Virginia Commerce Bancorp, Inc. (“Virginia Commerce” or the “Company”) (NASDAQ:VCBI), announced that it has repurchased all of the Company’s Series A Cumulative Perpetual Preferred Stock that was issued to the U.S. Treasury under the TARP Capital Purchase Program. Pursuant to the redemption, the Treasury received from Virginia Commerce $71.3 million, consisting of $71.0 million in liquidation value of the preferred stock and approximately $256 thousand in accrued and unpaid dividends for the current quarter. The redemption will eliminate approximately $5.5 million annually in cash dividends on the preferred stock and related expenses.
Peter A. Converse, President and Chief Executive Officer, commented, “We are very pleased to make this announcement which is consistent with the TARP repayment intent and application indicated in our third quarter earnings release. We believe that regulatory approval to repay TARP validates the strength and stability of Virginia Commerce and recognizes our achievements in enhancing our credit quality and maintaining strong operating performance. We are also pleased that we were able to repay TARP through retained earnings and liquidity. While this repayment strategy may have taken longer to accomplish, we believe that it served the best interests of our stockholders as we were able to avoid the expenses and potential dilutive effects associated with an additional capital raise.”
The TARP preferred stock had a carrying value of $68.6 million at September 30, 2012, net of unaccreted discount. Virginia Commerce will accelerate the accretion of the preferred stock discount in this fourth quarter of 2012, which is expected to reduce net income available to common stockholders by approximately $1.9 million, or $0.06 per diluted common share. In connection with Virginia Commerce’s participation in TARP, in 2008 the Company issued to the U.S. Treasury a warrant to purchase 2,696,203 shares of common stock. Virginia Commerce intends to negotiate with the U.S. Treasury to repurchase this warrant, subject to regulatory approval.