<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                      ___________________________________

                                   FORM 10-K
                      ___________________________________

             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 1999
                        Commission File Number 0-26314

                         JAMES RIVER BANKSHARES, INC.

                Virginia                      54-1740210
          State of Incorporation      IRS Employer Identification No.

                  1514 Holland Road , Suffolk, Virginia 23434

     Registrant's telephone number, including area code:   (757) 934-8100

       Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $5.00
                                   par value

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes       X       No
        ------        ------

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K. [X]

     The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 1, 2000:  Common Stock - $47,789,940.

     The number of shares outstanding of the registrant's common stock as of
March 1, 2000:  4,609,440.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1999 ("Annual Report") are incorporated by reference in Part
I and Part II of this Form 10-K.  Portions of the definitive Proxy Statement
(the "2000 Proxy Statement") to be used in connection with the 2000 Annual
Meeting of Shareholders are incorporated by reference in Part III of this Form
10-K.
<PAGE>

                               Table of Contents




                                    Part I
Item
----
1.  Business                                                                  1
     I.   Operations of James River's Banking Subsidiaries                    2
          A. Loan Portfolio                                                   3
          B. Asset Quality                                                    5
          C. Non Performing Assets                                            8
          D. Investments                                                      9
          E. Deposits                                                         11
          F. Short Term Borrowings                                            12
          G. Long Term Borrowings                                             12
          H. Average Balances, Interest Income and Average Yields and Rates   13
          I. Rate and Volume Analysis                                         14
          J. Interest Sensitivity Analysis                                    15
     II.  Market Area and Competition                                         17
     III. Supervision and Regulation of James River's Banking Subsidiaries    17
          A. Analysis of Capital                                              18
          B. Liquidity                                                        19
          C. Employees                                                        19
2.  Properties                                                                19
3.  Legal Proceedings                                                         20
4.  Submission of Matters to a Vote of Security Holders                       20

                                    Part II

5.  Market for Registrant's Common Equity and Related
    Shareholder Matters                                                       21
6.  Selected Consolidated Financial Data                                      21
7.  Management's Discussion and Analysis of Financial Condition               21
7a. Quantitative and Qualitative Disclosures About Market Risk                21
8.  Financial Statements and Supplementary Data                               21
9.  Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure                                       21

                                   Part III

10. Directors and Executive Officers of the Registrant                        22
11. Executive Compensation                                                    22
12. Security Ownership of Certain Beneficial Owners and Management            22
13. Certain Relationships and Related Transactions                            22

                                    Part IV

14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K          23
<PAGE>

        Certain information appearing elsewhere in this report contains forward
looking statements that are subject to risks and uncertainties that could cause
the Company's future results to differ materially from those anticipated in
these forward looking statements.  These forward looking statements include, but
are not limited to, statements regarding management's goals to improve
profitability, make strategic acquisitions, and other risks, expectations, or
goals.  Risks and uncertainties that may affect the financial condition and
results of operations of the Company include, but are not limited to, general
economic and business conditions, interest rate trends, competition from banks
and other financial service providers, new financial products and services,
risks inherent in making loans, including repayment risks and changing
collateral value, changing trends in customer profiles, technological changes,
and changes in laws and regulations applicable to James River and its
subsidiaries. Although James River believes that its expectations with respect
to any forward looking statements are based upon reasonable assumptions within
the limits of its knowledge of its business and operations, there can be no
assurance that actual results will not differ materially from any future results
that may be expressed or implied by forward looking statements.

                                    PART I

Item 1. Business

General

        James River Bankshares, Inc. ("James River" or the "Company") is a
Virginia bank holding company that commenced operations June 1, 1995. James
River was capitalized pursuant to a share exchange ("Share Exchange") between
Bank of Suffolk, a Virginia state chartered bank ("BOS"), and James River Bank
("JRB"), also a Virginia state chartered bank. In the Share Exchange,
shareholders of BOS and JRB exchanged their shares of common stock of BOS and
JRB, respectively, for shares of James River Common Stock. BOS and JRB became
wholly owned subsidiaries of James River on May 31, 1995.

        In the first quarter of 1996, James River and its subsidiaries
consummated several significant transactions. First, in two separate
transactions that both closed on March 1, 1996, James River acquired Bank of
Isle of Wight, a Virginia state chartered bank in Smithfield, Virginia ("BIW")
and First Colonial Bank, FSB, a federal savings bank in Hopewell, Virginia
("FCB"). In the aggregate, these two transactions more than doubled James
River's total assets and net loans. JRB also consummated the acquisition of
three branch banking offices on March 23, 1996, one of which is located in the
City of Franklin, Virginia, and two of which are located in Courtland, Virginia,
in Southampton County. JRB assumed aggregate deposit liabilities of
approximately $34 million in connection with the branch acquisitions. In
addition, BOS purchased a branch bank facility in Suffolk and commenced
operations at this branch in June 1996.

        In May 1998, FCB converted from a federal savings bank charter to a
Virginia state chartered bank and changed its name to First Colonial Bank.
Prior to its conversion, FCB sold the assets of its consumer finance company
subsidiaries, Family Finance Corporation and Family Finance of Virginia, Inc.,
to the Company.  Also, in 1998, BIW changed its name to James River
Bank/Colonial ("JRBC") in conjunction with the opening of two branch offices on
the Hampton Roads Peninsula.

        In February 2000, the Company's board of directors approved the
suspension of operations of Mortgage Company of James River, Inc. The decision
to suspend operations was made in view of operating losses sustained in 1999 and
expected losses in 2000. The closing will result in an expected charge of
approximately $105 thousand after taxes to first quarter earnings in 2000.

        In August 1999, James River completed its acquisition of State Bank of
Remington, Inc., a Virginia state charted bank in Remington, Virginia ("SBR").
Shareholders of SBR received 2.9 shares of James River common stock for each
outstanding share of SBR common stock.  SBR had approximately 291,000 shares of
common stock outstanding, which converted into 843,815 whole shares of James
River's common stock.  Also

                                       1
<PAGE>

in 1999, James River purchased Colonial Loans, Inc., a consumer finance company
located in Fredericksburg, Virginia.

        James River now has five operating bank subsidiaries with a total of 27
banking offices that conduct operations along the James River basin from
Hopewell, Virginia to Suffolk, Virginia and in the Piedmont area of Virginia in
southern Fauquier County.


Operations of James River's Banking Subsidiaries

        General. All of the banking subsidiaries provide a wide range of
financial services primarily to individuals and to small and medium-sized
businesses. These services include individual and commercial demand and time
deposits, commercial and consumer loans, traveler's checks, safe deposit
facilities, U.S. Government Savings Bonds, collection items, and official
checks. BOS and JRBC are authorized to provide trust services but do not
currently do so.

        BOS was formed in 1967 and has seven branches in Suffolk, Virginia and
one office in Chesapeake, Virginia, which was opened in October 1998. FCB was
formed in 1972 and commenced operations in 1975. Based in Hopewell, Virginia,
FCB has seven branches located in Hopewell, Petersburg, Colonial Heights, and
the counties of Dinwiddie and Chesterfield. JRB was chartered in 1933. Its main
office is in Waverly, Virginia. It operates a total of six branches in Sussex
and Southhampton Counties and the city of Franklin. JRBC was formed in 1971 in
Smithfield, Virginia. In the fourth quarter of 1998, it opened two additional
offices in Newport News and Grafton, Virginia. SBR was formed in 1913 and has
three branches located in Remington, Bealeton and Catlett, Virginia.

        Credit Policies. James River's banking subsidiaries employ written
policies and procedures to manage credit risk. This process includes formulation
of portfolio management strategy, guidelines for underwriting standards and risk
assessment, procedures for on-going identification and management of credit
deterioration, and regular portfolio reviews to estimate loss exposure and to
ascertain compliance with internal policies.

        A major element of credit risk management is the diversification of
risk. The objective of each subsidiary is to maintain a diverse loan portfolio
to minimize the impact of any single event or set of circumstances.
Concentration parameters are based upon individual risk factors, policy
constraints, economic conditions, collateral, and products. James River's
subsidiaries generally do not make loans outside their market area unless the
borrower has an established relationship with the bank and conducts its
principal business operations within the bank's market area. Consequently, James
River's banking subsidiaries and their borrowers are directly affected by the
economic conditions prevailing in their respective market areas.

                                       2
<PAGE>

        The following table sets forth the composition of the loan portfolio of
James River's banking subsidiaries on a restated consolidated basis (by
percentage) for the five years ended December 31, 1999.

<TABLE>
<CAPTION>

                                             Loan Portfolio by Percentage

                                                                    December 31,
                                      ---------------------------------------------------------------------
                                            1999          1998          1997          1996          1995
                                           -----          ----          ----          ----          ----
          <S>                             <C>           <C>           <C>           <C>           <C>
                                                              (dollars in thousands)
          Commercial                          14.3%         12.4%         13.3%         10.2%         12.4%
          Real estate-commercial              19.5%         18.2%         19.0%          9.1%          8.9%
          Real estate-construction
            and land development               5.9%          8.4%          7.2%          5.9%          3.8%
          Real estate-mortgage                48.6%         50.0%         49.0%         62.1%         62.6%
          Agricultural                         1.1%          0.9%          1.8%          0.8%          0.4%
          Installment                         10.6%         10.1%          9.7%         11.9%         11.9%
                                      ---------------------------------------------------------------------
           Total Loans                       100.0%        100.0%        100.0%        100.0%        100.0%

          Total Loans                      $333,149      $312,571      $296,648      $277,014      $243,247
                                      ---------------------------------------------------------------------
</TABLE>

   James River's service area provides lending opportunities to small
businesses, farmers, and a wide range of consumers.  Most of the small
businesses are either retail or agribusiness companies.  The loan portfolio set
forth above for James River's banking subsidiaries is 74.1% collateralized by
first and second deeds of trust on residential and commercial real estate.  This
heavy collateralization by real estate requires an ascertainment of property
values in the service areas and lending on the appropriate loan-to-value ratios.

   Commercial.  Commercial loans represented 33.8% of James River's total loan
portfolio on December 31, 1999.  Commercial loans are used to purchase
commercial real estate, to purchase capital equipment, to support letters of
credit and to fund inventory purchases.  To support all of the commercial
business credits, borrowers' financials are kept current and are analyzed to
determine repayment through cash flows and annual earnings.  Because most of
these businesses are small, principal owners generally are asked to personally
guarantee the credit.

     Agricultural.  At December 31, 1999, agricultural loans totaled $3.6
million or 1.1% of the loan portfolio.  These were all farm operating loans
including loans secured by farm equipment.  Loans secured by farm equipment have
annual payments and are part of the loan portfolio with maturities of up to five
years.

     Real Estate Construction and Land Development.  Real estate construction
and land development loans amounted to $19.7 million or 5.9% of the loan
portfolio at December 31, 1999.  Most of these loans were made to either
homeowners who were having their own home built or to contractors who were
building a residence under contract.  In addition, the Company provides
financing to contractors for residential real estate construction that is not
pre-sold.

   Real Estate Mortgage.  Real estate mortgage loans amounted to $162.0 million
or 48.6% of the loan portfolio at December 31, 1999.  Of the real estate
mortgages, 86.0% were residential mortgages on one to four family units.  These
loans were either open ended adjustable rate mortgages ("ARMS"), amortized
monthly, predominately on a 20 year amortized basis, or closed end balloon
loans, monthly amortized and based on 15 or 20 year amortization.  Both the ARMs
and the balloons have one, three or five year adjustable rates. $23.0 million
were real estate loans to individuals used for farm purchases and multifamily
residential properties.

   Installment.  On December 31, 1999, $35.3 million or 10.6% of total loans
were consumer and installment loans.  Installment loans include home improvement
loans, automobile loans and personal unsecured loans.

                                       3
<PAGE>

Loan Portfolio

        As described above, the portfolio of James River's banking subsidiaries
is comprised of commercial loans, agricultural loans, real estate loans, and
installment loans. Net loans consist of total loans minus the allowance for loan
losses, unearned discounts, and deferred loan fees. Net loans were $328.9
million at December 31, 1999, 5.40% more than net loans of $312.0 million at
December 31, 1998. The average balance of total loans as a percentage of average
earning assets was 71.5%, 70.2%, 70.2%, 66.5% and 65.6% for 1999, 1998, 1997,
1996 and 1995, respectively. James River's banking subsidiaries had no loans
outstanding to foreign countries or for highly leveraged transactions as of
December 31, 1999, 1998, 1997, 1996, or 1995.

        In the normal course of business, James River's banking subsidiaries
make various commitments and incur certain contingent liabilities which are
disclosed but not reflected in its financial statements. These commitments and
contingent liabilities include commitments to extend credit and standby letters
of credit. At December 31, 1999, commitments for standby letters of credit
totaled $2.0 million and commitments to extend credit were $59.1 million. At
December 31, 1998, commitments for standby letters of credit totaled $3.0
million and commitments to extend credit totaled $71.5 million.

        Interest income on installment, commercial, and real estate mortgage
loans is computed on the principal balance outstanding. Most loans carry an
interest rate tied to the base rate of James River's banking subsidiaries, which
is generally the Wall Street Journal prime rate.

        The following table summarizes the composition of the loan portfolio at
the dates indicated for James River's banking subsidiaries.

<TABLE>
<CAPTION>
                                                      Loan Portfolio

                                                                   December 31,
                                        ------------------------------------------------------------------
                                           1999          1998          1997          1996          1995
                                           ----          ----          ----          ----          ----
                                                              (dollars in thousands)
<S>                                      <C>           <C>            <C>          <C>           <C>
Commercial                               $ 47,736      $ 38,669      $ 39,511      $ 28,348      $ 30,157
Real estate-commercial                     64,816        56,786        56,379        25,206        21,596
Real estate-construction
  and land development                     19,675        26,417        21,290        16,192         9,158
Real estate-mortgage                      162,044       156,372       145,278       172,090       152,395
Agricultural                                3,605         2,848         5,236         2,256         1,102
Installment                                35,273        31,479        28,954        32,922        28,839
                                        ------------------------------------------------------------------
  Total Loans                             333,149       312,571       296,648       277,014       243,247
Less:
  Allowance for loan
    Losses                                  4,788         4,273         3,928         3,769         3,551
  Unearned discount                            11            18            30            73           167
  Deferred loan fees (costs)                 (161)         (129)           50           169           159
                                      --------------------------------------------------------------------
    Net loans receivable                  328,511       308,409       292,640       273,003       239,370
Loans held for sale                           345         3,599           789         1,192         1,483
    Net loans                            $328,856      $312,008      $293,429      $274,195      $240,853
                                         ========      ========      ========      ========      ========
</TABLE>

                                       4
<PAGE>

        Set forth below is information regarding the maturity of loans for James
River's banking subsidiaries at December 31, 1999:

<TABLE>
<CAPTION>
                                      Maturity Schedule of Loans

                                                                              December 31, 1999
                                                   ----------------------------------------------------------------------------
                                                                            Over One
                                                         One Year            through           Over Five            Total
                                                          or Less          Five Years            Years              Loans
                                                          -------          ----------          ---------            -----
                                                                             (Dollars in thousands)
<S>                                                      <C>               <C>                <C>                  <C>
Commercial                                                     $19,158           $ 19,902           $  8,676           $ 47,736
Real estate-commercial                                           5,554             20,988             38,274             64,816
Real estate-construction
  and land development                                          14,152              1,641              3,882             19,675
Real estate-mortgage                                            18,747             42,363            100,934            162,044
Agricultural                                                     2,044              1,280                281              3,605
Installment                                                      7,802             26,999                472             35,273
                                                               -------           --------           --------           --------
  Total                                                        $67,457           $113,173           $152,519           $333,149
                                                               =======           ========           ========           ========
Loans maturing after one year with
  predetermined rates                                                                                                   165,502
Loans maturing after one year with
  variable rates                                                                                                        100,190
                                                                                                                       --------
  Total                                                                                                                $265,692
                                                                                                                       ========
</TABLE>

Asset Quality

        James River's banking subsidiaries attempt to maintain the allowance for
loan losses at a sufficient level to provide for potential losses in the loan
portfolio. The provision for loan losses is determined periodically by senior
management and lending officers based upon consideration of several factors,
including changes in the character and size of the loan portfolio and related
loan loss experience, a review and examination of overall loan quality which
includes the assessment of problem loans, and an analysis of anticipated
economic conditions in the market area. In addition, bank regulatory agencies
that regularly review the loan portfolio as part of their examination process,
internal loan review personnel, and advice from James River's independent
accountants are considered in reviewing and assessing the adequacy of the
allowance for loan losses.

                                       5
<PAGE>

        An analysis of the allowance for loan losses, including charge off
activity is presented below for James River's banking subsidiaries for the
periods indicated.

<TABLE>
<CAPTION>
                                  Allowance for Loan Losses

                                                                          December 31,
                              ------------------------------------------------------------------------------------------------------
                                       1999                1998                1997                 1996                 1995
                                ------------------  ------------------  -------------------  -------------------  ------------------
<S>                             <C>                 <C>                 <C>                  <C>                  <C>
                                                                       (dollars in thousands)
Balance, beginning of
  Period                                $   4,273           $   3,928             $  3,770             $  3,551            $  3,338
                              ------------------------------------------------------------------------------------------------------

Less charge offs:
  Commercial                                   52                  87                  114                   60                  71
  Installment                                 246                 234                  261                  215                  91
  Real Estate                                 134                  21                   70                  173                  64
                              ------------------------------------------------------------------------------------------------------
     Total Charge offs                        432                 342                  445                  448                 226
                              ------------------------------------------------------------------------------------------------------
Plus recoveries:
 Commercial                                     1                  27                   86                   23                  50
  Installment                                  82                  70                   45                   52                  61
  Real estate                                  16                  53                    3                   71                   4
                              ------------------------------------------------------------------------------------------------------
    Total recoveries                           99                 150                  134                  146                 115
                              ------------------------------------------------------------------------------------------------------
Net charge offs                               333                 192                  311                  302                 111
                              ------------------------------------------------------------------------------------------------------
Provision for loan losses                     670                 537                  469                  521                 341
                              ------------------------------------------------------------------------------------------------------
Adjustment to conform
  fiscal year                                   -                   -                    -                    -                 (17)
                              ------------------------------------------------------------------------------------------------------
Adjustment for allowance
  from acquisition                            178                   -                    -                    -                   -
                              ------------------------------------------------------------------------------------------------------
                              ------------------------------------------------------------------------------------------------------

Balance end of period                   $   4,788           $   4,273             $  3,928             $  3,770            $  3,551
                              ------------------------------------------------------------------------------------------------------

Allowance for loan losses
to period end total loans                   1.44%               1.35%                1.32%                1.36%               1.45%

Allowance for loan losses
to nonaccrual loans                      1,071.14            1,095.64               437.90               835.92              476.78

Average total loans                       328,259             307,703              292,406              262,510             226,003

Net charge offs
to average loans                            0.10%               0.06%                0.11%                0.12%               0.05%
</TABLE>

                                       6
<PAGE>

        A breakdown of the allowance for loan losses for James River's banking
subsidiaries at the periods indicated is provided in the following table;
however, management of James River does not believe that the allowance for loan
losses can be fragmented by category with any precision that would be useful to
investors. The breakdown of the allowance for loan losses is based primarily
upon those factors discussed above in computing the allowance for loan losses as
a whole. Because all of these factors are subject to change, the breakdown is
not necessarily indicative of the category of future loan losses.

<TABLE>
<CAPTION>
                                          Allocation of Allowance for Loan Losses in Dollars

                                                             December 31,
                                   ----------------------------------------------------------------
                                      1999         1998         1997          1996          1995
                                      ----         ----         ----          ----          ----
                                                       (dollars in thousands)
<S>                                  <C>          <C>           <C>          <C>           <C>
Commercial                           $1,837       $  762       $1,040        $  862        $  759
Real estate-commercial                  801        1,509        1,191         1,197         1,055
Real estate-construction
  and land development                  252          165          105           104           101
Real estate-mortgage                    635          704          873           927         1,031
Agricultural                            233          234          188            33            40
Installment                           1,030          899          531           647           565
                                   ----------------------------------------------------------------
Total allowance for
  loan losses                        $4,788       $4,273       $3,928        $3,770        $3,551
                                   ----------------------------------------------------------------
</TABLE>

        The following table sets forth the composition of the loan portfolio of
James River's banking subsidiaries on a consolidated basis (by percentage) for
the five years ended December 31, 1999.

<TABLE>
<CAPTION>
                                          Amount of Loans to Gross Loans by Percentages

                                                             December 31,
                                   ---------------------------------------------------------------
                                       1999        1998        1997         1996          1995
                                       ----        ----        ----         ----          ----
<S>                                   <C>          <C>         <C>          <C>           <C>
Commercial                             14.3%       12.4%       13.3%        10.2%         12.4%
Real estate-commercial                 19.5%       18.2%       19.0%         9.1%          8.9%
Real estate-construction
  and land development                  5.9%        8.4%        7.2%         5.9%          3.8%
Real estate-mortgage                   48.6%       50.0%       49.0%        62.1%         62.6%
Agricultural                            1.1%        0.9%        1.8%         0.8%          0.4%
Installment                            10.6%       10.1%        9.7%        11.9%         11.9%
                                   ---------------------------------------------------------------
    Total loans                       100.0%      100.0%      100.0%       100.0%        100.0%
                                   ---------------------------------------------------------------
</TABLE>

                                       7
<PAGE>

        The following table details information concerning nonaccrual,
restructured and past due loans, as well as foreclosed assets for James River's
banking subsidiaries, for the dates indicated.

<TABLE>
<CAPTION>
                                                      Non-performing Assets

                                                                           December 31,
                              ---------------------------------------------------------------------------------------------------
                                       1999                1998                1997                1996                1995
                                       ----                ----                ----                ----                ----
                                                                        (dollars in thousands)
<S>                                  <C>                 <C>                 <C>                 <C>                 <C>
Nonaccrual loans                           $  447              $  390              $  897              $  451              $  745
Foreclosed assets                           1,772               1,640               2,449               2,425               1,868
                              ---------------------------------------------------------------------------------------------------
  Total non-performing
    Assets                                 $2,219              $2,030              $3,346              $2,876              $2,613
                              ---------------------------------------------------------------------------------------------------
Loans past due 90 or
  more days accruing
  Interest                                 $  877              $  521              $  591              $  975              $  915
Non-performing loans
  to total loans, at
  period end                                 0.13%               0.12%               0.30%               0.16%               0.30%
Non-performing loans
  to period end loans
  and foreclosed assets                      0.13%               0.12%               0.30%               0.16%               0.30%
</TABLE>

        As of December 31, 1999, loans 30 days or more delinquent for James
River's banking subsidiaries totaled $6.8 million, which includes those non-
performing loans above that have possible credit problems and cause management
to have concerns about the borrowers' continuing ability to comply with existing
repayment terms. Of these potential problem loans, $5.3 million are secured by
security interests in real estate.

        The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 114, "Accounting by Creditors for Impairment of a Loan," on January 1, 1995.
Under this standard, a loan is considered impaired, based on current information
and events, if it is probable that the Company will be unable to collect the
scheduled payments of principal or interest when due according to the
contractual terms of the loan agreement. Increases and decreases in the
allowance due to changes in the measurement of impaired loans, if applicable,
are included in the provision for loan losses. Loans continue to be classified
as impaired unless they are brought fully current and the collection of
scheduled interest and principal is considered probable. When a loan or portion
of a loan is determined to be uncollectible, the portion deemed uncollectible is
charged against the allowance and subsequent recoveries, if any, are credited to
the allowance.

        The recorded investments in impaired loans requiring an allowance for
loan losses as determined in accordance with SFAS No. 114 were $2,752,000,
$1,408,000 and $2,017,000 at December 31, 1999, 1998 and 1997, respectively. The
impaired loans at December 31, 1999, consisted of $428,000 of commercial,
$820,000 commercial real estate, $1,236,000 real estate mortgage, $145,000 real
estate construction and land development, $120,000 agricultural, and $3,000
personal loans. The impaired loans at December 31, 1998, consisted of $35,000 of
commercial, $78,000 real estate-commercial, $1,151,000 real estate mortgage,
$120,000 agricultural loans, and $24,000 personal loans. The impaired loans at
December 31, 1997, consisted of $227,000 of commercial, $818,000 real estate-
commercial, $386,000 real estate mortgage, and $586,000 agricultural loans. All
of the impaired loans at December 31, 1999, 1998 and 1997, were measured using
the fair value of collateral method. The portion of the allowance for loan
losses allocated to the impaired loan balance was $560,000, $162,000 and
$423,000 at December 31, 1999, 1998 and 1997, respectively.

                                       8
<PAGE>

Investments

        The carrying value of the investment portfolio of James River and its
subsidiaries was $115.7 million at December 31, 1999, compared to $110.8 million
at December 31, 1998.  The average balance of the investment portfolio increased
$10.2 million or 9.5% in 1999 compared to 1998.  The average balance of the
portfolio decreased 5.4%, or $6.1 million, in 1998.

        At December 31, 1999, 1998, and 1997, there was no obligation of any
issuer in the investment portfolio, exclusive of obligations of the U.S.
Government or U.S. agencies and corporations, which in the aggregate exceeded
10% of shareholders' equity.

        The market value of James River and its subsidiaries Held-to-Maturity
securities was 98.7% and 102.7% of carrying value at years ended December 31,
1999 and 1998, respectively.

        The following table summarizes the carrying values of securities for
James River and its subsidiaries for the dates indicated.

<TABLE>
<CAPTION>
                                                 Securities Portfolio

                                                                                           December 31,
                                                                    ---------------------------------------------------------
                                                                              1999                 1998                 1997
                                                                              ----                 ----                 ----
                                                                                        (dollars in thousands)
<S>                                                                 <C>                 <C>                         <C>
U. S. Treasury and other government agencies                                   $ 73,965           $ 72,942           $ 70,288
State and political subdivisions                                                 33,919             30,122             27,367
Other securities                                                                  7,863              7,723              8,163
                                                                     --------------------------------------------------------
    Total Securities                                                           $115,747           $110,787           $105,818
                                                                    ---------------------------------------------------------
</TABLE>

                                       9
<PAGE>

        The following table sets forth the maturity distribution and weighted
average yields of the investment portfolio of James River and it subsidiaries at
December 31, 1999. The weighted average yields are calculated on the basis of
book value of the investments portfolio and on the interest income of
investments adjusted for amortization of premium and accretion of discount.
Yields on tax-exempt investments have been computed on a tax equivalent basis
assuming a federal tax rate of 34%.

<TABLE>
<CAPTION>
                                                     Maturities of Investments

                                                                                         December 31, 1999
                                                                    ----------------------------------------------------------
                                                                                                                  Weighted
                                                                             Book              Market          average yield
                                                                             ----              ------          -------------
                                                                            Value               Value
                                                                            -----               -----
<S>                                                                   <C>                 <C>                <C>
                                                                                        (Dollars in thousands)
U.S. Treasury securities
  One year or less                                                             $  1,250            $  1,254               6.47%
  After one year to five years                                                    2,297               2,318               6.76%
  After five years to ten years                                                       -                   -
  After ten years                                                                     -                   -
                                                                               --------            --------
    Total                                                                         3,547               3,572               6.66%
                                                                               --------            --------
Federal agency securities
  One year or less                                                                5,139               5,044               6.00%
  After one year to five years                                                   41,239              40,244               6.10%
  After five years to ten years                                                  26,454              25,239               6.35%
  After ten years                                                                     -                   -
                                                                               --------            --------
    Total                                                                        72,832              70,273               6.18%
                                                                               --------            --------
State and political subdivisions securities
  One year or less                                                                2,955               2,959               6.90%
  After one year to five years                                                   15,251              15,244               7.11%
  After five years to ten years                                                  15,952              15,359               6.50%
  After ten years                                                                   303                 291               7.68%
                                                                               --------            --------
    Total                                                                        34,461              33,853               6.82%
                                                                               --------            --------
Federal Reserve Bank Stock and other equity stock
  One year or less                                                                    -                   -
  After one year to five years                                                        -                   -
  After five years to ten years                                                       -                   -
  After ten years                                                                 7,617               7,355                   -
                                                                               --------            --------
    Total                                                                         7,617               7,355                   -
                                                                               --------            --------
Other debt securities
  One year or less                                                                    4                   4               6.14%
  After one year to five years                                                      250                 250               6.46%
  After five years to ten years                                                     254                 254               9.36%
  After ten years                                                                     -                   -               6.46%
                                                                               --------            --------
    Total                                                                           508                 508               7.85%
                                                                               --------            --------
  Total securities                                                              118,965             115,561               6.38%
                                                                               --------            --------
  Unrealized gain on securities available-for-sale                               (3,218)                  -
                                                                               --------            --------
  Total securities at period end                                               $115,747            $115,561
                                                                               --------            --------
</TABLE>

                                       10
<PAGE>

Deposits

        James River's banking subsidiaries primarily use deposits to fund their
loan and investment portfolios. Since the end of 1996, as demonstrated below,
James River's banking subsidiaries have continued to experience overall deposit
growth, despite a decrease in interest bearing checking and certificates of
deposit. Average balances in total deposits increased from $415.8 million in
1998 to $426.8 million in 1999, a growth of $11.0 million or 2.6%. For the
comparable period ending December 31, 1998, average total deposits increased
$16.9 million or 4.2%.

        The following table details the average amount of, and the average rate
paid on, the following primary deposit categories for James River's banking
subsidiaries for the periods indicated.

<TABLE>
<CAPTION>
                                                   Average Deposits and Average Rates Paid

                                                                 Years ended December 31,
                                     ---------------------------------------------------------------------------
                                               1999                        1998                     1997
                                     -------------------------      --------------------    --------------------

                                      Average      Average      Average      Average     Average      Average
                                      Balance       Rate        Balance       Rate       Balance        Rate
                                      -------       ----        -------       ----       -------        ----
<S>                                   <C>           <C>           <C>         <C>        <C>            <C>
                                                              (Dollars in thousands)
Interest-bearing deposits:
  Checking                            $ 56,101      2.25%       $ 64,403      2.86%      $ 52,314       2.68%
  Money market savings                  37,878      2.84%         23,787      3.54%        24,089       3.23%
  Regular savings                       57,092      2.73%         55,672      3.21%        57,818       3.28%
  Certificates of deposit:
    $100,000 and over                   36,854      3.94%         37,294      3.92%        32,750       4.67%
    Under $100,000                     182,040      5.46%        183,627      5.83%       184,692       5.68%
                                      --------                  --------                 --------
Total interest-bearing deposits        369,965      4.13%        364,783      4.56%       351,663       4.58%
Non-interest bearing                    56,838                    51,046                   47,237
                                      --------                  --------                 --------
Total deposits                        $426,803      3.58%       $415,829      4.00%      $398,900       4.04%
                                      ========                  ========                 ========
</TABLE>

        The following is a summary of the maturity distribution of certificates
of deposit in amounts of $100,000 or more for James River's banking subsidiaries
as of December 31, 1999

                    Maturities of CDs of $100,000 or More
                             at December 31, 1999

                                       Amount        Percent
                                       ------        -------
                                       (Dollars in thousands)
Three months or less                  $ 7,877          22.6%
Over three months to twelve months     15,487          44.3%
Over twelve months                     11,564          33.1%
                                      -------        -------
  Total                               $34,928         100.0%
                                      =======        =======


        Certificates of deposit in amounts of $100,000 or more at December 31,
1999 and 1998 were $34.9 million and $38.2 million, respectively. The balance at
December 31, 1999, represented 16.8% of total certificates of deposit. The
December 31, 1998 amount represents 16.9% of the total certificates of deposit
balance of $226.5 million at that date.

        James River's banking subsidiaries do not accept brokered deposits, and
all large certificates of deposit are community based.

                                       11
<PAGE>

Short-Term Borrowings

        James River's banking subsidiaries occasionally find it necessary to
purchase federal funds on a short-term basis due to fluctuations in loan and
deposit levels. James River's banking subsidiaries have several arrangements
pursuant to which they may purchase funds. Borrowings of James River's banking
subsidiaries include the purchase and sale of federal funds, and securities sold
under repurchase agreements. Set forth below are short term borrowings for James
River's banking subsidiaries at the periods indicated.

<TABLE>
<CAPTION>
                                                          Short-Term Borrowings

                                                                              Years ended December 31,
                                                                ----------------------------------------------------------------
                                                                       1999                  1998                  1997
                                                                       ----                  ----                  ----
                                                                                    (dollars in thousands)
<S>                                                               <C>                   <C>                    <C>
Average daily amount of short-term borrowings
  outstanding during the period                                    $    4,228             $     953             $     748
Average interest rate on average
  daily short-term borrowings                                           4.22%                 5.60%                 6.28%
Maximum outstanding short-term borrowings
  outstanding at any month end                                          8,483                 1,801                 4,000
Short-term borrowings outstanding at period end                    $    4,561             $     742             $     200
</TABLE>

Long-Term Borrowings

        At December 31, 1999, the Company had borrowings from the Federal Home
Loan Bank system totaling $11 million at interest rates ranging from 4.95% to
5.36%. The borrowings mature between September 29, 2004 and August 7, 2009. The
borrowings are subject to early conversion options by the FHLB and early
termination options by the Company beginning in 2000 for $6 million of the
borrowings and in 2004 for the remaining $5 million. The FHLB has a blanket lien
on real estate loans as collateral on these borrowings. Interest only is payable
on a quarterly basis until maturity.

                                       12
<PAGE>

The following table illustrates average balances of interest-earning assets and
interest-bearing liabilities for James River and its subsidiaries for the period
indicated, showing the average distribution of assets, liabilities,
shareholders' equity, and the related income, expense, and corresponding
weighted average yields and costs.  The average balances used for the purposes
of these tables and other statistical disclosures were calculated by using the
daily average balances

<TABLE>
<CAPTION>
                                 Average Balances, Interest Income and Expenses, and Average Yields and Rates

                                                                        Years Ended December 31,
                                    ------------------------------------------------------------------------------------------------
                                              1999                                1998                            1997
                                    ------------------------------    -----------------------------   ------------------------------
                                               Interest                          Interest                       Interest
                                     Average   Income/   Average      Average    Income/   Average    Average   Income/    Average
                                     Balance   Expense  Yield/rate    Balance    Expense  Yield/rate  Balance   Expense   Yield/rate
                                     -------   -------  ----------    -------    -------  ----------  -------   -------    ---------
<S>                             <C>           <C>       <C>         <C>        <C>       <C>        <C>         <C>       <C>
Assets:
Interest bearing assets:
  Securities:
    U.S. Treasury                   $  7,469    $   481     6.44%     $ 14,608    $   907   6.21%     $ 18,568    $ 1,156     6.23%
    Federal agency                    69,856      4,374     6.26%       56,323      3,563   6.33%       51,379      3,219     6.27%
    State and political               32,998      2,347     7.11%       28,927      2,104   7.27%       26,041      1,990     7.64%
     subdivisions
    Federal reserve stock              2,803        189     6.74%        2,211        150   6.78%        1,879        131     6.97%
    Other securities                   4,848        271     5.59%        5,702        347   6.09%       15,999      1,062     6.64%
                                    --------    -------               --------    -------             --------    -------
        Total Securities             117,974      7,662     6.49%      107,771      7,071   6.56%      113,866      7,558     6.64%
                                    --------    -------               --------    -------             --------    -------
  Loans:
    Commercial                        85,998      7,270     8.45%       74,869      6,615   8.84%       70,774      6,418     9.07%
    Real estate-construction          18,790      1,704     9.07%       21,203      1,796   8.47%       18,934      1,822     9.62%
    Real estate-mortgage             175,774     14,554     8.28%      171,223     14,896   8.70%      165,360     14,345     8.68%
    Installment                       47,697      5,105    10.70%       40,407      4,378  10.83%       37,338      4,046    10.84%
                                    --------    -------               --------    -------             --------    -------
        Total Loans                  328,259     28,633     8.72%      307,702     27,685   9.00%      292,406     26,631     9.11%
                                    --------    -------               --------    -------             --------    -------
  Interest bearing deposits in
    other banks                        5,108        282     5.52%        9,669        553   5.72%        2,161        163     7.54%
  Federal funds sold                   7,914        369     4.66%       13,054        720   5.52%        8,351        475     5.69%
                                    --------    -------               --------    -------             --------    -------
      Total money market              13,022        651     5.00%       22,723      1,273   5.60%       10,512        638     6.07%
       investments                  --------    -------               --------    -------             --------    -------
        Total interest-earning
         assets/total interest
         income                      459,255     36,946     8.04%      438,196     36,029   8.22%      416,784     34,827     8.36%
                                    --------    -------               --------    -------             --------    -------
Non-interest earning assets:
  Cash and due from banks             14,026                            15,334                          14,937
  Other assets                        10,998                            11,436                          11,785
  Less:  Allowance for loan losses    (4,532)                           (4,088)                         (3,907)
  Fixed assets                        11,422                            10,481                           9,662
                                    --------                          --------                        --------
      Total non-interest              31,914                            33,163                          32,477
       earning assets               --------                          --------                        --------
        Total Assets                $491,169                          $471,359                        $449,261
                                    ========                          ========                        ========
Liabilities and shareholders'
 equity:
Interest bearing liabilities:
  Interest bearing deposits:
    Checking                        $ 56,101    $ 1,261     2.25%     $ 64,403    $ 1,841   2.86%     $ 52,314    $ 1,402     2.68%
    Money market savings              37,878      1,074     2.84%       23,787        842   3.54%       24,089        779     3.23%
    Regular savings                   57,092      1,560     2.73%       55,672      1,788   3.21%       57,818      1,899     3.28%
    Certificates of deposit:
      $100,000 and over               36,854      1,453     3.94%       37,294      1,461   3.92%       32,750      1,530     4.67%
      Under $100,000                 182,040      9,935     5.46%      183,627     10,702   5.83%      184,692     10,486     5.68%
                                    --------    -------               --------    -------             --------    -------
        Total interest               369,965     15,283     4.13%      364,783     16,634   4.56%      351,663     16,096     4.58%
         bearing deposits
  Federal funds purchased & other      9,258        466     5.03%          952         54   5.67%          748         47     6.28%
                                    --------    -------               --------    -------             --------    -------
    Total interest bearing
        liabilities/total
        interest expense             379,223     15,749     4.15%      365,735     16,688   4.56%      352,411     16,143     4.58%
                                    --------    -------               --------    -------             --------    -------
Non-interest bearing liabilities:
  Demand deposits                     56,838                            51,046                          47,237
  Other liabilities                    3,993                             4,688                           3,721
                                    --------                          --------                        --------
    Total non-interest liabilities    60,831                            55,734                          50,958
                                    --------                          --------                        --------
        Total liabilities            440,054                           421,469                         403,369
Shareholders' equity                  51,115                            49,890                          45,892
                                    --------                          --------                        --------
        Total Liabilities and
          Shareholders' equity      $491,169                          $471,359                        $449,261
                                    ========                          ========                        ========
Interest spread                                             3.89%                           3.66%                             3.78%
Net interest income/net
  interest margin                               $21,197     4.62%                 $19,341   4.41%                 $18,684     4.48%
                                                =======                           =======                         =======
</TABLE>

(1) Tax equivalent adjustments (using 34% federal income tax rates) have been
    made in calculating the yields on tax-free loans and investments.
(2) For the purposes of these computations, non-accruing loans are included in
    the daily average loan amounts outstanding.
(3) Daily average balances are calculated using the aggregate daily average
    balances on a monthly basis.
(4) The yield/rate of the investment securities is computed using the amortized
    cost basis.

                                       13
<PAGE>

        The following table describes the impact on the interest income of James
River and its subsidiaries resulting from changes in average balances and
average rates for the periods indicated. The change in interest due to both
volume and rate has been allocated to volume and rate changes in proportion to
the relationship of the absolute dollar amounts of the change in each.

<TABLE>
<CAPTION>
                                            Rate and Volume Analysis

                                                               Years ended December 31,
                                     --------------------------------------------------------------------------
                                              1999 compared to 1998                 1998 compared to 1997
                                     ------------------------------------   -----------------------------------
                                                  Change Due To:                        Change Due To:
                                                 ---------------                       ---------------
                                          Increase                               Increase
                                         (Decrease)   Rate     Volume           (Decrease)   Rate     Volume
                                         ----------   ----     ------           ----------   ----     ------
<S>                                      <C>        <C>       <C>               <C>         <C>      <C>
Interest income:
Securities:
    U.S. Treasury                         $  (426)  $    35    $ (461)             $ (249)   $  (3)   $ (246)
    Federal agency                            811       (36)      847                 344       32       312
    State and political
      subdivisions                            243       (45)      288                 114      (88)      202
    Federal Reserve stock                      39        (1)       40                  19       (3)       22
    Other equity securities                   (76)      (27)      (49)               (715)     (82)     (633)
                                          -------   -------    ------              ------    -----    ------
      Total Securities                        591       (74)      665                (487)    (144)     (343)
                                          -------   -------    ------              ------    -----    ------

Loans:
  Commercial                                  655      (268)      923                 197     (157)      354
  Real estate-construction                    (92)      150      (242)                (26)    (244)      218
  Real estate-mortgage                       (342)     (761)      419                 551       41       510
  Installment                                 727       (53)      780                 332       (1)      333
                                          -------   -------    ------              ------    -----    ------
    Total Loans                               948      (932)    1,880               1,054     (361)    1,415
                                          -------   -------    ------              ------    -----    ------
Interest bearing deposits
  in other banks                             (271)      (19)     (252)                390      (29)      419
Federal funds sold                           (351)      (99)     (252)                245      (14)      259
                                          -------   -------    ------              ------    -----    ------
  Total money market
    investments                              (622)     (118)     (504)                635      (43)      678
                                          -------   -------    ------              ------    -----    ------

  Total interest income                       917    (1,124)    2,041               1,202     (548)    1,750
                                          -------   -------    ------              ------    -----    ------

Interest expense:
  Interest bearing deposits:
    Checking                                 (580)     (362)     (218)                439       98       341
    Money market savings                      232      (117)      349                  63       73       (10)
    Regular savings                          (228)     (275)       47                (111)     (41)      (70)
    Certificates of deposit:
      $100,000 and over                        (8)        9       (17)                (69)    (491)      422
      Under $100,000                         (767)     (675)      (92)                216      276       (60)
                                          -------   -------    ------              ------    -----    ------
        Total interest bearing
          deposits                         (1,351)   (1,420)       69                 538      (85)      623
                                          -------   -------    ------              ------    -----    ------

Federal funds purchased                       412        (5)      417                   7       (4)       11
                                          -------   -------    ------              ------    -----    ------
Total interest expense                       (939)   (1,425)      486                 545      (89)      634
                                          -------   -------    ------              ------    -----    ------
Net interest income                       $ 1,856   $   301    $1,555              $  657    $(459)   $1,162
                                          =======   =======    ======              ======    =====    ======
</TABLE>

                                       14
<PAGE>

Interest Sensitivity

        An important element of both earnings performance and liquidity is
management of the interest sensitivity gap. The interest sensitivity gap is the
difference between interest-sensitive assets and interest-sensitive liabilities
in a specific time interval. The gap can be managed by repricing assets or
liabilities, by selling investments held for sale, by replacing an asset or
liability at maturity, or by adjusting the interest rate during the life of an
asset or liability. Matching the amounts of assets and liabilities repricing in
the same time interval helps to hedge the interest rate risk and minimize the
impact on net interest income in periods of rising or falling interest rates.

        James River's banking subsidiaries evaluate interest sensitivity risk
and then formulate guidelines regarding asset generation and pricing, funding
sources and pricing, and off-balance sheet commitments in order to decrease
sensitivity risk. These guidelines are based upon management's outlook regarding
future interest rate movements, the state of the regional and national economy,
and other financial and business risk factors.

        On December 31, 1999, James River and it subsidiaries had $84.3 million
more in liabilities than assets that repriced within three months or less and
was, therefore, in a liability-sensitive position. Positive gaps can affect
earnings adversely in a period of falling rates, while negative gaps can
adversely impact earnings in a period of rising rates. In either scenario,
certain repricing decisions are within management's discretion and can influence
actual results. To reduce the impact of shifts in prevailing interest rates,
$171.6 million of the loan portfolio of James River's banking subsidiaries at
December 31, 1999, had a repricing frequency of less than one year. Moreover, as
of December 31, 1999, James River and its banking subsidiaries collectively held
$102.0 million in investments held as "Available for Sale" which could be sold
quickly to meet any special funding needs.

        In addition, the Company measures the effects of changes in interest
rates on the economic value of equity, net interest income, and net income. The
Company's analysis measures hypothetical interest rate changes in a variety of
scenarios. A present value computation is used in determining the effect of the
hypothetical interest rate changes on the fair value of interest sensitive
assets and liabilities. Computations of prospective effects of these
hypothetical interest rate changes are based on many assumptions, including
relative levels of market interest rates, loan prepayments, and deposit decay.
The results of the analyses should not be relied upon as indicative of actual
results. The computations do not contemplate actions that could be undertaken by
management in response to changes in interest rates. In addition, certain
shortcomings, which could affect the actual values of interest sensitive assets
and liabilities, are inherent in this method of analysis. Given these and other
limitations of the analysis, if interest rates increased or decreased 200 basis
points instantaneously, net interest income would decrease by 5.2% and increase
by 4.5%, respectively. The above analysis uses standard present value
methodology and makes assumptions regarding balance sheet growth and mix, market
interest rate levels, and pricing spreads based on instrument type.

                                       15
<PAGE>

        The following table illustrates the interest sensitivity gap position of
James River and its subsidiaries as of December 31, 1999. This table presents a
position that existed at one particular day, that changes continually, and that
is not necessarily indicative of James River's position at any other time.

<TABLE>
<CAPTION>
                                       Interest Sensitivity Analysis

                                                                     December 31, 1999
                                                                Maturity or Repricing In:
                                              ----------------------------------------------------------------
                                                  3 Months        4-12              1-5           Over
                                                  or Less         Months           Years         5 Years
                                                  -------         ------           -----         -------
                                                                   (Dollars in thousands)
<S>                                              <C>              <C>              <C>           <C>
Interest-sensitive assets:
  Loans                                            $110,732       $  60,904        $ 86,821       $ 75,187
  Securities                                            936           6,635          49,029         59,147
  Federal Funds sold and other                        3,450               -               -              -
                                                   --------       ---------        --------       --------
    Total interest-sensitive assets                $115,118       $  67,539        $135,850       $134,334
                                                   ========       =========        ========       ========
  Cumulative interest-sensitive assets             $115,118       $ 182,657        $318,507       $452,841
                                                   ========       =========        ========       ========

Interest-sensitive liabilities:
  NOW accounts                                     $ 71,549       $       -        $      -       $      -
  Regular savings                                    54,909               -               -              -
  Certificates of deposit                            48,998          88,086          70,877            495
  Money market savings                               19,393               -               -              -
  Short-term borrowings                               4,561               -               -              -
  Long-term borrowings                                    -           6,000           5,000              -
                                                   --------       ---------        --------       --------
    Total interest-sensitive liabilities           $199,410       $  94,086        $ 75,877       $    495
                                                   ========       =========        ========       ========
  Cumulative interest-sensitive liabilities        $199,410       $ 293,496        $369,373       $369,868
                                                   ========       =========        ========       ========
  Period gap                                       $(84,292)      $ (26,547)       $ 59,973       $133,839
                                                   ========       =========        ========       ========
  Cumulative gap                                   $(84,292)      $(110,839)       $(50,866)      $ 82,973
                                                   ========       =========        ========       ========
  Ratio of cumulative interest-sensitive
    assets to interest-sensitive
    liabilities                                       57.73%          62.23%          86.23%        122.43%
  Ratio of cumulative gap to total assets             (0.17)          (0.23)          (0.10)          0.17
</TABLE>

Return on Equity and Assets

        The following table summarizes ratios for James River and its
subsidiaries considered to be significant indicators of James River's
profitability and financial condition during the periods indicated:

<TABLE>
<CAPTION>
                                     Return on Equity and Assets

                                                                        Years ended December 31,
                                                       ----------------------------------------------------------
                                                              1999                1998                1997
                                                              ----                ----                ----

<S>                                                          <C>                 <C>                 <C>
Return on average assets                                       0.88%               0.99%               0.97%
Return on average equity                                       8.42%               9.33%               9.51%
Dividend payout ratio                                         49.13%              38.47%              36.77%
Average equity to average asset ratio                         10.41%              10.58%              10.22%
</TABLE>

                                       16
<PAGE>

Market Area and Competition

        James River has five operating bank subsidiaries with a total of 27
banking offices that conduct operations from the Tidewater region of
Southeastern Virginia to the tri-city areas of Hopewell, Petersburg and Colonial
Heights in South-central Virginia and in the Piedmont area of Virginia in
Southern Fauquier County. All of James River's subsidiaries operate in highly
competitive environments, competing for deposits and loans with other financial
institutions, many of which possess greater financial resources than those
available to James River's subsidiaries. Certain of these institutions have
higher lending limits than James River's subsidiaries and may provide various
services for their customers which James River's subsidiaries do not offer
directly to their customers. In addition, there can be no assurance that other
financial institutions, with substantially greater resources than James River's
subsidiaries, will not establish operations in their respective service areas.

Supervision and Regulation of James River's Banking Subsidiaries

        James River's subsidiaries are subject to state and federal banking laws
and regulations which impose specific requirements or restrictions and provide
for general regulatory oversight with respect to virtually all aspects of their
operations. Any change in applicable laws or regulations may have a material
adverse effect on the business and prospects of James River.

        All five of James River's banking subsidiaries are state chartered banks
and members of the Federal Reserve System. As such, all are subject to
supervision, examination and regulation by the Virginia Bureau of Financial
Institutions and the Federal Reserve. With the exception of FCB, the banking
subsidiaries' deposits are insured by the Bank Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation ("FDIC"). FCB's deposits continue to be
insured by the Savings Association Insurance Fund ("SAIF") following its
conversion from a federal savings bank to a Virginia state bank.

        Federal and state banking laws and regulations govern all areas of the
operations of the banking subsidiaries, including maintenance of cash reserves,
loans, mortgages, maintenance of minimum capital, payment of dividends, and
establishment of branch offices. Federal and state bank regulatory agencies also
have the general authority to eliminate dividends paid by insured banks if such
payment is deemed to constitute an unsafe or unsound practice. The Federal
Reserve has authority to impose penalties, initiate civil administrative
actions, and take other steps to prevent the bank subsidiaries from engaging in
unsafe or unsound practices. In this regard, the Federal Reserve has adopted
capital adequacy requirements applicable to its member banks.

Supervision and Regulation of James River

        General. As a bank holding company, James River is subject to state and
federal banking and bank holding company laws and regulations which impose
specific requirements or restrictions and provide for general regulatory
oversight with respect to virtually all aspects of its operations.

        Bank Holding Companies. As a bank holding company registered under the
Bank Holding Company Act ("BHC Act"), James River is subject to regulation by
the Federal Reserve. The Federal Reserve has jurisdiction under the BHC Act to
approve any bank or non-bank acquisition, merger or consolidation proposed by a
bank holding company.

        The Federal Reserve may require a bank holding company to serve as a
source of financial strength to its subsidiary depository institutions and to
commit resources to support such institutions in circumstances where it might
not do so absent such policy. In addition, the "cross-guarantee" provisions of
the federal law require insured depository institutions under common control to
reimburse the FDIC for any loss suffered or reasonably anticipated by either the
SAIF or the BIF as a result of the default of a commonly controlled insured
depository institution or for any assistance provided by the FDIC to a commonly
controlled insured depository
                                       17
<PAGE>

institution in danger of default. The FDIC's claim for damages is superior to
claims of shareholders of the insured depository institution or its holding
company but is subordinate to claims of depositors, secured creditors and
holders of subordinated debt (other than affiliates) of the commonly controlled
insured depository institutions. James River also is registered under the bank
holding company laws of Virginia. Accordingly, James River and its subsidiaries
are subject to regulation and supervision by the BIF.

        Capital Requirements. The Federal Reserve, the Office of the Comptroller
of the Currency and the FDIC have issued substantially similar risk-based and
leverage capital guidelines applicable to United States banking organizations.
In addition, those regulatory agencies may from time to time require that a
banking organization maintain capital above the minimum levels because of its
financial condition or actual or anticipated growth. Under the risk-based
capital requirements of these federal bank regulatory agencies, James River and
its subsidiaries are required to maintain a minimum ratio of total capital to
risk-weighted assets of at least 8%. At least half of the total capital is
required to be "Tier 1 capital," which consists principally of common and
certain qualifying preferred shareholders' equity, less certain intangible
assets and other adjustments. The remainder, "Tier 2 capital," consists of a
limited amount of subordinated and other qualifying debt (including certain
hybrid capital instruments) and a limited amount of the general loan loss
allowance. The Tier 1 and total capital to risk-weighted assets ratios of James
River as of December 31, 1999 were 15.7% and 17.0%, respectively, exceeding the
minimums required.

        In addition, each of the federal regulatory agencies has established a
minimum leverage capital ratio (Tier 1 capital to average tangible assets).
These guidelines provide for a minimum ratio of 3% for banks and bank holding
companies that meet certain specified criteria, including that they have the
highest regulatory examination rating and are not contemplating significant
growth or expansion.  All other institutions are expected to maintain a leverage
ratio of at least 100 to 200 basis points above the minimum.  The leverage ratio
of James River as of December 31, 1999, was 10.3%.  The guidelines also provide
that banking organizations experiencing internal growth or making acquisitions
will be expected to maintain strong capital positions substantially above the
minimum supervisory levels, without significant reliance on intangible assets.

        The following table sets forth in detail the various capital ratios of
James River and its subsidiaries on a consolidated basis at the dates indicated.

<TABLE>
<CAPTION>
                                                Analysis of Capital

                                                                               December 31,
                                                      --------------------------------------------------------------
                                                              1999                 1998                 1997
                                                              ----                 ----                 ----
                                                                          (Dollars in thousands)
<S>                                                           <C>                  <C>                  <C>
Tier 1 Capital:
  Common stock                                                   $ 23,066             $ 22,827             $ 22,583
  Additional paid capital                                           4,338                4,096                3,789
  Retained earnings                                                25,718               23,531               20,667
  Less:  Unrealized loss on equity securities                        (235)                (221)                (110)
  Less:  Goodwill                                                  (2,324)              (2,236)              (2,504)
    Total Tier 1 capital                                         $ 50,563             $ 47,997             $ 44,425
                                                                 ========             ========             ========
Tier 2 Capital:
  Allowance for loan losses                                         4,028                3,787                3,622
  Allowable long-term debt                                              -                    -                    -
                                                                 --------             --------             --------
    Total Tier 2 capital                                         $  4,028             $  3,787             $  3,622
                                                                 ========             ========             ========

Risk-weighted assets                                             $321,451             $302,440             $290,497
Capital Ratios:
  Tier 1 risk-based capital ratio                                   15.73%               15.87%               15.29%
  Total risk-based capital ratio                                    16.98%               17.12%               16.54%
  Tier 1 capital to average adjusted
    total assets                                                    10.31%                9.96%                9.94%
</TABLE>

                                       18
<PAGE>

        Deposit Insurance. The deposits of the Company's banking subsidiaries
are insured up to $100,000 per insured depositor (as defined by law and
regulation) by the FDIC through the SAIF and the BIF. The SAIF and the BIF are
administered and managed by the FDIC. As insurer, the FDIC is authorized to
conduct examinations of and to require reporting by SAIF and BIF-insured
institutions. FIRREA also authorizes the FDIC to prohibit any SAIF and BIF-
insured institution from engaging in any activity that the FDIC determines by
regulation or order to pose a serious threat to the SAIF and BIF.

        Section 38 of the Federal Deposit Insurance Act, as amended by the
Federal Deposit Insurance Corporation Improvement Act ("FDICIA"), requires that
the federal banking agencies establish five capital levels for insured
depository institutions - "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and, "critically
undercapitalized" - and requires or permits such agencies to take certain
supervisory actions as an insured institution's capital level falls. The Company
has been notified by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") that it is classified as a "well capitalized"
institution for this purpose.

        Governmental Monetary Policies and Economic Controls. James River and
its banking subsidiaries are affected by monetary policies of regulatory
authorities, including the Federal Reserve, which regulates the national money
supply in order to mitigate recessionary and inflationary pressures. Among the
techniques available to the Federal Reserve are engaging in open market
transactions in United States Government securities, changing the discount rate
on bank borrowings, and changing reserve requirements against bank deposits.
These techniques are used in varying combinations to influence the overall
growth of bank loans, investments and deposits. Their use may also affect
interest rates charged on loans or paid on deposits. The effect of governmental
policies on the earnings of James River cannot be predicted.

Liquidity

        Liquidity represents an institution's ability to meet present and future
financial obligations through either the sale or maturity of existing assets or
the acquisition of additional funds through liability management.  Liquid assets
include cash and due from banks, interest-bearing deposits with banks, federal
funds sold, securities available for sale, and investments and loans maturing
within one year.  As a result of the Company's management of liquid assets and
the ability to generate liquidity through liability funding, management believes
that the Company maintains overall liquidity sufficient to satisfy its
depositors' requirements and to meet customers' credit needs.

        At December 31, 1999, cash, interest-bearing deposits with banks,
securities classified as available for sale, and federal funds sold were 26.9%
of total earning assets, compared to 30.1% at December 31, 1998.

Employees

        At December 31, 1999, James River and its subsidiaries had the
equivalent of 266 full time employees. None of the Company's employees are
represented by any collective bargaining unit. James River considers relations
with its employees to be good.

Item 2. Properties

        James River's headquarters are located at 1514 Holland Road, Suffolk,
Virginia.  The headquarters are owned by James River.  James River does not have
any interest in any other properties other than those owned or leased by its
subsidiaries.  James River's five banking subsidiaries collectively own 23 of
their 27 branch banking offices and lease the land for three offices.

                                       19
<PAGE>

Item 3. Legal Proceedings

        In the course of its operation, James River and its subsidiaries are
parties to various legal proceedings. James River does not believe that the
outcome of these lawsuits, individually or in the aggregate, will have a
material adverse effect on James River's business, financial position or results
of operations.

Item 4. Submission of Matters to a Vote of Security Holders
        No matters were submitted to James River's shareholders for a vote
during the fourth quarter of the year ended December 31, 1999.

                                       20
<PAGE>

                                    PART II

Item 5.  Market for Registrant's Common Equity and Related Shareholder Matters

         The information included under "Market Price for Common Stock"
appearing on page 40 of the Annual Report is incorporated herein by reference.

Item 6.  Selected Consolidated Financial Data

         The information included under "Five Year Financial Summary" appearing
on page 12 of the Annual Report is incorporated herein by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

         The information included under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing on pages 7 through 11
of the Annual Report is incorporated herein by reference.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

         The information captioned "Liquidity and Market Risk" appearing on
pages 10 and 11 of "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Annual Report is incorporated herein by
reference.

Item 8.  Financial Statements and Supplementary Data

        (a) The Financial Statements and the notes thereto appearing on pages 14
            through 37 of the Annual Report are incorporated herein by
            reference.

        (b)  Unaudited quarterly financial information for the Company is
             contained in Note 20 on page 36 of the Financial Statements
             included in the Annual Report and is incorporated herein by
             reference. The quarterly financial information in the Annual Report
             is presented on a restated basis and reflects consolidated results
             of operations of BOS, JRB, FCB , JRBC and SBR for the periods
             presented.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         Information regarding James River's decision to change its independent
accountants is contained in Reports on Form 8-K and 8-K/A previously filed with
the Securities and Exchange Commission on February 3, 1999 and March 8, 1999.

                                       21
<PAGE>

                                   PART III

   The information required by Part III, Items 10, 11, 12 and 13 has been
incorporated herein by reference to the Company's 2000 Proxy Statement as set
forth below in accordance with General Instruction G(3) of Form 10-K.

Item 10. Directors and Executive Officers of the Registrant.

         Information relating to directors and executive officers of the Company
and compliance with Section 16(a) of the Securities Exchange Act of 1934 is set
forth in the sections entitled "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Company's 2000 Proxy Statement
and is incorporated herein by reference.

Item 11. Executive Compensation.

         Information regarding compensation of officers and directors of the
Company is set forth in the section entitled "Executive Compensation" in the
Company's 2000 Proxy Statement and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

         Information regarding ownership of the Company's Common Stock is set
forth in the section entitled "Security Ownership of Management and Certain
Beneficial Owners" in the Company's 2000 Proxy Statement and is incorporated
herein by reference.

Item 13. Certain Relationships and Related Transactions

         Information regarding certain relationships and related transactions
with the Company is set forth in the section entitled "Certain Relationships and
Related Transactions" in the Company's 2000 Proxy Statement and is incorporated
herein by reference.

                                       22
<PAGE>

                                    PART IV


Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

        (a) The following documents are filed as part of this report:

            1.  The following consolidated financial statements of the Company
            at December 31, 1999 and 1998 and for the three years ending
            December 31, 1999, 1998 and 1997, and the auditors' report thereon
            are incorporated by reference to the pages indicated in the Annual
            Report:

                       Consolidated Financial Statements              Page
                       ---------------------------------              ----
                Consolidated Balance Sheets                            14
                Consolidated Statements of Income                      15
                Consolidated Statements of Shareholders' Equity        16
                Consolidated Statements of Cash Flows                  17
                Notes to Consolidated Financial Statements             18
                Independent Auditor's Report                           13

            2.  Financial Statement Schedules - None.

            3.  The exhibits listed on the accompanying Exhibit Index are filed
            or incorporated by reference as part of this Form 10-K and such
            Exhibit Index is incorporated herein by reference.

        (b) Reports on Form 8-K in quarter ended December 31, 1999: None

        (c) The exhibits listed on the accompanying Exhibit Index are filed or
            incorporated by reference as part of this Form 10-K and such
            Exhibit Index is incorporated herein by reference.

        (d) Financial Statements excluded from Annual Report pursuant to Rule
            14(a)-3(b) - Not applicable.

                                       23
<PAGE>

                                  Signatures
                                  ----------

   In accordance with Section 13 of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, in the City of Suffolk,
State of Virginia, on March 23, 2000.

                                        JAMES RIVER BANKSHARES, INC.



                                        By: /s/ Harold U. Blythe
                                           ----------------------------
                                           Harold U. Blythe, President

   In accordance with the Exchange Act, this Report has been signed by the
following persons in the capacities and on the dates stated.  Each person, in so
signing, also makes, constitutes and appoints Harold U. Blythe and Robert E.
Spencer, Jr. and each of them individually, his true and lawful attorney-in-fact
in his place and stead, with full power of substitution, to execute and cause to
be filed with the Securities and Exchange Commission, any and all amendments to
this Report, including any exhibits or other documents filed in connection
therewith.

   Signature               Title                           Date
   ---------               -----                           ----



/s/ G. P. Jackson          Chairman of The Board            March 23, 2000
-------------------------  Director
G. P. Jackson


/s/ Bruce B. Gray          Vice Chairman of The             March 23, 2000
-------------------------  Board and Director
Bruce B. Gray


/s/ Harold U. Blythe       President and Chief Executive    March 23, 2000
-------------------------  Officer, Director
Harold U. Blythe           (Principal Executive Officer)


/s/ Donald W. Fulton, Jr.  Senior Vice President and        March 23, 2000
-------------------------  Chief Financial Officer
Donald W. Fulton, Jr.      (Principal Financial and Accounting Officer)


/s/ James E. Butler, Jr.   Director                         March 23, 2000
-------------------------
James E. Butler, Jr.


/s/ John A. Berna          Director                         March 23, 2000
-------------------------
John A. Berna


/s/ Elmon T. Gray          Director                         March 23, 2000
-------------------------
Elmon T. Gray


/s/ H. R. Higgins, Jr.     Director                         March 23, 2000
-------------------------
H. R. Higgins, Jr.

                                       24
<PAGE>

/s/ Ben P. Kanak           Director                         March 23, 2000
--------------------------
Ben P. Kanak


/s/ John A. Ramsey, Jr.    Director                         March 23, 2000
--------------------------
John A. Ramsey, Jr.


/s/ Robert E. Spencer, Jr. Director                         March 23, 2000
--------------------------
Robert E. Spencer, Jr.


                                       25
<PAGE>

                                 EXHIBIT INDEX

Exhibit
 No.                             Description
 ---                             -----------
*2.1  Agreement and Plan of Reorganization dated November 21, 1994 (Incorporated
      by reference to the Registrant's Registration Statement of Form S-4,
      Commission File No. 33-88322, previously filed with the Commission on
      January 6, 1995.
*2.2  First Colonial Bank Agreement and Plan of Merger dated June 30, 1995, as
      amended (Incorporated by reference to the Registrant's Registration
      Statement on Form S-4, Commission File No. 33-99254, previously filed with
      the Commission on November 13, 1995).
*2.3  Bank of Isle of Wight Agreement and Plan of Merger dated June 30, 1995
      (Incorporated by reference to the Registrant's Registration Statement on
      Form S-4, Commission File No. 33-99254, previously filed with the
      Commission on November 13, 1995).
*2.4  State Bank of Remington, Inc. Agreement and Plan of Merger dated August
      15, 1999 (Incorporated by reference to the Registrant's Registration
      Statement of Form S-4, Commission File No. 333-78331, previously filed
      with the Commission on May 12, 1999).
*3.1  Articles of Incorporation of James River Bankshares, Inc. (Incorporated by
      reference to the Registrant's Registration Statement on Form S-4,
      Commission File No. 33-88322, previously filed with the Commission on
      January 6, 1995.)
*3.2  Amended and Restated Bylaws of James River Bankshares, Inc. (Incorporated
      by reference to the Registrant's Form 10-K/A, Commission File No. 0-26314,
      previously filed with the Commission on August 12, 1996).
*4    Form of Common Stock certificate of James River Bankshares, Inc.
      (Incorporated by reference to the Registrant's Registration Statement on
      Form S-4, Commission File No. 33-88322, previously filed with the
      Commission on January 6, 1995).
*10.1 Agreement between The Bank of Waverly and First Union National Bank, dated
      November 13, 1995, regarding branch acquisitions (Incorporated by
      reference to the Registrant's Registration Statement on Form S-4,
      Commission File No. 33-99254, previously filed with the Commission on
      December 22, 1995).
*10.2 Employment Agreement between James River Bankshares, Inc. and Harold U.
      Blythe dated July 18, 1995 (Incorporated by reference to Amendment No. 1
      to the Registrant's Registration Statement on Form S-4, Commission File
      No. 33-99254, previously filed with the Commission on December 22, 1995).
*10.3 Employment Agreement between James River Bankshares, Inc. and Glenn T.
      McCall dated July 18, 1995 (Incorporated by reference to Amendment No. 1
      to the Registrant's Registration Statement on Form S-4, Commission File
      No. 33-99254, previously filed with the Commission on December 22, 1995).
*10.4 Employment Agreement between First Colonial Bank and James C. Stewart
      dated February 29, 1996 (Incorporated by reference to the Registrant's
      Form 10-K, Commission File No. 0-26314, previously filed with the
      Commission on April 15, 1996).
*10.5 Employment Agreement between Bank of Isle of Wight and Robert E. Spencer,
      Jr. dated February 29, 1996 (Incorporated by reference to the Registrant's
      Form 10-K, Commission File No. 0-26314, previously filed with the
      Commission on April 15, 1996).
*10.6 Employment Agreement between James River Bankshares, Inc. and Donald W.
      Fulton, Jr. dated January 1, 1998. (Incorporated by reference to the
      Registrant's Form 10-K, Commission File No. 0-26314, previously filed with
      the Commission on March 30, 1998.)
*10.7 Early Retirement Agreement dated March 05, 1999, between First Colonial
      Bank and James C. Stewart.
***13 Annual Report to security holders.

<PAGE>

  *21    List of Subsidiaries. (Incorporated by reference to the Registrant's
         Form 10-K, Commission File No. 0-26314, previously filed with the
         Commission on April 15, 1996.)
***23.1  Consent of Yount, Hyde & Barbour, P.C.
***23.2  Consent of Goodman & Company, L.L.P.
***24.1  Power of Attorney (appears on the signature page hereto)
***27.1  Financial Data Schedule
***99.1  Independent Accountant Report of Goodman & Company, L.L.P.
--------------------------------------------------------------------------------
*    (Not filed herewith.  In accordance with Rule 12b-32 of the General
     Rules and Regulations under the Securities Exchange Act of 1934, the
     exhibit is incorporated by reference.)
***  Filed herewith.