VCBI Virginia Commerce Bancorp (MM)

Virginia Commerce Bancorp, Inc. (the “Company”), (Nasdaq: VCBI), parent company of Virginia Commerce Bank (the “Bank”), today reported a net loss of $6.4 million, or $0.24 per diluted common share, for the second quarter of 2009, compared with earnings of $4.9 million, or $0.18 per diluted common share, for the same period in 2008. The second quarter loss was primarily due to $18.4 million in provisions for loan losses versus $3.7 million for the three months ended June 30, 2008, as total non-performing assets and loans 90+ days past due decreased $22.5 million from March 31, 2009, and net-charge-offs of $16.9 million were taken during the quarter.

Peter A. Converse, Chief Executive Officer, commented, “In the second quarter, we made progress in reducing our overall level of non-performing assets by $22.5 million. That progress included meaningful reductions of $19.7 million in non-accrual loans and $18.6 million in loans 90+ days past due, as $16.9 million in charge-offs were taken and other real estate owned increased $15.7 million through foreclosures. To achieve the reductions, the Company incurred an operating loss, primarily due to increased loan loss reserve provisions in the quarter. That is in keeping with our commitment to fully utilize operating earnings and, if necessary, our capital cushion, to aggressively address our problem loans. Along with the reduction in problem loans, the Company is pleased to report that loans 30 to 89 days past due declined significantly from $55.7 million at the end of the first quarter to $19.2 million as of June 30.”

Converse continued, “Management is cautiously optimistic that we are headed in the right direction and expects continued improvement in asset quality measures going forward, notwithstanding market or economic headwinds beyond our control. While our bottom line will continue to be challenged at least through the end of this year, we believe that our capital is sufficient to absorb loan-related losses and still be maintained at well-capitalized levels. We will continue to pursue all appropriate measures to significantly decrease non-performing assets with the goal of reducing them from the high point of $162.1 million at the end of the first quarter to $100 million or less by year-end. A case in point is the recent introduction of our Stimulus Mortgage Program to assist our home builder and lot developer loan customers with selling inventory by providing special mortgage financing to purchasers. We are already experiencing positive results from this program, especially in paydowns on problem construction and development loans from property sales enabled through these special mortgage terms.”

“Clearly we are committed to aggressive problem loan resolution as our top priority this year. At the same time, we also remain focused on our core competencies and the other elements of our action plan to restore stockholder value. Before loan loss reserve provisioning, our pre-tax operating income in the second quarter was $10.4 million after accruing for a $1.2 million special FDIC insurance assessment, as compared to pre-provision, pre-tax income of $9.5 million for the first quarter. We continue to be an active, responsive lender as we reposition our loan portfolio by pursuing alternative lending strategies, including ramping up our government contract lending. Efforts to reduce our acquisition, development and construction lending concentration have resulted in that portfolio category declining by $78.8 million year-to-date. We are making good progress in improving our deposit mix with second quarter growth of $21.1 million in demand deposits and $111.6 million in savings and interest-bearing checking accounts, while time deposits, or CDs, decreased by $180.6 million. The decline in CDs has lowered that deposit concentration from 67.2% of total deposits at year-end 2008 to 54.4% at the end of the second quarter, and is expected to reach the 45 - 50% level by the end of 2009. These improvements in our deposit mix have contributed nicely to a lowering of our cost of funds and a sequential improvement of 20 basis points in our net interest margin from 3.15% in the first quarter of 2009 to 3.35% this quarter.”

Converse concluded, “It appears that our ship is moving in the right direction and we are determined to keep it on course to improve operating performance and restore stockholder value.”

SUMMARY REVIEW OF FINANCIAL PERFORMANCE

Net (Loss) Income

For the three months ended June 30, 2009, the Company recorded a net operating loss of $5.2 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 $6.4 million, or $0.24 per diluted common share, compared to earnings of $4.9 million, or $0.18 per diluted common share, in the second quarter of 2008. For the six months ended June 30, 2009, the Company reported a net loss to common stockholders of $9.6 million compared to earnings of $9.1 million for the same period in 2008. Earnings for both the three and six- month periods were significantly impacted by loan loss provisions of $18.4 million and $31.8 million, respectively, due to the year-over-year increase in the level of non-performing assets and $29.3 million in net charge-offs in 2009.

On a pre-tax, pre-provision basis, operating income of $10.4 million for the three months ended June 30, 2009, was down $874 thousand as compared to $11.2 million for the three months ended June 30, 2008. However, the current quarter results include a special, one-time FDIC insurance assessment of $1.2 million. On a sequential basis, pre-tax, pre-provision operating income was up $809 thousand, despite the special assessment.

Asset Quality and Provisions For Loan Losses

Provisions for loan losses were $18.4 million for the three months ended June 30, 2009, compared to $3.7 million in the same period in 2008, due to an increase in non-performing assets and loans 90+ days past due from $43.9 million at June 30, 2008, to $139.6 million at June 30, 2009. For the six months ended June 30, 2009, provisions totaled $31.8 million compared to $7.8 million for the six months ended June 30, 2008, with 2009 year-to-date net charge-offs of $29.3 million compared to $3.9 million in the first half of 2008. As a result, total loan loss reserves to non-performing loans rose from 25.1% at March 31, 2009, to 35.0% at this quarter-end.

The higher levels of provisions and net-charge-offs are attributable to Management’s focus on aggressive problem loan resolution, as total non-performing assets and loans 90+ days past due declined by $22.5 million during the quarter from $162.1 million, or 5.84% of total assets, to $139.6 million, or 5.17% of total assets. Non-accrual loans decreased by $19.7 million, loans 90+ days past due decreased by $18.6 million and other real estate owned (foreclosed properties) increased by $15.7 million. In addition to the quarterly decline in non-accruals and loans 90+ days past due, loans past due 30 to 89 days were reduced significantly from $55.7 million at March 31, 2009, to $19.2 million.

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. Additions to non-performing loans in the second quarter included $3.3 million in one-to-four family residential loans and $7.7 million in non-owner occupied, non-farm, non-residential loans which were predominantly located in outer sub-markets and negatively impacted by higher vacancy and delinquent rents. Additionally, a $2.4 million commercial and industrial loan impacted by fraud and embezzlement was added. Overall, as of June 30, 2009, $74.6 million, or 67.0%, of non-performing loans represented acquisition, development and construction loans, $14.9 million, or 13.4%, represented non-farm, non-residential loans, $12.3 million, or 11.0%, represented commercial and industrial loans and $4.3 million, or 3.9%, represented loans on one-to-four family residential properties.

Charge-offs for the quarter primarily related to the write-down to current fair market value of acquisition, development and construction loans or related other real estate owned by $15.8 million and the recognition of losses on $1.1 million in commercial and industrial loans, predominantly to real estate-related or small business concerns.

Net Interest Income

Net interest income for the second quarter of $22.0 million was up $1.3 million, or 6.2% over the same quarter last year, due to overall balance sheet growth, and an increase in the net interest margin from 3.30% in the second quarter of 2008 to 3.35% for the current three-month period. Year-to-date net interest income of $42.8 million was up 6.4%, compared to $40.2 million in 2008. On a sequential basis, net interest income increased $1.2 million as the net interest margin rose twenty basis points from 3.15% in the first quarter of 2009, primarily due to a twenty-six basis point drop in the cost of interest-bearing liabilities. 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. Furthermore, the improvement in the net interest margin occurred despite the reversal of $423 thousand in interest on loans placed on non-accrual, which lowered the yield on loans by seven basis points.

Year-over-year, yields on loans are down 106 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 96 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 margin to average from 3.30% to 3.40%.

Non-Interest Income

Non-interest income for the second quarter was up $220 thousand, or 12.7%, from $1.7 million in 2008, to $1.9 million, with a $537 thousand increase in fees and net gains on mortgage loans held-for-sale more than offsetting declines in other non-interest income categories, including a $108 thousand impairment loss on securities. For the six months ended June 30, 2009, non-interest income was up $409 thousand, or 12.2%, due again to higher levels of fees and net gains on mortgage loans held-for-sale. Sequentially, non-interest income was up $129 thousand.

Non-Interest Expense

Non-interest expense increased $2.4 million, or 21.2%, from $11.2 million in the second quarter of 2008, to $13.6 million, and was up $4.6 million, or 21.0%, for the six months ended June 30, 2009, to $26.6 million. Compared to the first quarter of 2009, non-interest expense is up $563 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, as well as higher legal and professional services expenses associated with the collection of non-performing loans and OREO. As a result of these increases in expenses, the efficiency ratio rose from 49.9% in the second quarter of 2008 to 56.7% in the current period. Sequentially, the ratio improved slightly from 57.7%.

Loans

Over the past twelve months, loans, net of allowance for loan losses, increased $33.6 million, or 1.5%, to $2.2 billion, as non-farm, non-residential real estate loans increased $60.1 million, or 6.1%, one-to-four family residential loans increased $64.8 million, or 21.3%, while real estate construction loans fell by $95.9 million, or 15.9%, and commercial and industrial loans remained unchanged. Since December 31, 2008, net loans are down $55.1 million, or 2.4%, with non-farm non-residential loans up $30.9 million, construction loans down $78.8 million, one-to-four family residential loans for portfolio up $12.4 million. In addition, one-to-four family residential loans originated for sale totaled $64.8 million for the quarter ended June 30, 2009, and $125.9 million year-to-date, compared to $22.5 million and $44.2 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 $92.2 million, or 4.4%, from $2.1 billion to $2.2 billion, with demand deposits increasing $36.3 million, or 17.8%, savings and interest-bearing demand deposits increasing by $192.1 million, or 33.8%, and time deposits falling $136.2 million, or 10.3%. Sequentially, deposits were down $47.9 million, or 2.1%, with demand deposits increasing by $21.1 million, savings and interest-bearing demand accounts growing $111.6 million, and time deposits decreasing by $180.6 million. 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 increasingly focused on demand deposits as well as cross-selling activities tied to the acquisition of savings and interest-bearing demand accounts. The proportionate share of time deposits relative to total deposits has declined from 67.2% at year-end 2008 to 54.4% as of June 30, 2009, and is expected to be in the 45-50% range by the end of this year.

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 $113.2 million, or 40.6%, year-over-year, to $165.7 million at June 30, 2009, with a $63.0 million decline in Fed funds purchased. Since December 31, 2008, this funding source is down $22.2 million, with $12 million of the decline in Fed funds purchased.

Investment Securities

Investment securities decreased $25.6 million, or 7.4%, from $346.4 million at June 30, 2008, to $320.8 million at June 30, 2009, and were down $30.6 million sequentially from the first quarter. The majority of the current period and year-over-year decline in securities were due to calls and maturities in U.S. Government agency debt obligations as well as higher levels of prepayments on 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 $108 thousand impairment loss for the second quarter on one of the four pools.

Capital and Stockholders’ Equity

Stockholders’ equity increased $67.7 million, or 38.6%, from $175.4 million at June 30, 2008, to $243.0 million at June 30, 2009, with a net loss to common stockholders of $5.9 million over the twelve-month period, and $71 million in preferred stock issued to the U.S. Treasury under the Treasury’s Capital Purchase Program. 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. Additionally, in September 2008, the Company raised $25 million in qualifying capital through the sale of trust preferred securities to the Company’s directors and certain of its executive officers. The issuance of the trust preferred securities also included warrants to purchase an aggregate of 1.5 million shares of common stock. As a result of this issuance, and the issuance of the preferred shares, the Company’s Tier 1 Capital ratio increased from 9.31% at June 30, 2008, to 12.72% as of June 30, 2009, and its total qualifying capital ratio increased from 10.42% to 13.97%.

CONFERENCE CALL

Virginia Commerce Bancorp will host a teleconference call for the financial community on July 24, 2009, at 11:00 a.m. Eastern Daylight Time to discuss the first quarter 2009 financial results. The public is invited to listen to this conference call by dialing 866-261-3182 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 24, 2009, until 11:59 p.m. Eastern Daylight Time on July 31, 2009. The public is invited to listen to this conference call replay by dialing 888-266-2081 and entering access code 1380066.

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. 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.

  Virginia Commerce Bancorp, Inc. Financial Highlights (Dollars in thousands, except per share data) (Unaudited)       Three Months Ended June 30,   Six Months Ended June 30, 2009   2008   % Change   2009   2008   % Change Summary Operating Results:         Interest and dividend income $37,183 $40,400 -8.0 % $74,737 $80,463 -7.1 % Interest expense 15,183 19,686 -22.9 % 31,980 40,284 -20.6 % Net interest and dividend income 22,000 20,714 6.2 % 42,757 40,179 6.4 % Provision for loan losses 18,423 3,656 403.9 % 31,813 7,768 309.5 % Non-interest income 1,949 1,729 12.7 % 3,769 3,360 12.2 % Non-interest expense 13,586 11,206 21.2 % 26,609 21,998 21.0 % (Loss) income before income taxes (8,060 ) 7,581 -206.3 % (11,896 ) 13,773 -186.4 % Net (loss) income ($5,184 ) $ 4,921 -205.3 % ($7,593 ) $9,069 -183.7 % Effective dividend on preferred stock 1,251 -- N/A 2,037 -- N/A Net (loss) income available to common stockholders ($6,435 ) $ 4,921 -230.8 % ($9,630 ) $9,069 -206.2 %   Performance Ratios: Return on average assets -0.77 % 0.76 % -0.56 % 0.73 % Return on average equity -8.36 % 11.18 % -6.11 % 10.43 % Net interest margin 3.35 % 3.30 % 3.25 % 3.32 % Efficiency ratio (1) 56.7 % 49.9 % 57.2 % 50.5 %   Per Share Data: (2) Net (loss) income per common share-basic ($0.24 ) $0.18 -233.3 % ($0.36 ) $0.34 -205.9 % Net (loss) income per common share-diluted ($0.24 ) $0.18 -233.3 % ($0.36 ) $0.33 -209.1 % Average number of shares outstanding: Basic 26,691,430 26,553,361 26,693,074 26,532,984 Diluted 26,909,417 27,153,901 27,001,579 27,201,418       As of June 30, 2009   2008   % Change   Selected Balance Sheet Data: Loans, net $2,217,945 $2,184,359 1.5 % Investment securities 320,842 346,403 -7.4 % Assets 2,699,494 2,655,417 1.5 % Deposits 2,191,473 2,099,286 4.4 % Stockholders’ equity 243,013 175,363 38.6 % Book value per common share (2) $6.44 $6.60 -2.4 %   Capital Ratios (% of risk weighted assets): Tier 1 capital: Company 12.72 % 9.31 % Bank 12.68 % 7.56 % Total qualifying capital: Company 13.97 % 10.42 % Bank 13.93 % 10.39 % Tier 1 leverage: Company 11.18 % 8.40 % Bank 11.35 % 6.81 % Tangible common equity: Company 6.37 % 6.60 % Bank 11.34 % 6.57 %         As of June 30,       2009   2008 3/31/09   Asset Quality: Non-performing assets: Non-accrual loans: Commercial $ 12,259 $ 1,951 $ 10,433 Real estate-one-to-four family residential: Closed end first and seconds 3,843 173 735 Home equity lines   494     395     319   Total Real estate-one-to-four family residential $ 4,337 $ 568 $ 1,054 Real estate-non-farm, non-residential: Owner Occupied 6,462 2,534 6,319 Non-owner occupied   8,460     411     792   Total Real estate-non-farm, non-residential $ 14,922 $ 2,945 $ 7,111 Real estate-construction: Residential-Owner Occupied 2,389 3,889 5,115 Residential-Builder 53,251 23,278 67,274 Commercial   18,955     1,513     34,829   Total Real estate-construction: $ 74,595 $ 28,680 107,218 Consumer 23 40 -2 Total Non-accrual loans 106,136 34,184 125,814 OREO   28,198     6,091     12,455   Total non-performing assets $ 134,334 $ 40,275 $ 138,269 Loans 90+ days past due and still accruing   5,232     3,641     23,790   Total non-performing assets and past due loans $ 139,566 $ 43,916 $ 162,059   Non-performing assets to total loans: 5.94 % 1.82 % 6.05 % to total assets: 4.98 % 1.52 % 4.99 % Non-performing assets and past due loans to total loans: 6.17 % 1.98 % 7.09 % to total assets: 5.17 % 1.65 % 5.84 % Allowance for loan losses to total loans 1.72 % 1.18 % 1.64 % Allowance for loan losses to non-performing loans 35.00 % 69.01 % 25.06 %   Loans 30 to 89 days past due $ 19,243 $ 41,095 $ 55,730   Net charge-offs Commercial $ 3,176 $ 1,993 $ 2,097 Real estate-one-to-four family residential: Closed end first and seconds 1,156 686 115 Home equity lines   824     --     826   Total Real estate-one-to-four family residential $ 1,980 $ 686 $ 941 Real estate-multi-family residential -- -- -- Real estate-non-farm, non-residential: Owner Occupied 211 -- 211 Non-owner occupied   --     --     --   Total Real estate-non-farm, non-residential $ 211 $ -- $ 211 Real estate-construction: Residential-Owner Occupied 702 -- 40 Residential-Builder 12,896 1,119 3,542 Commercial   10,223     --     5,509   Total real estate-construction: $ 23,821 $ 1,119 $ 9,091 Farmland -- -- -- Consumer   122     127     31   Total Net charge-offs $ 29,310 $ 3,925 $ 12,371 Net charge-offs to average loans outstanding 1.27 % 0.19 % 0.53 %     As of June 30,         2009   2008   % Change   3/31/09   % Change         Loan Portfolio: Commercial $ 259,812 $ 254,110 2.2 % $ 265,279 -2.1 % Real estate-one to four family residential: Closed end first and seconds 236,523 197,858 19.5 % 229,062 3.3 % Home equity lines   133,176   107,025     24.4 %   128,291   3.8 % Total Real estate-one-to-four family residential $ 369,699 $ 304,883 21.3 % $ 357,353 3.5 % Real estate-multifamily residential 69,616 62,667 11.1 % 66,577 4.6 % Real estate-non-farm, non-residential: Owner Occupied 428,372 411,357 4.1 % 428,112 0.1 % Non-owner occupied   613,825   570,731     7.6 %   594,423   3.3 % Total Real estate-non-farm, non-residential $ 1,042,197 $ 982,088 6.1 % $ 1,022,535 1.9 % Real estate-construction: Residential-Owner Occupied 23,047 24,308 -5.2 % 24,119 -4.4 % Residential-Builder 259,370 310,907 -16.6 % 289,375 -10.4 % Commercial   223,916   266,981     -16.1 %   247,695   -9.6 % Total Real estate-construction: $ 506,333 $ 602,196 -15.9 % $ 561,189 -9.8 % Farmland 2,678 2,003 33.7 % 2,498 7.2 % Consumer   10,532   7,641     37.8 %   9,934   6.0 % Total loans $ 2,260,867 $ 2,215,588 2.0 % $ 2,285,365 -1.1 % Less unearned income 3,944 5,126 -23.1 % 3,911 0.8 % Less allowance for loan losses   38,978   26,103     49.3 %   37,494   4.0 % Loans, net $ 2,217,945 $ 2,184,359 1.5 % $ 2,243,960 -1.2 %       As of June 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 $ 19,958 7.1 % $ -- -- -- Montgomery. MD 11,069 3.9 % 4,413 1.6 % 0.7 % Prince Georges, MD 33,885 12.0 % 10,016 3.5 % 1.3 % Other Counties in MD 5,711 2.0 % 344 0.1 % 0.4 % Arlington/Alexandria, VA 48,225 17.1 % 5,698 2.0 % -- Fairfax, VA 73,948 26.2 % 15,347 5.4 % 0.5 % Culpeper/Fauquier, VA 1,762 0.6 % 320 0.1 % -- Frederick, VA 6,750 2.4 % 6,750 2.4 % 0.8 % Loudoun, VA 29,280 10.4 % 770 0.3 % 0.2 % Prince William, VA 13,083 4.6 % 4,009 1.4 % 0.2 % Spotsylvania, VA 1,491 0.5 % -- -- -- Stafford, VA 21,851 7.7 % 4,898 1.7 % -- Other Counties in VA 15,293 5.4 % 3,075 1.1 % 0.3 % Outside VA, D.C. & MD   111   0.0 %   --     --   0.4 % $ 282,417 100.0 % $ 55,640 19.7 % 4.8 %      

As of June 30, 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 $ 11,315 5.1 % $ -- -- -- Montgomery. MD 1,422 0.6 % -- -- -- Prince Georges, MD 10,155 4.5 % -- -- -- Other Counties in MD 7,747 3.5 % -- -- -- Arlington/Alexandria, VA 3,220 1.4 % -- -- -- Fairfax, VA 25,357 11.3 % 1,513 0.7 % 4.6 % Henrico, VA 11,798 5.3 % -- -- -- Loudoun, VA 42,049 18.8 % 15,181 6.8 % -- Prince William, VA 57,112 25.5 % 2,261 1.0 % -- Spotsylvania, VA 10,498 4.7 % -- -- -- Stafford, VA 37,489 16.7 % -- -- -- Other Counties in VA   5,754   2.6 %   --     --   --   $ 223,916 100.0 % $ 18,955 8.5 % 4.6 %       As of June 30,         2009   2008   % Change   3/31/09   % Change   Investment Securities (at book value): Available-for-sale: U.S. Government Agency obligations $ 204,896 $ 262,724 -22.0 % $ 239,346 -14.4 % Domestic corporate debt obligations 1,864 6,786 -72.5 % 1,239 50.4 % Obligations of states and political subdivisions 40,219 29,242 37.5 % 33,473 20.2 % Restricted stock: Federal Reserve Bank 5,597 1,442 288.1 % 5,597 -- Federal Home Loan Bank 6,010 6,459 -7.0

%

6,009 -- Community Bankers’ Bank   145   55     163.6

%

  145   --   $ 258,731 $ 306,708 -15.6 % $ 285,809 -9.5 % Held-to-maturity: U.S. Government Agency obligations $ 15,258 $ 20,974 -27.3 % $ 17,382 -12.2 % Obligations of states and political subdivisions   46,853   18,721     150.3 %   48,281   3.0 % $ 62,111 $ 39,695 56.5 % $ 65,663 -5.4 %  

(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.

  Virginia Commerce Bancorp, Inc. Consolidated Balance Sheets (Dollars in thousands, except per share data) As of June 30, (Unaudited)         2009       2008   Assets Cash and due from banks $ 31,693 $ 44,068 Interest-bearing deposits with other banks -- 16,715 Securities (fair value: 2009, $322,100; 2008, $346,485) 320,842 346,403 Federal funds sold 22,999 -- Loans held-for-sale 12,940 3,415 Loans, net of allowance for loan losses of $38,978 in 2009 and $26,103 in 2008 2,217,945 2,184,359 Bank premises and equipment, net 14,601 13,601 Accrued interest receivable 9,826 10,992 Other assets   68,648     35,864   Total assets $ 2,699,494   $ 2,655,417   Liabilities and Stockholders’ Equity Deposits Demand deposits $ 239,658 $ 203,362 Savings and interest-bearing demand deposits 759,861 567,757 Time deposits   1,191,954     1,328,167   Total deposits $ 2,191,473 $ 2,099,286 Securities sold under agreement to repurchase and federal funds purchased 165,730 278,895 Other borrowed funds 25,000 50,000 Trust preferred capital notes 65,929 41,244 Accrued interest payable 5,237 7,329 Other liabilities   3,112     3,300   Total liabilities $ 2,456,481   $ 2,480,054   Stockholders’ Equity Preferred stock, net of discount, $1.00 par, 1,000,000 shares authorized, Series A; $1,000.00 stated value; 71,000 issued and outstanding $ 63,267 $ --

Common stock, $1.00 par, 50,000,000 shares authorized, issued and outstanding 2009, 26,693,074; 2008, 26,566,711

26,693 26,567 Surplus 96,200 94,244 Warrants 8,520 -- Retained earnings 50,904 56,777 Accumulated other comprehensive loss, net   (2,571 )   (2,225 ) Total stockholders’ equity $ 243,013 $ 175,363 Total liabilities and stockholders’ equity $ 2,699,494   $ 2,655,417       Virginia Commerce Bancorp, Inc. Consolidated Statements of Operations (Dollars in thousands except per share data) (Unaudited)       Three Months Ended   Six Months Ended June 30,   June 30, 2009   2008   2009   2008 Interest and dividend income:     Interest and fees on loans $ 33,186 $ 35,935 $ 66,629 $ 71,826 Interest and dividends on investment securities: Taxable 3,495 3,769 7,157 7,548 Tax-exempt 406 298 751 569 Dividends 84 100 168 192 Interest on deposits with other banks - 85 - 102 Interest on federal funds sold   12       213     32       226 Total interest and dividend income $ 37,183     $ 40,400   $ 74,737     $ 80,463 Interest expense: Deposits $ 12,796 $ 17,307 $ 27,427 $ 35,337

Securities sold under agreement to repurchase and federal funds purchased

835 1,418 1,455 3,101 Other borrowed funds 269 270 534 464 Trust preferred capital notes   1,283       691     2,564       1,382 Total interest expense $ 15,183     $ 19,686   $ 31,980     $ 40,284 Net interest income: $ 22,000 $ 20,714 $ 42,757 $ 40,179 Provision for loan losses   18,423       3,656     31,813       7,768 Net interest income after provision for loan losses $ 3,577     $ 17,058   $ 10,944     $ 32,411 Non-interest income: Service charges and other fees $ 903 $ 945 $ 1,790 $ 1,866 Non-deposit investment services commissions 122 199 279 349 Fees and net gains on loans held-for-sale 952 415 1,759 851 Impairment loss on securities (108 ) -- (138 ) -- Other   80       170     79       294 Total non-interest income $ 1,949     $ 1,729   $ 3,769     $ 3,360 Non-interest expense: Salaries and employee benefits $ 5,694 $ 5,853 $ 11,615 $ 11,709 Occupancy expense 2,437 2,167 5,204 4,314 Data processing expense 576 542 1,176 1,081 Other operating expense   4,879       2,644     8,614       4,894 Total non-interest expense $ 13,586     $ 11,206   $ 26,609     $ 21,998 (Loss) income before taxes $ (8,060 ) $ 7,581 $ (11,896 ) $ 13,773 (Benefit) provision for income taxes   (2,876 )     2,660     (4,303 )     4,704 Net (loss) income $ (5,184 )   $ 4,921   $ (7,593 )   $ 9,069 Effective dividend on preferred stock   1,251       --   $ 2,037       -- Net (loss) income available to common stockholders $ (6,435 ) $ 4,921 $ (9,630 ) $ 9,069 Earnings per common share, basic (1) $ (0.24 ) $ 0.18 $ (0.36 ) $ 0.34 Earnings per common share, diluted (1) $ (0.24 ) $ 0.18 $ (0.36 ) $ 0.33     Virginia Commerce Bancorp, Inc. Consolidated Average Balances, Yields, and Rates Three Months Ended June 30, (Unaudited)             2009 2008 (Dollars in thousands)

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Assets         Securities (1) $ 334,487 $ 3,985 4.93 % $ 331,321 $ 4,167 5.14 % Loans, net of unearned income (2) 2,294,007 33,186 5.81 % 2,150,165 35,935 6.71 % Interest-bearing deposits in other banks 79 -- 0.12 % 13,311 85 2.58 % Federal funds sold   27,400     12   0.17 %   41,595     213   2.03 % Total interest-earning assets $ 2,655,973 $ 37,183 5.65 % $ 2,536,392 $ 40,400 6.41 % Other assets   60,769   54,700 Total Assets $ 2,716,742 $ 2,591,092   Liabilities and Stockholders’ Equity Interest-bearing deposits: NOW accounts $ 229,785 $ 717 1.25 % $ 167,541 $ 689 1.65 % Money market accounts 160,923 573 1.43 % 212,071 1,437 2.72 % Savings accounts 304,347 1,720 2.27 % 180,939 1,367 3.03 % Time deposits   1,264,340     9,786   3.10 %   1,346,262     13,814   4.12 % Total interest-bearing deposits $ 1,959,395 $ 12,796 2.62 % $ 1,906,813 $ 17,307 3.64 %

Securities sold under agreement to repurchase and federal funds purchased

187,897 835 1.78 % 231,347 1,418 2.46 % Other borrowed funds 25,000 269 4.25 % 25,275 270 4.23 % Trust preferred capital notes   65,898     1,283   7.70 %   40,000     691   6.83 % Total interest-bearing liabilities $ 2,238,190 $ 15,183 2.72 % $ 2,203,435 $ 19,686 3.58 % Demand deposits and other liabilities   229,881   211,168 Total liabilities $ 2,468,071 $ 2,414,603 Stockholders’ equity   248,671   176,489 Total liabilities and stockholders’ equity $ 2,716,742 $ 2,591,092 Interest rate spread 2.93 % 2.83 % Net interest income and margin $ 22,000 3.35 % $ 20,714 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 $892 thousand and $1.4 million for the three months ended June 30, 2009 and 2008, respectively.

  Virginia Commerce Bancorp, Inc. Consolidated Average Balances, Yields, and Rates Six Months Ended June 30, (Unaudited)             2009 2008 (Dollars in thousands)

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Assets         Securities (1) $ 336,576 $ 8,076 4.95 % $ 326,155 $ 8,309 5.20 % Loans, net of unearned income (2) 2,303,301 66,629 5.84 % 2,090,394 71,826 6.90 % Interest-bearing deposits in other banks 91 -- 0.12 % 7,340 102 2.79 % Federal funds sold   34,354     32   0.18 %   21,899     226   2.04 % Total interest-earning assets $ 2,674,322 $ 74,737 5.66 % $ 2,445,788 $ 80,463 6.62 % Other assets   57,411   58,133 Total Assets $ 2,731,733 $ 2,503,921   Liabilities and Stockholders’ Equity Interest-bearing deposits: NOW accounts $ 210,409 $ 1,326 1.27 % $ 156,930 $ 1,201 1.53 % Money market accounts 155,362 1,151 1.49 % 209,303 3,093 2.96 % Savings accounts 273,059 3,159 2.33 % 172,887 2,808 3.26 % Time deposits   1,343,894     21,791   3.27 %   1,281,000     28,235   4.42 % Total interest-bearing deposits $ 1,982,724 $ 27,427 2.79 % $ 1,820,120 $ 35,337 3.89 % Securities sold under agreement to repurchase and federal funds purchased 186,561 1,455 1.57 % 232,771 3,101 2.67 % Other borrowed funds 25,000 534 4.25 % 25,138 464 3.66 % Trust preferred capital notes   65,865     2,564   7.74 %   40,000     1,382   6.83 % Total interest-bearing liabilities $ 2,260,150 $ 31,980 2.85 % $ 2,118,029 $ 40,284 3.81 % Demand deposits and other liabilities   221,005   211,456 Total liabilities $ 2,481,155 $ 2,329,485 Stockholders’ equity   250,578   174,436 Total liabilities and stockholders’ equity $ 2,731,733 $ 2,503,921 Interest rate spread 2.81 % 2.81 % Net interest income and margin $ 42,757 3.25 % $ 40,179 3.32 %  

(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 $1.7 million and $2.7 million for the six months ended June 30, 2009 and 2008, respectively.