Virginia Commerce Bancorp, Inc. (Nasdaq:VCBI), parent company of
Virginia Commerce Bank (the "Bank"), today reported its financial
results for the first quarter ended March 31, 2006. First Quarter
2006 Highlights: -- Net income of $5.7 million representing a 32.2%
increase over first quarter 2005 -- Diluted earnings per share up
31.0% to $0.38 -- Loans and deposits up 32.9% and 33.1%,
respectively, since March 31, 2005 -- Efficiency ratio improves
further to 45.9% -- Nineteenth branch opened in January Peter A.
Converse, Chief Executive Officer, commented, "It's always nice to
start the year with strong performance, and considering the
competitive landscape in our market, we're particularly pleased
with first quarter results. Earnings, assets, loans and deposits
all rose over 30% as compared to the same quarter last year.
Deposit growth benefited significantly from the CD and money market
promotions we ran for most of the first quarter. Although the
advertised rates for these deposit products were market-leading and
will put more pressure on our net interest margin, we are confident
that the margin will remain above 4%." Converse added, "We also
began the year with a new branch in January in Newington, just
south of Springfield. It is our nineteenth branch overall and
already has over $7 million in deposits and repos combined. It
should be followed by up to four more branches over the remainder
of the year. These branches will help sustain our growth momentum
but shouldn't strain our overhead. In fact, despite three new
branches opening in 2005 and another this past quarter,
non-interest expense increased less than earnings, resulting in the
efficiency ratio improving to 45.9%. All in all we feel very good
about our prospects for the rest of 2006." SUMMARY REVIEW OF
FINANCIAL PERFORMANCE Net Income First quarter earnings of $5.7
million represented an increase of 32.2% over 2005 first quarter
earnings of $4.3 million. On a diluted per share basis, first
quarter 2006 earnings were $0.38 compared to $0.29 for the first
quarter of 2005, an increase of 31.0%. The year-over-year increase
in net income was due to a 27.1% increase in net interest income
and a 40.4% increase in non-interest income. These increases in
revenue more than offset a 25.8% increase in non-interest expense.
As a result, the Company's efficiency ratio improved further from
46.7% to 45.9%. Net Interest Income Net interest income for the
first quarter of $16.1 million was up 27.1% over the same quarter
last year due to strong loan growth, as the net interest margin
declined from 4.40% in the first quarter of 2005 to 4.27% for the
current three-month period. The margin decreased seven basis points
from 4.34% in the fourth quarter of 2005. As interest rates have
continued to increase over the past year, the Company's yield on
interest-earning assets rose eighty-seven basis points from 6.34%
in the first quarter of 2005, to 7.21% in the current quarter, with
the yield on loans rising eighty-six basis points primarily on
increases in the prime rate. However, the cost of interest-bearing
liabilities increased one hundred-eighteen basis points from 2.38%
to 3.56% due to rates paid on money market accounts, time deposits
and repurchase agreements. Management expects the net interest
margin to decline further in the next quarter as a result of
continuing competitive pressures on deposit rates in the Company's
market area and as the full impact of the rates paid for new money
market and time deposits in the first quarter are realized. Despite
these factors, the margin is expected to remain above 4.00%.
Non-Interest Income Non-interest income for the first quarter rose
$492 thousand, or 40.4%, from $1.2 million in 2005, to $1.7 million
with service charges and other fees rising $368 thousand, or 82.3%,
due to fees from lockbox operations and overdrafts, while fees and
net gains on mortgage loans held-for-sale increased $112 thousand.
Compared to the three months ended December 31, 2005, non-interest
income was lower by $305 thousand with fees from lockbox
operations, non-deposit investment services and mortgage loans
held-for-sale all down for the period due mostly to seasonal
fluctuations. Non-Interest Expense Non-interest expense increased
$1.7 million, or 25.8%, from $6.5 million in the first quarter of
2005, to $8.2 million in the current period, and was mostly
unchanged from the three months ended December 31, 2005. The
year-over-year increases were due to the opening of the Bank's
eighteenth and nineteenth branch locations in June 2005 and January
2006, the hiring of additional loan and business development
officers and other staffing and facilities expansion to support the
significant levels of loan and deposit growth. However, earnings
growth and diligence in managing and containing the expenses
associated with the new branches and facilities expansion, resulted
in further improvement in the efficiency ratio from 46.7% in 2005,
to 45.9%. Management expects only slightly higher levels in all
non-interest expense categories in the second quarter with the next
new branch location expected to open in the early part of the third
quarter. Loans Loans, net of allowance for loan losses, increased
$338.5 million, or 32.9%, from $1.03 billion at March 31, 2005, to
$1.37 billion at March 31, 2006. Growth occurred in all categories,
but primarily in non-farm, non-residential real estate loans and
real estate construction loans, which rose 24.1% and 52.8%,
respectively, while commercial loans increased 29.2%
year-over-year. Since December 31, 2005, loans are up $98.4
million, or 31.2%, on an annualized basis, with growth again
concentrated in commercial real estate and construction. Deposits
Since March 31, 2005, deposits have increased $346.2 million, or
33.1%, from $1.04 billion to $1.39 billion, with non-interest
bearing demand deposits increasing $31.2 million, interest-bearing
demand deposits rising $55.9 million, and time deposits growing by
$259.1 million. For the three months ended March 31, 2006, deposits
rose $148.4 million, or 47.6%, on an annualized basis, with demand
deposits growing by $11.8 million, interest-bearing demand accounts
increasing by $29.3 million, and time deposits increasing by $107.3
million. Growth in the first quarter was supported by several
promotions for both money market and time deposits in local
newspapers as the Bank continued to gather these deposits to fund a
continuing strong loan pipeline. Repurchase Agreements and Other
Borrowings Repurchase agreements, which represent funds of numerous
demand deposit customers of the Bank, increased $67.0 million, or
240.0%, from $47.9 million at March 31, 2005, to $114.9 million at
March 31, 2006, and increased $3.1 million from $111.8 million at
December 31, 2005. Two accounts represented $42.0 million of the
$114.9 million at March 31, and are expected to decline
significantly in the second quarter. At March 31, 2005, the Bank
had $31.0 million in outstanding advances with the Federal Home
Loan Bank of Atlanta, those advances which were used to help loan
funding during that quarter were repaid in the second quarter of
2005. Trust Preferred Securities On December 20, 2005, the Company
completed the private placement of an aggregate of $25 million of
trust preferred securities through VCBI Capital Trust III, a newly
formed trust subsidiary organized under Delaware law. The
securities mature on February 23, 2036, and are redeemable at par,
at the Company's option, at any time on or after February 23, 2011,
subject to regulatory approval. The securities are redeemable prior
to February 23, 2011, at a premium ranging up to 104% of the
principal amount thereof, upon the occurrence of certain regulatory
or legal events. The securities bear interest on a quarterly basis,
at a 6.19% fixed rate until February 23, 2011, at which time the
interest rate becomes a variable rate, adjusted quarterly, equal to
142 basis points over three-month LIBOR. The proceeds from this
issuance were used to supplement the Company's capital for
continued growth and other general corporate purposes. Provision
For Loan Losses/Asset Quality Provisions for loan losses increased
$174 thousand from $831 thousand in the first quarter of 2005, to
$1.0 million during the current period as impaired loans increased
by $362 thousand during the quarter to $2.3 million versus an
increase of only $5 thousand in the first quarter of 2005. However,
asset quality remains strong with total non-performing assets and
past due loans to total assets of 0.19%, up from 0.13% at December
31, 2005, due to the $362 thousand in impaired loans noted above
and an $888 thousand increase in loans 90 days past due. The
increase in loans over 90 days past due represents two loans on
one-to-four family residential properties, of which one for $340
thousand is current as to interest and in the renewal process.
Stockholders' Equity Stockholders' equity increased $23.2 million,
or 24.3%, from $95.7 million at March 31, 2005, to $118.9 million
at March 31, 2006, on earnings of $21.1 million, $1.40 per share,
and $2.4 million in net proceeds and tax benefits from the exercise
of options by company directors, officers and employees. On March
16, 2006, the Company declared a 3-for-2 stock split in the form of
a 50% stock dividend to be paid on May 12, 2006, to shareholders of
record as of the close of business on April 28, 2006. This split is
subject to the approval by shareholders of an amendment to the
Articles of Incorporation of the Company at its annual meeting to
be held on April 26, 2006, increasing the number of authorized
shares to 50 million. CONFERENCE CALL Virginia Commerce Bancorp
will host a teleconference call for the financial community on
April 13, 2006, at 11:00 a.m. Eastern Daylight Time to discuss the
first quarter 2006 financial results. The public is invited to
listen to this conference call by dialing 866-837-9780 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 April 13, 2006,
until 11:59 p.m. Eastern Daylight Time on April 20, 2006. The
public is invited to listen to this conference call replay by
dialing 888-266-2081 and entering passcode 885884. ABOUT VIRGINIA
COMMERCE BANCORP Virginia Commerce Bancorp, Inc. is the parent bank
holding company for Virginia Commerce Bank (the "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
nineteen branch offices, two residential mortgage offices 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. -0-
*T Virginia Commerce Bancorp, Inc. Financial Highlights (Dollars in
thousands, except per share data) (Unaudited) Three Months Ended
March 31, 2006 2005 % Change ---------------------------------
Summary Operating Results: Interest and dividend income $ 27,241 $
18,300 48.9% Interest expense 11,089 5,587 98.5% Net interest and
dividend income 16,152 12,713 27.1% Provision for loan losses 1,005
831 20.9% Non-interest income 1,711 1,219 40.4% Non-interest
expense 8,194 6,514 25.8% Income before income taxes 8,664 6,587
31.5% Net income $ 5,714 $ 4,321 32.2% Performance Ratios: Return
on average assets 1.46% 1.46% Return on average equity 20.13%
18.68% Net interest margin 4.27% 4.40% Efficiency ratio (1) 45.87%
46.69% Per Share Data: (2) Net income-basic $ 0.40 $ 0.31 29.0% Net
income-diluted $ 0.38 $ 0.29 31.0% Average number of shares
outstanding: Basic 14,210,134 13,983,982 Diluted 15,101,077
14,940,954 As of March 31, --------------------------------- 2006
2005 % Change --------------------------------- Selected Balance
Sheet Data: Loans, net $1,368,610 $1,030,060 32.9% Investment
securities 169,530 162,341 4.4% Assets 1,678,432 1,244,459 34.9%
Deposits 1,391,983 1,045,760 33.1% Stockholders' equity 118,911
95,676 24.3% Book value per share (2) $ 8.33 $ 6.84 21.8% Capital
Ratios (% of risk weighted assets): Tier 1 capital: Company 10.87%
10.34% Bank 7.93% 8.57% Total qualifying capital: Company 12.07%
11.35% Bank 11.85% 11.20% Asset Quality: Non-performing assets:
Impaired loans $ 2,342 $ 1,197 95.6% Non-accrual loans 13 17 -23.5%
Loans 90+ days past due and still accruing 890 -- N/A -----------
----------- Total non-performing assets and past due loans $ 3,245
$ 1,214 267.3% to total loans: 0.23% 0.12% to total assets: 0.19%
0.10% Allowance for loan losses to total loans 1.07% 1.07% Net
charge-offs (recoveries) $13 $(1) Net charge-offs to average loans
outstanding 0.001% 0.00% As of March 31,
--------------------------------- 2006 2005 % Change
--------------------------------- Loan Portfolio: Commercial $
137,039 $ 106,053 29.2% Real estate-one-to-four family residential
162,951 127,497 27.8% Real estate-multi-family residential 65,936
48,502 35.9% Real estate-nonfarm, nonresidential 609,449 491,043
24.1% Real estate-construction 407,120 266,432 52.8% Consumer 6,290
6,511 -3.5% ----------- ----------- --------- Total loans
$1,388,785 $1,046,038 32.8% Less unearned income 5,362 4,744 13.0%
Less allowance for loan losses 14,813 11,234 31.9% -----------
----------- --------- Loans, net $1,368,610 $1,030,060 32.9%
Investment Securities (at book value): Available-for-sale: U.S.
Government Agency obligations $ 113,938 $ 98,148 16.1% U.S.
Treasuries -- 9,953 n/a Domestic corporate debt obligations 6,048
6,035 0.2% Obligations of states and political subdivisions 1,365
1,333 2.4% Restricted stock: Federal Reserve Bank 1,442 1,442 --
Federal Home Loan Bank 3,034 3,672 -17.4% Community Bankers' Bank
55 55 -- ----------- ----------- --------- $ 125,882 $ 120,638 4.4%
Held-to-maturity: U.S. Government Agency obligations $ 34,684 $
32,774 5.8% Obligations of states and political subdivisions 8,964
8,434 6.3% Domestic corporate debt obligations -- 495 n/a
----------- ----------- --------- $ 43,648 $ 41,703 4.7% (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. (2) Adjusted to give effect to a five-for-four
split in the form of a 25% stock dividend in May 2005. Virginia
Commerce Bancorp, Inc. Consolidated Balance Sheets (Dollars in
thousands, except per share data) As of March 31, (Unaudited) 2006
2005 ----------- ----------- Assets Cash and due from banks $
33,379 $ 21,136 Interest-bearing deposits with other banks 1,045
1,015 Securities (fair value: 206, $168,324; 2005, $162,010)
169,530 162,341 Federal funds sold 68,000 -- Loans held-for-sale
8,066 5,323 Loans, net of allowance for loan losses of $14,813 in
2006 and $11,234 in 2005 1,368,610 1,030,060 Bank premises and
equipment, net 7,817 7,165 Accrued interest receivable 6,499 4,376
Other assets 15,486 13,043 ----------- ----------- Total assets
$1,678,432 $1,244,459 ----------- ----------- Liabilities and
Stockholders' Equity Deposits Demand deposits $ 200,384 $ 169,189
Savings and interest-bearing demand deposits 378,891 322,963 Time
deposits 812,708 553,608 ----------- ----------- Total deposits
$1,391,983 $1,045,760 Securities sold under agreement to repurchase
and federal funds purchased 114,940 47,898 Other borrowed funds --
31,000 Trust preferred capital notes 44,344 18,570 Accrued interest
payable 4,037 2,259 Other liabilities 4,217 3,296 -----------
----------- Total liabilities $1,559,521 $1,148,783 -----------
----------- Stockholders' Equity Preferred stock, $1.00 par,
1,000,000 shares authorized and unissued $ -- $ -- Common stock,
$1.00 par, 20,000,000 shares authorized, issued and outstanding
2006, 14,272,050; 2005, 11,189,129 14,272 11,189 Surplus 37,315
37,971 Retained earnings 68,954 47,898 Accumulated other
comprehensive loss, net (1,630) (1,382) ----------- -----------
Total stockholders' equity $ 118,911 $ 95,676 Total liabilities and
stockholders' equity $1,678,432 $1,244,459 ----------- -----------
Virginia Commerce Bancorp, Inc. Consolidated Statements of Income
(Dollars in thousands except per share data) Three Months Ended
March 31, (Unaudited) 2006 2005 -------- -------- Interest and
dividend income: Interest and fees on loans $25,368 $16,808
Interest and dividends on investment securities: Taxable 1,585
1,358 Tax-exempt 60 59 Dividends 63 55 Interest on deposits with
other banks 13 6 Interest on federal funds sold 152 14 --------
-------- Total interest and dividend income $27,241 $18,300
-------- -------- Interest expense: Deposits $ 9,171 $ 4,835
Securities sold under agreement to repurchase and federal funds
purchased 956 269 Other borrowed funds 216 211 Trust preferred
capital notes 746 272 -------- -------- Total interest expense
$11,089 $ 5,587 -------- -------- Net interest income: $16,152
$12,713 Provision for loan losses 1,005 831 -------- -------- Net
interest income after provision for loan losses $15,147 $11,882
-------- -------- Non-interest income: Service charges and other
fees $ 815 $ 447 Non-deposit investment services commissions 91 80
Fees and net gains on loans held-for-sale 717 605 Other 88 87
-------- -------- Total non-interest income $ 1,711 $ 1,219
-------- -------- Non-interest expense: Salaries and employee
benefits $ 4,820 $ 3,790 Occupancy expense 1,267 947 Data
processing 477 370 Other operating expense 1,630 1,407 --------
-------- Total non-interest expense $ 8,194 $ 6,514 --------
-------- Income before taxes on income $ 8,664 $ 6,587 Provision
for income taxes 2,950 2,266 -------- -------- Net Income $ 5,714 $
4,321 -------- -------- Earnings per common share, basic (1) $ 0.40
$ 0.31 Earnings per common share, diluted (1) $ 0.38 $ 0.29 (1)
Adjusted to give effect to a five-for-four split in the form of a
25% stock dividend in May 2005. Virginia Commerce Bancorp, Inc.
Consolidated Average Balances, Yields, and Rates Three Months Ended
March 31, (Unaudited) 2006 ---------------------------- Interest
Average Average Income- Yields (Dollars in thousands) Balance
Expense /Rates ---------------------------- Assets Securities (1) $
174,031 $ 1,708 3.97% Loans, net of unearned income (2) 1,344,409
25,368 7.55% Interest-bearing deposits in other banks 1,044 13
5.00% Federal funds sold 13,597 152 4.46%
---------------------------- Total interest-earning assets
$1,533,081 $27,241 7.21% Other assets 52,031 ----------- Total
Assets $1,585,112 ----------- Liabilities and Stockholders' Equity
Interest-bearing deposits: NOW accounts $ 196,084 $ 811 1.68% Money
market accounts 140,403 1,005 2.90% Savings accounts 18,593 25
0.54% Time deposits 747,684 7,330 3.98%
---------------------------- Total interest-bearing deposits
$1,102,764 $ 9,171 3.37% Securities sold under agreement to
repurchase and federal funds purchased 100,466 956 3.86% Other
borrowed funds 18,333 216 4.72% Trust preferred capital notes
43,000 746 6.94% ---------------------------- Total
interest-bearing liabilities $1,264,563 $11,089 3.56% Demand
deposits and other liabilities 205,402 ----------- Total
liabilities $1,469,965 Stockholders' equity 115,147 -----------
Total liabilities and stockholders' equity $1,585,112 -----------
Interest rate spread 3.65% Net interest income and margin $16,152
4.27% 2005 ---------------------------- Interest Average Average
Income- Yields (Dollars in thousands) Balance Expense /Rates
---------------------------- Assets Securities (1) $ 164,739 $
1,472 3.62% Loans, net of unearned income (2) 1,004,383 16,808
6.69% Interest-bearing deposits in other banks 1,013 6 2.37%
Federal funds sold 2,256 14 2.46% ----------------------------
Total interest-earning assets $1,172,391 $18,300 6.34% Other assets
30,665 ----------- Total Assets $1,203,056 ----------- Liabilities
and Stockholders' Equity Interest-bearing deposits: NOW accounts $
203,320 $ 761 1.52% Money market accounts 103,117 372 1.46% Savings
accounts 20,284 27 0.55% Time deposits 521,395 3,675 2.86%
---------------------------- Total interest-bearing deposits $
848,116 $ 4,835 2.31% Securities sold under agreement to repurchase
and federal funds purchased 56,140 269 1.94% Other borrowed funds
30,467 211 2.77% Trust preferred capital notes 18,000 272 6.04%
---------------------------- Total interest-bearing liabilities $
952,723 $ 5,587 2.38% Demand deposits and other liabilities 156,505
----------- Total liabilities $1,109,228 Stockholders' equity
93,828 ----------- Total liabilities and stockholders' equity
$1,203,056 ----------- Interest rate spread 3.96% Net interest
income and margin $12,713 4.40% (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 $1.36 million and $992
thousand for the three months ended March 31, 2006 and 2005,
respectively. *T
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