VCBI Virginia Commerce Bancorp (MM)

Virginia Commerce Bancorp, Inc. (the “Company”) (Nasdaq:VCBI), parent company of Virginia Commerce Bank (the “Bank”), today reported net income to common stockholders of $2.9 million, or $0.11 per diluted common share, for the fourth quarter of 2009, compared with earnings of $1.1 million, or $0.04 per diluted common share, for the same period in 2008. Net interest margin expansion and reduced provisions for loan losses, as non-performing assets declined during the quarter, drove the improvement in earnings on a year-over-year and sequential basis. Fourth quarter earnings were impacted by $1.1 million in loan loss provisions, a $1.4 million impairment loss on securities and a $3.0 million provision for a contingent liability related to an off-balance sheet letter-of-credit. However, overall results represent a significant turnaround as total non-performing assets and loans 90+ days past due decreased $25.4 million, or 20.6%, from $123.5 million at September 30, 2009, to $98.1 million, and net-charge-offs of $6.1 million were down from $17.9 million in the third quarter.

Peter A. Converse, Chief Executive Officer, commented, “We are encouraged by our continued progress in reducing problem assets and being able to finish the year on a profitable note. This quarter represents the third consecutive quarterly reduction in NPAs and 90+ days past due loans from the first quarter peak of $162 million to our previously stated goal of less than $100 million by year-end. Notable progress was also made in decreasing loans past due 30 to 89 days from $30.1 million as of September 30, 2009, to $4.7 million at December 31. Barring any unforeseen escalation in credit deterioration, it appears that meaningful improvement in asset quality metrics will be sustainable through 2010 without the significant level of provisioning and charge-offs incurred last year. With the fourth quarter reduction in non-performing loans, the loan loss reserve coverage ratio has risen from 80.5% as of September 30, 2009, to 93.6% at year-end with minimal provisioning. Additionally, the percent of NPAs and loans 90+ days past due to total assets declined further, from 4.52% to 3.60% on a sequential basis, and is anticipated to be in the 1.50 – 2.00% range by year-end.”

Converse continued, “With our profit in the fourth quarter, the prospects for improved performance in 2010 are promising. We feel we’re on the right track with positive trends in problem loans and credit costs. Our core earnings were again over $12 million for the quarter, driven largely by an increasing net interest margin and stringent operating expense containment. As provisioning, collection, impairment and FDIC insurance expenses normalize over time, the strength of our core earnings portends well for our return to stronger bottom line performance.”

SUMMARY REVIEW OF FINANCIAL PERFORMANCE

Net Income (Loss)

For the three months ended December 31, 2009, the Company recorded net income of $4.1 million. After an effective dividend of $1.2 million to the U.S. Treasury on preferred stock, the Company reported net income to common stockholders of $2.9 million, or $0.11 per diluted common share, compared to earnings of $1.1 million, or $0.04 per diluted common share, in the fourth quarter of 2008. For the year ended December 31, 2009, the Company reported a net loss to common stockholders of $37.9 million compared to earnings of $12.8 million for the same period in 2008. Earnings for the year were significantly impacted by loan loss provisions of $81.9 million, taken in consideration of the level of non-performing assets and $53.2 million in net charge-offs in 2009. Earnings were also impacted by a $10.0 million loss on other real estate owned, a $1.8 million impairment loss on securities, and a $3.0 million provision for a contingent liability related to an off-balance sheet letter-of-credit commitment on a Shared National Credit.

Excluding taxes, loan loss provisions, the losses on OREO and securities, and the $3.0 million contingent liability, core operating earnings for the three months ended December 31, 2009, of $12.6 million were up compared to $10.9 million for the three months ended December 31, 2008, and increased sequentially from $12.3 million for the three months ended September 30, 2009. This positive trend is due to continued strong operating expense controls, improvement in the net interest margin, and despite significantly higher FDIC insurance premiums and higher legal and professional services expenses associated with the resolution of non-performing loans and OREO in 2009.

Asset Quality and Provisions For Loan Losses

For the year ended December 31, 2009, provisions for loan losses were $81.9 million compared to $25.4 million in 2008, with total net charge-offs in 2009 of $53.2 million versus $11.2 million for the year ended December 31, 2008. For the three months ended December 31, 2009, loan loss provisions were only $1.1 million, a decline of $8.2 million from the same period in 2008 and net charge-offs were only $6.1 million. Management’s commitment to aggressive problem loan resolution continues to yield positive results, as total non-performing assets and loans 90+ days past due declined by $25.4 million during the fourth quarter from $123.5 million, or 4.52% of total assets, to $98.1 million, or 3.60% of total assets. Non-accrual loans decreased by $19.4 million, loans 90+ days past due were up by $1.9 million and other real estate owned (foreclosed properties) decreased by $7.9 million. Furthermore, loans past due 30 to 89 days decreased $26.2 million during the quarter to only $4.7 million. As a result of these improvements, the coverage of loan loss reserves to non-performing loans rose from 80.5% at September 30, 2009, to 93.6% as of December 31, 2009. In addition to loan loss provisions, a $3 million contingent liability reserve was established during the quarter to recognize the potential loss relating to a $15 million participation with three other banks in a $76.2 million letter of credit serving as credit enhancement for a commercial office building financed with taxable bonds. This property is in the process of being sold with an anticipated deficiency.

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 December 31, 2009, $37.5 million, or 53.9%, of non-performing loans represented acquisition, development and construction loans, $15.1 million, or 21.7%, represented non-farm, non-residential loans, $10.7 million, or 15.4%, represented commercial and industrial loans and $6.2 million, or 8.9%, represented loans on one-to-four family residential properties.

Charge-offs of $6.1 million for the quarter were primarily related to the write down of $2.4 million on a land acquisition loan secured by commercial ground and $1.4 million on loans secured by an industrial building. Both of these properties were in outer sub-markets and reflected a decline in the fair value of the underlying collateral. The balance of charge-offs pertained to the write-off of anticipated deficiency balances relating to small business credits, consumer loans and residential mortgages and home equity lines in the process of collection and/or collateral liquidation.

Net Interest Income

Net interest income for the fourth quarter of $25.2 million was up 20.5%, compared with $20.9 million for the same quarter last year, as the net interest margin increased from 3.19% in the fourth quarter of 2008 to 3.78% for the current three-month period. Year-to-date net interest income of $91.4 million was up 10.1%, compared to $83.0 million in 2008, as the net interest margin rose from 3.30% in 2008, to 3.45%. On a sequential basis, the margin was up twenty-six basis points from 3.52% in the third quarter of 2009. The year-over-year increases in the net interest margin were driven by lower deposit costs due to significant reductions in the level of time deposits, increased levels of demand deposits and increased levels of lower rate interest-bearing transaction accounts. As a result, the average cost of interest-bearing deposits fell from 3.55% in 2008, to 2.50% in 2009, and fell sequentially from 2.34% to 2.08%. Yields on interest-earning assets fell to a lesser extent over these periods. For 2010, management anticipates the margin will be in the 3.50% to 3.70% range.

Non-Interest Income (Loss)

For the year ended December 31, 2009, non-interest income reflects a loss of $4.4 million compared to $6.4 million of income in 2008 due to $10.0 million in losses on other real estate owned and a $1.8 million impairment loss on securities. Excluding this total of $11.8 million in losses, non-interest income rose $1.0 million with slightly lower deposit account service charges offset by a $1.4 million increase in fees and net gains on mortgage loans originated and sold. The losses on OREO are consistent with management’s commitment to aggressive disposition of these assets, rather than land banking them with uncertain future upside potential, while the further impairment loss on securities was due to additional deferrals and defaults by the underlying issuers. On a sequential basis, excluding OREO and securities impairment losses, non-interest income was mostly unchanged.

Non-Interest Expense

Excluding the one-time $3.0 million contingent liability provision noted earlier in this report, non-interest expense increased $2.8 million, or 24.8%, from $11.5 million in the fourth quarter of 2008, to $14.4 million (as adjusted) and was up $9.1 million, or 20.4%, from $44.8 million for the year ended December 31, 2008, to $53.9 million in 2009, again as adjusted for the $3.0 million provision contingency. 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, the efficiency ratio rose from 50.1% in 2008 to 55.6%.

Investment Securities

Investment securities increased $22.9 million, or 7.0%, from $325.7 million at December 31, 2008, to $348.6 million at December 31, 2009, and were down $20.5 million sequentially from the third quarter. The majority of the year-over-year increase in securities was concentrated in U.S. Government agency debt obligations and mortgage-backed securities, and bank-qualified municipal bonds. The portfolio also contains four pooled trust preferred securities with an amortized cost basis of $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 for the fourth quarter, the Bank recorded an additional impairment loss of an aggregate of $1.4 million on three of the four pools.

Loans

Over the past twelve months, loans, net of allowance for loan losses, decreased $63.0 million, or 2.8%, to $2.2 billion, as non-farm, non-residential real estate loans increased $114.6 million, or 11.3%, and one-to-four family residential loans increased $49.5 million, or 13.9%, while real estate construction loans fell by $156.8 million, or 26.8%, and commercial and industrial loans were down 14.7%. Sequentially, net loans were up $55.8 million, or 2.6%, with non-farm non-residential loans up $55.6 million, construction loans down $10.1 million, and one-to-four family residential loans for portfolio up $8.0 million. In addition, one-to-four family residential loans originated for sale totaled $32.4 million for the three months ended December 31, 2009, and $188.7 million year-to-date, compared to $19.1 million and $80.6 million for the same periods in 2008.

Loan production in 2009 was negatively impacted by declining economic activity and demand in both the business and consumer sectors, a reallocation of lending personnel 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 $57.2 million, or 2.6%, to slightly over $2.2 billion, as demand deposits increased $44.8 million, or 23.0%, savings and interest-bearing demand deposits grew by $467.1 million, or 90.2%, and time deposits declined by $454.7 million, or 31.2%. Sequentially, deposits were down $5.5 million, or 0.2%, with demand deposits increasing by $11.2 million, time deposits decreasing by $110.3 million, and savings and interest-bearing demand accounts growing $93.6 million. The increases in savings and interest-bearing demand deposits were 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, requiring lower levels of funding, 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 45.1% as of December 31, 2009, and is expected to decrease below 40% by the end of 2010. Brokered certificates of deposit were $50.1 million at December 31, 2009, as compared to $168.3 million at December 31, 2008, and have been utilized as a back-up funding source to the extent that they represent a reasonably low cost alternative.

Capital Levels and Stockholders’ Equity

Stockholders’ equity decreased $34.4 million, or 13.6%, from $253.3 million at December 31, 2008, to $218.9 million at December 31, 2009, with a net loss to common stockholders of $37.9 million over the twelve-month period, a $1.1 million increase in other comprehensive income related to the investment securities portfolio, and $918 thousand in proceeds and tax benefits related to the exercise of options by company directors, officers and employees and stock option expense credits. As a result of these changes, the Company’s Tier 1 Capital ratio decreased from 13.07% at December 31, 2008, to 11.48% at December 31, 2009, and its total qualifying capital ratio declined from 14.44% to 12.73% for the same period.

CONFERENCE CALL

Virginia Commerce Bancorp will host a teleconference call for the financial community on January 26, 2010, at 11:00 a.m. Eastern Standard Time to discuss the fourth quarter 2009 financial results. The public is invited to listen to this conference call by dialing 866-227-1607 at least 10 minutes prior to the call.

A replay of the conference call will be available from 2:00 p.m. Eastern Standard Time on January 26, 2010, until 11:59 p.m. Eastern Standard Time on February 2, 2010. The public is invited to listen to this conference call replay by dialing 888-266-2081 and entering access code 1428686.

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 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, and to our Quarterly Reports on Form 10-Q filed in 2009, 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 December 31,   Year Ended December 31, 2009   2008   % Change   2009   2008   % Change Summary Operating Results: Interest and dividend income $ 38,273 $ 39,438 -3.0% $ 150,633 $ 160,468 -6.1% Interest expense 13,030 18,488 -29.5% 59,229 77,430 -23.5% Net interest and dividend income 25,243 20,950 20.5%

91,404

83,038 10.1% Provision for loan losses 1,100 9,310 -88.2% 81,913 25,378 222.8% Non-interest income (loss) (548) 1,474 -137.2% (4,352) 6,431 -167.7% Non-interest expense 17,337 11,520 50.5% 56,868 44,776 27.0% Income (loss) before income taxes 6,258 1,594 292.6% (51,729) 19,315 -367.8% Net income (loss) $ 4,155 $ 1,342 209.7% $ (33,325) $ 13,084 -354.7% Effective dividend on preferred stock 1,251 258 384.9% 4,539 258 1,659.3% Net income (loss) available to common stockholders $ 2,904 $ 1,084 168% $ (37,864) $ 12,826 -395.2%   Performance Ratios: Return on average assets 0.60% 0.20% -1.22% 0.51% Return on average equity 7.53% 2.77% -13.89% 7.18% Net interest margin 3.78% 3.19% 3.45% 3.30% Efficiency ratio (1) 56.24% 51.37% 55.57% 50.05%   Per Share Data: Net income (loss) per common share-basic $ 0.11 $ 0.04 175% $ (1.42) $ 0.48 -395.8% Net income (loss) per common share-diluted $ 0.11 $ 0.04 175% $ (1.42) $ 0.47 -402.1% Average number of shares outstanding: Basic 26,728,300 26,569,664 26,692,570 26,555,484 Diluted 27,014,836 27,309,809 26,692,570 27,249,839       As of December 31,   2009   2008   % Change 9/30/09   6/30/09 Selected Balance Sheet Data: Loans, net $ 2,210,064 $ 2,273,086 -2.8% $ 2,154,252 $ 2,217,945 Investment securities 348,585 325,743 7.0% 369,059 309,090 Assets 2,725,297 2,715,922 0.3% 2,734,112 2,699,494 Deposits 2,229,327 2,172,142 2.6% 2,234,804 2,191,473 Stockholders’ equity 218,868 253,287 -13.6% 215,994 243,013 Book value per common share $ 5.53 $ 6.86 -19.4% $ 5.43 $ 6.44   Capital Ratios: Tier 1 capital: Company 11.48% 13.07% 11.53% 12.72% Bank 11.41% 13.16% 11.48% 12.68% Total qualifying capital: Company 12.73% 14.44% 12.78% 13.97% Bank 12.66% 14.41% 12.73% 13.93% Tier 1 leverage: Company 10.29% 11.76% 10.21% 11.18% Bank 10.23% 11.81% 10.17% 11.35% Tangible common equity: Company 5.43% 6.71% 5.30% 6.37% Bank 10.32% 11.65% 10.20% 11.34%           (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. For purposes of this calculation non-interest expense does not include the $3.0 million provision for contingent liabilities.           As of December 31,       2009   2008 9/30/09   6/30/09   Asset Quality: Non-performing assets: Non-accrual loans: Commercial $ 6,929 $ 12,178 $ 9,792 $ 12,259 Real estate-one-to-four family residential: Closed end first and seconds 5,769 -- 6,846 3,843 Home equity lines   420   320   781   494 Total Real estate-one-to-four family residential $ 6,189 $ 320 $ 7,627 $ 4,337 Real estate-non-farm, non-residential: Owner Occupied 8,600 4,976 9,703 6,462 Non-owner occupied   6,506   1,210   9,152   8,460 Total Real estate-non-farm, non-residential $ 15,106 $ 6,186 $ 18,855 $ 14,922 Real estate-construction: Residential-Owner Occupied 517 4,543 2,389 2,389 Residential-Builder 30,110 48,178 36,886 53,251 Commercial   6,911   39,819   9,457   18,955

Total Real estate-construction:

$ 37,538 $ 92,540 $ 48,732 $ 74,595 Consumer   47   10   187   23 Total Non-accrual loans $ 65,809 $ 111,234 $ 85,193 $ 106,136 OREO   28,499   7,569   36,402   28,198 Total non-performing assets $ 94,308 $ 118,803 $ 121,595 $ 134,334   Loans 90+ days past due and still accruing: Commercial $ 3,797 $ 1,789 $ 150 $ 251 Real estate-one-to-four family residential: Closed end first and seconds -- 195 -- 482 Home equity lines   --   --   --   -- Total Real estate-one-to-four family residential $ -- $ 195 $ -- $ 482 Real estate-multi-family residential -- -- 1,506 1,506 Real estate-non-farm, non-residential: Owner Occupied -- -- -- -- Non-owner occupied   --   --   249   703 Total Real estate-non-farm, non-residential $ -- $ -- $ 249 $ 703 Real estate-construction: Residential-Owner Occupied -- 40 -- -- Residential-Builder 26 4,094 -- 2,290 Commercial   --   --   --   -- Total Real estate-construction: $ 26 $ 4,134 $ -- $ 2,290 Consumer   3   --   --   -- Total loans 90+ days past due and still accruing $ 3,826 $ 6,118 $ 1,905 $ 5,232   Total non-performing assets and past due loans $ 98,134 $ 124,921 $ 123,500 $ 139,566     Non-performing assets to total loans: 4.14% 5.13% 5.46% 5.94% to total assets: 3.46% 4.37% 4.45% 4.98% Non-performing assets and past due loans to total loans: 4.31% 5.40% 5.54% 6.17% to total assets: 3.60% 4.60% 4.52% 5.17% Allowance for loan losses to total loans 2.86% 1.58% 3.15% 1.72% Allowance for loan losses to non-performing loans 93.56% 31.08% 80.50% 35.00%   Total allowance for loan loss $ 65,152 $ 36,475 $ 70,114 $ 38,978 Total provisions for loan losses $ 81,913 $ 25,378 $ 80,813 $ 31,813           As of December 31,       2009   2008 9/30/09   6/30/09 Loans 30 to 89 days past due: Commercial $ 866 $ 2,138 $ 2,728 $ 3,442 Real estate-one-to-four family residential: Closed end first and seconds 352 4,864 2,950 6,317 Home equity lines   139   --   42   559 Total Real estate-one-to-four family residential $ 491 $ 4,864 $ 2,992 $ 6,876 Real estate-multi-family residential -- -- -- -- Real estate-non-farm, non-residential: Owner Occupied 1,854 5,849 5,779 3,932 Non-owner occupied   --   8,807   16,447   4,749 Total Real estate-non-farm, non-residential $ 1,854 $ 14,656 $ 22,226 $ 8,681 Real estate-construction: Residential-Owner Occupied -- 800 829 -- Residential-Builder 1,370 15,917 1,554 -- Commercial   --   3,680   336   -- Total real estate-construction: $ 1,370 $ 20,397 $ 2,719 $ -- Farmland -- -- -- -- Consumer   141   177   212   244 Total loans 30 to 89 days past due $ 4,722 $ 42,232 $ 30,877 $ 19,243     Year-to-date Year-to-date 12/31/09   12/31/08 9/30/09   6/30/09 Net charge-offs: Commercial $ 15,578 $ 3,420 $ 15,350 $ 3,176 Real estate-one-to-four family residential: Closed end first and seconds 1,825 721 1,405 1,156 Home equity lines   1,465   312   961   824 Total Real estate-one-to-four family residential $ 3,290 $ 1,033 $ 2,366 $ 1,980 Real estate-multi-family residential -- 95 -- -- Real estate-non-farm, non-residential: Owner Occupied 1,901 (25) 468 211 Non-owner occupied   58   --   58   -- Total Real estate-non-farm, non-residential $ 1,959 $ (25) $ 526 $ 211 Real estate-construction: Residential-Owner Occupied 1,012 -- 702 702 Residential-Builder 17,556 6,313 17,100 12,896 Commercial   13,492   --   10,946   10,223 Total real estate-construction: $ 32,060 $ 6,313 $ 28,748 $ 23,821 Farmland -- -- -- -- Consumer   349   327   184   122 Total net charge-offs $ 53,236 $ 11,163 $ 47,174 $ 29,310 Net charge-offs to average loans outstanding 2.34% 0.51% 2.06% 1.27%            

As of December 31,

 

 

 

 

2009   2008   % Change   9/30/09   % Change Loan Portfolio: Commercial $ 238,327 $ 279,470 -14.7% $ 239,895 -0.6% Real estate-one to four family residential: Closed end first and seconds 271,501 233,887 16.1% 264,398 2.7% Home equity lines   135,233   123,366 9.6%   134,295 0.7% Total Real estate-one-to-four family residential $ 406,734 $ 357,253 13.9% $ 398,693 2.0% Real estate-multifamily residential 66,799 66,611 0.3% 68,002 -1.7% Real estate-non-farm, non-residential: Owner Occupied 452,776 418,372 8.2% 430,173 5.3% Non-owner occupied   673,169   592,953 13.5%   640,136 5.2% Total Real estate-non-farm, non-residential $ 1,125,945 $ 1,011,325 11.3% $ 1,070,309 5.2% Real estate-construction: Residential-Owner Occupied 15,161 20,691 -26.7% 13,645 11.1% Residential-Builder 224,855 296,266 -24.1% 235,358 -4.5% Commercial   188,276   268,119 -29.8%   189,431 -0.6% Total Real estate-construction: $ 428,292 $ 585,076 -26.8% $ 438,434 -2.3% Farmland 2,675 2,498 7.1% 2,678 -0.1% Consumer   10,368   11,698 -11.4%   10,191 1.7% Total loans $ 2,279,140 $ 2,313,931 -1.5% $ 2,228,202 2.3% Less unearned income 3,924 4,370 -10.2% 3,836 2.3% Less allowance for loan losses   65,152   36,475 78.6%   70,114 -7.1% Loans, net $ 2,210,064 $ 2,273,086 -2.8% $ 2,154,252 2.6%       As of December 31, 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 $ 16,480 6.9% $ -- -- -0.1% Montgomery, MD 9,621 4.0% 2,972 1.2% 0.9% Prince Georges, MD 23,437 9.8% 1,000 0.4% 2.2% Other Counties in MD 4,834 2.0% -- -- 0.5% Arlington/Alexandria, VA 47,756 19.9% 4,159 1.7% -- Fairfax, VA 56,679 23.6% 7,524 3.1% 1.3% Culpeper/Fauquier 1,022 0.4% 200 0.1% 0.1% Frederick -- 0.0% 6,250 2.6% 0.9% Henrico, VA -- 0.0% -- -- 0.1% Loudoun, VA 28,551 11.9% 770 0.3% 0.3% Prince William, VA 11,659 4.9% 2,854 1.2% 0.9% Spotsylvania, VA 871 0.4% -- -- -- Stafford, VA 22,514 9.4% 4,898 2.0% -- Other Counties in VA 16,482 6.9% -- -- 0.3% Outside VA, MD & DC   110 0.0%   -- -- 0.4% $ 240,016 100.0% $ 30,627 12.8% 7.7%       As of December 31, 2009 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 $ 14,709 7.8% $ -- -- -- Montgomery, MD 1,407 0.7% -- -- -- Prince Georges, MD 11,215 6.0% -- -- -- Other Counties in MD 7,749 4.1% -- -- -- Arlington/Alexandria, VA 9,312 4.9% -- -- -- Fairfax, VA 18,060 9.6% -- -- 5.8% Henrico, VA 816 0.4% -- -- -- Loudoun, VA 32,528 17.3% 4,797 2.5% 1.3% Prince William, VA 51,399 27.3% 2,114 1.1% 0.1% Spotsylvania, VA 2,679 1.4% -- -- -- Stafford, VA 29,005 15.4% -- -- -- Other Counties in VA 6,997 3.7% -- -- -- Outside VA, MD & DC   2,400 1.3%   -- -- -- $ 188,276 100.0% $ 6,911 3.7% 7.2%       As of December 31, 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 $ 73,355 6.5% $ -- -- -- Montgomery, MD 33,637 3.0% -- -- -- Prince Georges, MD 60,130 5.3% 1,156 0.1% -- Other Counties in MD 48,411 4.3% -- -- -- Arlington/Alexandria, VA 180,193 16.0% 4,065 0.4% 0.02% Fairfax, VA 277,116 24.6% 1,242 0.1% -- Culpeper/Fauquier 1,289 0.1% -- -- -- Henrico, VA 31,317 2.8% 1,875 0.2% -- Loudoun, VA 111,076 9.9% 1,122 0.1% 0.04% Prince William, VA 185,269 16.5% 1,622 0.1% 0.1% Spotsylvania, VA 20,305 1.8% -- -- -- Stafford, VA 22,176 2.0% -- -- -- Other Counties in VA 71,421 6.3% 4,024 0.4% -- Outside VA, MD & DC   10,250 0.9%   -- -- -- $ 1,125,945 100.0% $ 15,106 1.3% 0.2%  

Of this total of $1.1 billion in non-farm/non-residential real estate loans, approximately $48.5 million will mature in 2010, $42.2 million in 2011 and $72.8 million in 2012.

      As of December 31,       2009   2008   % Change 9/30/09   % Change     Investment Securities (at book value): Available-for-sale: U.S. Government Agency obligations $247,134 $ 235,434 5.0% $263,871 -6.3% Pooled trust preferred securities 2,031 3,948 -48.6% 3,084 -34.1% Obligations of states and political subdivisions 42,356 29,454 43.8% 42,585 -0.5% $291,521 $ 268,836 8.4% $309,540 -5.8% Held-to-maturity: U.S. Government Agency obligations $ 12,323 $ 18,764 -34.3% $ 13,574 -9.2% Obligations of states and political subdivisions 44,741 38,143 17.3% 45,945 -2.6% $ 57,064 $ 56,907 0.3% $ 59,519 -4.1%       Virginia Commerce Bancorp, Inc. Consolidated Balance Sheets (Dollars in thousands, except per share data) As of December 31, (Unaudited)   2009 2008 Assets Cash and due from banks $ 25,211 $ 33,515 Securities (fair value: 2009, $349,835; 2008, $337,771) 348,585 325,743 Restricted stocks 11,751 11,076 Loans held-for-sale 6,492 6,221 Loans, net of allowance for loan losses of $65,152 in 2009 and $36,475 in 2008 2,210,064 2,273,086 Bank premises and equipment, net 13,794 14,740 Accrued interest receivable 10,537 10,593 Other real estate owned 28,499 7,569 Other assets   70,364   33,379 Total assets $ 2,725,297 $ 2,715,922 Liabilities and Stockholders’ Equity Deposits Demand deposits $ 239,604 $ 194,791 Savings and interest-bearing demand deposits 985,152 518,054 Time deposits   1,004,571   1,459,297 Total deposits $ 2,229,327 $ 2,172,142 Securities sold under agreement to repurchase and federal funds purchased 176,729 187,959 Other borrowed funds 25,000 25,000 Trust preferred capital notes 66,057 65,800 Accrued interest payable 4,014 8,160 Contingent liability 2,960 -- Other liabilities   2,342   3,574 Total liabilities $ 2,506,429 $ 2,462,635 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 $ 63,993 $ 62,541 Common stock, $1.00 par, 50,000,000 shares authorized, issued and outstanding 2009, 26,744,545; 2008, 26,575,569 26,745 26,575 Surplus 96,588 95,840 Warrants 8,520 8,520 Retained earnings 22,671 60,535 Accumulated other comprehensive income (loss), net   351   (724) Total stockholders’ equity $ 218,868 $ 253,287 Total liabilities and stockholders’ equity $ 2,725,297 $ 2,715,922       Virginia Commerce Bancorp, Inc. Consolidated Statements of Operations (Dollars in thousands, except per share data) (Unaudited)   Three Months Ended Twelve months Ended December 31,   December 31, 2009   2008   2009   2008     Interest and dividend income: Interest and fees on loans $ 34,212 $ 35,346 $ 134,548 $ 143,501 Interest and dividends on investment securities: Taxable 3,527 3,677 14,050 15,017 Tax-exempt 414 340 1,591 1,248 Dividend on restricted stocks 90 61 355 320 Interest on deposits with other banks -- 5 -- 145 Interest on federal funds sold   30     9     89     237 Total interest and dividend income $ 38,273   $ 39,438   $ 150,633   $ 160,468 Interest expense: Deposits $ 10,522 $ 15,751 $ 49,598 $ 67,261 Securities sold under agreement to repurchase and federal funds purchased 998 1,057 3,475 5,534 Other borrowed funds 271 345 1,077 1,235 Trust preferred capital notes   1,239     1,335     5,079     3,400 Total interest expense $ 13,030   $ 18,488   $ 59,229   $ 77,430 Net interest income: $ 25,243 $ 20,950 $ 91,404 $ 83,038 Provision for loan losses   1,100     9,310     81,913     25,378 Net interest income after provision for loan losses $ 24,143   $ 11,640   $ 9,491   $ 57,660 Non-interest income (loss): Service charges and other fees $ 923 $ 1,009 $ 3,606 $ 3,902 Non-deposit investment services commissions 156 189 600 702 Fees and net gains on loans held-for-sale 538 284 2,912 1,498 Loss on other real estate owned (867) -- (9,952) -- Impairment loss on securities (1,403) -- (1,821) -- Other   105     (8)     303     329 Total non-interest income $ (548)   $ 1,474   $ (4,352)   $ 6,431 Non-interest expense: Salaries and employee benefits $ 5,780 $ 5,750 $ 23,040 $ 23,362 Occupancy expense 2,583 2,332 10,253 8,857 Data processing expense 662 557 2,436 2,166 Provision for contingent liabilities 2,960 -- 2,960 -- Other operating expense   5,352     2,881     18,179     10,391 Total non-interest expense $ 17,337   $ 11,520   $ 56,868   $ 44,776 Income (loss) before taxes $ 6,258 $ 1,594 $ (51,729) $ 19,315 Provision (benefit) for income taxes   2,103     252     (18,404)     6,231 Net income (loss) $ 4,155   $ 1,342   $ (33,325)   $ 13,084 Effective dividend on preferred stock   1,251     258     4,539     258 Net income (loss) available to common stockholders $ 2,904 $ 1,084 $ (37,864) $ 12,826   Earnings (loss) per common share, basic $ 0.11 $ 0.04 $ (1.42) $ 0.48 Earnings (loss) per common share, diluted $ 0.11 $ 0.04 $ (1.42) $ 0.47               Virginia Commerce Bancorp, Inc. Consolidated Average Balances, Yields, and Rates Three Months Ended December 31, (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) $ 361,179 $ 3,941 4.51% $ 313,302 $ 4,017 5.18% Restricted Stock 11,752 90 3.08% 9,749 61 2.48% Loans, net of unearned income (2) 2,245,065 34,212 6.06% 2,290,388 35,346 6.13% Interest-bearing deposits in other banks 93 -- 0.04% 270 5 1.56% Federal funds sold   53,164     30   0.22%   12,229     9   0.28% Total interest-earning assets $ 2,671,253 $ 38,273 5.71% $ 2,625,938 $ 39,438 5.98% Other assets   73,674   52,249 Total Assets $ 2,744,927 $ 2,678,187   Liabilities and Stockholders’ Equity Interest-bearing deposits: NOW accounts $ 252,373 $ 771 1.21% $ 174,059 $ 678 1.54% Money market accounts 155,725 558 1.42% 166,633 916 2.18% Savings accounts 542,167 2,493 1.82% 172,201 1,072 2.47% Time deposits   1,059,948     6,700   2.51%   1,453,087     13,085   3.57% Total interest-bearing deposits $ 2,010,213 $ 10,522 2.08% $ 1,965,980 $ 15,751 3.18% Securities sold under agreement to repurchase and federal funds purchased 178,779 998 2.21% 202,741 1,057 2.07% Other borrowed funds 25,000 271 4.25% 44,293 345 3.05% Trust preferred capital notes   66,026     1,239   7.34%   63,751     1,335   8.20% Total interest-bearing liabilities $ 2,280,018 $ 13,030 2.27% $ 2,276,765 $ 18,488 3.22% Demand deposits and other liabilities   246,104   209,004 Total liabilities $ 2,526,122 $ 2,485,769 Stockholders’ equity   218,805   192,418 Total liabilities and stockholders’ equity $ 2,744,927 $ 2,678,187 Interest rate spread 3.44% 2.76% Net interest income and margin $ 25,243 3.78% $ 20,950 3.19%   (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 $300 thousand and $1.2 million for the three months ended December 31, 2009, and 2008, respectively.               Virginia Commerce Bancorp, Inc. Consolidated Average Balances, Yields, and Rates Year Ended December 31, (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) $ 334,873 $ 15,641 4.82% $ 320,497 $ 16,265 5.19% Restricted stock 11,589 355 3.06% 7,695 320 4.15% Loans, net of unearned income (2) 2,279,294 134,548 5.91% 2,180,883 143,501 6.57% Interest-bearing deposits in other banks 91 -- 0.09% 4,831 145 2.99% Federal funds sold   42,718     89   0.20%   14,067     237   1.66% Total interest-earning assets $ 2,668,565 $ 150,633 5.67% $ 2,527,973 $ 160,468 6.35% Other assets   67,737   54,611 Total Assets $ 2,736,302 $ 2,582,584   Liabilities and Stockholders’ Equity

 

Interest-bearing deposits: NOW accounts $ 228,189 $ 2,825 1.24% $ 165,374 $ 2,655 1.60% Money market accounts 157,216 2,302 1.46% 198,429 5,389 2.71% Savings accounts 381,042 7,764 2.04% 175,629 5,124 2.91% Time deposits   1,221,328     36,707   3.01%   1,349,116     54,093   4.00% Total interest-bearing deposits $ 1,987,775 $ 49,598 2.50% $ 1,888,548 $ 67,261 3.55% Securities sold under agreement to repurchase and federal funds purchased 186,106 3,475 1.87% 223,114 5,534 2.47% Other borrowed funds 25,000 1,077 4.25% 36,202 1,235 3.36% Trust preferred capital notes   65,930     5,079   7.60%   46,373     3,400   7.21% Total interest-bearing liabilities $ 2,264,811 $ 59,229 2.62% $ 2,194,237 $ 77,430 3.52% Demand deposits and other liabilities   231,554   206,117 Total liabilities $ 2,496,365 $ 2,400,354 Stockholders’ equity   239,937   182,230 Total liabilities and stockholders’ equity $ 2,736,302 $ 2,582,584 Interest rate spread 3.05% 2.83% Net interest income and margin $ 91,404 3.45% $ 83,038 3.30%   (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 $3.3 million and $5.0 million for the nine months ended December 31, 2009, and 2008, respectively.