Virginia Commerce Bancorp, Inc. (the “Company”), (Nasdaq: VCBI),
parent company of Virginia Commerce Bank (the “Bank”), today
reported its financial results for the third quarter of 2013.
Third Quarter 2013
Highlights
- Net Income Available to Common
Stockholders and Earnings per Diluted Common Share: Net income
available to common stockholders totaled $7.0 million, or $0.20 per
diluted common share, for the third quarter of 2013. This compares
to $7.1 million, or $0.21 per diluted common share, for the third
quarter of 2012, and $7.5 million, or $0.21 per diluted common
share, for the second quarter of 2013.
- Adjusted Operating Earnings (a
non-GAAP measure) Increased: Adjusted operating earnings
increased to $7.9 million, or $0.23 per diluted common share, for
the third quarter of 2013. This compares to $5.8 million, or $0.17
per diluted common share, for the third quarter of 2012, and $7.7
million, or $0.22 per diluted common share, for the second quarter
of 2013.
- Quarterly Return on Average Assets
(ROAA) of 0.99% and Return on Average Equity (ROAE) of
10.72%
- Improved Asset Quality:
Non-performing assets (“NPAs”) decreased 35.3%, from $59.5 million
as of September 30, 2012, to $38.5 million at September 30, 2013,
while sequentially decreasing $7.3 million, or 16.0%. Total
troubled debt restructurings (“TDRs”) declined $23.1 million, or
51.5%, from September 30, 2012, to $21.8 million at September 30,
2013, and declined $5.1 million, or 19.0%, from June 30, 2013.
- Net Interest Margin Growth: The
net interest margin was 3.88% in the third quarter of 2013,
compared to 3.62% in the third quarter of 2012. Sequentially, the
net interest margin increased six basis points from 3.82% in the
second quarter of 2013.
- Capital Strength and Book Value per
Common Share Growth: The ratio of tangible common equity (a
non-GAAP measure) improved to 9.59% at September 30, 2013, as
compared to 8.08% and 8.95% at September 30, 2012, and June 30,
2013, respectively. The book value per common share increased from
$7.63 at September 30, 2012, to $7.88 at September 30, 2013.
Sequentially, the book value per common share increased from $7.78
at June 30, 2013.
SUMMARY REVIEW OF FINANCIAL PERFORMANCE
Net Income
For the three months ended September 30, 2013, the Company
recorded net income available to common stockholders of $7.0
million, or $0.20 per diluted common share, compared to net income
available to common shareholders of $7.1 million, or $0.21 per
diluted common share, for the three months ended September 30,
2012. The year-over-year decrease was primarily due to a decrease
of $1.1 million in net interest income and a $2.9 million decrease
in non-interest income, partially offset by a $347 thousand
decrease in non-interest expense, a $1.3 million decrease in
provision for loan losses and an $861 thousand decrease in
provision for income taxes. The Company’s net income available to
common stockholders decreased sequentially from $7.5 million, or
$0.21 per diluted common share, for the second quarter of 2013,
primarily due to a decrease of $539 thousand in net interest
income, a $374 thousand decrease in non-interest income and an $827
thousand increase in non-interest expense, partially offset by a
$692 thousand decrease in provision for loan losses, and a $538
thousand decrease in provision for income taxes.
For the nine months ended September 30, 2013, the Company
reported net income available to common stockholders of $20.5
million, or $0.58 per diluted common share, compared to net income
available to common stockholders of $18.3 million, or $0.54 per
diluted common share, for the same period in 2012. The year-to-date
earnings increase from 2012 to 2013 was attributable to the
Company’s repurchase of all of its TARP preferred stock during the
fourth quarter of 2012, and related elimination of a $4.1 million
effective dividend on preferred stock for the first nine months of
2013, a $6.1 million decrease in the provision for loan losses, an
$846 thousand decrease in non-interest expense and a $942 thousand
decrease in provision for income taxes, partially offset by a
decrease in net interest income of $3.2 million and a decrease in
non-interest income of $6.5 million.
Adjusted operating earnings (a non-GAAP measure) for the three
months ended September 30, 2013, were $7.9 million, or $0.23 per
diluted common share, compared to $5.8 million, or $0.17 per
diluted common share, for the same period in 2012. The
year-over-year improvement in adjusted operating earnings was
largely attributable to the Company’s repurchase of all of its TARP
preferred stock during the fourth quarter of 2012, and related
elimination of a $1.4 million effective quarterly dividend on
preferred stock for the third quarter of 2013, a $1.3 million
decrease in provision for loan losses, a $347 thousand decrease in
non-interest expense (which includes $1.2 million of merger-related
expenses in the third quarter of 2013) and a decrease in provision
for income taxes of $861 thousand (with a related tax effect
adjustment of ($886) thousand). These items were partially offset
by a decrease in net interest income of $1.1 million, a $2.9
million decrease in non-interest income (which includes the impact
of gains of $2.1 million generated by the sales of investment
securities in the third quarter 2012). On a sequential basis,
adjusted operating earnings were up $233 thousand, for the three
months ended September 30, 2013, primarily due to a $692 thousand
decrease in provision for loan losses and a reduction of $538
thousand in provision for income taxes (with a related tax effect
adjustment of $(130) thousand), partially offset by an $827
thousand increase in non-interest expense (which includes a
sequential increase in merger-related expenses of $873 thousand) a
$539 thousand decrease in net interest income and a $374 thousand
decrease in non-interest income. The Company calculates adjusted
operating earnings by excluding impairment loss on investment
securities, realized gains and losses on sale of investment
securities, merger-related expenses, acceleration of the accretion
of the preferred stock discount, and certain other non-recurring
items from net income available to common stockholders.
Asset Quality and Provision For Loan Losses
Total non-performing assets and loans 90+ days past due declined
$19.9 million, or 33.4%, from $59.5 million at September 30, 2012,
to $39.7 million at September 30, 2013, and decreased $7.3 million
sequentially from $47.0 million at June 30, 2013, as a result of
net reductions in loans on non-accrual status of $6.0 million, due
to sales of underlying properties and a note sale completed by the
Company during the third quarter of 2013. Other real estate owned
declined $1.4 million during the third quarter, driven by the sale
of a large land parcel located in Prince George’s County, Maryland.
As a percentage of total assets, non-performing assets decreased
from 1.98% at September 30, 2012, to 1.44% at September 30, 2013,
and decreased from 1.66% at June 30, 2013. As of September 30,
2013, the allowance for loan losses represented 1.98% of total
loans, compared to 1.92% at both June 30, 2013, and September 30,
2012. The allowance for loan losses covered 137.5% of total
non-performing loans as of September 30, 2013, compared to 115.3%
and 90.8%, at June 30, 2013, and September 30, 2012,
respectively.
As of September 30, 2013, $13.1 million, or 45.7%, of
non-performing loans represented acquisition, development and
construction (“ADC”) loans; $7.8 million, or 27.3%, represented
non-farm, non-residential loans; $2.7 million, or 9.3%, represented
commercial and industrial (“C&I”) loans; and $5.0 million, or
17.6%, represented loans on one-to-four family residential
properties. As of September 30, 2013, specific reserves of $19.8
million have been established for non-performing loans and other
loans determined to be impaired. The Company continues to pursue an
aggressive campaign to reduce non-performing and other impaired
loans and is implementing and executing various disposition
strategies on an ongoing basis. These strategies are dependent upon
project completion, permitting, satisfaction of contract
contingencies and other factors and in a number of cases represent
situations which require longer timeframes to obtain optimal
principal recovery.
Included in the loan portfolio at September 30, 2013, are loans
classified as troubled debt restructurings (“TDRs”), totaling $21.8
million, a 51.5% decrease from $44.9 million at September 30, 2012.
Sequentially, total TDRs decreased $5.1 million from $26.9 million
at June 30, 2013, as a result of TDR reductions of $6.2 million
during the third quarter of 2013, led by a third-party refinance of
a hotel property totaling $5.0 million, partially offset by new
TDRs during the third quarter of 2013 totaling $1.1 million. TDRs
are performing, accruing loans that represent relationships for
which a modification to the contractual interest rate or repayment
structure has been granted to address a financial hardship. A
significant portion of TDRs were performing prior to modification.
These loans make up 1.1% of the total loan portfolio at September
30, 2013, and represent $8.0 million in ADC loans, $9.9 million in
non-farm, non-residential real estate loans, $2.5 million in
C&I loans and $1.4 million in one-to-four family residential
loans. At September 30, 2013, 42.9% of the Company’s TDRs were
reviewable TDRs and 57.1% were permanent TDRs. Reviewable TDRs are
loans that have been restructured at or will return to a market
rate of interest and can include a temporary interest rate
modification, partial deferral of interest or principal, or an
extension of term. They can return to performing status upon six
months of on-time payments following the return to a market rate of
interest, but only in the fiscal year following the year of
restructure. Permanent TDRs are loans that have been restructured
and include a permanent interest rate reduction. They remain in a
TDR status until the loan is paid off.
Classified loans were $139.1 million for the quarter ended
September 30, 2013, a $43.4 million decrease from $182.5 million at
September 30, 2012. Sequentially, classified loans decreased $8.2
million from $147.3 million at June 30, 2013. The quarterly
decrease in classified loans was largely due to payoffs received
from third-party refinancing of $8.5 million, regular payments and
curtailments of $7.5 million, a note sale of $2.8 million and
credit upgrades totaling $1.6 million, partially offset by
additions to classified loans totaling $11.7 million, substantially
concentrated in one relationship of $10.1 million to a government
contractor, and secured primarily by real estate.
Provision for loan losses was $1.8 million for the quarter ended
September 30, 2013, down $1.3 million, or 41.0%, compared to $3.1
million in the same period in 2012. Net charge-offs were $2.1
million for the three months ended September 30, 2013, compared to
$3.4 million and $8.5 million for the quarters ended June 30, 2013,
and September 30, 2012, respectively. For the nine months ended
September 30, 2013, provision for loan losses totaled $6.2 million,
compared to $12.3 million for the prior-year period, with 2013
year-to-date net charge-offs amounting to $8.1 million, compared to
$19.7 million in the nine months ended September 30, 2012. The
increase in the allowance for loan losses as a percentage of total
loans from September 30, 2012, to September 30, 2013, is due to
higher specific reserves related to certain credits, partially
offset by the decrease in total loans outstanding. As a result, the
third quarter analysis of the adequacy of the loan loss reserve
indicated that loan loss provisioning of $1.8 million was
sufficient to maintain appropriate coverage. The $6.4 million
decrease in net charge-offs for the three months ended September
30, 2013, compared to the same period in 2012, was primarily due to
net charge-offs of non-farm, non-residential real estate loans
decreasing $4.9 million, from $5.5 million in the third quarter of
2012, to $630 thousand in the third quarter of 2013.
Net Interest Income and Net Interest Margin
Net interest income was $25.3 million for the third quarter of
2013 and declined $1.1 million, or 4.2%, from the same quarter last
year. The net interest margin increased 26 basis points from 3.62%
in the third quarter of 2012, to 3.88% for the same period in 2013.
On a sequential basis, the net interest margin was up 6 basis
points from 3.82% in the second quarter of 2013. The year-over-year
increase in the third quarter net interest margin was mostly due to
an improvement in the mix of interest-earning assets and
interest-bearing deposits and a reduction in average
interest-bearing deposit rates, the impact of which was partially
offset by lower average yield on loans. Interest and dividend
income decreased $2.5 million on average total interest-earnings
assets of $2.62 billion for the three months ended September 30,
2013, compared to interest and dividend income generated by average
total interest-earnings assets of $2.94 billion for the same period
in 2012. The average rate earned on total interest-earning assets
was 4.65% for the third quarter of 2013, as compared to 4.50% for
the third quarter 2012, and 4.58% for the second quarter 2013.
Interest expense decreased $1.4 million to $5.1 million generated
on an average total interest-bearing liability balance of $2.02
billion for the quarter ended September 30, 2013, from $6.5 million
generated on an average total interest-bearing liability balance of
$2.31 billion for the same period in 2012. The decline in interest
expense is mostly attributable to a series of interest rate
reductions on interest-bearing deposit products and the continued
repricing and run-off of higher cost deposits in the time deposit
portfolio. The average rate paid on total interest-bearing
liabilities was 1.00% for the third quarter of 2013, as compared to
1.12% for the third quarter 2012, and 0.98% for the second quarter
of 2013.
Non-Interest Income
For the three months ended September 30, 2013, the Company
recognized $1.8 million in non-interest income, compared to
non-interest income of $4.7 million for the three months ended
September 30, 2012, and $2.2 million in the sequential quarter.
Included in the third quarter 2012 non-interest income was a gain
on sale of securities of $2.1 million, while the third quarter of
2013 and the sequential quarter did not include a gain or loss on
sale of securities. The Company recognized non-interest income of
$6.6 million for the nine months ended September 30, 2013, compared
to non-interest income of $13.1 million for the same period in
2012. For the nine months ended September 30, 2012, non-interest
income included a gain on sale of securities of $6.0 million, while
non-interest income for the nine months ended September 30, 2013,
did not include a gain or loss on sale of securities.
Fees and net gains on loans held-for-sale decreased in the third
quarter 2013, on a year-over-year basis, by $761 thousand, or
70.3%, and on a sequential quarter basis decreased by $354
thousand, or 52.4%. The decrease can be attributed to a lower
volume of mortgage loans originated for sale in the secondary
market in response to higher interest rates which decreased
refinance activity and a focus on one-to-four family residential
loans held in portfolio due to less competitive rates on mortgage
products offered by correspondents in the secondary mortgage
market. For the nine months ended September 30, 2013, fees and net
gains on loans held-for-sale decreased $895 thousand, or 30.7%,
compared to the nine months ended September 30, 2012. Income
generated by bank-owned life insurance increased $252 thousand and
$750 thousand for the three months ended September 30, 2013, and
nine months ended September 30, 2013, respectively, compared to the
same periods in the prior year. The increase can be primarily
attributed to $30.0 million in bank-owned life insurance assets
purchased during the second half of 2012 that have contributed to
earnings during the nine months ended September 30, 2013.
Non-Interest Expense
Non-interest expense decreased $347 thousand, or 2.3%, from
$15.2 million in the third quarter of 2012, to $14.9 million in the
third quarter of 2013. Sequentially, non-interest expense increased
$827 thousand, or 5.9%, from $14.0 million for the second quarter
in 2013. The year-over-year decrease was primarily related to a
decrease of $1.1 million in salaries and employee benefits, a
decrease of $156 thousand in FDIC insurance premiums, a $235
thousand decrease in other operating expense, partially offset by
$1.2 million in merger-related expenses during the third quarter of
2013. The sequential increase was primarily related to an increase
of $873 thousand in merger-related expenses.
Investment Securities
Investment securities decreased $64.0 million, or 11.7%,
year-over-year to $481.2 million at September 30, 2013, and were
down $1.6 million sequentially from June 30, 2013. There was no
gain or loss on sale of investment securities during the third
quarter 2013. During the third quarter of 2012, the Company sold
$26.0 million of investment securities resulting in a $1.6 million
realized gain on sale of securities and PreSTL VI was redeemed
resulting in a gain of $436 thousand. The investment portfolio
contains two pooled trust preferred investment securities with a
book value of $5.1 million, and a market value of $1.6 million at
September 30, 2013, for which the Company performs a quarterly
analysis to determine whether any other-than-temporary impairment
exists. The analysis includes stress tests on the underlying
collateral and cash flow estimates based on the current and
projected future levels of deferrals, defaults, and prepayments
within each pool. There was no recorded impairment loss for the
three or nine months ended September 30, 2013 and September 30,
2012.
Loans
Loans, net of allowance for loan losses, decreased $83.6
million, or 4.0%, from $2.10 billion at September 21, 2012, to
$2.02 billion at September 30, 2013. Non-farm, non-residential real
estate loans decreased $68.5 million, or 5.9%; multifamily real
estate loans decreased $16.5 million, or 19.0%; C&I loans
decreased $11.8 million, or 5.1%; while ADC loans increased $4.3
million, or 1.6%; one-to-four family residential loans increased
$7.2 million, or 1.8%; consumer loans increased $1.6 million, or
23.0%; and farmland loans increased $671 thousand, or 13.7%, from
September 30, 2012, to September 30, 2013. Sequentially, loans, net
of allowance for loan losses, decreased $76.4 million, or 3.6%. The
sequential decrease in loans was attributable to a $42.6 million
decrease in non-farm, non-residential loans, a $29.7 million
decrease in C&I loans, a $1.8 million decrease in ADC loans and
a $2.5 million decrease in one-to-four family residential loans.
The year-over-year and sequential decreases in non-farm,
non-residential real estate and multi-family real estate loans were
driven by a highly competitive loan origination environment which
drove increased refinancing activity and strategic loan sales and
problem loan workouts initiated to improve asset quality. The
year-over-year and sequential decrease in C&I loans was
attributable to lower borrowing activity due to the impact of
sequestration on government contracting sector borrowers and pay
downs resulting from problem loan resolution activities.
Deposits
Total deposits at September 30, 2013, were $2.10 billion, a
decrease of $117.0 million, or 5.3%, compared to September 30,
2012, with demand deposits increasing $54.6 million, or 14.0%,
savings and interest-bearing demand deposits decreasing $71.6
million, or 6.1%, and time deposits decreasing $99.9 million, or
15.4%. As of September 30, 2013, non-interest bearing demand
deposits represented 21.2% of total deposits, compared to 17.7% at
September 30, 2012. On a linked quarter basis, deposits decreased
$84.0 million, or 3.9%, with demand deposits decreasing $20.5
million, or 4.4%, savings and interest-bearing demand accounts
decreasing $31.4 million, or 2.8%, and time deposits decreasing
$32.0 million, or 5.5%. The reduction in interest-bearing and time
deposits has been intentional, resulting from a series of interest
rate reductions that continued throughout 2012 and into 2013. As a
result of deposit rate decreases and an improving deposit mix, the
cost of total interest-bearing deposits and total deposits declined
from 0.91% and 0.76%, respectively, for the quarter ended September
30, 2012, and 0.77% and 0.62% for the quarter ended June 30, 2013,
to 0.75% and 0.60% for the quarter ended September 30, 2013.
Capital Levels and Stockholders’ Equity
Stockholders’ equity decreased $47.3 million, or 15.2%, from
$311.5 million at September 30, 2012, to $264.3 million at
September 30, 2013, with a $68.6 million decline from the repayment
of TARP preferred stock and a $12.3 million decrease in other
comprehensive income, partially offset by net income available to
common stockholders of $24.7 million over the twelve-month period
and $8.9 million in proceeds and tax benefits related to the
exercise of warrants and options. The decrease in other
comprehensive income is directly related to the reduction in fair
market value of marketable securities resulting from the rise in
long term interest rates in the current year. As a result of these
changes, the Company’s Tier 1 capital ratio decreased from 16.29%
at September 30, 2012, to 15.58% at September 30, 2013, and its
total qualifying capital ratio decreased from 17.55% to 16.84% over
the same period. Sequentially, the Company’s Tier 1 and total
qualifying capital ratios are each up 122 basis points,
attributable to net income available to common stockholders of $7.0
million in the third quarter of 2013. The Company’s tangible common
equity ratio increased from 8.08% at September 30, 2012, and 8.95%
at June 30, 2013, to 9.59% at September 30, 2013. The 151 basis
point increase in tangible common equity ratio from September 30,
2012, to September 30, 2013, is primarily due to $24.7 million in
retained net income available to common stockholders for the twelve
months ended September 30, 2013. Sequentially, the 64 basis point
increase in tangible common equity ratio is primarily related to
$7.0 million in retained net income available to common
stockholders for the third quarter of 2013 and a decrease of $79.9
million in total tangible assets during the third quarter of 2013,
partially offset by a decrease of $515 thousand in other
comprehensive income.
ABOUT VIRGINIA COMMERCE BANCORP,
INC.
Virginia Commerce Bancorp, Inc. is the parent bank holding
company for Virginia Commerce Bank, a Virginia state chartered bank
that commenced operations in May 1988. The Bank pursues a
traditional community banking strategy, offering a full range of
business and consumer banking services through twenty-eight branch
offices, one residential mortgage office and one wealth management
services office, principally to individuals and small-to-medium
size businesses in Northern Virginia and the Metropolitan
Washington, D.C. area.
On October 17, 2013, the Company’s shareholders approved a
merger agreement pursuant to which the Company will be acquired by
a subsidiary of United Bankshares, Inc. (“United” and such merger,
the “Merger”). On October 21, 2013, the shareholders of United also
approved the Merger. The Company and United have received
regulatory approval for the Merger from the Virginia State
Corporation Commission, but have not yet received regulatory
approval from the Board of Governors of the Federal Reserve System.
For more information about this Merger, see the Company’s Current
Report on Form 8-K filed with the Securities and Exchange
Commission (the “SEC”) on January 31, 2013, the Company’s Annual
Report on Form 10-K filed with the SEC on March 14, 2013, and the
registration statement filed by United with the SEC on Form S-4 on
May 29, 2013 (and all subsequent amendments thereof and prospectus
supplements thereunder).
NON-GAAP PRESENTATIONS
The Company prepares its financial statements under accounting
principles generally accepted in the United States, or “GAAP”.
However, this press release also refers to certain non-GAAP
financial measures that we believe, when considered together with
GAAP financial measures, provide investors with important
information regarding our operational performance. An analysis of
any non-GAAP financial measure should be used in conjunction with
results presented in accordance with GAAP.
Adjusted operating earnings is a non-GAAP financial measure that
reflects net income available to common stockholders excluding
impairment loss on investment securities, realized gains and losses
on sale of investment securities, merger-related expenses and
certain other non-recurring items. These excluded items are
difficult to predict and we believe that adjusted operating
earnings provides the Company and investors with a valuable measure
of the Company’s operational performance and a valuable tool to
evaluate the Company’s financial results. Calculation of adjusted
operating earnings for the three months ended September 30, 2013,
September 30, 2012, and June 30, 2013, is as follows:
Three Months Three Months Ended Ended September 30,
June 30, (Dollars in thousands)
2013 2012
2013 Net Income Available to Common
Stockholders $ 6,953 $ 7,122 $ 7,463 Adjustments to net income
available to common stockholders: Realized gain on sale of
investment securities -- (2,056) -- Merger-related expenses 1,155
-- 282 Net tax effect adjustment
(166)
720 (36) Adjusted
Operating Earnings $ 7,942 $ 5,786 $ 7,709
Earnings per common share-diluted $ 0.20 $ 0.21 $ 0.21
Adjustments to earnings per common share-diluted Realized gain on
sale of investment securities, net tax affect -- $ (0.04) --
Merger-related expenses, net tax affect $ 0.03 -- $ 0.01
Adjusted operating earnings per common share-diluted $ 0.23
$ 0.17 $ 0.22
The adjusted efficiency ratio is a non-GAAP financial measure
that is computed by dividing non-interest expense excluding
merger-related expenses, by the sum of net interest income on a tax
equivalent basis, and non-interest income excluding realized gains
and losses on sale of investment securities, merger-related
expenses and certain other non-recurring items. We believe that
this measure provides investors with important information about
our operating efficiency. Comparison of our adjusted efficiency
ratio with those of other companies may not be possible because
other companies may calculate the adjusted efficiency ratio
differently. Calculation of the adjusted efficiency ratio for the
three and nine months ended September 30, 2013 and 2012 is as
follows:
Three Months Ended Nine Months Ended
(Dollars in thousands)
September 30, September 30,
2013 2012
2013 2012 Summary Operating
Results: Non-interest expense $ 14,865 $ 15,212 $
46,550 $ 47,396 Merger-related expenses
1,155
-- 2,021
-- Adjusted non-interest expense $ 13,710 $ 15,212 $
44,529 $ 47,396 Net interest income $ 25,253 $ 26,368 $
76,839 $ 80,064 Non-interest income 1,822 4,725 6,576 13,095
Gain on sale of investment securities
--
(2,056) --
(5,976) Adjusted non-interest income $ 1,822 $ 2,669 $
6,576 $ 7,119 Tax equivalent adjustment $ 344 $ 360 $ 1,053
$ 1,091
Total net interest income and non-interest
income, adjusted
$ 27,419 $ 29,397 $ 84,468 $ 88,274
Efficiency Ratio,
adjusted 50.0% 51.8% 52.7% 53.7%
The tangible common equity ratio is a non-GAAP financial measure
representing the ratio of tangible common equity to tangible
assets. Tangible common equity and tangible assets are non-GAAP
financial measures derived from GAAP-based amounts. We calculate
tangible common equity for the Company by excluding the balance of
intangible assets and outstanding preferred stock issued to the
U.S. Treasury from total stockholders’ equity. We calculate
tangible assets by excluding the balance of intangible assets from
total assets. We had no intangible assets for the periods
presented. We believe that this is consistent with the treatment by
regulatory agencies, which exclude intangible assets from the
calculation of regulatory capital ratios. Accordingly, we believe
that these non-GAAP financial measures provide information that is
important to investors and that is useful in understanding our
capital position and ratios. However, these non-GAAP financial
measures are supplemental and are not substitutes for an analysis
based on a GAAP measure. As other companies may use different
calculations for non-GAAP measures, our presentation may not be
comparable to other similarly titled measures reported by other
companies. Calculation of the Company’s tangible common equity
ratio as of September 30, 2013, September 30, 2012, June 30, 2013
and March 31, 2013 is as follows:
(Dollars in thousands)
As of September
30, June 30, March 31, 2013
2012 2013 2013 Tangible common equity:
Total stockholders’ equity $ 264,253 $ 311,528 $ 253,764 $
253,803 Less: Outstanding TARP senior preferred stock --
68,621 -- -- Intangible assets
--
-- -- --
Tangible common equity $ 264,253 $ 242,907 $ 253,764 $ 253,803
Total tangible assets $ 2,756,322 $ 3,004,742 $ 2,836,235 $
2,883,388
Tangible common equity ratio 9.59% 8.08%
8.95% 8.80%
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking statements within
the meaning of the Securities and Exchange Act of 1934, as amended,
including statements of goals, intentions, and expectations as to
future trends, plans, events or results of Company operations and
policies, including but not limited to potential benefits and
impacts of a merger between the Company and United Bankshares,
Inc., our outlook on earnings, including our future net interest
margin, and statements regarding asset quality, our loan and
investment security portfolios, our deposit portfolio and
anticipated changes to our deposit costs and balances, projected
growth, capital position, capital strategies, our plans regarding
and expected future levels of our non-performing assets, business
opportunities in our market and other strategic initiatives or
transactions, and general economic conditions. When we use words
such as “may”, “will”, “anticipates”, “believes”, “expects”,
“plans”, “estimates”, “potential”, “continue”, “should”, and
similar words or phrases, you should consider them as identifying
forward-looking statements. These forward-looking statements are
not guarantees of future performance. These statements are based
upon current and anticipated economic conditions, nationally and in
the Company’s market, interest rates and interest rate policy,
competitive factors, and other conditions which by their nature,
are not susceptible to accurate forecast, and are subject to
significant uncertainty. Because of these uncertainties and the
assumptions on which this release and the forward-looking
statements are based, actual future operations and results may
differ materially from those indicated herein. Readers are
cautioned against placing undue reliance on any such
forward-looking statements. The Company’s past results are not
necessarily indicative of future performance. For additional
information regarding factors that could affect the Company's
operations and results, see the Company’s Annual Report on Form
10-K for the year ended December 31, 2012, and other reports filed
with and furnished to the Securities and Exchange Commission, and
the registration statement filed by United with the SEC on Form S-4
on May 29, 2013 (and all subsequent amendments thereof and
prospectus supplements thereunder).
Virginia Commerce Bancorp, Inc. Financial Highlights
(Dollars in thousands, except per share data) (Unaudited)
Three Months Ended September 30, Nine Months
Ended September 30, 2013 2012 % Change 2013
2012 % Change
Summary Financial Results:
Interest and dividend income
$30,340 $32,863 -7.7% $92,571 $100,511 -7.9% Interest expense 5,087
6,495 -21.7% 15,732 20,447 -23.1% Net interest income 25,253 26,368
-4.2% 76,839 80,064 -4.0% Provision for loan losses 1,834 3,111
-41.0% 6,207 12,267 -49.4% Non-interest income 1,822 4,725 -61.4%
6,576 13,095 -49.8% Non-interest expense 14,865 15,212 -2.3% 46,550
47,396 -1.8% Income before income taxes 10,376 12,770 -18.7% 30,658
33,496 -8.5% Net income $ 6,953 $ 8,486 -18.1% $20,452 $ 22,348
-8.5% Effective dividend on preferred stock -- $ 1,364 -100.0% --
$4,090 -100.0% Net income available to common stockholders $ 6,953
$ 7,122 -2.4% $20,452 $ 18,258 12.0%
Performance
Ratios: Return on average assets 0.99% 1.11% 0.97% 1.00% Return
on average equity 10.72% 10.95% 10.74% 9.95% Net interest margin
3.88% 3.62% 3.85% 3.74% Efficiency ratio, adjusted 50.00% 51.75%
52.72% 53.69%
Per Share Data: Earnings per common
share-basic $0.21 $0.22 -4.5% $0.63 $0.58 8.6% Earnings per common
share-diluted $0.20 $0.21 -4.8% $0.58 $0.54 7.4% Average number of
shares outstanding: Basic 33,068,722 31,824,656 32,702,828
31,713,132 Diluted 35,354,356 33,750,689 35,283,936 33,645,408
As of September 30, As of 2013
2012 % Change 06/30/13 % Change
Selected
Balance Sheet Data: Loans, net of allowance for loan losses
$2,018,996 $2,102,588 -4.0% $2,095,391 -3.6% Investment securities
481,177 545,143 -11.7% 482,727 -0.3% Assets 2,756,322 3,004,742
-8.3% 2,836,235 -2.8% Deposits 2,095,584 2,212,556 -5.3% 2,179,557
-3.9% Stockholders’ equity 264,253 311,528 -15.2% 253,764 4.1% Book
value per common share $7.88 $7.63 3.3% $7.78 1.3%
Capital Ratios (% of risk weighted assets): Tier 1 capital:
Company 15.58% 16.29% 14.36% Bank 14.93% 15.81% 13.85% Total
qualifying capital: Company 16.84% 17.55% 15.62% Bank 16.19% 17.06%
15.11% Tier 1 leverage: Company 12.07% 12.27% 11.40% Bank 11.80%
12.00% 11.03% Tangible common equity: Company 9.59% 8.08% 8.95%
(Dollars in thousands) As
of September 30, As of 2013 2012 6/30/2013 3/31/2013
Asset Quality: Non-performing assets: Non-accrual
loans: Commercial $ 2,663 $ 3,443 $ 7,249 $ 3,136 Real
estate-one-to-four family residential: Permanent first and second
2,655 5,689 2,884 2,263 Home equity loans and lines
2,382 2,576
2,230 2,379 Total real
estate-one-to-four family residential $ 5,037 $ 8,265 $ 5,114 $
4,642 Real estate-multi-family residential -- -- -- -- Real
estate-non-farm, non-residential: Owner-occupied 4,571 1,804 5,302
2,561 Non-owner-occupied
3,239
4,731 3,309
4,030 Total real estate-non-farm, non-residential $
7,810 $ 6,535 $ 8,611 $ 6,591 Real estate-construction: Residential
4,112 10,510 4,628 7,615 Commercial
8,976
16,679 8,978
13,185 Total real estate-construction $ 13,088 $
27,189 $ 13,606 $ 20,800 Consumer
23
18 16 16 Total
non-accrual loans $ 28,621 $ 45,450 $ 34,596 $ 35,185 OREO
9,923 14,089
11,290 9,562 Total non-performing
assets $ 38,544 $ 59,539 $ 45,886 $ 44,747 Loans 90+ days
past due and still accruing: Commercial $ 250 $ -- $ -- $ 232 Real
estate-one-to-four family residential: Permanent first and second
876 -- 1,074 -- Home equity loans and lines
--
-- --
-- Total real estate-one-to-four family residential $
876 $ -- $ 1,074 $ -- Real estate-multi-family residential -- -- --
-- Real estate-non-farm, non-residential: Owner-occupied -- -- --
-- Non-owner-occupied
-- --
-- -- Total real
estate-non-farm, non-residential $ -- $ -- $ -- $ -- Real
estate-construction: Residential -- -- -- -- Commercial
-- -- --
-- Total real estate-construction $ -- $ -- $
-- $ -- Consumer
-- --
-- 22 Total loans 90+ days
past due and still accruing $ 1,126 $ -- $ 1,074 $ 254 Total
non-performing assets and past due loans $ 39,670 $ 59,539 $ 46,960
$ 45,001 Troubled debt restructurings $ 21,794 $ 44,892 $
26,890 $ 33,926 Non-performing assets to total loans: 1.87%
2.77% 2.14% 2.04% to total assets: 1.40% 1.98% 1.62% 1.55%
Non-performing assets and past due loans to total loans: 1.92%
2.77% 2.19% 2.05% to total assets: 1.44% 1.98% 1.66% 1.56%
Allowance for loan losses to total loans 1.98% 1.92% 1.92% 1.91%
Allowance for loan losses to non-performing loans 137.52% 90.84%
115.31% 118.43% Total allowance for loan losses $ 40,909 $
41,288 $ 41,131 $ 41,970
(Dollars in thousands) As of September 30, As of 2013 2012
6/30/13 3/31/13 Loans 30 to 89 days past due and
still accruing Commercial $ 6,292 $ 313 $ 8,165 $ 6,918 Real
estate-one-to-four family residential: Permanent first and second
3,920 230 3,817 4,416 Home equity loans and lines
150 395 198
34 Total real estate-one-to-four family
residential $ 4,070 $ 625 $ 4,015 $ 4,450 Real estate-multi-family
residential -- -- -- -- Real estate-non-farm, non-residential:
Owner-occupied 3,542 7,326 2,094 1,914 Non-owner-occupied
2,463 4,080
1,572 550 Total real
estate-non-farm, non-residential $ 6,005 $ 11,406 $ 3,666 $ 2,464
Real estate-construction: Residential 283 74 530 -- Commercial
-- 930
-- 2,138 Total real
estate-construction $ 283 $ 1,004 $ 530 $ 2,138 Consumer 46 12 3 96
Farmland
-- --
-- -- Total loans 30 to 89 days
past due $ 16,696 $ 13,360 $ 16,379 $ 16,066
For the three months ended
For the nine months ended
September 30,
September 30,
2013 2012 2013 2012 Net charge-offs Commercial
$ 1,669 $ 101 $ 2,371 $ 4,975 Real estate-one-to-four family
residential: Permanent first and second $ (45) $ 576 $ 31 $ 1,291
Home equity loans and lines
(3)
1,064 228
1,851 Total real estate-one-to-four family residential
$ (48) $ 1,640 $ 259 $ 3,142 Real estate-multi-family residential
-- -- -- (118) Real estate-non-farm, non-residential:
Owner-occupied $ 45 $ 2,599 $ 153 $ 2,820 Non-owner-occupied
585 2,890
1,542 3,525 Total real
estate-non-farm, non-residential $ 630 $ 5,489 $ 1,695 $ 6,345 Real
estate-construction: Residential $ (220) $ 1,131 $ 206 4,528
Commercial
-- 90
3,501 578 Total real
estate-construction $ (220) $ 1,221 $ 3,707 $ 5,106 Consumer 24 4
38 258 Farmland
-- --
-- -- Total net charge-offs
$ 2,055 $ 8,455 $ 8,070 $ 19,708 Net charge-offs to average loans
outstanding 0.10% 0.39% 0.37% 0.91% Total provision for loan
losses $ 1,834 $ 3,111 $ 6,207 $ 12,267
Classes of total loans by risk rating as of September 30, 2013,
are summarized as follows (dollars in thousands):
Special
Total Internal Risk Rating Grades Pass
Watch Mention Substandard
Doubtful Loans Commercial $
162,914 $ 21,739 $ 8,257 $ 23,497 $ 1,790 $ 218,197 Real
estate-one-to-four family residential: Permanent first and second
253,358 9,222 14,197 19,333 -- 296,110 Home equity loans and lines
100,070 2,606
1,800 3,881
1,487 109,844 Total real
estate-one-to-four family residential $ 353,428 $ 11,828 $ 15,997 $
23,214 $ 1,487 $ 405,954 Real estate-multi-family residential
66,782 3,548 -- -- -- 70,330 Real estate-non-farm, non-residential:
Owner-occupied 353,479 36,235 23,069 26,198 -- 438,981
Non-owner-occupied
505,643
91,680 20,785
33,098 --
651,206 Total real estate-non-farm, non-residential $
859,122 $ 127,915 $ 43,854 $ 59,296 $ -- $ 1,090,187 Real
estate-construction: Residential 124,733 11,634 18,402 5,919 --
160,688 Commercial
64,946
15,201 584
23,777 --
104,508 Total real estate-construction $ 189,679 $
26,835 $ 18,986 $ 29,696 $ -- $ 265,196 Consumer 8,307 183 175 119
-- 8,784 Farmland 2,328 3,232
-- -- -- 5,560
Total $ 1,642,560 $
195,280 $ 87,269 $
135,822 $ 3,277 $
2,064,208
Classes of total loans by risk rating as of September 30, 2012,
are summarized as follows (dollars in thousands):
Special
Total Internal Risk Rating Grades Pass
Watch Mention Substandard
Doubtful Loans Commercial $
163,539 $ 28,262 $ 14,710 $ 21,630 $ 1,810 $ 229,951 Real
estate-one-to-four family residential: Permanent first and second
231,543 14,590 11,252 22,651 114 280,150 Home equity loans and
lines
108,153 2,737
1,968 4,243
1,545 118,646 Total real
estate-one-to-four family residential $ 339,696 $ 17,327 $ 13,220 $
26,894 $ 1,659 $ 398,796 Real estate-multi-family residential
81,738 5,104 -- -- -- 86,842 Real estate-non-farm, non-residential:
Owner-occupied 357,423 66,865 21,376 21,591 -- 467,255
Non-owner-occupied
483,742
131,036 33,608
43,076 --
691,462 Total real estate-non-farm, non-residential $
841,165 $ 197,901 $ 54,984 $ 64,667 $ -- $ 1,158,717 Real
estate-construction: Residential 81,656 18,262 18,095 37,757 --
155,770 Commercial
33,365
15,277 28,560
27,935 --
105,137 Total real estate-construction $ 115,021 $
33,539 $ 46,655 $ 65,692 $ -- $ 260,907 Consumer 6,585 230 222 104
-- 7,141 Farmland 1,000 3,889
-- -- -- 4,889
Total $ 1,548,744 $
286,252 $ 129,791 $
178,987 $ 3,469 $
2,147,243
Classes of total loans by risk rating as of June 30, 2013, are
summarized as follows (dollars in thousands):
Special
Total Internal Risk Rating Grades Pass
Watch Mention Substandard
Doubtful Loans Commercial $
180,358 $ 24,555 $ 10,389 $ 30,830 $ 1,790 $ 247,922 Real
estate-one-to-four family residential: Permanent first and second
252,596 9,390 14,671 20,416 111 297,184 Home equity loans and lines
101,633 2,875
1,541 3,729
1,489 111,267 Total real
estate-one-to-four family residential $ 354,229 $ 12,265 $ 16,212 $
24,145 $ 1,600 $ 408,451 Real estate-multi-family residential
64,416 5,026 -- -- -- 69,442 Real estate-non-farm, non-residential:
Owner-occupied 364,632 46,316 34,076 18,797 -- 463,821
Non-owner-occupied
492,768
115,700 20,863
39,625 --
668,956 Total real estate-non-farm, non-residential $
857,400 $ 162,016 $ 54,939 $ 58,422 $ -- $ 1,132,777 Real
estate-construction: Residential 124,428 13,330 19,179 6,732 --
163,669 Commercial
36,520
10,701 32,503
23,611 --
103,335 Total real estate-construction $ 160,948 $
24,031 $ 51,682 $ 30,343 $ -- $ 267,004 Consumer 8,503 192 172 149
-- 9,016 Farmland 2,350 3,732
-- -- -- 6,082
Total $ 1,628,204 $
231,817 $ 133,394 $
143,889 $ 3,390 $
2,140,694
Classes of total loans by risk rating as of March 31, 2013, are
summarized as follows (dollars in thousands):
Special
Total Internal Risk Rating Grades Pass
Watch Mention Substandard
Doubtful Loans Commercial $
179,904 $ 35,203 $ 10,099 $ 28,429 $ 1,817 $ 255,452 Real
estate-one-to-four family residential: Permanent first and second
237,871 15,057 13,539 17,331 112 283,910 Home equity loans and
lines
103,277 2,711
1,874 4,048
1,538 113,448 Total real
estate-one-to-four family residential $ 341,148 $ 17,768 $ 15,413 $
21,379 $ 1,650 $ 397,358 Real estate-multi-family residential
74,742 5,053 -- -- -- 79,795 Real estate-non-farm, non-residential:
Owner-occupied 386,845 47,226 35,505 19,995 -- 489,571
Non-owner-occupied
484,330
112,387 27,724
43,014 --
667,455 Total real estate-non-farm, non-residential $
871,175 $ 159,613 $ 63,229 $ 63,009 $ -- $ 1,157,026 Real
estate-construction: Residential 116,566 16,847 19,677 10,568 --
163,658 Commercial
45,236
18,409 32,163
33,268 --
129,076 Total real estate-construction $ 161,802 $
35,256 $ 51,840 $ 43,836 $ -- $ 292,734 Consumer 9,861 201 155 187
-- 10,404 Farmland 2,208 3,887
-- -- -- 6,095
Total $ 1,640,840 $
256,981 $ 140,736 $
156,840 $ 3,467 $
2,198,864 Troubled Debt
Restructurings (TDRs) -
By Loan Type
As of September 30, 2013 Reviewable TDRs Permanent
TDRs Total TDRs (Dollars in thousands) # of
As % of # of As % of # of
As % of Loans Balance Balance Loans Balance
Balance Loans Balance Balance
Loan
Type: Commercial -- $
--
--
2 $ 2,477 19.9 % 2 $ 2,477 11.3 %
Real estate-one-to-four family
residential: Permanent first and second 3 $ 1,437 15.4 % -- $
--
--
3 $ 1,437 6.6 % Home equity loans and lines
--
--
--
-- --
--
-- --
--
Total real estate-one-to-four family residential 3 $ 1,437 15.4 %
-- $ --
--
3 $ 1,437 6.6 %
Real estate-multi-family residential -- --
--
-- --
--
-- --
--
Real estate-non-farm, non-residential: Owner-occupied 3 $
7,127 76.2 % -- $ --
--
3 $ 7,127 32.7 % Non-owner-occupied
1
789 8.4 % 3
1,950 15.7 %
4 2,739 12.6
% Total real estate-non-farm, non-residential 4 $
7,916 84.6 % 3 $ 1,950 15.7 % 7 $ 9,866 45.3 %
Real
estate-construction: Residential -- $ --
--
-- $ --
--
-- $ --
--
Commercial
-- --
--
4 8,014 64.4
% 4 8,014
36.8 % Total real estate-construction --
--
--
4 $ 8,014 64.4 % 4 $ 8,014 36.8 %
Consumer -- --
--
-- --
--
-- --
--
Farmland -- --
--
-- --
--
-- --
--
Total 7 $ 9,353 100.0 % 9 $ 12,441 100.0 % 16 $ 21,794 100.0
%
Troubled Debt Restructurings (TDRs)
-
By Quarterly Review / Maturity
Date
As of September 30, 2013 Reviewable TDRs Permanent
TDRs Total TDRs (Dollars in thousands) # of
As % of # of As % of # of
As % of Loans Balance Balance Loans Balance
Balance Loans Balance Balance
Review /
Maturity by Quarter: 2013 4th Quarter
1
$ 789 8.4% -- $
--
--
1 $ 789 3.6% Total 2013: 1 $
789 8.4% -- $ --
--
1 $ 789 3.6%
2014 1st Quarter 2 $ 773 8.3% -- $ --
--
2 $ 773 3.5% 2nd Quarter -- --
--
1 1,025 8.2% 1 1,025 4.7% 3rd Quarter 2 6,771 72.4% -- --
--
2 6,771 31.1% 4th Quarter
-- --
--
1 5,400 43.4% 1
5,400 24.8% Total 2014: 4 $7,544 80.7% 2
$ 6,425 51.6% 6 $13,969 64.1%
2015 & beyond
2 $1,020 10.9%
5 $ 6,016 48.4%
7 $ 7,036 32.3% Total
Loans 7 $9,353 100.0% 9 $12,441 100.0% 16 $21,794 100.0%
Troubled Debt Restructurings (TDRs)
-
Migration by Quarter
As of September 30, 2013
(Dollars in thousands)
4/1/09 to 7/1/09 to 10/1/09 to
1/1/10 to 4/1/10 to 7/1/10 to 10/1/10
to 1/1/11 to 6/30/09 9/30/09
12/31/09 3/31/10 6/30/10 9/30/10
12/31/10 3/31/11 Period Beginning Balance --
$33,309 $37,425 $71,885 $80,993 $ 96,976 $105,617 $102,996
Additions: New Loans Added $33,309 $ 5,226 $37,663 $23,477
$21,720 $ 12,698 $ 12,377 $ 3,188 Loan Advances
--
974 348 219 472
220 531 486 Subtotal
Additions: $33,309 $ 6,200 $38,011 $23,696 $22,192 $ 12,918 $
12,908 $ 3,674
Deductions: Sales Proceeds -- $ 944 $
1,783 $ 1,218 $ 761 -- $ 125 $ 367 Payments -- 317 174 50 1,202
1,138 433 1,989 Reviews -- -- 229 75 3,714 2,468 -- 5,731 Upgrades
-- -- -- -- -- -- 11,000 -- Partial C/Os w/Continuing TDRs -- -- --
-- -- -- -- 5,656 Charge-offs w/Loans Sold or Settled -- -- 56 --
-- -- -- 251 Transfer to NPA
-- 823
1,309 13,245 532
671 3,971 800 Subtotal
Deductions: -- $ 2,084 $ 3,551 $14,588 $ 6,209 $ 4,277 $ 15,529 $
14,794
Net Increase / (Decrease) $33,309 $ 4,116
$34,460 $ 9,108 $15,983 $ 8,641 ($ 2,621) ($ 11,120)
%
Increase / (Decrease) from Preceding Period 12.4% 92.1% 12.7%
19.7% 8.9% (2.5%) (10.8%)
Period Ended Balance
$33,309 $37,425 $71,885 $80,993 $96,976 $105,617 $102,996 $ 91,876
4/1/11 to 7/1/11 to 10/1/11 to
1/1/12 to 4/1/12 to 7/1/12 to 10/1/12
to 1/1/13 to 6/30/11 9/30/11
12/31/11 3/31/12 6/30/12 9/30/12
12/31/12 3/31/13 Period Beginning Balance
$91,876 $81,070 $71,686 $52,264 $42,426 $43,054 $44,892 $43,448
Additions: New Loans Added $ 116 $ 984 $ 753 $ 541 $
1,345 $ 8,804 $ 6,771 $ 231 Loan Advances
197
53 40 236 186
46 65 -- Subtotal Additions:
$ 313 $ 1,037 $ 793 $ 777 $ 1,531 $ 8,850 $ 6,836 $ 231
Deductions: Sales Proceeds $ 126 $ 4,597 $ 6,168 $ 5,098 $
247 $ 531 $ 3,904 $ -- Payments 1,715 532 990 226 158 785 72 64
Reviews 640 4,292 10,111 3,888 498 1,465 635 9,689 Upgrades -- --
-- -- -- -- 3392 -- Partial C/Os w/Continuing TDRs 3,000 -- -- --
-- 2,587
--
--
Charge-offs w/Loans Sold or Settled -- -- 2,946 604 -- --
--
-- Transfer to NPA
5,638 1,000
-- 799 -- 1,644
277 -- Subtotal Deductions: $11,119
$10,421 $20,215 $10,615 $ 903 $ 7,012 $ 8,280 $ 9,753
Net
Increase / (Decrease) ($10,806) ($9,384) ($19,422) ($9,838) $
628 $ 1,838 ($1,444) ($9,522)
% Increase / (Decrease)
from Preceding Period (11.8%) (11.6%) (27.1%) (18.8%) 1.5% 4.3%
(3.20%) (21.9%)
Period Ended Balance $81,070 $71,686
$52,264 $42,426 $43,054 $44,892 $43,448 $33,926
Troubled Debt Restructurings (TDRs)
-
Migration by Quarter
As of September 30, 2013
(Dollars in thousands)
4/1/13 to 7/1/13 to 6/30/13
9/30/13 TOTAL Period Beginning Balance $33,926
$26,890
Additions: New Loans Added $ 1,063 $ 1,123
$171,389 Loan Advances
-- --
4,073
Subtotal Additions:
$ 1,063 $ 1,123
$175,462 Deductions: Sales
Proceeds $ 46 $ -- $25,915 Payments 28 5,003 14,876 Reviews 663 600
44,698 Upgrades -- -- 14,392 Partial C/Os w/Continuing TDRs -- --
11,243 Charge-offs w/Loans Sold or Settled 27 616 4,500 Transfer to
NPA
7,335 -- 38,044 Subtotal
Deductions: $ 8,099 $ 6,219
$153,668 Net Increase
/ (Decrease) ($7,036) ($5,096)
% Increase /
(Decrease) from Preceding Period (20.7%) (18.9%)
Period Ended Balance $26,890
$21,794 $21,794
(Dollars in thousands) As of September
30, As of 2013 2012 %
Change 6/30/13 % Change
Loan Portfolio:
Commercial $ 218,197 $ 229,951 -5.1% $ 247,922 -12.0% Real
estate-one to four family residential: Permanent first and second
296,110 280,150 5.7% 297,184 -0.4% Home equity loans and lines
109,844 118,646
-7.4% 111,267 -1.3%
Total real estate-one-to-four family residential $ 405,954 $
398,796 1.8% $ 408,451 -0.6% Real estate-multifamily residential
70,330 86,842 -19.0% 69,442 1.3% Real estate-non-farm,
non-residential: Owner-occupied 438,981 467,255 -6.1% 463,821 -5.4%
Non-owner-occupied
651,206
691,462 -5.8% 668,956
-2.7% Total real estate-non-farm, non-residential $
1,090,187 $ 1,158,717 -5.9% $ 1,132,777 -3.8% Real
estate-construction: Residential 160,688 155,770 3.2% 163,669 -1.8%
Commercial
104,508 105,137
-0.6% 103,335 1.1%
Total real estate-construction: $ 265,196 260,907 1.6% $ 267,004
-0.7% Consumer 8,784 7,141 23.0% 9,016 -2.6% Farmland
5,560 4,889 13.7%
6,082 -8.6% Total loans $
2,064,208 $ 2,147,243 -3.9% $ 2,140,694 -3.6% Less unearned income
4,303 3,367 27.8% 4,172 3.1% Less allowance for loan losses
40,909 41,288 -0.9%
41,131 -0.5% Loans, net $
2,018,996 $ 2,102,588 -4.0% $ 2,095,391 -3.6%
(Dollars in thousands) As of September 30, 2013
Residential, Acquisition, Development
and Construction
Net charge-
Non-accruals offs as a % Total Percentage Non-accrual as a % of of
By County/Jurisdiction of Origination: Outstandings
of Total Loans Outstandings Outstandings District of
Columbia $ 1,146 0.7% $ 314 0.2% -- Montgomery, MD -- 0.0% -- -- --
Prince Georges, MD 7,122 4.4% 3,043 1.9% -- Other Counties in MD
3,542 2.2% 56 -- -- Arlington/Alexandria, VA 41,848 26.0% 700 0.5%
0.4% Fairfax, VA 28,515 17.7% -- -- -- Culpeper/Fauquier, VA 10,377
6.5% -- -- -- Frederick, VA -- 0.0% -- -- -0.1% Henrico, VA 943
0.6% -- -- -- Loudoun, VA 12,972 8.1% -- -- -- Prince William, VA
29,332 18.3% -- -- -- Spotsylvania, VA 611 0.4% -- -- -- Stafford,
VA 19,412 12.1% -- -- -- Other Counties in VA 2,600 1.6% -- --
-0.1% Outside VA, D.C. & MD
2,268
1.4% -- --
-- $ 160,688 100.0% $ 4,112 2.6% 0.2%
(Dollars in thousands)
As of September 30, 2013
Commercial, Acquisition, Development
and Construction
Net charge-
Non-accruals offs as a % Total Percentage Non-accrual as a % of of
By County/Jurisdiction of Origination: Outstandings
of Total Loans Outstandings Outstandings District of
Columbia $ 1,054 1.0% $ -- -- -- Montgomery, MD 2,000 1.9% -- -- --
Prince Georges, MD 6,333 6.1% -- -- -- Other Counties in MD 2,034
1.9% -- -- -- Arlington/Alexandria, VA 495 0.5% 495 0.4% --
Fairfax, VA 1,509 1.5% -- -- 0.2% Culpeper/Fauquier, VA 1,348 1.3%
1,108 1.1% 1.0% Frederick, VA 2,000 1.9% -- -- -- Henrico, VA -- --
-- -- -- Loudoun, VA 14,058 13.5% -- -- -- Prince William, VA
42,956 41.1% -- -- -- Spotsylvania, VA 1,580 1.5% -- -- --
Stafford, VA 23,764 22.7% 6,538 6.3% 2.1% Other Counties in VA
5,377 5.1% 835 0.8% -- Outside VA, D.C. & MD
-- -- --
-- -- $ 104,508 100.0% $ 8,976 8.6% 3.3%
(Dollars in thousands) As of September 30, 2013
Non-Farm/Non-Residential
Net charge-
Non-accruals offs as a % Total Percentage Non-accrual as a % of of
By County/Jurisdiction of Origination: Outstandings
of Total Loans Outstandings Outstandings District of
Columbia $ 64,150 5.9% $ -- -- -- Montgomery, MD 16,382 1.5% -- --
-- Prince Georges, MD 64,249 5.9% -- -- -- Other Counties in MD
51,170 4.7% -- -- -- Arlington/Alexandria, VA 144,508 13.3% 910
0.1% -- Fairfax, VA 272,876 25.0% -- -- 0.1% Culpeper/Fauquier, VA
4,793 0.5% 1,576 0.1% -- Frederick, VA 7,567 0.7% -- -- -- Henrico,
VA 18,646 1.7% -- -- -- Loudoun, VA 131,033 12.0% 3,661 0.3% --
Prince William, VA 197,854 18.1% -- -- -- Spotsylvania, VA 21,292
2.0% -- -- -- Stafford, VA 18,930 1.7% -- -- 0.1% Other Counties in
VA 67,973 6.2% 1,663 0.2% -- Outside VA, D.C. & MD
8,764 0.8% --
-- -- $ 1,090,187 100.0% $ 7,810 0.7%
0.2% Of this total of $1.1 billion in
non-farm/non-residential real estate loans, approximately $32.6
million will mature in 2013, $135.4 million in 2014 and $67.8
million in 2015. As of September 30,
As of (Dollars in thousands) 2013
2012 % Change 6/30/13 % Change
Investment Securities (at book value): Available-for-sale
(AFS): U.S. government treasury obligations $ -- $ 15,000 -100% $
-- -- U.S. government agency obligations 386,475 429,416 -10.0%
387,269 -21.0% Pooled trust preferred securities 1,612 358 350.3%
779 106.9% Obligations of states and political subdivisions
93,090 100,369 -7.3%
94,679 -1.7% Total Investment
Securities $ 481,177 $ 545,143 -11.7% $ 482,727 -0.3%
Virginia Commerce Bancorp, Inc. Consolidated Balance Sheets
(Dollars in thousands, except per share data) (Unaudited, except as
of December 31, 2012) As of September 30,
As ofDecember 31,
2013 2012 2012
Assets Cash and due from banks
$ 38,962 $ 29,620 $ 49,531 Investment securities, AFS 481,177
545,143 493,424 Restricted stocks, at cost 10,928 11,272 10,147
Interest bearing deposits in other banks 101,000 213,973 1,000
Loans held-for-sale 847 19,330 15,195 Loans, net of allowance for
loan losses of $40,909, $41,288 and $42,773 2,018,996 2,102,588
2,142,872 Bank premises and equipment, net 8,780 10,511 10,072
Accrued interest receivable 7,706 9,541 8,563 Other real estate
owned, net of valuation allowance of $3,293, $5,287 and $6,374
9,923 14,089 12,302 Bank owned life insurance 45,303 14,176 44,393
Other assets 32,700 34,499 36,193 Total assets
$ 2,756,322 $ 3,004,742 $ 2,823,692
Liabilities and
Stockholders’ Equity Deposits Demand deposits $ 445,256
$ 390,692 $ 416,091 Savings and interest-bearing demand deposits
1,103,173 1,174,789 1,200,397 Time deposits 547,155
647,075 628,904 Total deposits $ 2,095,584 $ 2,212,556 $
2,245,392 Securities sold under agreement to repurchase 285,414
409,320 250,718 Other borrowed funds 40,000 -- 7,000 Trust
preferred capital notes 67,019 66,762 66,827 Accrued interest
payable 1,763 2,131 1,885 Other liabilities 2,289
2,445 6,561 Total liabilities $ 2,492,069 $ 2,693,214 $
2,578,383
Stockholders’ Equity Preferred stock, net of
discount, $1.00 par value per share, 1,000,000 shares authorized,
Series A; $1,000 stated value; 71,000 issued and outstanding $ --
$
68,621
$ -- Common stock, $1.00 par value per share, 50,000,000 shares
authorized, issued and outstanding September 2013, 33,526,210
including 183,195 in unvested restricted stock issued; September
2012, 31,824,756 including 110,215 in unvested restricted stock
issued; December 2012, 31,920,756 including 110,215 in unvested
restricted stock issued 33,343 31,715 31,811 Surplus 125,197
117,905 118,508 Warrants 8,520 8,520 8,520 Retained earnings
103,939 79,258 83,487 Accumulated other comprehensive income
(loss), net (6,746) 5,509 2,983 Total
stockholders’ equity $ 264,253 $ 311,528 $ 245,309 Total
liabilities and stockholders’ equity $ 2,756,322 $ 3,004,742 $
2,823,692 Virginia Commerce Bancorp,
Inc. Consolidated Statements of Operations (Dollars in thousands
except per share data) (Unaudited) Three Months Ended Nine
Months Ended September 30, September 30, 2013 2012 2013
2012
Interest and dividend income:
Interest and fees on loans $ 27,429 $ 29,820 $ 84,325 $ 90,868
Interest and dividends on investment securities: Taxable 2,226
2,232 6,126 7,328 Tax-exempt 543 574 1,671 1,748 Dividends on
restricted stocks 113 105 340 310 Interest on deposits in other
banks 29 132 109 257
Total interest and dividend income $ 30,340 $ 32,863 $
92,571 $ 100,511
Interest expense: Deposits $ 3,182 $
4,261 $ 10,045 $ 13,668
Securities sold under agreement to
repurchase and federal funds purchased
933 1,017 2,774 3,068 Other borrowed funds 20 242 54 779 Trust
preferred capital notes 952 975 2,859
2,932 Total interest expense $ 5,087 $ 6,495 $
15,732 $ 20,447
Net interest income $ 25,253 $ 26,368
$ 76,839 $ 80,064 Provision for loan losses 1,834
3,111 6,207 12,267 Net interest income
after provision for loan losses $ 23,419 $ 23,257 $ 70,632
$ 67,797
Non-interest income: Service charges and
other fees 900 $ 882 $ 2,736 $ 2,638 Non-deposit investment
services commissions 248 211 775 705 Fees and net gains on loans
held-for-sale 321 1,082 2,018 2,913 Gain on sale of investment
securities -- 2,056 -- 5,976 Bank owned life insurance 302 50 909
159 Other 51 444 138 704
Total non-interest income $ 1,822 $ 4,725 $ 6,576 $
13,095
Non-interest expense: Salaries and employee benefits
$ 6,436 $ 7,493 $ 21,327 $ 22,517 Occupancy expense 2,314 2,380
7,038 7,142 FDIC insurance premiums 504 660 1,536 2,488 Loss on
other real estate owned (71) (141) 1,712 1,566 Other real estate
owned expenses 406 322 879 902 Franchise tax expense 752 935 2,247
2,435 Data processing expense 705 664 2,104 1,992 Merger-related
expenses 1,155 -- 2,021 -- Other operating expense 2,664
2,899 7,686 8,354 Total
non-interest expense $ 14,865 $ 15,212 $ 46,550 $
47,396 Income before taxes $ 10,376 $ 12,770 $ 30,658 $ 33,496
Provision for income taxes 3,423 4,284
10,206 11,148
Net income $ 6,953 $
8,486 $ 20,452 $ 22,348 Effective dividend on preferred
stock -- 1,364 -- 4,090
Net income available to common stockholders $ 6,953 $ 7,122
$ 20,452 $ 18,258 Earnings per common share, basic $ 0.21 $ 0.22 $
0.63 $ 0.58 Earnings per common share, diluted $ 0.20 $ 0.21 $ 0.58
$ 0.54
Virginia Commerce Bancorp, Inc. Consolidated Average Balances,
Yields, and Rates Three Months Ended September 30, (Unaudited)
2013 2012 Interest Average Interest Average Average Income-
Yields Average Income- Yields (Dollars in thousands) Balance
Expense /Rates Balance Expense /Rates
Assets Investment securities (1) $ 483,096 $ 2,769 2.53% $
550,210 $ 2,806 2.26% Restricted stock 10,800 113 4.13% 11,272 105
3.68% Loans, net of unearned income (2) 2,092,844 27,429 5.21%
2,176,109 29,820 5.46% Interest-bearing deposits in other banks
30,823 29 0.37% 200,966
132 0.26%
Total interest-earning assets $
2,617,563 $ 30,340 4.65% $ 2,938,557 $ 32,863 4.50% Other assets
165,054 82,555
Total Assets $ 2,782,617 $
3,021,112
Liabilities and Stockholders’ Equity
Interest-bearing deposits: NOW accounts $ 416,985 $ 288 0.27% $
380,623 $ 357 0.37% Money market accounts 235,005 182 0.31% 242,896
248 0.41% Savings accounts 464,945 352 0.30% 569,339 585 0.41% Time
deposits 565,986 2,360 1.70%
665,193 3,071 1.84% Total interest-bearing
deposits $ 1,682,921 $ 3,182 0.75% $ 1,858,051 $ 4,261 0.91%
Securities sold under agreement to repurchase and federal funds
purchased(3) 236,637 933 1.56% 365,235 1,017 1.11% Other borrowed
funds 37,120 20 0.21% 22,282 242 4.25% Trust preferred capital
notes 66,983 952 5.56% 66,727
975 5.72%
Total interest-bearing
liabilities $ 2,023,661 $ 5,087 1.00% $ 2,312,295 $ 6,495 1.12%
Demand deposits and other liabilities 501,628 401,460
Total liabilities $ 2,525,289 $ 2,713,755 Stockholders’
equity 257,328 307,357
Total liabilities and
stockholders’ equity $ 2,782,617 $ 3,021,112 Interest rate
spread 3.65% 3.38% Net interest income and margin $ 25,253 3.88% $
26,368 3.62% (1) Yields on investment 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
investment securities, which are reflected as a component of
stockholders’ equity. Average yields on investment 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 $1.1 million and $2.0 million for the three months ended
September 30, 2013 and 2012, respectively. (3) The securities sold
under agreement to repurchase related to customers had an average
balance of $161.6 million at an average rate of 0.19% for the three
months ended September 30, 2013, and $290.2 million at an average
rate of 0.23% for the same period 2012. Also, included are
wholesale agreements with an average balance of $75.0 million at an
average rate of 4.51% for the three months ended September 30,
2013, and $75.0 million at an average rate of 4.52% for the same
period for 2012.
Virginia Commerce Bancorp, Inc. Consolidated Average
Balances, Yields, and Rates Nine Months Ended September 30,
(Unaudited)
2013 2012 Interest Average Interest Average Average
Income- Yields Average Income- Yields (Dollars in thousands)
Balance Expense /Rates Balance Expense
/Rates
Assets Investment securities (1) $ 490,078 $ 7,797
2.33% $ 581,381 $ 9,076 2.26% Restricted stock 10,702 340 4.24%
11,254 310 3.68% Loans, net of unearned income (2) 2,157,464 84,325
5.24% 2,172,353 90,868 5.60% Interest-bearing deposits in other
banks 47,165 109 0.31% 132,897
257 0.26%
Total interest-earning assets
$ 2,705,409 $ 92,571 4.63% $ 2,897,885 $ 100,511 4.68% Other assets
121,832 75,569
Total Assets $ 2,827,241 $
2,973,454
Liabilities and Stockholders’ Equity
Interest-bearing deposits: NOW accounts $ 430,695 $ 934 0.29% $
354,154 $ 972 0.37% Money market accounts 226,830 515 0.30% 227,301
704 0.41% Savings accounts 484,528 1,097 0.30% 599,799 2,001 0.45%
Time deposits 589,847 7,499 1.70%
710,515 9,991 1.88% Total
interest-bearing deposits $ 1,731,900 $ 10,045 0.78% $ 1,891,769 $
13,668 0.97% Securities sold under agreement to repurchase and
federal funds purchased(3) 281,098 2,774 1.32% 321,871 3,068 1.27%
Other borrowed funds 30,582 54 0.23% 24,088 779 4.25% Trust
preferred capital notes 66,921 2,859
5.63% 66,663 2,932 5.78%
Total
interest-bearing liabilities $ 2,110,501 $ 15,732 1.00% $
2,304,391 $ 20,447 1.19% Demand deposits and other liabilities
446,730 369,169
Total liabilities $ 2,557,231
$ 2,673,560 Stockholders’ equity 270,010 299,894
Total liabilities and stockholders’ equity $ 2,827,241 $
2,973,454 Interest rate spread 3.63% 3.49% Net interest income and
margin $ 76,839 3.85% $ 80,064 3.74% (1) Yields on
investment 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 investment securities, which are reflected
as a component of stockholders’ equity. Average yields on
investment securities are stated on a tax equivalent basis, using a
35% rate. (2) Loans placed on non-accrual status are included in
the average balances. Net loan fees and late charges included in
interest income on loans totaled $3.7 million and $3.7 million for
the nine months ended September 30, 2013, and 2012, respectively.
(3) The sold under agreement to repurchase related to customers had
an average balance of $205.5 million at an average rate of 0.16%
for the nine months ended September 30, 2013, and $246.9 million at
an average rate of 0.29% for the same period 2012. Also, included
are wholesale agreements with an average balance of $75.0 million
at an average rate of 4.51% for the nine months ended September 30,
2013, and $75.0 million at an average rate of 4.52% for the same
period for 2012.
Virginia Commerce Bancorp, Inc.Mark S. MerrillChief Financial
Officer703-633-6120mmerrill@vcbonline.com
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