTICE IS HEREBY GIVEN that pursuant to its bylaws and call of its directors, the 20182019 Annual Meeting (the “Meeting”) of the holders of shares of Common Stock of Bank of the James Financial Group, Inc. (“Financial”) will be held at Boonsboro Country Club, 1709 BCC Drive, Lynchburg, Virginia 24503 on May 15, 201821, 2019 at 4:00 p.m. local time for the following purposes.

The purposes of the Meeting are to consider and act upon:

1.    The election of four (4)five (5) Group ThreeOne directors;

2.    The ratification of the selection by Financial of Yount, Hyde & Barbour, P.C., an independent registered public accounting firm, to audit the financial statements of Financial for the fiscal year ending on December 31, 2018;2019;

3.    The approval of the Bank of the James Financial Group, Inc. 2018 Equity Incentive Plan;

4.    The approval of the Bank of the James Financial Group, Inc. 2018 Employee Stock Purchase Plan;

5.    The approval, in an advisory,non-binding vote, of the executive compensation described in the Proxy Statement; and

6.4.    Such other matters as may properly come before the Meeting or any adjournment or postponement thereof.

We are not aware of any other business to come before the Meeting, other than procedural matters incident to the conduct of the Meeting.

Your attention is directed to the Proxy Statement accompanying this Notice for a more complete statement regarding the matters proposed to be acted upon at the Meeting. Holders of shares of Common Stock of record at the close of business on March 20, 201826, 2019 will be entitled to notice of and to vote at the Meeting or any postponements or adjournments thereof.

This Notice, the Proxy Statement and a proxy card are being sent to shareholders of Financial on or about April 9, 2018.12, 2019. A copy of a Message to Shareholders and Financial’s Annual Report on Form10-K for the year ended December 31, 2017,2018, which contains our audited financial statements, also accompany thisthe Proxy Statement.

Regardless of whether you plan to attend the Meeting, we urge you to vote your shares via a toll-free telephone number, via the internet, or by completing, signing, dating, and mailing the enclosed proxy card in the enclosed envelope to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. You can revoke a proxy at any time before its exercise at the Meeting by following the instructions set forth in the Proxy Statement.

BANK OF THE JAMES FINANCIAL GROUP, INC.

20182019 PROXY STATEMENT

TABLE OF CONTENTS

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BANK OF THE JAMES FINANCIAL GROUP, INC.

828 Main Street

Lynchburg, VA 24504

Proxy Statement

20182019 Annual Meeting of Shareholders

May 15, 201821, 2019 at 4:00 p.m.

GENERAL INFORMATION

Introduction

This proxy statement (“Proxy Statement”) is furnished in connection with the solicitation by the board of directors of Bank of the James Financial Group, Inc. (the “Company” or “Financial”) of the enclosed proxy to be used at the 20182019 Annual Meeting of Shareholders of the Company. The Company is the holding company for Bank of the James (the “Bank”).

Date, Time and Place of the Meeting

The solicitation of the enclosed proxy is made by and on behalf of the board of directors of Financial to be used at the Annual Meeting of Shareholders to be held on May 15, 201821, 2019 at 4:00 p.m. local time (the “Meeting”). The Meeting will be held atat:

Boonsboro Country Club

1709 BCC Drive

Lynchburg, Virginia 24503

Record Date and Mailing Date

The close of business on March 20, 201826, 2019 (the “Record Date”) was the record date for the determination of shareholders entitled to notice of, and to vote, at the Meeting. We first mailed this Proxy Statement and the enclosed proxy card to shareholders on or about April 9, 2018.12, 2019.

Voting Rights of Shareholders

On the Record Date, there were 4,378,436 shares of common stock of Financial (the “Common Stock”) issued and outstanding. Financial has no other class of stock outstanding. Each outstanding share of Common Stock is entitled to one vote on all matters to be acted upon at the Meeting. Only shareholders of record at the close of business on March 20, 201826, 2019 are entitled to notice of and to vote at the Meeting or any adjournment or postponement thereof.

To the knowledge of Financial’s management, entities affiliated with Basswood Capital Management, LLC and The Banc Funds Company, L.L.C.Eidelman Virant Capital, Inc. beneficially owned approximately 9.14%9.69% and 6.08%5.76%, respectively, of Financial’s outstanding Common Stock as of the Record Date, as set forth in more detail under “Certain Beneficial Owners” below. Except for those affiliated entities, to the knowledge of Financial’s management, no other person owned beneficially more than 5% of Financial’s outstanding Common Stock. As of the Record Date, directors and executive officers of Financial and their affiliates, as a group, owned of record and beneficially, inclusive of options that have vested or will vest within 60 days thereof, a total of 451,781457,305 shares of Common Stock, or approximately 10.32%10.44% of the shares of Common Stock deemed outstanding on such date. Directors and executive officers of Financial have indicated an intention to vote their shares of Common Stock “FOR” the director nominees set forth herein, “FOR” the ratification of the appointment of Yount, Hyde & Barbour, P.C., “FOR” the approval of the equity incentive plan, “FOR” the approval of the employee stock purchase plan, and “FOR” the approval of thenon-binding resolution on executive compensation.

If you hold your shares in a bank or brokerage account, you will receive instructions from your bank or broker that you must follow for your shares to be voted. Please follow those instructions carefully to assure that your shares are voted in accordance with your wishes on the matters presented in this Proxy Statement.

Quorum

A quorum of shareholders is necessary to hold a valid meeting. If the holders of at least a majority of the total number of outstanding shares of Common Stock entitled to vote are represented in person or by proxy at the Meeting, a quorum will exist. We will include brokernon-votes, as defined below, and proxies marked as abstentions to determine the number of shares present at the Meeting. In the event that there are not sufficient voting shares represented for a quorum, or to approve or ratify any matter being presented at the time of the Meeting, the Meeting may be adjourned in order to permit further solicitation of proxies.

VOTING AT THE MEETING

Proposals to be Considered

At the Meeting, the shareholders will be asked toto:

The board of directors does not know of any other matters that are to come before the Meeting except for incidental, procedural matters. If any other matters are properly brought before the Meeting (as determined by a majority of the board of directors), the persons named in the accompanying proxy card will vote the shares represented by each proxy on such matters.

Procedures for Voting By Proxy; Revocation of Proxies

If you properly execute, deliver and do not revoke your proxy, the persons appointed as proxies will vote your shares according to the instructions you have specified on the proxy card. If you sign and return your proxy card but do not specify how the persons appointed as proxies are to vote your shares, your proxy will be voted “FOR” the election of the director nominees, “FOR” the approval of the equity incentive plan, “FOR” the approval of the employee stock purchase plan, “FOR” the ratification of the appointment of Yount, Hyde & Barbour, P.C., “FOR” the approval of thenon-binding resolution on executive compensation, and in the best judgment of the persons appointed as proxies as to all other matters properly brought before the Meeting. If any nominee for the election to the board of directors named in this Proxy Statement becomes unavailable for election for any reason, the proxy will be voted for a substitute nominee selected by the board of directors.

Any shareholder who executes a proxy has the power to revoke it at any time before it is voted by giving written notice of revocation to Financial, by executing and delivering a substitute proxy to Financial, or by attending the Meeting and voting in person. If a shareholder desires to revoke a proxy by written notice, such notice should be mailed or delivered, so that it is received on or prior to the Meeting date, to J. Todd Scruggs, Secretary, Bank of the James Financial Group, Inc., 828 Main Street, Lynchburg, Virginia 24504.

Effect of BrokerNon-Votes and Abstentions

Brokers who hold shares of Common Stock for the accounts of their clients may vote these shares either as directed by their clients or in their own discretion if permitted by the exchange or other organizations of which they are members. A brokernon-vote occurs when a broker, bank, or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. A brokernon-vote does not count as a vote in favor of or against a particular proposal for which the broker has no discretionary voting authority. In addition, if a shareholder abstains from voting on a particular proposal, the abstention does not count in favor of or against the proposal.

If your broker holds shares of Common Stock that you own in “street name,” then, under applicable rules, brokers may exercise discretionary voting power only on “routine” matters. Consequently, the broker may not vote your shares on Proposals One and Three, Four and Five, allneither of which are notis considered routine, without receiving instructions from you. The broker may vote your shares on Proposal Two even if the broker does not receive instructions from you (ratification of the appointment of our independent auditor is considered a “routine” matter for which the broker may exercise discretionary voting power).

Vote Required

Each share of Financial’s Common Stock entitles the record holder thereof to one vote for each matter to be voted upon at the Meeting. Shares for which the holder has elected to abstain or to withhold the proxies’ authority to vote and brokernon-votes on a matter will count toward a quorum for the Meeting, but will not be included in determining the number of votes cast with respect to a matter.

Directors are elected by a plurality of the votes cast. Thus, in the election of directors, those receiving the greatest number of votes for election will be elected even if they do not receive a majority. With regard to the election of directors set forth in Proposal One, the proxy being provided by the board enables a shareholder to vote for the election of the nominees proposed by the board, to withhold authority to vote for the nominees being proposed, or to vote for the election of only certain nominees. Only shares that are voted in favor of a nominee will be counted toward that nominee’s achievement of a plurality. Accordingly, “withhold” votes and brokernon-votes will have no effect on the outcome of this proposal.

For all other proposals, votes may be cast in favor or against, or shareholders may abstain from voting. Approval of these other proposals requires an affirmative vote of a majority of the votes cast on the matter. Thus, although abstentions and brokernon-votes are counted for purposes of determining the presence or absence of a quorum, they are not counted for purposes of determining whether such a matter has been approved, and will have no effect.

How to Vote Your Shares

Shareholders of Financial are requested to vote their shares by dialing1-800-690-6903 and following the instructions, via the internet at the following address:http://www.proxyvote.com, or by completing, dating, and signing the form of proxy and returning it promptly to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, in the enclosed envelope. If a proxy is properly executed and returned in time for voting, it will be voted as indicated thereon. Shareholders may attend the Meeting and vote in person.

Principal Executive Office

The principal executive offices of Financial are located at 828 Main Street, Lynchburg, Virginia 24504.

SOLICITATION OF PROXIES

The cost of soliciting proxies for the Meeting will be borne by Financial. In addition to solicitation by mail, Financial will request banks, brokers and other custodians, nominees and fiduciaries to send proxy materials to the beneficial owners of shares of Common Stock and to secure their voting instructions, if necessary. Certain officers and regularother employees of the Bank, without additional compensation, may solicit proxies personally, by telephone, facsimile, or otherwise, from some shareholders if proxies are not received promptly. We may also reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for their reasonableout-of-pocket expenses in forwarding proxy materials to the beneficial owners of shares of Common Stock.

Financial has retained Broadridge (“Broadridge”) to oversee the mechanics of our solicitation of proxies. Broadridge will prepare the mailing labels, place the proxy materials in envelopes, mail the proxy materials to shareholders of record, receive the proxies from shareholders, tally the proxy votes, and present the final numbers to Financial.

PROPOSAL ONE - ELECTION OF DIRECTORS

Financial’s bylaws provide that the board of directors is to be composed of no less than five and no more than twenty-five directors. Our articles of incorporation further provide that the board of directors shall be divided into three groups (Groups One, Two, and Three), as nearly equal in number as possible, with staggered terms. Financial’s board of directors currently consists of 13 persons. Each of the directors also serves as a director of the Bank, Financial’s wholly-owned subsidiary.

Under Virginia law, the terms of the incumbent Group ThreeOne directors expire at the Meeting, provided, however, that all directors continue to serve until their successors have been duly elected and qualified.

The nomineesfollowing persons have been nominated for election to the board of directors are Lewisof the Company: A. Douglas Dalton III, James F. Daly, Watt R. Foster, Jr., Phillip C. Addison, John R. Alford,Jamerson, and Thomas W. Pettyjohn, Jr., William C Bryant III, and J. Todd Scruggs. If elected, the nominee will serve a three-year term to expire at the annual meeting of shareholders in 2022.

Nominees and Continuing DirectorsNOMINEES AND CONTINUING DIRECTORS

Nominees

Set forth below is certain information concerning the nominees.

Each of the nominees is currently a director of Financial whose current term expires at the Meeting. Each nominee has agreed to serve if elected.

(1)    As of March 26, 2019.

(2)    All of the directors of Financial also serve as members of the board of directors of the Bank. For all years prior to 2004, all directorships were with the Bank only.

Continuing Directors

Set forth below is certain information concerning the continuing directors.

(1)    As of March 26, 2019.

(2)    All of the directors of Financial also serve as members of the board of directors of the Bank. For all years prior to 2004, all directorships were with the Bank only.

CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS MATTERS

General

The boards of Financial and the Bank are identical in membership. The business and affairs of Financial are managed under the direction of its board of directors in accordance with the Virginia Stock Corporation Act, Financial’s articles of incorporation, and Financial’s bylaws. Members of the board of directors are kept informed of Financial’s business through discussions with management, by reviewing materials provided to them, and by participating in meetings of the board of directors and its committees.

Independence of Directors

The board of directors is comprised of a majority of directors who qualify as independent based on the definition of “independent director” as defined by Rule 5605(a)(2) of the Listing Rules of the NASDAQ Stock Market (“NASDAQ”). The board has determined that the following current directors and nominees of Financial are “independent” under the foregoing criteria:

The board of directors has determined that Robert R.Messrs. Chapman III and J. Todd Scruggs do not qualify as independent directors because they currently serve as executive officers of Financial and the Bank. Mr. Bryant does not qualify as an independent director because in 20172018 the Bank paid rent in excess of $200,000 to Jamesview Investments, LLC, an entity which Mr. Bryant owns. Mr. Alford does not qualify as an independent director because his law firm from time to time represents the Company in legal matters and has accepted compensation for such service. No other persons other than those set forth above served as a director of Financial in 2017.2018.

Director Qualifications

The board of directors believes that it is necessary for each of the Company’s directors to possess many qualities and skills. The Nominating Committee seeks candidates who possess the background, skills and expertise to make a significant contribution to the board and to the Company and its shareholders. When searching for new candidates, the Nominating Committee considers the evolving needs of the board of directors and searches for candidates that fill any current or anticipated future gaps. Among other things, the Nominating Committee specifically considers the following:

The Nominating Committee also considers such other criteria as may be relevant at the time and looks for candidates that will complement the existing board composition. Under our governing documents, no individual may be nominated for election or elected as a director if the individual on the date of election has attained the age of 73. The Nominating Committee does not have a formal policy with respect to diversity; however, the board of directors and the Nominating Committee believe that it is essential that the board members represent diverse viewpoints. In considering candidates for the board of directors, the Nominating Committee considers the entirety of each candidate’s credentials in the context of these standards. With respect to the nomination of continuing directors forre-election, the individual’s contributions to the board of directors are also considered. The Nominating Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective directors.

Our board members bring a wealth of leadership experience, community ties, and knowledge of Region 2000 to the board of directors. In considering the directors’ and director nominees’ individual experience, qualifications, attributes and skills, the board has concluded that the appropriate experience, qualifications, attributes and skills are represented on the board as a whole and on each of the board’s committees.

The board has concluded that each director and nominee possesses the personal traits and characteristics described above. Each director has demonstrated business and financial acumen, an ability to exercise sound judgment, compatibility with other directors, as well as a commitment to service to the Company and our board. In addition to the information below regarding each director’s and nominee’s specific experience, qualifications, attributes and skills that led our board to the conclusion that he/she should serve as a director, we also believe that all of our directors and director nominees have a reputation for integrity, honesty, and adherence to high ethical standards.

There are no family relationships among any directors, director nominees and executive officers.

DIRECTOR AND OFFICER BIOGRAPHICAL INFORMATION

The following discusses the backgrounds and qualifications of our director nominees and the directors continuing in office. Unless otherwise indicated, each of the following persons has held his or her present position for the last five years.

Nominees to the Board

Lewis C. AddisonA. Douglas Dalton III, 66,38, is recently retired from his position as Senior Vice-President/Chief Financial OfficerOperations Manager for English Construction Company, Inc. He is a 2003 graduate of Virginia Tech and Treasurer for Centra Health, Inc., where he had worked in various capacities since 1979. He holds a bachelor’s degree in Business with a major in Accounting from Virginia Tech. Mr. Addison was a Certified Public Accountant and is a Past President of the Virginia Chapter of the Healthcare Financial Management Association.Management. He is currently Chairman ofserves on the Board of Piedmont Community Health Plan, Inc.Directors for Boys and ChairmanGirls Club of Greater Lynchburg. Mr. Dalton has served on the Altavista Advisory Board for Bank of the Industrial Development AuthorityJames for several years before being appointed to Financial’s board of directors. Mr. Dalton brings business skills such as project management, knowledge of the Townconstruction industry, and local economy knowledge to the board.

James F. Daly, 61, is the President of Amherst.Daly Seven, Inc., a company engaged primarily in hotel development and management. Mr. AddisonDaly has extensive experienceserved in complex financial matters and serves as Financial’s audit committee financial expert under SEC guidelines.

John R. Alford, Jr., 57,this capacity since 1980. He is a shareholder with Caskie & Frost, P.C., a law firm based in Lynchburg. In his practice, Mr. Alford provides advice to corporations and other business entities in mattersgraduate of corporate law, commercial transactions, and real estate and to individual clients in matters including estate planning, estate administration, and real estate matters. HeVirginia Tech where he received a bachelor’s degree in EconomicsBusiness Management. He currently serves on the advisory board for the Boys and Girls Club of Greater Lynchburg. Mr. Daly provides experience in commercial real estate management, commercial real estate financing, construction project management, and business operations.

Watt R. Foster, Jr., 59, is a native of Brookneal, Virginia. Mr. Foster is the President and Chief Executive Officer of Foster Fuels, Inc., a company engaged primarily in the sale and distribution of petroleum and propane products, and related products as well as the provision of emergency fuel delivery throughout the United States. He is also owner of Phelps Creek Angus Farm, a 500 headcow-calf operation located in Campbell County. Mr. Foster received a bachelor’s degree in Business Management from James Madison University. Mr. Foster is a member of the UniversityStaunton River Chapter of the Masonic Lodge. Mr. Foster provides the board with a strong knowledge of business, including the operation of wide ranging, complex operations, and real estate purchase and development.

Phillip C. Jamerson, 60, is Vice President and Owner of Jamerson Building Supply and Jamerson Real Estate and is the pastCo-Owner and CEO of Jamerson-Lewis Construction. Mr. Jamerson is a 1981 graduate of Virginia Tech and has a B.S. degree in Building Construction. He is currently serving on the Board of Directors and Executive Committee of the Lynchburg Humane Society and on the Board of Patrick Henry Family Services. He was previously a member of the Appomattox Economic Development Agency and the Region 2000 Workforce Development Board. Mr. Jamerson provides the board with a strong knowledge of business, including real estate purchase and development as well as construction and project management.

Thomas W. Pettyjohn, Jr., 72, is the chairman of the board of Financial. Mr. Pettyjohn grew up in Amherst County and has been a resident of Lynchburg since 1972. Mr. Pettyjohn received a bachelor’s degree in History and a J.D. from Washington & Lee University SchoolUniversity. Mr. Pettyjohn retired from Davidson & Garrard, Inc., an investment advisory firm in Lynchburg, on December 31, 2015. Mr. Pettyjohn has an extensive banking background, having worked at Central Fidelity National Bank for many years. While at Central Fidelity, Mr. Pettyjohn held the titles of Law. Prior to joiningExecutive Vice President and Division Manager of Residential Real Estate, Executive Vice President and Division Manager of Commercial Banking/Western Division, Vice President andIn-House Counsel of Central Fidelity Bank’s predecessor, Fidelity American Bankshares, Inc., and statewide Manager for Indirect Lending. At the time of his retirement from Central Fidelity, Mr. Pettyjohn was Executive Vice President of Real Estate Administration for the Mortgage Division. Mr. Pettyjohn is currently on the board of directors and chairman of the finance committee of Amazement Square Children’s Museum. He has served as the President of the board of directors of Financial, Mr. Alford was a member of the Bank’s Lynchburg Advisory Board. Mr. Alford is a board member of Sweet Briar College, a board member of the Greater Lynchburg Community Trust, immediate past president and former board member of Boonsboro Country Club, a former Trustee for James River Day Schoolan elder and a formerdeacon of First Presbyterian Church and as chairman and board member for the Alliance for Families & Children. Mr. Alford provides the board with valuable experience and perspective gained in the legal profession as well as strong business contacts.

William C. Bryant III, 53, is the President of and Auctioneer for Ted Counts Realty and Auction Company. He holds a B.S. in Business Management from LaSalle University. Mr. Bryant received a certificate in Real Estate Appraisal from the International College of Real Estate Appraisal in Columbia, Tennessee and is a graduate of the Mosley Flint School of Real Estate in Roanoke, Virginia. In addition, he is a graduate of the Mendenhall School of Auctioneering in High Point, North Carolina, and obtained CAI designation through Indiana University, the Certified Auctioneers Institute in Bloomington, Indiana. Mr. Bryant is a member of the National Association of Realtors, the Virginia Association of Realtors, the National Association of Auctioneers and the Virginia Association of Auctioneers. He previously served on the board of the Lynchburg Regional Chamber of Commerce and serves on the Commonwealth of Virginia Auctioneers Regulator Board and is a member of the Lynchburg Board of Realtors.First Presbyterian Weekday School. Mr. Bryant provides executive experience, broad ties to the business community and significantPettyjohn has extensive experience in valuing assets in a broad rangeand knowledge of categories,banking and law, including real estate, heavy equipment,lending, commercial banking and livestock.

J. Todd Scruggs, 50, is a native of Lynchburg. Mr. Scruggs isfinancial matters and brings this valuable experience to the Secretary-Treasurer of Financial and Executive Vice President and Chief Financial Officer of the Bank. Mr. Scruggs was aco-organizer of the Bank and has served as its Chief Financial Officer since its formation in 1999. Prior to serving as an organizer for the Bank, Mr. Scruggs worked at Crestar Investment Group, where he was a Financial Consultant and an Investment Representative. Mr. Scruggs has a Bachelor of Science in Commerce from the University of Virginia McIntire School of Commerce. Mr. Scruggs also graduated from the University of South Carolina School of Graduate Bank Investment Management. Mr. Scruggs is Secretary of both Financial and the Bank. He currently serves on the finance committee of Interfaith Outreach Association, the board of STEP with Links, the board of the E.C. Glass Foundation, and is involved with the Ways to Work Program at HumanKind. He has served on the board of the Central Virginia Community College Education Foundation and previously served on the board finance committee of Centra Health, Inc. Mr. Scruggs has experience in preparing and reviewing complex financial information, investment, asset/liability management, and regulatory matters.board.

Directors Continuing in Office

Lydia K. Langley, 53,54, is a Lynchburg native and recently retired owner of Langley Rentals for 27 years. Langley Rentals owned and managed residential rental properties, including apartments, duplexes, and single family homes in the Lynchburg area. Ms. Langley has a B.A. from the University of Virginia and a Masters of Administration from Lynchburg College. She served 9 years on the Planning Commission for the City of Lynchburg and was an original member of the Lynchburg Police Foundation. Ms. Langley previously served on the board of The Ellington as well as the Lynchburg Advisory Board of Bank of the James for five years before being appointed to the board of Financial. Ms. Langley provides the board with strong business knowledge, particularly related to the operation of a rental real estate business and local real estate values.

Robert R. Chapman III, 55,56, serves as the President of Financial and the President and Chief Executive Officer of the Bank. He has been a resident of Lynchburg for twenty-three24 years and has been the President of Financial since January 2004 and President and CEO of the Bank since January 2003. Mr. Chapman was aco-organizer of Bank of the James in 1999. Previously, Mr. Chapman was Vice President and Branch Manager and a Commercial Account Manager at Crestar Bank for 15 years. Mr. Chapman is a graduate of Virginia Military Institute where he received a bachelor’s degree in Economics. Following graduation, Mr. Chapman served as First Lieutenant in the United States Army. Mr. Chapman graduated from the Stonier Graduate School of Banking. Mr. Chapman is a board member and past President of the Lynchburg City Schools Education Foundation. He also serves on the board of the Centra Foundation and is a member of First Presbyterian Church. In addition to his extensive experience in bank administration, asset/liability management, residential and commercial real estate lending, and business and industry lending, Mr. Chapman has experience in theday-to-day management of the Bank and knowledge of its business and operations.

Julie P. Doyle, 54,55, has lived in Lynchburg since 1993. Ms. Doyle is the President and Executive Director of The Education & Research Foundation, Inc. located in Lynchburg, a position she has held since 2005. Ms. Doyle directs the business operations of a clinical research site whose primary market focus is dermatological medications and products. Ms. Doyle holds a Bachelor of Science degree in Mechanical Engineering from the University of Notre Dame and a Master of Business Administration degree from George Washington University. Active in the community, Ms. Doyle currently holds board positions with Centra Health, Inc., University of Lynchburg, College and the Lynchburg City Schools Education Foundation. She formerly served as the chair of the Lynchburg City School Board. Ms. Doyle provides the board with executive experience, a strong financial background, and good relationships within the community.

Dr. Augustus A. Petticolas, Jr., 69,70, has practiced dentistry in Lynchburg since 1976. He is a graduate of Livingstone College in Salisbury, North Carolina and holds a bachelor’s degree in English with a minor in Biological Sciences and French. He earned his Doctor of Dental Surgery degree at the University of Maryland. Dr. Petticolas is involved in numerous community endeavors and is a founding board member of the Free Clinic of Central Virginia, Inc. In addition, he currently serves on the boards of the Greater Lynchburg Community Trust and the Centra Health Foundation. He previously has served on the board of Centra Health, Inc. He joined the board of directors of Bank of the James in 2005. In July, 2008, Governor Tim Kaine appointed Dr. Petticolas to serve a four-year term on the Virginia Board of Dentistry. Dr. Petticolas brings business experience, knowledge of project management, and leadership skills to the board.

PhillipLewis C. JamersonAddison, 59,67, is Vice Presidentretired from his position as Senior Vice-President/Chief Financial Officer and Owner of Jamerson Building Supply and Jamerson Real Estate and is the pastCo-Owner and CEO of Jamerson-Lewis Construction. Mr. Jamerson is a 1981 graduate of Virginia Tech and has a B.S. degreeTreasurer for Centra Health, Inc., where he had worked in Building Construction.various capacities since 1979. He is currently serving on the Board of Directors and Executive Committee of the Lynchburg Humane Society and on the Board of Patrick Henry Family Services. He was previously a member of the Appomattox Economic Development Agency and the Region 2000 Workforce Development Board. Mr. Jamerson provides the board with a strong knowledge of business, including real estate purchase and development as well as construction and project management.

A. Douglas Dalton III, 37, is Operations Manager for English Construction Company, Inc. He is a 2003 graduate of Virginia Tech and holds a bachelor’s degree in Business Management.with a major in Accounting from Virginia Tech. Mr. Addison was a Certified Public Accountant and is a Past President of the Virginia Chapter of the Healthcare Financial Management Association. He is currently serves onChairman of the Board of Directors for BoysPiedmont Community Health Plan, Inc. and Girls Club of Greater Lynchburg. Mr. Dalton has served on the Altavista Advisory Board for BankChairman of the James for several years before being appointed to Financial’s board of directors. Mr. Dalton brings business skills such as project management, knowledgeIndustrial Development Authority of the construction industry,Town of Amherst. Mr. Addison has extensive experience in complex financial matters and local economy knowledge to the board.serves as Financial’s audit committee financial expert under SEC guidelines.

James F. DalyJohn R. Alford, Jr., 60,58, is the President of Daly Seven, Inc.a shareholder with Caskie & Frost, P.C., a company engaged primarilylaw firm based in hotel developmentLynchburg. In his practice, Mr. Alford provides advice to corporations and management. Mr. Daly has servedother business entities in this capacity since 1980.matters of corporate law, commercial transactions, and real estate and to individual clients in matters including estate planning, estate administration, and real estate matters. He is a graduate of Virginia Tech where he received a bachelor’s degree in Business Management. He currently serves onEconomics from the advisory board for the Boys and Girls ClubUniversity of Greater Lynchburg. Mr. Daly provides experience in commercial real estate management, commercial real estate financing, construction project management, and business operations.

Watt R. Foster, Jr., 58, is a native of Brookneal, Virginia. Mr. Foster is the President and Chief Executive Officer of Foster Fuels, Inc., a company engaged primarily in the sale and distribution of petroleum and propane products, and related products as well as the provision of emergency fuel delivery throughout the United States. He is also owner of Phelps Creek Angus Farm, a 500 headcow-calf operation located in Campbell County. Mr. Foster received a bachelor’s degree in Business Management from James Madison University. Mr. Foster is a member of the Staunton River Chapter of the Masonic Lodge. Mr. Foster provides the board with a strong knowledge of business, including the operation of wide ranging, complex operations, and real estate purchase and development.

Thomas W. Pettyjohn, Jr., 71, is the chairman of the board of Financial. Mr. Pettyjohn grew up in Amherst County and has been a resident of Lynchburg since 1972. Mr. Pettyjohn received a bachelor’s degree in HistoryVirginia and a J.D. from Washington & Lee University. Mr. Pettyjohn retired from his position at Davidson & Garrard, Inc., an investment advisory firm in Lynchburg, on December 31, 2015. Mr. Pettyjohn has an extensive banking background, having worked at Central Fidelity National Bank for many years. While at Central Fidelity, Mr. Pettyjohn held the titlesUniversity School of Executive Vice President and Division Manager of Residential Real Estate, Executive Vice President and Division Manager of Commercial

Banking/Western Division, Vice President andIn-House Counsel of Central Fidelity Bank’s predecessor, Fidelity American Bankshares, Inc., and statewide Manager for Indirect Lending. At the time of his retirement from Central Fidelity, Mr. Pettyjohn was Executive Vice President of Real Estate Administration for the Mortgage Division. Mr. Pettyjohn is currently on the board of directors and chairman of the finance committee of Amazement Square Children’s Museum. He has served as the President ofLaw. Prior to joining the board of directors of Financial, Mr. Alford was a member of the Bank’s Lynchburg Advisory Board. Mr. Alford is a board member of Sweet Briar College, a board member of the Greater Lynchburg Community Foundation, a former president and board member of Boonsboro Country Club, an eldera former Trustee for James River Day School and deacona former chairman and board member for the Alliance for Families & Children. Mr. Alford provides the board with valuable experience and perspective gained in the legal profession as well as strong business contacts.

William C. Bryant III, 54, is the President of First Presbyterian Church and as chairmanAuctioneer for Ted Counts Realty and Auction Company. He holds a B.S. in Business Management from LaSalle University. Mr. Bryant received a certificate in Real Estate Appraisal from the International College of Real Estate Appraisal in Columbia, Tennessee and is a graduate of the Mosley Flint School of Real Estate in Roanoke, Virginia. In addition, he is a graduate of the Mendenhall School of Auctioneering in High Point, North Carolina, and obtained CAI designation through Indiana University, the Certified Auctioneers Institute in Bloomington, Indiana. Mr. Bryant is a member of the National Association of Realtors, the Virginia Association of Realtors, the National Association of Auctioneers and the Virginia Association of Auctioneers. He previously served on the board of the First Presbyterian Weekday School.Lynchburg Regional Chamber of Commerce and serves on the Commonwealth of Virginia Auctioneers Regulator Board and is a member of the Lynchburg Board of Realtors. Mr. Pettyjohn has extensiveBryant provides executive experience, broad ties to the business community and significant experience in and knowledgevaluing assets in a broad range of banking and law,categories, including real estate, lending, commercial bankingheavy equipment, and livestock.

J. Todd Scruggs, 51, is a native of Lynchburg. Mr. Scruggs is the Secretary-Treasurer of Financial and Executive Vice President and Chief Financial Officer of the Bank. Mr. Scruggs was aco-organizer of the Bank and has served as its Chief Financial Officer since its formation in 1999. Prior to serving as an

organizer for the Bank, Mr. Scruggs worked at Crestar Investment Group, where he was a Financial Consultant and an Investment Representative. Mr. Scruggs has a Bachelor of Science in Commerce from the University of Virginia McIntire School of Commerce. Mr. Scruggs also graduated from the University of South Carolina School of Graduate Bank Investment Management. Mr. Scruggs is Secretary of both Financial and the Bank. He currently serves on the finance committee of Interfaith Outreach Association, the board of Boonsboro Country Club, the board of the E.C. Glass Foundation, and is involved with the Ways to Work Program at HumanKind. He has served on the board of the Central Virginia Community College Education Foundation and previously served on the board finance committee of Centra Health, Inc. Mr. Scruggs has experience in preparing and reviewing complex financial mattersinformation, investment, asset/liability management, and brings this valuable experience to the board.regulatory matters.

Executive Officers Who Are Not Directors

The following sets forth biographical information and the business experience of eachnon-director executive officer of the Bank.

Harry P. Umberger, Jr., 52,53, has served as Executive Vice President and Senior Credit Officer of the Bank since December 2007. From 2003 to 2007, Mr. Umberger served as Senior Vice President and Senior Credit Officer of the Bank. He joined the Bank in 2001 as a Vice President and Commercial Lender. Mr. Umberger started his banking career in 1990 with Sovran Bank. He had also worked with two other Region 2000 community banks prior to joining the Bank. Mr. Umberger has a Bachelor of Arts degree from Hampden-Sydney College with majors in both Economics and Spanish. He is also a graduate of the Virginia Banker’s School of Bank Management. Mr. Umberger serves on the Timbrook Youth Basketball Board.

Board Leadership and Risk Oversight

Robert R. Chapman III serves as Financial’s Chief Executive Officer and Thomas W. Pettyjohn, Jr., an independent director, serves as the Chairman of the Board. The Company has determined that splitting the role of Chairman of the Board and Chief Executive Officer is appropriate for the Company, because the board believes it is prudent to have an independent director set the agenda for board meetings instead of an inside director. The board feels this arrangement allows the directors to appropriately exercise their oversight role.

The board of directors is actively involved in oversight of risks that could affect Financial and the Bank. This oversight is conducted primarily through committees of the board, as disclosed in the descriptions of each of the committees below, but the full board has retained responsibility for general oversight of risks. The board satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within Financial and the Bank.

Code of Ethics

Financial has adopted a code of ethics that applies to Financial’s directors, executive officers (including the principal financial officer, principal accounting officer or controller, or persons performing similar functions), and senior officers. The code of ethics has been posted under the “Investor Relations” section on Financial’s website:www.bankofthejames.bank. Any waiver or substantial amendments of the code of ethics applicable to our directors and executive officers also will be disclosed on our website.

Meeting Attendance

Board and Committee Meeting Attendance

The board of directors of Financial held five (5)six (6) meetings during 2017.2018. During 2017,2018, except for Mr. Addison,Foster, who attended 73%67% of the meetings, each of the directors attended at least 75% of the meetings of the board of Financial and the committees of Financial on which they serve. In calculating attendance, the Company did not include meetings of the board of directors of the Bank or its committees. The board of directors of the Bank, which consists of all members of the board of directors of Financial, met thirteen (13)twelve (12) times during 2017.2018. During 2017,2018, except for Mr. Foster who attended 62% of the meetings, each of the directors also attended at least 75% of the board meetings of the Bank and the committees of the Bank on which they serve.

Director Fees

Our outside directors serve and are compensated as both directors of Financial and the Bank. In the year ended December 31, 2017,2018, Financial or the Bank, as applicable, paid the outside directors the following standard fees:

In 2018,2019, the directors will continue to be paid the same amounts as set forth in the table above. Members of the board of directors do not receive any compensation except as set forth hereinherein.Non-employee board members are not eligible to receive awards under the 2018 Bank of the James Financial Group, Inc. Equity Incentive Plan and were not eligible to receive option grants under thenow-expired 1999 Stock Option Plan. In 2017,2018, total fees paid tonon-employee directors were approximately $192,000.$178,850.

The following table contains information regarding the compensation awarded or paid to, or earned by, Financial’s directors during the 20172018 fiscal year.

Attendance at Meetings of Shareholders

Financial encourages each member of the board of directors to attend the upcoming Annual Meeting of Shareholders. All of Financial’s directors attended the 20172018 Annual Meeting of Shareholders of Financial with the exception of Julie P. Doyle and Phillip C. Jamerson, who werewas unable to attend for business reasons.

COMMITTEES OF THE BOARD OF DIRECTORS OF FINANCIAL

The board of directors of Financial has the following four standing committees to assist the board in the discharge of its duties: Executive Committee, Audit Committee, Nominating Committee, and Compensation Committee. The board of directors of the Bank has corresponding committees and, in addition, has standing Loan, Investment, Enterprise Risk Management, and Compliance Committees to assist it in the discharge of its duties.

The board of directors of Financial has adopted charters for its Audit Committee, Nominating Committee, and Compensation Committee to define the duties and responsibilities of those committees. These charters are available on the “Investor Relations” page of our website (www.bankofthejames.bank)(www.bankofthejames.bank) under “Governance Documents.” If you would prefer to receive a copy via mail at no cost to you, please contact J. Todd Scruggs, Secretary of Financial.

Members of Board Committees

The following table sets forth the membership during the year ended December 31, 20172018 of each of Financial’s standing committees:

Executive Committee

The Executive Committee reviews extraordinary confidential issues and serves as a forum for discussing executive decisions. The Executive Committee has all the powers of the board in the management and the conduct of the business and affairs of Financial in the intervals between meetings of the full board, except that the Executive Committee may not increase the number of directors, fill vacancies on the board, remove directors, approve an amendment to the articles of incorporation or bylaws, approve a plan of merger or consolidation, or take other actions that cannot by law be delegated by the board. For the year ended December 31, 2017,2018, the Executive Committee of each of Financial and the Bank had twelve (12)eleven (11) meetings.

Audit Committee

Financial’s Audit Committee has been established in accordance with § 3(a)(58)(A) of the Securities Exchange Act. The Audit Committee reviews and approves compliance policies and procedures and assists and monitors general audits performed by federal and state agencies. The Audit

Committee is responsible for the selection and recommendation of the independent accounting firm for the annual audit. The Audit Committee of Financial reviews and accepts the reports of Financial’s

independent auditors, internal auditor, and federal and state examiners. As part of its oversight of Financial’s financial statements, the Audit Committee reviews and discusses with management and Financial’s independent registered public accountants, all annual and quarterly financial statements and disclosures prior to their issuance.

In addition, the Audit Committee reviews key initiatives and programs aimed at maintaining the effectiveness of Financial’s internal and disclosure control structure. As part of this process, the Audit Committee continues to monitor the scope and adequacy of Financial’s internal auditing program. In addition, the Audit Committee is the appropriate body to receive, review, and investigate, as appropriate, certain complaints, including those from whistleblowers. For the year ended December 31, 2017,2018, the Audit Committees of Financial and the Bank had five (5) meetings.

Financial’s board has determined that Lewis C. Addison is an “Audit Committee Financial Expert” as that term is defined by the Securities and Exchange Commission rules adopted pursuant to the Sarbanes-Oxley Act of 2002.

The board has determined that Mr. Addison and each other member of the Audit Committee qualify as independent based on the definition of “independent director” under the applicable NASDAQ rules and applicable Securities and Exchange Commission regulations. Each member of the Audit Committee is able to read and understand financial statements, including Financial’s balance sheet, income statement, and cash flow statement.

Nominating Committee

The Nominating Committee reviews and recommends candidates for nomination to the board for expiring/expired or otherwise vacant seats. For the year ended December 31, 20172018 the Nominating Committee had one (1) meeting.

All members of the Nominating Committee are independent based on the definition of “independent director” under the applicable NASDAQ rules and applicable Securities and Exchange Commission regulations. Currently, Financial does not have a formal process by which to consider candidates recommended by shareholders. Financial believes that because of the current operating environment, it is critical for the board of directors to be comprised of individuals with the types of expertise and scope currently represented on the board and that the Nominating Committee is best positioned to identify such individuals. As discussed above, the Nominating Committee considers all candidates based on the criteria set forth under “Director Qualifications,” including share ownership, business experience and expertise, character, particular goals and needs of Financial for additional competencies or characteristics, educational background, and board experience in evaluating potential nominees.

Compensation Committee

The Compensation Committees of Financial and the Bank, as applicable, review, recommend, and approve compensation for its employees. Each member of the Compensation Committee is an “independent director” under the applicable NASDAQ rules and applicable Securities and Exchange

Commission regulations. For the year ended December 31, 2017,2018, the Compensation Committee of the Bank had two (2) meetings, but because Financial does not have any employees and does not compensate its officers directly, the Compensation Committee of Financial did not meet.

CERTAIN BENEFICIAL OWNERS

As of the Record Date, the following persons were the only shareholders known to the Company to beneficially own more than 5% of Financial’s outstanding Common Stock:

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information as of March 20, 201826, 2019 regarding the number of shares of Common Stock of Financial beneficially owned by (1) each director, (2) each executive officer, and (3) directors and executive officers as a group. The address of each director and executive officer is c/o Bank of the James Financial Group, Inc., 828 Main Street, Lynchburg, VA 24504.

(3)	Includes beneficial ownership of 2,100 shares held by Mr. Alford’s wife.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Executive Officer Compensation

The Compensation Committees of Financial and the Bank are tasked with reviewing officer and employee compensation and employee benefit plans and making recommendations to the respective boards concerning such matters. The Compensation Committee also approves awards under the 2018 Bank of the James Financial Group, Inc. Equity Incentive Plan. Each Compensation Committee’s membership is determined by the board of the respective company that such Compensation Committee serves.

The Compensation Committees review and approve the goals of Financial and the Bank, as applicable, relevant to compensation, evaluate the performance of the President and Chief Executive Officer in light of these goals, and make a recommendation on the President and Chief Executive Officer’s compensation, including equity or other compensation, to the respective full board of directors which determines the appropriate compensation for the following year.

Compensation of senior management is determined by the President and Chief Executive Officer with direction from the Compensation Committee, while staying within the targeted overall compensation budgeted by the Bank.

The compensation of senior management is a mix of i) base salary; ii) retirement, insurance, and health benefits; iii) perquisites and other benefits; iv) commissions on loan and investment sales for certain members of senior management; and v) awards under the 2018 Bank of the James Financial Group, Inc. Equity Incentive Plan ,and vi) for certain members of senior management, participation in a Salary Continuation Agreement. Formerly, members of senior management along with other employees participated in Financial’s 1999 stock option plan, which expired in 2009.

The primary objective of our compensation programs is to provide competitive compensation to attract, retain, and motivate qualified employees who will contribute to the long-term success of Financial.Financial and its subsidiaries. Compensation is designed to be competitive with the Bank’s peers and to enhance long-term value to the Company’s shareholders. In furtherance of this objective, the Compensation Committees regularly evaluate the compensation provided to the Bank’s executive officers to ensure that it remains competitive in relation to the compensation paid to similarly situated executive officers at other financial institutions of comparable size and performance. In addition, Financial endeavors to ensure that the compensation provided to Financial’s and its subsidiaries’ executive officers is internally equitable based upon the skill requirements and responsibilities associated with each executive position. Financial does not believe that the current compensation structure incentivizes any employee to take undue risk.

Although neither Financial nor the Bank has adopted a bonus plan, the board of directors has the discretion to award bonuses to employees based on individual and company performance.

The officers of Financial presently are serving without compensation from Financial. They are, however, compensated by the Bank for services rendered as officers of the Bank. The table below summarizes certain information with respect to compensation paid by the Bank to certain employees of the Bank who performed policy-making duties for Financial for services rendered in all respects for the fiscal year ended December 31, 2017.2018.

Summary Compensation Table—20172018

Stock Option Plan

The 1999 Stock Option Plan, as amended, expired in 2009.

Outstanding Equity Awards at Fiscal Year End

In 2018, the Company adopted the 2018 Bank of the James Financial Group, Inc. Equity Incentive Plan. As of December 31, 2017,2018, the named executive officers have no outstanding equity awards.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table summarizes information concerning Financial’s equity compensation plans at December 31, 2017.2018. All figures have been adjusted to reflect all stock dividends declared by Financial.

Executive Compensation Arrangements

Employment Agreements

None of our employees have employment agreements.

Salary Continuation Agreements

The Bank entered into Salary Continuation Agreements on August 6, 2009 with each of Robert R. Chapman III, President of the Bank; J. Todd Scruggs, Executive Vice President and Chief Financial Officer; and Harry P. Umberger, Executive Vice President and Senior Credit Officer (collectively, the “Named Executive Officers”).

On October 18, 2016, the Bank entered into First Amendments to each of the Salary Continuation Agreements (each as amended, a “First Amended Salary Continuation Agreement”) with each of the Named Executive Officers, to be effective as of October 1, 2016. In connection with Mr. Umberger’s First Amended Salary Continuation Agreement, the Bank and Mr. Umberger also entered into that certain 2016

Salary Continuation Agreement (the “2016 Salary Continuation Agreement”), to be effective as of October 1, 2016. The First Amended Salary Continuation Agreements, and in the case of Mr. Umberger, the 2016 Salary Continuation Agreement, provide each of the Named Executive Officers with increased Supplemental Benefits, as summarized below.

Robert R. Chapman III. Mr. Chapman’s First Amended Salary Continuation Agreement provides for a lump sum payment of $2,315,177 payable within 90 days following Mr. Chapman’s normal retirement date at age 65 or the date of his death if he is employed by the Bank at the time of his death.

If Mr. Chapman’s employment terminates prior to his reaching age 65 other than for cause, death, disability, or change in control, Mr. Chapman shall be paid a lump sum equal to the Early Termination benefit set forth on Schedule A of the First Amended Salary Continuation Agreement for the applicable plan year immediately preceding such termination date. This amount is payable within 90 days following the date on which his employment terminates.

If Mr. Chapman becomes disabled prior to his reaching age 65, he shall receive a lump sum payment equal to the Disability benefit set forth on Schedule A of the First Amended Salary Continuation Agreement for the applicable plan year immediately preceding his disability. This amount shall be paid within 90 days following the date on which Mr. Chapman reaches age 65.

If Mr. Chapman’s employment with the Bank terminates within 24 months following a Change in Control (as defined in the initial Salary Continuation Agreement), Mr. Chapman shall be paid a lump sum equal to the Change in Control benefit set forth on Schedule A of the First Amended Salary Continuation Agreement for the applicable plan year immediately preceding such termination date. This payment shall be made within 90 days of the date on which Mr. Chapman’s employment terminates.

J. Todd Scruggs. Mr. Scruggs’ First Amended Salary Continuation Agreement provides for annual payments of $170,484 payable in equal monthly installments for 15 years beginning within 90 days following Mr. Scruggs’ normal retirement date at age 65 or the date of his death if he is employed by the Bank at the time of his death.

If Mr. Scruggs’ employment terminates prior to his reaching age 65 other than for cause, death, disability, or change in control, Mr. Scruggs shall be paid a lump sum equal to the Early Termination benefit set forth on Schedule A of the First Amended Salary Continuation Agreement for the applicable plan year immediately preceding such termination date. This amount is payable within 90 days following the date on which his employment terminates.

If Mr. Scruggs becomes disabled prior to his reaching age 65, he shall receive a lump sum payment equal to the Disability benefit set forth on Schedule A of the First Amended Salary Continuation Agreement for the applicable plan year immediately preceding his disability. This amount shall be paid within 90 days following the date on which Mr. Scruggs reaches age 65.

If Mr. Scruggs’ employment with the Bank terminates within 24 months following a Change in Control (as defined in the initial Salary Continuation Agreement), Mr. Scruggs shall be paid a lump sum equal to the Change in Control benefit set forth on Schedule A of the First Amended Salary Continuation Agreement for the applicable plan year immediately preceding such termination date. This payment shall be made within 90 days of the date on which Mr. Scruggs’ employment terminates.

Harry P. Umberger. Mr. Umberger’s First Amended Salary Continuation Agreement freezes the amount of the Supplemental Benefits provided under Mr. Umberger’s initial Salary Continuation Agreement. Supplement Benefits are also provided under Mr. Umberger’s 2016 Salary Continuation Agreement.

Mr. Umberger’s 2016 Salary Continuation Agreement provides for a lump sum payment of $886,660 payable within the month following the date of Mr. Umberger’s separation from service after age 65 or the date of his death if he is employed by the Bank at the time of his death. In addition to this payment, Mr. Umberger’s First Amended Salary Continuation Agreement provides for annual payments of $44,085 payable in equal monthly installments for 15 years beginning within 90 days following Mr. Umberger’s normal retirement date at age 65 or the date of his death prior to attaining the age of 65 if he is employed by the Bank at the time of his death.

If Mr. Umberger’s employment terminates prior to his reaching age 65 other than for cause, death, disability, or change in control, Mr. Umberger shall be paid, pursuant to the 2016 Salary Continuation Agreement, a lump sum equal to the Early Termination benefit set forth on Schedule A of the 2016 Salary Continuation Agreement for the applicable plan year immediately preceding such termination date. This amount is payable within the month following the date on which his employment terminates. In addition to this payment, Mr. Umberger’s First Amended Salary Continuation Agreement provides for an annual benefit, payable in equal monthly installments for 15 years, in the amount necessary to fully amortize the accrued benefit amount of $188,340.22 over the15-year period, crediting interest monthly on the unpaid portion of such accrued benefit amount at an annual rate of 6% (the “Accrued Annual Benefit”). Payments on this Accrued Annual Benefit shall begin within 90 days following the date of Mr. Umberger’s early termination.

If Mr. Umberger becomes disabled prior to his reaching age 65, he shall receive, pursuant to the 2016 Salary Continuation Agreement, a lump sum payment equal to the Disability benefit set forth on Schedule A of the 2016 Salary Continuation Agreement for the applicable plan year immediately preceding his disability. This amount shall be paid within the month following the date of Mr. Umberger’s disability. In addition to this payment, Mr. Umberger’s First Amended Salary Continuation Agreement provides for the Accrued Annual Benefit in the event of Mr. Umberger’s disability. Payments on this Accrued Annual Benefit shall begin within 90 days following the date on which Mr. Umberger reaches age 65.

If Mr. Umberger’s employment with the Bank terminates within 24 months following a Change in Control (as defined in the 2016 Salary Continuation Agreement), Mr. Umberger shall be paid, pursuant to the 2016 Salary Continuation Agreement, a lump sum equal to the Change in Control benefit set forth on Schedule A of the 2016 Salary Continuation Agreement for the applicable plan year immediately preceding

such termination date. This payment shall be made within the month following the date on which Mr. Umberger’s employment terminates. In addition to this payment, Mr. Umberger’s First Amended Salary Continuation Agreement provides for the Accrued Annual Benefit. Payments on this Accrued Annual Benefit shall begin within 90 days of the date on which Mr. Umberger’s employment terminates following a Change in Control.

TRANSACTIONS WITH RELATED PARTIES

Loans and Extensions of Credit. Financial maintains written policies and procedures to strictly control all loans to insiders in accordance with Federal law (Regulation O). Insiders include any executive officer, director, or principal shareholder and entities which such persons control. Some of the directors and officers of Financial and the Bank are at present, as in the past, customers of the Bank, and the Bank has

had, and expects to have in the future, banking transactions in the ordinary course of its business with directors, officers, principal shareholders, and their associates, on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with others. These transactions do not involve more than the normal risk of collectability or present other unfavorable features. At December 31, 20172018 and 2016,2017 the total outstanding loans to directors and officers and their related parties, including loans guaranteed by such persons, aggregated $14,592,000$14,213,000 and $15,869,000,$14,592,000, respectively. None of these loans or other extensions of credit are disclosed as nonaccrual, past due, restructured, or potential problem loans.

Other Transactions. The Bank entered into a lease agreement in October 2003 pursuant to which it currently leases approximately 29,623 square feet of office space at 828 Main Street, Lynchburg, Virginia. The property is owned by Jamesview Investments, LLC, a Virginia limited liability company, which is owned by our director, William C. Bryant III. The initial lease term commenced on August 1, 2004 and expired on July 31, 2014, at which time the Bank exercised its first of two five year renewal options. The lease payments totaled approximately $302,000 in each of 20172018 and 2016.2017. The Bank and Jamesview currently are negotiating an amendment to the lease. The amendment is subject to the approval process for related party transactions discussed below.

During January of 2017, Financial issued $5,000,000 in unregistered debt securities (the “2017 Notes”) to accredited investors in a private placement. The 2017 Notes bear interest at the rate of 4% per year with interest payable quarterly in arrears. One member (including immediate family members) of the board of directors purchased an aggregate of approximately $1,000,000 of 2017 Notes. During 2017,2018, this director received interest payments totaling approximately $40,000 and during 2018,2019, this director has received interest payments totaling $10,000. The related party above purchased the 2017 Notes on the same terms as all other purchasers of the 2017 Notes.

Approval Process for OtherRelated Party Transactions. The disinterested members of the board of directors review all related party transactions for potential conflicts of interest. The board of directors must approve all related party transactions and such transactions must be on terms not less favorable to Financial or the Bank than those that prevail in arms-length transactions with third parties. Related party transactions are those involving Financial and the Bank which are required to be disclosed pursuant to SEC RegulationRegulation S-K, Item 404.

There are no legal proceedings to which any director, officer, principal shareholder, or associate is a party that would be material and adverse to the Bank.

AUDIT COMMITTEE REPORT

The Audit Committee has reviewed and discussed the audited consolidated financial statements of Financial with management and with Yount, Hyde & Barbour, P.C. (“YHB”), the independent auditors for the year ended December 31, 2017.2018. Management represented to the Audit Committee that Financial’s financial statements were prepared in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), and the Audit Committee has reviewed and discussed the financial statements with management and the independent auditors. The discussions with YHB also included the matters required to be discussed by PCAOB Auditing Standard No. 1301, as amended.

YHB provided to the Audit Committee the written disclosures and letter required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding the firm’s communications with the Audit Committee concerning independence. YHB also discussed with the Audit Committee the firm’s independence from Financial, the Bank, and their management.

Based on the discussions with management and YHB, the Audit Committee’s review of the representations of management, and the report of YHB, the Audit Committee unanimously recommended to the board of directors that the audited financial statements be included in Financial’s Annual Report on Form10-K filed with the Securities and Exchange Commission for the year ended December 31, 2017.2018.

Submitted by the Audit Committee of Financial’s board of directors.

Augustus A. Petticolas, Jr. - Chair

Lewis C. Addison

James F. Daly

Julie P. Doyle

Lydia K. Langley

Phillip C. Jamerson

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

YHB served as independent auditors for Financial for 20172018 and 2016.2017. Representatives from YHB are expected to be present at the Meeting with the opportunity to make a statement and to answer any questions you may have.

YHB has advised Financial that neither it nor any of its members have any direct financial interest or material indirect financial interest in the securities of Financial or in connection with Financial and/or the Bank, in the capacity of promoter, underwriter, voting trustee, director, officer, or employee.

Fees Paid to Independent Auditors for 20172018 and 20162017 Fiscal Years

For the fiscal years ended December 31, 20172018 and 2016,2017, YHB audited the financial statements included in Financial’s Annual Report on Form10-K, reviewed Financial’s quarterly reports on Form10-Q, and provided certain tax services including tax compliance, tax advice, and tax planning.

The following table presents the aggregate fees paid or to be paid by Financial and the Bank for professional services rendered by YHB for the years 20172018 and 2016:2017:

Audit Related Fees

The fees for audit related services in 2018 and 2017 were $9,025 and 2016 were $8,750 and $8,500 respectively.

All Other Fees

Other than the fees set forth above, YHB did not bill Financial or the Bank for any other fees during either of the past two (2) years.

Audit CommitteePre-Approval Policies and Procedures

It is the policy of the Audit Committee that Financial’s independent auditor may provide only those services that have beenpre-approved by the Audit Committee. Unless a type of service to be provided by the independent auditor has received generalpre-approval, it requires specificpre-approval by the Audit Committee. The term of any generalpre-approval is 12 months from the date ofpre-approval, unless the Audit Committee or a related engagement letter specifically provides for a different period. The Audit Committee will annually review andpre-approve the services that may be provided by the independent auditor without obtaining specificpre-approval. The Audit Committeepre-approved all services provided by YHB in 20172018 and 2016.2017.

Requests or applications to provide services that require specific approval by the Audit Committee must be submitted to the Audit Committee by both the independent auditor and the principal accounting officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the Securities and Exchange Commission’s rules on auditor independence.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based upon a review of beneficial ownership reporting Forms 3 and 4 furnished to Financial under Rule16a-3(e) of the SEC, and upon appropriate written representations, we believe that all reports of initial and subsequent changes in beneficial ownership of Financial’s securities as required pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), were filed with the Commission on a timely basis for 20172018 by all persons who were directors or executive officers of Financial or beneficial owners of more than 10% of our outstanding Common Stock at any time during the year.

Required Vote

Directors are elected by a plurality of the votes cast. Thus, in the election of directors, those receiving the greatest number of votes for election will be elected even if they do not receive a majority of the votes. With regard to the election of directors set forth in Proposal One, the proxy being provided by the board enables a shareholder to vote for the election of the nominees proposed by the board, to withhold authority to vote for the nominees being proposed, or to vote for the election of only certain nominees. Only shares that are voted in favor of a nominee will be counted toward that nominee’s achievement of a plurality. Accordingly, “withhold” votes and brokernon-votes will have no impact on the outcome of this proposal.

PROPOSAL TWO -

RATIFICATION OF INDEPENDENT AUDITORS

The Audit Committee of the board of Financial has recommended and the board has appointed, subject to ratification by the shareholders, Yount, Hyde & Barbour, P.C., Winchester, Virginia (“YHB”) as independent public accountants to audit the books of Financial for the fiscal year ending December 31, 2018.2019.

The board requests that the shareholders ratify Financial’s selection of YHB as independent public accountants to audit the books and accounts of Financial for the fiscal year ending December 31, 2018.2019.

Required Vote

The affirmative vote of a majority of the votes cast, without regard to brokernon-votes and proxies marked as “Abstain,” is required to ratify the selection of Yount, Hyde & Barbour, P.C. as independent auditors for the year ending December 31, 2018.2019. Accordingly, abstentions and brokernon-votes, if any, will have no impact on the outcome of this proposal.

PROPOSAL THREE -

APPROVAL OF 2018 EQUITY INCENTIVE PLAN

The board of directors has adopted, subject to shareholder approval, the Bank of the James Financial Group, Inc. 2018 Equity Incentive Plan (the “Equity Incentive Plan”), to promote the long-term financial success of the Company, and its subsidiaries, including Bank of the James, by providing a means to attract, retain, and reward employees who contribute to the Company’s success and to further align their interests with those of the Company’s shareholders through the ownership of shares of Common Stock of the Company. By approving the Equity Incentive Plan, the Company’s shareholders will give the Company the flexibility it needs to continue to attract and retain highly qualified employees by offering a competitive compensation program linked in part to the performance of the Company’s Common Stock.

The following is a summary of the material features of the Equity Incentive Plan, which is qualified in its entirety by reference to the provisions of the Equity Incentive Plan, attached hereto asAppendix A.

General

Subject to permitted adjustments for certain corporate transactions, the Equity Incentive Plan authorizes the issuance or delivery to participants of up to 250,000 shares of Common Stock pursuant to grants of restricted stock awards, restricted stock unit awards, incentive stock options andnon-qualified stock options (sometimes referred to as an “Award” or collectively as “Awards”). This amount represents approximately 5.7% of the Company’s total issued and outstanding shares of Common Stock. As discussed below, certain limitations apply as to the total number of shares that may be issued for a particular type of Award under the Equity Incentive Plan, as well as the number of shares that may be issued to an individual employee pursuant to certain Awards.

The Equity Incentive Plan is expected to be administered by the members of the Company’s Compensation Committee who are“Non-Employee Directors” and “Outside Directors,” as defined in the Equity Incentive Plan (the “Committee”). The Company’s board of directors may also administer the Equity Incentive Plan. The Committee has the authority and powers set forth in the Equity Incentive Plan, including, but not limited to, selecting the employees who will receive Awards; establishing the terms and conditions relating to each Award; adopting rules and regulations relating to the Equity Incentive Plan; interpreting the Equity Incentive Plan; and administering the Equity Incentive Plan. The Equity Incentive Plan also allows the Committee to delegate all or any portion of its administrative responsibilities and powers to a subcommittee, subject to the provisions of the Equity Incentive Plan and resolutions of the board of directors. The Committee may also delegate to one or more of the Company’s officers, the authority to determine when Awards are to be granted under the Equity Incentive Plan and to select the participants to whom Awards will be granted (subject to the limitations set forth with respect to “insiders” as defined in Section 16 of the Exchange Act, and any limitations set forth in the Equity Incentive Plan).

The Committee may grant an Award under the Equity Incentive Plan as an assumption or substitute for the payment for grants or rights earned or due under any plan of any entity acquired by the Company or its subsidiaries.

Market Value of Underlying Securities of the Equity Incentive Plan

As of March 27, 2018, the closing price per share of Common Stock as reported on the NASDAQ Capital Market was $15.45.

Eligibility

Full-time employees of the Company and its subsidiaries are eligible to receive Awards under the Equity Incentive Plan. While all full-time employees are eligible, we currently contemplate granting Awards to those employees who contribute significantly to the success of Financial and its subsidiaries. As of March 27, 2018, approximately 143 employees of the Company are eligible to receive Awards under the Equity Incentive Plan.

Types of Awards

The Committee may determine the type and terms and conditions of Awards under the Equity Incentive Plan, which shall be set forth in an award agreement delivered to each participant. Each Award shall be subject to conditions established by the Committee and set forth in the recipient’s award agreement, and shall be subject to such vesting conditions and restrictions, if any, as determined by the Committee (see “Vesting of Awards” below). Awards may be granted in a combination of incentive andnon-qualified stock options, restricted stock, or restricted stock units. The shares of Common Stock with respect to which Awards may be made under the Equity Incentive Plan, shall be shares currently authorized but unissued, currently held or, to the extent permitted or required by applicable law or regulation, subsequently acquired by the Company, including shares purchased on the market.

Stock Options.A stock option is the right to purchase shares of Common Stock at a specified price for a specified period of time. Under the Equity Incentive Plan, the exercise price may not be less than the fair market value of a share of Common Stock on the date the stock option is granted (or 110% of fair market value in the case of incentive stock options held by persons owning more than 10% of the total combined voting power of all classes of Company stock (a “10% Shareholder”)). Fair market value for purposes of the Equity Incentive Plan means:

Stock options are either “incentive” stock options or“non-qualified” stock options. Incentive stock options have certain potential tax advantages that are not available tonon-qualified stock options, and must comply with the requirements of Section 422 of the Internal Revenue Code, including without limitation, certain restrictions on the transferability of incentive stock options and the requirement that no incentive stock option may be exercisable after the expiration of ten years after the date it is granted (or 5 years in the case of a 10% Shareholder). Shares of Common Stock purchased upon the exercise of a stock option must be paid for at the time of exercise (i) in cash; (ii) by tendering, either actually or constructively, shares of Common Stock valued at fair market value as of the day of exercise; or (iii) by any combination of these methods. No stock option can be exercised for a fraction of a share.

Restricted Stock.A restricted stock award is a grant of Common Stock to a participant, subject to vesting requirements and other restrictions determined by the Committee, as permitted in the Equity Incentive Plan and set forth in the award agreement. Restricted stock awards may be granted only in whole shares of Common Stock. Unless otherwise determined by the Committee, the recipient of a restricted stock award may exercise any voting rights with respect to shares of Common Stock subject to an unvested

award, and any dividends and distributions with respect to a restricted stock award will be accumulated but not distributed to the participant unless and until the participant vests in such restricted stock award. The Committee, in its discretion, may provide that accumulated dividends bear interest at a rate and subject to such terms as established by the Committee. Any such dividend payments or distributions (and interest thereon, if applicable) may be paid in cash, or in the discretion of the Committee, in shares of Common Stock having a fair market value equal to the amount of such dividends.

Restricted Stock Units.A restricted stock unit award is similar to a restricted stock award except that no share of Common Stock is actually awarded to the recipient on the date of grant. Each restricted stock unit is evidenced by an award agreement that specifies the vesting and/or restriction period, the number of restricted stock units granted, and any other provisions determined by the Committee and permitted under the Equity Incentive Plan. The Committee may also grant restricted stock unit awards with a deferral feature, the payment or settlement of which is deferred until a specified date or on the occurrence of a specified, objectively determinable event that occurs after the vesting date, as set forth in the award agreement. Restricted stock unit awards that have vested (or for which the deferral period has expired in the case of any restricted stock unit with a deferral feature) will be paid or settled by delivering one share of Common Stock to the participant in exchange for each restricted stock unit, or, in the sole discretion of the Committee, in cash or a combination of cash and shares of Common Stock, in lieu of delivering shares of Common Stock exclusively. A participant shall have no voting rights with respect to any restricted stock units, but may, in the discretion of the Committee, be granted dividend equivalents with respect to restricted stock units, as described below.

Dividend Equivalents.The Committee is authorized to grant dividend equivalents with respect to restricted stock units available under the Equity Incentive Plan. Dividend equivalents confer on the participant the right to a credit in the form of additional restricted stock units equal to cash and stock dividends or distributions paid with respect to all or a portion of the number of shares of Company common stock subject to the restricted stock unit award. The Committee, in its discretion, may provide that dividend equivalents credited to a participant may bear interest at a rate and subject to such terms as established by the Committee. The dividend equivalent right (and interest thereon, if applicable) will be paid in cash, or in the discretion of the Committee, in shares of Common Stock having a fair market value equal to the amount of the dividend equivalents (and interest, if applicable). The dividend equivalent subject to a restricted stock unit will be paid or settled at the same time as the share of Common Stock and/or cash is distributed to the participant in payment or settlement of such restricted stock unit, provided, that if the participant forfeits the restricted stock unit, the corresponding dividend equivalent will also be forfeited.

Performance Awards.A performance award is an award of restricted stock or restricted stock units that will vest upon the achievement of one or more performance measures set forth in the Equity Incentive Plan (see “Performance Features” below).

Limitation on Awards under the Equity Incentive Plan

The maximum aggregate number of shares of Common Stock that may be issued under the Equity Incentive Plan pursuant to the exercise of incentive stock options is 50,000 shares. The maximum number of shares of Common Stock with respect to which Awards may be granted in any calendar year to a single employee under the Equity Incentive Plan will not exceed 10,000 shares in the aggregate. If and to the extent the aggregate fair market value (as of the date of grant) of shares of Common Stock with respect to which incentive stock options are exercisable by the holder thereof in any calendar year exceeds $100,000 in the aggregate, the stock options, or portions thereof, which exceed such limit, shall be treated asnon-qualified stock options.

To the extent any shares of Common Stock covered by an Award (including restricted stock awards) are not delivered to a participant because the award is forfeited or cancelled or because a stock option is not exercised, the shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Equity Incentive Plan (that is, they will remain available for grant under the Equity Incentive Plan); provided, however, that shares of Common Stock subject to an Award that are (a) tendered in payment of a stock option, (b) delivered or withheld by the Company to satisfy a tax withholding obligation, or (c) covered by a stock-settled Award that were not issued upon settlement of the Award, shall not again be made available for issuance or delivery under the Equity Incentive Plan.

In the event of a corporate transaction involving the Company’s Common Stock, including, without limitation, any recapitalization, forward or reverse stock split, reorganization, merger, consolidation,spin-off, combination or exchange of shares, stock dividend, or other extraordinary and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), or other relevant change in the capitalization of the Company after any Award is granted, the Committee will, in an equitable manner, adjust any or all of the number and kind of securities deemed to be available for grants of stock options, restricted stock awards and restricted stock units, the number and kind of securities that may be delivered or deliverable in respect of outstanding stock options, restricted stock and restricted stock units, and the exercise price of stock options. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, awarded stock options, restricted stock awards, and restricted stock units. Unless the Committee determines that an adjustment is otherwise in the best interests of the Company or its subsidiaries, the Committee will endeavor to ensure any adjustments will not adversely affect thetax-favored status of any stock options or adversely affect any exemptions under federal and state securities laws.

Prohibition Against Repricing or Cancelling of Stock Options.The Equity Incentive Plan provides that, neither the Committee nor the board of directors is authorized, without Company shareholder approval, to (i) make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of a stock option previously granted, (ii) take any other action treated as a repricing under generally accepted accounting principles, (iii) cancel a stock option in exchange for a stock option with a lower exercise price than the option sought to be cancelled, or (iv) cancel underwater stock options in exchange for cash, other Company securities, or other Awards.

Performance Features

The performance criteria that may be used for Awards of restricted stock or restricted stock units shall be based on the following performance measures: revenue; revenue growth; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; operating income;pre- orafter-tax income; net operating profit after taxes; economic value added (or an equivalent metric); ratio of operating earnings to capital spending; cash flow (before or after dividends); cash-flow per share (before or after dividends); net earnings; net sales; sales growth; share price performance; return on assets or net assets; return on equity; return on capital (including return on total capital or return on invested capital); cash flow return on investment; total shareholder return; improvement in or attainment of expense levels; improvement in or attainment of working capital levels or performance criteria and any other objective goals as may be established by the Committee. The performance criteria that will be used to establish one or more performance goals based on the attainment of specific levels of performance of the Company as a whole, or of any one or more subsidiaries or business or operational units of the Company or a subsidiary, and may be measured as compared to the performance of a group of comparable companies, or published or special index that the Committee, in its sole discretion, deems appropriate, or as the Committee may select. The Committee may adjust performance measures and performance goals in certain circumstances as set forth in the Equity Incentive Plan.

Vesting of Awards

If the vesting of an Award under the Equity Incentive Plan is conditioned on the completion of a specified period of service with the Company or its subsidiaries, without the achievement of performance measures or objectives, and without it being granted in lieu of, or in exchange for, other compensation, then the required period of service for full vesting shall be determined by the Committee and evidenced in an award agreement, subject to:

Subject to the foregoing, the Committee will have the power to accelerate any restrictions or vesting requirements applicable to an Award at any time after the grant of the Award or to accelerate the time period to exercise a stock option, provided that such acceleration is consistent with Section 409A of the Internal Revenue Code. The Committee will also have the authority to remove any or all restrictions on Awards of restricted stock and restricted stock units if it determines that such action is appropriate due to changes in applicable law or circumstances, after such Award is granted.

Effect of Termination of Service on Awards

Stock Options. Unless otherwise determined by the Committee and stated in an award agreement or in an employment agreement approved by the Committee, in the event of a participant’s termination of continuous service for any reason other than disability, death, or for cause, stock options will be exercisable only as to those shares that were immediately exercisable by the participant at the date of such termination and only for three months following such termination or for the remaining term of the stock option, if less. In the event of termination of continuous service for cause (as defined in the Equity Incentive Plan), all stock options that have not been exercised (whether or not vested) will immediately terminate and become unexercisable. Stock options that were immediately exercisable by the participant at the date of death or at the date of termination due to disability, as the case may be, may be exercised for one year following termination of service due to death or disability or for the remaining term of the stock option, if less.

Restricted Stock and Restricted Stock Units. Subject to the terms of the Equity Incentive Plan, the Committee may provide in the award agreement for an Award of restricted stock or restricted stock units, when and whether such Award will vest and/or expire and be forfeited as a result of a participant’s termination of service for any or no reason, or for certain reasons specified by the Committee, which could include for example, death, disability, cause, or retirement after a certain age.

Change in Control

Unless otherwise determined by the Committee and stated in an award agreement, all outstanding stock options then held by a participant will become fully exercisable (subject to the expiration provisions otherwise applicable to the stock option) upon (a) an involuntary termination without cause or (b) a voluntary termination for “good reason,” that occurs at or within twelve months following a change in control of the Company. In that event, such stock options may be exercised for a period of three months following the participant’s involuntary termination or voluntary termination for “good cause,” or for the remaining term of the stock option, if less.

Unless otherwise determined by the Committee and stated in an award agreement, all restricted stock awards and restricted stock units (including, without limitation, any Award of restricted stock or restricted stock units based on the achievement of performance or other goals or criteria) shall be fully earned and vested upon (a) an involuntary termination without cause or (b) a voluntary termination for “good reason,” that occurs at or within twelve months following a change in control of the Company.

For purposes of the Equity Incentive Plan, a change in control occurs when: (a) any one person, or more than one person acting as a group, other than any employee benefit plan sponsored by the Company or the Bank, acquires ownership of stock of the Company or of the Bank that, together with stock held by such person or group, constitutes more than fifty percent of the total fair market value or total voting power of the stock of the Company or the Bank; or (b) any one person, or more than one person acting as a group, other than any employee benefit plan sponsored by the Company or the Bank acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company or the Bank possessing thirty percent or more of the total voting power of the stock of the Company or the Bank; or (c) a majority of members of the board of directors of the Company or the Bank is replaced during any twelve-month period by Company or Bank directors whose appointment or election is not endorsed by a majority of the members of the Company or Bank board of directors before the date of each appointment or election; or (d) any one person, or more than one person acting as a group acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company or the Bank that have a total gross fair market value equal to or more than forty percent of the total gross fair market value of all of the assets of the Company or the Bank immediately before such acquisition or acquisitions. For purposes of subsection (d), gross fair market value means the value of the assets of the Company or the Bank, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. Notwithstanding the foregoing, in the event an Award constitutes deferred compensation under Section 409A of the Internal Revenue Code, then with respect to such Award, a change in control shall be defined as required under that Section of the Internal Revenue Code.

Forfeiture and Clawbacks

In addition to the applicable vesting conditions of an Award, the Committee may specify in an award agreement that rights, payments and benefits with respect to an Award may be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, including termination of employment for cause; breach ofnon-competition,non-solicitation, confidentiality or other restrictive covenants contained in the award agreement or that may otherwise apply to the participant; or other conduct of the participant that is detrimental to the business or reputation of the Company or any subsidiary.

The Company may cancel any Award, require reimbursement of any Award by a participant, and effect any other right of recoupment of equity or other compensation provided under the Equity Incentive Plan in accordance with and subject to (a) any clawback policy adopted by the board of directors from time to time and (b) any provisions of applicable law, which could in certain circumstances require repayment or forfeiture of Awards or any shares of Common Stock or other cash or property received with respect to the Awards, including any value received from a disposition of the shares of Common Stock acquired upon payment or settlement of the Awards.

Amendment and Termination

The board of directors may terminate, amend, or modify the Equity Incentive Plan in any respect without shareholder approval, unless the particular amendment or modification requires shareholder approval under the Internal Revenue Code, the rules and regulations under Section 16 of the Exchange Act, the rules and regulations of the exchange on which the shares of Common Stock are then listed, by any regulatory body having jurisdiction with respect thereto, or pursuant to any other applicable laws, rules, or regulations. No termination, amendment, or modification of the Equity Incentive Plan or any Award, other than in connection with a change in control or capital adjustment pursuant to the Equity Incentive Plan or as required by applicable law, may adversely affect any rights under any Awards previously granted under the Equity Incentive Plan, without the participant’s written consent.

Duration of Plan

The Equity Incentive Plan will become effective upon the approval by the shareholders at this annual meeting. The Equity Incentive Plan will remain in effect as long as any Awards under it are outstanding; provided, however, no incentive stock option may be exercised after the expiration of ten years after its grant date; and provided, further, that no Award may be granted under the Equity Incentive Plan on or after the10-year anniversary of the date that the first Award is granted under the Equity Incentive Plan. The Company may not grant any incentive stock options after the tenth anniversary of the date on which the shareholders approve the Equity Incentive Plan.

Registration with the SEC

The Company intends to file a Registration Statement on FormS-8 relating to the issuance of the shares of Common Stock under the Equity Incentive Plan with the Commission pursuant to the Securities Act of 1933, as amended, as soon as is practicable after approval of the Equity Incentive Plan by the Company’s shareholders.

Banking Regulatory Provision

All Awards will be subject to any condition, limitation, or prohibition under any financial institution regulatory policy or rule to which the Company or any of its subsidiaries is subject.

Federal Income Tax Considerations

The following is a summary of the federal income tax consequences that may arise in conjunction with participation in the Equity Incentive Plan.

Non-Qualified Stock Options.The grant of anon-qualified option will not result in taxable income to the participant. Except as described below, the participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares acquired over the exercise price for those shares, and the Company will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of the shares will be treated as capital gains and losses, with the basis in the shares equal to the fair market value of the shares at the time of exercise.

Incentive Stock Options.The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive stock option will not result in taxable income to the participant provided the participant was, without a break in service, an employee of the Company or a subsidiary during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled, as that term is defined in the Internal Revenue Code).

The excess of the fair market value of the shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the incentive stock option is exercised. For purposes of determining the participant’s alternative minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those shares equal to the fair market value of the shares at the time of exercise.

If the participant does not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within one year after the exercise of the stock option, then, upon disposition of the shares, any amount realized in excess of the exercise price will be taxed as a capital gain. A capital loss will be recognized to the extent that the amount realized is less than the exercise price.

If the foregoing holding period requirements are not met, the participant will generally realize ordinary income at the time of the disposition of the shares, in an amount equal to the lesser of (i) the excess of the fair market value of the shares on the date of exercise over the exercise price, or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price, and the Company will be entitled to a corresponding deduction. If the amount realized exceeds the value of the shares on the date of exercise, any additional amount will be a capital gain. If the amount realized is less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares.

Restricted Stock.A participant who has been granted a restricted stock award will not realize taxable income at the time of grant, provided that the shares of Common Stock subject to the Award are not delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that constitute a “substantial risk of forfeiture” for federal income tax purposes. Upon the later of delivery or vesting of shares subject to an Award, the holder will realize ordinary income in an amount equal to the then fair

market value of those shares and the Company will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of delivery or vesting. Dividends paid to the holder during the restriction period, if so provided, will also be compensation income to the participant and the Company will be entitled to a corresponding deduction for tax purposes. A participant who makes an election under Section 83(b) of the Internal Revenue Code will include the full fair market value of the restricted stock award in taxable income in the year of grant at the grant date fair market value.

Restricted Stock Units.A participant who has been granted a restricted stock unit will not realize taxable income as long as the award remains in the form of a restricted stock unit. If and when a share of Common Stock is issued in settlement of a restricted stock unit, the tax consequences for restricted stock awards (see paragraph above) will be realized. If, in the sole discretion of the Committee, the restricted stock unit is converted to a cash amount and distributed, the participant will recognize income at the time of distribution equal to the cash received. Since no stock is transferred to the participant on the grant date of the restricted stock unit, an election to have the restricted stock unit taxed at the grant date cannot be made since Section 83(b) of the Internal Revenue Code requires a transfer of stock.

Withholding of Taxes.The Company may withhold amounts from participants to satisfy withholding tax requirements. Except as otherwise provided by the Committee, participants may have shares withheld from Awards to satisfy tax withholding requirements.

Change in Control.Any acceleration of the vesting or payment of Awards under the Equity Incentive Plan in the event of a termination of service without cause or for good reason within twelve months following a change in control may cause part or all of the consideration involved to be treated as an “excess parachute payment” under the Internal Revenue Code, which may subject the participant to a 20% excise tax and preclude deduction by the Company.

Tax Advice.The preceding discussion is based on federal tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the federal income tax aspects of the Equity Incentive Plan. A participant may also be subject to state, local, and foreign taxes in connection with the grant of Awards under the Equity Incentive Plan. The foregoing is not legal or tax advice and the Company encourages participants to consult with their individual legal and tax advisors to determine the applicability of the tax rules to the Awards granted to them in their personal circumstances.

Accounting Treatment

Under FASB ASC Topic 718, the Company is required to recognize compensation expense on its income statement over the requisite service period or performance period based on the grant date fair value of stock options and other equity-based compensation (such as restricted stock).

Awards to be Granted

The board of directors has adopted the Equity Incentive Plan. If the Equity Incentive Plan is approved by shareholders, the Committee intends to meet promptly after shareholder approval to determine the specific terms of the Awards, including the allocation of Awards to executive officers and employees. At the present time, no determination has been made as to granting or allocation of any Awards.

Required Vote

The affirmative vote of a majority of the votes cast, without regard to brokernon-votes and proxies marked as “Abstain,” is required to approve the Equity Incentive Plan. Accordingly, abstentions and brokernon-votes, if any, will have no impact on the outcome of this proposal.

PROPOSAL FOUR -

APPROVAL OF 2018 EMPLOYEE STOCK PURCHASE PLAN

The board of directors has adopted, subject to shareholder approval, the Bank of the James Financial Group, Inc. 2018 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). The purpose of the Employee Stock Purchase Plan is to facilitate employee participation in the ownership and economic progress of the Company and its subsidiaries by providing employees with an opportunity to acquire an ownership interest in the Company. In addition, the Employee Stock Purchase Plan will aid the Company in the retention of outstanding individuals upon whose judgment, interest and dedication the successful conduct of the Company’s business largely depends.

The board of directors believes that the Employee Stock Purchase Plan will encourage broader ownership of shares of Common Stock by employees of the Company and its subsidiaries, and thereby provide, an incentive for employees to contribute to the continued profitability and success of the Company. In particular, by approving the Employee Stock Purchase Plan, the shareholders will provide the Company with a convenient means to enable employees of the Company and its subsidiaries who might not otherwise purchase and hold shares of Common Stock to do so, and that the discounted purchase price feature of the Employee Stock Purchase Plan will provide a meaningful inducement to participate. The board also believes that employees’ continuing economic interest, as shareholders, in the performance and success of the Company will enhance their entrepreneurial spirit, which can greatly contribute to the Company’s long-term profitability.

The following is a summary of the more significant features of the Employee Stock Purchase Plan, which is qualified in its entirety by reference to the provisions of the Employee Stock Purchase Plan, attached hereto asAppendix B.

General

The Employee Stock Purchase Plan provides a means for employees of the Company and employees of the Company’s subsidiaries to authorize payroll deductions on a voluntary basis to be used for the periodic purchase of shares of Common Stock. All employees electing to participate in the Employee Stock Purchase Plan will have equal rights and privileges. Under the Employee Stock Purchase Plan, eligible employees will be able to purchase shares of Common Stock at a price (the “Purchase Price”) equal to at least the lesser of 85% (or such greater percentage designated by the Committee) of the fair market value of shares of Common Stock on the last trading day of the applicable offering period or on the first

trading day of the next succeeding offering period. For purposes of the Employee Stock Purchase Plan, the fair market value of shares of Common Stock on a particular date will be the reported “closing price” on the NASDAQ Capital Market on that date if it is a trading day and otherwise, on the prior trading day.

Administration

The board will delegate responsibilities for administering the Employee Stock Purchase Plan to the Committee. The Committee will have the authority to interpret the Employee Stock Purchase Plan and construe its terms, adopt rules and regulations relating to the Employee Stock Purchase Plan and make all determinations under the Employee Stock Purchase Plan. The Employee Stock Purchase Plan provides that each offering period will commence on or about January 1 and July 1 of each year and each offering period will consist of onesix-month period, unless a different period is established by the Committee and announced to eligible employees before the beginning of the applicable offering period; provided, that the Committee may change the duration, frequency, start, and end dates of the offering periods.

The Committee will establish and maintain an account for each participant in the Employee Stock Purchase Plan (each, a “Plan Account”) to which payroll deductions will be credited and amounts debited when applied to purchase shares of Common Stock. The Committee will also establish with the transfer agent for the Company’s Common Stock (the “Transfer Agent”), a separate account for each participant which will be credited with shares of Common Stock that the participant purchases under the Employee Stock Purchase Plan (each, a “Stock Account”).

The Committee will also establish and administer procedures through which eligible employees may enroll in the Employee Stock Purchase Plan.

Eligibility

Any individual who, as of the first day of the applicable enrollment period, has been employed for at least ninety days for at least twenty hours per week by the Company, or of any subsidiary of the Company that has been designated by the board or the Committee as a subsidiary whose employees are eligible to participate in the Employee Stock Purchase Plan (each a “Designated Subsidiary”), is eligible to participate in the Employee Stock Purchase Plan by following the enrollment procedures set forth in the Employee Stock Purchase Plan and as established by the Committee (see “Participation” below); provided that such individual does not directly or indirectly own shares of stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any of the Company’s subsidiaries. The board currently anticipates that the Bank and BOTJ Insurance, LLC will each be a “Designated Subsidiary” for purposes of the Employee Stock Purchase Plan, and that, as of March 27, 2018, approximately 143 employees of the Company and its subsidiaries will be eligible to participate in the Employee Stock Purchase Plan.

Shares Subject to the Employee Stock Purchase Plan

Subject to approval by shareholders, the maximum number of shares of Common Stock that may be purchased under the Employee Stock Purchase Plan will be 250,000 shares, subject to adjustment as described below in “Changes in Capitalization and Similar Changes” beginning on page 39 of this Proxy Statement. Shares of Common Stock purchased under the Employee Stock Purchase Plan will be authorized but unissued (i.e., newly-issued) shares of Common Stock not reserved for any other purpose or shares acquired on the market.

Market Value of Underlying Securities of the Employee Stock Purchase Plan

As of March 27, 2018, the closing price per share of Common Stock as reported on the NASDAQ Capital Market was $15.45.

Participation

An eligible employee will be permitted to enroll for an offering period (i.e., become a participant in the Employee Stock Purchase Plan) by delivering the appropriate written election to participate to the Committee within the period specified by the Committee. Upon enrollment in the Employee Stock Purchase Plan, a participant must elect the rate at which the participant will make payroll contributions for the purchase of shares of Common Stock. Elections must be stated as a percentage of the participant’s compensation on each pay day occurring during the applicable offering period, which percentage must be at least one percent and may not exceed ten percent (or such other maximum percentage as the Committee may establish from time to time prior to the beginning of an offering period); provided that in no event may a participant be allowed to purchase (or hold options that would allow the participant to purchase) shares of Common Stock under the Employee Stock Purchase Plan that (a) would cause the participant to directly or indirectly own shares of Company stock possessing five percent or more of the total combined voting power of all classes of stock of the Company; (b) would allow the participant to purchase more than one thousand five hundred shares of Common Stock during any offering period; or (c) would permit the participant, after the date of grant, to purchase shares of Company stock under all stock purchase plans of the Company and its subsidiaries having a fair market value (determined at the time of grant) of more than $25,000 for each calendar year in which the participant may purchase shares under the Employee Stock Purchase Plan. All employee contributions will be made by means of direct payroll deduction and from taxable compensation. The payroll deduction rate elected by a participant will continue in effect until the participant modifies the rate as described below, withdraws from participating in (or otherwise becomes ineligible to participate in) the Employee Stock Purchase Plan, or terminates his employment with the Company or Designated Subsidiary. A participant may change the rate of payroll deduction only once during an offering period, by submitting a new enrollment form authorizing such change at least fifteen days before the applicable purchase date, and may authorize a change in the rate of payroll deductions for future offering periods by submitting a new enrollment form at least fifteen days before the start of the future offering period for which such change is to first apply.

A participant’s payroll deductions will be credited to the participant’s Plan Account. As of the last day of each offering period, the value of each participant’s Plan Account will be divided by the purchase price established for that offering period. Each participant will be deemed to have purchased the number of whole shares of Common Stock produced by this calculation. If application of the procedures described in the preceding two sentences results in the purchase by all participants during that offering period of an aggregate number of shares greater than the number of shares offered during that offering period, the Committee will make a pro rata allocation of the remaining available shares of Common Stock among participants and any cash remaining in participants’ Plan Accounts will be credited to the next offering period.

As promptly as reasonably practicable after the end of each offering period, the Company will deliver, or cause to be delivered, the shares of Common Stock purchased by a participant during that offering period to the Transfer Agent for deposit into that participant’s Stock Account. No interest will be credited on payroll contributions pending investment in shares of Common Stock. The Transfer Agent will either purchase such shares of Common Stock in the market or directly from the Company as directed by the Committee.

Participants will be entitled to vote the number of whole shares of Common Stock credited to their respective Stock Accounts. A participant’s rights under the Employee Stock Purchase Plan will be nontransferable, except upon death of the participant in which case, the shares of Common Stock and any cash then held in the participant’s Stock Account and/or Plan Account will be transferred to the person or persons designated by the participant as beneficiary or beneficiaries on forms provided by the Committee.

Effect of Termination of Employment on Election to Participate

A participant whose employment with the Company and its Designated Subsidiaries is terminated will be deemed to have withdrawn from participation in the Employee Stock Purchase Plan. Any cash amounts credited to his or her Plan Account for the offering period during which the termination of employment occurs will be released to the participant (or to the participant’s beneficiary, in the event of the participant’s death) within 30 days following the participant’s termination of employment. No shares will be purchased for a participant in any offering period that ends after the participant’s termination of employment.

Changes in Capitalization and Similar Changes

The aggregate number of shares of Common Stock available under the Employee Stock Purchase Plan (as well as any share-based limits under the Employee Stock Purchase Plan) and the respective purchase price, number of shares and other share-based limitations applicable to outstanding or subsequently issued rights to purchase shares of Common Stock under the Employee Stock Purchase Plan, will be appropriately adjusted by the Committee in the event of any dividend or other distribution (whether in the form of cash, Common Stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,split-up,spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, or other change in the Company’s structure affecting the shares of Company stock.

Termination of, or Changes to, the Employee Stock Purchase Plan

The Committee may terminate, suspend or amend the Employee Stock Purchase Plan at any time without further shareholder approval, unless the particular action requires shareholder approval under the rules and regulations under Section 16 of the Exchange Act, the Internal Revenue Code, or the rules and regulations of the exchange on which shares of Common Stock are then listed.

If the Employee Stock Purchase Plan is terminated, the Committee may elect to terminate all outstanding offering periods either immediately or once all of the shares of Common Stock available for such offering period have been purchased, either on the next applicable purchase date (which may be accelerated by the Committee) or upon the expiration of the offering period in accordance with its terms. If the Employee Stock Purchase Plan is terminated effective on a day other than the last day of any offering period, all amounts that have not been used to purchase shares of Common Stock will be returned to participants, without interest, as soon as administratively practicable. No further shares of Common Stock will be offered under the Employee Stock Purchase Plan for any subsequent offering period.

Federal Income Tax Consequences

The following is a summary of the federal income tax consequences that may arise in conjunction with participation in the Employee Stock Purchase Plan.

The Employee Stock Purchase Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. Under such an arrangement, no taxable income will be recognized by a participant, and no deductions will be allowable to the Company, upon either the grant or the exercise of the purchase rights. Taxable income will not be recognized until either there is a sale or other disposition of the shares of Common Stock acquired under the Employee Stock Purchase Plan, or in the event the participant should die while still owning the purchased shares.

If a participant sells or otherwise disposes of the purchased shares of Common Stock within two years after the participant’s entry date into the offering period in which the shares were acquired, or within one year after the actual purchase date of those shares, then the participant will recognize ordinary income in the year of sale or disposition equal to the amount by which the closing selling price of shares of the Common Stock on the purchase date exceeded the Purchase Price paid for those shares, and the Company will be entitled to an income tax deduction, for the taxable year in which such disposition occurs, equal in amount to such excess. The participant also will recognize a capital gain to the extent the amount realized upon the sale of the purchased shares of Common Stock exceeds the sum of (1) the aggregate Purchase Price for those shares; and (2) the ordinary income recognized in connection with his or her acquisition.

If a participant sells or disposes of the purchased shares of the Common Stock more than two years after the participant’s entry date into the offering period in which the shares were acquired and more than one year after the actual Purchase Date of those shares, then the participant will recognize ordinary income in the year of sale or disposition equal to the lesser of (a) the amount by which the closing sales price of the shares of Common Stock on the sale or disposition date exceeded the Purchase Price paid for those shares, or (b) the amount by which the fair market value of the shares of Common Stock exceeds the Purchase Price on the entry date into the offering period. Any additional gain upon the sale or disposition of the purchased Common Stock will be taxed as a long-term capital gain. The Company will not be entitled to an income tax deduction with respect to such disposition.

If a participant still owns the purchased Common Stock at the time of death, then the participant’s estate will recognize ordinary income in the year of death equal to the lesser of (1) the amount by which the closing selling price of the shares of Common Stock on the date of death exceeds the Purchase Price paid for those shares of Common Stock, or (2) the amount by which the fair market value of the shares of Common Stock exceeds the Purchase Price on the entry date into the offering period.

The preceding discussion is based on federal tax laws and regulations presently in effect, which are subject to change, and the discussion does not discuss federal employment taxes, the tax consequences of any participant’s death and does not purport to be a complete description of the federal income tax aspects of the Employee Stock Purchase Plan. A participant may also be subject to state, local, and/or foreign taxes in connection with the participation in and the purchase of shares of Common Stock under the Employee Stock Purchase Plan. . The foregoing is not legal or tax advice and the Company encourages participants to consult with their individual legal and tax advisors to determine the applicability of the tax rules to their participation in and purchase of shares of Common Stock under the Employee Stock Purchase Plan, in their personal circumstances.

For additional details, please see “Securities Authorized for Issuance Under Equity Compensation Plans” on page 20 of this Proxy Statement.

Required Vote

The affirmative vote of a majority of the votes cast, without regard to brokernon-votes and proxies marked as “Abstain,” is required to approve the Employee Stock Purchase plan Accordingly, abstentions and brokernon-votes, if any, will have no impact on the outcome of this proposal.

PROPOSAL FIVE -

ADVISORY(NON-BINDING) VOTE ON EXECUTIVE COMPENSATION

The compensation of our Principal Executive Officer and our two other most highly compensated executive officers of our consolidated entity (“Named Executive Officers”) is described in “PROPOSAL One—ELECTION OF DIRECTORS—Executive Officer Compensation.” Shareholders are urged to read the Executive Officer Compensation section of this Proxy Statement, which discusses our compensation policies and procedures with respect to our Named Executive Officers.

Shareholders will be asked at the Meeting to provide their support with respect to the compensation of our Named Executive Officers by voting on the following advisory,non-binding resolution:

RESOLVED, that the shareholders of Bank of the James Financial Group, Inc. approve the compensation of the Named Executive Officers as disclosed in this Proxy Statement.

This advisory vote, commonly referred to as a“say-on-pay” advisory vote, isnon-binding on the board of directors. Althoughnon-binding, the board of directors and the Compensation Committee value constructive dialogue on executive compensation and other important governance topics with our shareholders and encourage all shareholders to vote their shares on this matter. The board of directors and the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding our executive compensation programs.

Required Vote

The affirmative vote of a majority of the votes cast, without regard to brokernon-votes and proxies marked as “Abstain,” is required to approve the advisory resolution approving the compensation of the Named Executive Officers as set forth in this Proxy Statement. Accordingly, abstentions and brokernon-votes if any, will have no impact on the outcome of this proposal.

COMMUNICATIONS WITH MEMBERS OF THE BOARD

Shareholders may communicate with the board of directors by mailing written communications to the attention of J. Todd Scruggs, Secretary to the board of directors, at the principal office of Financial at 828 Main St.,Street, Lynchburg, VA 24504. All such communications are reviewed by the Secretary to the board and submitted to the board of directors, unless they are deemednon-substantive.

OTHER MATTERS THAT MAY COME BEFORE THE MEETING

The board of directors is not aware of any matters to be presented for action at the Meeting other than as set forth herein. However, if any other matters properly come before the Meeting, or any adjournment or postponement thereof, the person or persons voting the proxies will vote them in accordance with their best judgment.

WHERE YOU CAN FIND MORE INFORMATION INCLUDING OUR ANNUAL REPORT AND FINANCIAL STATEMENTS

A copy of Financial’s Annual Report on Form10-K for the year ended December 31, 20172018 has been furnished to the shareholders. Additional copies of the Message to Shareholders and copies of the Annual Report on Form10-K may be obtained from Financial’s website (www.bankofthejames.bank) or by written request to J. Todd Scruggs, Secretary ofto the board of directors, at 828 Main Street, Lynchburg, VA 24504.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

KEEP THIS PORTION FOR YOUR RECORDS

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DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.    For Withhold For All To withhold authority to vote for any All All Except individual nominee(s), mark “For All Except” and write the number(s) of the The Board of Directors recommends you vote FOR 0 the following: nominee(s) on the line below. 2     0 0 0 1. Election of Directors     Nominees 0000000000 01 Lewis C. Addison 02 John R. Alford, Jr. 03 William C. Bryant III 04 J. Todd Scruggs The Board of Directors recommends you vote FOR proposals 2, 3, 4 and 5. For Against Abstain 2. To ratify the selection by Financial of Yount, Hyde & Barbour, P.C., independent public accountants to audit    0 0 0    the financial statements of Financial for the fiscal year ending on December 31, 2018. 3. Approval of the Bank of the James Financial Group, Inc. 2018 Equity Incentive Plan.    0 0 0 4. Approval of the Bank of the James Financial Group, Inc. 2018 Employee Stock Purchase Plan.    0 0 0 5. Approval, in an advisory,non-binding vote, of the executive compensation described in the Proxy Statement.    0 0 0 NOTE: Such other matters as may properly come before the Meeting or any adjournment or postponement thereof. For address change/comments, mark here.                0 Investor Address Line 1 17 . (see reverse for instructions) Yes No 1 . Investor Address Line 2 . 0 Please indicate if you plan to attend this meeting    0 0 Investor Address Line 3 R1 Investor Address Line 4                Investor Address Line 5 1

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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Annual Report, Notice & Proxy Statement and Message to Shareholders are available atwww.proxyvote.com

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