UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended JUNE 30, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-28635

VIRGINIA COMMERCE BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

VIRGINIA
(State or Other Jurisdiction
of Incorporation or Organization)

54-1964895
(I.R.S. Employer Identification No.)

5350 LEE HIGHWAY, ARLINGTON, VIRGINIA 22207

(Address of Principal Executive Offices)

703-534-0700

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x . No o .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company as defined in Rule12b-2 of the Securities Exchange Act. Yes o . No x .

As of August 7, 2008, the number of outstanding shares of registrant’s common stock, par value $1.00 per share was: 26,566,711

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VIRGINIA COMMERCE BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of dollars, except per share data)

	Unaudited			Audited
	June 30,			December 31,
	2008			2007
Assets
Cash and due from banks	$	44,068		$	34,201
Interest-bearing deposits with other banks	16,715			1,140
Securities (fair value: 2008, $346,485, 2007, $326,314)	346,403			326,237
Loans held-for-sale	3,415			4,339
Loans, net of allowance for loan losses of $26,103 in 2008 and $22,260 in 2007	2,184,359			1,924,741
Bank premises and equipment, net	13,601			12,705
Accrued interest receivable	10,992			11,451
OREO	6,091			—
Other assets	29,773			24,883
Total assets	$	2,655,417		$	2,339,697
Liabilities and Stockholders’ Equity
Deposits
Demand deposits	$	203,362		$	213,820
Savings and interest-bearing demand deposits	567,757			517,165
Time deposits	1,328,167			1,138,180
Total deposits	$	2,099,286		$	1,869,165
Securities sold under agreement to repurchase and federal funds purchased	278,895			222,534
Other borrowed funds	50,000			25,000
Trust preferred capital notes	41,244			41,244
Accrued interest payable	7,329			8,942
Other liabilities	3,300			3,669
Commitments and contingent liabilities	—			—
Total liabilities	$	2,480,054		$	2,170,554
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 2008, 26,566,711; 2007, 24,022,850	26,567			24,023
Surplus	94,244			73,672
Retained earnings	56,777			70,239
Accumulated other comprehensive income (loss), net	(2,225		)	1,209
Total stockholders’ equity	$	175,363		$	169,143
Total liabilities and stockholders’ equity	$	2,655,417		$	2,339,697

Notes to consolidated financial statements are an integral part of these statements.

VIRGINIA COMMERCE BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands of dollars, except per share data)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007

Interest and dividend income:
Interest and fees on loans	$	35,935	$	34,515	$	71,826	$	67,315
Interest and dividends on investment securities:
Taxable	3,769		2,920		7,548		5,596
Tax-exempt	298		163		569		253
Dividends	100		74		192		140
Interest on deposits with other banks	85		17		102		35
Interest on federal funds sold	213		90		226		547
Total interest and dividend income	$	40,400	$	37,779	$	80,463	$	73,886
Interest expense:
Deposits	$	17,307	$	16,756	$	35,337	$	32,946
Securities sold under agreement to repurchase and federal funds purchased	1,418		1,585		3,101		2,836
Other borrowed funds	270		—		464		—
Trust preferred capital notes	691		782		1,382		1,559
Total interest expense	$	19,686	$	19,123	$	40,284	$	37,341
Net interest income:	$	20,714	$	18,656	$	40,179	$	36,545
Provision for loan losses	3,656		300		7,768		660
Net interest income after provision for loan losses	$	17,058	$	18,356	$	32,411	$	35,885
Non-interest income:
Service charges and other fees	$	945	$	820	$	1,866	$	1,660
Non-deposit investment services commissions	199		193		349		377
Fees and net gains on loans held-for-sale	415		769		851		1,430
Other	170		193		294		370
Total non-interest income	$	1,729	$	1,975	$	3,360	$	3,837
Non-interest expense:
Salaries and employee benefits	$	5,853	$	5,785	$	11,709	$	11,321
Occupancy expense	2,167		1,628		4,314		3,244
Data processing expense	542		430		1,081		997
Other operating expense	2,644		2,054		4,894		3,824
Total non-interest expense	$	11,206	$	9,897	$	21,998	$	19,386
Income before income taxes	$	7,581	$	10,434	$	13,773	$	20,336
Provision for income taxes	2,660		3,555		4,704		6,983
Net Income	$	4,921	$	6,879	$	9,069	$	13,353

Earnings per common share, basic (1)	$	0.18	$	0.26	$	0.34	$	0.51
Earnings per common share, diluted (1)	$	0.18	$	0.25	$	0.33	$	0.49

(1) Adjusted to give effect to a 10% stock dividend paid May 2008.

Notes to consolidated financial statements are an integral part of these statements.

VIRGINIA COMMERCE BANCORP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the six months ended June 30, 2008 and 2007

(In thousands of dollars)

(Unaudited)

										Accumulated
										Other						Total
	Preferred		Common				Retained			Comprehensive			Comprehensive			Stockholders’
	Stock		Stock		Surplus		Earnings			Income (Loss)			Income			Equity
Balance, January 1, 2007	$	—	$	21,560	$	31,231	$	87,744		$	(684	)				$	139,851
Comprehensive Income:
Net Income							13,353						$	13,353		13,353
Other comprehensive income (loss), unrealized holding losses arising during the period (net of tax of $645)										(1,196		)	(1,196		)	(1,196		)
Total comprehensive income													$	12,157
Stock options exercised	—		181		198		—			—						379
Stock option expense	—		—		205		—			—						205
Employee Stock Purchase Plan	—		2		30		—			—						32
10% stock dividend paid May 2007	—		2,172		41,108		(43,280		)	—						—
Cash paid in lieu of fractional shares	—		—		—		(12		)	—						(12		)
Balance, June 30, 2007	$	—	$	23,915	$	72,772	$	57,805		$	(1,880	)				$	152,612

Balance, January 1, 2008	$	—	$	24,023	$	73,672	$	70,239		$	1,209					$	169,143
Comprehensive Income:
Net Income							9,069						$	9,069		9,069
Other comprehensive income (loss), unrealized holding losses arising during the period (net of tax of $1,849)										(3,434		)	(3,434		)	(3,434		)
Total comprehensive income													$	5,635
Stock options exercised	—		132		168		—			—						300
Stock option expense	—		—		288		—			—						288
Employee Stock Purchase Plan	—		—		3		—			—						3
10% stock dividend paid May 2008	—		2,412		20,113		(22,525		)	—						—
Cash paid in lieu of fractional shares	—		—		—		(6		)	—						(6		)
Balance, June 30, 2008	$	—	$	26,567	$	94,244	$	56,777		$	(2,225	)				$	175,363

Notes to consolidated financial statements are an integral part of these statements.

VIRGINIA COMMERCE BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of Dollars)

(Unaudited)

	Six Months Ended June 30,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	9,069		$	13,353
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,270			908
Provision for loan losses	7,768			660
Stock based compensation expense	288			205
Deferred tax benefit	(1,450		)	(526		)
Accretion of security discounts, net	(86		)	(172		)
Origination of loans held-for-sale	(44,256		)	(98,189		)
Sale of loans	45,683			93,847
Proceeds from gain on sale of loans	(502		)	(826		)
Changes in other assets and other liabilities:
Decrease (Increase) in accrued interest receivable	460			(1,575		)
Increase in other assets	(7,682		)	(1,241		)
Decrease in other liabilities	(1,982		)	(1,982		)
Net Cash Provided by Operating Activities	$	8,580		$	4,462

CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans	$	(267,387	)	$	(108,685	)
Purchase of securities available-for-sale	(103,440		)	(53,869		)
Purchase of securities held-to-maturity	(7,127		)	(1,500		)
Proceeds from principal payments on securities available-for-sale	11,877			1,416
Proceeds from principal payments on securities held-to-maturity	2,889			2,520
Proceeds from calls and maturities of securities available-for-sale	60,282			18,800
Proceeds from calls and maturities of securities held-to-maturity	10,155			—
Purchase of bank premises and equipment	(2,166		)	(2,537		)
Net Cash Used In Investing Activities	$	(294,917	)	$	(143,855	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits	$	230,121		$	139,515
Net increase in repurchase agreements and Federal Funds purchased	56,361			14,170
Net increase in other borrowed funds	25,000			—
Net proceeds from issuance of capital stock	303			411
Cash paid in lieu of fractional shares	(6		)	(12		)
Net Cash Provided By Financing Activities	$	311,779		$	154,084

Net Increase In Cash and Cash Equivalents	25,442			14,691

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	35,341			36,068
CASH AND CASH EQUIVALENTS – END OF PERIOD	$	60,783		$	50,759

Supplemental Schedule of Noncash Investing Activities:
Unrealized loss on available-for-sale securities	$	(5,283	)	$	(1,841	)
Tax benefits on stock options exercised	45			69
Other real estate owned transferred from loans	6,045			—

Supplemental Disclosure of Cash Flow Information:
Taxes Paid	$	5,778		$	9,026
Interest Paid	41,897			37,319

Notes to consolidated financial statements are an integral part of these statements.

VIRGINIA COMMERCE BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. General

The accompanying unaudited consolidated financial statements of Virginia Commerce Bancorp, Inc. and its subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. All significant intercompany balances and transactions have been eliminated. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments and reclassifications consisting of a normal and recurring nature considered necessary to present fairly the financial positions as of June 30, 2008 and December 31, 2007, the results of operations for the three and six months ended June 30, 2008 and 2007, and statements of cash flows and stockholders’ equity for the six months ended June 30, 2008 and 2007. These statements should be read in conjunction with the Company’s annual report on Form 10-K for the period ended December 31, 2007.

Operating results for the three and six month periods ended June 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008, or any other period.

FAIR VALUE MEASUREMENTS

SFAS No. 157, Fair Value Measurements , defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follow:

·	Level 1	inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

·	Level 2	inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

·	Level 3	inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

Securities

Where quoted prices are available in an active market, securities are classified within level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within level 3 of the valuation hierarchy. Currently, all of the Company’s securities are considered to be Level 2 securities.

Loans held-for-sale

Loans held for sale which is required to be measured in a lower of cost or fair value. Under SFAS No. 157, market value is to represent fair value. Management obtains quotes or bids on all or part of these loans directly from the purchasing financial institutions. Premiums received or to be received on the quotes or bids are indicative of the fact that cost is lower than fair value. At June 30, 2008, the entire balance of loans held-for–sale was recorded at its cost.

Impaired loans

SFAS No. 157 applies to loans measured for impairment using the practical expedients permitted by SFAS No. 114, Accounting by Creditors for Impairment of a Loan , including impaired loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is collateral dependent). Fair

value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation which is then adjusted for the cost related to liquidation of the collateral.

Other Real Estate Owned

Certain assets such as other real estate owned (OREO) are measured at fair value less cost to sell. We believe that the fair value component in its valuation follows the provisions of SFAS No. 157.

2. Investment Securities

Amortized cost and fair value of securities available-for-sale and held-to-maturity as of June 30, 2008 are as follows (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Available-for-Sale:
U.S. Government Agency obligations	$	263,200	$	1,540	$	(2,016	)	$	262,724
Domestic corporate debt obligations	8,894		—		(2,108		)	6,786
Obligations of states and political subdivisions	30,080		86		(924		)	29,242
Restricted stock:
Federal Reserve Bank	1,442		—		—			1,442
Federal Home Loan Bank	6,459		—		—			6,459
Community Bankers’ Bank	55		—		—			55
	$	310,130	$	1,626	$	(5,048	)	$	306,708

Held-to-Maturity:
U.S. Government Agency obligations	$	20,974	$	38	$	(235	)	$	20,777
Obligations of states and political subdivisions	18,721		293		(14		)	19,000
	$	39,695	$	331	$	(249	)	$	39,777

VIRGINIA COMMERCE BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(Unaudited)

Amortized cost and fair value of securities available-for-sale and held-to-maturity as of December 31, 2007 are as follows (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Available–for-sale:
U.S. Government Agency obligations	$	240,329	$	2,737	$	(101	)	$	242,965
Domestic corporate debt obligations	9,241		—		(697		)	8,544
Obligations of states and political subdivisions	23,079		137		(215		)	23,001
Restricted stock:
Federal Reserve Bank	1,442		—		—			1,442
Federal Home Loan Bank	4,631		—		—			4,631
Community Bankers’ Bank	55		—		—			55
	$	278,777	$	2,874	$	(1,013	)	$	280,638

Held-to-maturity:
U.S. Government Agency obligations	$	33,725	$	100	$	(124	)	$	33,701
Obligations of state and political subdivisions	11,874		111		(10		)	11,975
	$	45,599	$	211	$	(134	)	$	45,676

The amortized cost of securities pledged as collateral for repurchase agreements, certain public deposits, and other purposes were $266.9 million and $274.0 million at June 30, 2008, and December 31, 2007, respectively.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Provided below is a summary of securities which were in an unrealized loss position at June 30, 2008, and December 31, 2007. Of the total securities in an unrealized loss position at June 30, 2008, 79.7% were U.S. Government Agency obligations with maturities ranging from three months to thirty years. As the Company has the ability and intent to hold these securities until maturity, or until such time as the value recovers, no declines are deemed to be other-than-temporary. In addition, there has been no deterioration in the ratings for any of the securities that would require they be sold.

	Less Than 12 Months					12 Months of Longer				Total
At June 30, 2008 (Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-sale:
U.S. Government Agency obligations	$	111,806	$	(2,016	)	$	—	$	—	$	111,806	$	(2,016	)
Domestic corporate debt obligations	6,786		(2,108		)	—		—		6,786		(2,108		)
Obligations of states/political subdivisions	22,037		(924		)	—		—		22,037		(924		)
	$	140,629	$	(5,048	)	$	—	$	—	$	140,629	$	(5,048	)
Held-to-maturity:
U.S. Government Agency obligations	$	11,874	$	(235	)	$	—	$	—	$	11,874	$	(235	)
Obligations of states/political subdivisions	2,629		(14		)	—		—		2,629		(14		)
	$	14,503	$	(249	)	$	—	$	—	$	14,503	$	(249	)

VIRGINIA COMMERCE BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(Unaudited)

	Less Than 12 Months					12 Months of Longer					Total
At December 31, 2007 (Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available-for-sale:
U.S. Government Agency obligations	$	—	$	—		$	10,682	$	(101	)	$	10,682	$	(101	)
Domestic corporate debt obligations	8,544		(697		)	—		—			8,544		(697		)
Obligations of states/political subdivisions	12,886		(212		)	569		(3		)	13,455		(215		)
	$	21,430	$	(909	)	$	11,251	$	(104	)	$	32,681	$	(1,013	)
Held-to-maturity:
U.S. Government Agency obligations	$	—	$	—		$	16,611	$	(124	)	$	16,611	$	(124	)
Obligations of states/political subdivisions	—		—			1,994		(10		)	1,994		(10		)
	$	0	$	0		$	18,605	$	(134	)	$	18,605	$	(134	)

3. Loans

Major classifications of loans, excluding loans held-for-sale, are summarized as follows:

	June 30, 2008		December 31, 2007
	(In Thousand of Dollars)

Commercial	$	254,110	$	238,670
Real estate-one-to-four family residential:
Closed end first and seconds	197,858		178,310
Home equity lines	107,025		88,055
Total Real estate-one-to-four family residential	$	304,883	$	266,365
Real estate-multi-family residential	62,667		56,952
Real estate-non-farm, non-residential:
Owner Occupied	411,357		356,035
Non-owner occupied	570,731		479,468
Total Real estate-non-farm, non-residential	$	982,088	$	835,503
Real estate-construction:
Residential-Owner Occupied	24,308		23,590
Residential-Builder	310,907		302,362
Commercial	266,981		218,338
Total Real estate-construction	$	602,196	$	544,290
Farmland	2,003		8,714
Consumer	7,641		1,468
Total Loans	$	2,215,588	$	1,951,962
Less unearned income	5,126		4,961
Less allowance for loan losses	26,103		22,260
Loans, net	$	2,184,359	$	1,924,741

4. Allowance for Loan Loss

An analysis of the allowance for loan losses for the six months ended June 30, 2008, June 30, 2007, and the year ended December 31, 2008 is shown below (dollars in thousands):

	June 30, 2008			June 30, 2007			December 31, 2007
Allowance, at beginning of period	$	22,260		$	18,101		$	18,101
Provision charged against income	7,768			660			4,340
Recoveries added to reserve	23			15			31
Losses charged to reserve	(3,948		)	(40		)	(212		)
	$	26,103		$	18,736		$	22,260

Information about impaired loans as of and for June 30, 2008 and December 31, 2007, is as follows (dollars in thousands):

	June 30, 2008		December 31, 2007
Non-accrual loans for which a specific allowance has been provided	$	14,780	$	3,826
Non-accrual loans for which no specific allowance has been provided	19,404		—
Other impaired loans for which a specific allowance has been provided	23,255		—
Other impaired loans for which no specific allowance has been provided	21,093		15,444
Total Impaired loans	$	78,532	$	19,270

Allowance provided for impaired loans, included in the allowance for loan losses	$	5,994	$	1,228

5. Earnings Per Share

The following shows the weighted average number of shares used in computing earnings per share and the effect on the weighted average number of shares of potentially dilutive common stock. As of June 30, 2008 there were 1,042,694 anti-dilutive stock options outstanding. The weighted average number of shares for both periods presented, have been adjusted to give effect to a 10% stock dividend paid in May 2008. Potentially dilutive common stock had no effect on income available to common stockholders.

	Three Months Ended						Six Months Ended
	June 30, 2008			June 30, 2007			June 30, 2008			June 30, 2007
		Per			Per			Per			Per
		Share			Share			Share			Share
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Basic earnings per share	26,553,361	$	0.18	26,294,535	$	0.26	26,542,780	$	0.34	26,284,205	$	0.51
Effect of dilutive securities:
Stock options	600,540			1,141,162			668,434			1,156,815
Diluted earnings per share	27,153,901	$	0.18	27,435,697	$	0.25	27,211,214	$	0.33	27,441,020	$	0.49

6. Stock Compensation Plan

At June 30, 2008, the Company had a stock-based compensation plan. Included in salaries and employee benefits expense for the six months ended June 30, 2008 and 2007, is $288 thousand and $205 thousand, respectively, of stock-based compensation expense which is based on the estimated fair value of 598,184 options granted between January 2006 and June 2008, as adjusted, amortized on a straight-line basis over a five year requisite service period. As of June 30, 2008, there was $2.1 million remaining of total unrecognized compensation expense related to these option awards which will be recognized over the remaining requisite service periods.

The fair value of each grant is estimated at the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions for grants in 2008 and 2007:

	2008		2007
Expected volatility	23.14	%	23.59	%
Expected dividends	.00	%	.00	%
Expected term (in years)	7.2		7.5
Risk-free rate	3.35% to 3.39	%	3.70% to 4.93	%

In 2006, the Company took into consideration guidance under SFAS 123R and SEC Staff Accounting Bulletin No.107 (SAB 107) when reviewing and updating assumptions. For 2006 and 2007 the weighted average expected option term reflects the application of the simplified method set out in SAB 107, which defines the life as the average of the contractual term of the options and the weighted average vesting period for all option tranches. In 2008, the Company reviewed prior option exercise data in determining an expected term of 7.2 years.

Stock option plan activity for the six months ended June 30, 2008, adjusted to give effect to the 10% stock dividend in May 2008, is summarized below:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value ($ 000)
Outstanding at January 1, 2008	2,000,505		$	7.13
Granted	234,531		10.61
Exercised	(141,861	)	1.79
Forfeited	(32,953	)	14.43
Outstanding at June 30, 2008	2,060,222		$	7.77	5.22	$	0.00
Exercisable at June 30, 2008	1,585,943		$	6.09	4.12	$	0.00

The total value of in-the-money options exercised during the six months ended June 30, 2008, was $927,303.

VIRGINIA COMMERCE BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(Unaudited)

7. Capital Requirements

A comparison of the Company’s and its wholly-owned subsidiary’s, Virginia Commerce Bank (the “Bank”) capital ratios as of June 30, 2008 with the minimum regulatory guidelines is as follows:

	Actual		Minimum Guidelines		Minimum to be “Well-Capitalized”
Total Risk-Based Capital:
Company	10.42	%	8.00	%	—
Bank	10.39	%	8.00	%	10.00	%

Tier 1 Risk-Based Capital:
Company	9.31	%	4.00	%	—
Bank	7.56	%	4.00	%	6.00	%

Leverage Ratio:
Company	8.40	%	4.00	%	—
Bank	6.81	%	4.00	%	5.00	%

8. Other Borrowed Money and Lines of Credit

The Bank maintains a $375.0 million line of credit with the Federal Home Loan Bank of Atlanta. The interest rate and term of each advance from the line is dependent upon the advance and commitment type. Advances on the line are secured by all of the Bank’s qualifying first liens, second liens and home equity lines-of-credit on one-to-four unit single-family dwellings. As of June 30, 2008, the book value of these qualifying loans totaled approximately $148.9 million and the amount of available credit using this collateral was $93.0 million. Advances on the line of credit in excess of this amount require pledging of additional assets, including other types of loans and investment securities. As of June 30, 2008, the Bank had $50 million in outstanding advances. The Bank has additional short-term lines of credit totaling $120.0 million with nonaffiliated banks at June 30, 2008, on which $63 million was outstanding at that date.

9. Trust Preferred Securities

On December 19, 2002, the Company completed a private placement issuance of $15.0 million of trust preferred securities through a newly formed, wholly-owned, subsidiary trust (VCBI Capital Trust II) which issued $470 thousand in common equity to the Company. These securities bear a floating rate of interest, adjusted semi-annually, of 330 basis points over six month Libor, currently 6.43%, with a maximum rate of 11.9% until December 30, 2007. These securities were callable at par beginning December 30, 2007. On December 20, 2005, the Company completed a private placement of $25.0 million of trust preferred securities through a newly formed, wholly-owned, subsidiary trust (VCBI Capital Trust III) which issued $774 thousand in common equity to the Company. These securities bear a fixed rate of interest of 6.19% until February 23, 2011, at which time they convert to a floating rate, adjusted quarterly, of 142 basis points over three month Libor. These securities are callable at par beginning February 23, 2011.

The principal asset of each trust is a similar amount of the Company’s junior subordinated debt securities with an approximately 30 year term from issuance and like interest rates to the trust preferred securities. The obligations of the Company with respect to the trust preferred securities constitute a full and unconditional guarantee by the Company of each Trust’s obligations with respect to the trust preferred securities to the extent set forth in the related guarantees. Subject to certain exceptions and limitations, the Company may elect from time to time to defer interest payments on the junior subordinated debt securities, resulting in a deferral of distribution payments on the related

trust preferred securities. If the Company defers interest payments on the junior subordinated debt securities, or otherwise is in default of the obligations in respect to the trust preferred securities, the Company would be prohibited from making dividend payments to its shareholders, and from most purchases, redemptions or acquisitions of the Company’s common stock.

The Trust Preferred Securities may be included in Tier 1 capital for regulatory capital adequacy purposes up to 25.0% of Tier 1 capital after its inclusion. The portion of the trust preferred securities not qualifying as Tier 1 capital may be included as part of total qualifying capital in Tier 2 capital. Commencing March 31, 2009, the aggregate amount of qualifying trust preferred securities which may be included in Tier 2 capital, along with other restricted core capital elements, is limited to 50% of Tier 1 capital, net of goodwill and certain other intangible assets.

10. Segment Reporting

In accordance with SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information” the Company has two reportable segments, its community banking operations and its mortgage banking division. Community banking operations, the major segment, involves making loans and gathering deposits from individuals and businesses in the Bank’s market area, while the mortgage banking division originates and sells mortgage loans, servicing released, on one-to-four family residential properties. Revenues from mortgage lending consist of interest earned on mortgage loans held-for-sale, loan origination fees, and net gains on the sale of loans in the secondary market. The Bank provides the mortgage division with short-term funds to originate loans and charges it interest on the funds based on what the Bank earns on overnight funds. Expenses include both fixed overhead and variable costs on originated loans such as loan officer commissions, document preparation and courier fees. The following table presents segment information for the six months ended June 30, 2008, and 2007. Eliminations consist of overhead and interest charges by the Bank to the mortgage lending division.

	Six Months Ended June 30, 2008
(In thousands)	Community Banking		Mortgage Lending			Eliminations			Total
Interest income	$	80,356	$	107		—			$	80,463
Non-interest income	2,509		851			—			3,360
Total operating income	$	82,865	$	958		$	—		$	83,823

Interest expense	$	40,284	$	44		$	(44	)	$	40,284
Provision for loan losses	7,768		—			—			7,768
Non-interest expense	20,842		1,198			(42		)	21,998
Total operating expense	$	68,894	$	1,242		$	(86	)	$	70,050
Income before taxes on income	$	13,971	$	(284	)	$	86		$	13,773
Provision for income taxes	4,803		(99		)	—			4,704
Net Income	$	9,168	$	(185	)	$	86		$	9,069

Total Assets	$	2,651,843	$	3,574		—			$	2,655,417

	Six Months Ended June 30, 2007
(In thousands)	Community Banking		Mortgage Lending			Eliminations			Total
Interest income	$	73,652	$	234		—			$	73,886
Non-interest income	2,407		1,430			—			3,837
Total operating income	$	76,059	$	1,664		$	—		$	77,723

Interest expense	$	37,341	$	205		$	(205	)	$	37,341
Provision for loan losses	660		—			—			660
Non-interest expense	17,818		1,539			29			19,386
Total operating expense	$	55,819	$	1,744		$	(176	)	$	57,387
Income before taxes on income	$	20,240	$	(80	)	$	176		$	20,336
Provision for income taxes	7,011		(28		)	—			6,983
Net Income	$	13,229	$	(52	)	$	176		$	13,353

Total Assets	$	2,100,375	$	13,172		—			$	2,113,547

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This management’s discussion and analysis and other portions of this report, 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.

Non-GAAP Presentations

This management’s discussion and analysis 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 which 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 principles generally accepted in the United States, or “GAAP”.

General

The following presents management’s discussion and analysis of the consolidated financial condition and results of operations of Virginia Commerce Bancorp, Inc. and subsidiaries (the “Company”) as of the dates and for the periods indicated. This discussion should be read in conjunction with the Company’s Consolidated Financial Statements and the Notes thereto, and other financial data appearing elsewhere in this report. The Company 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-six branch offices, one residential mortgage office and one investment services offices.

Headquartered in Arlington, Virginia, Virginia Commerce serves the Northern Virginia suburbs of Washington, D.C., including Arlington, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania and Stafford Counties and the cities of Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas and Manassas Park. Its service area also covers, to a lesser extent, Washington, D.C. and the nearby Maryland counties of Montgomery and Prince Georges. The Bank’s customer base includes small-to-medium sized businesses including firms that have contracts with the U.S. government, associations, retailers and industrial businesses, professionals and their firms, business executives, investors and consumers. Additionally, the Bank has strong market niches in commercial real estate and construction lending and operates its residential mortgage lending division as its only other business segment.

Critical Accounting Policies

During the quarter ended June 30, 2008 there were no changes in the Company’s critical accounting policies as reflected in the last report.

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The financial information contained within our statements is, to a significant extent, financial information that is based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset or relieving a liability. We use historical loss factors as one factor in determining the inherent loss that may be present in our loan portfolio. Actual losses could differ significantly from the historical factors that we use. In addition, GAAP itself may change from one previously acceptable method to another method.

Although the economics of our transactions would be the same, the timing of events that would impact our transactions could change.

The allowance for loan losses is an estimate of the losses that are inherent in our loan portfolio. The allowance is based on two basic principles of accounting: (i) SFAS 5, Accounting for Contingencies, which requires that losses be accrued when they are probable of occurring and estimable and (ii) SFAS 114, Accounting by Creditors for Impairment of a Loan, which requires that losses be accrued based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance.

Our allowance for loan losses has two basic components: the specific allowance and the unallocated allowance. Each of these components is determined based upon estimates that can and do change when the actual events occur. The specific allowance is used to individually allocate an allowance for impaired loans. Impairment testing includes consideration of the borrower’s overall financial condition, resources and payment record, support available from financial guarantors and the fair market value of collateral. These factors are combined to estimate the probability and severity of inherent losses based on the Company’s calculation of the loss embedded in the individual loan. Large groups of smaller balance, homogeneous loans are collectively evaluated for impairment. Impaired loans which meet the criteria for substandard, doubtful and loss are segregated from performing loans within the portfolio. Internally classified loans are then grouped by loan type (commercial, commercial real estate, commercial construction, residential real estate, residential construction or installment). When impairment testing reflects no need for specific reserves on a particular loan, the loan is then assigned the unallocated allowance factor for its loan type. The unallocated formula is used to estimate the loss of non-classified loans. These un-criticized loans are also segregated by loan type and allowance factors are assigned by management based on delinquencies, loss history, trends in volume and terms of loans, effects of changes in lending policy, the experience and depth of management, national and local economic trends, concentrations of credit, quality of the loan review system and the effect of external factors (i.e. competition and regulatory requirements). The factors assigned differ by loan type. The unallocated allowance recognizes potential losses whose impact on the portfolio has yet to be recognized by a specific allowance. Allowance factors and the overall size of the allowance may change from period to period based on management’s assessment of the above described factors and the relative weights given to each factor. Further information regarding the allowance for loan losses is provided under the caption: Allowance for Loan Losses/Provision for Loan Loss Expense , later in this report.

The Company’s 1998 Stock Option Plan (the “Plan”), which is shareholder-approved, permits the grant of share options to its directors and officers for up to 2.42 million shares of common stock, as adjusted for a ten-percent stock dividend paid on May 7, 2008. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant, generally vest based on 5 years of continuous service and have 10-year contractual terms. The fair value of each option award is estimated on the date of grant using a Black-Scholes option pricing model that currently uses historical volatility of the Company’s stock based on a 7.2 year expected term, before exercise, for the options granted, and a risk-free interest rate based on the U.S. Treasury curve in effect at the time of the grant to estimate total stock-based compensation expense. This amount is then amortized on a straight-line basis over the requisite service period, currently 5 years, to salaries and benefits expense. See Note 5 to the Consolidated Financial Statements for additional information regarding the Stock Option Plan and related expense.

Results of Operations

For the six months ended June 30, 2008, the Bank experienced strong growth in assets, loans and deposits, with total assets rising $315.7 million, or 13.2%, from $2.34 billion at December 31, 2007, to $2.65 billion at June 30, 2008, as total deposits grew $230.1 million, or 12.3%, from $1.87 billion to $2.10 billion. Earnings for the period of $9.1 million were down $4.3 million, or 32.1%, compared to $13.4 million earned in the same period in 2007. On a diluted per share basis, earnings for the six months ended June 30, 2008, were $0.33 compared to $0.49 for the same period in 2007, a decrease of 32.1%. For the three months ended June 30, 2008, earnings of $4.9 million were down $2.0 million, or 28.5%, from 2007 second quarter earnings of $6.9 million. Earnings for both the three and six months ended June 30, 2008, were significantly impacted by loan loss provisions of $3.7 million and $7.8 million, respectively. These higher provisions were the result of increases in the level of non-performing assets and other impaired loans, $3.9 million in net charge-offs year-to-date, and overall loan portfolio growth.

Loans, net of the allowance for loan losses, increased $259.6 million, or 13.5%, from $1.92 billion at December 31, 2007, to $2.18 billion at June 30, 2008, and represented 104.1% of total deposits at June 30, 2008, compared to 103.0% at December 31, 2007. The majority of the growth in loans occurred in non-farm, non-residential real estate loans which increased $146.6 million, or 17.5%, from $835.5 million at December 31, 2007, to $982.1 million at

June 30, 2008, while construction loans rose $57.9 million and one-to-four family residential real estate loans increased by $19.9 million. Increases in one-to-four family residential loans are due to the Bank holding more of its originations in portfolio rather than selling them, due to a reduction in demand and available products in the secondary market, while the growth in construction loans was concentrated in commercial real estate projects. Since June 30, 2007, residential construction loans are down $17.6 million and are expected to decrease further as that lending focus is significantly curtailed.

Total deposit growth of $230.1 million included a decrease in demand deposits of $10.5 million, or 4.9%, from $213.8 million at December 31, 2007, to $203.3 million at June 30, 2008, an increase in savings and interest-bearing demand deposits of $50.6 million, or 9.8%, and an increase in time deposits of $190.0 million, from $1.14 billion at December 31, 2007, to $1.33 billion. The majority of the Bank’s deposits are attracted from individuals and businesses in the Northern Virginia and the Metropolitan Washington, D.C. area, and the interest rates the Bank pays are generally near the top of the local market.

Repurchase agreements, the majority of which represent funds of significant commercial demand deposit customers, and Fed funds purchased increased $56.4 million, or 25.3%, from $222.5 million at December 31, 2007, to $278.9 million at June 30, 2008. As of June 30, 2008, Fed funds purchased represented $63.0 million of the $278.9 million in total repurchase agreements and Fed funds purchased.

As noted, for the six months ended June 30, 2008, net income decreased $4.3 million, or 32.1%, from $13.4 million for the six months ended June 30, 2007, to $9.1 million, as net interest income increased $3.6 million, or 9.9%, non-interest income decreased $477 thousand, or 12.4%, non-interest expense rose $2.6 million, or 13.5%, and provisions for loan losses were up $7.1 million. Diluted earnings per share, adjusted giving effect to a 10% stock dividend in May 2008, of $0.33 were down $0.16, or 32.7%, from $0.49 for the comparable period in 2007. The Company’s annualized return on average assets and return on average equity were 0.73% and 10.43% for the current six month period compared to 1.32% and 18.40% for the six months ended June 30, 2007.

For the three months ended June 30, 2008, net income of $4.9 million was down $2.0 million, or 28.5%, compared to $6.9 million for the same period in 2007 as net interest income rose $2.1 million, or 11.0%, non-interest income decreased $246 thousand, or 12.5%, and provisions for loan losses were up $3.4 million. Diluted earnings per share declined $0.07, or 28.0%, from $0.25 for the three months ended June 30, 2007, to $0.18 for the three month period ended June 30, 2008. The return on average assets and return on average equity were 0.76% and 11.18% for the three months ended June 30, 2008, compared to 1.34% and 18.41% for the same period in 2007.

Stockholders’ equity increased $6.3 million, or 3.7%, from $169.1 million at December 31, 2007, to $175.4 million at June 30, 2008, on earnings of $9.1 million, $303 thousand in proceeds and tax benefits related to the exercise of options by Company directors, officers and employees, $288 thousand in stock based compensation expense credits and a decrease of $3.4 million in other comprehensive income related to the investment securities portfolio, net of tax. In May, 2008, the Company paid a 10% stock dividend increasing the number of shares outstanding to 26.6 million.

Net Interest Income

Net interest income is the excess of interest earned on loans and investments over the interest paid on deposits and borrowings, and is the Company’s primary revenue source. Net interest income is thereby affected by balance sheet growth, changes in interest rates and changes in the mix of investments, loans, deposits and borrowings. Net interest income increased $3.6 million, or 9.9%, from $36.5 million for the six months ended June 30, 2007, to $40.2 million for the six month period ended June 30, 2008, and increased $2.1 million, or 11.0%, from $18.6 million for the three months ended June 30, 2007, to $20.7 million for the three months ended June 30, 2008. Increases for both periods were due to overall balance sheet growth as the net interest margin declined from 3.74% for the six months ended June 30, 2007, to 3.32% for the current six-month period and from 3.75% for the three months ended June 30, 2007, to 3.30% for the three months ended June 30, 2008.

The year-over-year declines in the net interest margin continue to be primarily the result of lower yields on loans due to reductions in the prime rate from 8.25% in June 2007, to 5.00% presently. As a result, the yield on loans fell 128 basis points, from 7.88% for the three months ended June 30, 2007, to 6.71% in the current period. On the funding side, ongoing strong competition for deposits in the local market has not allowed for the same level of decline in the cost of interest-bearing liabilities, which decreased 91 basis points, from 4.49% for the three months ended June 30, 2007, to 3.58%. Increases in non-performing loans have also impacted the margin, accounting for a ten basis point

decline in the second quarter of 2008, and a seven basis point decline year-to-date. Over the next six months, and considering no change in the prime rate over that period, Management anticipates the margin will continue to range from 3.25% to 3.50% as over $800 million in time deposits mature and generally are expected to be renewed or replaced at lower rates.

The following tables show the average balance sheets for each of the three months and six months ended June 30, 2008 and 2007. In addition, the amounts of interest earned on interest-earning assets, with related yields on a tax-equivalent basis, and interest expense on interest-bearing liabilities, with related rates, are shown. Loans placed on a non-accrual status are included in the average balances. Net loan fees and late charges included in interest income on loans totaled $1.4 million and $1.5 million for the three months ended June 30, 2008, and 2007, respectively, and totaled $2.7 million and $2.8 million for the six month periods.

	Three months ended June 30,
	2008						2007
(Dollars in thousands)	Average Balance		Interest Income- Expense		Average Yields /Rates		Average Balance		Interest Income- Expense		Average Yields /Rates
Assets
Securities (1)	$	331,321	$	4,167	5.14	%	$	260,680	$	3,157	4.92	%
Loans, net of unearned income	2,150,165		35,935		6.71	%	1,733,803		34,515		7.88	%
Interest-bearing deposits in other banks	13,311		85		2.58	%	1,213		17		5.64	%
Federal funds sold	41,595		213		2.03	%	6,879		90		5.18	%
Total interest-earning assets	$	2,536,392	$	40,400	6.41	%	$	2,002,575	$	37,779	7.58	%
Other assets	54,700						61,465
Total Assets	$	2,591,092					$	2,064,040

Liabilities and Stockholders’ Equity
Interest-bearing deposits:
NOW accounts	$	167,541	$	689	1.65	%	$	159,701	$	673	1.69	%
Money market accounts	212,071		1,437		2.72	%	227,913		2,258		3.97	%
Savings accounts	180,939		1,367		3.03	%	106,170		1,172		4.43	%
Time deposits	1,346,262		13,814		4.12	%	1,011,207		12,653		5.02	%
Total interest-bearing deposits	$	1,906,813	$	17,307	3.64	%	$	1,504,991	$	16,756	4.47	%
Securities sold under agreement to repurchase and federal funds purchased	231,347		1,418		2.46	%	160,953		1,585		3.95	%
Other borrowed funds	25,275		270		4.23	%	—		—		—
Trust preferred capital notes	40,000		691		6.83	%	43,000		782		7.20	%
Total interest-bearing liabilities	$	2,203,435	$	19,686	3.58	%	$	1,708,944	$	19,123	4.49	%
Demand deposits and other liabilities	211,168						205,237
Total liabilities	$	2,414,603					$	1,914,181
Stockholders’ equity	176,489						149,859
Total liabilities and stockholders’ equity	$	2,591,092					$	2,064,040
Interest rate spread					2.83	%					3.09	%
Net interest income and margin			$	20,714	3.30	%			$	18,656	3.75	%

(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 loans and securities are stated on a tax equivalent basis, using a 35% rate.

	Six months ended June 30,
	2008						2007
(Dollars in thousands)	Average Balance		Interest Income- Expense		Average Yields /Rates		Average Balance		Interest Income- Expense		Average Yields /Rates
Assets
Securities (1)	$	326,155	$	8,309	5.20	%	$	251,088	$	5,989	4.83	%
Loans, net of unearned income	2,090,394		71,826		6.90	%	1,701,409		67,315		7.98	%
Interest-bearing deposits in other banks	7,340		102		2.79	%	1,269		35		5.64	%
Federal funds sold	21,899		226		2.04	%	20,928		547		5.20	%
Total interest-earning assets	$	2,445,788	$	80,463	6.62	%	$	1,974,694	$	73,886	7.56	%
Other assets	58,133						60,525
Total Assets	$	2,503,921					$	2,035,219

Liabilities and Stockholders’ Equity
Interest-bearing deposits:
NOW accounts	$	156,930	$	1,201	1.53	%	$	158,356	$	1,321	1.68	%
Money market accounts	209,303		3,093		2.96	%	232,366		4,547		3.95	%
Savings accounts	172,887		2,808		3.26	%	92,159		1,979		4.33	%
Time deposits	1,281,000		28,235		4.42	%	1,013,631		25,099		4.99	%
Total interest-bearing deposits	$	1,820,120	$	35,337	3.89	%	$	1,496,512	$	32,946	4.44	%
Securities sold under agreement to repurchase and federal funds purchased	232,771		3,101		2.67	%	145,786		2,836		3.92	%
Other borrowed funds	25,138		464		3.66	%	—		—		—
Trust preferred capital notes	40,000		1,382		6.83	%	43,000		1,559		7.21	%
Total interest-bearing liabilities	$	2,118,029	$	40,284	3.81	%	$	1,685,298	$	37,341	4.47	%
Demand deposits and other liabilities	211,456						203,564
Total liabilities	$	2,329,485					$	1,888,862
Stockholders’ equity	174,436						146,357
Total liabilities and stockholders’ equity	$	2,503,921					$	2,035,219
Interest rate spread					2.81	%					3.09	%
Net interest income and margin			$	40,179	3.32	%			$	36,545	3.74	%

Allowance for Loan Losses / Provision for Loan Loss Expense

The provision for loan losses is based upon management’s estimate of the amount required to maintain an adequate allowance for loan losses reflective of the risks in the loan portfolio. For the six months ended June 30, 2008, provisions for loan losses were $7.8 million compared to $660 thousand in the same period in 2007. This was due to a $36.4 million increase in non-performing assets from December 31, 2007, to June 30, 2008, higher net loan growth of $259.6 million in 2008 as compared to growth of $108.0 million for the six months ended June 30, 2007, and $3.9 million in net charge-offs year-to-date. In addition, other impaired loans, which, although well-secured and currently performing, but in some instances requiring higher reserve levels, increased from $15.4 million at December 31, 2007, to $44.3 million at June 30, 2008. As a result, the allowance for loan losses to total loans rose from 1.14% at December 31, 2007, to 1.18% as of June 30, 2008. See “Risk Elements and Non-performing Assets” for additional discussion relating to the increase in non-performing assets and potential problem loans.

Management feels that the allowance for loan losses is adequate at June 30, 2008. However, there can be no assurance that additional provisions for loan losses will not be required in the future, due to possible changes in the economic assumptions underlying management’s estimates and judgments, adverse developments in the economy, on a national basis or in the Company’s market area, or changes in the circumstances of particular borrowers.

The Company generates a quarterly analysis of the allowance for loan losses, with the objective of quantifying portfolio risk into a dollar figure of inherent losses, thereby translating the subjective risk value into an objective number. Emphasis is placed on semi-annual independent external loan reviews and monthly internal reviews. The determination of the allowance for loan losses is based on applying and summing the results of eight qualitative factors and one quantitative factor to each category of loans along with any specific allowance for impaired and adversely classified loans within the particular category. Each factor is assigned a percentage weight and that total weight is applied to each loan category. The resulting sum from each loan category is then combined to arrive at a total allowance for all categories. Factors are different for each loan category. Qualitative factors include: levels and trends in delinquencies and non-accruals, trends in volumes and terms of loans, effects of any changes in lending policies, the experience, ability and depth of management, national and local economic trends and conditions, concentrations of credit, quality of the Company’s loan review system, and regulatory requirements. The total allowance required thus changes as the percentage weight assigned to each factor is increased or decreased due to its particular circumstance, as the various types and categories of loans change as a percentage of total loans and as specific allowances are required on impaired loans.

The following schedule summarizes the changes in the allowance for loan losses:

	Six Months			Six Months			Twelve Months
	Ended			Ended			Ended
	June 30, 2008			June 30, 2007			December 31, 2007
	(In Thousands of Dollars)

Allowance, at beginning of period	$	22,260		$	18,101		$	18,101
Provision charged against income	7,768			660			4,340
Recoveries:
Consumer loans	23			15			31
Losses charged to reserve:
Commercial loans	(1,993		)	—			—
Consumer loans	(150		)	(40		)	(212		)
Real estate - one-to-four family residential	(686		)	—			—
Real estate – residential construction	(1,119		)	—			—
Net charge-offs	(3,925		)	(25		)	(181		)
Allowance, at end of period	$	26,103		$	18,736		$	22,260

Ratio of net charge-offs to average loans outstanding during period	0.19		%	0.001		%	0.01		%
Allowance for loan losses to total loans	1.18		%	1.06		%	1.14		%

Risk Elements and Non-performing Assets

Non-performing assets consist of non-accrual loans, restructured loans, and other real estate owned (foreclosed properties). For the six months ended June 30, 2008, the total non-performing assets and loans that are 90 days or more past due and still accruing interest increased by $39.5 million from $4.4 million at December 31, 2007, to $43.9 million at June 30, 2008. In addition to the increase in non-performing loans, other impaired loans, which, although well-secured and currently performing, but in some instances requiring higher reserve levels, increased from $37.8 million at March 31, 2008, to $44.3 million at June 30, 2008. As a result, the ratio of non-performing assets and loans past due 90 days and still accruing to total assets increased from 0.19% at December 31, 2007, to 1.65% at June 30, 2008.

Loans are placed in non-accrual status when in the opinion of management the collection of additional interest is unlikely or a specific loan meets the criteria for non-accrual status established by regulatory authorities. No interest is taken into income on non-accrual loans. A loan remains on non-accrual status until the loan is current as to both principal and interest or the borrower demonstrates the ability to pay and remain current, or both.

Foreclosed real properties include properties that have been substantively repossessed or acquired in complete or partial satisfaction of debt. Such properties, which are held for resale, are carried at the lower of cost or fair value, including a reduction for the estimated selling expenses, or principal balance of the related loan.

Year-to-date additions to non-performing loans, charge-offs and other impaired loans have been concentrated in the residential-builder construction portfolio and are also evident in non-farm, non-residential real estate and commercial loans, which are tied to enterprises engaged in residential construction or other residential real estate related businesses. Other sectors and sub-markets of the broader loan portfolio continue to perform well with delinquencies and losses well below peer experience. Management is focused on risk identification and mitigating activities within the impacted portfolio segments and sub-markets and is establishing specific reserves where warranted, based upon a current market value analysis of the underlying collateral.

The market decline remains dynamic. As non-performing loans are addressed, additional charge-offs are anticipated to range from 0.35% of average loans outstanding, to a worst case scenario of 0.50% for the year, inclusive of first and second quarter charge-offs. Non-performing assets could prospectively rise to the 3.0% level by year-end, on a worst case basis.

Total non-performing assets consist of the following:

	June 30, 2008			June 30, 2007			December 31, 2007
	(In Thousands of Dollars)

Non-accrual loans:
Commercial	$	1,951		$	924		$	1,583
Real estate-one-to-four family residential:
Closed end first and seconds	173			—			95
Home equity lines	395			—			—
Total Real estate-one-to-four family residential	$	568		$	—		$	95
Real estate-multi-family residential	—			—
Real estate-non-farm, non-residential:
Owner Occupied	2,534			—			125
Non-owner occupied	411			141			—
Total Real estate-non-farm, non-residential	$	2,945		$	141		$	125
Real estate-construction:
Residential-Owner Occupied	3,889			—			—
Residential-Builder	23,278			2,184			1,941
Commercial	1,513			—			—
Total Real estate-construction:	$	28,680		$	2,184		$	1,941
Consumer	40			3			82
Total Non-accrual loans	34,184			3,252			3,826
OREO	6,091			—			—
Total non-performing assets	$	40,275		$	3,252		$	3,826
Loans 90+ days past due and still accruing	3,641			461			579
Total non-performing assets and past due loans	$	43,916		$	3,713		$	4,405

Non-performing assets
to total loans:	1.82		%	0.18		%	0.20		%
to total assets:	1.52		%	0.15		%	0.19		%
Non-performing assets and past due loans
to total loans:	1.99		%	0.21		%	0.23		%
to total assets:	1.65		%	0.17		%	0.19		%

Concentrations of Credit Risk

The Bank does a general banking business, serving the commercial and personal banking needs of its customers. The Bank’s market area consists of the Northern Virginia suburbs of Washington, D.C., including Arlington, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania and Stafford Counties, the cities of Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas and Manassas Park, and to some extent the Maryland suburbs and the city of Washington D.C. Substantially all of the Company’s loans are made within its market area.

The ultimate collectibility of the Bank’s loan portfolio and the ability to realize the value of any underlying collateral, if needed, are influenced by the economic conditions of the market area. The Company’s operating results are therefore closely related to the economic conditions and trends in the Metropolitan Washington, D.C. area.

At June 30, 2008, the Company had $1.64 billion, or 74.3%, of total loans concentrated in commercial real estate. Commercial real estate for purposes of this discussion includes all construction loans, loans secured by multi-family residential properties and loans secured by non-farm, non-residential properties. At December 31, 2007, commercial real estate loans were $1.44 billion, or 73.7%, of total loans. Total construction loans of $602.2 million at June 30, 2008, represented 27.2% of total loans, loans secured by multi-family residential properties of $62.7 million represented 2.8% of total loans, and loans secured by non-farm, non-residential properties of $982.1 million represented 44.3%.

Construction loans at June 30, 2008, included $310.9 million in loans to commercial builders of single family residential property and $24.3 million to individuals on single family residential property, representing 14.0% and 1.1% of total loans, respectively, and together representing 15.1% of total loans. These loans are made to a number of unrelated entities and generally have a term of twelve to eighteen months. In addition the Company had $267.0 million of construction loans on non-residential commercial property at June 30, 2008, representing 12.1% of total loans. These total construction loans of $602.2 million include $219.0 million in land acquisition and or development loans on residential property and $128.3 million in land acquisition and or development loans on commercial property, together totaling $347.3 million, or 15.7% of total loans. Adverse developments in the Northern Virginia real estate market or economy, including substantial increases in mortgage interest rates, slower housing sales, and increased commercial property vacancy rates, could have an adverse impact on these groups of loans and the Bank’s income and financial position. At June 30, 2008, the Company had no other concentrations of loans in any one industry exceeding 10% of its total loan portfolio. An industry for this purpose is defined as a group of counterparties that are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

The Bank has established formal policies relating to the credit and collateral requirements in loan originations including policies that establish limits on various loan types as a percentage of total loans and total capital. Loans to purchase real property are generally collateralized by the related property with limitations based on the property’s appraised value. Credit approval is primarily a function of collateral and the evaluation of the creditworthiness of the individual borrower, guarantors and or the individual project. Management considers the concentration of credit risk to be acceptable due to the diversification of borrowers over numerous businesses and industries.

The federal banking regulators have issued guidance for those institutions which are deemed to have concentrations in commercial real estate lending. Pursuant to the supervisory criteria contained in the guidance for identifying institutions with a potential commercial real estate concentration risk, institutions which have (1) total reported loans for construction, land development, and other land which represent in total 100% or more of an institutions total risk-based capital; or (2) total commercial real estate loans representing 300% or more of the institutions total risk-based capital and the institution’s commercial real estate loan portfolio has increased 50% or more during the prior 36

months are identified as having potential commercial real estate concentration risk. Institutions which are deemed to have concentrations in commercial real estate lending are expected to employ heightened levels of risk management with respect to their commercial real estate portfolios, and may be required to hold higher levels of capital. The Company, like many community banks, has a concentration in commercial real estate loans. Management has extensive experience in commercial real estate lending, and has implemented and continues to maintain heightened portfolio monitoring and reporting, and strong underwriting criteria with respect to its commercial real estate portfolio. The Company is well capitalized. Nevertheless, it is possible that the Company could be required to maintain higher levels of capital as a result of our commercial real estate concentration, which could require us to obtain additional capital, and may adversely affect shareholder returns.

Non-Interest Income

Non-interest income decreased $477 thousand, or 12.4%, from $3.8 million for the six months ended June 30, 2007, to $3.3 million for the same period ended June 30, 2008, and decreased $246 thousand, or 12.5%, from $2.0 million for the three months ended June 30, 2007, to $1.7 million in the current period. Reduced fees and net gains on mortgage loans held-for-sale account for the majority of the decrease in non-interest income year-over-year, due to lower levels of originations being sold.

Non-Interest Expense

For the six months ended June 30, 2008, non-interest expense increased $2.6 million, or 13.5%, compared to the same period in 2007, and increased $1.3 million, or 13.2%, from $9.9 million for the three months ended June 30, 2007, to $11.2 million for the three months ended June 30, 2008. The majority of the year-over-year increases were due to the opening of five new branch locations and collections expense associated with non-performing loans and OREO. As a result of this increased expense, as well as slower growth in net interest income and lower non-interest income, the efficiency ratio rose from 48.0% in the second quarter of 2007 to 49.9% in the current period and to 50.5% on a year-to-date basis. Management expects slightly higher levels in all non-interest expense categories for the remainder of 2008 with the opening of an additional branch location in the fall.

Provision for Income Taxes

The Company’s income tax provisions are adjusted for non-deductible expenses and non-taxable interest after applying the U.S. federal income tax rate of 35%. The provision for income taxes totaled $2.7 million and $3.6 million for the three months ended June 30, 2008 and 2007, respectively, and totaled $4.7 million and $7.0 million for the six month periods. The effects of non-deductible expenses and non-taxable income on the Company’s income tax provisions are minimal.

Liquidity

The Company’s principal sources of liquidity and funding are its deposit base. The level of deposits necessary to support the Company’s lending and investment activities is determined through monitoring loan demand. Considerations in managing the Company’s liquidity position include, but are not limited to, scheduled cash flows from existing loans and investment securities, anticipated deposit activity including the maturity of time deposits, and projected needs from anticipated extensions of credit. The Company’s liquidity position is monitored daily by management to maintain a level of liquidity conducive to efficiently meet current needs and is evaluated for both current and longer term needs as part of the asset/liability management process.

The Company measures total liquidity through cash and cash equivalents, securities available-for-sale, mortgage loans held-for-sale, other loans and investment securities maturing within one year, less securities pledged as collateral for repurchase agreements, public deposits and other purposes, and less any outstanding federal funds purchased. These liquidity sources increased $36.3 million, or 6.3%, from $577.5 million at December 31, 2007, to $613.8 million at June 30, 2007, due to an increase in available-for-sale securities and loans maturing within one year.

Additional sources of liquidity available to the Company include the capacity to borrow funds through established short-term lines of credit with various correspondent banks, and the Federal Home Loan Bank of Atlanta. Available funds from these liquidity sources, based on presently pledged collateral, were approximately $90.0 million and $125.0 million at June 30, 2008, and December 31, 2007, respectively. The Bank’s available portion of its line of credit with the Federal Home Loan Bank of Atlanta is $43.0 million of the $90.0 million as of June 30, 2008.

Off-Balance Sheet Arrangements

The Company enters into certain off-balance sheet arrangements in the normal course of business to meet the financing needs of its customers. These off-balance sheet arrangements include commitments to extend credit, standby letters of credit and financial guarantees which would impact the Company’s liquidity and capital resources to the extent customer’s accept and or use these commitments. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. With the exception of these off-balance sheet arrangements, and the Company’s obligations in connection with its trust preferred securities, the Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, that is material to investors.

Commitments to extend credit which amounted to $560.0 million at June 30, 2008, and $551.0 million at December 31, 2007, represent legally binding agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Standby letters of credit are conditional commitments issued by the Company guaranteeing the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. At June 30, 2008, and December 31, 2007, the Company had $74.7 million and $53.7 million, respectively, in outstanding standby letters of credit.

Contractual Obligations

Since December 31, 2007, there have been no significant changes in the Company’s contractual obligations other than additional leases entered into for new branch locations.

Capital

The assessment of capital adequacy depends on a number of factors such as asset quality, liquidity, earnings performance, changing competitive conditions and economic forces, and the overall level of growth. The adequacy of the Company’s current and future capital is monitored by management on an ongoing basis. Management seeks to maintain a capital structure that will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses.

Both the Company’s and the Bank’s capital levels continue to meet regulatory requirements. The primary indicators relied on by bank regulators in measuring the capital position are the Tier 1 risk-based capital, total risk-based capital, and leverage ratios. Tier 1 capital consists of common and qualifying preferred stockholders’ equity less goodwill. Total risk-based capital consists of Tier 1 capital, qualifying subordinated debt, and a portion of the allowance for loan losses. Risk-based capital ratios are calculated with reference to risk-weighted assets. The leverage ratio compares Tier 1 capital to total average assets for the most recent quarter end. The Bank’s Tier 1 risk-based capital ratio was 7.56% at June 30, 2008, compared to 7.77% at December 31, 2007, and its total risk-based capital ratio was 10.39% at June 30, 2008, compared to 10.73% at December 31, 2007. These ratios are in excess of the mandated minimum requirement of 4.00% and 8.00%, respectively. The Bank’s leverage ratio was 6.81% at June 30, 2008, compared to 7.12% at December 31, 2007, and is also in excess of the mandated minimum requirement of 4.00%. Based on these ratios, the Bank is considered “well capitalized” under regulatory prompt corrective action guidelines. The Company’s Tier 1 risk-based capital ratio, total risk-based capital ratio, and leverage ratio was 9.31%, 10.42% and 8.40%, respectively, at June 30, 2008. Both the Company’s and Bank’s capital positions reflect proceeds of the issuance of $40 million in trust preferred securities.

The ability of the Company to continue to grow is dependent on its earnings and the ability to obtain additional funds for contribution to the Bank’s capital, through borrowing, the sale of additional common stock, or through the issuance of additional trust preferred securities or other qualifying securities. In the event that the Company is unable to obtain additional capital for the Bank on a timely basis, the growth of the Company and the Bank may be curtailed, and the Company and the Bank may be required to reduce their level of assets in order to maintain compliance with regulatory capital requirements. Under those circumstances, net income and the rate of growth of net income may be adversely affected.

The Federal Reserve has revised the capital treatment of trust preferred securities. As a result, the capital treatment of trust preferred securities has been revised to provide that beginning in 2009, such securities can be counted as Tier 1 capital at the holding company level, together with other restricted core capital elements, up to 25% of total capital (net of goodwill), and any excess as Tier 2 capital up to 50% of Tier 1 capital. At June 30, 2008, trust preferred securities represented 18.4% of the Company’s Tier 1 capital and 16.4% of its total qualifying capital. Should future trust preferred issuances to increase holding company capital levels not be available to the same extent as currently, the Company may be required to raise additional equity capital, through the sale of common stock or other means, sooner than it would otherwise do so.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (SFAS 141(R)). The Standard will significantly change the financial accounting and reporting of business combination transactions. SFAS 141(R) establishes the criteria for how an acquiring entity in a business combination recognizes the assets acquired and liabilities assumed in the transaction; establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. Acquisition related costs including finder’s fees, advisory, legal, accounting valuation and other professional and consulting fees are required to be expensed as incurred. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008 and early implementation is not permitted. The Company does not expect the implementation to have a material impact on its consolidated financial statements .

In December 2007, the FASB issued Statement of Financial Accounting Standards No.160, “Non-controlling Interests in Consolidated Financial Statements” (SFAS 160). SFAS 160 requires the Company to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company does not expect the implementation of SFAS 160 to have a material impact on its consolidated financial statements.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133” (SFAS 161). SFAS 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. The Company does not expect the implementation of SFAS 161 to have a material impact on its consolidated financial statements.

Internet Access To Company Documents

The Company provides access to its SEC filings through the Bank’s Web site at www.vcbonline.com. After accessing the Web site, the filings are available upon selecting “about us/stock information/financial information.” Reports available include the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after the reports are electronically filed or furnished to the SEC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, the Company is exposed to market risk, or interest rate risk, as its net income is largely dependent on its net interest income. Market risk is managed by the Company’s Asset/Liability Management Committee that formulates and monitors the performance of the Company based on established levels of market risk as dictated by policy. In setting tolerance levels, or limits on market risk, the Committee considers the impact on earnings and capital, the level and general direction of interest rates, liquidity, local economic conditions and other factors. Interest rate risk, or interest sensitivity, can be defined as the amount of forecasted net interest income that may be gained or lost due to favorable or unfavorable movements in interest rates. Interest rate risk, or sensitivity, arises when the maturity or repricing of interest-bearing assets differs from the maturing or repricing of interest-bearing liabilities and as a result of the difference between total interest-bearing assets and interest-bearing liabilities.

The Company seeks to manage interest rate sensitivity while enhancing net interest income by periodically adjusting this asset/liability position.

One of the tools used by the Company to assess interest sensitivity on a monthly basis is the static gap analysis that measures the cumulative differences between the amounts of assets and liabilities maturing or repricing within various time periods. It is the Company’s goal to limit the one-year cumulative difference, or gap, in an attempt to limit changes in future net interest income from changes in market interest rates. The following table shows a static gap analysis reflecting the earlier of the maturity or repricing dates for various assets, including prepayment and amortization estimates, and liabilities as of June 30, 2008. At that point in time, the Company had a cumulative net liability sensitive one-year gap position of $420.4 million, or a negative 16.29% of total interest-bearing assets.

This position would generally indicate that over a period of one-year net interest earnings should decrease in a rising interest rate environment as more liabilities would reprice than assets and should increase in a falling interest rate environment. However, this measurement of interest rate risk sensitivity represents a static position as of a single day and is not necessarily indicative of the Company’s position at any other point in time, does not take into account the differences in sensitivity of yields and costs of specific assets and liabilities to changes in market rates, and it does not take into account the specific timing of when changes to a specific asset or liability will occur. More accurate measures of interest sensitivity are provided to the Company using earnings simulation models.

At June 30, 2008

	Interest Sensitivity Periods
	Within			91 to 365			Over 1 to 5			Over
(Dollars in thousands)	90 Days			Days			Years			5 Years			Total
Interest Earning Assets
Securities, at amortized cost	$	24,777		$	100,268		$	106,188		$	118,592		$	349,825
Interest bearing deposits in other banks	15,546			1,169			—			—			16,715
Loans held-for-sale	3,415			—			—			—			3,415
Loans, net of unearned income	855,695			284,577			873,074			197,116			2,210,462
Total interest earning assets	$	899,433		$	386,014		$	979,262		$	315,708		$	2,580,417
Interest-bearing Liabilities
NOW accounts	$	84,274		$	—		$	84,274		$	—		$	168,548
Money market accounts	104,088			—			104,089			—			208,177
Savings accounts	95,516			—			95,516			—			191,032
Time deposits	534,315			593,802			200,050			—			1,328,167
Securities sold under agreement to repurchase and federal funds purchased	253,895			—			—			25,000			278,895
Trust preferred capital notes	—			15,000			25,000			—			40,000
Other borrowed funds	25,000			—			25,000			—			50,000
Total interest-bearing liabilities	$	1,097,088		$	608,802		$	533,929		$	25,000		$	2,264,819
Cumulative maturity / interest sensitivity gap	$	(197,655	)	$	(420,443	)	$	24,890		$	315,598		$	315,598
As % of total earnings assets	-7.66		%	-16.29		%	0.96		%	12.23		%

In order to more closely measure interest sensitivity, the Company uses earnings simulation models on a quarterly basis. These models utilize the Company’s financial data and various management assumptions as to balance sheet growth, interest rates, operating expense, and other non-interest income sources to forecast a base level of earnings over a one-year period. This base level of earnings is then shocked assuming a 200 basis points higher and lower level of interest rates over the forecasted period. The most recent earnings simulation model was run based on data as of June 30, 2008, and consistent with the Company’s belief from the static gap analysis that its balance sheet

structure was liability sensitive at that time, the model projected that forecasted earnings over a one-year period would decrease by 10.68% if interest rates were to be 200 basis points higher than expected, and forecasted earnings to increase by 5.90% if interest rates were to be 200 basis points lower than expected. Management believes the modeled results are consistent with the short duration of its balance sheet and given the many variables that effect the actual timing of when assets and liabilities will reprice. The Company has set a limit on this measurement of interest sensitivity to a maximum decline in earnings of 20%. Since the earnings model uses numerous assumptions regarding the effect of changes in interest rates on the timing and extent of repricing characteristics, future cash flows and customer behavior, the model cannot precisely estimate net income and the effect on net income from sudden changes in interest rates. Actual results will differ from simulated results noted above due to the timing, magnitude and frequency of interest rate changes and changes in market conditions and management strategies, among other factors.

ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated, as of the last day of the period covered by this report, the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective. There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15 under the Securities Act of 1934) during the quarter ended June 30, 2008, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings – None

Item 1A. Risk Factors

There have been no material changes to the risk factors as previously disclosed in the Company’s Form 10-K for the year ended December 31, 2007, except for the increase in the level of non-performing assets and loan loss provisions discussed under “Risk Elements and Non-performing assets.”

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Sales of Unregistered Securities. - None

(b) Use of Proceeds.- Not Applicable.

Item 3. Defaults Upon Senior Securities.- None

Item 4. Submission of Matters to a Vote of Security Holders

On April 30, 2008, the annual meeting of shareholders of the Company was held for the purpose of electing eight (8) directors to serve until the next annual meeting and until their successors are duly elected and qualified.

The name of each director elected at the meeting, and the votes cast for such persons, who constitute the entire Board of Directors in office following the meeting, are set forth below.

Name	For	Withheld	Broker Non-votes
Leonard Adler	20,414,614	232,759	none
Michael Anzilotti	17,969,783	2,677,590	none
Peter A. Converse	18,087,743	2,559,630	none
W. Douglas Fisher	20,159,842	487,531	none
David M. Guernsey	20,122,252	525,121	none
Robert H. L’Hommedieu	17,431,390	3,215,983	none
Norris E. Mitchell	20,139,693	507,680	none
Arthur L. Walters	20,065,657	581,716	none

Additionally, on April 30, 2008, at the annual meeting of shareholders, shareholders approved an amendment to the Company’s 1998 Stock Option Plan extending the term of the plan until June 2013. Results of the vote were 15,791,790 for, 347,181 against and 4,508,402 broker non-votes.

Item 5. Other Information. –

(a) Required 8-K Disclosures. None

(b) Changes in Procedures for Director Nominations by Securityholders. None

Item 6. Exhibits

Exhibit No.		Description
3.1		Articles of Incorporation of Virginia Commerce Bancorp, Inc. (1)
3.2		Bylaws of Virginia Commerce Bancorp, Inc. (2)
4.1		Junior Subordinated Indenture, dated as of December 19, 2002 between Virginia Commerce Bancorp, Inc. and The Bank of New York, as Indenture Trustee (3)
4.2		Amended and Restated Declaration of Trust, dated as of December 19, 2002 among Virginia Commerce Bancorp, Inc., The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, and Peter A. Converse, William K. Beauchesne and Marcia J. Hopkins as Administrative Trustees (3)
4.3		Guarantee Agreement dated as of December 19, 2002, between Virginia Commerce Bancorp, Inc. and The Bank of New York, as Guarantee Trustee (3)
4.4		Junior Subordinated Indenture, dated as of December 20, 2005 between Virginia Commerce Bancorp, Inc. and Wilmington Trust Company, as Trustee (3)
4.5		Amended and Restated Declaration of Trust, dated as December 20, 2005, between Virginia Commerce Bancorp, Inc. and Wilmington Trust Company, as Delaware Trustee and Institutional Trustee, and Peter A. Converse, William K. Beauchesne and Marcia J. Hopkins as Administrative Trustees (3)
4.6		Guarantee Agreement dated as of December 20, 2005, between Virginia Commerce Bancorp, Inc. and Wilmington Trust Company, as Guarantee Trustee (3)
10.1		Amended and Restated 1998 Stock Option Plan (4)
10.2		Virginia Commerce Bancorp Amended and Restated Employee Stock Purchase Plan (5)
10.3		2007 Virginia Commerce Bank Executive and Director Deferred Compensation Plan (6)
11		Statement Regarding Computation of Per Share Earnings See Note 4 to the Consolidated Financial Statements included in this report
21		Subsidiaries of the Registrant:
		Virginia Commerce Bank-Virginia
		VCBI Capital Trust II-Delaware
		VCBI Capital Trust III-Delaware
		Subsidiaries of Virginia Commerce Bank:
		Northeast Land and Investment Company-Virginia
		Virginia Commerce Insurance Agency, L.L.C.-Virginia
31.1		Certification of Peter A. Converse, Chief Executive Officer
31.2		Certification of William K. Beauchesne, Treasurer and Chief Financial Officer
32.1		Certification of Peter A. Converse Chief Executive Officer
32.2		Certification of William K. Beauchesne, Treasurer and Chief Financial Officer

(1)		Incorporated by reference to the same numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2006.
(2)		Incorporated by reference to the same numbered exhibit to the Company’s Current Report on Form 8-K filed on July 27, 2007.
(3)		Not filed in accordance with the provisions of Item 601(b)(4)(iii) of Regulation SK. The Company agrees to provide a copy of these documents to the Commission upon request.
(4)		Incorporated by reference to exhibit 4 to the Company’s Registration Statement on Form S-8 (No. 333-142447)
(5)		Incorporated by reference to the same numbered exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2008
(6)		Incorporated by reference to the same numbered exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 7, 2008	BY	/s/ Peter A. Converse
		Peter A. Converse, Chief Executive Officer


Date: August 7, 2008	BY	/s/ William K. Beauchesne
		William K. Beauchesne, Treasurer and Chief Financial Officer

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VCBI Virginia Commerce Bancorp (MM)

5350 LEE HIGHWAY, ARLINGTON, VIRGINIA 22207

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(1) Adjusted to give effect to a 10% stock dividend paid May 2008.

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VCBI Virginia Commerce Bancorp (MM)

5350 LEE HIGHWAY, ARLINGTON, VIRGINIA 22207

N/A

(1) Adjusted to give effect to a 10% stock dividend paid May 2008.

Net Interest Income

Item 1A. Risk Factors

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