Virginia Commerce Bancorp, Inc. Reports Continued Earnings Improvement And Further Reductions In Non-Performing Assets

Virginia Commerce Bancorp, Inc. (the “Company”), (Nasdaq: VCBI), parent company of Virginia Commerce Bank (the “Bank”), today reported net income to common stockholders of $4.3 million, or $0.15 per diluted common share, for the second quarter of 2010, compared with a net loss of $6.4 million, or $0.24 per diluted common share, for the same period in 2009. Lower loan loss provisions and a higher net interest margin drove the year-over-year increase in earnings, while non-performing assets and loans 90+ days past due declined $17.2 million during the quarter.

Peter A. Converse, Chief Executive Officer, commented, “It is gratifying to be able to report a third consecutive quarter of improved earnings as well as a meaningful reduction in non-performing assets. We are certainly encouraged by the earnings progress year-to-date as net income available to common stockholders for the six months ended June 30 exceeded $7.5 million as compared to a net loss of $9.6 million for the same period last year. The turnaround continues to benefit from lower provisioning expense and strong core earnings.”

Converse continued, “We remain optimistic that we can sustain the positive metrics that are driving our performance, especially our higher net interest margin and strong efficiency ratio. Additionally, continued progress in working through our problem assets should enable us to realize further reductions in loan loss provisioning and other credit costs. We still feel the most likely case for year-end NPAs and loans 90+ days past due to total assets will be in the 2.00 to 2.50% range.”

“The prospects for enhancing our banking franchise and stockholder value appear to be on the right track. We look forward to taking advantage of market opportunities as the economy strengthens.”

SUMMARY REVIEW OF FINANCIAL PERFORMANCE

Net Income (Loss)

For the three months ended June 30, 2010, the Company recorded net income of $5.6 million. After an effective dividend of $1.3 million to the U.S. Treasury on preferred stock, the Company reported net income to common stockholders of $4.3 million, or $0.15 per diluted common share, compared to a net loss to common stockholders of $6.4 million, or $0.24 per diluted common share, in the second quarter of 2009. For the six months ended June 30, 2010, the Company reported net income to common stockholders of $7.5 million, or $0.26 per diluted common share, compared to a net loss to common stockholders of $9.6 million for the same period in 2009. Earnings improvement for both the three-and six-month periods were attributable to lower provisions for loan losses and a higher net interest margin.

Core operating earnings for the three months ended June 30, 2010, were $14.2 million, up $3.7 million, or 36.1%, compared to $10.5 million for the three months ended June 30, 2009. On a sequential basis, core operating earnings were up $1.8 million for the three months ended June 30, 2010. The Company calculates core operating earnings by excluding taxes, provisions for loan losses, losses on other real estate owned and losses on securities from net income.

Asset Quality and Provisions For Loan Losses

Provisions for loan losses were $4.2 million for the quarter ended June 30, 2010, compared to $18.4 million in the same period in 2009, with total net charge-offs of $4.3 million in the second quarter of 2010 versus $16.9 million for the same period a year ago. For the six months ended June 30, 2010, provisions for loan losses totaled $8.4 million compared to $31.8 million for the prior year period, with 2010 year-to-date net charge-offs of $11.2 million significantly reduced from $29.3 million in the first half of 2009.

Total non-performing assets and loans 90+ days past due declined from $139.6 million at June 30, 2009, to $91.6 million at June 30, 2010, and decreased $17.2 million sequentially from $108.8 million at March 31, 2010. As of June 30, 2010, the allowance for loan losses represented 2.77% of total loans, up slightly from 2.75% at March 31, 2010, with such allowance covering 95.7% of total non-performing loans.

Non-performing loans continue to be concentrated in residential and commercial construction and land development loans in outer sub-markets hardest hit by the residential downturn and commercial and consumer credits experiencing the after shocks in sub-contracting businesses and workforce employment. Overall, as of June 30, 2010, $37.8 million, or 58.0%, of non-performing loans represented acquisition, development and construction (“ADC”) loans, $16.3 million, or 25.1%, represented non-farm, non-residential loans, $5.6 million, or 8.6%, represented commercial and industrial loans and $5.3 million, or 8.1%, represented loans on one-to-four family residential properties.

Charge-offs for the quarter were impacted by $2.5 million in recoveries realized from continued collection activities, the most significant of which totaled $1.9 million relating to the sale of business assets of a retirement community developer to an acquiring entity.

Included in the loan portfolio are loans classified as troubled debt restructurings (“TDRs”) totaling $97.0 million. These loans represent situations in which a modification to the contractual interest rate or repayment structure has been granted to address a financial hardship. These loans make up 4.3% of the total loan portfolio and represent $48.6 million in ADC loans, $31.2 million in non-farm, non-residential real estate loans, $11.8 million in commercial loans and $5.3 million in one-to four family residential loans. TDRs at quarter-end included only one loan in the amount of $624 thousand which was over 30 days past due based upon modified terms.

Net Interest Income

Net interest income of $26.2 million for the second quarter of 2010 was up $4.2 million, or 19.2% over the same quarter last year, due primarily to an increase in the net interest margin from 3.35% in the second quarter of 2009 to 3.89% for the current three-month period. Year-to-date net interest income of $51.0 million was up 19.4%, compared to $42.8 million in 2009. On a sequential basis, the margin was up ten basis points. The year-over-year increases in the net interest margin were driven by lower deposit costs due to significant reductions in the level of time deposits, and increased levels of demand deposits and lower rate interest-bearing transaction accounts. As a result, the average cost of interest-bearing deposits fell from 2.72% in the second quarter of 2009, to 1.89% in the second quarter of 2010, while the yield on interest-earning assets declined only fifteen basis points from 5.65% to 5.50%. Management anticipates the net interest margin will range between 3.7% and 3.9% over the remainder of the year.

Non-Interest Income (Loss)

For the three months ended June 30, 2010, the Company recognized $28 thousand of non-interest income, down from $1.9 million for the three months ended June 30, 2009. The Company recognized a non-interest loss of $283 thousand for the six months ended June 30, 2010, compared to non-interest income of $3.8 million for the same period in 2009. Non-interest income for the second quarter includes $1.1 million in losses on other real estate owned and $668 thousand in impairment losses on securities, while in the second quarter of 2009, non-interest income included $108 thousand in impairment losses on securities and no losses on other real estate owned. Non-interest income generated by service charges and other fees, non-deposit investment services commissions, fees and net gains on mortgage loans held for sale, and gain on sale of securities decreased $287 thousand during the second quarter of 2010 from the first quarter of 2010, and decreased by $839 thousand for the six months ended June 30, 2010, from the same period last year.

Non-Interest Expense

Non-interest expense increased $142 thousand, or 1.0%, from $13.6 million in the second quarter of 2009 to $13.7 million in the second quarter of 2010, and was up $908 thousand, or 3.4%, from $26.6 million for the six months ended June 30, 2009, to $27.5 million year-to-date June 30, 2010. Compared to the first quarter of 2010, non-interest expense was down $61 thousand. The majority of the year-over-year increases were due to higher legal and professional services expenses associated with the collection of non-performing loans and higher expenses on other real estate owned. As a result of a minimal increase in overhead and higher levels of net interest income, the efficiency ratio improved from 56.7% in the second quarter of 2009 to 50.3% in the second quarter of 2010.

Investment Securities

Investment securities increased $70.1 million, or 22.7%, year-over-year to $379.2 million at June 30, 2010, and were up $45.1 million sequentially from March 31, 2010. U.S. Government agency securities, including callable step-up bonds and collateralized mortgage obligations (CMOs) comprised a majority of the increases as slower loan growth and increases in deposits provided higher levels of investable funds. The portfolio contains four pooled trust preferred securities with an amortized cost basis of $6.3 million for which the Bank performs a quarterly analysis for other than temporary impairment due to significantly depressed current market quotes. The analysis includes stress tests on the underlying collateral and cash flow estimates based on the current and projected future levels of deferrals and defaults within each pool. Based on the most recent analysis, the Bank recorded an aggregate impairment loss of $668 thousand on three of the four pools in the second quarter of 2010, and an aggregate of $3.3 million to date.

Loans

Loans, net of allowance for loan losses, decreased $30.0 million, or 1.4%, from $2.22 billion at June 30, 2009, to $2.19 billion at June 30, 2010. Non-farm, non-residential real estate loans increased $98.8 million, or 9.5%, and one-to-four family residential loans increased $49.9 million, or 13.5%, while acquisition, development and construction loans fell by $127.4 million, or 25.2%, and commercial loans were down $42.0 million, or 16.1%. Sequentially, net loans were down $15.2 million, or 0.7%. Year-over-year loan production has been negatively impacted by lower economic activity and demand for credit in both the business and consumer sectors, a reallocation of lending personnel to problem loan identification and resolution and a strategic decision to restrict acquisition, development and construction lending and focus on deposit generation and non-credit products. Lending efforts are being focused on building greater market share in commercial lending, especially in sectors forecast for growth, such as government contract lending, professional practices and associations and select service industries, with strategic hiring, marketing campaigns and calling efforts.

Deposits

For the twelve months ended June 30, 2010, deposits increased $122.6 million, or 5.6%, to $2.31 billion, with demand deposits increasing $14.8 million, or 6.2%, savings and interest-bearing demand deposits increasing by $435.1 million, or 57.3%, and time deposits falling $327.3 million, or 27.5%. Sequentially, deposits rose $14.1 million, or 0.6%, with demand deposits increasing by $22.7 million, or 9.8%, savings and interest-bearing demand accounts growing $106.7 million, or 9.8%, and time deposits decreasing by $115.4 million, or 11.8%. The increases in demand deposits are primarily due to successful deposit gathering efforts led by the Company’s team of eight business development officers who are focused on acquisition and retention of commercial operating funds, cash management services and other related cross-sales. The increases in savings and interest-bearing demand deposits were due primarily to success with the Company’s MEGA Savings and MEGA Checking account products as well as its Premier Interest Checking for non-profits. The declines in time deposits are reflective of lower loan volume requiring lower levels of funding, and strategic pricing of certificates of deposits relative to both the competitive market and the Company’s pricing on interest-bearing transaction accounts. The proportionate share of time deposits to total deposits has declined from a peak of 67.2% at year-end 2008 to 37.4% as of June 30, 2010. Brokered certificates of deposit represent $60.1 million of total time deposits, or 2.6% of total deposits, at June 30, 2010.

Capital Levels and Stockholders’ Equity

Stockholders’ equity decreased $12.7 million, or 5.2%, from $243.0 million at June 30, 2009 to $230.3 million at June 30, 2010, with a net loss to common stockholders of $20.7 million over the twelve-month period, a $5.5 million increase in other comprehensive income related to the investment securities portfolio, and $1.1 million in proceeds and tax benefits related to the exercise of options by Company directors and officers, and stock option expense credits. As a result of these changes, the Company’s Tier 1 capital ratio decreased from 12.72% at June 30, 2009, to 12.13% at June 30, 2010, and its total qualifying capital ratio decreased from 13.97% to 13.38%. The Bank’s ratios declined by similar levels. Sequentially, the Company’s and Bank’s Tier 1 and total qualifying capital ratios are up 22 and 28 basis points, respectively.

RUSSELL 2000 ® INDEX

The Company also announced that it has been added to the Russell 2000 ® Index and the Russell 3000 ® Index in connection with the annual rebalancing of the Russell family of indices by Russell Investments. The annual rebalancing captures the 3,000 largest U.S. stocks as of the end of May, ranking them by total market capitalization. The largest 1,000 companies in this ranking comprise the Russell 1000 ® Index, and the next 2,000 companies become the Russell 2000. The Russell indices are used by investment managers and institutional investors for index funds and as benchmarks for both passive and active investment strategies.

CONFERENCE CALL

The Company will host a teleconference call for the financial community on July 19, 2010, at 10:00 a.m. Eastern Daylight Time to discuss the second quarter 2010 financial results. The public is invited to listen to this conference call by dialing 866-244-4629 at least 10 minutes prior to the call.

A replay of the conference call will be available from 1:00 p.m. Eastern Daylight Time on July 19, 2010, until 11:59 p.m. Eastern Daylight Time on July 26, 2010. The public is invited to listen to this conference call replay by dialing 888-266-2081 and entering access code 1470538.

ABOUT VIRGINIA COMMERCE BANCORP, INC.

Virginia Commerce Bancorp, Inc. is the parent bank holding company for Virginia Commerce Bank, a Virginia state chartered bank that commenced operations in May 1988. The Bank pursues a traditional community banking strategy, offering a full range of business and consumer banking services through twenty-eight branch offices, one residential mortgage office and one wealth management services office, principally to individuals and small-to-medium size businesses in Northern Virginia and the Metropolitan Washington, D.C. area.

NON-GAAP PRESENTATIONS

The Company prepares its financial statements under accounting principles generally accepted in the United States, or “GAAP”. However, this press release also refers to certain non-GAAP financial measures that we believe, when considered together with GAAP financial measures, provide investors with important information regarding our operational performance. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

Core operating earnings is a non-GAAP financial measure that reflects net income excluding taxes, loan loss provisions, losses on other real estate owned and impairment losses on securities from net income. These excluded items are difficult to predict and we believe that core operating earnings provides the Company and investors with a valuable measure of the performance of the Company’s operational performance and a valuable tool to evaluate the Company’s financial results.

The adjusted efficiency ratio is a non-GAAP financial measure that is computed by dividing non-interest expense by the sum of net interest income on a tax equivalent basis and non-interest income before losses on other real estate owned. We believe that this measure provides investors with important information about our operating efficiency. Comparison of our adjusted efficiency ratio with those of other companies may not be possible because other companies may calculate the adjusted efficiency ratio differently.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies, including but not limited to our outlook on earnings, including our future net interest margin, and statements regarding asset quality, projected growth, capital position, our plans regarding and expected future levels of our non-performing assets, business opportunities in our markets, and general economic conditions. When we use words such as “may”, “will”, “anticipates”, “believes”, “expects”, “plans”, “estimates”, “potential”, “continue”, “should”, and similar words or phrases, you should consider them as identifying forward-looking statements. These forward-looking statements are not guarantees of future performance. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast, and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this release and the forward-looking statements are based, actual future operations and results may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company’s past results are not necessarily indicative of future performance.
           
Virginia Commerce Bancorp, Inc.
Financial Highlights
(Dollars in thousands, except per share data)
(Unaudited)
 
 
Three Months Ended June 30,   Six Months Ended June 30,
2010   2009   % Change   2010   2009   % Change
Summary Operating Results:
Interest and dividend income $ 37,161 $ 37,183 -0.1 % $ 73,888 $ 74,737 -1.1 %
Interest expense 10,940 15,183 -27.9 % 22,851 31,980 -28.5 %
Net interest income 26,221 22,000 19.2 % 51,037 42,757 19.4 %
Provision for loan losses 4,200 18,423 -77.2 % 8,438 31,813 -73.5 %
Non-interest income (charges) 28 1,949 -98.6 % (283 ) 3,769 -107.5 %
Non-interest expense 13,728 13,586 1.0 % 27,517 26,609 3.4 %
Income (loss) before income taxes 8,321 (8,060 ) -203.2 % 14,799 (11,896 ) -224.4 %
Net income (loss) $ 5,571 $ (5,184 ) -207.5 % $ 10,040 $ (7,593 ) -232.2 %
Effective dividend on preferred stock 1,251 1,251 0.0 % 2,502 2,038 22.8 %
Net income (loss) available to common stockholders $ 4,320 $ (6,435 ) -167.1 % $ 7,538 $ (9,631 ) -178.3 %
 
Performance Ratios:
Return on average assets 0.79 % -0.77 % 0.72 % -0.56 %
Return on average equity 9.82 % -8.36 % 9.01 % -6.11 %
Net interest margin 3.89 % 3.35 % 3.84 % 3.25 %
Efficiency ratio, adjusted (1) 50.3 % 56.7 % 52.2 % 57.2 %
 
Per Share Data:
Earnings (loss) per common share-basic $ 0.16 $ (0.24 ) 166.7 % $ 0.28 $ (0.36 ) 177.8 %
Earnings (loss) per common share-diluted $ 0.15 $ (0.24 ) 162.5 % $ 0.26 $ (0.36 ) 172.2 %
Average number of shares outstanding:
Basic 26,945,284 26,691,430 26,939,603 26,693,074
Diluted 28,553,907 26,909,417 28,282,392 27,001,579
 
 
 
As of June 30,      
2010   2009   % Change 03/31/10   12/31/09
Selected Balance Sheet Data:
Loans, net $ 2,187,912 $ 2,217,945 -1.4 % $ 2,203,156 $ 2,210,064
Investment securities 379,212 309,090 22.7 % 334,160 348,585
Assets 2,826,807 2,699,494 4.7 % 2,803,004 2,725,297
Deposits 2,314,086 2,191,473 5.6 % 2,299,989 2,229,327
Stockholders’ equity 230,331 243,013 -5.2 % 224,259 218,868
Book value per common share $ 5.91 $ 6.44 -8.2 % $ 5.69 $ 5.53
 
Capital Ratios (% of risk weighted assets):
Tier 1 capital:
Company 12.13 % 12.72 % 11.91 % 11.48 %
Bank 12.09 % 12.68 % 11.81 % 11.41 %
Total qualifying capital:
Company 13.38 % 13.97 % 13.16 % 12.73 %
Bank 13.34 % 13.93 % 13.06 % 12.66 %
Tier 1 leverage:
Company 10.37 % 11.39 % 10.34 % 10.29 %
Bank 10.36 % 11.35 % 10.29 % 10.23 %
Tangible common equity:
Company 5.86 % 6.66 % 5.70 % 5.68 %
Bank 10.39 % 11.34 % 10.20 % 10.32 %
 
        (1)   Computed by dividing non-interest expense by the sum of net interest income on a tax-equivalent basis using a 35% rate and non-interest income before losses on other real estate owned.
 
       
As of June 30,      
2010   2009 03/31/10   12/31/09
 
Asset Quality:
Non-performing assets:
Non-accrual loans:
Commercial $ 5,346 $ 12,259 $ 9,931 $ 6,929
Real estate-one-to-four family residential:
Closed end first and seconds 4,369 3,843 4,610 5,769
Home equity lines   630     494     693     420  
Total Real estate-one-to-four family residential $ 4,999 $ 4,337 $ 5,303 $ 6,189
Real estate-multi-family residential -- -- -- --
Real estate-non-farm, non-residential:
Owner Occupied 8,045 6,462 9,019 8,600
Non-owner occupied   8,298     8,460     14,871     6,506  
Total Real estate-non-farm, non-residential $ 16,343 $ 14,922 $ 23,890 $ 15,106
Real estate-construction:
Residential-Owner Occupied -- 2,389 -- 517
Residential-Builder 30,877 53,251 36,078 30,110
Commercial   6,911     18,955     6,911     6,911  
Total Real estate-construction: $ 37,788 $ 74,595 $ 42,989 $ 37,538
Consumer   122     23     119     47  
Total Non-accrual loans 64,598 106,136 $ 82,232 $ 65,809
OREO   26,477     28,198     26,269     28,499  
Total non-performing assets $ 91,075 $ 134,334 $ 108,501 $ 94,308
 
Loans 90+ days past due and still accruing:
Commercial $ 264 $ 251 $ 45 $ 3,797
Real estate-one-to-four family residential:
Closed end first and seconds 280 482 238 --
Home equity lines   --     --     --     --  
Total Real estate-one-to-four family residential $ 280 $ 482 $ 238 $ --
Real estate-multi-family residential -- 1,506 -- --
Real estate-non-farm, non-residential:
Owner Occupied -- -- -- --
Non-owner occupied   --     703     --     --  
Total Real estate-non-farm, non-residential $ -- $ 703 $ -- $ --
Real estate-construction:
Residential-Owner Occupied -- -- -- --
Residential-Builder -- 2,290 26 26
Commercial   --     --     --     --  
Total Real estate-construction: $ -- $ 2,290 $ 26 $ 26
Consumer   --     --     9     3  
Total loans 90+ days past due and still accruing $ 544 $ 5,232 $ 318 $ 3,826
 
Total non-performing assets and past due loans $ 91,619 $ 139,566 $ 108,819 $ 98,134
 
Troubled debt restructurings $ 96,976 $ 31,787 $ 80,993 $ 71,885
 
Non-performing assets
to total loans: 4.04 % 5.94 % 4.78 % 4.14 %
to total assets: 3.22 % 4.98 % 3.87 % 3.46 %
Non-performing assets and past due loans
to total loans: 4.06 % 6.18 % 4.79 % 4.31 %
to total assets: 3.24 % 5.17 % 3.88 % 3.60 %
Allowance for loan losses to total loans 2.77 % 1.72 % 2.75 % 2.86 %
Allowance for loan losses to non-performing loans 95.71 % 35.00 % 75.60 % 93.56 %
 
Total allowance for loan losses $ 62,345 $ 38,978 $ 62,407 $ 65,152
 
 
 

As of June 30,
     
2010   2009 03/31/10   12/31/09
 
Loans 30 to 89 days past due
Commercial $ 73 $ 3,442 $ 393 $ 866
Real estate-one-to-four family residential:
Closed end first and seconds 3,374 6,317 1,233 352
Home equity lines   830     559     3,225     139  
Total Real estate-one-to-four family residential $ 4,204 $ 6,876 $ 4,458 $ 491
Real estate-multi-family residential -- -- -- --
Real estate-non-farm, non-residential:
Owner Occupied 1,612 3,932 2,184 1,854
Non-owner occupied   2,129     4,749     5,277     --  
Total Real estate-non-farm, non-residential $ 3,741 $ 8,681 $ 7,461 $ 1,854
Real estate-construction:
Residential-Owner Occupied -- -- -- --
Residential-Builder 2,270 -- 1,079 1,370
Commercial   --     --     --     --  
Total real estate-construction: $ 2,270 $ -- $ 1,079 $ 1,370
Farmland -- -- -- --
Consumer   55     244     110     141  
Total loans 30 to 89 days past due $ 10,343 $ 19,243 $ 13,501 $ 4,722
 

For six months ended

June 30,

For three

months

ended
 

For twelve

months

ended
2010   2009 03/31/10   12/31/09
 
Net charge-offs
Commercial $ 3,748 $ 3,176 $ 2,491 $ 15,578
Real estate-one-to-four family residential:
Closed end first and seconds 2,249 1,156 1,964 1,825
Home equity lines   88     824     (14 )   1,465  
Total Real estate-one-to-four family residential $ 2,337 $ 1,980 $ 1,950 $ 3,290
Real estate-multi-family residential -- -- -- --
Real estate-non-farm, non-residential:
Owner Occupied 1,273 211 760 1,901
Non-owner occupied   1,336     --     188     58  
Total Real estate-non-farm, non-residential $ 2,609 $ 211 $ 948 $ 1,959
Real estate-construction:
Residential-Owner Occupied 116 702 116 1,012
Residential-Builder 2,581 12,896 953 17,556
Commercial   (283 )   10,223     (125 )   13,492  
Total real estate-construction: $ 2,414 $ 23,821 $ 944 $ 32,060
Farmland -- -- -- --
Consumer   138     122     650     349  
Total net charge-offs $ 11,246 $ 29,310 $ 6,983 $ 53,236
Net charge-offs to average loans outstanding 0.49 % 1.27 % 0.31 % 2.34 %
 
Total provision for loan losses $ 8,438 $ 31,813 $ 4,238 $ 81,913
 
         
As of June 30,      
2010   2009   % Change 03/31/10   % Change
 
Loan Portfolio:
Commercial $ 217,859 $ 259,812 -16.1 % $ 224,498 -2.9 %
Real estate-one to four family residential:
Closed end first and seconds 284,118 236,523 20.1 % 278,708 1.9 %
Home equity lines   135,508   133,176 1.8 %   134,638 0.6 %
Total Real estate-one-to-four family residential $ 419,626 $ 369,699 13.5 % $ 413,346 1.5 %
Real estate-multifamily residential 84,453 69,616 21.3 % 72,560 16.4 %
Real estate-non-farm, non-residential:
Owner Occupied 483,032 428,372 12.8 % 464,338 4.0 %
Non-owner occupied   657,957   613,825 7.2 %   659,687 -0.3 %
Total Real estate-non-farm, non-residential $ 1,140,989 $ 1,042,197 9.5 % $ 1,124,025 1.5 %
Real estate-construction:
Residential-Owner Occupied 16,792 23,047 -27.1 % 17,707 -5.2 %
Residential-Builder 182,962 259,370 -29.5 % 210,600 -13.1 %
Commercial   179,192   223,916 -20.0 %   194,019 -7.6 %
Total Real estate-construction: $ 378,946 $ 506,333 -25.2 % $ 422,326 -10.3 %
Farmland 2,299 2,678 -14.2 % 2,673 -14.0 %
Consumer   9,969   10,532 -5.3 %   10,014 -0.5 %
Total loans $ 2,254,141 $ 2,260,867 -0.3 % $ 2,269,442 -0.7 %
Less unearned income 3,884 3,944 -1.5 % 3,879 0.1 %
Less allowance for loan losses   62,345   38,978 59.9 %   62,407 -0.1 %
Loans, net $ 2,187,912 $ 2,217,945 -1.4 % $ 2,203,156 -0.7 %
 
   
As of June 30, 2010
Residential, Acquisition, Development and Construction

 

By County/Jurisdiction of Origination:

Total

Outstandings
 

Percentage

of Total
 

Non-accrual

Loans
 

Non-accruals

as a % of

Outstandings
 

Net charge-

offs as a % of

Outstandings
District of Columbia $ 4,523   2.3 % $ --   --   --
Montgomery, MD 6,459 3.2 % 5,157 2.6 % 0.5 %
Prince Georges, MD 21,830 10.9 % 1,390 0.7 % --
Other Counties in MD 5,081 2.5 % -- -- 0.1 %
Arlington/Alexandria, VA 36,958 18.5 % 3,669 1.8 % --
Fairfax, VA 48,462 24.4 % 4,301 2.2 % 0.5 %
Culpeper/Fauquier, VA 4,453 2.2 % 3,368 1.7 % 0.2 %
Frederick, VA 6,281 3.1 % 6,250 3.1 % --
Loudoun, VA 27,784 13.9 % 770 0.4 % --
Prince William, VA 7,294 3.7 % 1,073 0.5 % --
Spotsylvania, VA 562 0.3 % -- -- --
Stafford, VA 22,684 11.3 % 4,899 2.5 % --
Other Counties in VA 6,217 3.1 % -- -- --
Outside VA, D.C. & MD   1,166 0.6 %   -- --   --  
$ 199,754 100.0 % $ 30,877 15.5 % 1.3 %
 
                   
As of June 30, 2010
Commercial, Acquisition, Development and Construction

 

By County/Jurisdiction of Origination:

Total

Outstandings
 

Percentage

of Total
 

Non-accrual

Loans
 

Non-accruals

as a % of

Outstandings
 

Net charge-

offs as a % of

Outstandings
District of Columbia $ 16,611   9.3 % $ --   --   --
Montgomery, MD 1,385 0.8 % -- -- --
Prince Georges, MD 12,175 6.7 % -- -- --
Other Counties in MD 9,447 5.3 % -- -- --
Arlington/Alexandria, VA 9,312 5.2 % -- -- --
Fairfax, VA 20,994 11.6 % -- -- -0.2 %
Culpeper/Fauquier, VA 3,020 1.7 % -- -- --
Henrico, VA 833 0.5 % -- -- --
Loudoun, VA 32,749 18.2 % 4,797 2.7 % --
Prince William, VA 37,730 21.1 % 2,114 1.2 % --
Spotsylvania, VA 2,698 1.5 % -- -- --
Stafford, VA 30,026 16.8 % -- -- --
Other Counties in VA 1,562 0.9 % -- -- --
Outside VA, D.C. & MD   650 0.4 %   -- --   --  
$ 179,192 100.0 % $ 6,911 3.9 % -0.2 %
 
                   
As of June 30, 2010
Non-Farm/Non-Residential

 

By County/Jurisdiction of Origination:

Total

Outstandings
 

Percentage

of Total
 

Non-accrual

Loans
 

Non-accruals

as a % of

Outstandings
 

Net charge-

offs as a % of

Outstandings
District of Columbia $ 76,241   6.7 % $ --   --   --
Montgomery, MD 36,032 3.2 % 7,575 0.7 % 0.1 %
Prince Georges, MD 59,064 5.2 % 1,128 0.1 % --
Other Counties in MD 47,499 4.2 % -- -- --
Arlington/Alexandria, VA 182,539 16.0 % 3,945 0.3 % --
Fairfax, VA 275,441 24.1 % -- -- --
Culpeper/Fauquier, VA 6,189 0.5 % -- -- --
Frederick, VA 6,347 0.6 % -- -- --
Henrico, VA 30,860 2.7 % 1,500 0.1 % --
Loudoun, VA 111,867 9.8 % 628 0.1 % 0.1 %
Prince William, VA 198,419 17.4 % 1,341 0.1 % --
Spotsylvania, VA 19,951 1.7 % -- -- --
Stafford, VA 21,950 1.9 % -- -- --
Other Counties in VA 58,468 5.1 % 226 0.0 % --
Outside VA, MD & DC   10,122 0.9 %   -- --   --  
$ 1,140,989 100.0 % $ 16,343 1.4 % 0.2 %
 
Of this total of $1.1 billion in non-farm/non-residential real estate loans, approximately $37.7 million will mature in 2010, $59.1 million in 2011 and $60.3 million in 2012.
 
         
As of June 30,        
2010   2009   % Change   3/31/10   % Change
 
Investment Securities (at book value):
Available-for-sale:
U.S. Government Agency obligations $ 277,282 $ 204,896 35.3 % $ 234,811 18.1 %
Pooled trust preferred securities 1,481 1,864 -20.5 % 1,772 -16.4 %
Obligations of states and political subdivisions   57,249   40,219 42.3 %   43,209 32.5 %
$ 336,012 $ 246,979 36.0 % $ 279,792 20.1 %
Held-to-maturity:
U.S. Government Agency obligations $ 9,556 $ 15,258 -37.4 % $ 10,906 -12.4 %
Obligations of states and political subdivisions   33,644   46,853 -28.2 %   43,462 -22.6 %
$ 43,200 $ 62,111 -30.4 % $ 54,368 -20.5 %
 
   
Virginia Commerce Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
As of June 30,
(Unaudited)
 
2010 2009
Assets
Cash and due from banks $ 29,026 $ 31,693
Investment securities (fair value: 2010, $380,247; 2009, $310,348) 379,212 309,090
Restricted stocks, at cost 11,752 11,752
Federal funds sold 91,502 22,999
Loans held-for-sale 9,620 12,940
Loans, net of allowance for loan losses of $62,345 in 2010 and $38,978 in 2009 2,187,912 2,217,945
Bank premises and equipment, net 12,738 14,601
Accrued interest receivable 10,317 9,826
Other real estate owned, net of valuation allowance of $5,871 in 2010, and $0 in 2009 26,477 28,198
Other assets   68,251   40,050
Total assets $ 2,826,807 $ 2,699,494
Liabilities and Stockholders’ Equity
Deposits
Demand deposits $ 254,475 $ 239,658
Savings and interest-bearing demand deposits 1,194,985 759,861
Time deposits   864,626   1,191,954
Total deposits $ 2,314,086 $ 2,191,473
Securities sold under agreement to repurchase and federal funds purchased 183,456 165,730
Other borrowed funds 25,000 25,000
Trust preferred capital notes 66,185 65,929
Accrued interest payable 3,293 5,237
Other liabilities   4,456   3,112
Total liabilities $ 2,596,476 $ 2,456,481
Stockholders’ Equity
Preferred stock, net of discount, $1.00 par, 1,000,000 shares authorized, Series A; $1,000.00 stated value; 71,000 issued and outstanding $ 64,719 $ 63,267
Common stock, $1.00 par, 50,000,000 shares authorized, issued and outstanding 2010, 26,949,173 including 9,335 in unvested restricted stock issued; 2009, 26,693,074 26,940 26,693
Surplus 97,061 96,200
Warrants 8,520 8,520
Retained earnings 30,210 50,904
Accumulated other comprehensive income (loss), net   2,881   (2,571)
Total stockholders’ equity $ 230,331 $ 243,013
Total liabilities and stockholders’ equity $ 2,826,807 $ 2,699,494
 
   
Virginia Commerce Bancorp, Inc.
Consolidated Statements of Operations
(Dollars in thousands except per share data)
(Unaudited)
 
Three Months Ended Six Months Ended
June 30,   June 30,
2010   2009   2010   2009
Interest and dividend income:    
Interest and fees on loans $ 33,236 $ 33,186 $ 66,141 $ 66,629
Interest and dividends on investment securities:
Taxable 3,311 3,495 6,591 7,157
Tax-exempt 476 406 902 751
Dividends on restricted stocks 88 84 176 168
Interest on federal funds sold   50     12     78     32
Total interest and dividend income $ 37,161   $ 37,183   $ 73,888   $ 74,737
Interest expense:
Deposits $ 8,431 $ 12,796 $ 17,859 $ 27,427

Securities sold under agreement to repurchase and federal funds purchased
1,010 835 1,999 1,455
Other borrowed funds 268 269 534 534
Trust preferred capital notes   1,231     1,283     2,459     2,564
Total interest expense $ 10,940   $ 15,183   $ 22,851   $ 31,980
Net interest income $ 26,221 $ 22,000 $ 51,037 $ 42,757
Provision for loan losses   4,200     18,423     8,438     31,813
Net interest income after provision for loan losses $ 22,021   $ 3,577   $ 42,599   $ 10,944
Non-interest income (charges):
Service charges and other fees $ 838 $ 903 $ 1,714 $ 1,790
Non-deposit investment services commissions 178 122 307 279
Fees and net gains on loans held-for-sale 483 952 829 1,759
Loss on other real estate owned (1,060) -- (1,978) --
Gain on sale of securities 139 -- 139 --
Impairment loss on securities (668) (108) (1,519) (138)
Other   118     80     225     79
Total non-interest income (charges) $ 28   $ 1,949   $ (283)   $ 3,769
Non-interest expense:
Salaries and employee benefits $ 5,991 $ 5,694 $ 11,986 $ 11,615
Occupancy expense 2,410 2,437 5,120 5,204
FDIC insurance 1,332 1,884 2,641 2,796
Franchise tax expense 718 775 1,435 1,550
Data processing expense 579 576 1,253 1,176
Other operating expense   2,698     2,220     5,082     4,268
Total non-interest expense $ 13,728   $ 13,586   $ 27,517   $ 26,609
Income (loss) before taxes $ 8,321 $ (8,060) $ 14,799 $ (11,896)
Provision (benefit) for income taxes   2,750     (2,876)     4,759     (4,303)
Net income (loss) $ 5,571   $ (5,184)   $ 10,040   $ (7,593)
Effective dividend on preferred stock   1,251     1,251     2,502     2,038
Net income (loss) available to common stockholders $ 4,320 $ (6,435) $ 7,538 $ (9,631)
Earnings (loss) per common share, basic $ 0.16 $ (0.24) $ 0.28 $ (0.36)
Earnings (loss) per common share, diluted $ 0.15 $ (0.24) $ 0.26 $ (0.36)
 
           
Virginia Commerce Bancorp, Inc.
Consolidated Average Balances, Yields, and Rates
Three Months Ended June 30,
(Unaudited)
                   
2010 2009
(Dollars in thousands)

AverageBalance
 

InterestIncome-Expense
 

AverageYields/Rates

AverageBalance
 

InterestIncome-Expense
 

AverageYields/Rates
Assets
Securities (1) $ 362,411 $ 3,787 4.30 % $ 322,735 $ 3,901 5.02 %
Restricted stock 11,752 88 3.00 % 11,752 84 2.87 %
Loans, net of unearned income (2) 2,266,145 33,236 5.89 % 2,294,007 33,186 5.81 %
Interest-bearing deposits in other banks 186 -- 0.06 % 79 -- 0.12 %
Federal funds sold   85,797     50   0.23 %   27,400     12   0.17 %
Total interest-earning assets $ 2,726,291 $ 37,161 5.50 % $ 2,655,973 $ 37,183 5.65 %
Other assets   87,131   60,769
Total Assets $ 2,813,422 $ 2,716,742
 
Liabilities and Stockholders’ Equity
Interest-bearing deposits:
NOW accounts $ 369,336 $ 817 0.89 % $ 229,785 $ 717 1.25 %
Money market accounts 155,482 479 1.23 % 160,923 573 1.43 %
Savings accounts 638,407 2,480 1.56 % 304,347 1,720 2.27 %
Time deposits   885,828     4,655   2.11 %   1,264,340     9,786   3.10 %
Total interest-bearing deposits $ 2,049,053 $ 8,431 1.65 % $ 1,959,395 $ 12,796 2.62 %
Securities sold under agreement to repurchase and federal funds purchased 185,343 1,010 2.18 % 187,897 835 1.78 %
Other borrowed funds 25,000 268 4.25 % 25,000 269 4.25 %
Trust preferred capital notes   66,154     1,231   7.36 %   65,898     1,283   7.70 %
Total interest-bearing liabilities $ 2,325,550 $ 10,940 1.89 % $ 2,238,190 $ 15,183 2.72 %
Demand deposits 245,196 220,247
Other liabilities   15,089   9,634
Total liabilities $ 2,585,835 $ 2,468,071
Stockholders’ equity   227,587   248,671
Total liabilities and stockholders’ equity $ 2,813,422 $ 2,716,742
Interest rate spread 3.61 % 2.93 %
Net interest income and margin $ 26,221 3.89 % $ 22,000 3.35 %
 
(1) Yields on securities available-for-sale have been calculated on the basis of historical cost and do not give effect to changes in the fair value of those securities, which are reflected as a component of stockholders’ equity. Average yields on securities are stated on a tax equivalent basis, using a 35% rate.
 
(2) Loans placed on non-accrual status are included in the average balances. Net loan fees and late charges included in interest income on loans totaled $539 thousand and $892 thousand for the three months ended June 30, 2010 and 2009, respectively.
           
Virginia Commerce Bancorp, Inc.
Consolidated Average Balances, Yields, and Rates
Six Months Ended June 30,
(Unaudited)
                   
2010 2009
(Dollars in thousands)

AverageBalance
 

InterestIncome-Expense
 

AverageYields/Rates

AverageBalance
 

InterestIncome-Expense
 

AverageYields/Rates
Assets
Securities (1) $ 350,391 $ 7,493 4.42 % $ 325,244 $ 7,908 5.06 %
Restricted stock 11,752 176 3.02 % 11,423 168 2.96 %
Loans, net of unearned income (2) 2,273,538 66,141 5.88 % 2,303,301 66,629 5.84 %
Interest-bearing deposits in other banks 114 -- 0.07 % 91 -- 0.12 %
Federal funds sold   67,367     78   0.23 %   34,354     32   0.18 %
Total interest-earning assets $ 2,703,162 $ 73,888 5.54 % $ 2,674,413 $ 74,737 5.66 %
Other assets   87,845   57,320
Total Assets $ 2,791,007 $ 2,731,733
 
Liabilities and Stockholders’ Equity
Interest-bearing deposits:
NOW accounts $ 325,483 $ 1,630 1.01 % $ 210,409 $ 1,326 1.27 %
Money market accounts 151,070 971 1.30 % 155,362 1,151 1.49 %
Savings accounts 621,150 4,977 1.62 % 273,059 3,159 2.33 %
Time deposits   943,597     10,281   2.20 %   1,343,894     21,791   3.27 %
Total interest-bearing deposits $ 2,041,300 $ 17,859 1.76 % $ 1,982,724 $ 27,427 2.79 %
Securities sold under agreement to repurchase and federal funds purchased 183,659 1,999 2.19 % 186,561 1,455 1.57 %
Other borrowed funds 25,000 534 4.25 % 25,000 534 4.25 %
Trust preferred capital notes   66,122     2,459   7.39 %   65,865     2,564   7.74 %
Total interest-bearing liabilities $ 2,316,081 $ 22,851 1.99 % $ 2,260,150 $ 31,980 2.85 %
Demand deposits 234,795 209,980
Other liabilities   15,333   11,025
Total liabilities $ 2,566,209 $ 2,481,155
Stockholders’ equity   224,798   250,578
Total liabilities and stockholders’ equity $ 2,791,007 $ 2,731,733
Interest rate spread 3.55 % 2.81 %
Net interest income and margin $ 51,037 3.84 % $ 42,757 3.25 %
 
(1) Yields on securities available-for-sale have been calculated on the basis of historical cost and do not give effect to changes in the fair value of those securities, which are reflected as a component of stockholders’ equity. Average yields on securities are stated on a tax equivalent basis, using a 35% rate.
 
(2) Loans placed on non-accrual status are included in the average balances. Net loan fees and late charges included in interest income on loans totaled $1.3 million and $1.7 million for the six months ended June 30, 2010 and 2009, respectively.

Copyright Business Wire 2010

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