Virginia Commerce Bancorp, Inc. (the “Company”) (Nasdaq:VCBI),
parent company of Virginia Commerce Bank (the “Bank”), today
reported a net loss of $31.1 million, or $1.17 per diluted common
share, for the third quarter of 2009, compared with earnings of
$2.7 million, or $0.10 per diluted common share, for the same
period in 2008. The third quarter loss was primarily due to $49.0
million in provisions for loan losses versus $8.3 million for the
three months ended September 30, 2008, and a $9.1 million loss on
other real estate owned. Total non-performing assets and loans 90+
days past due decreased $16.1 million from June 30, 2009, and
net-charge-offs of $17.9 million were taken during the quarter.
With this increase in provisions, the allowance for loan losses
rose from 1.72% of total loans as of June 30, 2009, to 3.15% as of
September 30, 2009.
Peter A. Converse, Chief Executive Officer, commented, “We are
pleased to report ongoing progress in reducing non-performing
assets and loans 90+ days past due, as the total has declined for
two consecutive quarters from $162.1 million as of March 31, 2009,
to $123.5 million this quarter-end. For the current quarter,
non-accrual loans decreased $20.9 million and loans 90+ days past
due decreased $3.3 million, while other real estate owned increased
by $8.2 million. Management remains cautiously optimistic that
asset quality will continue to improve.”
Converse continued, “Improving credit metrics undoubtedly are
being achieved at the expense of increased loan loss reserve
provisioning and charge-offs, as we remain focused on aggressive
problem loan resolution. In analyzing the level of our reserves
relative to existing problem credits, peer group coverage ratios
and the uncertain pace of economic recovery, we determined that
increasing reserves with a provision of $49 million was warranted.
While that provision significantly impacted earnings, it more than
doubled our non-performing loan coverage ratio to 80.5 %, which we
feel provides adequate cushion. It should not be interpreted,
however, as an indication of heightened concern by management about
large, imminent losses or increasing deterioration in the loan
portfolio. Rather, management felt it was a prudent risk management
measure that positions our Bank in line with current industry and
peer standards.”
“Despite the substantive costs of working out problem loans, we
are encouraged by the strength of our core operating earnings,
which have increased over the last two quarters from $9.6 million
in the first quarter to $12.0 million this quarter. We expect that
these earnings will remain in the $10-12 million range for the
foreseeable future and consider them indicative of our bottom line
potential once we get beyond our credit issues. Contributing to
core earnings performance has been a rising net interest margin,
which increased sequentially from 3.35% to 3.52%. The improving
margin in turn has benefited from continued improvement in our
deposit mix. Certificates of deposit as a percent of total deposits
have declined further, from a high of 67.2% at year-end 2008, to
49.9% this quarter, as we enjoy greater success in generating lower
cost deposits. Core earnings also continue to benefit from vigilant
cost containment, exclusive of collection costs.”
Converse concluded, “The loss this quarter is disappointing to
say the least. However, it has enabled us to raise the allowance
for loan losses to a level that provides prudent coverage of the
risk in our non-performing loans and overall portfolio, thereby
positioning us for a quicker return to profitability. While
absorbing losses year-to-date in addressing problem loans and
building reserves, the Company has remained well-capitalized with
the Tier 1 capital ratio at 11.53% and the total qualifying capital
ratio at 12.78% as of September 30.”
SUMMARY REVIEW OF FINANCIAL PERFORMANCE
Net (Loss) Income
For the three months ended September 30, 2009, the Company
recorded a net operating loss of $29.9 million. After an effective
dividend of $1.2 million to the U.S. Treasury on preferred stock,
the Company reported a net loss to common stockholders of $31.1
million, or $1.17 per diluted common share, compared to earnings of
$2.7 million, or $0.10 per diluted common share, in the third
quarter of 2008. For the nine months ended September 30, 2009, the
Company reported a net loss to common stockholders of $40.8 million
compared to earnings of $11.7 million for the same period in 2008.
Earnings for both the three and nine-month periods were
significantly impacted by loan loss provisions of $49.0 million and
$80.8 million, respectively, taken in consideration of the level of
non-performing assets and $47.2 million in net charge-offs in 2009.
Earnings were also impacted by a $9.1 million loss on other real
estate owned.
Before taxes, loan loss provisions and losses on other real
estate owned, core operating earnings for the three months ended
September 30, 2009, of $12.0 million were down slightly compared
to $12.2 million for the three months ended September 30,
2008. However, on a sequential basis, core operating earnings were
up $1.6 million compared to $10.4 million for the three months
ended June 30, 2009, and are up $2.4 million compared to core
operating earnings of $9.6 million for the three months ended March
31, 2009. This positive trend is due to continued strong operating
expense controls and improvement in the net interest margin.
Asset Quality and Provisions For Loan Losses
Provisions for loan losses were $49.0 million for the three
months ended September 30, 2009, compared to $8.3 million in the
same period in 2008, as non-performing assets and loans 90+ days
past due increased from $85.3 million at September 30, 2008, to
$123.5 million at September 30, 2009. For the nine months ended
September 30, 2009, provisions totaled $80.8 million compared to
$16.1 million for the nine months ended September 30, 2008, with
2009 year-to-date net charge-offs of $47.2 million compared to $5.7
million in 2008. As a result, the coverage of loan loss reserves to
non-performing loans rose from 35.0% at June 30, 2009, to 80.5% as
of this quarter-end, and the allowance for loan losses increased
from 1.72% of total loans to 3.15%. The significant quarterly
increase in reserves is not an indication of heightened concern or
expectations of further credit deterioration. Rather, it is an
attempt to increase the coverage ratio on a one-time basis relative
to the current level of non-performing loans and in recognition of
continued economic uncertainty in regard to the commercial real
estate market. Progress with respect to management’s commitment to
aggressive problem loan resolution continues, as total
non-performing assets and loans 90+ days past due declined by $16.1
million during the quarter from $139.6 million, or 5.17% of total
assets, to $123.5 million, or 4.52% of total assets. Non-accrual
loans decreased by $20.9 million, loans 90+ days past due decreased
by $3.3 million and other real estate owned (foreclosed properties)
increased by $8.2 million. Although loans past due 30 to 89 days
increased $11.6 million during the quarter to $30.9 million, they
remain significantly lower from their peak level of $55.7 million
at March 31, 2009. Approximately 28% of loans past due 30 to 89
days relate to a single non-farm, non-residential credit.
Non-performing loans continue to be concentrated in residential
and commercial construction and land development loans in outer
sub-markets hardest hit by the residential downturn and commercial
and consumer credits experiencing the after shocks in
sub-contracting businesses and workforce employment. Overall, as of
September 30, 2009, $48.7 million, or 56.0%, of non-performing
loans represented acquisition, development and construction loans,
$19.1 million, or 21.9%, represented non-farm, non-residential
loans, $9.9 million, or 11.4%, represented commercial and
industrial loans and $9.1 million, or 10.5%, represented loans on
one-to-four family residential properties.
Charge-offs of $17.9 million for the quarter were up $1 million
sequentially and primarily related to the write-down to current
fair market value of acquisition, development and construction
loans of $4.9 million and commercial and industrial loans of $12.2
million. The acquisition, development and construction loan
write-down was in anticipation of pending sale contracts and/or
foreclosures over the next quarter. The commercial and industrial
loan write-down was attributed primarily to an $8.4 million
charge-off relating to participation in a rapidly deteriorating
shared national credit engaged in the development of continuing
care retirement communities and a $3.6 million charge-off relating
to the auction of heavy construction equipment financed for a site
development contractor and the subsequent restructuring of related
loans.
Net Interest Income
Net interest income for the third quarter of $23.4 million was
up $1.5 million, or 6.8% over the same quarter last year, due to
overall balance sheet growth, and an increase in the net interest
margin from 3.38% in the third quarter of 2008 to 3.52% for the
current three-month period. Year-to-date net interest income of
$66.2 million was up 6.6%, compared to $62.1 million for the same
period in 2008. On a sequential basis, net interest income
increased $1.4 million as the net interest margin rose seventeen
basis points from 3.35% in the second quarter of 2009, primarily
due to a twenty-two basis point drop in the cost of
interest-bearing liabilities as the yield on earning assets
remained unchanged. This drop in the cost of funds is due to
significant reductions in the level of time deposits, increased
levels of demand deposits and increased levels of lower rate
interest-bearing transaction accounts.
Year-over-year, the net interest margin was unchanged at 3.34%,
as yields on loans are down 86 basis points due to reductions in
the prime rate and increases in the level of non-performing loans,
while the cost of interest-bearing liabilities are down 89 basis
points due to the changes noted above in the funding mix. With
market rates expected to remain mostly unchanged through the
remainder of 2009, Management anticipates the fourth quarter margin
to average from 3.50% to 3.60%.
Non-Interest Income
For the three months ended September 30, 2009, non-interest
income reflects a loss of $7.6 million compared to $1.6 million in
income in the same period of 2008 due to a $9.1 million loss on
other real estate owned and a $280 thousand impairment loss on
securities. The $9.1 million OREO loss resulted from carrying value
write-downs of four land development assets, based on pending sales
contracts/offers due to settle this fourth quarter or the first
quarter of next year. These losses are consistent with management’s
commitment to aggressive disposition of OREO, rather than land
banking assets with uncertain future upside potential. Excluding
these losses, non-interest income rose $195 thousand
quarter-over-quarter with the majority of the increase in fees and
net gains on mortgage loans held-for-sale. Results were similar on
a year-over-year basis with non-interest income increasing $742
thousand, excluding the $9.1 million loss on other real estate
owned and $418 thousand in impairment losses on securities, due
again to higher levels of fees and net gains on mortgage loans
held-for-sale.
Non-Interest Expense
Non-interest expense increased $1.7 million, or 14.8%, from
$11.3 million in the third quarter of 2008, to $12.9 million, and
was up $6.3 million, or 18.9%, for the nine months ended September
30, 2009, to $39.5 million. Compared to the second quarter of 2009,
non-interest expense is down $664 thousand. The majority of the
year-over-year increases were due to significantly higher FDIC
insurance premiums, including a special one-time assessment of $1.2
million in the second quarter of 2009, as well as higher legal and
professional services expenses associated with the resolution of
non-performing loans and OREO. As a result of these increases in
expenses, the efficiency ratio rose from 47.9% in the third quarter
of 2008 to 52.1% in the current period. Sequentially, the ratio
improved from 56.7%.
Loans
Over the past twelve months, loans, net of allowance for loan
losses, decreased $78.5 million, or 3.5%, to $2.15 billion, as
non-farm, non-residential real estate loans increased $67.2
million, or 6.7%, and one-to-four family residential loans
increased $69.7 million, or 21.2%, while real estate construction
loans fell by $155.8 million, or 26.2%, and commercial and
industrial loans were down 10.3%. Since December 31, 2008, net
loans are down $118.8 million, or 5.3%, with non-farm
non-residential loans up $59.0 million, construction loans down
$146.6 million, and one-to-four family residential loans for
portfolio up $41.4 million. In addition, one-to-four family
residential loans originated for sale totaled $30.4 million for the
quarter ended September 30, 2009, and $156.3 million year-to-date,
compared to $17.2 million and $61.5 million for the same periods in
2008. This contributed to the gain in non-interest income as noted
earlier.
Year-to-date loan production has been negatively impacted by
declining economic activity and demand in both the business and
consumer sectors, a reallocation of personnel resources to problem
loan identification and resolution and a strategic decision to
moderate loan growth in the face of an uncertain economy and
heightened risk factors. Going forward, lending efforts will be
focused on building greater market share in commercial and
industrial lending, especially in sectors forecast for growth, such
as government contract lending and select service industries with
strategic hiring, marketing campaigns and calling efforts.
Deposits
Year-over-year, deposits increased $79.0 million, or 3.7%, from
$2.1 billion to $2.2 billion, with demand deposits increasing $21.9
million, or 10.6%, savings and interest-bearing demand deposits
increasing by $354.9 million, or 166.1%, and time deposits falling
$297.9 million, or 21.1%. Sequentially, deposits were up $43.3
million, or 2.0%, with demand deposits decreasing by $11.3 million,
time deposits decreasing by $77.1 million, and savings and
interest-bearing demand accounts growing $131.7 million. That
increase was due primarily to success with the Company’s MEGA
Savings and MEGA Checking accounts. The declines in time deposits
are reflective of lower loan volume and a strategy to reduce the
Bank's historically heavy reliance on certificates of deposit as a
funding source with deposit gathering efforts and cross-selling
activities focused on demand deposits, savings and interest-bearing
demand accounts. The proportionate share of time deposits to total
deposits has declined from 67.2% at year-end 2008 to 49.9% as of
September 30, 2009. It is expected that the percentage share of
time deposits will further decline to 45.0% or less by year-end,
including a planned reduction in brokered certificates of deposit
from $60.1 million at September 30, 2009, to approximately $30
million.
Repurchase Agreements and Fed Funds Purchased
Repurchase agreements, the majority of which represent sweep
funds of significant commercial demand deposit customers, and Fed
funds purchased decreased $12.5 million, or 6.3%, year-over-year,
to $185.5 million at September 30, 2009. Since December 31, 2008,
this funding source is down $2.4 million.
Investment Securities
Investment securities increased $51.2 million, or 16.1%, from
$317.9 million at September 30, 2008, to $369.1 million at
September 30, 2009, and were up $48.2 million sequentially from the
second quarter. The majority of the current period and
year-over-year increase in securities was concentrated in U.S.
Government agency debt obligations and mortgage-backed securities.
The portfolio also contains four pooled trust preferred
collateralized debt obligations totaling $8.9 million, for which
the Bank performs a quarterly analysis for other than temporary
impairment due to significantly depressed current market quotes.
The analysis includes stress tests on the underlying collateral and
cash flow estimates based on the current and projected future
levels of deferrals and defaults within each pool. Based on the
most recent analysis, the Bank recorded a total impairment loss of
$280 thousand for the third quarter on two of the four pools.
Capital Levels and Stockholders’ Equity
Stockholders’ equity increased $37.6 million, or 21.1%, from
$178.4 million at September 30, 2008, to $216.0 million at
September 30, 2009, with the issuance of $71 million in preferred
stock to the U.S. Treasury under the Treasury’s Capital Purchase
Program, and a net loss to common stockholders of $39.7 million
over the twelve-month period. In connection with the issuance of
the preferred stock, the Company also issued warrants to purchase
an aggregate of 2.7 million shares of common stock to the Treasury.
As a result of this overall increase in stockholders’ equity, the
Company’s Tier 1 Capital ratio increased from 10.21% at September
30, 2008, to 11.53% as of September 30, 2009, and its total
qualifying capital ratio increased from 11.59% to 12.78%.
Sequentially, the Tier 1 ratio declined from 12.72% and the total
qualifying ratio decreased from 13.97%.
CONFERENCE CALL
Virginia Commerce Bancorp will host a teleconference call for
the financial community on October 27, 2009, at 11:00 a.m. Eastern
Daylight Time to discuss the third quarter 2009 financial results.
The public is invited to listen to this conference call by dialing
866-244-4576 at least 10 minutes prior to the call.
A replay of the conference call will be available from 12:00
p.m. Eastern Daylight Time on October 27, 2009, until 11:59 p.m.
Eastern Standard Time on November 3, 2009. The public is invited to
listen to this conference call replay by dialing 888-266-2081 and
entering access code 1406981.
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-seven branch
offices, one residential mortgage office 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
before losses on OREO. 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. Please refer to our Annual Report on Form 10-K
for the year-ended December 31, 2008, for a discussion of these
factors. Readers are cautioned against placing undue reliance on
any such forward-looking statements. The Company’s past results are
not necessarily indicative of future performance.
Virginia Commerce
Bancorp, Inc. Financial Highlights (Dollars in thousands, except
per share data) (Unaudited) Three Months Ended
September 30, Nine months Ended September 30,
2009
2008 % Change 2009
2008 % Change Summary Operating
Results: Interest and dividend income $ 37,623 $ 40,567 -7.3% $
112,360 $ 121,030 -7.2% Interest expense 14,219 18,658 -23.8%
46,199 58,942 -21.6% Net interest and dividend income 23,404 21,909
6.8% 66,161 62,088 6.6% Provision for loan losses 49,000 8,300
490.4% 80,813 16,068 402.9% Non-interest income (7,573) 1,597
-574.2% (3,804) 4,957 -176.7% Non-interest expense 12,922 11,258
14.8% 39,531 33,256 18.9% (Loss) income before income taxes
(46,091) 3,948 -1267.5% (57,987) 17,721 -427.2% Net (loss) income
$(29,887) $ 2,673 -1218.1% $(37,480) $ 11,742 -419.2% Effective
dividend on preferred stock 1,251 -- N/A 3,288 -- N/A Net (loss)
income available to common stockholders $(31,138) $ 2,673 -1264.9%
$(40,768) $ 11,742 -447.2%
Performance Ratios: Return
on average assets -4.34% 0.40% -1.83% 0.61% Return on average
equity -49.33% 5.98% -20.36% 8.91% Net interest margin 3.52% 3.38%
3.34% 3.34% Efficiency ratio (1) 52.11% 47.89% 55.42% 49.60%
Per Share Data: Net (loss) income per common share-basic
$(1.17) $0.10 -1270.0% $(1.53) $0.44 -447.7% Net (loss) income per
common share-diluted $(1.17) $0.10 -1270.0% $(1.53) $0.43 -455.8%
Average number of shares outstanding: Basic 26,694,898 26,566,711
26,691,490 26,550,757 Diluted 26,925,625 27,059,996 26,974,070
27,183,397 As of September 30,
2009 2008 % Change 6/30/09 3/31/09
Selected Balance Sheet Data: Loans, net $2,154,252
$2,232,779 -3.5% $2,217,945 $2,243,960 Investment securities
369,059 317,862 16.1% 309,090 339,721 Assets 2,734,112 2,661,688
2.7% 2,699,494 2,772,888 Deposits 2,234,804 2,155,842 3.7%
2,191,473 2,239,365 Stockholders’ equity 215,994 178,357 21.1%
243,013 249,868 Book value per common share $5.43 $6.71 -19.1%
$6.44 $6.70
Capital Ratios: Tier 1 capital: Company
11.53% 10.21% 12.72% 12.95% Bank 11.48% 10.32% 12.68% 13.07% Total
qualifying capital: Company 12.78% 11.59% 13.97% 14.35% Bank 12.73%
11.57% 13.93% 14.32% Tier 1 leverage: Company 10.21% 9.11% 11.18%
11.31% Bank 10.17% 9.23% 11.35% 11.44% Tangible common equity:
Company 5.30% 6.70% 6.37% 6.45% Bank 10.20% 9.08% 11.34%
11.35
% (1)
Computed by dividing non-interest expense by the sum of net
interest income on a tax-equivalent basis using a 35% rate and
non-interest income before losses on other real estate owned.
As of September 30,
2009 2008 6/30/09 3/31/09
Asset Quality: Non-performing assets: Non-accrual loans:
Commercial $ 9,792 $ 9,944 $ 12,259 $ 10,433 Real
estate-one-to-four family residential: Closed end first and seconds
6,846 98 3,843 735 Home equity lines
781
320 494
319 Total Real estate-one-to-four family
residential $ 7,627 $ 418 $ 4,337 $ 1,054 Real estate-non-farm,
non-residential: Owner Occupied 9,703 2,511 6,462 6,319 Non-owner
occupied
9,152 411
8,460 792
Total Real estate-non-farm, non-residential $ 18,855 $ 2,922
$ 14,922 $ 7,111 Real estate-construction: Residential-Owner
Occupied 2,389 3,981 2,389 5,115 Residential-Builder 36,886 32,701
53,251 67,274 Commercial
9,457
21,710 18,955
34,829 Total Real estate-construction: $ 48,732
$ 58,392 $ 74,595 $ 107,218 Consumer
187
2 23
(2 ) Total Non-accrual loans $ 85,193 $
71,678 $ 106,136 $ 125,814 OREO
36,402
6,002 28,198
12,455 Total non-performing assets $
121,595 $ 77,680 $ 134,334 $ 138,269 Loans 90+ days past due
and still accruing: Commercial $ 150 $ 699 $ 251 $ 1,810 Real
estate-one-to-four family residential: Closed end first and seconds
-- 165 482 4,032 Home equity lines
--
-- --
184 Total Real estate-one-to-four family
residential $ -- $ 165 $ 482 $ 4,216 Real estate-multi-family
residential 1,506 -- 1,506 -- Real estate-non-farm,
non-residential: Owner Occupied -- -- -- 363 Non-owner occupied
249 --
703 8,807 Total Real
estate-non-farm, non-residential $ 249 $ -- $ 703 $ 9,170 Real
estate-construction: Residential-Owner Occupied -- -- -- --
Residential-Builder -- 6,693 2,290 8,594 Commercial
-- --
-- -- Total Real
estate-construction: $ -- 6,693 $ 2,290 $ 8,594 Consumer
-- 24
-- -- Total loans
90+ days past due and still accruing $ 1,905 $ 7,581 $ 5,232 $
23,790 Total non-performing assets and past due loans $
123,500 $ 85,261 $ 139,566 $ 162,059 Non-performing
assets to total loans: 5.46 % 3.42 % 5.94 % 6.05 % to total assets:
4.45 % 2.92 % 4.98 % 4.99 % Non-performing assets and past due
loans to total loans: 5.54 % 3.76 % 6.17 % 7.09 % to total assets:
4.52 % 3.20 % 5.17 % 5.84 % Allowance for loan losses to total
loans 3.15 % 1.44 % 1.72 % 1.64 % Allowance for loan losses to
non-performing loans 80.50 % 41.17 % 35.00 % 25.06 % Total
allowance for loan loss $ 70,114 $ 32,634 $ 38,978 $ 37,494 Total
provisions for loan losses $ 80,813 $ 16,068 $ 31,813 $ 13,390
As of September 30,
2009 2008
6/30/09 3/31/09 Loans 30 to 89 days
past due: Commercial $ 2,728 $ 1,779 $ 3,442 $ 1,999 Real
estate-one-to-four family residential: Closed end first and seconds
2,950 325 6,317 7,120 Home equity lines
42
150 559
89 Total Real estate-one-to-four
family residential $ 2,992 $ 475 $ 6,876 $ 7,209 Real
estate-multi-family residential -- -- -- 1,506 Real
estate-non-farm, non-residential: Owner Occupied 5,779 1,774 3,932
6,911 Non-owner occupied
16,447
1,787 4,749
8,034 Total Real estate-non-farm,
non-residential $ 22,226 $ 3,561 $ 8,681 $ 14,945 Real
estate-construction: Residential-Owner Occupied 829 -- -- 5,470
Residential-Builder 1,554 8,248 -- 11,027 Commercial
336 2,214
-- 13,264 Total real
estate-construction: $ 2,719 $ 10,462 $ -- $ 29,761 Farmland -- --
-- -- Consumer
212
149 244
310 Total loans 30 to 89 days past due $ 30,877
$ 16,426 $ 19,243 $ 55,730 Net charge-offs: Commercial $
15,350 $ 1,979 $ 3,176 $ 2,097 Real estate-one-to-four family
residential: Closed end first and seconds 1,405 623 1,156 115 Home
equity lines
961 162
824 826
Total Real estate-one-to-four family residential $ 2,366 $
785 $ 1,980 $ 941 Real estate-multi-family residential -- 95 -- --
Real estate-non-farm, non-residential: Owner Occupied 468 -- 211
211 Non-owner occupied
58
-- --
-- Total Real estate-non-farm, non-residential
$ 526 $ -- $ 211 $ 211 Real estate-construction: Residential-Owner
Occupied 702 -- 702 40 Residential-Builder 17,100 2,519 12,896
3,542 Commercial
10,946
-- 10,223
5,509 Total real estate-construction: $ 28,748
$ 2,519 $ 23,821 $ 9,091 Farmland -- -- -- -- Consumer
184 316
122 31 Total net
charge-offs $ 47,174 $ 5,694 $ 29,310 $ 12,371 Net charge-offs to
average loans outstanding 2.06 % 0.27 % 1.27 % 0.53 %
As of September 30,
2009 2008 % Change
6/30/09 % Change
Loan Portfolio: Commercial $ 239,895
$ 267,296 -10.3 % $ 259,812 -7.7 % Real estate-one to four family
residential: Closed end first and seconds 264,398 214,383 23.3 %
236,523 11.8 % Home equity lines
134,295
114,671 17.1 %
133,176 0.8 % Total Real
estate-one-to-four family residential $ 398,693 $ 329,054 21.2 % $
369,699 7.8 % Real estate-multifamily residential 68,002 65,661 3.6
% 69,616 -2.3 % Real estate-non-farm, non-residential: Owner
Occupied 430,173 416,437 3.3 % 428,372 0.4 % Non-owner occupied
640,136 586,688
9.1 % 613,825
4.3 % Total Real estate-non-farm,
non-residential $ 1,070,309 $ 1,003,125 6.7 % $ 1,042,197 2.7 %
Real estate-construction: Residential-Owner Occupied 13,645 22,733
-40.0 % 23,047 -40.8 % Residential-Builder 235,358 315,723 -25.5 %
259,370 -9.3 % Commercial
189,431
255,756 -25.9 %
223,916 -15.4 % Total Real
estate-construction: $ 438,434 $ 594,212 -26.2 % $ 506,333 -13.4 %
Farmland 2,678 2,413 10.9 % 2,678 -.04 % Consumer
10,191 8,477 20.2
% 10,532 -3.2
% Total loans $ 2,228,202 $ 2,270,238 -1.9 % $
2,260,867 -1.4 % Less unearned income 3,836 4,825 -20.5 % 3,944
-2.7 % Less allowance for loan losses
70,114
32,634 114.8 %
38,978 79.9 % Loans, net $
2,154,252 $ 2,232,779 -3.5 % $ 2,217,945 -2.9 %
As
of September 30, 2009
Residential, 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 $ 18,993 7.6 % $ -- -- -0.1 % Montgomery, MD 9,660 3.9 %
3,583 1.4 % 0.9 % Prince Georges, MD 24,212 9.7 % -- -- 1.9 % Other
Counties in MD 4,879 2.0 % -- -- 0.4 % Arlington/Alexandria, VA
45,077 18.1 % 5,632 2.3 % -- Fairfax, VA 62,112 24.9 % 11,387 4.6 %
1.2 % Culpeper/Fauquier 1,025 0.4 % 200 0.1 % 0.1 % Frederick
13,131 5.3 % 6,750 2.7 % 0.8 % Henrico, VA -- 0.0 % -- -- 0.1 %
Loudoun, VA 27,436 11.0 % 770 0.3 % 0.3 % Prince William, VA 12,224
4.9 % 2,951 1.2 % 0.8 % Spotsylvania, VA 871 0.3 % -- -- --
Stafford, VA 22,421 9.0 % 4,898 2.0 % -- Other Counties in VA 6,852
2.8 % 3,104 1.2 % 0.3 % Outside VA, MD & DC
110 0.04 %
-- -- 0.4
% $ 249,003 100.0 % $ 39,275 15.8 % 7.1 %
As of September 30, 2009
Commercial, Acquisition,
Development and Construction Percentage
Non-accruals Net charge- Total of Non-accrual as a % of offs
as a % of
By County/Jurisdiction of Origination:
Outstandings Total Loans Outstandings
Outstandings District of Columbia $ 12,798 6.8 % $ -- -- --
Montgomery, MD 1,413 0.7 % -- -- -- Prince Georges, MD 10,374 5.5 %
-- -- -- Other Counties in MD 7,749 4.1 % -- -- --
Arlington/Alexandria, VA 9,312 4.9 % -- -- -- Fairfax, VA 15,651
8.3 % -- -- 5.8 % Henrico, VA 807 0.4 % -- -- -- Loudoun, VA 34,688
18.3 % 7,197 3.8 % -- Prince William, VA 51,805 27.3 % 2,260 1.2 %
-- Spotsylvania, VA 10,138 5.4 % -- -- -- Stafford, VA 27,937 14.7
% -- -- -- Other Counties in VA
6,759
3.6 % --
-- -- $ 189,431 100.0 % $
9,457 5.0 % 5.8 %
As of September 30, 2009
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 $ 54,649 5.1 % $ -- -- -- Montgomery, MD
34,057 3.2 % -- -- -- Prince Georges, MD 50,654 4.7 % 1,180 0.01 %
-- Other Counties in MD 48,439 4.5 % -- -- -- Arlington/Alexandria,
VA 173,479 16.2 % 4,138 0.4 % 0.02 % Fairfax, VA 261,090 24.4 %
5,088 0.5 % -- Culpeper/Fauquier 1,658 0.2 % -- -- -- Henrico, VA
31,306 2.9 % -- -- -- Loudoun, VA 111,546 10.4 % 1,769 0.2 % 0.02 %
Prince William, VA 187,918 17.6 % 2,888 0.3 % 0.01 % Spotsylvania,
VA 12,868 1.2 % -- -- -- Stafford, VA 22,107 2.1 % -- -- -- Other
Counties in VA 70,740 6.6 % 3,792 0.4 % -- Outside VA, MD & DC
9,798 0.9 %
-- -- -- $
1,070,309 100.0 % $ 18,855 1.8 % 0.05 % Of this total of
$1.1 billion in non-farm/non-residential real estate loans, $28.2
million will mature in the fourth quarter of 2009, $48.5 million in
2010, $42.2 million in 2011 and $72.8 million in 2012.
As of September 30,
2009 2008 % Change 6/30/09 %
Change
Investment Securities (at book value):
Available-for-sale: U.S. Government Agency obligations $263,871
$246,619 7.0% $204,896 28.8% Domestic corporate debt obligations
3,084 4,374 -29.5% 1,864 65.5% Obligations of states and political
subdivisions
42,585 28,545
49.2% 40,219 5.9% $309,540
$279,538 10.7% $246,979 25.3% Held-to-maturity: U.S. Government
Agency obligations $ 13,574 $ 19,772 -31.3% $ 15,258 -11.0%
Obligations of states and political subdivisions
45,945 18,552 147.7%
46,853 -1.9% $ 59,519 $ 38,324 55.3% $
62,111 -4.2% Virginia Commerce Bancorp, Inc.
Consolidated Balance Sheets (Dollars in thousands, except per share
data) As of September 30, (Unaudited) 2009 2008
Assets Cash and due from banks $ 25,760 $ 31,354 Fed funds
sold 56,413 -- Interest-bearing deposits with other banks -- 1,184
Securities (fair value: 2009, $370,417; 2008, $318,132) 369,059
317,862 Restricted stocks 11,751 9,276 Loans held-for-sale 2,285
4,547 Loans, net of allowance for loan losses of $70,114 in 2009
and $32,634 in 2008 2,154,252 2,232,779 Bank premises and
equipment, net 14,150 13,947 Accrued interest receivable 10,359
11,165 Other real estate owned 36,402 6,002 Other assets
53,681 33,572 Total assets $ 2,734,112 $ 2,661,688
Liabilities and Stockholders’ Equity
Deposits Demand deposits $ 228,395 $ 206,527 Savings and
interest-bearing demand deposits 891,568 536,620 Time deposits
1,114,841 1,412,695 Total deposits $ 2,234,804
$ 2,155,842 Securities sold under agreement to repurchase and
federal funds purchased 185,531 198,009 Other borrowed funds 25,000
50,000 Trust preferred capital notes 65,993 65,736 Accrued interest
payable 5,048 7,360 Other liabilities 1,742 6,384
Total liabilities $ 2,518,118 $ 2,483,331
Stockholders’ Equity Preferred stock, net of discount, $1.00
par, 1,000,000 shares authorized, Series A; $1,000.00 liquidation
value; 71,000 issued and outstanding $ 63,630 $ -- Common stock,
$1.00 par, 50,000,000 shares authorized, issued and outstanding
2009, 26,695,810; 2008, 26,566,711 26,696 26,567 Surplus 96,359
95,678 Warrants 8,520 -- Retained earnings 19,766 59,450
Accumulated other comprehensive income (loss), net 1,023
(3,338 ) Total stockholders’ equity $ 215,994 $ 178,357
Total liabilities and stockholders’ equity $ 2,734,112 $ 2,661,688
Virginia Commerce
Bancorp, Inc. Consolidated Statements of Income (Dollars in
thousands, except per share data) (Unaudited) Three Months
Ended Nine months Ended September 30, September 30, 2009
2008 2009 2008
Interest and dividend
income: Interest and fees on loans $ 33,707 $ 36,329 $ 100,336
$ 108,155 Interest and dividends on investment securities: Taxable
3,366 3,792 10,523 11,340 Tax-exempt 426 339 1,177 908 Dividend on
restricted stocks 97 67 265 259 Interest on deposits with other
banks -- 38 -- 140 Interest on federal funds sold 27
2 59 228 Total
interest and dividend income $ 37,623 $ 40,567
$ 112,360 $ 121,030
Interest expense: Deposits
$ 11,649 $ 16,173 $ 39,076 $ 51,510
Securities sold under agreement to
repurchase and federal funds purchased
1,022 1,376 2,477 4,477 Other borrowed funds 272 426 806 890 Trust
preferred capital notes 1,276 683
3,840 2,065 Total interest
expense $ 14,219 $ 18,658 $ 46,199
$ 58,942
Net interest income: $ 23,404 $ 21,909 $
66,161 $ 62,088 Provision for loan losses 49,000
8,300 80,813
16,068 Net interest income after provision for loan losses $
(25,596 ) $ 13,609 $ (14,652 ) $ 46,020
Non-interest income: Service charges and other fees $ 893 $
1,027 $ 2,683 $ 2,893 Non-deposit investment services commissions
165 164 444 513 Fees and net gains on loans held-for-sale 615 363
2,374 1,214 Loss on other real estate owned (9,085 ) -- (9,085 ) --
Impairment loss on securities (280 ) -- (418 ) -- Other 119
43 198 337
Total non-interest income $ (7,573 ) $ 1,597 $ (3,804
) $ 4,957
Non-interest expense: Salaries and employee
benefits $ 5,645 $ 5,903 $ 17,260 $ 17,612 Occupancy expense 2,466
2,211 7,670 6,525 Data processing expense 598 528 1,774 1,609 Other
operating expense 4,213 2,616
12,827 7,510 Total non-interest expense
$ 12,922 $ 11,258 $ 39,531 $
33,256 (Loss) income before taxes $ (46,091 ) $ 3,948 $ (57,987 ) $
17,721 (Benefit) provision for income taxes (16,204 )
1,275 (20,507 ) 5,979
Net
(loss) income $ (29,887 ) $ 2,673 $ (37,480 )
$ 11,742 Effective dividend on preferred stock 1,251
-- 3,288 --
Net (loss) income available to common stockholders $ (31,138
) $ 2,673 $ (40,768 ) $ 11,742 (Loss) earnings per common
share, basic $ (1.17 ) $ 0.10 $ (1.53 ) $ 0.44 (Loss) earnings per
common share, diluted $ (1.17 ) $ 0.10 $ (1.53 ) $ 0.43
Virginia Commerce
Bancorp, Inc. Consolidated Average Balances, Yields, and Rates
Three Months Ended September 30, (Unaudited)
2009 2008 (Dollars
in thousands)
Average
Balance
Interest
Income-
Expense
Average
Yields
/Rates
Average
Balance
Interest
Income-
Expense
Average
Yields
/Rates
Assets Securities (1) $ 327,690 $ 3,792 4.78 % $ 329,811 $
4,131 5.13 % Restricted Stock 11,752 97 3.29 % 7,985 67 3.37 %
Loans, net of unearned income (2) 2,266,294 33,707 5.91 % 2,250,390
36,329 6.42 % Interest-bearing deposits in other banks 89 -- 0.09 %
4,348 38 3.45 % Federal funds sold 48,725 27
0.21 % 413 2 1.80 %
Total
interest-earning assets $ 2,654,550 $ 37,623 5.65 % $ 2,592,947
$ 40,567 6.23 % Other assets 78,765 67,511
Total
Assets $ 2,733,315 $ 2,660,458
Liabilities and
Stockholders’ Equity Interest-bearing deposits: NOW accounts $
238,988 $ 728 1.21 % $ 173,396 $ 776 1.77 % Money market accounts
162,353 593 1.45 % 208,711 1,380 2.62 % Savings accounts 432,362
2,111 1.94 % 184,480 1,245 2.68 % Time deposits 1,141,571
8,217 2.86 % 1,379,898
12,772 3.67 % Total interest-bearing deposits $ 1,975,274 $
11,649 2.34 % $ 1,946,485 $ 16,173 3.30 % Securities sold under
agreement to repurchase and federal funds purchased 192,538 1,022
2.11 % 224,384 1,376 2.43 % Other borrowed funds 25,000 272 4.25 %
50,000 426 3.33 % Trust preferred capital notes 65,962
1,276 7.57 % 41,602 683
6.42 %
Total interest-bearing liabilities $ 2,258,774
$ 14,219 2.50 % $ 2,262,471 $ 18,658 3.27 % Demand deposits and
other liabilities 234,187 220,630
Total
liabilities $ 2,492,961 $ 2,483,101 Stockholders’ equity
240,354 177,357
Total liabilities and stockholders’
equity $ 2,733,315 $ 2,660,458 Interest rate spread 3.15 % 2.96
% Net interest income and margin $ 23,404 3.52 % $ 21,909 3.38 %
(1) Yields on securities
available-for-sale have been calculated on the basis of historical
cost and do not give effect to changes in the fair value of those
securities, which are reflected as a component of stockholders’
equity. Average yields on securities are stated on a tax equivalent
basis, using a 35% rate.
(2) Loans placed on non-accrual
status are included in the average balances. Net loan fees and late
charges included in interest income on loans totaled $1.3 million
and $1.2 million for the three months ended September 30, 2009, and
2008, respectively.
Virginia Commerce
Bancorp, Inc. Consolidated Average Balances, Yields, and Rates Nine
Months Ended September 30, (Unaudited)
2009 2008 (Dollars in
thousands)
Average
Balance
Interest
Income-
Expense
Average
Yields
/Rates
Average
Balance
Interest
Income-
Expense
Average
Yields
/Rates
Assets Securities (1) $ 326,009 $ 11,700 4.73 % $ 322,940 $
12,248 5.18 % Restricted stock 11,534 265 3.07 % 7,005 259 4.95 %
Loans, net of unearned income (2) 2,290,830 100,336 5.87 %
2,144,115 108,155 6.73 % Interest-bearing deposits in other banks
89 -- 0.11 % 6,336 140 2.93 % Federal funds sold 39,197
59 0.20 % 14,685 228
2.04 %
Total interest-earning assets $ 2,667,659 $
112,360 5.66 % $ 2,495,081 $ 121,030 6.49 % Other assets
66,472 56,128
Total Assets $ 2,734,131 $ 2,551,209
Liabilities and Stockholders’ Equity Interest-bearing
deposits: NOW accounts $ 220,039 $ 2,054 1.25 % $ 162,458 $ 1,977
1.62 % Money market accounts 157,718 1,743 1.48 % 209,104 4,473
2.85 % Savings accounts 326,744 5,271 2.16 % 176,780 4,053 3.05 %
Time deposits 1,275,712 30,008 3.14 %
1,314,207 41,008 4.16 % Total
interest-bearing deposits $ 1,980,213 $ 39,076 2.64 % $ 1,862,549 $
51,510 3.68 % Securities sold under agreement to repurchase and
federal funds purchased 188,575 2,477 1.76 % 229,955 4,477 2.59 %
Other borrowed funds 25,000 806 4.25 % 33,485 890 3.49 % Trust
preferred capital notes 65,898 3,840
7.68 % 40,538 2,065 6.69 %
Total
interest-bearing liabilities $ 2,259,686 $ 46,199 2.73 % $
2,166,527 $ 58,942 3.62 % Demand deposits and other liabilities
228,315 209,216
Total liabilities $ 2,488,001
$ 2,375,743 Stockholders’ equity 246,130 175,466
Total liabilities and stockholders’ equity $ 2,734,131 $
2,551,209 Interest rate spread 2.93 % 2.87 % Net interest income
and margin $ 66,161 3.34 % $ 62,088 3.34 % (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
$3.0 million and $3.9 million for the nine months ended September
30, 2009, and 2008, respectively.
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