Virginia Commerce Bancorp, Inc. Reports Strong Second Quarter Earnings And Performance

Virginia Commerce Bancorp, Inc. (the “Company”), (Nasdaq: VCBI), parent company of Virginia Commerce Bank (the “Bank”), today reported its financial results for the second quarter of 2013.

Second Quarter 2013 Highlights
  • Net Income Available to Common Stockholders and Diluted Earnings per Common Share Increased: Net income available to common stockholders totaled $7.5 million, or $0.21 per diluted common share, for the second quarter of 2013. This represented a $1.1 million increase, or $0.02 per diluted common share, compared to $6.4 million, or $0.19 per diluted common share for the second quarter of 2012. Sequentially, net income available to common stockholders increased $1.4 million, or $0.04 per diluted common share, representing a 23.5% increase from $0.17 per diluted common share, for the first quarter of 2013.
  • Adjusted Operating Earnings (a non-GAAP measure) Growth: Adjusted operating earnings increased to $7.7 million, or $0.22 per diluted common share, for the second quarter of 2013. This compares to $5.5 million, or $0.16 per diluted common share, for the second quarter of 2012, and $6.4 million, or $0.18 per diluted common share, in the first quarter of 2013.
  • Quarterly Return on Average Assets (ROAA) of 1.05% and Return on Average Equity (ROAE) of 11.68%
  • Asset Quality: Non-performing assets (“NPAs”) decreased 24.0%, from $60.4 million as of June 30, 2012, to $45.9 million at June 30, 2013, while sequentially increasing $1.1 million, or 2.5%. Total troubled debt restructurings (“TDRs”) declined $16.2 million, or 37.5%, from June 30, 2012, to $26.9 million at June 30, 2013, and declined $7.0 million, or 20.7% from March 31, 2013.
  • Net Interest Margin Stable: The net interest margin was 3.82% in the second quarter of 2013, compared to 3.80% in the second quarter of 2012. Sequentially, the net interest margin decreased three basis points from 3.85% in the first quarter of 2013.
  • Capital Strength and Book Value per Common Share: The ratio of tangible common equity (a non-GAAP measure) improved to 8.95% at June 30, 2013, as compared to 7.79% and 8.80% at June 30, 2012, and March 31, 2013, respectively. The book value per common share increased from $7.42 at June 30, 2012, to $7.78 at June 30, 2013. Sequentially, the book value per common share decreased from $7.81 at March 31, 2013.

SUMMARY REVIEW OF FINANCIAL PERFORMANCE

Net Income

For the three months ended June 30, 2013, the Company recorded net income available to common stockholders of $7.5 million, or $0.21 per diluted common share, compared to net income available to common shareholders of $6.4 million, or $0.19 per diluted common share, for the three months ended June 30, 2012. The year-over-year earnings improvement was largely attributable to the Company’s repurchase of all of its TARP preferred stock during the fourth quarter of 2012, and related elimination of a $1.4 million effective quarterly dividend on preferred stock, a $636 thousand decrease in provision for loan losses and a $1.5 million decrease in non-interest expense. These items were partially offset by a decrease in net interest income of $1.1 million and a $1.2 million decrease in non-interest income.

For the six months ended June 30, 2013, the Company reported net income available to common stockholders of $13.5 million, or $0.38 per diluted common share, compared to net income available to common stockholders of $11.1 million, or $0.33 per diluted common share, for the same period in 2012. The year-to-date earnings improvement from 2012 to 2013 was attributable to the Company’s repurchase of all of its TARP preferred stock during the fourth quarter of 2012, and related elimination of a $2.7 million effective dividend on preferred stock for the first six months of 2013, a $4.8 million decrease in the provision for loan losses and a $499 thousand decrease in non-interest expense, partially offset by a decrease in net interest income of $2.1 million and a $3.6 million decrease in non-interest income. The Company’s net income available to common stockholders increased sequentially from $6.0 million, or $0.17 per diluted common share, for the first quarter of 2013, primarily due to a decrease of $3.6 million in non-interest expense, partially offset by a $679 thousand increase in provision for loan losses, a $362 thousand decrease in non-interest income and a $1.1 million increase in provision for income taxes.

Adjusted operating earnings (a non-GAAP measure) for the three months ended June 30, 2013, were $7.7 million, or $0.22 per diluted common share, compared to $5.5 million, or $0.16 per diluted common share, for the same period in 2012. The year-over-year earnings improvement was largely attributable to the Company’s repurchase of all of its TARP preferred stock during the fourth quarter of 2012, and related elimination of a $1.4 million effective quarterly dividend on preferred stock for the second quarter of 2013, a $636 thousand decrease in provision for loan losses and a $1.5 million decrease in non-interest expense (which includes $282 thousand of merger-related expenses in the second quarter of 2013). These items were partially offset by a decrease in net interest income of $1.1 million, and an increase in provision for income taxes of $62 thousand (with a related tax effect adjustment of $501 thousand). On a sequential basis, adjusted operating earnings were up $1.3 million, or $0.04 per diluted common share, for the three months ended June 30, 2013, primarily due to a decrease of $3.6 million in non-interest expense (which includes a sequential reduction in merger-related expenses of $302 thousand), partially offset by a $679 thousand increase in provision for loan losses, a $362 thousand decrease in non-interest income and a an increase in provision for income taxes of $1.1 million (with a related tax effect adjustment of $(168) thousand). The Company calculates adjusted operating earnings by excluding impairment loss on investment securities, realized gains and losses on sale of investment securities, merger-related expenses, acceleration of the accretion of the preferred stock discount, and certain other non-recurring items from net income available to common stockholders.

Asset Quality and Provision For Loan Losses

Total non-performing assets and loans 90+ days past due declined from $60.4 million at June 30, 2012, to $47.0 million at June 30, 2013, but, increased $2.0 million sequentially from $45.0 million at March 31, 2013, as a result of the placement of three relationships totaling $8.4 million on non-accrual status, representing previously classified loans which were restructured, but failed to perform under modified terms. This offset other progress in problem asset resolution for the quarter. As a percentage of total assets, non-performing assets decreased from 2.00% at June 30, 2012, to 1.62% at June 30, 2013, and increased from 1.55% at March 31, 2013. As of June 30, 2013, the allowance for loan losses represented 1.92% of total loans, compared to 1.91% and 2.14%, at March 31, 2013, and June 30, 2012, respectively. The allowance for loan losses covered 115.3% of total non-performing loans as of June 30, 2013, compared to 118.4% and 100.5%, at March 31, 2013, and June 30, 2012, respectively.

As of June 30, 2013, $13.6 million, or 39.3%, of non-performing loans represented acquisition, development and construction (“ADC”) loans; $8.6 million, or 24.9%, represented non-farm, non-residential loans; $7.2 million, or 21.0%, represented commercial and industrial (“C&I”) loans; and $5.1 million, or 14.8%, represented loans on one-to-four family residential properties. As of June 30, 2013, specific reserves of $16.4 million have been established for non-performing loans and other loans determined to be impaired. The Company continues to pursue an aggressive campaign to reduce non-performing and other impaired loans and is implementing and executing various disposition strategies on an ongoing basis. These strategies are dependent upon project completion, permitting, satisfaction of contract contingencies and other factors and in a number of cases represent situations which require longer timeframes to obtain optimal principal recovery.

Included in the loan portfolio at June 30, 2013, are loans classified as troubled debt restructurings (“TDRs”), totaling $26.9 million, a 37.5% decrease from $43.1 million at June 30, 2012. Sequentially, TDRs decreased $7.0 million from $33.9 million at March 31, 2013, as a result of the previously mentioned restructured loans being placed on non-accrual status. TDRs are performing, accruing loans that represent relationships for which a modification to the contractual interest rate or repayment structure has been granted to address a financial hardship. A significant portion of TDRs were performing prior to modification. These loans make up 1.3% of the total loan portfolio at June 30, 2013, and represent $6.9 million in ADC loans, $15.5 million in non-farm, non-residential real estate loans, $2.5 million in C&I loans and $2.0 million in one-to-four family residential loans. At June 30, 2013, 37.0% of the Company’s TDRs were reviewable TDRs and 63.0% were permanent TDRs. Reviewable TDRs are loans that have been restructured at or will return to a market rate of interest and can include a temporary interest rate modification, partial deferral of interest or principal, or an extension of term. They can return to performing status upon six months of on-time payments following the return to a market rate of interest, but only in the fiscal year following the year of restructure. Permanent TDRs are loans that have been restructured and include a permanent interest rate reduction. They remain in a TDR status until the loan is paid off.

Classified loans were $147.3 million for the quarter ended June 30, 2013, a $42.0 million decrease from $189.3 million at June 30, 2012. Sequentially, classified loans decreased $13.0 million from $160.3 million at March 31, 2013. The quarterly decrease was largely due to the payoff of $12.3 million in classified loans, the upgrade of $3.2 million in classified loans, the transfer of $2.1 million to other real estate owned and $4.0 million in charge-offs, partially offset by new additions to classified loans totaling $10.8 million.

Provision for loan losses was $2.5 million for the quarter ended June 30, 2013, down $636 thousand, or 20.1%, compared to $3.2 million in the same period in 2012. Net charge-offs were $3.4 million for the three months ended June 30, 2013, compared to $2.6 million and $1.9 million for the quarters ended March 31, 2013, and June 30, 2012, respectively. For the six months ended June 30, 2013, provision for loan losses totaled $4.4 million, compared to $9.2 million for the prior-year period, with 2013 year-to-date net charge-offs amounting to $6.0 million, compared to $11.3 million in the first half of 2012. The decrease in the allowance for loan losses as a percentage of total loans from June 30, 2012, to June 30, 2013, is due to charge-offs incurred during 2013 being primarily supported by specific reserves in the allowance for loan losses. As a result, the second quarter analysis of the adequacy of the loan loss reserve indicated that loan loss provisioning of $2.5 million was sufficient to maintain appropriate coverage. The $1.5 million increase in net charge-offs for the three months ended June 30, 2013, compared to the same period in 2012, was primarily due to net charge-offs in the real-estate construction portfolio increasing $1.5 million, from $299 thousand in the second quarter of 2012, to $1.8 million in the second quarter of 2013.

Net Interest Income and Net Interest Margin

Net interest income was $25.8 million for the second quarter of 2013 and declined $1.1 million, or 4.2%, from the same quarter last year. The net interest margin increased 2 basis points from 3.80% in the second quarter of 2012, to 3.82% for the same period in 2013. On a sequential basis, the net interest margin was down 3 basis points from 3.85% in the first quarter of 2013. The year-over-year increase in the second quarter net interest margin was due to an improvement in the mix of interest-earning assets and interest-bearing deposits, with a reduction in interest-bearing deposit rates partially offset by lower average yield on loans. Interest and dividend income decreased $2.6 million on average total interest-earnings assets of $2.75 billion for the three months ended June 30, 2013, compared to interest and dividend income generated by average total interest-earnings assets of $2.89 billion for the same period in 2012. The decline in interest income is mostly attributable to lower yielding average loans being generated in the current low interest rate environment and the repricing of adjustable rate average loans in the portfolio to lower yields. The average rate earned on total interest-earning assets was 4.58% for the second quarter of 2013, as compared to 4.74% for the second quarter 2012, and 4.65% for the first quarter 2013. Interest expense decreased $1.5 million to $5.2 million generated on an average total interest-bearing liability balance of $2.15 billion for the quarter ended June 30, 2013, from $6.7 million generated on an average total interest-bearing liability balance of $2.30 billion for the same period in 2012. The decline in interest expense is mostly attributable to a series of interest rate reductions on interest-bearing deposit products and the continued repricing and run-off of higher cost deposits in the time deposit portfolio. The average rate paid on total interest-bearing liabilities was 0.98% for the second quarter of 2013, as compared to 1.18% for the second quarter 2012, and 1.01% for the first quarter of 2013.

Non-Interest Income

For the three months ended June 30, 2013, the Company recognized $2.2 million in non-interest income, compared to non-interest income of $3.4 million for the three months ended June 30, 2012, and $2.6 million in the sequential quarter. Included in the second quarter 2012 non-interest income was a gain on sale of investment securities of $1.3 million, while the second quarter of 2013 did not include a gain or loss on sale of investment securities. The Company recognized non-interest income of $4.8 million for the six months ended June 30, 2013, compared to non-interest income of $8.4 million for the same period in 2012. For the six months ended June 30, 2012, non-interest income included a gain on sale of investment securities of $3.9 million, while non-interest income for the six months ended June 30, 2013, did not include a gain or loss on sale of investment securities.

Fees and net gains on loans held-for-sale decreased in the second quarter 2013, on a year-over-year basis, by $155 thousand, or 18.7%, and on a sequential quarter basis decreased by $347 thousand, or 34.0%. The decrease can be primarily attributed to lower volume of mortgage loans originated for sale in the secondary market, which was driven by higher interest rates on mortgage products during the second quarter of 2013. For the six months ended June 30, 2013, fees and net gains on loans held-for-sale decreased $134 thousand, or 7.3%, compared to the six months ended June 30, 2012. Income generated by bank-owned life insurance increased $252 thousand and $498 thousand for the three months ended June 30, 2013, and six months ended June 30, 2013, respectively, compared to the same periods in the prior year. The increase can be attributed to $30.0 million in bank-owned life insurance assets purchased during the second half of 2012 that have contributed to earnings during the first two quarters of 2013.

Non-Interest Expense

Non-interest expense decreased $1.5 million, or 9.8%, from $15.5 million in the second quarter of 2012, to $14.0 million in the second quarter of 2013. Sequentially, non-interest expense decreased $3.6 million, or 20.5%, from $17.6 million for the first quarter in 2013. The year-over-year decrease was primarily related to a decrease of $526 thousand in salaries and employee benefits, a decrease of $343 thousand on other real estate owned losses and expenses, a decrease of $318 thousand in FDIC insurance premiums, a $572 thousand decrease in other operating expense, partially offset by $282 thousand in merger-related expenses. The sequential decrease was primarily related to a decrease of $1.5 million in salaries and employee benefits, a decrease of $656 thousand in other real estate owned losses and expenses, $302 thousand less in merger-related expenses and $1.0 million less in other operating expenses.

Investment Securities

Investment securities decreased $84.0 million, or 14.8%, year-over-year to $482.7 million at June 30, 2013, and were down $12.4 million sequentially from March 31, 2013. There was no gain on sale of investment securities during the second quarter 2013. During the second quarter of 2012, the Company sold $67.9 million of investment securities resulting in a $1.3 million realized gain on sale of investment securities. The investment portfolio contains two pooled trust preferred investment securities with a book value of $5.1 million, and a market value of $779 thousand at June 30, 2013, for which the Company performs a quarterly analysis to determine whether any other-than-temporary impairment exists. The analysis includes stress tests on the underlying collateral and cash flow estimates based on the current and projected future levels of deferrals, defaults, and prepayments within each pool. There was no recorded impairment loss for the three or six months ended June 30, 2013 and June 30, 2012.

Loans

Loans, net of allowance for loan losses, decreased $36.2 million, or 1.7% year-over-year. Non-farm, non-residential real estate loans decreased $22.9 million, or 2.0%; multifamily real estate loans decreased $14.7 million, or 17.5%; C&I loans decreased $8.7 million, or 3.4%; ADC loans decreased $3.9 million, or 1.5%; while one-to-four family residential loans increased $6.6 million or 1.6%; and farmland loans increased $2.5 million or 70.2%, from June 30, 2012, to June 30, 2013. Sequentially, loans, net of allowance for loan losses, decreased $57.4 million, or 2.7%. The sequential decrease in loans was attributable to a $25.7 million decrease in ADC loans, a $24.2 million decrease in non-farm, non-residential loans, a $10.4 million decrease in multi-family residential loans and a $7.5 million decrease in C&I loans, which were partially offset by an $11.1 million increase in one-to-four family residential loans. The decrease in most loan categories was primarily a result of a combination of the refinance or sale of a few large commercial and residential real estate projects; the impact of sequestration on the level of borrowing by government contracting sector borrowers; and problem loan.

Deposits

Total deposits at June 30, 2013, were $2.18 billion, a decrease of $72.1 million, or 3.2%, compared to June 30, 2012, with demand deposits increasing $82.1 million, or 21.4%, savings and interest-bearing demand deposits decreasing $51.5 million, or 4.3%, and time deposits decreasing $102.7 million, or 15.1%. As of June 30, 2013, non-interest bearing demand deposits represented 21.4% of total deposits, compared to 17.0% at June 30, 2012. On a linked quarter basis, deposits decreased $7.4 million, or 0.3%, with demand deposits increasing by $45.2 million, or 10.8%, savings and interest-bearing demand accounts decreasing $28.8 million, or 2.5%, and time deposits decreasing by $23.8 million, or 4.0%. The reduction in time deposits has been intentional, resulting from a series of interest rate reductions that continued throughout 2012 and into the first quarter of 2013. As a result of deposit rate decreases and an improving deposit mix, the cost of total interest-bearing deposits and total deposits declined from 0.95% and 0.81% for the quarter ended June 30, 2012 and 0.80% and 0.65% for the quarter ended March 31, 2013, to 0.77% and 0.62% for the quarter ended June 30, 2013, respectively.

Capital Levels and Stockholders’ Equity

Stockholders’ equity decreased $49.5 million, or 16.3%, from $303.3 million at June 30, 2012, to $253.8 million at June 30, 2013, with a $68.1 million decline from the repayment of TARP preferred stock and a $11.3 million decrease in other comprehensive income, partially offset by net income available to common stockholders of $24.9 million over the twelve-month period and $5.1 million in proceeds and tax benefits related to the exercise of warrants and options. As a result of these changes, the Company’s Tier 1 capital ratio decreased from 15.74% at June 30, 2012, to 14.36% at June 30, 2013, and its total qualifying capital ratio decreased from 17.00% to 15.62% over the same period. Sequentially, the Company’s Tier 1 and total qualifying capital ratios are up 69 and 70 basis points, respectively, attributable to net income available to common stockholders of $7.5 million in the second quarter of 2013. The Company’s tangible common equity ratio increased from 7.79% at June 30, 2012, and 8.80% at March 31, 2013, to 8.95% at June 30, 2013. The 116 basis point increase in tangible common equity ratio from June 30, 2012, to June 30, 2013, is primarily due to $24.9 million in retained net income available to common stockholders for the twelve months ended June 30, 2013. Sequentially, the 15 basis point increase in tangible common equity ratio is primarily related to $7.5 million in retained net income available to common stockholders for the second quarter of 2013 and a decrease of $47.2 million in total tangible assets during the second quarter of 2013, partially offset by a decrease of $8.3 million in other comprehensive income. The decrease in other comprehensive income is directly related to the decline in the fair market value of investment securities in the second quarter of 2013, resulting from the rise in long-term interest rates and suppressed securities prices in the bond market.

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.

On January 29, 2013, the Company signed a definitive merger agreement to be acquired by United Bankshares, Inc. For more information about this merger, see the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on January 31, 2013, the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2013, and the registration statement filed by United Bankshares, Inc. with the SEC on Form S-4 on May 29, 2013 (and all subsequent amendments thereof).

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.

Adjusted operating earnings is a non-GAAP financial measure that reflects net income available to common stockholders excluding impairment loss on investment securities, realized gains and losses on sale of investment securities, merger-related expenses and certain other non-recurring items. These excluded items are difficult to predict and we believe that adjusted operating earnings provides the Company and investors with a valuable measure of the Company’s operational performance and a valuable tool to evaluate the Company’s financial results. Calculation of adjusted operating earnings for the three months ended June 30, 2013, June 30, 2012, and March 31, 2013, is as follows:
   
Three Months Three Months
Ended Ended
June 30, March 31,
(Dollars in thousands) 2013   2012 2013
 
Net Income Available to Common Stockholders $ 7,463 $ 6,357 $ 6,036
Adjustments to net income available to common stockholders:
Realized gain on sale of investment securities -- (1,328) --
Merger-related expenses 282 -- 584
Net tax effect adjustment   (36)   465   (204)
 
Adjusted Operating Earnings $ 7,709 $ 5,494 $ 6,416
 
 
Earnings per common share-diluted $ 0.21 $ 0.19 $ 0.17
Adjustments to earnings per common share-diluted
Realized gain on sale of investment securities, net tax affect -- $ (0.03) --
Merger-related expenses, net tax affect $ 0.01 -- $ 0.01
 
Adjusted operating earnings per common share-diluted $ 0.22 $ 0.16 $ 0.18
 

The adjusted efficiency ratio is a non-GAAP financial measure that is computed by dividing non-interest expense excluding merger-related expenses, by the sum of net interest income on a tax equivalent basis, and non-interest income excluding realized gains and losses on sale of investment securities, merger-related expenses and certain other non-recurring items. 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. Calculation of the adjusted efficiency ratio for the three and six months ended June 30, 2013, and 2012, is as follows:

   
Three Months Ended Six Months Ended

(Dollars in thousands)
June 30,   June 30,
2013   2012   2013   2012
Summary Operating Results:    
Non-interest expense $ 14,038 $ 15,557 $ 31,685 $ 32,184
Merger-related expenses 282 -- 866 --
Adjusted non-interest expense $ 13,756 $ 15,557 $ 30,819 $ 32,184
 
Net interest income $ 25,792 $ 26,917 $ 51,586 $ 53,696
 
Non-interest income 2,196 3,421 4,754 8,370
Gain on sale of investment securities   --   (1,328)   --   (3,920)
Adjusted non-interest income $ 2,196 $ 2,093 $ 4,754 $ 4,450
 

Total net interest income and non-interest income, adjusted (1)
$ 27,988 $ 29,010 $ 56,340 $ 58,146
 
Efficiency Ratio, adjusted 48.5% 53.0% 54.0% 54.7%
 
(1)   Tax Equivalent Income of $28,341 for the three months ended June 30, 2013, and $57,049 for the six months ended June 30, 2013. Tax Equivalent Income of $29,376 for the three months ended June 30, 2012, and $58,878 for the six months ended June 30, 2012.
 

The tangible common equity ratio is a non-GAAP financial measure representing the ratio of tangible common equity to tangible assets. Tangible common equity and tangible assets are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible common equity for the Company by excluding the balance of intangible assets and outstanding preferred stock issued to the U.S. Treasury from total stockholders’ equity. We calculate tangible assets by excluding the balance of intangible assets from total assets. We had no intangible assets for the periods presented. We believe that this is consistent with the treatment by regulatory agencies, which exclude intangible assets from the calculation of regulatory capital ratios. Accordingly, we believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our capital position and ratios. However, these non-GAAP financial measures are supplemental and are not substitutes for an analysis based on a GAAP measure. As other companies may use different calculations for non-GAAP measures, our presentation may not be comparable to other similarly titled measures reported by other companies. Calculation of the Company’s tangible common equity ratio as of June 30, 2013, June 30, 2012, March 31, 2013 and December 31, 2012 is as follows:
     
(Dollars in thousands) As of June 30, March 31, December 31,
2013   2012 2013 2012
Tangible common equity:  
Total stockholders’ equity $ 253,764 $ 303,294 $ 253,803 $ 245,309
 
Less:
Outstanding TARP senior preferred stock -- 68,146 -- --
Intangible assets   --   --   --   --
Tangible common equity $ 253,764 $ 235,148 $ 253,803 $ 245,309
 
Total tangible assets $ 2,836,235 $ 3,017,276 $ 2,883,388 $ 2,823,692
 
Tangible common equity ratio 8.95% 7.79% 8.80% 8.69%
 

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 potential benefits and impacts of a merger between the Company and United Bankshares, Inc., our outlook on earnings, including our future net interest margin, and statements regarding asset quality, our loan and investment security portfolios, our deposit portfolio and anticipated changes to our deposit costs and balances, projected growth, capital position, capital strategies, our plans regarding and expected future levels of our non-performing assets, business opportunities in our market and other strategic initiatives or transactions, 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. For additional information regarding factors that could affect the Company's operations and results, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, and other reports filed with and furnished to the Securities and Exchange Commission, and the registration statement filed by United Bankshares, Inc. with the SEC on Form S-4 on May 29, 2013 (and all subsequent amendments thereof).

Additional Information About the Merger and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

In connection with the pending merger between United Bankshares, Inc. (“United”) and the Company (the “Company”), United has filed with the SEC a registration statement on Form S-4 that includes a preliminary proxy statement of the Company and a preliminary proxy statement and preliminary prospectus of United. The registration statement has not yet become effective. Stockholders are urged to read the registration statement and the joint proxy statement/prospectus regarding the Merger when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. You will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about the Company and United at the SEC’s Internet site ( http://www.sec.gov ). You will also be able to obtain these documents, free of charge, from the Company by accessing the Company’s website at www.vcbonline.com under the tab “About VCB,” then under the heading “Investor Relations.” You will also be able to obtain these documents, free of charge, from United’s website at www.ubsi-inc.com under the tab “Investor Relations.”

United, the Company and their respective directors, executive officers, and certain other members of management and employees of United, the Company and their respective subsidiaries may be deemed to be participants in the solicitation of proxies from stockholders of the Company in connection with the Merger. Information about the directors and executive officers of United is set forth in United’s proxy statement filed with the SEC on April 3, 2013. Information about the directors and executive officers of the Company is set forth in the Company’s proxy statement filed with the SEC on March 22, 2013. Additional information regarding the interests of such participants is included in the joint proxy statement/prospectus, and will be included in the final version of the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.
 
Virginia Commerce Bancorp, Inc.
Financial Highlights
(Dollars in thousands, except per share data)
(Unaudited)
 
 
  Three Months Ended June 30,   Six Months Ended June 30,
2013   2012   % Change   2013   2012   % Change
Summary Financial Results:          
Interest and dividend income $ 31,029 $ 33,643 -7.8 % $ 62,231 $ 67,648 -8.0 %
Interest expense 5,237 6,726 -22.1 % 10,645 13,952 -23.7 %
Net interest income 25,792 26,917 -4.2 % 51,586 53,696 -3.9 %
Provision for loan losses 2,526 3,162 -20.1 % 4,373 9,156 -52.2 %
Non-interest income 2,196 3,421 -35.8 % 4,754 8,370 -43.2 %
Non-interest expense 14,038 15,557 -9.8 % 31,685 32,184 -1.6 %
Income before income taxes 11,424 11,619 -1.7 % 20,282 20,726 -2.1 %
Net income $ 7,463 $ 7,720 -3.3 % $ 13,499 $ 13,862 -2.6 %
Effective dividend on preferred stock -- 1,363 -100.0 % -- 2,726 -100.0 %
Net income available to common stockholders $ 7,463 $ 6,357 17.4 % $ 13,499 $ 11,136 21.2 %
 
Performance Ratios:
Return on average assets 1.05 % 1.04 % 0.95 % 0.94 %
Return on average equity 11.68 % 10.28 % 10.78 % 9.41 %
Net interest margin 3.82 % 3.80 % 3.83 % 3.80 %
Efficiency ratio, adjusted 48.54 % 53.0 % 54.02 % 54.7 %
 
Per Share Data:
Earnings per common share-basic $ 0.23 $ 0.20 15.0 % $ 0.42 $ 0.35 20.0 %
Earnings per common share-diluted $ 0.21 $ 0.19 10.5 % $ 0.38 $ 0.33 15.2 %
Average number of shares outstanding:
Basic 32,602,261 31,811,390 32,519,880 31,657,370
Diluted 35,349,885 33,637,832 35,248,725 33,592,767
 
 
 
As of June 30, As of
2013   2012   % Change 03/31/13   % Change
Selected Balance Sheet Data:
Loans, net of allowance for loan losses $ 2,095,391 $ 2,131,572 -1.7 % $ 2,152,816 -2.7 %
Investment securities 482,727 566,688 -14.8 % 495,086 -2.5 %
Assets 2,836,235 3,017,276 -6.0 % 2,883,388 -1.6 %
Deposits 2,179,557 2,251,692 -3.2 % 2,186,932 -0.3 %
Stockholders’ equity 253,764 303,294 -16.3 % 253,803 --
Book value per common share $ 7.78 $ 7.42 4.9 % $ 7.81 -0.4 %
 
Capital Ratios (% of risk weighted assets):
Tier 1 capital:
Company 14.36 % 15.74 % 13.67 %
Bank 13.85 % 15.20 % 13.15 %
Total qualifying capital:
Company 15.62 % 17.00 % 14.92 %
Bank 15.11 % 16.46 % 14.41 %
Tier 1 leverage:
Company 11.40 % 12.25 % 11.06 %
Bank 11.03 % 11.91 % 10.69 %
Tangible common equity:
Company 8.95 % 7.79 % 8.80 %
 

         
(Dollars in thousands) As of June 30, As of
2013   2012 3/31/2013   12/31/12
 
Asset Quality:
Non-performing assets:
Non-accrual loans:
Commercial $ 7,249 $ 2,540 $ 3,136 $ 3,317
Real estate-one-to-four family residential:
Permanent first and second 2,884 5,500 2,263 3,606
Home equity loans and lines   2,230   3,480   2,379   2,498
Total real estate-one-to-four family residential $ 5,114 $ 8,980 $ 4,642 $ 6,104
Real estate-multi-family residential -- -- -- --
Real estate-non-farm, non-residential:
Owner-occupied 5,302 3,504 2,561 1,791
Non-owner-occupied   3,309   2,079   4,030   3,864
Total real estate-non-farm, non-residential $ 8,611 $ 5,583 $ 6,591 $ 5,655
Real estate-construction:
Residential 4,628 12,379 7,615 16,976
Commercial   8,978   16,859   13,185   5,860
Total real estate-construction $ 13,606 $ 29,238 $ 20,800 $ 22,836
Consumer   16   18   16   17
Total non-accrual loans $ 34,596 $ 46,359 $ 35,185 $ 37,929
OREO   11,290   14,018   9,562   12,302
Total non-performing assets $ 45,886 $ 60,377 $ 44,747 $ 50,231
 
Loans 90+ days past due and still accruing:
Commercial $ -- $ 45 $ 232 $ --
Real estate-one-to-four family residential:
Permanent first and second 1,074 -- -- --
Home equity loans and lines   --   --   --   --
Total real estate-one-to-four family residential $ 1,074 $ -- $ -- $ --
Real estate-multi-family residential -- -- -- --
Real estate-non-farm, non-residential:
Owner-occupied -- -- -- --
Non-owner-occupied   --   --   --   --
Total real estate-non-farm, non-residential $ -- $ -- $ -- $ --
Real estate-construction
Residential -- -- -- --
Commercial   --   --   --   --

Total real estate-construction
$ -- $ -- $ -- $ --
Consumer   --   --   22   --
Total loans 90+ days past due and still accruing $ 1,074 $ 45 $ 254 $ --
 
Total non-performing assets and past due loans $ 46,960 $ 60,422 $ 45,001 $ 50,231
 
Troubled debt restructurings $ 26,890 $ 43,054 $ 33,926 $ 43,448
 
Non-performing assets
to total loans: 2.14% 2.77% 2.04% 2.29%
to total assets: 1.62% 2.00% 1.55% 1.78%
Non-performing assets and past due loans
to total loans: 2.19% 2.77% 2.05% 2.29%
to total assets: 1.66% 2.00% 1.56% 1.78%
Allowance for loan losses to total loans 1.92% 2.14% 1.91% 1.95%
Allowance for loan losses to non-performing loans 115.31% 100.49% 118.43% 112.77%
 
Total allowance for loan losses $ 41,131 $ 46,632 $ 41,970 $ 42,773
 

       
(Dollars in thousands) As of June 30, As of
2013   2012 3/31/13   12/31/12
 
Loans 30 to 89 days past due and still accruing
Commercial $ 8,165 $ 2,099 $ 6,918 $ 366
Real estate-one-to-four family residential:
Permanent first and second 3,817 4,149 4,416 2,089
Home equity loans and lines   198   249   34   223
Total real estate-one-to-four family residential $ 4,015 $ 4,398 $ 4,450 $ 2,312
Real estate-multi-family residential -- -- -- --
Real estate-non-farm, non-residential:
Owner-occupied 2,094 349 1,914 1,688
Non-owner-occupied   1,572   2,979   550   1,661
Total real estate-non-farm, non-residential $ 3,666 $ 3,328 $ 2,464 $ 3,349
Real estate-construction:
Residential 530 -- -- --
Commercial   --   --   2,138   --

Total real estate-construction
$ 530 $ -- $ 2,138 $ --
Consumer 3 17 96 39
Farmland   --   --   --   --
Total loans 30 to 89 days past due $ 16,379 $ 9,842 $ 16,066 $ 6,066
 
For the three months ended For the six months ended
June 30, June 30,
2013   2012 2013   2012
 
Net charge-offs
Commercial $ 247 $ 207 $ 702 $ 4,874
Real estate-one-to-four family residential:
Permanent first and second $ 127 $ 842 $ 76 $ 715
Home equity loans and lines   257   449   231   787
Total real estate-one-to-four family residential $ 384 $ 1,291 $ 307 $ 1,502
Real estate-multi-family residential -- (118) -- (118)
Real estate-non-farm, non-residential:
Owner-occupied $ (2) $ 174 $ 108 $ 221
Non-owner-occupied   967   3   957   635
Total real estate-non-farm, non-residential $ 965 $ 177 $ 1,065 $ 856
Real estate-construction:
Residential $ (300) (89) $ 426 3,397
Commercial   2,053   388   3,501   488
Total real estate-construction $ 1,753 $ 299 $ 3,927 $ 3,885
Consumer 16 45 14 254
Farmland   --   --   --   --
Total net charge-offs $ 3,365 $ 1,901 $ 6,015 $ 11,253
Net charge-offs to average loans outstanding 0.15% 0.09% 0.27% 0.52%
 
Total provision for loan losses $ 2,526 $ 3,162 $ 4,373 $ 9,156
 

           

Classes of total loans by risk rating as of June 30, 2013, are summarized as follows (dollars in thousands):
 
Special Total
Internal Risk Rating Grades   Pass   Watch   Mention   Substandard   Doubtful   Loans
 
Commercial $ 180,358 $ 24,555 $ 10,389 $ 30,830 $ 1,790 $ 247,922
Real estate-one-to-four family residential:
Permanent first and second 252,596 9,390 14,671 20,416 111 297,184
Home equity loans and lines   101,633   2,875   1,541   3,729   1,489   111,267
Total real estate-one-to-four family residential $ 354,229 $ 12,265 $ 16,212 $ 24,145 $ 1,600 $ 408,451
Real estate-multi-family residential 64,416 5,026 -- -- -- 69,442
Real estate-non-farm, non-residential:
Owner-occupied 364,632 46,316 34,076 18,797 -- 463,821
Non-owner-occupied   492,768   115,700   20,863   39,625   --   668,956
Total real estate-non-farm, non-residential $ 857,400 $ 162,016 $ 54,939 $ 58,422 $ -- $ 1,132,777
Real estate-construction:
Residential 124,428 13,330 19,179 6,732 -- 163,669
Commercial   36,520   10,701   32,503   23,611   --   103,335
Total real estate-construction $ 160,948 $ 24,031 $ 51,682 $ 30,343 $ -- $ 267,004
Consumer 8,503 192 172 149 -- 9,016
Farmland     2,350     3,732     --     --     --     6,082
Total   $ 1,628,204   $ 231,817   $ 133,394   $ 143,889   $ 3,390   $ 2,140,694
           

Classes of total loans by risk rating as of June 30, 2012, are summarized as follows (dollars in thousands):
 
Special Total
Internal Risk Rating Grades   Pass   Watch   Mention   Substandard   Doubtful   Loans
 
Commercial $ 188,952 $ 29,560 $ 11,729 $ 24,563 $ 1,810 $ 256,614
Real estate-one-to-four family residential:
Permanent first and second 228,273 14,069 10,285 25,141 114 277,882
Home equity loans and lines   110,765   2,851   2,119   5,978   2,240   123,953
Total real estate-one-to-four family residential $ 339,038 $ 16,920 $ 12,404 $ 31,119 $ 2,354 $ 401,835
Real estate-multi-family residential 80,717 3,460 -- -- -- 84,177
Real estate-non-farm, non-residential:
Owner-occupied 367,535 62,369 25,067 16,490 -- 471,461
Non-owner-occupied   510,605   102,602   26,174   44,792   --   684,173
Total real estate-non-farm, non-residential $ 878,140 $ 164,971 $ 51,241 $ 61,282 $ -- $ 1,155,634
Real estate-construction:
Residential 75,605 22,476 19,807 29,176 -- 147,064
Commercial   40,181   18,090   26,702   38,903   --   123,876
Total real estate-construction $ 115,786 $ 40,566 $ 46,509 $ 68,079 $ -- $ 270,940
Consumer 8,093 307 165 73 -- 8,638
Farmland     3,415     158     --     --     --     3,573
Total   $ 1,614,141   $ 255,942   $ 122,048   $ 185,116   $ 4,164   $ 2,181,411

           

Classes of total loans by risk rating as of March 31, 2013, are summarized as follows (dollars in thousands):
 
Special Total
Internal Risk Rating Grades   Pass   Watch   Mention   Substandard   Doubtful   Loans
 
Commercial $ 179,904 $ 35,203 $ 10,099 $ 28,429 $ 1,817 $ 255,452
Real estate-one-to-four family residential:
Permanent first and second 237,871 15,057 13,539 17,331 112 283,910
Home equity loans and lines   103,277   2,711   1,874   4,048   1,538   113,448
Total real estate-one-to-four family residential $ 341,148 $ 17,768 $ 15,413 $ 21,379 $ 1,650 $ 397,358
Real estate-multi-family residential 74,742 5,053 -- -- -- 79,795
Real estate-non-farm, non-residential:
Owner-occupied 386,845 47,226 35,505 19,995 -- 489,571
Non-owner-occupied   484,330   112,387   27,724   43,014   --   667,455
Total real estate-non-farm, non-residential $ 871,175 $ 159,613 $ 63,229 $ 63,009 $ -- $ 1,157,026
Real estate-construction:
Residential 116,566 16,847 19,677 10,568 -- 163,658
Commercial   45,236   18,409   32,163   33,268   --   129,076
Total real estate-construction $ 161,802 $ 35,256 $ 51,840 $ 43,836 $ -- $ 292,734
Consumer 9,861 201 155 187 -- 10,404
Farmland     2,208     3,887     --     --     --     6,095
Total   $ 1,640,840   $ 256,981   $ 140,736   $ 156,840   $ 3,467   $ 2,198,864
           

Classes of total loans by risk rating as of December 31, 2012, are summarized as follows (dollars in thousands):
 
Special Total
Internal Risk Rating Grades   Pass   Watch   Mention   Substandard   Doubtful   Loans
 
Commercial $ 202,088 $ 25,048 $ 11,976 $ 19,822 $ 2,073 $ 261,007
Real estate-one-to-four family residential:
Permanent first and second 235,672 15,585 12,233 19,038 112 282,640
Home equity loans and lines   106,872   2,724   1,871   4,165   1,543   117,175
Total real estate-one-to-four family residential $ 342,544 $ 18,309 $ 14,104 $ 23,203 $ 1,655 $ 399,815
Real estate-multi-family residential 73,317 5,080 -- -- -- 78,397
Real estate-non-farm, non-residential:
Owner-occupied 384,923 46,123 35,675 19,757 -- 486,478
Non-owner-occupied   488,415   108,868   30,094   41,378   --   668,755
Total real estate-non-farm, non-residential $ 873,338 $ 154,991 $ 65,769 $ 61,135 $ -- $ 1,155,233
Real estate-construction:
Residential 104,835 17,651 20,720 26,771 -- 169,977
Commercial   41,336   18,645   26,281   25,800   --   112,062
Total real estate-construction $ 146,171 $ 36,296 $ 47,001 $ 52,571 $ -- $ 282,039
Consumer 7,744 208 219 95 -- 8,266
Farmland     1,000     3,888     --     --     --     4,888
Total   $ 1,646,202   $ 243,820   $ 139,069   $ 156,826   $ 3,728   $ 2,189,645

                                   
Troubled Debt Restructurings (TDRs) -
By Loan Type
As of June 30, 2013 Reviewable TDRs Permanent TDRs Total TDRs
(Dollars in thousands)

# of

Loans
    Balance    

As % of

Balance

# of

Loans
    Balance    

As % of

Balance

# of

Loans
    Balance    

As % of

Balance
Loan Type:
Commercial -- $ -- 0.0 % 2 $ 2,480 14.7 % 2 $ 2,480 9.2 %
Real estate-one-to-four family residential:
Permanent first and second 6 $ 2,043 20.5 % -- $ -- 0.0 % 6 $ 2,043 7.6 %
Home equity loans and lines --   -- 0.0 % --   -- 0.0 % --   -- 0.0 %
Total real estate-one-to-four family residential 6 $ 2,043 20.5 % -- $ -- 0.0 % 6 $ 2,043 7.6 %
Real estate-multi-family residential -- -- 0.0 % -- -- 0.0 % -- -- 0.0 %
Real estate-non-farm, non-residential:
Owner-occupied 3 $ 7,127 71.5 % -- $ -- 0.0 % 3 $ 7,127 26.5 %
Non-owner-occupied 1   793 8.0 % 4   7,556 44.6 % 5   8,349 31.1 %
Total real estate-non-farm, non-residential 4 $ 7,920 79.5 % 4 $ 7,556 44.6 % 8 $ 15,476 57.6 %
Real estate-construction:
Residential-owner-occupied -- $ -- 0.0 % -- $ -- 0.0 % -- $ -- 0.0 %
Residential-builder -- -- 0.0 % -- -- 0.0 % -- -- 0.0 %
Commercial --   -- 0.0 % 3   6,891 40.7 % 3   6,891 25.6 %
Total real estate-construction -- $ -- 0.0 % 3 $ 6,891 40.7 % 3 $ 6,891 25.6 %
Consumer -- -- 0.0 % -- -- 0.0 % -- -- 0.0 %
Farmland --   -- 0.0 % --   -- 0.0 % --   -- 0.0 %
Total 10 $ 9,963 100.0 % 9 $ 16,927 100.0 % 19 $ 26,890 100.0 %
 
 
 
Troubled Debt Restructurings (TDRs) -
By Quarterly Review / Maturity Date
As of June 30, 2013 Reviewable TDRs Permanent TDRs Total TDRs
(Dollars in thousands)

# of

Loans
    Balance    

As % of

Balance
# of

Loans
    Balance    

As % of

Balance
# of

Loans
    Balance    

As % of

Balance
Review / Maturity by Quarter:
2013
2nd Quarter -- $ -- 0.0 % 1 $ 465 2.7 % 1 $ 465 1.7 %
3rd Quarter 4 1,267 12.7 % 2 3,634 21.5 % 6 4,901 18.2 %
4th Quarter 1   793 8.0 % --   -- 0.0 % 1   793 3.0 %
Total 2013: 5 $ 2,060 20.7 % 3 $ 4,099 24.2 % 8 $ 6,159 22.9 %
2014
1st Quarter 1 $ 112 1.1 % -- $ -- 0.0 % 1 $ 112 0.4 %
2nd Quarter -- -- 0.0 % 1 1,026 6.0 % 1 1,026 3.8 %
3rd Quarter 2 6,771 68.0 % 1 5,579 33.0 % 3 12,350 45.9 %
4th Quarter --   -- 0.0 % 1   5,400 31.9 % 1   5,400 20.1 %
Total 2014: 3 $ 6,883 69.1 % 3 $ 12,005 70.9 % 6 $ 18,888 70.2 %
2015 & beyond 2   1,020 10.2 % 3   823 4.9 % 5   1,843 6.9 %
Total Loans 10 $ 9,963 100.0 % 9 $ 16,927 100.0 % 19 $ 26,890 100.0 %
 

 

Troubled Debt Restructurings (TDRs) -

Migration by Quarter

As of June 30, 2013

(Dollars in thousands)
 
 
 

4/1/09 to

6/30/09
 

7/1/09 to

9/30/09
 

10/1/09 to

12/31/09
 

1/1/10 to

3/31/10
 

4/1/10 to

6/30/10
 

7/1/10 to

9/30/10
 

10/1/10 to

12/31/10
 

1/1/11 to

3/31/11
 

4/1/11 to

6/30/11
Period Beginning Balance -- $ 33,309 $ 37,425 $ 71,885 $ 80,993 $ 96,976 $ 105,617 $ 102,996 $ 91,876
 
Additions:
New Loans Added $ 33,309 $ 5,226 $ 37,663 $ 23,477 $ 21,720 $ 12,698 $ 12,377 $ 3,188 $ 116
Loan Advances   --   974   348   219   472   220   531   486   197
Subtotal Additions: $ 33,309 $ 6,200 $ 38,011 $ 23,696 $ 22,192 $ 12,918 $ 12,908 $ 3,674 $ 313
 
Deductions:
Sales Proceeds -- $ 944 $ 1,783 $ 1,218 $ 761 -- $ 125 $ 367 $ 126
Payments -- 317 174 50 1,202 1,138 433 1,989 1,715
Reviews -- -- 229 75 3,714 2,468 -- 5,731 640
Upgrades -- -- -- -- -- -- 11,000 -- --
Partial C/Os w/Continuing TDRs -- -- -- -- -- -- -- 5,656 3,000
Charge-offs w/Loans Sold or Settled -- -- 56 -- -- -- -- 251 --
Transfer to NPA   --   823   1,309   13,245   532   671   3,971   800   5,638
Subtotal Deductions: -- $ 2,084 $ 3,551 $ 14,588 $ 6,209 $ 4,277 $ 15,529 $ 14,794 $ 11,119
 
Net Increase / (Decrease) $ 33,309 $ 4,116 $ 34,460 $ 9,108 $ 15,983 $ 8,641 ($ 2,621) ($ 11,120) ($10,806)
 

% Increase / (Decrease) from Preceding Period
12.4% 92.1% 12.7% 19.7% 8.9% (2.5%) (10.8%) (11.8%)
 
Period Ended Balance $ 33,309 $ 37,425 $ 71,885 $ 80,993 $ 96,976 $ 105,617 $ 102,996 $ 91,876 $ 81,070
 
 

7/1/11 to

9/30/11

10/1/11 to

12/31/11

1/1/12 to

3/31/12

4/1/12 to

6/30/12

7/1/12 to

9/30/12

10/1/12 to

12/31/12

1/1/13 to

3/31/13

4/1/13 to

6/30/13

TOTAL
Period Beginning Balance $ 81,070 $ 71,686 $ 52,264 $ 42,426 $ 43,054 $ 44,892 $ 43,448 $ 33,926
 
Additions:
New Loans Added $ 984 $ 753 $ 541 $ 1,345 $ 8,804 $ 6,771 $ 231 $ 1,063 $ 170,266
Loan Advances   53   40   236   186   46   65   --   --   4,073
Subtotal Additions: $ 1,037 $ 793 $ 777 $ 1,531 $ 8,850 $ 6,836 $ 231 $ 1,063 $ 174,339
 
Deductions:
Sales Proceeds $ 4,597 $ 6,168 $ 5,098 $ 247 $ 531 $ 3,904 $ -- $ 46 $ 25,915
Payments 532 990 226 158 785 72 64 28 9,873
Reviews 4,292 10,111 3,888 498 1,465 635 9,689 663 44,098
Upgrades -- -- -- -- --

3,392
-- -- 14,392
Partial C/Os w/Continuing TDRs -- -- -- -- 2,587 0 -- -- 11,243
Charge-offs w/Loans Sold or Settled -- 2,946 604 -- -- 0 -- 27 3,884
Transfer to NPA   1,000   --   799   --   1,644   277   --   7,335   38,044
Subtotal Deductions: $ 10,421 $ 20,215 $ 10,615 $ 903 $ 7,012 $ 8,280 $ 9,753 $ 8,099 $ 147,449
 
Net Increase / (Decrease) ($9,384) ($19,422) ($9,838) $ 628 $ 1,838 ($1,444) ($9,522) ($7,036)
 
% Increase / (Decrease) from Preceding Period (11.6%) (27.1%) (18.8%) 1.5% 4.3% (3.20%) (21.9%) (20.7%)
 
Period Ended Balance $ 71,686 $ 52,264 $ 42,426 $ 43,054 $ 44,892 $ 43,448 $ 33,926 $ 26,890 $ 26,890
 

                   
(Dollars in thousands) As of June 30,         As of        
2013     2012     % Change 3/31/13     % Change
 
Loan Portfolio:
Commercial $ 247,922 $ 256,614 -3.4 % $ 255,452 -3.0 %
Real estate-one to four family residential:
Permanent first and second 297,184 277,882 6.9 % 283,910 4.7 %
Home equity loans and lines   111,267   123,953 -10.2 %   113,448 -1.9 %
Total real estate-one-to-four family residential $ 408,451 $ 401,835 1.6 % $ 397,358 2.8 %
Real estate-multifamily residential 69,442 84,177 -17.5 % 79,795 -13.0 %
Real estate-non-farm, non-residential:
Owner-occupied 463,821 471,461 -1.6 % 489,571 -5.3 %
Non-owner-occupied   668,956   684,173 -2.2 %   667,455 0.2 %
Total real estate-non-farm, non-residential $ 1,132,777 $ 1,155,634 -2.0 % $ 1,157,026 -2.1 %
Real estate-construction:
Residential 163,669 147,064 11.3 % 163,658 0.0 %
Commercial   103,335   123,876 -16.6 %   129,076 -19.9 %
Total real estate-construction: $ 267,004 $ 270,940 -1.5 % $ 292,734 -8.8 %
Consumer 9,016 8,638 4.4 % 10,404 -13.3 %
Farmland   6,082   3,573 70.2 %   6,095 -0.2 %
Total loans $ 2,140,694 $ 2,181,411 -1.9 % $ 2,198,864 -2.7 %
Less unearned income 4,172 3,207 30.1 % 4,078 2.3 %
Less allowance for loan losses   41,131   46,632 -11.8 %   41,970 -2.0 %
Loans, net $ 2,095,391 $ 2,131,572 -1.7 % $ 2,152,816 -2.7 %
 
     
(Dollars in thousands) As of June 30, 2013
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 $ 1,160 0.7 % $ 325 0.2 % --
Montgomery, MD -- -- -- -- --
Prince Georges, MD 7,399 4.5 % 129 0.1 % --
Other Counties in MD 4,443 2.7 % 3,050 1.9 % --
Arlington/Alexandria, VA 33,076 20.2 % 661 0.4 % 0.4 %
Fairfax, VA 33,788 20.7 % -- -- --
Culpeper/Fauquier, VA 9,681 5.9 % 200 0.1 % --
Frederick, VA -- -- -- -- --
Henrico, VA 955 0.6 % -- -- --
Loudoun, VA 14,292 8.7 % 263 0.1 % --
Prince William, VA 34,572 21.1 % -- -- --
Spotsylvania, VA 365 0.2 % -- -- --
Stafford, VA 19,884 12.2 % -- -- --
Other Counties in VA 1,779 1.1 % -- -- -0.1 %
Outside VA, D.C. & MD   2,275 1.4 %   -- --   --  
$ 163,669 100.0 % $ 4,628 2.8 % 0.4 %
 

 
 
(Dollars in thousands) As of June 30, 2013
Commercial, Acquisition, Development and Construction       Non-accruals   Net charge-
Total Percentage Non-accrual as a % of offs as a % of
By County/Jurisdiction of Origination: Outstandings   of Total Loans   Outstandings   Outstandings
District of Columbia $ 402 0.4 % $ -- -- --
Montgomery, MD 1,999 1.9 % -- -- --
Prince Georges, MD 6,343 6.1 % -- -- --
Other Counties in MD 2,057 2.0 % -- -- --
Arlington/Alexandria, VA 495 0.5 % 495 0.5 % --
Fairfax, VA 6,870 6.7 % -- -- 0.2 %
Culpeper/Fauquier, VA 1,111 1.1 % 1,111 1.1 % 1.1 %
Frederick, VA 2,000 1.9 % -- -- --
Henrico, VA -- -- -- -- --
Loudoun, VA 13,984 13.5 % -- -- --
Prince William, VA 37,791 36.6 % -- -- --
Spotsylvania, VA 1,610 1.6 % -- -- --
Stafford, VA 23,296 22.5 % 6,537 6.3 % 2.1 %
Other Counties in VA 5,377 5.2 % 835 0.8 % --
Outside VA, D.C. & MD   -- --     -- --   --  
$ 103,335 100.0 % $ 8,978 8.7 % 3.4 %
 
 
(Dollars in thousands) As of June 30, 2013
Non-Farm/Non-Residential       Non-accruals   Net charge-
Total Percentage Non-accrual as a % of offs as a % of
By County/Jurisdiction of Origination: Outstandings   of Total Loans   Outstandings   Outstandings
District of Columbia $ 79,095 7.0 % $ -- -- --
Montgomery, MD 18,566 1.6 % 1,706 0.2 % --
Prince Georges, MD 70,798 6.3 % -- -- --
Other Counties in MD 45,786 4.0 % -- -- --
Arlington/Alexandria, VA 168,082 14.8 % 910 0.1 % --
Fairfax, VA 270,978 23.9 % 719 0.1 % 0.1 %
Culpeper/Fauquier, VA

4,839
0.4 % 1,603 0.1 % --
Frederick, VA 7,609 0.7 % -- -- --
Henrico, VA 21,407 1.9 % -- -- --
Loudoun, VA 128,633 11.4 % 3,673 0.3 % --
Prince William, VA 196,490 17.3 % -- -- --
Spotsylvania, VA 21,527 1.9 % -- -- --
Stafford, VA 24,654 2.2 % -- -- --
Other Counties in VA 65,457 5.8 % -- -- --
Outside VA, D.C. & MD   8,856 0.8 %   -- --   --  
$ 1,132,777 100.0 % $ 8,611 0.8 % 0.1 %
 
Of this total of $1.13 billion in non-farm/non-residential real estate loans, approximately $58.7 million will mature in 2013, $137.2 million in 2014 and $69.6 million in 2015.
       
As of June 30,     As of    
(Dollars in thousands) 2013   2012   % Change 3/31/13   % Change
 
Investment Securities (at book value):
Available-for-sale (AFS):
U.S. government treasury obligations $ -- $ 19,999 -100 % $ -- --
U.S. government agency obligations 387,269 448,297 -13.6 % $ 393,959 -1.7 %
Pooled trust preferred securities 779 556 40.1 % 364 114.0 %
Obligations of states and political subdivisions   94,679   97,836 -3.2 %   100,763 -6.0 %
Total Investment Securities $ 482,727 $ 566,688 -14.8 % $ 495,086 -2.5 %

   
Virginia Commerce Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
 
As of
As of June 30, December 31,
2013   2012 2012
Assets  
Cash and due from banks $ 28,804 $ 57,653 $ 49,531
Investment securities, AFS 482,727 566,688 493,424
Restricted stocks, at cost 10,253 11,272 10,147
Interest bearing deposits in other banks 99,000 152,129 1,000
Loans held-for-sale 7,848 12,851 15,195
Loans, net of allowance for loan losses of $41,131, $46,632 and $42,773 2,095,391 2,131,572 2,142,872
Bank premises and equipment, net 9,199 10,646 10,072
Accrued interest receivable 8,620 9,334 8,563
Other real estate owned, net of valuation allowance of $4,228, $6,571 and $6,374 11,290 14,018 12,302
Bank owned life insurance 45,000 14,126 44,393
Other assets   38,103     36,987   36,193
Total assets $ 2,836,235   $ 3,017,276 $ 2,823,692
Liabilities and Stockholders’ Equity
Deposits
Demand deposits $ 465,805 $ 383,714 $ 416,091
Savings and interest-bearing demand deposits 1,134,584 1,186,107 1,200,397
Time deposits   579,168     681,871   628,904
Total deposits $ 2,179,557 $ 2,251,692 $ 2,245,392
Securities sold under agreement to repurchase 301,620 364,568 250,718
Other borrowed funds 25,000 25,000 7,000
Trust preferred capital notes 66,955 66,698 66,827
Accrued interest payable 2,653 2,079 1,885
Other liabilities   6,686     3,945   6,561
Total liabilities $ 2,582,471 $ 2,713,982 $ 2,578,383
Stockholders’ Equity
Preferred stock, net of discount, $1.00 par value per share, 1,000,000 shares authorized, Series A; $1,000 stated value; 71,000 issued and outstanding $ -- $ 68,146 $ --
Common stock, $1.00 par value per share, 50,000,000 shares authorized, issued and outstanding June 2013, 32,623,439 including 189,546 in unvested restricted stock issued; June 2012, 31,812,914 including 113,717 in unvested restricted stock issued; December 2012, 31,920,756 including 110,215 in unvested restricted stock issued 32,434 31,699 31,811
Surplus 122,055 117,721 118,508
Warrants 8,520 8,520 8,520
Retained earnings 96,986 72,135 83,487
Accumulated other comprehensive income (loss), net   (6,231 )   5,073   2,983
Total stockholders’ equity $ 253,764   $ 303,294 $ 245,309
Total liabilities and stockholders’ equity $ 2,836,235   $ 3,017,276 $ 2,823,692

   
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,
2013   2012 2013   2012
Interest and dividend income:    
Interest and fees on loans $ 28,381 $ 30,427 $ 56,896 $ 61,048
Interest and dividends on investment securities:
Taxable 1,932 2,452 3,900 5,096
Tax-exempt 561 586 1,128 1,174
Dividends on restricted stocks 114 104 227 205
Interest on deposits in other banks   41     74   80     125
Total interest and dividend income $ 31,029   $ 33,643 $ 62,231   $ 67,648
Interest expense:
Deposits $ 3,340 $ 4,465 $ 6,863 $ 9,407

Securities sold under agreement to repurchase and federal funds purchased
926 1,014 1,841 2,051
Other borrowed funds 18 268 34 537
Trust preferred capital notes   953     979   1,907     1,957
Total interest expense $ 5,237   $ 6,726 $ 10,645   $ 13,952
Net interest income $ 25,792 $ 26,917 $ 51,586 $ 53,696
Provision for loan losses   2,526     3,162   4,373     9,156
Net interest income after provision for loan losses $ 23,266   $ 23,755 $ 47,213   $ 44,540
Non-interest income:
Service charges and other fees $ 906 $ 875 $ 1,836 $ 1,756
Non-deposit investment services commissions 245 242 527 494
Fees and net gains on loans held-for-sale 675 830 1,697 1,831
Gain on sale of investment securities -- 1,328 -- 3,920
Bank owned life insurance 306 54 607 109
Other   64     92   87     260
Total non-interest income $ 2,196   $ 3,421 $ 4,754   $ 8,370
Non-interest expense:
Salaries and employee benefits $ 6,713 $ 7,239 $ 14,891 $ 15,024
Occupancy expense 2,303 2,341 4,724 4,762
FDIC insurance premiums 515 833 1,032 1,828
Loss on other real estate owned 535 881 1,783 1,707
Other real estate owned expenses 265 262 473 580
Franchise tax expense 747 750 1,495 1,500
Data processing expense 674 675 1,399 1,328
Merger-related expenses 282 -- 866 --
Other operating expense   2,004     2,576   5,022     5,455
Total non-interest expense $ 14,038   $ 15,557 $ 31,685   $ 32,184
Income before taxes $ 11,424 $ 11,619 $ 20,282 $ 20,726
Provision for income taxes   3,961     3,899   6,783     6,864
Net income $ 7,463   $ 7,720 $ 13,499   $ 13,862
Effective dividend on preferred stock   --     1,363   --     2,726
Net income available to common stockholders $ 7,463 $ 6,357 $ 13,499 $ 11,136
Earnings per common share, basic $ 0.23 $ 0.20 $ 0.42 $ 0.35
Earnings per common share, diluted $ 0.21 $ 0.19 $ 0.38 $ 0.33

           
Virginia Commerce Bancorp, Inc.
Consolidated Average Balances, Yields, and Rates
Three Months Ended June 30,
(Unaudited)
 
                   
2013 2012
Interest Average Interest Average
Average Income- Yields Average Income- Yields
(Dollars in thousands) Balance   Expense   /Rates Balance   Expense   /Rates
Assets
Investment securities (1) $ 493,605 $ 2,493 2.23 % $ 589,230 $ 3,038 2.24 %
Restricted stock 10,253 114 4.46 % 11,272 104 3.73 %
Loans, net of unearned income (2) 2,186,123 28,381 5.22 % 2,165,893 30,427 5.66 %
Interest-bearing deposits in other banks   56,674     41   0.29 %   120,593     74   0.25 %
Total interest-earning assets $ 2,746,655 $ 31,029 4.58 % $ 2,886,988 $ 33,643 4.74 %
Other assets   102,635   76,126
Total Assets $ 2,849,290 $ 2,963,114
 
Liabilities and Stockholders’ Equity
Interest-bearing deposits:
NOW accounts $ 433,802 $ 315 0.29 % $ 354,559 $ 318 0.36 %
Money market accounts 225,500 171 0.30 % 222,898 221 0.40 %
Savings accounts 483,068 365 0.30 % 602,095 644 0.43 %
Time deposits   591,283     2,489   1.69 %   706,106     3,282   1.87 %
Total interest-bearing deposits $ 1,733,653 $ 3,340 0.77 % $ 1,885,658 $ 4,465 0.95 %
Securities sold under agreement to repurchase and federal funds purchased(3) 323,005 926 1.15 % 320,100 1,014 1.27 %
Other borrowed funds 25,000 18 0.28 % 25,000 268 4.25 %
Trust preferred capital notes   66,921     953   5.63 %   66,660     979   5.80 %
Total interest-bearing liabilities $ 2,148,579 $ 5,237 0.98 % $ 2,297,418 $ 6,726 1.18 %
Demand deposits and other liabilities   444,487   364,622
Total liabilities $ 2,593,066 $ 2,662,040
Stockholders’ equity   256,224   301,074
Total liabilities and stockholders’ equity $ 2,849,290 $ 2,963,114
Interest rate spread 3.60 % 3.56 %
Net interest income and margin $ 25,792 3.82 % $ 26,917 3.80 %
 
(1) Yields on investment 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 investment securities, which are reflected as a component of stockholders’ equity. Average yields on investment 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 $1.5 million for the three months ended June 30, 2013 and 2012, respectively.
(3) The securities sold under agreement to repurchase related to customers had an average balance of $248.0 million at an average rate of 0.13% for the three months ended June 30, 2013, and $245.1 million at an average rate of 0.28% for the same period 2012. Also, included are wholesale agreements with an average balance of $75.0 million at an average rate of 4.51% for the three months ended June 30, 2013, and $75.0 million at an average rate of 4.52% for the same period for 2012.

           
Virginia Commerce Bancorp, Inc.
Consolidated Average Balances, Yields, and Rates
Six Months Ended June 30,
(Unaudited)
 
                   
2013 2012
Interest Average Interest Average
Average Income- Yields Average Income- Yields
(Dollars in thousands) Balance   Expense   /Rates Balance   Expense   /Rates
Assets
Investment securities (1) $ 493,626 $ 5,028 2.26 % $ 597,137 $ 6,270 2.28 %
Restricted stock 10,653 227 4.30 % 11,246 205 3.68 %
Loans, net of unearned income (2) 2,190,309 56,896 5.25 % 2,170,454 61,048 5.67 %
Interest-bearing deposits in other banks   55,472     80   0.29 %   98,489     125   0.26 %
Total interest-earning assets $ 2,750,060 $ 62,231 4.62 % $ 2,877,326 $ 67,648 4.78 %
Other assets   102,162   76,593
Total Assets $ 2,852,222 $ 2,953,919
 
Liabilities and Stockholders’ Equity
Interest-bearing deposits:
NOW accounts $ 437,664 $ 646 0.30 % $ 340,775 $ 615 0.36 %
Money market accounts 222,674 332 0.30 % 219,417 456 0.42 %
Savings accounts 494,482 746 0.30 % 615,197 1,416 0.46 %
Time deposits   601,976     5,139   1.72 %   733,425     6,920   1.90 %
Total interest-bearing deposits $ 1,756,796 $ 6,863 0.79 % $ 1,908,814 $ 9,407 0.99 %
Securities sold under agreement to repurchase and federal funds purchased(3) 303,696 1,841 1.22 % 299,951 2,051 1.38 %
Other borrowed funds 27,260 34 0.25 % 25,000 537 4.25 %
Trust preferred capital notes   66,889     1,907   5.67 %   66,631     1,957   5.81 %
Total interest-bearing liabilities $ 2,154,641 $ 10,645 1.00 % $ 2,300,396 $ 13,952 1.22 %
Demand deposits and other liabilities   445,065   357,426
Total liabilities $ 2,599,706 $ 2,657,822
Stockholders’ equity   252,516   296,097
Total liabilities and stockholders’ equity $ 2,852,222 $ 2,953,919
Interest rate spread 3.62 % 3.56 %
Net interest income and margin $ 51,586 3.83 % $ 53,696 3.80 %
 
(1) Yields on investment 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 investment securities, which are reflected as a component of stockholders’ equity. Average yields on investment 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 $2.6 million and $2.7 million for the six months ended June 30, 2013 and 2012, respectively.
(3) The sold under agreement to repurchase related to customers had an average balance of $228.7 million at an average rate of 0.14% for the six months ended June 30, 2013, and $225.0 million at an average rate of 0.33% for the same period 2012. Also, included are wholesale agreements with an average balance of $75.0 million at an average rate of 4.51% for the six months ended June 30, 2013, and $75.0 million at an average rate of 4.52% for the same period for 2012.

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX