VCBI Virginia Commerce Bancorp (MM)

Virginia Commerce Bancorp, Inc. (Nasdaq:VCBI), parent company of Virginia Commerce Bank (the "Bank"), today reported its financial results for the second quarter and six months ended June 30, 2006. Second Quarter 2006 Highlights: -- Net income of $6.3 million representing a 40.7% increase over second quarter 2005 -- Diluted earnings per share up 40.0% to $0.28 -- Loans up 31.6% since June 30, 2005, and 14.3% year-to-date -- Efficiency ratio improves further to 44.5% Peter A. Converse, Chief Executive Officer, commented, "We're both proud and pleased to report robust earnings, strong loan growth and an improved efficiency ratio in our increasingly competitive market. The effect of this market pressure on our short-term deposit rates resulted in an 8 basis point decrease in the second quarter net interest margin to 4.19%, from 4.27% in the first quarter. Considering the significant gain in CD deposits in the first quarter through Washington Post promotional ads, we backed off from the market leading promotions in the second quarter to relieve some of the margin compression. As anticipated, deposit growth slowed considerably in the second quarter, despite a 22% increase quarter-over-quarter in money market accounts. Nonetheless, deposits and repurchase agreements, which are overnight deposit sweeps, increased a combined 22.2% for the first six months as compared to the prior year." Converse added, "With our promising loan pipeline and the prospect of adding more loan officers in the third quarter, loan volume is expected to remain strong. We will continue to maintain prudent underwriting standards that result in our peer-leading asset quality metrics. While all customer contact officers are focused on generating low-cost deposits, we will not hesitate to meet the competition head-on with more CD promotions in the third quarter and beyond to fund our loan growth. We accept that this will put more pressure on our net interest margin in the near-term, but feel it is a valid longer term strategy to maintain our growth momentum. We also feel that funding loans with higher rate deposits at least provides cross-selling opportunities that Federal Home Loan Bank advances don't afford. Our continued branching into new and in-fill markets also will enhance our deposit gathering efforts." Converse concluded, "We remain confident that we are up to the challenge of maintaining our high level of performance going forward." DETAILED REVIEW OF FINANCIAL PERFORMANCE Net Income Second quarter earnings of $6.3 million represented an increase of 40.7% over 2005 second quarter earnings of $4.5 million. On a diluted per share basis, second quarter 2006 earnings were $0.28 compared to $0.20 for the second quarter of 2005, an increase of 40.0%. For the six months ended June 30, 2006, earnings of $12.0 million represents a 36.5% increase over the $8.8 million earned for the same period in 2005, with diluted earnings per share of $0.53 increasing 35.9%. The increases in net income for both the quarter and year-to-date were due to a 27.9% and 27.5% increase in net interest income and a 12.4% and 24.8% increase in non-interest income, while non-interest expense climbed only 16.1% and 21.0%. Net Interest Income Net interest income for the second quarter of $17.3 million was up 27.9% compared with $13.6 million for the same quarter last year due to strong loan growth, as the net interest margin decreased eleven basis points from 4.30% in the second quarter of 2005 to 4.19% for the current three-month period. Year-to-date net interest income of $33.5 million was up 27.5%, compared to $26.3 million in 2005, again due to strong loan growth as the net interest margin for the six-month period declined from 4.35% in 2005, to 4.23%. Compared to the first quarter of 2006, the net interest margin is down eight points from 4.27% to 4.19%. These declines in the margin are the result of significantly higher short-term interest rates, particularly in money market and time deposits, driven by an industry-wide liability mix shift and a continuation of strong competition for deposits in the local market. Management expects continued margin pressure for the remainder of 2006, with current third quarter expectations remaining above 4.00% and possibly lower results in the fourth quarter. Non-Interest Income and Non-Interest Expense Non-interest income of $1.7 million in the second quarter was up 12.4%, from the $1.5 million for the same period in 2005 and was up $684 thousand, or 24.8%, on a year-to-date basis due primarily to higher levels of deposit account service charges. On a year-to-date basis, fees and net gains on loans held-for-sale were mostly unchanged from the first half of 2005, while they were down $151 thousand as compared to the second quarter of 2005. Compared to the first quarter of 2006, non-interest income was generally unchanged. Non-interest expense increased $1.2 million, or 16.7%, from $7.3 million in the second quarter of 2005, to $8.5 million, and was up $2.9 million, or 21.0%, from $13.8 million for the six months ended June 30, 2005, to $16.7 million year-to-date. Compared to the first quarter of 2006, non-interest expense is up $290 thousand, or 3.5%. The year-over-year increases were due to the opening of the Bank's eighteenth and nineteenth branch locations in June 2005 and January 2006, the hiring of additional loan and business development officers and other staffing and facilities expansion to support the significant levels of loan and deposit growth. Despite these non-interest expense increases, strong earnings growth allowed the efficiency ratio to improve to 44.5% for the second quarter. Operating expense may be higher in the second half of the year with the anticipated hiring of additional loan officers, the opening of the Bank's twentieth branch in August 2006, and up to two more branches expected to be opened by year-end. Loans Over the past year, loans, net of allowance for loan losses, increased $348.8 million, or 31.6%, from $1.1 billion at June 30, 2005, to $1.5 billion at June 30, 2006. Growth generally occurred in all categories, with the majority of loan growth occurring in non-farm, non-residential real estate loans and real estate construction loans. Since December 31, 2005, loans are up $181.6 million, or 14.3%, and are up $83.2 million, or 6.1% since March 31, 2006. Based on the current pipeline, management expects continued strong loan growth. Deposits and Borrowings Since June 30, 2005, deposits have increased $206.3 million, or 16.9%, from $1.2 billion to $1.4 billion with savings and interest-bearing demand deposits increasing by $67.9 million, and time deposits growing by $144.7 million. Of the total $67.9 million in savings and interest-bearing demand deposit growth, money markets increased $104.1 million while now and savings accounts fell by $32.5 and $3.7 million respectively. Year-to-date deposits are up $184.9 million, or 14.9%, with demand deposits having increased $17.2 million, savings and interest-bearing demand deposits increasing $48.4 million, and time deposits growing by $119.2 million. On a linked quarter basis, deposits increased $36.4 million, with the majority of the growth in demand and money market accounts as time deposits rose only $11.9 million during the period. The growth in time deposits in 2006 was mostly concentrated in first quarter due to special advertised rates on certificates of deposits ranging from six months to thirteen months in order to help fund strong loan demand. Repurchase agreements, which represent sweep funds of significant commercial demand deposit customers of the Bank, increased $76.3 million, or 258.9% from $48.0 million at June 30, 2005, to $124.2 million at June 30, 2006, and increased $9.3 million from $114.9 million at March 31, 2006. Trust Preferred Securities On December 20, 2005, the Company completed the private placement of an aggregate of $25 million of trust preferred securities through VCBI Capital Trust III, a newly formed trust subsidiary organized under Delaware law. The securities mature on February 23, 2036, and are redeemable at par, at the Company's option, at any time on or after February 23, 2011, subject to regulatory approval. The securities are redeemable prior to February 23, 2011, at a premium ranging up to 104% of the principal amount thereof, upon the occurrence of certain regulatory or legal events. The securities bear interest on a quarterly basis, at a 6.19% fixed rate until February 23, 2011, at which time the interest rate becomes a variable rate, adjusted quarterly, equal to 142 basis points over three-month LIBOR. The proceeds from this issuance were used to supplement the Company's capital for continued growth and other general corporate purposes. Asset Quality Asset quality remains strong with non-performing assets and past due loans declining from $3.8 million, or 0.28% of total assets, at June 30, 2005, to $2.6 million, or 0.15%, as of June 30, 2006, and falling $637 thousand from $3.2 million, or 0.19%, at March 31, 2006. With improved asset quality and despite overall strong loan growth, the provision for loan losses was $955 thousand for the second quarter of 2006 compared to $1.0 million in 2005, and as compared to $1.0 million in the first quarter of 2006. Year-to-date net charge-offs were $80 thousand compared to a net recovery of $2 thousand for the same period in 2005. Stockholders' Equity Stockholders' equity is up $24.2 million, or 24.0%, from $100.9 million at June 30, 2005, to $125.0 million at June 30, 2006, due to earnings growth and $2.8 million in net proceeds from the exercise of options and warrants by company directors, officers and employees. On May 12, 2006, a three-for-two split in the form of a 50% stock dividend was paid, increasing the number of shares outstanding by 7.1 million to 21.5 million as of quarter-end. CONFERENCE CALL Virginia Commerce Bancorp will host a teleconference call for the financial community on July 18, 2006, at 11:00 a.m. Eastern Daylight Time to discuss the second quarter 2006 financial results. The public is invited to listen to this conference call by dialing 866-219-5260 at least 10 minutes prior to the call. A replay of the conference call will be available from 2:00 p.m. Eastern Daylight Time on July 18, 2006, until 11:59 p.m. Eastern Daylight Time on July 25, 2006. The public is invited to listen to this conference call replay by dialing 888-266-2081 and entering passcode 929831. ABOUT VIRGINIA COMMERCE BANCORP Virginia Commerce Bancorp, Inc. is the parent bank holding company for Virginia Commerce Bank (the "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 nineteen branch offices, two residential mortgage offices and one investment services office, principally to individuals and small to medium-size businesses in Northern Virginia and the Metropolitan Washington, D.C. area. NON-GAAP PRESENTATIONS This press release refers to the efficiency ratio, which is computed by dividing non-interest expense by the sum of net interest income on a tax equivalent basis and non-interest income. This is a non-GAAP financial measure that we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate the efficiency ratio differently. The Company, in referring to its net income, is referring to income under accounting principals generally accepted in the United States, or "GAAP". FORWARD LOOKING STATEMENTS This press release may contain 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 and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as "may," "will," "anticipates," "believes," "expects," "plans," "estimates," "potential," "continue," "should," and similar words or phrases. 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 discussion 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. -0- *T Virginia Commerce Bancorp, Inc. Financial Highlights (Dollars in thousands, except per share data) (Unaudited) Three Months Ended June 30, 2006 2005 % Change --------------------------------- Summary Operating Results: Interest and dividend income $30,594 $20,422 49.8% Interest expense 13,246 6,856 93.2% Net interest and dividend income 17,348 13,566 27.9% Provision for loan losses 955 1,031 -7.4% Non-interest income 1,735 1,543 12.4% Non-interest expense 8,484 7,271 16.7% Income before income taxes 9,644 6,807 41.7% Net income $6,278 $4,463 40.7% Performance Ratios: Return on average assets 1.47% 1.37% Return on average equity 20.64% 18.21% Net interest margin 4.19% 4.30% Efficiency ratio (1) 44.46% 48.06% Per Share Data: (2) Net income-basic $0.29 $0.21 38.1% Net income-diluted $0.28 $0.20 40.0% Average number of shares outstanding: Basic 21,460,389 20,993,865 Diluted 22,768,877 22,433,778 Six Months Ended June 30, 2006 2005 % Change --------------------------------- Summary Operating Results: Interest and dividend income $57,835 $38,722 49.4% Interest expense 24,335 12,443 95.6% Net interest and dividend income 33,500 26,279 27.5% Provision for loan losses 1,960 1,862 5.3% Non-interest income 3,446 2,762 24.8% Non-interest expense 16,678 13,785 21.0% Income before income taxes 18,308 13,394 36.7% Net income $11,992 $8,784 36.5% Performance Ratios: Return on average assets 1.47% 1.41% Return on average equity 20.40% 18.43% Net interest margin 4.23% 4.35% Efficiency ratio (1) 45.14% 47.41% Per Share Data: (2) Net income-basic $0.56 $0.42 33.3% Net income-diluted $0.53 $0.39 35.9% Average number of shares outstanding: Basic 21,361,637 20,984,744 Diluted 22,684,088 22,422,429 As of June 30, --------------------------------- 2006 2005 % Change --------------------------------- Selected Balance Sheet Data: Loans, net $1,451,864 $1,103,020 31.6% Investment securities 204,793 155,386 31.8% Assets 1,728,666 1,394,030 24.0% Deposits 1,428,393 1,222,068 16.9% Stockholders' equity 125,073 100,879 24.0% Book value per share (2) $5.82 $4.80 21.3% Capital Ratios (% of risk weighted assets): Tier 1 capital: Company 10.84% 9.97% Bank 7.91% 8.32% Total qualifying capital: Company 11.91% 10.99% Bank 11.67% 10.84% Asset Quality Non-performing assets: Impaired loans $1,910 $2,815 -32.1% Non-accrual loans 562 16 3,412.5% Loans 90+ days past due and still accruing 136 1,003 -86.4% ----------- ----------- --------- Total non-performing assets and past due loans $2,608 $3,834 -32.0% to total loans: 0.18% 0.34% to total assets: 0.15% 0.28% Allowance for loan losses to total loans 1.07% 1.09% Net charge-offs (recoveries) $80 ($2) Net charge-offs to average loans outstanding 0.01% 0.00% As of June 30, --------------------------------- 2006 2005 % Change --------------------------------- Loan Portfolio: Commercial $148,828 $105,654 40.9% Real estate-one to four family residential 167,950 139,814 20.1% Real estate-multifamily residential 53,703 57,033 -5.8% Real estate-nonfarm, nonresidential 640,762 509,930 25.7% Real estate-construction 453,712 301,303 50.6% Consumer 7,659 6,708 14.2% ----------- ----------- --------- Total loans $1,472,614 $1,120,442 31.4% Less unearned income 5,049 5,156 -2.1% Less allowance for loan losses 15,701 12,266 28.0% ----------- ----------- --------- Loans, net $1,451,864 $1,103,020 31.6% Investment Securities (at book value): Available-for-sale: U.S. Government Agency obligations $145,904 $98,318 48.4% Domestic corporate debt obligations 6,048 6,035 0.2% Obligations of states and political subdivisions 1,351 1,363 -0.9% Restricted stock: Federal Reserve Bank 1,442 1,442 -- Federal Home Loan Bank 3,034 2,277 33.2% Community Bankers' Bank 55 55 -- ----------- ----------- --------- $157,834 $109,490 44.2% Held-to-maturity: U.S. Government Agency obligations $37,994 $36,965 2.8% Obligations of states and political subdivisions 8,965 8,435 6.3% Domestic corporate debt obligations -- 496 n/a ----------- ----------- --------- $46,959 $45,896 2.3% (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. (2) Adjusted to give effect to a three-for-two stock split in the form of a 50% stock dividend in May 2006. Virginia Commerce Bancorp, Inc. Consolidated Balance Sheets (Dollars in thousands, except per share data) As of June 30, (Unaudited) 2006 2005 ----------- ----------- Assets Cash and due from banks $29,566 $25,417 Interest-bearing deposits with other banks 1,055 1,021 Securities (fair value: 2006, $202,935; 2005, $155,428) 204,793 155,386 Federal funds sold -- 66,198 Loans held-for-sale 8,785 17,244 Loans, net of allowance for loan losses of $15,701 in 2006 and $12,266 in 2005 1,451,864 1,103,020 Bank premises and equipment, net 8,322 7,344 Accrued interest receivable 7,490 4,906 Other assets 16,791 13,494 ----------- ----------- Total assets $1,728,666 $1,394,030 =========== =========== Liabilities and Stockholders' Equity Deposits Demand deposits $205,795 $212,064 Savings and interest-bearing demand deposits 397,968 330,104 Time deposits 824,630 679,900 ----------- ----------- Total deposits $1,428,393 $1,222,068 Securities sold under agreement to repurchase and federal funds purchased 124,252 47,986 Trust preferred capital notes 44,344 18,570 Accrued interest payable 4,071 2,571 Other liabilities 2,533 1,956 Commitments and contingent liabilities -- -- ----------- ----------- Total liabilities $1,603,593 $1,293,151 =========== =========== Stockholders' Equity Preferred stock, $1.00 par, 1,000,000 shares authorized and un-issued $ -- $ -- Common stock, $1.00 par, 20,000,000 shares authorized, issued and outstanding 2006, 21,501,026; 2005, 14,002,959 21,501 14,003 Surplus 30,663 35,325 Retained earnings 75,227 52,357 Accumulated other comprehensive loss, net (2,318) (806) ----------- ----------- Total stockholders' equity $125,073 $100,879 Total liabilities and stockholders' equity $1,728,666 $1,394,030 =========== =========== Virginia Commerce Bancorp, Inc. Consolidated Statements of Income (Dollars in thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, --------------------------------------- 2006 2005 2006 2005 --------------------------------------- Interest and dividend income: Interest and fees on loans $28,098 $18,823 $53,466 $35,631 Interest and dividends on investment securities: Taxable 2,012 1,338 3,597 2,696 Tax-exempt 60 59 120 118 Dividends 64 57 127 112 Interest on deposits with other banks 13 7 26 13 Interest on federal funds sold 347 138 499 152 --------------------------------------- Total interest and dividend income $30,594 $20,422 $57,835 $38,722 --------------------------------------- Interest expense: Deposits $11,379 $6,136 $20,550 $10,971 Securities sold under agreement to repurchase and federal funds purchased 1,109 279 2,065 548 Other borrowed funds - 163 216 374 Trust preferred capital notes 758 278 1,504 550 --------------------------------------- Total interest expense $13,246 $6,856 $24,335 $12,443 --------------------------------------- Net interest income: $17,348 $13,566 $33,500 $26,279 Provision for loan losses 955 1,031 1,960 1,862 --------------------------------------- Net interest income after provision for loan losses $16,393 $12,535 $31,540 $24,417 --------------------------------------- Non-interest income: Service charges and other fees $796 $476 $1,611 $923 Non-deposit investment services commissions 136 115 227 195 Fees and net gains on loans held-for-sale 705 856 1,422 1,461 Other 98 96 186 183 --------------------------------------- Total non-interest income $1,735 $1,543 $3,446 $2,762 --------------------------------------- Non-interest expense: Salaries and employee benefits $4,911 $4,349 $9,731 $8,139 Occupancy expense 1,289 1,067 2,556 2,014 Data processing expense 465 354 942 724 Other operating expense 1,819 1,501 3,449 2,908 --------------------------------------- Total non-interest expense $8,484 $7,271 $16,678 $13,785 --------------------------------------- Income before taxes on income $9,644 $6,807 $18,308 $13,394 Provision for income taxes 3,366 2,344 6,316 4,610 --------------------------------------- Net Income $6,278 $4,463 $11,992 $8,784 --------------------------------------- Earnings per common share, basic (1) $0.29 $0.21 $0.56 $0.42 Earnings per common share, diluted (1) $0.28 $0.20 $0.53 $0.39 (1) Adjusted to give effect to a three-for-two stock split in the form of a 50% stock dividend in May 2006. Virginia Commerce Bancorp, Inc. Consolidated Average Balances, Yields, and Rates Three Months Ended June 30, (Unaudited) 2006 ----------------------------------- Interest Average Average Income- Yields (Dollars in thousands) Balance Expense /Rates ----------------------------------- Assets Securities (1) $200,856 $2,136 4.29% Loans, net of unearned income (2) 1,431,803 28,098 7.76% Interest-bearing deposits in other banks 1,052 13 4.95% Federal funds sold 29,144 347 4.71% ----------------------------------- Total interest-earning assets $1,662,855 $30,594 7.38% Other assets 49,328 ----------- Total Assets $1,712,183 =========== Liabilities and Stockholders' Equity Interest-bearing deposits: NOW accounts $183,869 $755 1.65% Money market accounts 193,969 1,628 3.37% Savings accounts 17,080 23 0.54% Time deposits 831,299 8,973 4.33% ----------------------------------- Total interest-bearing deposits $1,226,217 $11,379 3.72% Securities sold under agreement to repurchase and federal funds purchased 110,164 1,109 4.04% Other borrowed funds -- -- -- Trust preferred capital notes 43,000 758 6.97% ----------------------------------- Total interest-bearing liabilities $1,379,381 $13,246 3.85% Demand deposits and other liabilities 210,822 ----------- Total liabilities $1,590,203 Stockholders' equity 121,980 ----------- Total liabilities and stockholders' equity $1,712,183 =========== Interest rate spread 3.53% Net interest income and margin $17,348 4.19% 2005 ----------------------------------- Interest Average Average Income- Yields (Dollars in thousands) Balance Expense /Rates ----------------------------------- Assets Securities (1) $162,191 $1,454 3.63% Loans, net of unearned income (2) 1,086,567 18,823 6.85% Interest-bearing deposits in other banks 1,017 7 2.68% Federal funds sold 18,541 138 2.94% ----------------------------------- Total interest-earning assets $1,268,316 $20,422 6.46% Other assets 40,282 ----------- Total Assets $1,308,598 =========== Liabilities and Stockholders' Equity Interest-bearing deposits: NOW accounts $211,209 $900 1.71% Money market accounts 105,470 443 1.68% Savings accounts 20,288 28 0.55% Time deposits 596,327 4,765 3.21% ----------------------------------- Total interest-bearing deposits $933,294 $6,136 2.64% Securities sold under agreement to repurchase and federal funds purchased 48,041 279 2.33% Other borrowed funds 20,440 163 3.20% Trust preferred capital notes 18,000 278 6.12% ----------------------------------- Total interest-bearing liabilities $1,019,775 $6,856 2.70% Demand deposits and other liabilities 190,504 ----------- Total liabilities $1,210,279 Stockholders' equity 98,319 ----------- Total liabilities and stockholders' equity $1,308,598 =========== Interest rate spread 3.76% Net interest income and margin $13,566 4.30% (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 $1.5 million and $989 thousand for the three months ended June 30, 2006 and 2005, respectively. Virginia Commerce Bancorp, Inc. Consolidated Average Balances, Yields, and Rates Six Months Ended June 30, (Unaudited) 2006 ----------------------------------- Interest Average Average Income- Yields (Dollars in thousands) Balance Expense /Rates ----------------------------------- Assets Securities (1) $187,514 $3,844 4.14% Loans, net of unearned income (2) 1,388,348 53,466 7.77% Interest-bearing deposits in other banks 1,052 26 4.95% Federal funds sold 21,413 499 4.63% ----------------------------------- Total interest-earning assets $1,598,327 $57,835 7.30% Other assets 46,618 ----------- Total Assets $1,644,945 =========== Liabilities and Stockholders' Equity Interest-bearing deposits: NOW accounts $189,943 $1,566 1.66% Money market accounts 167,334 2,633 3.17% Savings accounts 17,832 48 0.54% Time deposits 789,723 16,303 4.16% ----------------------------------- Total interest-bearing deposits $1,164,832 $20,550 3.56% Securities sold under agreement to repurchase and federal funds purchased 105,342 2,065 3.95% Other borrowed funds 9,116 216 4.72% Trust preferred capital notes 43,000 1,504 6.96% ----------------------------------- Total interest-bearing liabilities $1,322,290 $24,335 3.71% Demand deposits and other liabilities 204,110 ----------- Total liabilities $1,526,400 Stockholders' equity 118,545 ----------- Total liabilities and stockholders' equity $1,644,945 =========== Interest rate spread 3.59% Net interest income and margin $33,500 4.23% 2005 ----------------------------------- Interest Average Average Income- Yields (Dollars in thousands) Balance Expense /Rates ----------------------------------- Assets Securities (1) $163,459 $2,926 3.63% Loans, net of unearned income (2) 1,045,702 35,631 6.87% Interest-bearing deposits in other banks 1,014 13 2.53% Federal funds sold 10,443 152 2.89% ----------------------------------- Total interest-earning assets $1,220,618 $38,722 6.40% Other assets 38,524 ----------- Total Assets $1,259,142 =========== Liabilities and Stockholders' Equity Interest-bearing deposits: NOW accounts $207,287 $1,661 1.62% Money market accounts 104,300 815 1.58% Savings accounts 20,286 55 0.55% Time deposits 559,068 8,440 3.04% ----------------------------------- Total interest-bearing deposits $890,941 $10,971 2.48% Securities sold under agreement to repurchase and federal funds purchased 52,068 548 2.12% Other borrowed funds 25,425 374 2.93% Trust preferred capital notes 18,000 550 6.08% ----------------------------------- Total interest-bearing liabilities $986,434 $12,443 2.54% Demand deposits and other liabilities 176,573 ----------- Total liabilities $1,163,007 Stockholders' equity 96,135 ----------- Total liabilities and stockholders' equity $1,259,142 =========== Interest rate spread 3.86% Net interest income and margin $26,279 4.35% (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 $2.9 million and $2.0 million for the six months ended June 30, 2006 and 2005, respectively. *T