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, 1998
                         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. [ ]

      The aggregate market value of voting stock held by  non-affiliates  of the
registrant as of March 16, 1998: Common Stock - $55,044,773.

      The number of shares  outstanding of the  registrant's  common stock as of
March 16, 1998: 3,741,230.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the  Registrant's  Annual Report to  Shareholders for the year
ended December 31, 1998 ("Annual  Report") are incorporated by reference in Part
I and Part II of this Form 10-K.


<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,  prepare the Company for Year 2000,
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,  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,
changes in laws and regulations  applicable to James River and its subsidiaries,
and risk related to Year 2000,  including the risks  associated with vendors and
their suppliers and risks from customers. 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 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.

      In October 1998, Mortgage Company of James River, Inc.("MCJR")  was formed
as an  operating  subsidiary  of JRB.  MCJR is a  residential  mortgage  lending
operation based in Richmond,  Virginia and initially plans to originate mortgage
loans  from  Hampton  Roads in the  Southeastern  portion  of  Virginia  through
Richmond and  Charlottesville in the Central portion of the state. MCJR actually
commenced its lending operations in early 1999.

      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.

<PAGE>

      James River now has four  operating bank  subsidiaries  with a total of 24
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.

      James River has also entered  into an  Agreement  and Plan of Merger dated
February 17, 1999 ("Merger  Agreement") with  the State Bank of Remington,  Inc.
("State Bank"). Under the terms of the Merger Agreement, State Bank would become
a wholly owned subsidiary of James River and would conduct  operations as a free
standing banking subsidiary.  The Merger Agreement provides that shareholders of
State  Bank  would  receive  2.9  shares of James  River  common  stock for each
outstanding  share of State Bank  common  stock.  State  Bank has  approximately
291,000 shares of common stock  outstanding.  The proposed  merger is subject to
regulatory and shareholder approval and to certain other conditions set forth in
the Merger Agreement.  Subject to satisfaction of these conditions,  James River
expects  the  transaction  to  close  in the  third  quarter  of 1999  and to be
accounted for as a pooling of interests.

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 the
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.

      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.


<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, 1998.  The amounts  reported
below for 1994 include  FCB's  applicable  balances as of June 30 for the period
indicated.


                         Loan Portfolio by Percentage


                                               December 31,
                             -----------------------------------------------
                               1998      1997      1996     1995      1994
                               ----      ----      ----     ----      ----
                                          (dollars in thousands)
         Commercial              12.1%     13.1%     9.7%     11.6%     8.9%
         Real estate-
           commercial            18.0%     19.2%     8.5%      7.6%    10.2%
         Real estate-
           construction
           and land
           development            9.0%      7.5%     6.0%      4.0%     2.4%
         Real estate-
           mortgage              51.3%     49.4%    64.8%     66.7%    63.9%
         Agricultural             0.9%      1.8%     1.0%      0.6%     0.5%
         Installment              8.7%      9.0%    10.0%      9.5%    14.1%
                             ------------------------------------------------
             Total Loans        100.0%    100.0%   100.0%    100.0%   100.0%

         Total Loans         $275,607  $263,219 $243,104  $208,143 $174,225
                             ------------------------------------------------


      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 79.4%  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 30.1% of James River's total loan
portfolio on December 31, 1998. 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,  1998,  agricultural  loans  totaled  $2.5
million.  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  $24.8  million  or 9.0% of the loan
portfolio  at  December  31,  1998.  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 form residential real estate construction that is not pre-sold.

      Real Estate  Mortgage.  At  December  31,  1998,  94.9% of the real estate
mortgages 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.  $10.1 million were real
estate loans to individuals used for farm purchases and multifamily  residential
properties.

<PAGE>

      Installment.  On December 31, 1998,  8.7% of total loans were consumer and
installment loans.  Installment loans include home improvement loans, automobile
loans and personal  unsecured  loans.  James River's  banking  subsidiaries,  on
consumer collaterized loans, generally use loan to value ratios of 75%.

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  $275.5
million at December  31,  1998,  5.76% more than net loans of $260.5  million at
December 31, 1997. The average balance of total loans as a percentage of average
earning assets was 72.2%,  72.1%,  67.4%,  66.0% and 61.0% for 1998, 1997, 1996,
1995 and 1994,  respectively.  James River's banking  subsidiaries  had no loans
outstanding  to foreign  countries or for highly  leveraged  transactions  as of
December 31, 1998, 1997, 1996, 1995, or 1994.

      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, 1998,  commitments  for standby  letters of credit  totaled $1.7
million and  commitments  to extend credit were $65.1  million.  At December 31,
1997,  commitments  for  standby  letters of credit  totaled  $1.6  million  and
commitments to extend credit totaled $40.1 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. The amounts reported
below for 1994 include FCB's applicable balances as of June 30, 1994.

                                    Loan Portfolio

                                              December 31,
                         -----------------------------------------------------
                            1998      1997       1996       1995      1994
                            ----      ----       ----       ----      ----
                                        (dollars in thousands)
Commercial                $  33,266 $  34,513   $ 23,689   $ 24,224  $ 15,463
Real estate-commercial       49,495    50,522     20,606     15,780    17,730
Real estate-construction
  and land development       24,838    19,683     14,520      8,317     4,151

Real estate-mortgage        141,484   130,055    157,605    138,851   111,403

Agricultural                  2,536     4,802      2,256      1,102       945

Installment                  23,988    23,644     24,428     19,869    24,533
                         -----------------------------------------------------
  Total Loans               275,607   263,219    243,104    208,143   174,225
Less:
  Allowance for loan
   losses                     3,827     3,457      3,176      2,891     2,691
  Unearned discount              17        25         38         60       122
  Deferred loan
   fees (costs)                (129)       50        169        159       106
                         -----------------------------------------------------
    Net loans receivable    271,892   259,687    239,721    205,033   171,306
Loans held for sale           3,599       789      1,192      1,483     3,677
    Net loans             $ 275,491 $ 260,476   $240,913   $206,516  $174,983
                           ========  ========   ========   ========   =======


<PAGE>

      Set forth below is  information  regarding the maturity of loans for James
River's banking subsidiaries at December 31, 1998:

                           Maturity Schedule of Loans

                                             December 31, 1998
                                 ------------------------------------------
                                           Over One
                                 One Year   through   Over Five   Total
                                  or Less  Five Years   Years     Loans
                                  -------  ----------   -----     -----
                                         (Dollars in thousands)

Commercial                        $  8,489   $ 19,063  $  5,714   $ 33,266
Real estate-commercial               7,051     14,059    28,385     49,495
Real estate-construction
  and land development              13,720      3,141     7,977     24,838
Real estate-mortgage                13,833     32,362    95,289    141,484
Agricultural                           932      1,262       342      2,536
Installment                          8,560     14,779       649     23,988
                                    ------    -------    ------    -------
  Total                           $ 52,585   $ 84,666  $138,356   $275,607
                                  ========   ========  ========   ========
Loans maturing after one year
  with predetermined rates                                         118,879
Loans maturing after one year
  with variable rates                                              104,143
                                                                  --------
  Total                                                           $223,022
                                                                  ========


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.


<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.  The amounts reported below for 1994 include FCB's applicable
balances as of June 30 for the period indicated.

                            Allowance for Loan Losses


                                        December 31,
                    -----------------------------------------------------
                       1998      1997       1996      1995       1994
                       ----      ----       ----      ----       ----
                                     (dollars in thousands)
Balance, beginning
  of period           $  3,457  $  3,176   $  2,891   $ 2,691   $  2,258
                    -----------------------------------------------------

Less charge offs:
  Commercial                59        12         17        71         25
  Installment              174       187        152        73         56
  Real Estate               21        70        133        64        169
                    -----------------------------------------------------
    Total Charge offs      254       249        302       208        250
                    -----------------------------------------------------

Plus recoveries:
  Commercial                 8        58         10        23         30
  Installment               56        30         15        57         26
  Real estate               53         3         71         4         34
                    -----------------------------------------------------
    Total recoveries       117        91         96        84         90
                    -----------------------------------------------------

Net charge offs            137       158        206       124        160
                    -----------------------------------------------------

Provision for loan
  losses                   507       439        491       341        593
                    -----------------------------------------------------

Adjustment to
  conform fiscal year        -         -          -       (17)         -
                    -----------------------------------------------------

Balance end of
  period              $  3,827  $  3,457   $  3,176   $ 2,891   $  2,691
                    -----------------------------------------------------

Allowance for loan
losses to period end
total loans               1.37%     1.31%      1.30%     1.38%      1.51%

Allowance for loan losses
to nonaccrual loans     981.28    385.40   1,091.41    388.05     165.60

Average total loans    272,842   258,988    228,009   191,650    169,096

Net charge offs
to average loans          0.05%     0.06%      0.09%     0.06%      0.09%


<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.  The amounts
reported below for 1994 include FCB's applicable  balances as of June 30 for the
period indicated.

               Allocation of Allowance for Loan Losses in Dollars

                                           December  31,
                         -----------------------------------------------------
                            1998       1997      1996       1995      1994
                            ----       ----      ----       ----      ----
                                        (dollars in thousands)
Commercial                  $   600    $   846   $   625    $   516   $   902
Real estate-commercial        1,479      1,161     1,152      1,004       790
Real estate-construction
  and land development          145         85        84         75         8
Real estate-mortgage            647        808       852        950       658
Agricultural                    221        176        21         22        92
Installment                     735        381       442        324       241
                         -----------------------------------------------------
Total allowance for
  loan losses              $  3,827   $  3,457  $  3,176   $  2,891  $  2,691
                         -----------------------------------------------------

      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,  1998.  The amounts  reported  below for 1994
include FCB's applicable balances as of June 30 for the period indicated.

                  Amount of Loans to Gross Loans by Percentages

                                               December 31,
                         -----------------------------------------------------
                            1998       1997      1996       1995      1994
                            ----       ----      ----       ----      ----
Commercial                    12.1%      13.1%      9.7%      11.6%      8.9%
Real estate-commercial        18.0%      19.2%      8.5%       7.6%     10.2%
Real estate-construction
  and land development         9.0%       7.5%      6.0%       4.0%      2.4%
Real estate-mortgage          51.3%      49.4%     64.8%      66.7%     63.9%
Agricultural                   0.9%       1.8%      1.0%       0.6%      0.5%
Installment                    8.7%       9.0%     10.0%       9.5%     14.1%
                         -----------------------------------------------------
    Total loans              100.0%     100.0%    100.0%     100.0%    100.0%
                         -----------------------------------------------------


<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.  The amounts reported below for
1994 include FCB's applicable balances as of June 30 for the period indicated.

                              Non-performing Assets

                                       December 31,
                    -----------------------------------------------------
                       1998      1997       1996      1995       1994
                       ----      ----       ----      ----       ----
                                     (dollars in thousands)
Nonaccrual loans       $   390   $   897    $   291   $   745   $  1,625
Foreclosed assets          264       573        171         4        496
                    -----------------------------------------------------
  Total
   non-performing
   assets              $   654   $ 1,470    $   462   $   749   $  2,121
                    -----------------------------------------------------
Loans past due 90
  or more days
  accruing interest    $   427   $   431    $   857   $   683    $   203
Non-performing
  loans to total loans,
  at period end           0.14%     0.34%      0.12%     0.36%      0.91%
Non-performing
  loans to period end
  loans and foreclosed
  assets                  0.14%     0.34%      0.12%     0.36%      0.91%

      As of  December  31,  1998,  loans 30 days or more  delinquent  for  James
River's  banking  subsidiaries  totaled  $4.7  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,  $3.1 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 $1,408,000, $2,017,000
and $3,137,000 at December 31, 1998, 1997 and 1996,  respectively.  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. The impaired loans at December 31,
1996,    consisted   of   $1,871,000   of   commercial   and   $1,266,000   real
estate-commercial  loans.  All of the impaired loans at December 31, 1998,  1997
and 1996, were measured using the fair value of collateral  method.  The portion
of the  allowance  for loan losses  allocated to the  impaired  loan balance was
$162,000,   $423,000  and  $558,000  at  December  31,  1998,   1997  and  1996,
respectively.


<PAGE>


Investments

      The  carrying  value of the  investment  portfolio  of James River and its
subsidiaries  was $89.0 million at December 31, 1998,  compared to $83.0 million
at December 31, 1997. The average balance of the investment  portfolio decreased
$6.4  million  or 6.9% in 1998  compared  to 1997.  The  average  balance of the
portfolio decreased 10.1%, or $10.3 million, in 1997.

      At December 31,  1998,  1997,  and 1996,  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 102.6% and 101.5% of carrying  value at years ended December 31,
1998 and 1997, respectively.

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

                               Securities Portfolio

                                                    December 31,
                                         --------------------------------
                                            1998      1997       1996
                                            ----      ----       ----
                                                (dollars in thousands)
U. S. Treasury and other government        $ 50,211  $ 43,535   $ 62,576
  agencies
State and political subdivisions             27,411    25,789     26,712
Other securities                             11,065    13,701     14,198
                                         --------------------------------
    Total Securities                       $ 89,017  $ 83,025   $103,486
                                         --------------------------------


<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, 1998.  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%.

                            Maturities of Investments

                                                December 31, 1998
                                         --------------------------------
                                                              Weighted
                                            Book     Market    average
                                           Value      Value     yield
                                           -----      -----     -----
                                             (Dollars in thousands)
U.S. Treasury securities
  One year or less                         $  2,353   $ 2,379      4.46%
  After one year to five years                4,131     4,310      4.65%
  After five years to ten years                 514       523      4.72%
  After ten years                                 -         -
                                           --------   -------
    Total                                     6,998     7,212      4.59%
                                           --------   -------
Federal agency securities
  One year or less                            1,260     1,254      6.37%
  After one year to five years               28,210    28,419      5.34%
  After five years to ten years               5,068     5,057      5.90%
  After ten years                             8,202     8,269      6.06%
                                           --------   -------
    Total                                    42,740    42,999      5.68%
                                           --------   -------

State and political subdivisions
 securities
  One year or less                            2,197     2,220      5.14%
  After one year to five years               10,493    10,795      5.66%
  After five years to ten years              13,647    14,054      6.26%
  After ten years                               696       717      6.59%
                                           --------    ------
    Total                                    27,033    27,786      5.94%
                                           --------    ------
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                             3,047     3,069          -
                                           --------   -------
    Total                                     3,047     3,069          -
                                           --------   -------

Other debt securities
  One year or less                              100       102      6.12%
  After one year to five years                  509       522      5.12%
  After five years to ten years                   -         -          -
  After ten years                             7,372     7,555      6.41%
                                           --------  --------
    Total                                     7,981     8,179      6.34%
                                           --------  --------
  Total securities                           87,799    89,245      5.68%
                                           --------  --------
  Unrealized gain on securities
   available-for-sale                         1,218         -
                                           --------  --------
  Total securities at period end           $ 89,017   $89,245
                                           --------  --------


<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 deposit growth,
especially in interest bearing checking, non-interest bearing checking, and time
deposits.  Average  balances in total deposits  increased from $268.1 million in
1995 to $321 million in 1996, a growth of $52.9 million or 19.8%.  Approximately
60% of the increase in average total  deposits in 1996 was  attributable  to the
deposit base  purchased by JRB in the Franklin and Courtland  branches.  For the
comparable  period ending  December 31, 1997,  average total deposits  increased
$22.2 million or 6.9%.  For the period ending  December 31, 1998,  average total
deposits increased $14.4 million, or 4.1%.

      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.

                     Average Deposits and Average Rates Paid

                                      Years ended December 31,
                        ---------------------------------------------------
                             1998             1997              1996
                        ---------------- ----------------  ----------------

                        Average Average  Average Average   Average   Average
                        Balance  Rate    Balance  Rate     Balance    Rate
                                      (Dollars in thousands)

Interest-bearing deposits:
  Checking             $  47,956  2.83%   $  37,023  2.56%  $  36,242  2.67%
  Money market savings    23,135  3.52%      23,391  3.22%     23,035  3.31%
  Regular savings         46,087  3.26%      48,601  3.35%     47,613  3.42%
  Certificates of
   deposit:
    $100,000 and over     33,588  3.78%      29,396  4.59%     24,834  5.61%
    Under $100,000       164,233  5.92%     165,010  5.75%    155,254  5.66%
                        --------           --------           -------
Total interest-bearing
 deposits                314,999  4.66%     303,421  4.67%    286,978  4.72%
Non-interest bearing      42,575             39,789            34,059
                        --------           --------           -------
Total deposits         $ 357,574  4.10%   $ 343,210  4.12%  $ 321,037  4.22%
                       =========          =========         =========


      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, 1998:

                      Maturities of CDs of $100,000 or More
                              at December 31, 1998

<TABLE>
<CAPTION>


                                                   Amount                Percent
                                                   ------                -------
<S>                                              <C>                     <C>

                                                        (Dollars in  thousands)

Three months or less                              $   7,109                  20.7%
Over three months to twelve months                   15,008                  43.7%
Over twelve months                                   12,190                  35.5%
                                                 ----------                  -----
                                                     34,307                 100.0%
                                                 ==========                 ======
</TABLE>



      Certificates  of deposit in amounts of $100,000  or more at  December  31,
1998 and 1997 were $34.3 million and $32.9 million, respectively. The balance of
$32.9 million at December 31, 1997,  represented 16.9% of total  certificates of
deposit. The December 31, 1998 amount represents 16.9% of the total certificates
of deposit balance of $203.1 million at that date.

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

<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.

                                 Short-Term Borrowings

                                                  Years ended December 31,
                                             ----------------------------------
                                                1998       1997        1996
                                                ----       ----        ----
                                                   (dollars in thousands)
Average daily amount of short-term
  borrowings outstanding during the period    $    831     $    620    $  396
Weighted average interest rate on average
  daily short-term borrowings                     5.63%        6.45%     5.81%
Maximum outstanding short-term borrowings
  outstanding at any month end                   1,601        4,000     4,456
Short-term borrowings outstanding at
  period end                                  $    719      $     -    $    -

<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

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

                                                                                Years Ended December 31,
                                           -----------------------------------  -----------------------  ---------------------------
                                                         1998                            1997                       1996
                                           -----------------------------------  -----------------------  ---------------------------
                                                         Interest   Average           Interest Average             Interest Average
                                             Average     Income/    Yield/   Average  Income/   Yield/  Average    Income/   Yield/
                                             Balance     Expense     rate    Balance  Expense    rate   Balance    Expense    rate
                                                                                (dollars in thousands)
<S>                                         <C>          <C>         <C>     <C>       <C>       <C>    <C>        <C>       <C>

Assets:
Interest bearing assets:
  Securities:
    U.S. Treasury                          $  10,034    $   631      6.29% $  12,317  $     784   6.37% $ 15,496   $    977   6.30%
    Federal agency                            44,394      2,825      6.36%    40,317      2,546   6.31%   36,669      2,317   6.32%
    State and political subdivisions          27,007      1,966      7.28%    25,075      1,916   7.64%   26,709      2,053   7.69%
    Federal reserve stock                      1,943        142      7.31%     1,732        123   7.10%    1,476         91   6.17%
    Other securities                           1,888        138      7.31%    12,185        839   6.89%   21,538      1,490   6.92%
                                             -------    -------            ---------   --------         --------   --------
        Total Securities                      85,266      5,702      6.69%    91,626      6,208   6.78%  101,888      6,928   6.80%
                                             -------    -------            ---------   --------         --------   --------
  Loans:
    Commercial                                70,282      6,168      8.78%    66,152      5,959   9.01%   50,209      4,606   9.17%
    Real estate-construction                  20,186      1,602      7.94%    17,580      1,678   9.54%   11,230      1,099   9.79%
    Real estate-mortgage                     151,926     13,330      8.77%   146,564     12,732   8.69%  143,227     12,182   8.51%
    Installment                               30,448      3,347     10.99%    28,692      3,104  10.82%   23,343      2,562  10.98%
                                             -------     ------            ---------   --------         --------   --------
        Total Loans                          272,842     24,447      8.96%   258,988     23,473   9.06%  228,009     20,449   8.97%
                                             -------     ------            ---------   --------         --------   --------
  Interest bearing deposits in
    other banks                                9,668        553      5.72%     2,161        163   7.54%    1,690        147   8.70%
  Federal funds sold                          10,020        556      5.55%     6,488        373   5.75%    6,653        363   5.46%
                                             -------     ------            ---------   --------         --------   --------
      Total money market investments          19,688      1,109      5.63%     8,649        536   6.20%    8,343        510   6.11%
                                             -------     ------            ---------   --------         --------   --------
        Total interest-earning assets/
          total interest income              377,796     31,258      8.27%   359,263     30,217   8.41%  338,240     27,887   8.24%
                                             -------    -------            ---------   --------         --------   --------
Non-interest earning assets:
  Cash and due from banks                     13,029                          12,743                      11,608
  Other assets                                 8,615                           8,729                       7,315
  Less:  Allowance for loan losses            (3,621)                         (3,379)                     (3,033)
  Fixed assets                                 9,119                           8,477                       6,918
                                           ---------                       ---------                    --------
      Total non-interest earning assets       27,142                          26,570                      22,808
                                           ---------                       ---------                    --------
        Total Assets                       $ 404,938                       $ 385,833                    $361,048
                                           =========                       =========                    ========
Liabilities and shareholders' equity:
Interest bearing liabilities:
  Interest bearing deposits:
    Checking                               $  47,956  $   1,355      2.83%  $ 37,023  $     949   2.56% $ 36,242    $    966  2.67%
    Money market savings                      23,135        815      3.52%    23,391        753   3.22%   23,035         762  3.31%
    Regular savings                           46,087      1,503      3.26%    48,601      1,626   3.35%   47,613       1,627  3.42%
    Certificates of deposit:
      $100,000 and over                       33,588      1,269      3.78%    29,396      1,348   4.59%   24,834       1,392  5.61%
      Under $100,000                         164,233      9,723      5.92%   165,010      9,481   5.75%  155,254       8,790  5.66%
                                           ---------  ---------             --------  ---------         --------    --------
        Total interest bearing deposits      314,999     14,665      4.66%   303,421     14,157   4.67%  286,978      13,537  4.72%
  Federal funds purchased & other                831         47      5.66%       620         40   6.45%      396          23  5.81%
                                           ---------  ---------             --------  ---------         --------    --------
    Total interest bearing liabilities/
        total interest expense               315,830     14,712      4.66%   304,041     14,197   4.67%  287,374      13,560  4.72%
                                           ---------  ---------             --------  ---------         --------    --------
Non-interest bearing liabilities:
  Demand deposits                             42,575                          39,789                      34,059
  Other liabilities                            4,195                           3,267                       3,579
                                           ---------                        --------                    --------
      Total non-interest liabilities          46,770                          43,056                      37,638
                                           ---------                        --------                    --------
        Total liabilities                    362,600                         347,097                     325,012
Shareholders' equity                          42,338                          38,736                      36,036
                                           ---------                        --------                    --------
        Total Liabilities and
          Shareholders' equity             $ 404,938                        $385,833                    $361,048
                                           =========                        ========                    ========
Interest spread                                                      3.62%                        3.74%                       3.53%
Net interest income/net interest margin               $  16,546      4.38%            $  16,020   4.46%             $ 14,327  4.24%
                                                      =========                       =========                     ========

</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, nonaccruing 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 securties is computed using the amortized
cost basis.




<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,
                  ------------------------------------------------------------------------------------------------------
                                  1998 compared to 1997                             1997 compared to 1996
                  ------------------------------------------------------------------------------------------------------
                                      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           $ (153)    $   (8)     $  (145)              $ (193)          $   7          $  (200)
    Federal agency             279         22          257                  229              (2)             231
    State and political
      subdivisions              50        (98)         148                 (137)            (11)            (126)
    Federal Reserve stock       19          4           15                   32              16               16
    Other equity securities   (701)         8         (709)                (651)             (4)            (647)
                            ------     ------      -------               ------           -----          -------
      Total Securities        (506)       (72)        (434)                (720)              6             (726)
                            ------     ------      -------               ------           -----          -------
Loans:
  Commercial                   209       (163)         372                1,353            (110)           1,463
  Real estate-construction     (76)      (325)         249                  579             (42)             621
  Real estate-mortgage         598        132          466                  550             266              284
  Installment                  243         53          190                  542             (45)             587
                            ------     ------      -------               ------           -----          -------
    Total Loans                974       (303)       1,277                3,024              69            2,955
                            ------     ------      -------               ------           -----          -------
Interest bearing deposits
  in other banks               390       (176)         566                   16             (25)              41
Federal funds sold             183        (20)         203                   10              19               (9)
                            ------     ------      -------               ------           -----          -------
  Total money market
    investments                573       (196)         769                   26              (6)              32
                            ------     ------      -------               ------           -----          -------

  Total interest income      1,041       (571)       1,612                2,330              69            2,261
                            ------     ------      -------               ------           -----          -------

Interest expense:
  Interest bearing deposits:
    Checking                   406        126          280                  (17)            (38)              21
    Money market savings        62         70           (8)                  (9)            (21)              12
    Regular savings           (123)       (39)         (84)                  (1)            (35)              34
    Certificates of deposit:
      $100,000 and over        (79)      (271)         192                  (44)           (300)             256
      Under $100,000           242        287          (45)                 691             139              552
                            ------     ------      -------               ------           -----          -------
        Total interest bearing
          deposits             508        173          335                  620            (255)             875
                            ------     ------      -------               ------           -----          -------

Federal funds purchased          7         (7)          14                   17               4               13
                            ------     ------      -------               ------           -----          -------
Total interest expense         515        166          349                  637            (251)             888
                            ------     ------      -------               ------           -----          -------
Net interest income          $ 526     $ (737)     $ 1,263              $ 1,693           $ 320          $ 1,373
                            ======     ======      =======              =======           =====          =======

</TABLE>


<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, 1998,  James River and it  subsidiaries  had $80.7 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. To reduce the impact of
shifts in prevailing  interest  rates,  $107.7  million of the loan portfolio of
James  River's  banking  subsidiaries  at  December  31,  1998,  had a repricing
frequency of less than one year. Moreover,  as of December 31, 1998, James River
and its banking subsidiaries collectively held $80.2 million in investments held
as "Available for Sale" which could be sold quickly to meet any special  funding
needs.


<PAGE>




      The following table  illustrates the interest  sensitivity gap position of
James River and its  subsidiaries as of December 31, 1998. 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.

                          Interest Sensitivity Analysis

                                              December 31, 1998
                                          Maturity or Repricing In:
                                 ------------------------------------------
                                 3 Months  4-12       1-5        Over
                                 or Less   Months     Years      5 Years
                                 -------   ------     -----      -------
                                           (Dollars in thousands)
Interest-sensitive assets:
  Loans                         $ 72,834  $  34,821   $116,471  $ 55,192
  Securities                         600      5,355     44,019    39,043
  Federal Funds sold              10,809          -          -         -
                                 -------    -------    -------   -------
    Total interest-sensitive
     assets                     $ 84,243  $  40,176   $160,490  $ 94,235
                                 =======    =======    =======    ======
  Cumulative interest-sensitive
     assets                     $ 84,243  $ 124,419   $284,909  $379,144
                                 =======    =======    =======   =======


Interest-sensitive liabilities:
  NOW accounts                  $ 58,187  $       -   $      -  $      -
  Regular savings                 44,037          -          -         -
  Certificates of deposit         42,172     89,570     70,416       985
  Money market savings            20,600          -          -         -
                                 -------    -------   --------   -------
    Total interest-sensitive
     liabilities                $164,996  $  89,570   $ 70,416  $  $ 985
                                 =======    =======    =======    ======

  Cumulative interest-sensitive
   liabilities                  $164,996  $ 254,566   $324,982  $325,967
                                 ========   =======    =======   =======
  Period gap                    $(80,753) $ (49,394)  $ 90,074  $ 93,250
                                 ========   =======     ======    ======
  Cumulative gap                $(80,753) $(130,147)  $(40,073) $ 53,177
                                 ========   =======    =======    ======
  Ratio of cumulative
   interest-sensitive assets to
   interest-sensitive
    liabilities                    51.06%    48.87%     87.67%   116.31%
  Ratio of cumulative gap to       (0.19)    (0.31)     (0.10)     0.13
    total assets

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:

                           Return on Equity and Assets

                                 Years ended December 31,
                              --------------------------------
                                 1998       1997      1996
                                 ----       ----      ----

Return on average assets           1.06%      0.99%     0.67%
Return on average equity          10.18%      9.82%     6.71%
Dividend payout ratio             36.15%     36.05%    52.80%
Average equity to average
  asset ratio                     10.46%     10.04%     9.98%


<PAGE>


Market Area and Competition

      James  River  has  four  operating  bank  subsidiaries  with a total of 24
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. 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 four 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 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.

<PAGE>

      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, 1998 were 15.6% and 16.9%, 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, 1998, was 9.8%.  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.

                               Analysis of Capital

                                        December 31,
                               -------------------------------
                                 1998      1997       1996
                                 ----      ----       ----
                                   (Dollars in thousands)

Tier 1 Capital:
  Common stock                  $ 18,607  $ 18,363   $ 12,290
  Additional Paid Capital          3,878     3,572      3,521
  Retained earnings               20,414    17,663     21,629
  Less:  Intangibles              (2,236)   (2,504)    (2,750)
                                 -------   -------    -------
    Total Tier 1 capital        $ 40,663  $ 37,094   $ 34,690
                                 =======   =======    =======

Tier 2 Capital:
  Allowance for loan losses        3,260     3,151      2,702
                                  ------    ------    -------
    Total Tier 2 capital        $  3,260  $  3,151   $  2,702
                                  ======    ======    =======
Total Risk-Based Capital        $ 43,923  $ 40,245   $ 37,392
                                 =======   =======    =======

Risk-weighted assets            $260,267  $252,115   $216,158

Capital Ratios:
  Tier 1 risk-based capital
   ratio                          15.62%    14.71%     16.05%
  Total risk-based capital
   ratio                          16.88%    15.96%     17.30%
  Tier 1 capital to average
   adjusted total assets           9.84%     9.68%      9.68%

<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.

Employees

      At December 31, 1998,  James River and its subsidiaries had the equivalent
of 232 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.

Year 2000 Issue
      The  information  captioned  "Year  2000  Project"  appearing  on pages 11
through 13 of the "Management's  Discussion and Analysis of Financial  Condition
and  Results of  Operations"  in the  Annual  Report is  incorporated  herein by
reference.

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 four banking  subsidiaries  collectively  own 20 of
their 24 branch banking offices and lease the land for three offices.

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, 1998.

<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 14 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 13
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
             16  through  37 of the Annual  Report  are  incorporated  herein by
             reference.

      (b)    Unaudited  quarterly  financial  information  for  the  Company  is
             contained  in  Note  16 on  page  37 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 and JRBC 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.


<PAGE>



                                    PART III


Item 10.  Directors and Executive Officers of the Registrant.

      The Company's Bylaws provide that the number of directors shall be between
seven  and  seventeen.  Directors  serve  a  one  year  term.  In  two  separate
transactions  that closed in February 1996, the Company  acquired First Colonial
Bank  ("FCB") in  Hopewell,  Virginia  ("FCB  Transaction")  and Bank of Isle of
Wight, now named James River Bank/Colonial ("Colonial") in Smithfield,  Virginia
("Colonial Transaction"), pursuant to which FCB and Colonial became wholly owned
subsidiaries of the Company. In accordance with the respective  negotiated terms
of the FCB  Transaction  and  Colonial  Transaction,  Ben P.  Kanak and James C.
Stewart,  directors of FCB, and John A. Ramsey, Jr. and Robert E. Spencer,  Jr.,
directors of Colonial, were all appointed to the Company's Board of Directors in
March 1996. The separate terms of the FCB Transaction  and Colonial  Transaction
required that Messrs. Kanak and Stewart, on the one hand, and Messrs. Ramsey and
Spencer,  on the other hand,  be  nominated  for  election as  directors  at the
Company's  1997  and  1998  Annual  Meetings  to  serve  a one  year  term.  For
information  regarding an Early  Retirement  Agreement  between FCB and James C.
Stewart, see "Item 11. Executive Compensation - Stewart Retirement Agreement."

      The following information relates to the Company's directors and executive
officers.  There are no family relationships among any of the directors,  except
that  Mr.  Elmon  Gray  is the  father  of Mr.  Bruce  Gray,  nor is  there  any
arrangement or understanding between any director pursuant to which the director
was elected,  except as otherwise described above with respect to Messrs. Kanak,
Stewart, Ramsey and Spencer.

      Harold U. Blythe, 56, the Company's President and Chief Executive Officer,
has been an executive officer and director of the Company since it was initially
organized in December  1994.  From 1989 until 1997, Mr. Blythe was President and
Chief Executive Officer of Bank of Suffolk ("BOS"),  one of the Company's wholly
owned  banking  subsidiaries.  Mr.  Blythe also served as a director of BOS from
1989 until 1997.  Mr.  Blythe is  Chairman of the Board of James River  Support,
Inc., the Company's non-banking operations subsidiary, and Chairman of the Board
of Mortgage Company of James River,  Inc.  ("MCJR"),  the Company's  residential
mortgage lending subsidiary.  He is also Chairman of the Board of Family Finance
Corp.,  a consumer  finance  subsidiary  of the  Company.  Mr.  Blythe is also a
director of Community Bankers Bank, Richmond, Virginia.

      James E.  Butler,  Jr.,  73,  has been a  director  of the  Company  since
December  1994 and a director of BOS since 1973.  Mr. Butler is the President of
Butler Paper Company.

      Bruce B. Gray, 45, the Company's Vice Chairman, has been a director of the
Company since December 1994.  From 1993 until 1997, he was Chairman of the Board
of  James  River  Bank  ("JRB"),  one  of the  Company's  wholly  owned  banking
subsidiaries,  and served as a director of JRB from 1977 until 1997.  Mr.  Bruce
Gray is Vice  President of Gray Lumber Co.,  Gray Land & Timber Co. and Gray Co.
Mr. Bruce Gray is also a partner of Grayland Co. and Gray Loblolly Co.

      Elmon T. Gray, 73, has been a director of the Company since December 1994,
and served as the  Company's  Chairman  of the Board from 1994 until  1997.  Mr.
Elmon Gray was a director  of JRB from 1949 until  1996,  serving as Chairman of
the Board from 1977 to 1993.  Mr.  Elmon Gray has been  President of Gray Lumber
Co. since 1952 and  President of Gray Co. since 1993.  He was  President of Gray
Land & Timber Co.  from 1992 until 1993.  Mr. Gray is a partner of Grayland  Co.
and Gray Loblolly Co.

      Horace R.  Higgins,  Jr.,  51, was elected as a director of the Company in
1998 and has been President of Higgins  Trucking  Company for over 26 years. Mr.
Higgins served as director of JRB from 1984 until 1998.


<PAGE>



      G. P.  Jackson,  72,  the  Company's  Chairman  of the  Board,  has been a
director of the Company since  December  1994. Mr. Jackson also is currently the
Chairman  of the Board of BOS and has been a  director  of BOS since  1967.  Mr.
Jackson  is  engaged  in real  estate  rentals  and  contracting,  and serves as
President of G.P.  Jackson,  Inc.,  Jackson & Jackson Bros.,  Inc.,  Holland and
Jackson, Inc. and Suffolk Glass, Inc.

      Ben P. Kanak,  76, was  appointed  to the Board of Directors in March 1996
after  consummation  of the FCB  Transaction  as described  above.  Mr. Kanak is
currently  Chairman  of the Board of  Directors  of FCB, a position  he has held
since 1982.  Mr.  Kanak has been a director of FCB since FCB was formed in 1972.
Mr.  Kanak  also  serves  as a member of the Board of  Directors  of Plant  Food
Products, Inc. Mr. Kanak has been an independent farmer since 1942.

      John A. Ramsey,  Jr., 69, was appointed to the Board of Directors in March
1996 after  consummation  of the Colonial  Transaction as described  above.  Mr.
Ramsey has been Chairman of the Board of Directors of Colonial  since 1991,  and
is a charter  director of Colonial  having served as a director  since 1971. Mr.
Ramsey is a farmer, and has been President of Ramsey Brothers,  Inc. since 1991,
which farms numerous properties in and around Isle of Wight County, Virginia. He
has also been President of Prescription Fertilizer, Inc. since 1991.

      Robert E.  Spencer,  Jr.,  57, was  appointed to the Board of Directors in
March 1996 after  consummation  of the Colonial  transaction.  Mr.  Spencer is a
Senior Vice President of the Company and is responsible for bank investments and
asset/liability  management,  a position to which he was appointed in 1997.  Mr.
Spencer served Colonial as a director and President and Chief Executive  Officer
from 1986 until 1997. He is also a director of MCJR.

      James C.  Stewart,  60, was  appointed  to the Board of Directors in March
1996 after the  consummation  of the FCB  Transaction.  Mr.  Stewart  has been a
director,  President and Chief Executive  Officer of FCB since 1973. Mr. Stewart
is also a director of MCJR and Family Finance Corp. Mr. Stewart has entered into
an Early Retirement  Agreement with FCB. See "Item 11. Executive  Compensation -
Stewart Retirement Agreement."

      Donald W. Fulton,  Jr., 52, is the  Company's  Senior Vice  President  and
Chief Financial  Officer,  a position to which he was appointed in January 1998.
He is also the  Treasurer  of MCJR.  From 1968 to October  31, 1997,  Mr. Fulton
served as an executive officer of Jefferson Bankshares, Inc. of Charlottesville,
Virginia as  its  Vice President-Investor  Relations.  Jefferson  Bankshares was
acquired by Wachovia  Corporation  on October 31, 1997.   From that date through
December 31, 1997,  Mr.  Fulton was  employed by Wachovia on  merger  transition
activities  pertaining to financial  reporting,  corporate  communications,  and
corporate securities matters.

Section 16(a) Beneficial Ownership Reporting Compliance

        Section  16(a)  of the  Securities  Exchange  Act of 1934,  as  amended,
requires directors, officers and persons who beneficially own more than 10% of a
registered class of equity  securities of the Company to file initial reports of
ownership (Forms 3) and reports of changes in beneficial ownership ( Forms 4 and
5) with the Securities and Exchange  Commission ("SEC") and NASDAQ. Such persons
are also  required  under the rules and  regulations  promulgated  by the SEC to
furnish the Company  with  copies of all  Section  16(a) forms they file.  Based
solely on a review of the copies of such forms  furnished  to the  Company,  the
Company  believes that all reporting  requirements  under Section 16(a) for 1998
were met in a timely  manner by its  directors,  officers  and greater  than 10%
beneficial owners, except that sales of Company common stock by James C. Stewart
which took place in May and June 1998 and a  transfer  by him of Company  common
stock which took place in September 1998 were not reported on a Form 4, but were
reported on a Form 5 on February 12,1999.


<PAGE>

Item 11.  Executive Compensation.

      The following table presents an overview of executive compensation paid by
the Company and its subsidiaries during 1998, 1997 and 1996 to Harold U. Blythe,
President  and Chief  Executive  Officer of the  Company  and to the three other
executive  officers  of the Company  whose  combined  salary and bonus  exceeded
$100,000  in 1998 (  collectively  the  "Named  Executive  Officers").  No other
executive  officer of the Company or any banking  subsidiary  received  combined
salary and bonus in excess of $100,000 during 1998.

<TABLE>
<CAPTION>


                                                      Summary Compensation Table

                                             Annual Compensation                           Long Term Compensation
                                             -------------------                           ----------------------
                                                                                          Securities
                                                                                          Underlying       All other
Name and principal positon                     Year        Salary($)       Bonus($)       Options(#)      Compensation
----------------------------------------   -------------  -----------  ---------       ---------------- ---------------
<S>                                           <C>          <C>           <C>            <C>                 <C>


Harold U. Blythe, President and CEO            1998     $ 140,184         $16,272 (1)         0          $ 12,213  (2)
   of the Company                              1997       136,224          13,622 (1)         0            14,701  (2)
                                               1996       132,000 (3)       6,600        37,500 (4)        18,882  (5)


Robert E. Spencer, Jr. Senior Vice             1998       106,980 (6)      12,838 (1)         0             9,628  (2)
   President - Bank Investments and            1997       104,425          16,082 (1)         0             9,002  (2)
   Asset/Liability Management                  1996        95,656           4,963        22,500 (4)         6,192  (2)


Donald W. Fulton, Jr., Senior Vice             1998       102,000 (7)      12,240 (1)    22,500 (4)        20,456  (8)
   President and Chief Financial Officer


James C. Stewart, President of FCB  (9)        1998       137,566 (10)      9,428 (1)         0            10,114  (2)
                                               1997       134,671 (11)     32,179 (12)        0            11,974  (1)
                                               1996       126,960 (13)          -        22,500 (4)        22,191 (14)

</TABLE>




(1) Paid pursuant to the Company's Cash Bonus Program. See "-Cash Bonus Program"
    below.
(2) Consists of Company  contributions to 401(k) and Profit Sharing Plan.
(3) Includes  $22,800 of director  fees paid by  the Company and BOS
(4) Options granted pursuant to the 1996  Employee Stock Option Plan. See "-1996
    Employee Stock Option Plan" below.
(5) Consists of premiums paid for life insurance  policies and  contributions to
    401(k) Plan.
(6) Includes $24,012 of director fees paid by the Company and Colonial.
(7) Mr. Fulton joined the Company in January 1998.
(8) Consists of $15,754 of  relocation  and moving  expenses  paid  pursuant to
    the Fulton Employment Agreement described  in "-Executive Officer Employment
    Agreements" below.  Also includes $4,702 of Company contributions  to 401(k)
    and Profit Sharing Plan.
(9) Pursuant to the terms of an Early  Retirement  Agreement,  Mr.  Stewart  has
    resigned as an employee of FCB and director of FCB and the Company effective
    May 26, 1999. See "Stewart Retirement Agreement" below.
(10)Includes  $25,325  of  director  fees paid by the  Company  and FCB.
(11)Includes  $25,500  of  director  fees  paid  by  the  Company, FCB and FCB's
    subsidiaries.
(12)Consists of (i) $10,519 bonus for 1996 paid in January 1997 and (ii) $21,660
    bonus for 1997 paid in December 1997 pursuant to the Cash Bonus Program.
(13)Includes $23,500 of director fees paid by the Company and FCB.
(14)Consists of funding of FCB's ESOP and life  insurance  premiums paid by FCB
    to fund Mr. Stewart's supplemental income plan. Also includes  contributions
    to 401(k) Plan.


<PAGE>




Option Grants in Last Fiscal Year

      The table below sets forth  information  regarding  stock option grants to
Donald W. Fulton,  Jr. during the fiscal year ended December  31,1998.  No other
stock options were granted to Named Executive Officers in 1998.

<TABLE>
<CAPTION>


                       Number            % of total
                       of Securities     Options
                       Underlying        Granted to
                       Options           Employees in      Exercise          Expiration      Grant Date
Name                   Granted           Fiscal Year       Price             Date            Present Value($)
----                   -------           -----------       -----             ----            ----------------
<S>                    <C>               <C>               <C>               <C>             <C>

Donald W. Fulton, Jr.   22,500            60%              $21.45            02/25/08(1)     $367,875 (2)

</TABLE>

-------------
(1)  4,500 option shares vested on February  26, 1999. The remaining option
     shares vest in 4 tranches of 4,500 shares each on February 26, 2000,  2001,
     2002 and 2003. Each tranche expires if unexercised on February 25, 2008.
(2)  Value  determined  using the  Black-Scholes option  pricing  model with the
     following weighted average  assumptions:  dividend yield of 2.2%,  expected
     volatility  of 24%,  risk free interest rate of 5.5% and expected life of 5
     years.  The actual value,  if any, that may be realized on the options will
     depend on the excess of the stock price over the exercise price on the date
     the option is exercised.  Accordingly,  there can be no assurance  that the
     value realized on the options will be at or near the value estimated by the
     Black-Scholes model.


Aggregate Option Exercises and Fiscal Year End Option Values

      The table below sets forth  information  regarding stock options exercised
by Named Executive  Officers in 1998 and exerciseable and  unexerciseable  stock
options held as of December 31, 1998, by the Named  Executive  Officers.  All of
these options were granted  pursuant to the Company's 1996 Employee Stock Option
Plan except as otherwise indicated.


<TABLE>
<CAPTION>


                                                     Number of Securities
                                                     Underlying                        Value of Unexercised
                                                     Unexercised Options               In-The-Money Options
                              Shares                 at Fiscal Year-End (#)             At Fiscal Year-End (#)(1)
                              Acquired               ---------------------             -------------------------
                              Upon        Value
Name                          Exercise(#) Realized($) Exerciseable    Unexerciseable  Exerciseable  Unexerciseable
----                          ----------  ----------  ------------    --------------  ------------  --------------
<S>                           <C>         <C>         <C>             <C>             <C>           <C>

Harold U. Blythe                2,642     $10,092(2)    12,358            22,500       $48,691(3)   $88,650(3)

Robert E. Spencer, Jr.            0           0          9,000            13,500        35,460(3)    53,190(3)

Donald W. Fulton, Jr.             0           0           0               22,500           0              -(4)

James C. Stewart                6,880     118,542(5)    29,640(6)         13,500       246,607(6)    53,190(3)

</TABLE>
-------------------

(1) The closing  sale  price of the  Company's  Common  Stock on  NASDAQ/NMS  on
    December 31, 1998 was $17.50 per share.
(2) Mr.  Blythe exercised  the options in March,  1998 at an  exercise  price of
    $13.56 per share.On the date of exercise, the closing price of the Company's
    Common Stock on NASDAQ/NMS was $17.38.
(3) The exercise price of these options is $13.56 per share.
(4) The exercise price of these options is $21.45 per share.
(5) Mr. Stewart  exercised  the options in April,  1998 at an exercise  price of
    $7.27 per share. On the date of exercise, the closing price of the Company's
    Common Stock on NASDAQ/NMS was $24.50.
(6) Includes  20,640  options  which  were  originally granted  by FCB and  were
    converted  into  options to buy the  Company's Common Stock when the Company
    acquired FCB in February  1996. The exercise price of these options is $7.27
    per share. Also includes 9,000 options granted pursuant to the Company's
    1996 Employee Stock Option Plan, the exercise price of which is $13.56 per
    share. On March 16, 1999, Mr. Stewart exercised a total of 43,140 options
    pursuant to the terms  of an  Early  Retirement  Agreement  described  in
    "-Stewart Retirement Agreement" below.



<PAGE>




Compensation of Directors

      Other than Mr. Stewart, directors of the Company who are also employees of
the Company or its  subsidiaries  do not receive  director fees. Mr. Stewart and
the non-employee  directors who serve on the Executive  Committee are paid a fee
of $1,500 per month and non-employee directors who do not serve on the Executive
Committee  are paid a fee of $1,000 per month.  The Chairman of the Board of the
Company,  who  serves on the  Executive  Committee,  is paid a fee of $1,700 per
month. Directors also receive annual retainers and monthly fees if they serve on
the Boards of the Company's  subsidiary  banks.  The fees are based on the asset
sizes of those banks and are payable in accordance with the following schedule:

ASSETS:                          $0-50       $51-100      $101-150    $151-200
                              --------------------------------------------------
                                            (dollars in millions)

                              --------------------------------------------------
FEES:

Annual Retainer payable monthly $2,400      $3,000         $3,600      $4,200
Monthly board meeting              100         150            200         250
Board Chairman per board monthly   150         200            250         300
Committee meeting                   50          75            100         125


      In addition to the fees payable above,  Mr. Jackson also receives $600 per
month from BOS,  of which he is  Chairman  of the Board,  for  appraisal  review
services.  Directors  of the  Company  currently  have the  option of  receiving
registered  shares of Common  Stock of the  Company  in lieu of  receiving  cash
payments for director fees.

Executive Officer Employment Agreements

      Harold U. Blythe, a director and the President and Chief Executive Officer
of the Company is  currently  compensated  pursuant to an  Employment  Agreement
("Blythe Employment Agreement") that was entered into in June 1995 in connection
with the  capitalization and formation of the Company by BOS and JRB. The Blythe
Employment  Agreement has a term of seven years,  commencing on July 1, 1995. In
1995,  the  Compensation  Committee  of the  Board of  Directors  ("Compensation
Committee")  established  an initial  annual salary of $109,200 under the Blythe
Employment  Agreement  which  can be  adjusted  periodically,  provided  that no
adjustment  can be made that would  provide for a salary lower than the original
$109,200.  Mr.  Blythe's  current  annual  salary  under the  Blythe  Employment
Agreement is $142,968,  which includes amounts formerly payable to Mr. Blythe as
director  fees that are now paid as  salary.  The  Blythe  Employment  Agreement
provides that in the event of a change of control of the Company following which
Mr.  Blythe  is  not  given  reasonably   equivalent,   acceptable   duties  and
responsibilities  as he had prior to the change of  control,  Mr.  Blythe may be
terminated  or resign,  and,  in either  such case,  Mr.  Blythe is  entitled to
receive 2.99 times his annual base  compensation then being paid to him pursuant
to the Blythe  Employment  Agreement.  In the event the Company  terminates  Mr.
Blythe's  employment  without  cause,  and  provided  that Mr.  Blythe  does not
thereafter  compete with the Company,  the Blythe Employment  Agreement provides
that Mr. Blythe will receive his regular  compensation  for a period of one year
following termination, or during the remaining term of the agreement,  whichever
is less.

      Effective May 1, 1996,  the Company and Mr. Blythe entered into a deferred
compensation  agreement  ("Blythe  Deferred  Agreement").  The  Blythe  Deferred
Agreement provides for the payment of certain  retirement,  death and disability
benefits.  The  retirement  benefit is payable if Mr. Blythe retires at any time
after age 60. Thereafter, the Company will pay Mr. Blythe or his beneficiaries a
base monthly benefit of $2,000 per month for 120 consecutive months. The monthly
payment  is  subject to upward or  downward  adjustment  based on cost of living
increases or decreases.  In the event that Mr. Blythe dies before his retirement
date,  the Company will pay $5,000 per month for 120  consecutive  months to Mr.
Blythe's designated  beneficiary.  In the event Mr. Blythe's employment with the
Company  terminates  prior to retirement as a result of disability,  the Company
will pay Mr.  Blythe a disability  benefit of $3,166 per month.

<PAGE>

The  disability  benefit will  continue  throughout  the period of disability or
until  Mr.  Blythe  reaches  age 60,  at which  time Mr.  Blythe  will  commence
receiving the retirement benefit described above. In addition,  in the event Mr.
Blythe  terminates  his  employment  with the Company for any reason  other than
death or disability prior to attaining age 60, the Company will pay Mr. Blythe a
lump sum termination benefit. Commencing May 1, 1998, the termination benefit is
$25,000 and increases by $25,000 on May 1 of each year thereafter for a total of
a $100,000  termination benefit should Mr. Blythe terminate employment under the
conditions described in the preceding sentence between May 1, 2001 and April 30,
2002.  After May 1, 2002, Mr. Blythe is eligible for full  retirement  benefits.
Mr.  Blythe's  deferred  compensation  arrangement is funded by a life insurance
policy on the life of Mr.  Blythe for which the Company pays premiums and is the
beneficiary.  Finally, the benefits provided under the Blythe Deferred Agreement
will   immediately   vest  and   become   nonforfietable   in  the  event  of  a
Change-in-Control of the Company as defined in the agreement.

      The Company has also entered into an employment  agreement  with Robert E.
Spencer, Jr. ("Spencer Employment Agreement"). The Spencer Employment Agreement,
which was  initially  entered into in connection  with the Colonial  Transaction
described in "Item 10 - Directors and Executive Officers of the Registrant", has
an initial  five year term that  commenced  in 1996.  The  Company is  currently
paying  Mr.  Spencer a base  salary of  $109,104  under the  Spencer  Employment
Agreement.  If Mr. Spencer is terminated  without cause, the Spencer  Employment
Agreement  provides  that he will continue to receive his salary for a period of
one year following  termination of employment.  The Spencer Employment Agreement
also  contains a change of control  provision  that is the same as that provided
for in the Blythe Employment Agreement.

      Effective  September 1, 1998, the Company and Mr.  Spencer  entered into a
deferred  compensation  agreement  ("Spencer Deferred  Agreement").  The Spencer
Deferred  Agreement  provides for the payment of certain  retirement,  death and
disability  benefits.  The retirement  benefit is payable if Mr. Spencer retires
any time after the age of 62.  Thereafter,  the Company will pay Mr.  Spencer or
his beneficiaries a base monthly benefit of $2,000 per month for 120 consecutive
months. The monthly payment is subject to upward or downward adjustment based on
cost of living increases or decreases.  In the event Mr. Spencer dies before his
retirement  date,  the  Company  will pay $5,000  per month for 120  consecutive
months to Mr.  Spencer's  designated  beneficiary.  In the  event Mr.  Spencer's
employment terminates prior to retirement as a result of disability, the Company
will pay Mr.  Spencer a disability  benefit of $3,000 per month.  The disability
benefit will continue  throughout  the period of disability or until Mr. Spencer
reaches age 62, at which time Mr. Spencer will commence receiving the retirement
benefit  described  above.  Finally,  in the event Mr.  Spencer  terminates  his
employment with the Company for any reason other than death or disability  prior
to  attaining  age 62,  the  Company  will pay a lump sum  termination  benefit.
Commencing  September 1, 2000, the termination  benefit is $50,000 and increases
by $25,000 on  September  1 for each year  thereafter  for a total of a $100,000
termination benefit should Mr. Spencer terminate employment under the conditions
described in the  preceding  sentence  between  September 1, 2002 and August 31,
2003.  After  September 1, 2003,  Mr.  Spencer is eligible  for full  retirement
benefits.  Mr.  Spencer's  deferred  compensation  agreement is funded by a life
insurance  policy on the life of Mr.  Spencer  for which  the  Company  pays the
premiums  and  is the  beneficiary.  The  Spencer  Deferred  Agreement  contains
Change-in-Control provisions similar to those in the Blythe Deferred Agreement.

      On January 1, 1998, the Company entered into an Employment  Agreement with
Donald W. Fulton,  Jr. ("Fulton  Employment  Agreement"),  pursuant to which Mr.
Fulton  serves as the  Company's  Senior  Vice  President  and  Chief  Financial
Officer.  The initial term of the Fulton Employment  Agreement was one year with
successive  one year renewals  upon the mutual  agreement of the Company and Mr.
Fulton. The Fulton Employment  Agreement was extended for a second one year term
on January 1, 1999.  Under the Fulton  Employment  Agreement,  Mr. Fulton's base
salary is currently $104,040.  Pursuant to the Fulton Employment Agreement,  the
Company  also granted Mr.  Fulton  options to purchase  22,500  shares of Common
Stock at an exercise price of $21.45 per share. The Fulton Employment  Agreement
contains  termination of employment and change of control  provisions similar to
those contained in the Blythe Employment Agreement.

      The Company and Mr. Fulton entered into a deferred compensation  agreement
("Fulton  Deferred  Agreement")  on  September  1,  1998.  The  Fulton  Deferred
Agreement  contains  similar terms and provisions as those  described above with
respect to the Spencer Deferred Agreement. In the event Mr. Fulton


<PAGE>



terminates his employment for any reason other than death or disability prior to
reaching age 62, the Company will pay a lump sum termination benefit. Commencing
January 1, 2003,  the  termination  benefit is $50,000 and increases  $15,000 on
January 1 for each year thereafter for a total of a $125,000 termination benefit
should Mr. Fulton  terminate  employment  under the conditions  described in the
preceding  sentence  between January 1, 2008 and October 31, 2008. After October
31, 2008, Mr. Fulton is eligible for full retirement benefits.

Stewart Retirement Agreement

      FCB has entered into an Early  Retirement  Agreement with James C. Stewart
("Stewart  Retirement  Agreement"),  a director of the Company and the President
and Chief  Executive  Officer of FCB. Under the terms of the Stewart  Retirement
Agreement, Mr. Stewart's last day of employment with FCB and last day of service
as a director  of FCB and the  Company  will be May 26,  1999.  FCB will pay Mr.
Stewart,  over 24  consecutive  semi-monthly  pay  periods,  an amount  totaling
$140,225,  less applicable  withholdings  required by law. Mr. Stewart will also
receive deferred compensation pursuant to the terms of his Deferred Compensation
Agreement dated November 1, 1988. Deferred  compensation  payments will commence
June 1, 1999 and will be $40,723 per year over a 15 year period.  As long as Mr.
Stewart is receiving  payments under the Stewart Retirement  Agreement,  he will
continue  to be  bound  by the  non-competition  restrictions  contained  in his
Employment  Agreement with FCB dated February 28, 1997. If Mr. Stewart  violates
these non  competition  restrictions,  he will  forfeit the right to receive any
payments otherwise due under the Stewart Retirement Agreement.

Compensation Committee Interlocks and Insider Participation

      No  member of the  Company's  Compensation  Committee  was an  officer  or
employee of the Company  during 1998.  During 1998, no executive  officer of the
Company served as a member of the Compensation  Committee of another entity, nor
did any executive  officer of the Company serve as a director of another entity,
one whose executive officers served on the Company's Compensation Committee. Two
members  of  the  Compensation  Committee,  Messrs.  Jackson  and  Butler,  have
outstanding  loans with certain of the Company's banking  subsidiaries.  Each of
these loans was made in the  ordinary  course of business on  substantially  the
same terms,  including interest rates,  collateral and repayment terms, as those
prevailing at the time for comparable  transactions  with unrelated  parties and
did not  involve  more than  normal  risk of  collectibility  or  present  other
unfavorable   features.   See  "Item  13.  Certain   Relationships  and  Related
Transactions".

Cash Bonus Program

      In 1998, the  Compensation  Committee of the Company's  Board of Directors
adopted specific criteria and parameters for awards of cash bonuses to Executive
Officers,  including certain executive  officers of the Company's  subsidiaries.
Under the Company's cash bonus program ("Bonus Program"),  bonuses are paid as a
percentage of base salary.  The  percentage  of salary  awarded as a bonus is in
turn based on the Company's or a particular  subsidiary's  net after tax income.
Executive  Officers of the Company receive bonuses based solely on the Company's
overall  financial  performance.  Executive  Officers  of  subsidiaries  receive
bonuses based solely on the financial  performance of the  subsidiaries by which
they are employed and the overall financial performance of the Company.



<PAGE>




      The Bonus Program currently  provides that, absent special  circumstances,
annual  salary  adjustments  will be  limited  to cost of living  increases.  In
addition,  the maximum bonus under the Bonus Program is 20% of base salary.  The
specific  criteria,  terms and  conditions  of the Bonus  Program are subject to
adjustment  at any time by the  Compensation  Committee.  For  1998,  a total of
$190,401 in cash bonuses was awarded  under the Bonus  Program.  The chart below
sets forth information regarding the cash bonuses for 1998 received by the Named
Executive Officers:

Name                          Bonus                   % of 1998 Base Salary (1)
----                          -----                   -------------------------

Harold U. Blythe              $16,272                             11.6%

Robert E. Spencer, Jr.        $12,838                             12.0%

Donald W. Fulton, Jr.         $12,240                             12.0%

James C. Stewart              $ 9,428                              8.4%



(1)Percentages  relate to 1998 base salary  exclusive of director  fees that are
   included in the Named Executive  Officers' salary for purposes of the Summary
   Compensation Table. See-"Summary Compensation Table."


1996 Employee Stock Option Plan

      During  1995,  the  Board  and  the  Compensation  Committee  studied  and
considered  means by which the Company could award and  compensate key employees
of the Company in a manner that would align  closely the  interests  of such key
employees  with the interests of the Company's  shareholders.  In furtherance of
this goal,  the Board  adopted the 1996  Employee  Stock  Option  Plan  ("Option
Plan"),  which was  approved by the  Company's  shareholders  at the 1996 Annual
Meeting.  The purpose of the Option Plan is to support the business goals of the
Company and to attract, retain and motivate management officials of high caliber
by providing  incentives that will,  through the award of options to acquire the
Company's  Common  Stock,  associate  more  closely the  interests  of Executive
Officers and key  employees of the Company with the  interests of the  Company's
shareholders.  Participation is limited to Executive  Officers and key employees
of the  Company  who are in  positions  in which  their  decisions,  actions and
efforts  significantly  contribute to the success of the Company.  In 1998,  the
Compensation  Committee  awarded  options  to  purchase  37,500  shares  of  the
Company's Common Stock to eligible employees.


<PAGE>




Item 12.  Security Ownership of Certain Beneficial Owners and Management

      The following table sets forth information as of March 16, 1999,  relating
to the  beneficial  ownership of the  Company's  Common Stock by (i) each of the
Company's  directors  and Named  Executive  Officers,  (ii) all of the Company's
current  directors  and Named  Executive  Officers  as a group,  and (iii) other
persons  known by the  Company  to be the  beneficial  owner of more  than  five
percent (5%) of the Company's Common Stock. Except as otherwise set forth below,
the Company is not aware of any person or group of  affiliated  persons who owns
more than 5% of the Common Stock of the Company.  All of the Company's directors
and Named Executive Officers receive mail at the Company's  principal  executive
offices at 1514 Holland Road, Suffolk, Virginia 23434.


                                       Number of Shares     Percent of
             Name                        Beneficially      Outstanding
                                             Owned            Shares

             Harold U. Blythe              38,858 (1)          1.04

             James E. Butler, Jr.          57,405 (2)          1.53

             Bruce B. Gray                 99,216 (3)          2.65

             Elmon T. Gray                 72,512 (4)          1.94

             Horace R. Higgins, Jr.         1,763                *

             G. P. Jackson                160,000              4.28

             Ben P. Kanak                  75,176 (5)          2.01

             John A. Ramsey, Jr.           51,768 (6)          1.38

             Robert E. Spencer, Jr.        44,946 (7)          1.20

             Donald W. Fulton, Jr.          5,500 (8)            *

             James C. Stewart             123,071 (9)          3.29

             Current Directors and
             Executive Officers as a
             Group (11 persons)           730,315             19.52

             Bank America Corporation(10) 190,656 (11)         5.10
             101 South Tryon Street
             Charlotte, NC 28255

---------------------------------------
*   Less than 1% ownership


 (1)  Includes (i) 22,750 shares owned jointly by Mr. Blythe and his wife,  (ii)
      75 shares  owned by Mr.  Blythe's  wife,  for which Mr.  Blythe  disclaims
      beneficial  ownership,  and (iii) 1,500 shares owned by a family trust for
      which Mr. Blythe has voting and investment power. Also includes options to
      purchase  12,358 shares of Common Stock that are  currently  exerciseable,
      which were granted  pursuant to the Company's  1996 Employee  Stock Option
      Plan ("Option Plan").
 (2)  Includes  4,485  shares  owned by Mr.  Butler's wife, for which Mr. Butler
      disclaims beneficial ownership.
 (3)  Includes (i) an  aggregate of  45,314 shares held in  six trusts for which
      Mr. Bruce Gray and Mr. Garland Gray, II share voting and investment power,
      (ii) an aggregate of 1,602 in custodian  accounts for which Mr. Bruce Gray
      and Mr.  Garland  Gray,  II share voting and  investment  power.  Does not
      include any shares beneficially owned or otherwise described in this Proxy
      Statement by or with respect to Mr. Elmon T. Gray or by Mr.  Garland Gray,
      II, Mr.  Bruce  Gray's  father and brother  respectively.  Mr.  Bruce Gray
      disclaims  beneficial ownership of any shares other than the 99,216 shares
      listed above.
 (4)  Includes (i) 6,297 shares  owned by Mr. Elmon Gray's wife, Pamela B. Gray,
      and (ii) 63,969 shares owned by various  family trusts for which Mr. Elmon
      Gray shares voting and investment power with NationsBank. Does not include
      (i) 84,721 shares owned  collectively  by Elizabeth  Gray Duff,  Mr. Elmon
      Gray's sister,  and her husband and various  children,  (ii) 93,900 shares
      owned collectively by Florence Gray Tullidge, Mr. Elmon Gray's sister, and
      her husband and various children,  (iii) 95,902 shares owned  collectively
      by Mary G.  Stettinius,  Mr.  Elmon  Gray's  sister,  and her  husband and
      various children, or (iv) 15,921 shares owned collectively by Katharine T.
      Gray, Mr. Elmon Gray's daughter,  and her various children.  Also does not
      include any shares beneficially owned or other1wise described in the Proxy
      Statement by or with respect to Mr. Bruce Gray or Mr.  Garland  Gray,  II,
      who are both sons of Mr. Elmon Gray. Mr. Elmon Gray  disclaims  beneficial
      ownership of any shares  other than the 2,246 shares he owns  individually
      and the 63,969 shares owned by family trusts as described above.
 (5)  Includes 2,571 shares  owned by Mr. Kanak's  wife,  for  which  Mr.  Kanak
      disclaims beneficial ownership.
 (6)  Includes 36,792 shares owned jointly by Mr.  Ramsey and his wife and 1,320
      shares  owned  by Mr.  Ramsey's  wife.  Mr.  Ramsey  disclaims  beneficial
      ownership of the 1,320 shares owned directly by his wife.
 (7)  Includes  options  to  purchase  9,000  shares  of Common  Stock  that are
      currently  exerciseable,  which were  granted  pursuant  to the  Company's
      Option Plan.
 (8)  Includes  options  to  purchase  4,500  shares  of Common  Stock  that are
      currently  exerciseable,  which were  granted  pursuant  to the  Company's
      Option Plan.
 (9)  Includes 1,482 shares owned by Mr.  Stewart's  wife, for which Mr. Stewart
      disclaims  beneficial  ownership  and 2,407  shares  owned  jointly by Mr.
      Stewart and his wife.  Mr.  Stewart has entered  into an Early  Retirement
      Agreement  with  FCB.  See  "Item  11.  Executive   Compensation-  Stewart
      Retirement Agreement."
(10)  Information  regarding  BankAmerica  Corporation  ("BankAmerica") has been
      derived by the Company from a Schedule 13G filed by  BankAmerica  with the
      Securities and Exchange  Commission  ("Schedule 13G"). The 13G states that
      BankAmerica   filed  the  13G  on  behalf  of  BankAmerica,   NB  Holdings
      Corporation, 100 North Tryon Center, Charlotte, NC 28255, and NationsBank,
      N.A., 110 South Tryon Street, Charlotte, NC 28255.
(11)  The Schedule  13G  indicates  that  certain of these shares are subject to
      shared voting and dispositive power.

<PAGE>

Item 13.  Certain Relationships and Related Transactions

      The  directors  and  executive  officers  of the  Company  and its banking
subsidiaries,  and their family members and certain business  organizations  and
individuals  associated  with each of them, have been customers of the Company's
various subsidiary financial  institutions with which they are affiliated,  have
had normal banking transactions, including loans, with them, and are expected to
continue to do so in the future.  As of December 31, 1998, the Company's banking
subsidiaries  had  aggregate  direct and  indirect  loans to the  directors  and
executive  officers  of  the  Company  and  its  banking  subsidiaries  totaling
approximately  $8.76  million,  which  represented   approximately  20%  of  the
Company's  shareholders'  equity as of that date. Except as set forth below with
respect to Mr.  Stewart,  each of these  transactions  was made in the  ordinary
course of business on substantially  the same terms,  including  interest rates,
collateral and repayment  terms, as those  prevailing at the time for comparable
transactions with unrelated parties and did not involve more than normal risk of
collectibility or present other unfavorable features.

      James C.  Stewart,  a Named  Executive  Officer,  currently  has two loans
outstanding  with FCB with an aggregate  principal  balance of  $120,054.  These
loans were made in 1987  and1988  under then  existing  FCB loan  policies  that
allowed FCB to make loans to its  employees  at an interest  rate equal to FCB's
cost of funds adjusted  annually.  Under these terms, the current interest rates
of Mr. Stewart's loans are 4.85% and 4.88%, respectively.  Both of Mr. Stewart's
loans are  current  with no history of payment  default  and are secured by real
property.  FCB  discontinued the policy of making below market rate loans to its
employees in 1989.

                                     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, 1998 and 1997 and for the three years  ending  December
            31,  1998,  1997 and 1996,  and the  auditors'  report  thereon  are
            incorporated  by  reference  to the pages  indicated  in the  Annual
            Report:

                        Consolidated Financial Statements         Page
                        ---------------------------------         ----
            Consolidated Balance Sheets                             16
            Consolidated Statements of Income                       17
            Consolidated Statements of Shareholders' Equity         18
            Consolidated Statements of Cash Flows                   19
            Notes to Consolidated Financial Statements              20
            Report of Independent Auditors                          15

            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.


<PAGE>




(b)        Reports on Form 8-K in quarter ended December 31, 1998: 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.


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 25, 1999.

                          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.

<TABLE>
<CAPTION>


            Signature                     Title                        Date
<S>                                 <C>                                <C>



/s/ G. P. Jackson                   Chairman of The Board              March 25, 1999
------------------------------      Director
G. P. Jackson


/s/ Bruce B. Gray                   Vice Chairman of The               March 25, 1999
------------------------------      Board and Director
Bruce B. Gray


/s/ Harold U. Blythe                President and Chief Executive      March 25, 1999
------------------------------      Officer, Director
Harold U. Blythe                    (Principal Executive Officer)



/s/ Donald W. Fulton, Jr.           Senior Vice President and          March 25, 1999
------------------------------      Chief Financial Officer
Donald W. Fulton, Jr.               (Principal Financial and
                                    Accounting Officer)



/s/ James E. Butler, Jr.            Director                           March 25, 1999
------------------------------
James E. Butler, Jr.


/s/ Elmon T. Gray                   Director                           March 25, 1999
------------------------------
Elmon T. Gray


/s/ H. R. Higgins, Jr.              Director                           March 25, 1999
------------------------------
H. R. Higgins, Jr.


/s/ Ben P. Kanak                    Director                           March 25, 1999
------------------------------
Ben P. Kanak


/s/ John A. Ramsey, Jr.             Director                           March 25, 1999
------------------------------
John A. Ramsey, Jr.


/s/ Robert E. Spencer, Jr.          Director                           March 25, 1999
------------------------------
Robert E. Spencer, Jr.


/s/ James C. Stewart                Director                           March 25, 1999
------------------------------
James C. Stewart

</TABLE>

<PAGE>



                                  EXHIBIT INDEX

<TABLE>
<CAPTION>


Exhibit
  No.                                Description
  ---                                -----------
<S>     <C>

 *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).
 *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.
*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 Goodman & Company, L.L.P.
***24.1  Power of Attorney (appears on the signature page hereto)
***27.1  Financial Data Schedule
</TABLE>

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*     (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.