Virginia Commerce Bancorp, Inc. (the “Company”), (Nasdaq: VCBI),
parent company of Virginia Commerce Bank (the “Bank”), today
reported net income to common stockholders of $3.3 million, or
$0.11 per diluted common share, for the fourth quarter of 2010,
compared with net income to common stockholders of $2.9 million, or
$0.11 per diluted common share, for the same period in 2009. For
the year ended December 31, 2010, the Company reported net income
to common stockholders of $16.5 million, or $0.57 per diluted
common share, compared to a net loss to common stockholders of
$37.9 million, or $1.42 per diluted common share, for the year
ended December 31, 2009. Higher net interest income, higher
non-interest income and lower loan loss provisions drove the
year-over-year improvement in earnings, while non-performing assets
(“NPAs”) and loans 90+ days past due declined from $98.1 million at
December 31, 2009, to $74.6 million as of December 31, 2010.
Peter A. Converse, President and Chief Executive Officer,
commented, “It is gratifying to conclude 2010 with meaningful
progress in earnings and asset quality. This represents a
turnaround year for Virginia Commerce in contrast to our
disappointing performance in 2009. Net income to common
stockholders this past year of $16.5 million represented a
significant improvement over the $37.9 million loss to common
stockholders in 2009. Similarly, we have made great strides in
reducing NPAs and loans 90+ days past due by more than 50% from
their peak of $162.1 million as of March 31, 2009, to $74.6 million
at year-end 2010.”
“While we have made good progress and it is satisfying, we still
have our work cut out for us in 2011. We plan to again reduce NPAs
significantly this year. Barring unforeseen circumstances and
negative market forces, our strong core operating earnings should
enable the absorption of credit and OREO costs in pursuit of this
goal and still allow for continued earnings improvement. The
progress we expect in 2011 should position Virginia Commerce to
achieve even stronger performance in 2012.”
Converse continued, “Our plans in 2011 also involve getting back
on a growth track, especially in lending. Despite economic, market
and asset quality impediments to loan growth for most banks over
the last two years, it is anticipated that the climate will be
improving this year. Accordingly, we are taking measures to
position ourselves for greater loan production that involve
strategic hiring, focused marketing, increased calling efforts and
restructuring sales management.”
Converse concluded, “It is also clear that net income to common
stockholders will improve measurably when we are able to pay off
our $71 million in TARP funding. While we could choose to earn our
way out of TARP through retained earnings over the next two plus
years, it is also an option to pay it off as early as the second
half of this year through an equity offering. This decision will
largely be dependent on satisfactory appreciation in our stock
price and the prerequisite regulatory approval.”
SUMMARY REVIEW OF FINANCIAL PERFORMANCE
Net Income (Loss)
For the three months ended December 31, 2010, the Company
recorded net income of $4.5 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 $3.3 million, or
$0.11 per diluted common share, compared to net income to common
stockholders of $2.9 million, or $0.11 per diluted common share,
for the fourth quarter of 2009. For the year ended December 31,
2010, the Company reported net income to common stockholders of
$16.5 million, or $0.57 per diluted common share, compared to a net
loss to common stockholders of $37.9 million, or $1.42 per diluted
common share, in 2009. The year-over-year improvement in earnings
was attributable to higher net interest income, higher non-interest
income and significantly lower provisions for loan losses.
Core operating earnings for the three months ended December 31,
2010, were $15.0 million, up $2.4 million, or 19.1%, compared to
$12.6 million for the three months ended December 31, 2009. On a
sequential basis, core operating earnings for the fourth quarter of
2010 were up $346 thousand. The Company calculates core operating
earnings by excluding taxes, provisions for loan losses, losses on
other real estate owned, impairment losses on securities and
provisions for unfunded commitments from net income. For the three
months ended September 30, 2010, the Company is also excluding from
net income $1.0 million in bank-owned life insurance death benefits
received.
Asset Quality and Provisions For Loan Losses
Provisions for loan losses were $7.1 million for the quarter
ended December 31, 2010, compared to $1.1 million in the same
period in 2009, with total net charge-offs of $7.4 million in the
fourth quarter of 2010 versus $6.1 million for the same period a
year ago. For the year ended December 31, 2010, provisions for loan
losses totaled $20.6 million compared to $81.9 million in 2009,
with 2010 net charge-offs of $23.3 million significantly reduced
from $53.2 million in 2009.
Total non-performing assets and loans 90+ days past due declined
from $98.1 million at December 31, 2009, to $74.6 million at
December 31, 2010, and decreased $7.8 million sequentially from
$82.4 million at September 30, 2010, predominantly as a result of
sales of Other Real Estate Owned (“OREO”). As of December 31, 2010,
the allowance for loan losses represented 2.82% of total loans, up
slightly from 2.80% at September 30, 2010, with such allowance
covering 108.8% of total non-performing loans.
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, 2010, $33.6 million, or 58.7%, of non-performing loans
represented acquisition, development and construction (“ADC”)
loans, $13.1 million, or 22.8%, represented non-farm,
non-residential loans, $7.1 million, or 12.3%, represented loans on
one-to-four family residential properties, and $3.7 million, or
6.5%, represented commercial and industrial loans. Reductions in
existing non-performing loans during the fourth quarter of $13.3
million were largely offset by the addition of six single family
mortgages totaling $3.3 million, two commercial mortgages totaling
$5.1 million and two land parcels totaling $3.9 million to
non-accrual. Collateral for each of these loans was evaluated and
carrying values or specific reserves adjusted accordingly.
Included in the loan portfolio are loans classified as troubled
debt restructurings (“TDRs”), totaling $103.0 million, a sequential
reduction from $105.6 million at the end of the third quarter.
These are performing, accruing loans that represent relationships
for which a modification to the contractual interest rate or
repayment structure has been granted to address a financial
hardship. These loans make up 4.7% of the total loan portfolio and
represent $35.7 million in ADC loans, $49.7 million in non-farm,
non-residential real estate loans, $12.2 million in commercial
loans and $5.4 million in one-to-four family residential loans. A
$2.6 million reduction in TDRs during the quarter was achieved as a
result of the restructure of a $11 million commercial property back
to market rates and terms.
Net Interest Income
Net interest income of $27.1 million for the fourth quarter of
2010 was up $1.9 million, or 7.4%, over the same quarter last year,
due primarily to an increase in the net interest margin from 3.78%
in the fourth quarter of 2009 to 3.96% for the same period in 2010.
Net interest income for 2010 of $105.3 million was up 15.2%,
compared to $91.4 million in 2009. On a sequential basis, the net
interest margin was unchanged. The year-over-year increase in the
net interest margin was driven by lower deposit costs due to
significant reductions in the level of time deposits, and increased
levels of demand deposits and lower rate interest-bearing
transaction accounts. As a result, the average cost of
interest-bearing deposits fell from 2.50% in 2009 to 1.64% in 2010,
while the yield on interest-earning assets declined only seventeen
basis points from 5.67% to 5.50% year-over-year. Management
anticipates the net interest margin will average between 3.70% to
3.80% in 2011 as yields on loans and investment securities are
expected to continue to decline.
Non-Interest Income (Loss)
For the three months ended December 31, 2010, the Company
recognized $1.6 million in non-interest income, compared to a
non-interest loss of $548 thousand for the three months ended
December 31, 2009. For the year ended December 31, 2010, the
Company recognized non-interest income of $3.7 million compared to
a non-interest loss of $4.4 million in 2009. Non-interest income
for the fourth quarter of 2010 included $1.2 million in losses on
other real estate owned and $128 thousand in impairment losses on
securities, while in the fourth quarter of 2009, non-interest
income included $867 thousand in losses on other real estate owned
and $1.4 million in impairment losses on securities. Fees and net
gains on loans held for sale increased $1.2 million from $538
thousand in the fourth quarter of 2009, to $1.7 million in the
fourth quarter of 2010 due to higher levels of refinancing
activity.
Non-Interest Expense
Non-interest expense decreased $2.3 million, or 13.1%, from
$17.3 million in the fourth quarter of 2009, to $15.1 million in
the fourth quarter of 2010, and was up $318 thousand, or 0.6%, from
$56.9 million for the year ended December 31, 2009, to $57.2
million in 2010. Non-interest expense for the fourth quarter of
2009 and year ended December 31, 2009, included a $3.0 million
provision for unfunded commitments, while the Company did not
recognize any non-interest expense related to unfunded commitments
in 2010. The majority of these increases were due to higher legal
and professional services expenses associated with the collection
of non-performing loans, higher carrying expenses on other real
estate owned and higher commissions paid on mortgage loans
originated for sale. Despite these increases, higher levels of net
interest income resulted in the efficiency ratio improving from
55.6% for the year ended December 31, 2009 to 50.6% in 2010.
Investment Securities
Investment securities increased $63.2 million, or 18.1%,
year-over-year to $411.8 million at December 31, 2010, and were up
$30.8 million sequentially from September 30, 2010. U.S. Government
agency securities, including callable step-up bonds and
collateralized mortgage obligations (CMOs) comprised a majority of
the increases. The portfolio contains four pooled trust preferred
securities with an amortized cost basis of $5.9 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. Since the first
quarter of 2009, the Bank has recorded an aggregate impairment loss
of $3.5 million on three of the four pools.
Loans
Loans, net of allowance for loan losses, decreased $60.5
million, or 2.7%, from $2.21 billion at December 31, 2009, to $2.15
billion at December 31, 2010. Non-farm, non-residential real estate
loans increased $12.9 million, or 1.1%, multifamily real estate
loans increased $10.5 million, or 15.7%, while ADC loans fell by
$63.7 million, or 14.9%, and commercial loans were down $19.7
million, or 8.3%. Sequentially, net loans were down $28.4 million,
or 1.3%. Loan production in 2010 was negatively impacted by lower
economic activity and demand for credit in both the business and
consumer sectors, a reallocation of lending personnel to problem
loan identification and resolution, a strategic decision to
restrict acquisition, development and construction lending and an
increased emphasis on deposit generation and non-credit products.
Lending efforts in 2011 are being focused on building greater
market share in commercial lending, especially in sectors forecast
for growth, such as government contract lending, professional
practices and associations and select service industries, with
strategic hiring, marketing campaigns, calling efforts and sales
management restructuring.
Deposits
For the year ended December 31, 2010, deposits increased $17.9
million, or 0.8%, to $2.25 billion, with demand deposits increasing
$25.1 million, or 10.5%, savings and interest-bearing demand
deposits increasing by $216.1 million, or 21.9%, and time deposits
falling $223.4 million, or 22.2%. Sequentially, deposits fell $76.3
million, or 3.3%, with demand deposits decreasing by $5.0 million,
or 1.8%, savings and interest-bearing demand accounts falling $22.5
million, or 1.8%, and time deposits decreasing by $48.9 million, or
5.9%. The sequential decline in demand deposits is a result of
daily and period-end fluctuations as growth in that category
continued with a sequential increase in average demand deposit
balances of $17.3 million, or 6.8%, to $272.8 million. The
year-over-year increase in demand deposits is primarily due to
successful deposit gathering efforts led by the Company’s team of
eight business development officers who are focused on acquisition
and retention of commercial operating funds, cash management
services and other related cross-sales. The year-over-year increase
in savings and interest-bearing demand deposits was due primarily
to success with the Company’s MEGA Savings and MEGA Checking
account products as well as its Premier Interest Checking for
non-profits, with the sequential decline due primarily to a
strategic reduction in balances held by one depositor. The declines
in time deposits are reflective of strategic pricing of
certificates of deposits relative to both the competitive market
and the Company’s pricing on interest-bearing transaction accounts.
The proportionate share of time deposits to total deposits has
declined from a peak of 67.2% at year-end 2008 to 34.8% as of
December 31, 2010, and is expected to plateau near that level. At
December 31, 2010, the Bank had no brokered certificates of
deposit, down from $50.1 million at the end of 2009 and $30.0
million at September 30, 2010.
Capital Levels and Stockholders’ Equity
On September 29, 2010, the Company issued 1,904,766 shares of
its common stock at a price of $5.25 per share in a registered
direct placement with several institutional investors for total
gross proceeds of $10.0 million. In addition, the Company issued to
the investors warrants exercisable for shares of common stock,
which, if fully exercised, would provide an additional $11.4
million in gross proceeds to the Company. The warrants each have an
exercise price of $6.00 per share, which represents a 14.3% premium
to the offering price of the shares of common stock sold in the
registered direct placement. The Series A warrants, exercisable for
a total of 952,383 shares of common stock, are exercisable for a
period of seven months following the closing date. The Series B
warrants, also exercisable for a total of 952,383 shares of common
stock, are exercisable for a period of twelve months following the
closing date.
Stockholders’ equity increased $26.7 million, or 12.2%, from
$218.9 million at December 31, 2009, to $245.6 million at December
31, 2010, with $9.3 million in net proceeds from the above
referenced stock issuance, net income to common stockholders of
$16.5 million over the twelve-month period, a $1.9 million decrease
in other comprehensive income related to the investment securities
portfolio, and $1.4 million in proceeds and tax benefits related to
the exercise of options by Company directors and officers, and
stock option expense credits. As a result of these changes, the
Company’s Tier 1 capital ratio increased from 11.48% at December
31, 2009, to 13.20% at December 31, 2010, its total qualifying
capital ratio increased from 12.73% to 14.45% and its tangible
common equity ratio increased from 5.68% to 6.57%. Sequentially,
the Company’s Tier 1 and total qualifying capital ratios are each
up 20 basis points, and its tangible common equity ratio is up 18
basis points from September 30, 2010.
CONFERENCE CALL
The Company will host a teleconference call for the financial
community on January 20, 2011, at 11:00 a.m. Eastern Standard Time
to discuss the fourth quarter 2010 financial results. The public is
invited to listen to this conference call by dialing 866-814-1917
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 20, 2011, until 11:59 p.m. Eastern
Standard Time on January 27, 2011. The public is invited to listen
to this conference call replay by dialing 888-266-2081 and entering
access code 1507552.
ABOUT VIRGINIA COMMERCE BANCORP,
INC.
Virginia Commerce Bancorp, Inc. is the parent bank holding
company for Virginia Commerce Bank, a Virginia state chartered bank
that commenced operations in May 1988. The Bank pursues a
traditional community banking strategy, offering a full range of
business and consumer banking services through twenty-eight branch
offices, one residential mortgage office and one wealth management
services office, principally to individuals and small-to-medium
size businesses in Northern Virginia and the Metropolitan
Washington, D.C. area.
NON-GAAP PRESENTATIONS
The Company prepares its financial statements under accounting
principles generally accepted in the United States, or “GAAP”.
However, this press release also refers to certain non-GAAP
financial measures that we believe, when considered together with
GAAP financial measures, provide investors with important
information regarding our operational performance. An analysis of
any non-GAAP financial measure should be used in conjunction with
results presented in accordance with GAAP.
Core operating earnings is a non-GAAP financial measure that
reflects net income excluding taxes, loan loss provisions, losses
on other real estate owned, impairment losses on securities and
provisions for unfunded commitments from net income. For the three
months ended September 30, 2010, the Company is also excluding from
net income $1.0 million in bank-owned life insurance death benefits
received. These excluded items are difficult to predict and we
believe that core operating earnings provides the Company and
investors with a valuable measure of the performance of the
Company’s operational performance and a valuable tool to evaluate
the Company’s financial results. Calculation of core operating
earnings for the three months ended December 31, 2010, December 31,
2009, and September 30, 2010 is as follows:
Three Months Ended Three Months December 31, Ended
September 30, (in thousands)
2010
2009 2010 Net
Income $ 4,542 $ 4,155 $ 6,958 Adjustments to net income:
Provision for loan losses 7,056 1,100 5,100 Loss on other real
estate owned 1,233 867 713 Impairment loss on securities 128 1,403
-- Provision for unfunded commitments -- 2,960 -- Provision for
income taxes 2,030 2,103 2,917 Death benefits received from bank
owned life insurance -- -- (1,045 )
Core Operating
Earnings $ 14,989 $ 12,588 $ 14,643
The adjusted efficiency ratio is a non-GAAP financial measure
that is computed by dividing non-interest expense, before
provisions for unfunded commitments, by the sum of net interest
income on a tax equivalent basis and non-interest income before
losses on other real estate owned. We believe that this measure
provides investors with important information about our operating
efficiency. Comparison of our adjusted efficiency ratio with those
of other companies may not be possible because other companies may
calculate the adjusted efficiency ratio differently. Calculation of
the adjusted efficiency ratio for the three months and year ended
December 31, 2010 and December 31, 2009 is as follows:
Three Months Ended Year Ended (in thousands) December
31, December 31,
2010
2009 2010
2009 Summary Operating Results:
Non-interest expense $ 15,071 $ 17,337 $ 57,186 $ 56,868 Provision
for unfunded commitments -- (2,960 ) -- (2,960 ) Total $ 15,071 $
14,377 $ 57,186 $ 53,908 Net interest income $ 27,111 $
25,243 $ 105,329 $ 91,404 Non-interest income 1,588 (548 ) 3,697
(4,352 ) Losses on other real estate owned 1,233 867 3,924 9,952
Total $ 29,932 $ 25,562 $ 112,950 $ 97,004
Efficiency
Ratio, adjusted 50.4 % 56.2 % 50.6 % 55.6 %
The tangible common equity ratio is a non-GAAP financial measure
representing the ratio of tangible common equity to tangible
assets. Tangible common equity and tangible assets are non-GAAP
financial measures derived from GAAP-based amounts. We calculate
tangible common equity for the Company by excluding the balance of
intangible assets and outstanding preferred stock issued to the
U.S. Treasury from total stockholders’ equity. We calculate
tangible assets by excluding the balance of intangible assets from
total assets. We had no intangible assets for the periods
presented. We believe that this is consistent with the treatment by
bank regulatory agencies, which exclude intangible assets from the
calculation of regulatory capital ratios. Accordingly, we believe
that these non-GAAP financial measures provide information that is
important to investors and that is useful in understanding our
capital position and ratios. However, these non-GAAP financial
measures are supplemental and are not substitutes for an analysis
based on a GAAP measure. As other companies may use different
calculations for non-GAAP measures, our presentation may not be
comparable to other similarly titled measures reported by other
companies. Calculation of the Company’s tangible common equity
ratio as of December 31, 2010, December 31, 2009, September 30,
2010, and June 30, 2010 is as follows:
(in thousands)
As of December 31,
September 30,
June 30,
2010 2009 2010
2010 Tangible common equity: Total
stockholders’ equity $ 245,594 $ 218,868 $ 247,012 $ 230,331
Less: Outstanding TARP senior preferred stock 65,445 63,993 65,082
64,719 Intangible assets -- -- -- -- Tangible common equity $
180,149 $ 154,875 $ 181,930 $ 165,612 Total tangible assets
$ 2,741,648 $ 2,725,297 $ 2,846,003 $ 2,826,807
Tangible
common equity ratio 6.57 % 5.68 % 6.39 % 5.86 %
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking statements within
the meaning of the Securities and Exchange Act of 1934, as amended,
including statements of goals, intentions, and expectations as to
future trends, plans, events or results of Company operations and
policies, including but not limited to our outlook on earnings,
including our future net interest margin, and statements regarding
asset quality, projected growth, capital position, our plans
regarding and expected future levels of our non-performing assets,
business opportunities in our markets, and general economic
conditions. When we use words such as “may”, “will”, “anticipates”,
“believes”, “expects”, “plans”, “estimates”, “potential”,
“continue”, “should”, and similar words or phrases, you should
consider them as identifying forward-looking statements. These
forward-looking statements are not guarantees of future
performance. These statements are based upon current and
anticipated economic conditions, nationally and in the Company’s
market, interest rates and interest rate policy, expected yields on
loans and investment securities, competitive factors, and other
conditions which by their nature, are not susceptible to accurate
forecast, and are subject to significant uncertainty. Because of
these uncertainties and the assumptions on which this release and
the forward-looking statements are based, actual future operations
and results may differ materially from those indicated herein.
Readers are cautioned against placing undue reliance on any such
forward-looking statements. The Company’s past results are not
necessarily indicative of future performance. For additional
information regarding factors that could affect the Company's
operations and results, see the Company’s Annual Report on Form
10-K for the year ended December 31, 2009, and other reports filed
with and furnished to the Securities and Exchange Commission.
Virginia Commerce Bancorp, Inc. Financial Highlights
(Dollars in thousands, except per share data) (Unaudited)
Three Months Ended December 31, Year Ended
December 31,
2010 2009
% Change 2010
2009 %
Change Summary Operating Results:
Interest and dividend income $ 37,106 $ 38,273
-3.0 % $ 148,826 $ 150,633 -1.2 % Interest expense 9,995 13,030
-23.3 % 43,497 59,229 -26.6 % Net interest income 27,111 25,243 7.4
% 105,329 91.404 15.2 % Provision for loan losses 7,056 1,100 541.5
% 20,594 81,913 -74.9 % Non-interest income (charges) 1,588 (548 )
389.8 % 3,697 (4,352 ) 184.9 % Non-interest expense 15,071 17,337
-13.1 % 57,186 56,868 0.6 % Income (loss) before income taxes 6,572
6,258 5.0 % 31,246 (51,729 ) -160.4 % Net income (loss) $ 4,542 $
4,155 9.3 % $ 21,540 $ (33,325 ) -164.6 % Effective dividend on
preferred stock 1,250 1,251 -0.1 % 5,002 4,539 10.2 % Net income
(loss) available to common stockholders $ 3,292 $ 2,904 13.4 % $
16,538 $ (37,864 ) -143.7 %
Performance Ratios:
Return on average assets 0.64 % 0.60 % 0.77 % -1.22 % Return on
average equity 7.26 % 7.53 % 9.22 % -13.89 % Net interest margin
3.96 % 3.78 % 3.90 % 3.45 % Efficiency ratio, adjusted 50.35 %
56.24 % 50.63 % 55.57 %
Per Share Data: Earnings
(loss) per common share-basic $ 0.11 $ 0.11 0.0 % $ 0.60 $ (1.42 )
142.3 % Earnings (loss) per common share-diluted $ 0.11 $ 0.11 0.0
% $ 0.57 $ (1.42 ) 140.1 % Average number of shares outstanding:
Basic 28,936,750 26,728,300 27,603,741 26,692,570 Diluted
30,013,335 27,014,836 28,875,993 26,692,570 As
of December 31, 2010
2009 % Change 09/30/10
06/30/10
Selected Balance Sheet Data:
Loans, net $ 2,149,591 $ 2,210,064 -2.7 % $ 2,178,034 $ 2,187,912
Investment securities 411,761 348,585 18.1 % 380,915 379,212 Assets
2,741,648 2,725,297 0.6 % 2,846,003 2,826,807 Deposits 2,247,201
2,229,327 0.8 % 2,323,478 2,314,086 Stockholders’ equity 245,594
218,868 12.2 % 247,012 230,331 Book value per common share $ 6.03 $
5.53 9.0 % $ 6.09 $ 5.91
Capital Ratios (% of risk
weighted assets): Tier 1 capital: Company 13.20 % 11.48 % 13.00 %
12.13 % Bank 12.87 % 11.41 % 12.60 % 12.09 % Total qualifying
capital: Company 14.45 % 12.73 % 14.25 % 13.38 % Bank 14.12 % 12.66
% 13.85 % 13.34 % Tier 1 leverage: Company 11.07 % 10.29 % 10.84 %
10.37 % Bank 10.86 % 10.23 % 10.52 % 10.36 % Tangible common
equity: Company 6.57 % 5.68 % 6.39 % 5.86 % Bank (1) 11.01 % 10.32
% 10.60 % 10.39 %
(1) Calculated by dividing total stockholders’ equity by
total assets, as the Bank has no intangible assets or non-common
equity.
As of December 31,
2010 2009
09/30/10 06/30/10
Asset
Quality: Non-performing assets: Non-accrual loans: Commercial $
3,719 $ 6,929 $ 5,176 $ 5,346 Real estate-one-to-four family
residential: Closed end first and seconds 5,284 5,769 6,554 4,369
Home equity lines
1,529
420 724
630 Total Real estate-one-to-four family
residential $ 6,813 $ 6,189 $ 7,278 $ 4,999 Real
estate-multi-family residential -- -- -- -- Real estate-non-farm,
non-residential: Owner Occupied 8,942 8,600 5,251 8,045 Non-owner
occupied
4,114 6,506
1,204 8,298
Total Real estate-non-farm, non-residential $ 13,056 $
15,106 $ 6,455 $ 16,343 Real estate-construction: Residential-Owner
Occupied -- 517 -- -- Residential-Builder 27,189 30,110 31,138
30,877 Commercial
6,361
6,911 6,861
6,911 Total Real estate-construction: $ 33,550
$ 37,538 $ 37,999 $ 37,788 Consumer
19
47 110
122 Total Non-accrual loans 57,157 65,809
57,018 64,598 OREO
17,165
28,499 24,395
26,477 Total non-performing assets $ 74,322 $
94,308 $ 81,413 $ 91,075 Loans 90+ days past due and still
accruing: Commercial $ -- $ 3,797 $ 149 $ 264 Real
estate-one-to-four family residential: Closed end first and seconds
-- -- -- 280 Home equity lines
242
-- 369
-- Total Real estate-one-to-four family
residential $ 242 $ -- $ 369 $ 280 Real estate-multi-family
residential -- -- -- -- Real estate-non-farm, non-residential:
Owner Occupied -- -- 361 -- Non-owner occupied
-- --
-- -- Total Real
estate-non-farm, non-residential $ -- $ -- $ 361 $ -- Real
estate-construction: Residential-Owner Occupied -- -- -- --
Residential-Builder -- 26 -- -- Commercial
--
-- --
-- Total Real estate-construction: $ --
$ 26 $ -- $ -- Consumer
--
3 100
-- Total loans 90+ days past due and still
accruing $ 242 $ 3,826 $ 979 $ 544 Total non-performing
assets and past due loans $ 74,564 $ 98,134 $ 82,392 $ 91,619
Troubled debt restructurings $ 102,996 $ 71,885 $ 105,617 $
96,976 Non-performing assets to total loans: 3.36 % 4.14 %
3.63 % 4.04 % to total assets: 2.71 % 3.46 % 2.86 % 3.22 %
Non-performing assets and past due loans to total loans: 3.37 %
4.31 % 3.67 % 4.06 % to total assets: 2.72 % 3.60 % 2.90 % 3.24 %
Allowance for loan losses to total loans 2.82 % 2.86 % 2.80 % 2.77
% Allowance for loan losses to non-performing loans 108.79 % 93.56
% 108.24 % 95.71 % Total allowance for loan losses $ 62,442
$ 65,152 $ 62,776 $ 62,345 As of
December 31, 2010
2009 09/30/10 06/30/10
Loans 30 to 89 days past due Commercial $ 2,622 $ 866 $
1,237 $ 73 Real estate-one-to-four family residential: Closed end
first and seconds 4,109 352 1,813 3,374 Home equity lines
2,605 139
786 830 Total Real
estate-one-to-four family residential $ 6,714 $ 491 $ 2,599 $ 4,204
Real estate-multi-family residential -- -- -- -- Real
estate-non-farm, non-residential: Owner Occupied 1,909 1,854 12,463
1,612 Non-owner occupied
--
-- 174
2,129 Total Real estate-non-farm,
non-residential $ 1,909 $ 1,854 $ 12,637 $ 3,741 Real
estate-construction: Residential-Owner Occupied -- -- -- --
Residential-Builder -- 1,370 1,372 2,270 Commercial
-- --
-- -- Total real
estate-construction: $ -- $ 1,370 $ 1,372 $ 2,270 Farmland -- -- --
-- Consumer
347 141
36 55
Total loans 30 to 89 days past due $ 11,592 $ 4,722 $ 17,881 $
10,343 For nine For six For the year ended months months
December 31, ended ended 2010
2009 09/30/10 06/30/10
Net charge-offs Commercial $ 4,903 $ 15,578 $ 3,919 $ 3,748
Real estate-one-to-four family residential: Closed end first and
seconds 3,402 1,825 2,368 2,249 Home equity lines
254 1,465
77 88 Total Real
estate-one-to-four family residential $ 3,656 $ 3,290 $ 2,445 $
2,337 Real estate-multi-family residential 1,050 -- -- -- Real
estate-non-farm, non-residential: Owner Occupied 2,663 1,901 1,350
1,273 Non-owner occupied
2,540
58 1,479
1,336 Total Real estate-non-farm,
non-residential $ 5,203 $ 1,959 $ 2,829 $ 2,609 Real
estate-construction: Residential-Owner Occupied 324 1,012 368 116
Residential-Builder 8,077 17,556 6,361 2,581 Commercial
(233 ) 13,492
(233 ) (283
) Total real estate-construction: $ 8,168 $ 32,060 $
6,496 $ 2,414 Farmland -- -- -- -- Consumer
325
349 225
138 Total net charge-offs $
23,305 $ 53,236 $ 15,914 $ 11,246 Net charge-offs to average loans
outstanding 1.03 % 2.34 % 0.70 % 0.49 % Total provision for
loan losses $ 20,594 $ 81,913 $ 13,538 $ 8,438 As of
December 31, 2010 2009 % Change
09/30/10 % Change
Loan Portfolio: Commercial $ 218,600 $ 238,327 -8.3 % $
207,909 5.14 % Real estate-one to four family residential: Closed
end first and seconds 269,514 271,501 -0.7 % 288,318 -6.5 % Home
equity lines
131,397
135,233 -2.8 %
134,159 -2.1 % Total Real
estate-one-to-four family residential $ 400,911 $ 406,734 -1.4 % $
422,477 -5.1 % Real estate-multifamily residential 77,316 66,799
15.7 % 86,896 -11.0 % Real estate-non-farm, non-residential: Owner
Occupied 464,368 452,776 2.6 % 476,812 -2.61 % Non-owner occupied
674,448 673,169
0.2 % 662,695
1.77 % Total Real estate-non-farm,
non-residential $ 1,138,816 $ 1,125,945 1.1 % $ 1,139,507 -0.06 %
Real estate-construction: Residential-Owner Occupied 16,819 15,161
10.9 % 15,152 11.0 % Residential-Builder 160,763 224,855 -28.5 %
174,896 -8.08 % Commercial
187,028
188,276 -0.7 %
185,444 0.85 % Total Real
estate-construction: $ 364,610 $ 428,292 -14.9 % $ 375,492 -2.9 %
Farmland 2,418 2,675 -9.6 % 2,410 0.33 % Consumer
12,557 10,368 21.1
% 9,794 28.2
% Total loans $ 2,215,228 $ 2,279,140 -2.8 % $
2,244,485 -1.3 % Less unearned income 3,195 3,924 -18.6 % 3,675
-13.1 % Less allowance for loan losses
62,442
65,152 -4.2 %
62,776 -0.5 % Loans, net $
2,149,591 $ 2,210,064 -2.7 % $ 2,178,034 -1.3 % As of
December 31, 2010
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
$ 3,971 2.2 % $ -- -- 0.3 % Montgomery, MD 2,336 1.3 % 4,108 2.3 %
2.0 % Prince Georges, MD 18,594 10.5 % 739 0.4 % 0.2 % Other
Counties in MD 5,416 3.1 % 1,077 0.6 % 0.9 % Arlington/Alexandria,
VA 23,935 13.5 % 2,848 1.6 % -- Fairfax, VA 40,586 22.8 % 2,284 1.3
% 0.2 % Culpeper/Fauquier, VA 4,447 2.5 % 3,695 2.1 % 0.8 %
Frederick, VA 6,281 3.5 % 6,250 3.5 % -- Loudoun, VA 32,846 18.5 %
770 0.4 % -- Prince William, VA 7,867 4.4 % 1,054 0.6 % --
Spotsylvania, VA 296 0.2 % -- -- -- Stafford, VA 20,421 11.5 %
4,364 2.5 % 0.2 % Other Counties in VA 8,987 5.1 % -- -- 0.1 %
Outside VA, D.C. & MD
1,599
0.9 % --
-- -- $ 177,582 100.0 % $
27,189 15.3 % 4.7 % As of December 31, 2010
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
$ 10,214 5.5 % $ -- -- -- Montgomery, MD 1,365 0.7 % -- -- --
Prince Georges, MD 12,492 6.7 % -- -- -- Other Counties in MD 3,396
1.8 % -- -- -- Arlington/Alexandria, VA 9,312 5.0 % -- -- --
Fairfax, VA 28,390 15.1 % 2,800 1.5 % -0.1 % Culpeper/Fauquier, VA
3,020 1.6 % -- -- -- Henrico, VA 849 0.5 % -- -- -- Loudoun, VA
24,790 13.3 % 1,497 0.8 % -- Prince William, VA 58,198 31.1 % 2,064
1.1 % -- Spotsylvania, VA 2,715 1.5 % -- -- -- Stafford, VA 29,801
15.9 % -- -- -- Other Counties in VA 2,486 1.3 % -- -- -- Outside
VA, D.C. & MD
-- --
-- -- --
$ 187,028 100.0 % $ 6,361 3.4 % -0.1 % As of
December 31, 2010
Non-Farm/Non-ResidentialBy
County/Jurisdiction of Origination:
TotalOutstandings
Percentageof Total
Non-accrualLoans
Non-accrualsas a % ofOutstandings
Net charge-offs as a % ofOutstandings
District of Columbia $ 79,822 7.0% $ -- -- --
Montgomery, MD 35,477 3.1% -- -- 0.1% Prince Georges, MD 47,455
4.2% 719 0.1% -- Other Counties in MD 53,048 4.7% -- -- --
Arlington/Alexandria, VA 180,863 15.8% 2,341 0.2% -- Fairfax, VA
262,366 23.0% 3,699 0.3% -- Culpeper/Fauquier, VA 5,728 0.5% -- --
-- Frederick, VA 7,289 0.6% -- -- -- Henrico, VA 29,365 2.6% -- --
0.1% Loudoun, VA 117,906 10.4% 2,102 0.2% 0.2% Prince William, VA
206,443 18.1% 909 0.1% -- Spotsylvania, VA 20,102 1.8% -- -- --
Stafford, VA 21,382 1.9% -- -- -- Other Counties in VA 63,889 5.6%
3,286 0.3% 0.1% Outside VA, D.C. & MD
7,681
0.7% -- --
-- $ 1,138,816 100.0% $ 13,056 1.1% 0.5% Of
this total of $1.1 billion in non-farm/non-residential real estate
loans, approximately $71.0 million will mature in 2011, $70.1
million in 2012 and $101.7 million in 2013.
As of December 31, 2010
2009 % Change 9/30/10 % Change
Investment Securities (at book value): Available-for-sale:
U.S. Government Agency obligations $ 310,610 $ 247,134 25.7 % $
279,631 11.1 % Pooled trust preferred securities 430 2,031 -78.8 %
1,198 -64.1 % Obligations of states and political subdivisions
63,463 42,356
49.8 % 61,232
3.6 % $ 374,503 $ 291,521 28.5 % $
342,061 9.5 % Held-to-maturity: U.S. Government Agency obligations
$ 6,113 $ 12,323 -50.4 % $ 7,047 -13.3 % Obligations of states and
political subdivisions
31,145
44,741 -30.4 %
31,807 -2.1 % $ 37,258 $
57,064 -34.7 % $ 38,854 -4.1 %
Virginia Commerce Bancorp, Inc. Consolidated Balance Sheets
(Dollars in thousands, except per share data) As of December 31,
(Unaudited) 2010 2009
Assets Cash and due from banks
$ 36,932 $ 25,211 Investment securities (fair value: 2010,
$412,654; 2009, $349,836) 411,761 348,585 Restricted stocks, at
cost 11,751 11,751 Federal funds sold 10,455 -- Loans held-for-sale
10,049 6,492 Loans, net of allowance for loan losses of $62,442 in
2010 and $65,152 in 2009 2,149,591 2,210,064 Bank premises and
equipment, net 12,000 13,794 Accrued interest receivable 10,003
10,537
Other real estate owned, net of valuation
allowance of $6,782 in 2010, and $9,067 in 2009
17,165
28,499 Other assets 71,941 70,364 Total assets
$ 2,741,648 $ 2,725,297
Liabilities and
Stockholders’ Equity Deposits Demand deposits $ 264,744
$ 239,604 Savings and interest-bearing demand deposits 1,201,288
985,152 Time deposits 781,169 1,004,571 Total
deposits $ 2,247,201 $ 2,229,327 Securities sold under agreement to
repurchase and federal funds purchased 152,726 176,729 Other
borrowed funds 25,000 25,000 Trust preferred capital notes 66,314
66,057 Accrued interest payable 2,751 4,014 Other liabilities
2,062 5,302 Total liabilities $ 2,496,054 $
2,506,429
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 $ 65,445 $
63,993 Common stock, $1.00 par, 50,000,000 shares authorized,
issued and outstanding 2010, 28,962,935 including 9,335 in unvested
restricted stock issued; 2009, 26,744,545 28,954 26,745 Surplus
105,056 96,588 Warrants 8,520 8,520 Retained earnings 39,208 22,671
Accumulated other comprehensive income, net (1,589 )
351 Total stockholders’ equity $ 245,594 $ 218,868 Total
liabilities and stockholders’ equity $ 2,741,648 $ 2,725,297
Virginia Commerce Bancorp, Inc. Consolidated
Statements of Operations (Dollars in thousands except per share
data) (Unaudited) Three Months Ended Year Ended December 31,
December 31, 2010 2009 2010 2009
Interest and dividend income: Interest and
fees on loans $ 33,461 $ 34,212 $ 133,599 $ 134,548 Interest and
dividends on investment securities: Taxable 2,919 3,527 12,641
14,050 Tax-exempt 587 414 2,043 1,591 Dividends on restricted
stocks 89 90 356 355 Interest on federal funds sold 50
30 187 89 Total interest
and dividend income $ 37,106 $ 38,273 $ 148,826
$ 150,633
Interest expense: Deposits $ 7,490 $ 10,522
$ 33,462 $ 49,598
Securities sold under agreement to
repurchase and federal funds purchased
990 998 4,012 3,475 Other borrowed funds 271 271 1,077 1,077 Trust
preferred capital notes 1,244 1,239
4,946 5,079 Total interest expense $ 9,995
$ 13,030 $ 43,497 $ 59,229
Net interest
income $ 27,111 $ 25,243 $ 105,329 $ 91,404 Provision for loan
losses 7,056 1,100 20,594
81,913 Net interest income after provision for loan losses $
20,055 $ 24,143 $ 84,735 $ 9,491
Non-interest income (charges): Service charges and other
fees $ 821 $ 923 $ 3,376 $ 3,606 Non-deposit investment services
commissions 302 156 831 600 Fees and net gains on loans
held-for-sale 1,700 538 3,437 2,912 Loss on other real estate owned
(1,233) (867) (3,924) (9,952) Gain on sale of securities -- -- 139
-- Impairment loss on securities (128) (1,403) (1,647) (1,821)
Other 126 105 1,485
303 Total non-interest income (charges) $ 1,588 $
(548) $ 3,697 $ (4,352)
Non-interest expense:
Salaries and employee benefits $ 6,751 $ 5,780 $ 24,990 $ 23,040
Occupancy expense 2,417 2,583 9,951 10,253 FDIC insurance 1,324
1,311 5,277 5,411 Provision for unfunded commitments -- 2,960 --
2,960 Franchise tax expense 720 775 2,875 3,100 Data processing
expense 644 662 2,450 2,436 Other operating expense 3,215
3,266 11,643 9,668 Total
non-interest expense $ 15,071 $ 17,337 $ 57,186
$ 56,868 Income (loss) before taxes $ 6,572 $ 6,258 $ 31,246
$ (51,729) Provision (benefit) for income taxes 2,030
2,103 9,706 (18,404)
Net
income (loss) $ 4,542 $ 4,155 $ 21,540 $
(33,325) Effective dividend on preferred stock 1,250
1,251 5,002 4,539
Net income
(loss) available to common stockholders $ 3,292 $ 2,904 $
16,538 $ (37,864) Earnings (loss) per common share, basic $ 0.11 $
0.11 $ 0.60 $ (1.42) Earnings (loss) per common share, diluted $
0.11 $ 0.11 $ 0.57 $ (1.42)
Virginia Commerce Bancorp, Inc.
Consolidated Average Balances, Yields, and Rates Three Months Ended
December 31, (Unaudited)
2010 2009 (Dollars in thousands)
AverageBalance
InterestIncome-Expense
AverageYields/Rates
AverageBalance
InterestIncome-Expense
AverageYields/Rates
Assets Securities (1) $ 406,243 $ 3,506 3.64 % $ 361,179 $
3,941 4.51 % Restricted stock 11,752 89 3.06 % 11,752 90 3.08 %
Loans, net of unearned income (2) 2,241,720 33,461 5.93 % 2,245,065
34,212 6.06 % Interest-bearing deposits in other banks 385 0 0.08 %
93 -- 0.04 % Federal funds sold 81,314 50
0.24 % 53,164 30 0.22 %
Total
interest-earning assets $ 2,741,414 $ 37,106 5.41 % $ 2,671,253
$ 38,273 5.71 % Other assets 71,761 73,674
Total
Assets $ 2,813,175 $ 2,744,927
Liabilities and
Stockholders’ Equity Interest-bearing deposits: NOW accounts $
340,856 $ 593 0.69 % $ 252,373 $ 771 1.21 % Money market accounts
168,790 454 1.07 % 155,725 558 1.42 % Savings accounts 713,964
2,283 1.27 % 542,167 2,493 1.82 % Time deposits 794,684
4,160 2.08 % 1,059,948
6,700 2.51 % Total interest-bearing deposits $ 2,018,294 $
7,490 1.47 % $ 2,010,213 $ 10,522 2.08 % Securities sold under
agreement to repurchase and federal funds purchased 182,480 990
2.15 % 178,779 998 2.21 % Other borrowed funds 25,000 271 4.25 %
25,000 271 4.25 % Trust preferred capital notes 66,281
1,244 7.34 % 66,026 1,239
7.34 %
Total interest-bearing liabilities $ 2,292,055
$ 9,995 1.73 % $ 2,280,018 $ 13,030 2.27 % Demand deposits and
other liabilities 272,813 246,104
Total
liabilities $ 2,564,868 $ 2,526,122 Stockholders’ equity
248,307 218,805
Total liabilities and stockholders’
equity $ 2,813,175 $ 2,744,927 Interest rate spread 3.68 % 3.44
% Net interest income and margin $ 27,111 3.96 % $ 25,243 3.78 %
(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 $1.0 million and $300 thousand for
the three months ended December 31, 2010, and 2009, respectively.
Virginia Commerce Bancorp, Inc. Consolidated Average Balances,
Yields, and Rates Year Ended December 31, (Unaudited)
2010 2009 (Dollars in thousands)
AverageBalance
InterestIncome-Expense
AverageYields/Rates
AverageBalance
InterestIncome-Expense
AverageYields/Rates
Assets Securities (1) $ 372,480 $ 14,684 4.12 % $ 334,873 $
15,641 4.82 % Restricted stock 11,752 356 3.03 % 11,589 355 3.06 %
Loans, net of unearned income (2) 2,259,560 133,599 5.92 %
2,279,294 134,548 5.91 % Interest-bearing deposits in other banks
249 0 0.09 % 91 0 0.09 % Federal funds sold 79,882
187 0.23 % 42,718 89 0.20
%
Total interest-earning assets $ 2,723,923 $ 148,826 5.50 %
$ 2,668,565 $ 150,633 5.67 % Other assets 79,140
67,737
Total Assets $ 2,803,063 $ 2,736,302
Liabilities and Stockholders’ Equity Interest-bearing
deposits: NOW accounts $ 335,716 $ 2,971 0.89 % $ 228,189 $ 2,825
1.24 % Money market accounts 157,071 1,872 1.19 % 157,216 2,302
1.46 % Savings accounts 663,479 9,759 1.47 % 381,042 7,764 2.04 %
Time deposits 882,832 18,860 2.14 %
1,221,328 36,707 3.01 % Total
interest-bearing deposits $ 2,039,098 $ 33,462 1.64 % $ 1,987,775 $
49,598 2.50 % Securities sold under agreement to repurchase and
federal funds purchased 183,338 4,012 2.19 % 186,106 3,475 1.87 %
Other borrowed funds 25,000 1,077 4.25 % 25,000 1,077 4.25 % Trust
preferred capital notes 66,186 4,946
7.37 % 65,930 5,079 7.60 %
Total
interest-bearing liabilities $ 2,313,622 $ 43,497 1.88 % $
2,264,811 $ 59,229 2.62 % Demand deposits and other liabilities
255,871 231,554
Total liabilities $ 2,569,493
$ 2,496,365 Stockholders’ equity 233,570 239,937
Total liabilities and stockholders’ equity $ 2,803,063 $
2,736,302 Interest rate spread 3.62 % 3.05 % Net interest income
and margin $ 105,329 3.90 % $ 91,404 3.45 % (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 $3.3 million for the year ended December 31, 2010,
and 2009, respectively.
Virginia Commerce Bancorp (MM) (NASDAQ:VCBI)
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