Virginia Commerce Bancorp, Inc. Reports Third Quarter Results
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ARLINGTON, Va.--(BUSINESS WIRE)-- Virginia Commerce Bancorp, Inc. (the "Company") (Nasdaq: VCBI), parent company of Virginia Commerce Bank (the "Bank"), today reported a net loss of $31.1 million, or $1.17 per diluted common share, for the third quarter of 2009, compared with earnings of $2.7 million, or $0.10 per diluted common share, for the same period in 2008. The third quarter loss was primarily due to $49.0 million in provisions for loan losses versus $8.3 million for the three months ended September 30, 2008, and a $9.1 million loss on other real estate owned. Total non-performing assets and loans 90+ days past due decreased $16.1 million from June 30, 2009, and net-charge-offs of $17.9 million were taken during the quarter. With this increase in provisions, the allowance for loan losses rose from 1.72% of total loans as of June 30, 2009, to 3.15% as of September 30, 2009.
Peter A. Converse, Chief Executive Officer, commented, "We are pleased to report ongoing progress in reducing non-performing assets and loans 90+ days past due, as the total has declined for two consecutive quarters from $162.1 million as of March 31, 2009, to $123.5 million this quarter-end. For the current quarter, non-accrual loans decreased $20.9 million and loans 90+ days past due decreased $3.3 million, while other real estate owned increased by $8.2 million. Management remains cautiously optimistic that asset quality will continue to improve."
Converse continued, "Improving credit metrics undoubtedly are being achieved at the expense of increased loan loss reserve provisioning and charge-offs, as we remain focused on aggressive problem loan resolution. In analyzing the level of our reserves relative to existing problem credits, peer group coverage ratios and the uncertain pace of economic recovery, we determined that increasing reserves with a provision of $49 million was warranted. While that provision significantly impacted earnings, it more than doubled our non-performing loan coverage ratio to 80.5 %, which we feel provides adequate cushion. It should not be interpreted, however, as an indication of heightened concern by management about large, imminent losses or increasing deterioration in the loan portfolio. Rather, management felt it was a prudent risk management measure that positions our Bank in line with current industry and peer standards."
"Despite the substantive costs of working out problem loans, we are encouraged by the strength of our core operating earnings, which have increased over the last two quarters from $9.6 million in the first quarter to $12.0 million this quarter. We expect that these earnings will remain in the $10-12 million range for the foreseeable future and consider them indicative of our bottom line potential once we get beyond our credit issues. Contributing to core earnings performance has been a rising net interest margin, which increased sequentially from 3.35% to 3.52%. The improving margin in turn has benefited from continued improvement in our deposit mix. Certificates of deposit as a percent of total deposits have declined further, from a high of 67.2% at year-end 2008, to 49.9% this quarter, as we enjoy greater success in generating lower cost deposits. Core earnings also continue to benefit from vigilant cost containment, exclusive of collection costs."
Converse concluded, "The loss this quarter is disappointing to say the least. However, it has enabled us to raise the allowance for loan losses to a level that provides prudent coverage of the risk in our non-performing loans and overall portfolio, thereby positioning us for a quicker return to profitability. While absorbing losses year-to-date in addressing problem loans and building reserves, the Company has remained well-capitalized with the Tier 1 capital ratio at 11.53% and the total qualifying capital ratio at 12.78% as of September 30."
SUMMARY REVIEW OF FINANCIAL PERFORMANCE
Net (Loss) Income
For the three months ended September 30, 2009, the Company recorded a net operating loss of $29.9 million. After an effective dividend of $1.2 million to the U.S. Treasury on preferred stock, the Company reported a net loss to common stockholders of $31.1 million, or $1.17 per diluted common share, compared to earnings of $2.7 million, or $0.10 per diluted common share, in the third quarter of 2008. For the nine months ended September 30, 2009, the Company reported a net loss to common stockholders of $40.8 million compared to earnings of $11.7 million for the same period in 2008. Earnings for both the three and nine-month periods were significantly impacted by loan loss provisions of $49.0 million and $80.8 million, respectively, taken in consideration of the level of non-performing assets and $47.2 million in net charge-offs in 2009. Earnings were also impacted by a $9.1 million loss on other real estate owned.
Before taxes, loan loss provisions and losses on other real estate owned, core operating earnings for the three months ended September 30, 2009, of $12.0 million were down slightly compared to $12.2 million for the three months ended September 30, 2008. However, on a sequential basis, core operating earnings were up $1.6 million compared to $10.4 million for the three months ended June 30, 2009, and are up $2.4 million compared to core operating earnings of $9.6 million for the three months ended March 31, 2009. This positive trend is due to continued strong operating expense controls and improvement in the net interest margin.
Asset Quality and Provisions For Loan Losses
Provisions for loan losses were $49.0 million for the three months ended September 30, 2009, compared to $8.3 million in the same period in 2008, as non-performing assets and loans 90+ days past due increased from $85.3 million at September 30, 2008, to $123.5 million at September 30, 2009. For the nine months ended September 30, 2009, provisions totaled $80.8 million compared to $16.1 million for the nine months ended September 30, 2008, with 2009 year-to-date net charge-offs of $47.2 million compared to $5.7 million in 2008. As a result, the coverage of loan loss reserves to non-performing loans rose from 35.0% at June 30, 2009, to 80.5% as of this quarter-end, and the allowance for loan losses increased from 1.72% of total loans to 3.15%. The significant quarterly increase in reserves is not an indication of heightened concern or expectations of further credit deterioration. Rather, it is an attempt to increase the coverage ratio on a one-time basis relative to the current level of non-performing loans and in recognition of continued economic uncertainty in regard to the commercial real estate market. Progress with respect to management's commitment to aggressive problem loan resolution continues, as total non-performing assets and loans 90+ days past due declined by $16.1 million during the quarter from $139.6 million, or 5.17% of total assets, to $123.5 million, or 4.52% of total assets. Non-accrual loans decreased by $20.9 million, loans 90+ days past due decreased by $3.3 million and other real estate owned (foreclosed properties) increased by $8.2 million. Although loans past due 30 to 89 days increased $11.6 million during the quarter to $30.9 million, they remain significantly lower from their peak level of $55.7 million at March 31, 2009. Approximately 28% of loans past due 30 to 89 days relate to a single non-farm, non-residential credit.
Non-performing loans continue to be concentrated in residential and commercial construction and land development loans in outer sub-markets hardest hit by the residential downturn and commercial and consumer credits experiencing the after shocks in sub-contracting businesses and workforce employment. Overall, as of September 30, 2009, $48.7 million, or 56.0%, of non-performing loans represented acquisition, development and construction loans, $19.1 million, or 21.9%, represented non-farm, non-residential loans, $9.9 million, or 11.4%, represented commercial and industrial loans and $9.1 million, or 10.5%, represented loans on one-to-four family residential properties.
Charge-offs of $17.9 million for the quarter were up $1 million sequentially and primarily related to the write-down to current fair market value of acquisition, development and construction loans of $4.9 million and commercial and industrial loans of $12.2 million. The acquisition, development and construction loan write-down was in anticipation of pending sale contracts and/or foreclosures over the next quarter. The commercial and industrial loan write-down was attributed primarily to an $8.4 million charge-off relating to participation in a rapidly deteriorating shared national credit engaged in the development of continuing care retirement communities and a $3.6 million charge-off relating to the auction of heavy construction equipment financed for a site development contractor and the subsequent restructuring of related loans.
Net Interest Income
Net interest income for the third quarter of $23.4 million was up $1.5 million, or 6.8% over the same quarter last year, due to overall balance sheet growth, and an increase in the net interest margin from 3.38% in the third quarter of 2008 to 3.52% for the current three-month period. Year-to-date net interest income of $66.2 million was up 6.6%, compared to $62.1 million for the same period in 2008. On a sequential basis, net interest income increased $1.4 million as the net interest margin rose seventeen basis points from 3.35% in the second quarter of 2009, primarily due to a twenty-two basis point drop in the cost of interest-bearing liabilities as the yield on earning assets remained unchanged. This drop in the cost of funds is due to significant reductions in the level of time deposits, increased levels of demand deposits and increased levels of lower rate interest-bearing transaction accounts.
Year-over-year, the net interest margin was unchanged at 3.34%, as yields on loans are down 86 basis points due to reductions in the prime rate and increases in the level of non-performing loans, while the cost of interest-bearing liabilities are down 89 basis points due to the changes noted above in the funding mix. With market rates expected to remain mostly unchanged through the remainder of 2009, Management anticipates the fourth quarter margin to average from 3.50% to 3.60%.
Non-Interest Income
For the three months ended September 30, 2009, non-interest income reflects a loss of $7.6 million compared to $1.6 million in income in the same period of 2008 due to a $9.1 million loss on other real estate owned and a $280 thousand impairment loss on securities. The $9.1 million OREO loss resulted from carrying value write-downs of four land development assets, based on pending sales contracts/offers due to settle this fourth quarter or the first quarter of next year. These losses are consistent with management's commitment to aggressive disposition of OREO, rather than land banking assets with uncertain future upside potential. Excluding these losses, non-interest income rose $195 thousand quarter-over-quarter with the majority of the increase in fees and net gains on mortgage loans held-for-sale. Results were similar on a year-over-year basis with non-interest income increasing $742 thousand, excluding the $9.1 million loss on other real estate owned and $418 thousand in impairment losses on securities, due again to higher levels of fees and net gains on mortgage loans held-for-sale.
Non-Interest Expense
Non-interest expense increased $1.7 million, or 14.8%, from $11.3 million in the third quarter of 2008, to $12.9 million, and was up $6.3 million, or 18.9%, for the nine months ended September 30, 2009, to $39.5 million. Compared to the second quarter of 2009, non-interest expense is down $664 thousand. The majority of the year-over-year increases were due to significantly higher FDIC insurance premiums, including a special one-time assessment of $1.2 million in the second quarter of 2009, as well as higher legal and professional services expenses associated with the resolution of non-performing loans and OREO. As a result of these increases in expenses, the efficiency ratio rose from 47.9% in the third quarter of 2008 to 52.1% in the current period. Sequentially, the ratio improved from 56.7%.
Loans
Over the past twelve months, loans, net of allowance for loan losses, decreased $78.5 million, or 3.5%, to $2.15 billion, as non-farm, non-residential real estate loans increased $67.2 million, or 6.7%, and one-to-four family residential loans increased $69.7 million, or 21.2%, while real estate construction loans fell by $155.8 million, or 26.2%, and commercial and industrial loans were down 10.3%. Since December 31, 2008, net loans are down $118.8 million, or 5.3%, with non-farm non-residential loans up $59.0 million, construction loans down $146.6 million, and one-to-four family residential loans for portfolio up $41.4 million. In addition, one-to-four family residential loans originated for sale totaled $30.4 million for the quarter ended September 30, 2009, and $156.3 million year-to-date, compared to $17.2 million and $61.5 million for the same periods in 2008. This contributed to the gain in non-interest income as noted earlier.
Year-to-date loan production has been negatively impacted by declining economic activity and demand in both the business and consumer sectors, a reallocation of personnel resources to problem loan identification and resolution and a strategic decision to moderate loan growth in the face of an uncertain economy and heightened risk factors. Going forward, lending efforts will be focused on building greater market share in commercial and industrial lending, especially in sectors forecast for growth, such as government contract lending and select service industries with strategic hiring, marketing campaigns and calling efforts.
Deposits
Year-over-year, deposits increased $79.0 million, or 3.7%, from $2.1 billion to $2.2 billion, with demand deposits increasing $21.9 million, or 10.6%, savings and interest-bearing demand deposits increasing by $354.9 million, or 166.1%, and time deposits falling $297.9 million, or 21.1%. Sequentially, deposits were up $43.3 million, or 2.0%, with demand deposits decreasing by $11.3 million, time deposits decreasing by $77.1 million, and savings and interest-bearing demand accounts growing $131.7 million. That increase was due primarily to success with the Company's MEGA Savings and MEGA Checking accounts. The declines in time deposits are reflective of lower loan volume and a strategy to reduce the Bank's historically heavy reliance on certificates of deposit as a funding source with deposit gathering efforts and cross-selling activities focused on demand deposits, savings and interest-bearing demand accounts. The proportionate share of time deposits to total deposits has declined from 67.2% at year-end 2008 to 49.9% as of September 30, 2009. It is expected that the percentage share of time deposits will further decline to 45.0% or less by year-end, including a planned reduction in brokered certificates of deposit from $60.1 million at September 30, 2009, to approximately $30 million.
Repurchase Agreements and Fed Funds Purchased
Repurchase agreements, the majority of which represent sweep funds of significant commercial demand deposit customers, and Fed funds purchased decreased $12.5 million, or 6.3%, year-over-year, to $185.5 million at September 30, 2009. Since December 31, 2008, this funding source is down $2.4 million.
Investment Securities
Investment securities increased $51.2 million, or 16.1%, from $317.9 million at September 30, 2008, to $369.1 million at September 30, 2009, and were up $48.2 million sequentially from the second quarter. The majority of the current period and year-over-year increase in securities was concentrated in U.S. Government agency debt obligations and mortgage-backed securities. The portfolio also contains four pooled trust preferred collateralized debt obligations totaling $8.9 million, for which the Bank performs a quarterly analysis for other than temporary impairment due to significantly depressed current market quotes. The analysis includes stress tests on the underlying collateral and cash flow estimates based on the current and projected future levels of deferrals and defaults within each pool. Based on the most recent analysis, the Bank recorded a total impairment loss of $280 thousand for the third quarter on two of the four pools.
Capital Levels and Stockholders' Equity
Stockholders' equity increased $37.6 million, or 21.1%, from $178.4 million at September 30, 2008, to $216.0 million at September 30, 2009, with the issuance of $71 million in preferred stock to the U.S. Treasury under the Treasury's Capital Purchase Program, and a net loss to common stockholders of $39.7 million over the twelve-month period. In connection with the issuance of the preferred stock, the Company also issued warrants to purchase an aggregate of 2.7 million shares of common stock to the Treasury. As a result of this overall increase in stockholders' equity, the Company's Tier 1 Capital ratio increased from 10.21% at September 30, 2008, to 11.53% as of September 30, 2009, and its total qualifying capital ratio increased from 11.59% to 12.78%. Sequentially, the Tier 1 ratio declined from 12.72% and the total qualifying ratio decreased from 13.97%.
CONFERENCE CALL
Virginia Commerce Bancorp will host a teleconference call for the financial community on October 27, 2009, at 11:00 a.m. Eastern Daylight Time to discuss the third quarter 2009 financial results. The public is invited to listen to this conference call by dialing 866-244-4576 at least 10 minutes prior to the call.
A replay of the conference call will be available from 12:00 p.m. Eastern Daylight Time on October 27, 2009, until 11:59 p.m. Eastern Standard Time on November 3, 2009. The public is invited to listen to this conference call replay by dialing 888-266-2081 and entering access code 1406981.
ABOUT VIRGINIA COMMERCE BANCORP, INC.
Virginia Commerce Bancorp, Inc. is the parent bank holding company for Virginia Commerce Bank, a Virginia state chartered bank that commenced operations in May 1988. The Bank pursues a traditional community banking strategy, offering a full range of business and consumer banking services through twenty-seven branch offices, one residential mortgage office and one investment services office, principally to individuals and small-to-medium size businesses in Northern Virginia and the Metropolitan Washington, D.C. area.
NON-GAAP PRESENTATIONS
This press release refers to the efficiency ratio, which is computed by dividing non-interest expense by the sum of net interest income on a tax equivalent basis and non-interest income before losses on OREO. This is a non-GAAP financial measure that we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate the efficiency ratio differently. The Company, in referring to its net income, is referring to income under accounting principals generally accepted in the United States, or "GAAP".
FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as "may," "will," "anticipates," "believes," "expects," "plans," "estimates," "potential," "continue," "should," and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company's market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast, and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results may differ materially from those indicated herein. Please refer to our Annual Report on Form 10-K for the year-ended December 31, 2008, for a discussion of these factors. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company's past results are not necessarily indicative of future performance.
Virginia Commerce Bancorp, Inc.
Financial Highlights
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended September 30, Nine months Ended September 30,
2009 2008 % Change 2009 2008 % Change
Summary
Operating
Results:
Interest and
dividend $ 37,623 $ 40,567 -7.3% $ 112,360 $ 121,030 -7.2%
income
Interest 14,219 18,658 -23.8% 46,199 58,942 -21.6%
expense
Net interest
and dividend 23,404 21,909 6.8% 66,161 62,088 6.6%
income
Provision for 49,000 8,300 490.4% 80,813 16,068 402.9%
loan losses
Non-interest (7,573) 1,597 -574.2% (3,804) 4,957 -176.7%
income
Non-interest 12,922 11,258 14.8% 39,531 33,256 18.9%
expense
(Loss) income
before income (46,091) 3,948 -1267.5% (57,987) 17,721 -427.2%
taxes
Net (loss) $(29,887) $ 2,673 -1218.1% $(37,480) $ 11,742 -419.2%
income
Effective
dividend on 1,251 -- N/A 3,288 -- N/A
preferred
stock
Net (loss)
income
available to $(31,138) $ 2,673 -1264.9% $(40,768) $ 11,742 -447.2%
common
stockholders
Performance
Ratios:
Return on
average -4.34% 0.40% -1.83% 0.61%
assets
Return on
average -49.33% 5.98% -20.36% 8.91%
equity
Net interest 3.52% 3.38% 3.34% 3.34%
margin
Efficiency 52.11% 47.89% 55.42% 49.60%
ratio (1)
Per Share
Data:
Net (loss)
income per $(1.17) $0.10 -1270.0% $(1.53) $0.44 -447.7%
common
share-basic
Net (loss)
income per $(1.17) $0.10 -1270.0% $(1.53) $0.43 -455.8%
common
share-diluted
Average
number of
shares
outstanding:
Basic 26,694,898 26,566,711 26,691,490 26,550,757
Diluted 26,925,625 27,059,996 26,974,070 27,183,397
As of September 30,
2009 2008 % Change 6/30/09 3/31/09
Selected
Balance Sheet
Data:
Loans, net $2,154,252 $2,232,779 -3.5% $2,217,945 $2,243,960
Investment 369,059 317,862 16.1% 309,090 339,721
securities
Assets 2,734,112 2,661,688 2.7% 2,699,494 2,772,888
Deposits 2,234,804 2,155,842 3.7% 2,191,473 2,239,365
Stockholders' 215,994 178,357 21.1% 243,013 249,868
equity
Book value
per common $5.43 $6.71 -19.1% $6.44 $6.70
share
Capital
Ratios:
Tier 1
capital:
Company 11.53% 10.21% 12.72% 12.95%
Bank 11.48% 10.32% 12.68% 13.07%
Total
qualifying
capital:
Company 12.78% 11.59% 13.97% 14.35%
Bank 12.73% 11.57% 13.93% 14.32%
Tier 1
leverage:
Company 10.21% 9.11% 11.18% 11.31%
Bank 10.17% 9.23% 11.35% 11.44%
Tangible
common
equity:
Company 5.30% 6.70% 6.37% 6.45%
Bank 10.20% 9.08% 11.34% 11.35%
Computed by dividing non-interest expense by the sum of net interest
(1) income on a tax-equivalent basis using a 35% rate and non-interest
income before losses on other real estate owned.
As of September 30,
2009 2008 6/30/09 3/31/09
Asset Quality:
Non-performing assets:
Non-accrual loans:
Commercial $ 9,792 $ 9,944 $ 12,259 $ 10,433
Real estate-one-to-four
family residential:
Closed end first and seconds 6,846 98 3,843 735
Home equity lines 781 320 494 319
Total Real estate-one-to-four $ 7,627 $ 418 $ 4,337 $ 1,054
family residential
Real estate-non-farm,
non-residential:
Owner Occupied 9,703 2,511 6,462 6,319
Non-owner occupied 9,152 411 8,460 792
Total Real estate-non-farm, $ 18,855 $ 2,922 $ 14,922 $ 7,111
non-residential
Real estate-construction:
Residential-Owner Occupied 2,389 3,981 2,389 5,115
Residential-Builder 36,886 32,701 53,251 67,274
Commercial 9,457 21,710 18,955 34,829
Total Real $ 48,732 $ 58,392 $ 74,595 $ 107,218
estate-construction:
Consumer 187 2 23 (2 )
Total Non-accrual loans $ 85,193 $ 71,678 $ 106,136 $ 125,814
OREO 36,402 6,002 28,198 12,455
Total non-performing assets $ 121,595 $ 77,680 $ 134,334 $ 138,269
Loans 90+ days past due and
still accruing:
Commercial $ 150 $ 699 $ 251 $ 1,810
Real estate-one-to-four
family residential:
Closed end first and seconds -- 165 482 4,032
Home equity lines -- -- -- 184
Total Real estate-one-to-four $ -- $ 165 $ 482 $ 4,216
family residential
Real estate-multi-family 1,506 -- 1,506 --
residential
Real estate-non-farm,
non-residential:
Owner Occupied -- -- -- 363
Non-owner occupied 249 -- 703 8,807
Total Real estate-non-farm, $ 249 $ -- $ 703 $ 9,170
non-residential
Real estate-construction:
Residential-Owner Occupied -- -- -- --
Residential-Builder -- 6,693 2,290 8,594
Commercial -- -- -- --
Total Real $ -- 6,693 $ 2,290 $ 8,594
estate-construction:
Consumer -- 24 -- --
Total loans 90+ days past due $ 1,905 $ 7,581 $ 5,232 $ 23,790
and still accruing
Total non-performing assets $ 123,500 $ 85,261 $ 139,566 $ 162,059
and past due loans
Non-performing assets
to total loans: 5.46 % 3.42 % 5.94 % 6.05 %
to total assets: 4.45 % 2.92 % 4.98 % 4.99 %
Non-performing assets and
past due loans
to total loans: 5.54 % 3.76 % 6.17 % 7.09 %
to total assets: 4.52 % 3.20 % 5.17 % 5.84 %
Allowance for loan losses to 3.15 % 1.44 % 1.72 % 1.64 %
total loans
Allowance for loan losses to 80.50 % 41.17 % 35.00 % 25.06 %
non-performing loans
Total allowance for loan loss $ 70,114 $ 32,634 $ 38,978 $ 37,494
Total provisions for loan $ 80,813 $ 16,068 $ 31,813 $ 13,390
losses
As of September 30,
2009 2008 6/30/09 3/31/09
Loans 30 to 89 days past due:
Commercial $ 2,728 $ 1,779 $ 3,442 $ 1,999
Real estate-one-to-four family
residential:
Closed end first and seconds 2,950 325 6,317 7,120
Home equity lines 42 150 559 89
Total Real estate-one-to-four $ 2,992 $ 475 $ 6,876 $ 7,209
family residential
Real estate-multi-family -- -- -- 1,506
residential
Real estate-non-farm,
non-residential:
Owner Occupied 5,779 1,774 3,932 6,911
Non-owner occupied 16,447 1,787 4,749 8,034
Total Real estate-non-farm, $ 22,226 $ 3,561 $ 8,681 $ 14,945
non-residential
Real estate-construction:
Residential-Owner Occupied 829 -- -- 5,470
Residential-Builder 1,554 8,248 -- 11,027
Commercial 336 2,214 -- 13,264
Total real $ 2,719 $ 10,462 $ -- $ 29,761
estate-construction:
Farmland -- -- -- --
Consumer 212 149 244 310
Total loans 30 to 89 days past $ 30,877 $ 16,426 $ 19,243 $ 55,730
due
Net charge-offs:
Commercial $ 15,350 $ 1,979 $ 3,176 $ 2,097
Real estate-one-to-four family
residential:
Closed end first and seconds 1,405 623 1,156 115
Home equity lines 961 162 824 826
Total Real estate-one-to-four $ 2,366 $ 785 $ 1,980 $ 941
family residential
Real estate-multi-family -- 95 -- --
residential
Real estate-non-farm,
non-residential:
Owner Occupied 468 -- 211 211
Non-owner occupied 58 -- -- --
Total Real estate-non-farm, $ 526 $ -- $ 211 $ 211
non-residential
Real estate-construction:
Residential-Owner Occupied 702 -- 702 40
Residential-Builder 17,100 2,519 12,896 3,542
Commercial 10,946 -- 10,223 5,509
Total real $ 28,748 $ 2,519 $ 23,821 $ 9,091
estate-construction:
Farmland -- -- -- --
Consumer 184 316 122 31
Total net charge-offs $ 47,174 $ 5,694 $ 29,310 $ 12,371
Net charge-offs to average 2.06 % 0.27 % 1.27 % 0.53 %
loans outstanding
As of September 30,
2009 2008 % Change 6/30/09 % Change
Loan Portfolio:
Commercial $ 239,895 $ 267,296 -10.3 % $ 259,812 -7.7 %
Real estate-one to
four family
residential:
Closed end first and 264,398 214,383 23.3 % 236,523 11.8 %
seconds
Home equity lines 134,295 114,671 17.1 % 133,176 0.8 %
Total Real
estate-one-to-four $ 398,693 $ 329,054 21.2 % $ 369,699 7.8 %
family residential
Real
estate-multifamily 68,002 65,661 3.6 % 69,616 -2.3 %
residential
Real estate-non-farm,
non-residential:
Owner Occupied 430,173 416,437 3.3 % 428,372 0.4 %
Non-owner occupied 640,136 586,688 9.1 % 613,825 4.3 %
Total Real
estate-non-farm, $ 1,070,309 $ 1,003,125 6.7 % $ 1,042,197 2.7 %
non-residential
Real
estate-construction:
Residential-Owner 13,645 22,733 -40.0 % 23,047 -40.8 %
Occupied
Residential-Builder 235,358 315,723 -25.5 % 259,370 -9.3 %
Commercial 189,431 255,756 -25.9 % 223,916 -15.4 %
Total Real $ 438,434 $ 594,212 -26.2 % $ 506,333 -13.4 %
estate-construction:
Farmland 2,678 2,413 10.9 % 2,678 -.04 %
Consumer 10,191 8,477 20.2 % 10,532 -3.2 %
Total loans $ 2,228,202 $ 2,270,238 -1.9 % $ 2,260,867 -1.4 %
Less unearned income 3,836 4,825 -20.5 % 3,944 -2.7 %
Less allowance for 70,114 32,634 114.8 % 38,978 79.9 %
loan losses
Loans, net $ 2,154,252 $ 2,232,779 -3.5 % $ 2,217,945 -2.9 %
As of September 30, 2009
Residential,
Acquisition, Non-accruals Net charge-
Development and
Construction
Total Percentage Non-accrual as a % of offs as a %
of
By
County/Jurisdiction Outstandings of Total Loans Outstandings Outstandings
of Origination:
District of Columbia $ 18,993 7.6 % $ -- -- -0.1 %
Montgomery, MD 9,660 3.9 % 3,583 1.4 % 0.9 %
Prince Georges, MD 24,212 9.7 % -- -- 1.9 %
Other Counties in MD 4,879 2.0 % -- -- 0.4 %
Arlington/Alexandria, 45,077 18.1 % 5,632 2.3 % --
VA
Fairfax, VA 62,112 24.9 % 11,387 4.6 % 1.2 %
Culpeper/Fauquier 1,025 0.4 % 200 0.1 % 0.1 %
Frederick 13,131 5.3 % 6,750 2.7 % 0.8 %
Henrico, VA -- 0.0 % -- -- 0.1 %
Loudoun, VA 27,436 11.0 % 770 0.3 % 0.3 %
Prince William, VA 12,224 4.9 % 2,951 1.2 % 0.8 %
Spotsylvania, VA 871 0.3 % -- -- --
Stafford, VA 22,421 9.0 % 4,898 2.0 % --
Other Counties in VA 6,852 2.8 % 3,104 1.2 % 0.3 %
Outside VA, MD & DC 110 0.04 % -- -- 0.4 %
$ 249,003 100.0 % $ 39,275 15.8 % 7.1 %
As of September 30, 2009
Commercial,
Acquisition, Percentage Non-accruals Net charge-
Development and
Construction
Total of Non-accrual as a % of offs as a %
of
By
County/Jurisdiction Outstandings Total Loans Outstandings Outstandings
of Origination:
District of Columbia $ 12,798 6.8 % $ -- -- --
Montgomery, MD 1,413 0.7 % -- -- --
Prince Georges, MD 10,374 5.5 % -- -- --
Other Counties in MD 7,749 4.1 % -- -- --
Arlington/Alexandria, 9,312 4.9 % -- -- --
VA
Fairfax, VA 15,651 8.3 % -- -- 5.8 %
Henrico, VA 807 0.4 % -- -- --
Loudoun, VA 34,688 18.3 % 7,197 3.8 % --
Prince William, VA 51,805 27.3 % 2,260 1.2 % --
Spotsylvania, VA 10,138 5.4 % -- -- --
Stafford, VA 27,937 14.7 % -- -- --
Other Counties in VA 6,759 3.6 % -- -- --
$ 189,431 100.0 % $ 9,457 5.0 % 5.8 %
As of September 30, 2009
Non-Farm/Non-Residential Non-accruals Net charge-
Total Percentage Non-accrual as a % of offs as a %
of
By County/Jurisdiction Outstandings of Total Loans Outstandings Outstandings
of Origination:
District of Columbia $ 54,649 5.1 % $ -- -- --
Montgomery, MD 34,057 3.2 % -- -- --
Prince Georges, MD 50,654 4.7 % 1,180 0.01 % --
Other Counties in MD 48,439 4.5 % -- -- --
Arlington/Alexandria, VA 173,479 16.2 % 4,138 0.4 % 0.02 %
Fairfax, VA 261,090 24.4 % 5,088 0.5 % --
Culpeper/Fauquier 1,658 0.2 % -- -- --
Henrico, VA 31,306 2.9 % -- -- --
Loudoun, VA 111,546 10.4 % 1,769 0.2 % 0.02 %
Prince William, VA 187,918 17.6 % 2,888 0.3 % 0.01 %
Spotsylvania, VA 12,868 1.2 % -- -- --
Stafford, VA 22,107 2.1 % -- -- --
Other Counties in VA 70,740 6.6 % 3,792 0.4 % --
Outside VA, MD & DC 9,798 0.9 % -- -- --
$ 1,070,309 100.0 % $ 18,855 1.8 % 0.05 %
Of this total of $1.1 billion in non-farm/non-residential real estate loans, $28.2 million will mature in the fourth quarter of 2009, $48.5 million in 2010, $42.2 million in 2011 and $72.8 million in 2012.
As of September 30,
2009 2008 % Change 6/30/09 % Change
Investment Securities (at book
value):
Available-for-sale:
U.S. Government Agency $263,871 $246,619 7.0% $204,896 28.8%
obligations
Domestic corporate debt 3,084 4,374 -29.5% 1,864 65.5%
obligations
Obligations of states and 42,585 28,545 49.2% 40,219 5.9%
political subdivisions
$309,540 $279,538 10.7% $246,979 25.3%
Held-to-maturity:
U.S. Government Agency $ 13,574 $ 19,772 -31.3% $ 15,258 -11.0%
obligations
Obligations of states and 45,945 18,552 147.7% 46,853 -1.9%
political subdivisions
$ 59,519 $ 38,324 55.3% $ 62,111 -4.2%
Virginia Commerce Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
As of September 30,
(Unaudited)
2009 2008
Assets
Cash and due from banks $ 25,760 $ 31,354
Fed funds sold 56,413 --
Interest-bearing deposits with other banks -- 1,184
Securities (fair value: 2009, $370,417; 2008, 369,059 317,862
$318,132)
Restricted stocks 11,751 9,276
Loans held-for-sale 2,285 4,547
Loans, net of allowance for loan losses of $70,114 2,154,252 2,232,779
in 2009 and $32,634 in 2008
Bank premises and equipment, net 14,150 13,947
Accrued interest receivable 10,359 11,165
Other real estate owned 36,402 6,002
Other assets 53,681 33,572
Total assets $ 2,734,112 $ 2,661,688
Liabilities and Stockholders' Equity
Deposits
Demand deposits $ 228,395 $ 206,527
Savings and interest-bearing demand deposits 891,568 536,620
Time deposits 1,114,841 1,412,695
Total deposits $ 2,234,804 $ 2,155,842
Securities sold under agreement to repurchase and 185,531 198,009
federal funds purchased
Other borrowed funds 25,000 50,000
Trust preferred capital notes 65,993 65,736
Accrued interest payable 5,048 7,360
Other liabilities 1,742 6,384
Total liabilities $ 2,518,118 $ 2,483,331
Stockholders' Equity
Preferred stock, net of discount, $1.00 par,
1,000,000 shares authorized, Series A; $1,000.00 $ 63,630 $ --
liquidation value; 71,000 issued and outstanding
Common stock, $1.00 par, 50,000,000 shares
authorized, issued and outstanding 2009, 26,695,810; 26,696 26,567
2008, 26,566,711
Surplus 96,359 95,678
Warrants 8,520 --
Retained earnings 19,766 59,450
Accumulated other comprehensive income (loss), net 1,023 (3,338 )
Total stockholders' equity $ 215,994 $ 178,357
Total liabilities and stockholders' equity $ 2,734,112 $ 2,661,688
Virginia Commerce Bancorp, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Nine months Ended
September 30, September 30,
2009 2008 2009 2008
Interest and dividend income:
Interest and fees on loans $ 33,707 $ 36,329 $ 100,336 $ 108,155
Interest and dividends on
investment securities:
Taxable 3,366 3,792 10,523 11,340
Tax-exempt 426 339 1,177 908
Dividend on restricted stocks 97 67 265 259
Interest on deposits with other -- 38 -- 140
banks
Interest on federal funds sold 27 2 59 228
Total interest and dividend $ 37,623 $ 40,567 $ 112,360 $ 121,030
income
Interest expense:
Deposits $ 11,649 $ 16,173 $ 39,076 $ 51,510
Securities sold under agreement
to repurchase and federal funds 1,022 1,376 2,477 4,477
purchased
Other borrowed funds 272 426 806 890
Trust preferred capital notes 1,276 683 3,840 2,065
Total interest expense $ 14,219 $ 18,658 $ 46,199 $ 58,942
Net interest income: $ 23,404 $ 21,909 $ 66,161 $ 62,088
Provision for loan losses 49,000 8,300 80,813 16,068
Net interest income after $ (25,596 ) $ 13,609 $ (14,652 ) $ 46,020
provision for loan losses
Non-interest income:
Service charges and other fees $ 893 $ 1,027 $ 2,683 $ 2,893
Non-deposit investment services 165 164 444 513
commissions
Fees and net gains on loans 615 363 2,374 1,214
held-for-sale
Loss on other real estate owned (9,085 ) -- (9,085 ) --
Impairment loss on securities (280 ) -- (418 ) --
Other 119 43 198 337
Total non-interest income $ (7,573 ) $ 1,597 $ (3,804 ) $ 4,957
Non-interest expense:
Salaries and employee benefits $ 5,645 $ 5,903 $ 17,260 $ 17,612
Occupancy expense 2,466 2,211 7,670 6,525
Data processing expense 598 528 1,774 1,609
Other operating expense 4,213 2,616 12,827 7,510
Total non-interest expense $ 12,922 $ 11,258 $ 39,531 $ 33,256
(Loss) income before taxes $ (46,091 ) $ 3,948 $ (57,987 ) $ 17,721
(Benefit) provision for income (16,204 ) 1,275 (20,507 ) 5,979
taxes
Net (loss) income $ (29,887 ) $ 2,673 $ (37,480 ) $ 11,742
Effective dividend on preferred 1,251 -- 3,288 --
stock
Net (loss) income available to $ (31,138 ) $ 2,673 $ (40,768 ) $ 11,742
common stockholders
(Loss) earnings per common share, $ (1.17 ) $ 0.10 $ (1.53 ) $ 0.44
basic
(Loss) earnings per common share, $ (1.17 ) $ 0.10 $ (1.53 ) $ 0.43
diluted
Virginia Commerce Bancorp, Inc.
Consolidated Average Balances, Yields, and Rates
Three Months Ended September 30,
(Unaudited)
2009 2008
Interest Average Interest Average
(Dollars in Average Average
thousands) Income- Yields Income- Yields
Balance Balance
Expense /Rates Expense /Rates
Assets
Securities (1) $ 327,690 $ 3,792 4.78 % $ 329,811 $ 4,131 5.13 %
Restricted Stock 11,752 97 3.29 % 7,985 67 3.37 %
Loans, net of
unearned income 2,266,294 33,707 5.91 % 2,250,390 36,329 6.42 %
(2)
Interest-bearing
deposits in 89 -- 0.09 % 4,348 38 3.45 %
other banks
Federal funds 48,725 27 0.21 % 413 2 1.80 %
sold
Total
interest-earning $ 2,654,550 $ 37,623 5.65 % $ 2,592,947 $ 40,567 6.23 %
assets
Other assets 78,765 67,511
Total Assets $ 2,733,315 $ 2,660,458
Liabilities and
Stockholders'
Equity
Interest-bearing
deposits:
NOW accounts $ 238,988 $ 728 1.21 % $ 173,396 $ 776 1.77 %
Money market 162,353 593 1.45 % 208,711 1,380 2.62 %
accounts
Savings accounts 432,362 2,111 1.94 % 184,480 1,245 2.68 %
Time deposits 1,141,571 8,217 2.86 % 1,379,898 12,772 3.67 %
Total
interest-bearing $ 1,975,274 $ 11,649 2.34 % $ 1,946,485 $ 16,173 3.30 %
deposits
Securities sold
under agreement
to repurchase 192,538 1,022 2.11 % 224,384 1,376 2.43 %
and federal
funds purchased
Other borrowed 25,000 272 4.25 % 50,000 426 3.33 %
funds
Trust preferred 65,962 1,276 7.57 % 41,602 683 6.42 %
capital notes
Total
interest-bearing $ 2,258,774 $ 14,219 2.50 % $ 2,262,471 $ 18,658 3.27 %
liabilities
Demand deposits
and other 234,187 220,630
liabilities
Total $ 2,492,961 $ 2,483,101
liabilities
Stockholders' 240,354 177,357
equity
Total
liabilities and $ 2,733,315 $ 2,660,458
stockholders'
equity
Interest rate 3.15 % 2.96 %
spread
Net interest
income and $ 23,404 3.52 % $ 21,909 3.38 %
margin
(1) Yields on securities available-for-sale have been calculated on the basis of historical cost and do not give effect to changes in the fair value of those securities, which are reflected as a component of stockholders' equity. Average yields on securities are stated on a tax equivalent basis, using a 35% rate. (2) Loans placed on non-accrual status are included in the average balances. Net loan fees and late charges included in interest income on loans totaled $1.3 million and $1.2 million for the three months ended September 30, 2009, and 2008, respectively.
Virginia Commerce Bancorp, Inc.
Consolidated Average Balances, Yields, and Rates
Nine Months Ended September 30,
(Unaudited)
2009 2008
Interest Average Interest Average
(Dollars in Average Average
thousands) Income- Yields Income- Yields
Balance Balance
Expense /Rates Expense /Rates
Assets
Securities (1) $ 326,009 $ 11,700 4.73 % $ 322,940 $ 12,248 5.18 %
Restricted stock 11,534 265 3.07 % 7,005 259 4.95 %
Loans, net of
unearned income 2,290,830 100,336 5.87 % 2,144,115 108,155 6.73 %
(2)
Interest-bearing
deposits in 89 -- 0.11 % 6,336 140 2.93 %
other banks
Federal funds 39,197 59 0.20 % 14,685 228 2.04 %
sold
Total
interest-earning $ 2,667,659 $ 112,360 5.66 % $ 2,495,081 $ 121,030 6.49 %
assets
Other assets 66,472 56,128
Total Assets $ 2,734,131 $ 2,551,209
Liabilities and
Stockholders'
Equity
Interest-bearing
deposits:
NOW accounts $ 220,039 $ 2,054 1.25 % $ 162,458 $ 1,977 1.62 %
Money market 157,718 1,743 1.48 % 209,104 4,473 2.85 %
accounts
Savings accounts 326,744 5,271 2.16 % 176,780 4,053 3.05 %
Time deposits 1,275,712 30,008 3.14 % 1,314,207 41,008 4.16 %
Total
interest-bearing $ 1,980,213 $ 39,076 2.64 % $ 1,862,549 $ 51,510 3.68 %
deposits
Securities sold
under agreement
to repurchase 188,575 2,477 1.76 % 229,955 4,477 2.59 %
and federal
funds purchased
Other borrowed 25,000 806 4.25 % 33,485 890 3.49 %
funds
Trust preferred 65,898 3,840 7.68 % 40,538 2,065 6.69 %
capital notes
Total
interest-bearing $ 2,259,686 $ 46,199 2.73 % $ 2,166,527 $ 58,942 3.62 %
liabilities
Demand deposits
and other 228,315 209,216
liabilities
Total $ 2,488,001 $ 2,375,743
liabilities
Stockholders' 246,130 175,466
equity
Total
liabilities and $ 2,734,131 $ 2,551,209
stockholders'
equity
Interest rate 2.93 % 2.87 %
spread
Net interest
income and $ 66,161 3.34 % $ 62,088 3.34 %
margin
(1) Yields on securities available-for-sale have been calculated on the basis of historical cost and do not give effect to changes in the fair value of those securities, which are reflected as a component of stockholders' equity. Average yields on securities are stated on a tax equivalent basis, using a 35% rate. (2) Loans placed on non-accrual status are included in the average balances. Net loan fees and late charges included in interest income on loans totaled $3.0 million and $3.9 million for the nine months ended September 30, 2009, and 2008, respectively.
Source: Virginia Commerce Bancorp, Inc.
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