VCBI Virginia Commerce Bancorp (MM)

Virginia Commerce Bancorp, Inc. (Nasdaq:VCBI), parent company of Virginia Commerce Bank (the �Bank�), today reported its financial results for the fourth quarter and year ended December 31, 2007. Fourth Quarter 2007 Highlights: Net income of $5.6 million representing a 12.8% decrease over fourth quarter 2006 Diluted earnings per share down 8.0% to $0.23 Assets, loans and deposits up 5.0%, 6.0%, and 3.5%, sequentially Total non-performing loans and loans past due 90+ days finished at 0.19% of total assets Year 2007 Highlights: Net income of $25.8 million representing a 5.2% increase over 2006 Diluted earnings per share up 6.1% to $1.04 Assets, loans and deposits up 20.0%, 18.1%, and 16.4% Net charge-offs of 0.01% Efficiency ratio of 47.8% Four new branches opened Peter A. Converse, Chief Executive Officer, commented, �Although our fourth quarter earnings didn�t represent a strong finish by historical standards, we are pleased with our overall performance for the quarter and especially the year in light of a very challenging banking environment. Despite our unwavering commitment to prudent loan underwriting, our strong risk management and problem loan identification processes, and a very experienced lending team, the weakened local housing market resulted in some deterioration in a few residential-related credits. The loan loss reserve increase attributable to those credits was the primary cause for the reduced fourth quarter earnings. Nonetheless, our balance sheet growth for the year was robust, earnings increased to a record level year-over-year, our efficiency ratio remained in the high forties and net loan charge-offs were 0.01%.� Converse continued, �We are not out of the woods yet relative to our operating environment and we anticipate 2008 to represent a continuation of very challenging market conditions. We will persevere by continuing to focus on our core strengths and look forward to growing our franchise with opportunistic branching in select markets. In 2007, we opened four branches, including our entry into high-growth Loudoun County with two of those four new locations. We also took advantage of an in-fill opportunity in Centreville, our ninth Fairfax County location, and extended our border to the south with our first branch in Fredericksburg. In the first half of this year, we�will add three more branches in key locations. We will add a second Fredericksburg and a third Loudoun County branch as we build our reach and visibility in those markets. We will also fill a void in our coverage inside the beltway with a branch in Falls Church.� SUMMARY REVIEW OF FINANCIAL PERFORMANCE Net Income Fourth quarter earnings of $5.6 million were down $825 thousand, or 12.8%, over 2006 fourth quarter earnings of $6.4 million. On a diluted per share basis, fourth quarter earnings were $0.23 compared to $0.25 for the fourth quarter of 2006, a decrease of 8.0%. For the year ended December 31, 2007, earnings of $25.8 million represents a 5.2% increase over the $24.5 million earned in 2006, with diluted earnings per share of $1.04 increasing 6.1%. Earnings for the three months ended December 31, 2007, were negatively impacted by higher loan loss provisions due to overall loan portfolio growth and due to increases in the level of nonperforming loans, loans 90+ days past due, and other identified potential problem loans. Results for the year included a 9.2% increase in net interest income, a 7.6% increase in non-interest income, an efficiency ratio of 47.8% and a return on average assets and return on average equity of 1.21% and 16.75%, respectively. Net Interest Income Net interest income for the fourth quarter of $19.7 million was up 10.5%, compared with $17.8 million for the same quarter last year, as strong growth in interest-earning assets, particularly loans, offset a thirty one basis point decline in the net interest margin from 3.84% in the fourth quarter of 2006 to 3.53% for the current three-month period. For the year, net interest income of $75.2 million was up 9.2%, compared to $68.8 million in 2006, again due to strong growth in interest-earning assets as the net interest margin declined from 4.07% in 2006 to 3.65% in 2007. The declines in the net interest margin continue to be primarily the result of significantly higher short-term rates on savings, money market and time deposit accounts, a continuing shift of funds from lower rate interest-bearing checking accounts to higher rate accounts, and ongoing strong competition for deposits in the local market. These factors resulted in a forty six basis point increase in the cost of interest-bearing liabilities year-over-year, while the Company�s yield on interest-earning assets rose five basis points. Despite a 100 basis point decline in the prime rate since September 18, 2007, on a sequential basis the margin was down only five basis points from 3.58% in the third quarter of 2007, as the Bank was able to offset a twenty-five basis point drop in yield on its loan portfolio with higher yields on securities and lower rates on interest-bearing deposits. Management expects that further declines in the prime rate in early 2008 can also be somewhat offset with lower deposit rates as over $800 million of the Bank�s $1.1 billion in time deposits mature and are replaced with lower rate liabilities over the next six months. However, with the FOMCs 75 basis point decrease yesterday and potential near-term decreases, management now anticipates the margin to range from 3.30% to 3.55% for the foreseeable future. Non-Interest Income Non-interest income for the fourth quarter of $1.8 million was down $213 thousand, or 10.4%, compared to the same period in 2006, and was up $560 thousand, or 7.6%, from $7.3 million in 2006 to $7.9 million in 2007. Fees and net gains on mortgage loans held-for-sale were down $334 thousand in the fourth quarter and were down $352 thousand year-over-year as the Bank began to hold more of its originations in portfolio rather than selling them, due to a reduction in demand and available loan products in the secondary market. Deposit account service charges and other fees were up slightly for the year. Annual results also include a gain on sale of OREO of $638 thousand, and a loss of $387 thousand on the sale of securities, both in the third quarter of 2007. Non-Interest Expense Non-interest expense increased $1.3 million, or 14.9%, from $9.1 million in the fourth quarter of 2006, to $10.4 million in the current period, and increased $5.4 million, or 15.8%, from $34.3 million in 2006 to $39.7 million for the year ended December 31, 2007. The year-over-year increases were due to the opening of four new branch locations, the hiring of additional loan officers, other staffing and facilities expansion to support loan and deposit growth, and the resumption of FDIC insurance premiums in the second quarter of 2007. As a result of these increases in expenses, the efficiency ratio rose from 45.6% in the fourth quarter of 2006 to 48.3% in the current period and to 47.8% on a year-to-date basis. Management expects an efficiency ratio in the high forties for 2008, although it will be slightly higher in the first half as three new branches are opened. Loans Since December 31, 2006, loans, net of allowance for loan losses, have increased $294.9 million, or 18.1%, from $1.63 billion to $1.92 billion. The majority of the loan growth occurred in non-farm, non-residential real estate loans, particularly commercial owner-occupied, and one-to-four family residential real estate loans, rising 21.2% and 37.8%, respectively, while commercial loans increased 25.3%. Construction loans were up 5.7% year-over-year with growth primarily representing commercial real estate projects. During the three months ended December 31, 2007, loans increased $108.4 million, or 6.0%, with increases in all categories. Overall, loan growth in 2007 was impacted by a higher level of run-off, principally in residential construction loans, with total run-off of $305.1 million compared to $180.7 million in 2006. Management expects loan growth in 2008 to be very similar to what was experienced in 2007 in terms of net dollars and mix. Deposits Over the past year, deposits have increased $263.2 million, or 16.4%, from $1.60 billion to $1.87 billion, with demand deposits increasing $26.9 million, savings and interest-bearing demand deposits rising by $57.7 million, and time deposits growing by $178.7 million. For the three months ended December 31, 2007, deposits were up $63.4 million, or 3.5%, with demand deposits up $14.9 million, savings and interest-bearing demand deposits down $12.4 million, and time deposits growing by $60.9 million. Repurchase Agreements and Federal Funds Purchased Repurchase agreements, the majority of which represent sweep funds of significant commercial demand deposit customers, and Federal funds purchased increased $73.7 million, or 49.5%, from $148.9 million at December 31, 2006, to $222.5 million at December 31, 2007, and increased $42.0 million, or 23.2%, since September 30, 2007. Investment Securities Investment securities increased $92.0 million, or 39.3%, from $234.2 million at December 31, 2006, to $326.2 million at December 31, 2007, and were mostly unchanged during the three months ended December 31, 2007. The majority of this growth in securities occurred early in the third quarter of 2007 as loan growth lagged deposit growth and the Company held a significantly high level of overnight funds. As the rate paid on overnight funds began falling in mid-August the Company began purchasing investment securities ahead of potentially lower rates, with a mix of pass-throughs, CMOs, callable structures issued by U.S. government agencies, and various bank-qualified municipals. Additionally, in the third quarter of 2007, the Company restructured a portion of its portfolio, whereby the Company sold $35.0 million of available-for-sale securities, with a weighted average yield of 3.72% and an average remaining term of sixteen months. The sales resulted in an after-tax loss of $252 thousand. Proceeds from the sale were used to purchase $34.8 million in mortgage-backed agency securities with yields ranging from 5.52% to 5.75% for an average yield of 5.64% and with an average life of 5.1 years. Other Borrowed Funds With loan growth exceeding deposit growth in 2007 by $31.7 million and with investment securities rising by $92.0 million, the Company bridged the resulting funding shortfall with repurchase agreements, which, as noted above, rose $73.7 million, and other borrowed funds, which increased $25 million due to an advance from the Federal Home Loan Bank of Atlanta. The advance has a current rate of 2.91% and will convert to a fixed rate of 4.25% in March 2008, for a remaining term of 4.5 years, unless it is called. Asset Quality and Provisions For Loan Losses Provisions for loan losses increased in the fourth quarter from $1.0 million for the three months ended December 31, 2006, to $2.8 million in the current quarter. Of this $2.8 million in quarterly provisioning, $878 thousand was due to the $108.4 million increase in loans over the three-month period, $845 thousand was due to a $2.5 million increase in non-performing loans and loans 90+ days past due from $1.9 million at September 30, 2007, to $4.4 million, and $1.0 million was due to other identified potential problem loans centered primarily in residential land development and construction loans and businesses impacted by a weakened residential real estate market. These loans, which are well-secured and currently performing, require higher levels of reserves due to deteriorated operations and/or operating environment and increased $11.4 million from $4.0 million at September 30, 2007, to $15.4 million. Non-performing loans represent nine borrowing relationships, including four added during the quarter, of which one represents a significant part of the increase. Other identified potential problem loans represent eight borrowing relationships, including four added during the quarter, of which two represent a significant part of the increase. Overall, the total allowance for loan losses as a percent of total loans, increased from 1.06% at September 30, 2007, to 1.14% at December 31. For the year, provisions for loan losses of $4.3 million were slightly under the $4.4 million in provisions in 2006, as lower provisions due to lower net loan growth were offset with higher provisions, as non-performing loans and loans 90+ days past due increased from $3.9 million to $4.4 million at December 31, 2007, representing 0.19% of total assets. Other identified potential problem loans increased from $11.6 million at December 31, 2006, to $15.4 million at year-end. Net charge-offs of $181 thousand for the year, or 0.01% of average loans outstanding, were up slightly from $126 thousand in 2006. Management continues to focus particular attention on loan categories potentially impacted by the current slowdown in residential real estate. Stockholders� Equity Stockholders� equity increased $29.3 million, or 20.9%, from $139.9 million at December 31, 2006, to $169.1 million at December 31, 2007, due to earnings of $25.8 million, a $1.9 million increase in other comprehensive income related to the investment securities portfolio, and $1.6 million from proceeds and tax benefits related to the exercise of options by directors, officers and employees and stock option expense credits. On May 1, 2007, a ten percent stock dividend was paid, increasing the number of shares outstanding by 2.2 million to 24.0 million as of year-end. It was the twelfth consecutive year that a stock dividend or split had been paid. CONFERENCE CALL Virginia Commerce Bancorp will host a teleconference call for the financial community on January 23, 2008, at 11:30 a.m. Eastern Standard Time to discuss the fourth quarter and year-end 2007 financial results. The public is invited to listen to this conference call by dialing 866-861-4873 at least 10 minutes prior to the call. A replay of the conference call will be available from 2:30 p.m. Eastern Standard Time on January 23, 2008, until 11:59 p.m. Eastern Standard Time on January 30, 2008. The public is invited to listen to this conference call replay by dialing 888-266-2081 and entering access code 1186514. ABOUT VIRGINIA COMMERCE BANCORP, INC. 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 twenty-five branch offices, two residential mortgage offices and an 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. Financial Highlights (Dollars in thousands, except per share data) (Unaudited) � � Three Months Ended December 31, � Year Ended December 31, � 2007 � � � 2006 � � % Change � � � 2007 � � � 2006 � � % Change � Summary Operating Results: � � � � Interest and dividend income $ 40,775 $ 34,920 16.8 % $ 154,138 $ 125,292 23.0 % Interest expense 21,038 17,066 23.3 % 78,981 56,487 39.8 % Net interest and dividend income 19,737 17,854 10.5 % 75,157 68,805 9.2 % Provision for loan losses 2,770 1,026 170.0 % 4,340 4,406 -1.5 % Non-interest income 1,820 2,033 -10.4 % 7,883 7,323 7.6 % Non-interest expense 10,408 9,060 14.9 % 39,694 34,289 15.8 % Income before income taxes 8,379 9,801 -14.5 % 39,006 37,433 4.2 % Net income $ 5,606 $ 6,431 -12.8 % $ 25,787 $ 24,508 5.2 % � Performance Ratios: Return on average assets 0.97 % 1.34 % 1.21 % 1.40 % Return on average equity 13.40 % 18.74 % 16.75 % 19.51 % Net interest margin 3.53 % 3.84 % 3.65 % 4.07 % Efficiency ratio (1) 48.28 % 45.56 % 47.80 % 45.04 % � Per Share Data: (2) Net income-basic $ 0.23 $ 0.27 -14.8 % $ 1.08 $ 1.04 3.8 % Net income-diluted $ 0.23 $ 0.25 -8.0 % $ 1.04 $ 0.98 6.1 % Average number of shares outstanding: Basic 24,014,581 23,693,739 23,930,220 23,523,321 Diluted 24,610,554 24,897,456 24,840,298 24,876,881 � � � As of December 31, � 2007 � � � 2006 � � % Change � � Selected Balance Sheet Data: Loans, net $ 1,924,741 $ 1,629,827 18.1 % Investment securities 326,237 234,203 39.3 % Assets 2,339,697 1,949,082 20.0 % Deposits 1,869,165 1,605,941 16.4 % Stockholders� equity 169,143 139,851 20.9 % Book value per share (2) $ 7.04 $ 5.90 19.3 % � Capital Ratios (% of risk weighted assets): Tier 1 capital: Company 9.90 % 10.53 % Bank 7.77 % 7.83 % Total qualifying capital: Company 10.96 % 11.57 % Bank 10.73 % 11.34 % � Asset Quality Non-performing loans: Impaired loans $ 3,648 $ 3,910 Non-accrual loans � 178 � � 10 � Total non-performing loans $ 3,826 $ 3,920 Loans 90+ days past due and still accruing � 579 � � -- � Total non-performing loans and past due loans $ 4,405 $ 3,920 � Non-performing loans to total loans: 0.20 % 0.24 % to total assets: 0.16 % 0.20 % Non-performing loans and past due loans to total loans: 0.23 % 0.24 % to total assets: 0.19 % 0.20 % Allowance for loan losses to total loans 1.14 % 1.10 % Net charge-offs (recoveries) $ 181 $ 126 Net charge-offs to average loans outstanding 0.01 % 0.01 % � As of December 31, � 2007 � � 2006 � % Change � � � Loan Portfolio: Commercial $ 238,670 $ 190,527 25.3 % Real estate-one to four family residential 266,365 193,247 37.8 % Real estate-multifamily residential 56,952 57,913 -1.7 % Real estate-nonfarm, nonresidential 835,503 689,110 21.2 % Real estate-construction 544,290 515,040 5.7 % Farmland 1,468 -- 100.0 % Consumer � 8,714 � 6,997 24.5 % Total loans $ 1,951,962 $ 1,652,834 18.1 % Less unearned income 4,961 4,906 1.1 % Less allowance for loan losses � 22,260 � 18,101 23.0 % Loans, net $ 1,924,741 $ 1,629,827 18.1 % � Investment Securities (at book value): Available-for-sale: U.S. Government Agency obligations $ 242,966 $ 174,073 39.6 % Domestic corporate debt obligations 8,543 6,055 41.1 % Obligations of states and political subdivisions 23,001 3,659 528.6 % Restricted stock: Federal Reserve Bank 1,442 1,442 0.0 % Federal Home Loan Bank 4,631 3,034 52.6 % Community Bankers� Bank � 55 � 55 0.0 % $ 280,638 $ 188,318 49.0 % Held-to-maturity: U.S. Government Agency obligations $ 33,725 $ 35,520 -5.1 % Obligations of states and political subdivisions � 11,874 � 10,365 14.6 % $ 45,599 $ 45,885 -0.6 % (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 10% stock dividend in May 2007. Virginia Commerce Bancorp, Inc. Consolidated Balance Sheets (Dollars in thousands, except per share data) As of December 31, (Unaudited) � � 2007 2006 Assets Cash and due from banks $ 34,201 $ 34,989 Interest-bearing deposits with other banks 1,140 1,079 Securities (fair value: 2007, $326,314; 2006, $233,401) 326,237 234,203 Loans held-for-sale 4,339 7,796 Loans, net of allowance for loan losses of $22,260 in 2007 and $18,101 in 2006 1,924,741 1,629,827 Bank premises and equipment, net 12,705 9,273 Accrued interest receivable 11,451 9,315 Other assets � 24,883 � 22,600 � Total assets $ 2,339,697 $ 1,949,082 � Liabilities and Stockholders� Equity Deposits Demand deposits $ 213,820 $ 186,939 Savings and interest-bearing demand deposits 517,165 459,495 Time deposits � 1,138,180 � 959,507 � Total deposits $ 1,869,165 $ 1,605,941 Securities sold under agreement to repurchase and federal funds purchased 222,534 148,871 Other borrowed funds 25,000 -- Trust preferred capital notes 41,244 44,344 Accrued interest payable 8,942 5,923 Other liabilities � 3,669 � 4,152 � Total liabilities $ 2,170,554 $ 1,809,231 � Stockholders� Equity Preferred stock, $1.00 par, 1,000,000 shares authorized and un-issued $ -- $ -- Common stock, $1.00 par, 50,000,000 shares authorized, issued and outstanding 2007, 24,022,850; 2006, 21,560,253 24,023 21,560 Surplus 73,672 31,231 Retained earnings 70,239 87,744 Accumulated other comprehensive loss, net � 1,209 � (684 ) Total stockholders� equity $ 169,143 $ 139,851 Total liabilities and stockholders� equity $ 2,339,697 $ 1,949,082 � Virginia Commerce Bancorp, Inc. Consolidated Statements of Income (Dollars in thousands, except per share data) (Unaudited) � � � � Three Months Ended Year Ended December 31, � December 31, 2007 � 2006 � 2007 � 2006 � Interest and dividend income: Interest and fees on loans $ 36,163 $ 31,876 $ 138,919 $ 115,405 Interest and dividends on investment securities: Taxable 3,983 2,433 12,888 8,225 Tax-exempt 271 65 752 245 Dividends 91 68 308 276 Interest on deposits with other banks 88 16 140 55 Interest on federal funds sold � 179 � � 462 � � 1,131 � � � 1,086 Total interest and dividend income $ 40,775 � $ 34,920 � $ 154,138 � � $ 125,292 Interest expense: Deposits $ 18,222 $ 14,918 $ 69,398 $ 48,152 Securities sold under agreement to repurchase and federal funds purchased 1,860 1,352 6,259 4,730 Other borrowed funds 203 -- 225 506 Trust preferred capital notes � 753 � � 796 � � 3,099 � � � 3,099 Total interest expense $ 21,038 � $ 17,066 � $ 78,981 � � $ 56,487 Net interest income: $ 19,737 $ 17,854 $ 75,157 $ 68,805 Provision for loan losses � 2,770 � � 1,026 � � 4,340 � � � 4,406 Net interest income after provision for loan losses $ 16,967 � $ 16,828 � $ 70,817 � � $ 64,399 Non-interest income: Service charges and other fees $ 905 $ 836 $ 3,388 $ 3,226 Non-deposit investment services commissions 167 203 770 621 Fees and net gains on loans held-for-sale 525 859 2,706 3,058 Gain on sale of OREO -- -- 638 -- Gain (loss) on sale of securities -- -- (387 ) -- Other � 223 � � 135 � � 768 � � � 418 Total non-interest income $ 1,820 � $ 2,033 � $ 7,883 � � $ 7,323 Non-interest expense: Salaries and employee benefits $ 5,763 $ 5,333 $ 22,536 $ 19,911 Occupancy expense 1,985 1,444 7,031 5,448 Data processing expense 472 521 1,940 1,954 Other operating expense � 2,188 � � 1,762 � � 8,187 � � � 6,976 Total non-interest expense $ 10,408 � $ 9,060 � $ 39,694 � � $ 34,289 Income before taxes on income $ 8,379 $ 9,801 $ 39,006 $ 37,433 Provision for income taxes � 2,773 � � 3,370 � � 13,219 � � � 12,925 Net Income $ 5,606 � $ 6,431 � $ 25,787 � � $ 24,508 � Earnings per common share, basic (1) $ 0.23 $ 0.27 $ 1.08 $ 1.04 Earnings per common share, diluted (1) $ 0.23 $ 0.25 $ 1.04 $ 0.98 (1) Adjusted to give effect to a 10% stock dividend in May 2007. Virginia Commerce Bancorp, Inc. Consolidated Average Balances, Yields, and Rates Three Months Ended December 31, (Unaudited) � � � � 2007 2006 (Dollars in thousands) Average Balance � Interest Income-Expense � Average Yields /Rates Average Balance � Interest Income-Expense � Average Yields /Rates Assets � � � � Securities (1) $ 331,496 $ 4,345 5.34 % $ 221,753 $ 2,566 4.66 % Loans, net of unearned income (2) 1,877,790 36,163 7.65 % 1,590,753 31,876 7.85 % Interest-bearing deposits in other banks 7,386 88 4.73 % 1,071 16 5.81 % Federal funds sold � 16,083 � � 179 � 4.35 % � 35,476 � � 462 � 5.10 % Total interest-earning assets $ 2,232,755 $ 40,775 7.27 % $ 1,849,053 $ 34,920 7.50 % Other assets � 54,856 � 61,468 Total Assets $ 2,287,611 $ 1,910,521 � Liabilities and Stockholders� Equity Interest-bearing deposits: NOW accounts $ 148,996 $ 509 1.36 % $ 154,034 $ 630 1.62 % Money market accounts 214,429 2,052 3.80 % 232,338 2,269 3.87 % Savings accounts 158,788 1,636 4.09 % 49,021 450 3.65 % Time deposits � 1,110,633 � � 14,025 � 5.01 % � 942,160 � � 11,569 � 4.87 % Total interest-bearing deposits $ 1,632,846 $ 18,222 4.43 % $ 1,377,553 $ 14,918 4.30 % Securities sold under agreement to repurchase and federal funds purchased 207,470 1,860 3.56 % 135,912 1,352 3.95 % Other borrowed funds 25,000 203 3.17 % -- -- -- Trust preferred capital notes � 41,467 � � 753 � 7.11 % � 43,000 � � 796 � 7.24 % Total interest-bearing liabilities $ 1,906,783 $ 21,038 4.38 % $ 1,556,465 $ 17,066 4.35 % Demand deposits and other liabilities � 214,824 � 217,913 Total liabilities $ 2,121,607 $ 1,774,378 Stockholders� equity � 166,004 � 136,143 Total liabilities and stockholders� equity $ 2,287,611 $ 1,910,521 Interest rate spread 2.89 % 3.15 % Net interest income and margin $ 19,737 3.53 % $ 17,854 3.84 % (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 $1.4 million for the three months ended December 31, 2007, and 2006, respectively. Virginia Commerce Bancorp, Inc. Consolidated Average Balances, Yields, and Rates Year Ended December 31, �(Unaudited) � � � � � � � � � � � � 2007 2006 (Dollars in thousands) Average Balance � Interest Income-Expense � Average Yields /Rates Average Balance � Interest Income-Expense � Average Yields /Rates Assets � � � � Securities (1) $ 280,852 $ 13,948 5.04 % $ 199,658 $ 8,746 4.42 % Loans, net of unearned income (2) 1,766,501 138,919 7.87 % 1,470,264 115,405 7.85 % Interest-bearing deposits in other banks 2,802 140 5.01 % 1,055 55 5.20 % Federal funds sold � 22,372 � � 1,131 � 4.98 % � 21,972 � � 1,086 � 4.88 % Total interest-earning assets $ 2,072,527 $ 154,138 7.46 % $ 1,692,949 $ 125,292 7.41 % Other assets � 61,415 � 54,029 Total Assets $ 2,133,942 $ 1,746,978 � Liabilities and Stockholders� Equity Interest-bearing deposits: NOW accounts $ 155,047 $ 2,499 1.61 % $ 174,853 $ 2,880 1.65 % Money market accounts 224,524 8,806 3.92 % 195,482 6,879 3.52 % Savings accounts 120,061 5,148 4.29 % 26,934 608 2.26 % Time deposits � 1,054,962 � � 52,945 � 5.02 % � 843,661 � � 37,785 � 4.48 % Total interest-bearing deposits $ 1,554,594 $ 69,398 4.46 % $ 1,240,930 $ 48,152 3.88 % Securities sold under agreement to repurchase and federal funds purchased 165,499 6,259 3.78 % 118,092 4,730 4.01 % Other borrowed funds 6,986 225 3.18 % 9,726 506 5.13 % Trust preferred capital notes � 42,614 � � 3,099 � 7.17 % � 43,000 � � 3,099 � 7.11 % Total interest-bearing liabilities $ 1,769,693 $ 78,981 4.46 % $ 1,411,748 $ 56,487 4.00 % Demand deposits and other liabilities � 210,262 � 209,642 Total liabilities $ 1,979,955 $ 1,621,390 Stockholders� equity � 153,987 � 125,588 Total liabilities and stockholders� equity $ 2,133,942 $ 1,746,978 Interest rate spread 3.00 % 3.41 % Net interest income and margin $ 75,157 3.65 % $ 68,805 4.07 % (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 $5.5 million and $5.4 million for the twelve months ended December 31, 2007, and 2006, respectively.