U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/x/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended MARCH 31, 2000
--------------
/ / TRANSITION REPORT UNDER 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 Small Business Issuer as Specified in its Charter)
VIRGINIA 54-1964895
- ------------------------------------ ------------------------------------
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
5350 LEE HIGHWAY, ARLINGTON, VIRGINIA 22207
-------------------------------------------
(Address of Principal Executive Offices)
703-534-0700
------------
(Issuer's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ___.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of MAY 1, 2000:
Common stock, $1 par value--1,968,985
INDEX
Page No.
1
<PAGE>
<TABLE>
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999 3
Consolidated Statements of Income
Three months ended March 31, 2000 and 1999 4
Consolidated Statements of Stockholders' Equity
Three months ended March 31, 2000 and 1999 5
Consolidated Statements of Cash Flows
Three months ended March 31, 2000 and 1999 6
Notes to Consolidated Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 13
Part II. Other Information: 14
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
VIRGINIA COMMERCE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
2000 1999
----------- ------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 14,155 $ 10,758
Interest-bearing deposits with other banks -- 5,000
Securities available-for-sale (at market value) 30,155 28,553
Securities held-to-maturity (market value of
$16,952 and $17,298) 17,504 17,772
Federal funds sold 10,407 6,957
Loans held-for-sale 1,382 1,460
Loans, net of allowance for loan
losses of $2,035 and $1,889 218,465 203,711
Bank premises and equipment, net 5,723 5,719
Accrued interest receivable 1,728 1,306
Other assets 1,469 1,339
----------- -----------
TOTAL ASSETS $ 300,988 $ 282,575
=========== ===========
LIABILITIES:
Deposits
Non-interest bearing $ 42,863 $ 42,214
Interest-bearing 212,274 200,830
----------- -----------
TOTAL DEPOSITS 255,137 243,044
Repurchase agreements 23,705 17,837
Other borrowed funds 2,900 2,900
Other liabilities 1,208 1,306
----------- -----------
TOTAL LIABILITIES 282,950 265,087
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock; $5 par, 1,000,000 shares
authorized of which none have been issued $ -- $ --
Common stock; $1 par, 5,000,000 shares
authorized; issued and outstanding 1,968,985
shares 1,969 1,969
Surplus 11,091 11,091
Retained earnings 5,605 4,982
Accumulated other comprehensive income (loss),
net of tax (627) (554)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 18,038 17,488
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 300,988 $ 282,575
========== ==========
</TABLE>
Notes to financial statements are an integral part of these statements.
3
<PAGE>
VIRGINIA COMMERCE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
---- ----
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 4,775 $ 3,407
Interest on investment securities 735 788
Interest on federal funds sold 92 60
Interest on deposits with other banks 35 --
-------- --------
Total Interest Income 5,637 4,255
INTEREST EXPENSE:
Deposits 2,348 1,828
Repurchase agreements 177 155
Other borrowings 53 14
-------- --------
Total Interest Expense 2,578 1,997
-------- --------
Net Interest Income 3,059 2,258
PROVISION FOR LOAN LOSSES: 165 120
-------- --------
Net Interest Income After
Provision for Loan Losses 2,894 2,138
OTHER INCOME:
Service charges and other fees 218 168
Fees and net gains on loans held-for-sale 261 255
Other 8 11
-------- --------
Total Other Income 487 434
OTHER EXPENSES:
Salaries and employee benefits 1,329 979
Occupancy expense 477 332
Data processing expense 175 142
Other operating expense 454 341
-------- --------
Total Other Expenses 2,435 1,794
-------- --------
Income Before Income Taxes 946 778
Applicable Income Taxes 323 265
-------- --------
NET INCOME $ 623 $ 513
======== ========
EARNINGS PER COMMON SHARE, BASIC .32 .26
======== ========
EARNINGS PER COMMON SHARE, DILUTED .30 .25
======== ========
</TABLE>
Notes to financial statements are an integral part of these statements.
<PAGE>
VIRGINIA COMMERCE BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the three months ended March 31, 2000 and 1999
(In Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Preferred Common Retained Comprehensive Comprehensive
Stock Stock Surplus Earnings Income (Loss) Income Total
--------- -------- --------- ---------- -------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1999 $ -- $1,787 $ 11,240 $ 2,820 $ (15) $ 15,832
Comprehensive Income:
Net Income -- -- -- 513 $ 513 513
Other comprehensive income, net of tax
Unrealized holding losses on
securities available-for-sale arising
during the period (net of tax of $38) (115) --
------
Other comprehensive income, net of tax -- -- -- -- (115) (115) (115)
------
Total comprehensive income -- -- -- -- -- $ 398
======
Balance, March 31, 1999 $ -- $1,787 $ 11,240 $ 3,333 $(130) $ 16,230
===== ===== ======= ====== ==== ======
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Other
Preferred Common Retained Comprehensive Comprehensive
Stock Stock Surplus Earnings Income (Loss) Income Total
--------- -------- --------- ---------- --------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 2000 $ -- $1,969 $ 11,091 $ 4,982 $ (554) $ 17,488
Comprehensive Income:
Net Income -- -- -- 623 $ 623 623
Other comprehensive income, net of tax
Unrealized holding losses on
securities available-for-sale arising
during the period (net of tax of $38) (73) --
------
Other comprehensive income, net of tax -- -- -- -- (73) (73) (73)
------
Total comprehensive income -- -- -- -- -- $ 550
======
Balance, March 31, 2000 $ -- $1,969 $ 11,091 $ 5,605 $ (627) $ 18,038
=== ====== ======== ======= ======= ========
</TABLE>
Notes to financial statements are an integral part of these statements.
5
<PAGE>
VIRGINIA COMMERCE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 623 $ 513
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 183 131
Provision for loan losses 165 120
Deferred tax expense 38 59
Amortization of security premiums and accretion of discounts (8) 24
Changes in other assets and other liabilities:
(Increase) in accrued interest receivable (422) (288)
(Increase) in other assets (130) (133)
(Decrease) in other liabilities (98) (77)
-------- --------
Net Cash Provided by Operating Activities $ 351 $ 349
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) in loans (14,919) (12,121)
Origination of loans held-for-sale (9,614) (13,454)
Sale of loans 9,692 11,605
Purchase of securities available-for-sale (2,001) (172)
Proceeds from principal payments on securities available-for-sale 292 316
Proceeds from principal payments on securities held-to-maturity 272 835
Proceeds from calls and maturities of securities held to maturity -- 4,000
Purchase of bank premises and equipment (187) (458)
-------- --------
Net Cash (Used In) Investing Activities $ 16,465 $ (9,449)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits $ 12,093 $ 15,177
Net increase (decrease) in repurchase agreements 5,868 (1,462)
-------- --------
Net Cash Provided by Financing Activities $ 17,961 $ 13,715
-------- --------
Net Increase In Cash and Cash Equivalents 1,847 4,615
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 22,715 11,252
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 24,562 $ 15,867
======== ========
</TABLE>
Notes to financial statements are an integral part of these statements.
6
<PAGE>
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 generally accepted accounting principles 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 consistently of a normal and recurring
nature considered necessary to present fairly the financial positions as of
March 31, 2000 and December 31, 1999, and the results of operations and
cash flows for three months ended March 31, 2000 and 1999.
Operating results for the three month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2000.
2. INVESTMENT SECURITIES
Amortized cost and carrying amount (estimated market value) of securities
available-for-sale are summarized as follows:
<TABLE>
<CAPTION>
March 31, 2000
--------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------------------------------------------------
<S> <C> <C> <C> <C>
(In Thousands of Dollars)
US Government Agencies & Corporations 29,990 1 (951) 29,040
Federal Reserve Bank stock 392 -- -- 392
Federal Home Loan Bank stock 668 -- -- 668
Community Bankers' Bank stock 55 -- -- 55
-------- -------- ------ -------
$31,105 $ 1 $(951) $30,155
======== ======== ====== =======
</TABLE>
Amortized cost and estimated market value of securities held-to-maturity
are summarized as follows:
<TABLE>
<CAPTION>
March 31, 2000
--------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------------------------------------------------
<S> <C> <C> <C> <C>
(In Thousands of Dollars)
US Government Agencies & Corporations 17,504 -- (552) 16,952
-------- --------- -------- --------
$ 17,504 $ -- $ (552) $ 16,952
======== ========= ======== ========
</TABLE>
7
<PAGE>
VIRGINIA COMMERCE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
Securities available-for-sale at December 31, 1999 consist of the
following:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------------------------------------------------
<S> <C> <C> <C> <C>
(In Thousands of Dollars)
US Government Agencies & Corporations 28,278 4 (843) 27,439
Federal Reserve Bank stock 391 -- -- 391
Federal Home Loan Bank stock 668 -- -- 668
Community Bankers' Bank stock 55 -- -- 55
--------- ------ ------- -------
$ 29,392 $ 4 $ (843) $ 28,553
========= ====== ======= =======
</TABLE>
Securities held-to-maturity at December 31, 1999 consist of the following:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------------------------------------------------
<S> <C> <C> <C> <C>
(In Thousands of Dollars)
US Government Agencies & Corporations 17,772 -- (474) 17,298
------- ------- ------ -------
$ 17,772 $ -- $ (474) $ 17,298
======= ======= ====== =======
</TABLE>
3. LOANS
Major classifications of loans are summarized as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ -------------
<S> <C> <C>
(In Thousands of Dollars)
Commercial 28,871 26,423
Real estate -1-4 family residential 28,329 23,892
Real estate -multifamily residential 12,949 14,540
Real estate -nonfarm, nonresidential 121,364 117,106
Real estate -acquisition, development and construction 23,001 17,238
Consumer 6,558 6,968
---------- ----------
221,072 206,167
Less unearned Income (572) (567)
Less allowance for loan losses (2,035) (1,889)
---------- ----------
$218,465 $203,711
========== ==========
</TABLE>
8
<PAGE>
VIRGINIA COMMERCE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
4. EARNINGS PER SHARE
The following shows the weighted average number of shares used in computing
earnings per share and the effect on weighted average number of shares of
diluted potential common stock. Weighted average number of shares for the
period ending March 31, 1999 has been restated giving effect to a ten
percent stock restructuring in May 1999.
<TABLE>
<CAPTION>
March 31, 2000 March 31, 1999
-------------- --------------
Per Share Per Share
Shares Amount Shares Amount
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Basic earnings per share 1,968,985 $ .32 1,965,082 $ .26
Effect of dilutive securities:
Stock options 49,294 50,942
Warrants 63,304 63,560
---------- ----------
Diluted earnings per share 2,081,583 $ .30 2,079,584 $ .25
========== ======= ========== =======
</TABLE>
5. Capital Requirements
A comparison of the Company's capital as of March 31, 2000 with the minimum
regulatory requirements is as follows:
<TABLE>
<CAPTION>
Minimum
Actual Requirements
-------- --------------
<S> <C> <C>
Total Risk-Based Capital 8.57% 8.00 %
Tier 1Risk-Based Capital 7.73% 4.00 %
Leverage Ratio 6.51% 4.00 %
</TABLE>
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Forward-Looking Statements
Certain information contained in this discussion may include "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are generally identified by phrases such as
"the Company expects," "the Company believes" or words of similar import. Such
forward-looking statements involve known and unknown risks including, but not
limited to, changes in general economic and business conditions, interest rate
fluctuations, competition within and from outside the banking industry, new
products and services in the banking industry, risk inherent in making loans
such as repayment risks and fluctuating collateral values, problems with
technology utilized by the Company, changing trends in customer profiles and
changes in laws and regulations applicable to the Company. Although the Company
believes that its expectations with respect to the forward-looking statements
are based upon reliable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results,
performance or achievements of the Company will not differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements.
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
(in thousand of dollars). 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 offers a full range of banking services through ten branch
offices, principally to individuals and small to medium-size businesses in the
Metropolitan Washington, D.C. area.
Results of operations
Total assets increased $18,413, or 6.5% from $282,575 at December 31, 1999 to
$300,988 at March 31, 2000 as total deposits grew $12,093, or 5.0% from $243,044
to $255,137, and repurchase agreements increased $5,868, or 32.9% from $17,837
to $23,705 during the same period.
Loan demand was strong with total loans, net of allowance for loan losses,
increasing $14,754, or 7.2% from $203,711 at December 31, 1999 to $218,465 at
March 31, 2000, and representing 85.6% of total deposits at March 31, 2000
compared to 83.8% at December 31, 1999. The growth in loans utilized the
majority of funding sources during the three month period as cash and cash
equivalents grew a modest $1,847 from $22,715 at December 31, 1999 to $24,562 at
March 31, 2000, and securities increased $1,334, or 2.9% during the same period.
Deposit growth included a $649 increase in non-interest bearing demand deposits,
and an $11,444 increase in interest bearing deposits from $200,830 at December
31, 1999 to $212,274 at March 31, 2000.
Stockholders' equity grew $550 from $17,488 at December 31, 1999 to $18,038 at
March 31, 2000 with earnings of $623 for the period offset by an increase in
unrealized losses on available-for-sale securities of $73, net of tax.
Net income of $623 for the first quarter ending March 31, 2000, increased $110,
or 21.5% compared to $513 for the same period in 1999, as net interest income
increased $801, or 35.5%, and non-interest income increased $53 from $434 to
$487, while non-interest expense grew $641, or 35.7%. Diluted earnings per share
were $0.30 compared to $0.25, an increase of 20%.
Net Interest Income
10
<PAGE>
Net interest income grew $801, or 35.5% from $2,258 during the first quarter
1999 to $3,059 for the three months ending March 31, 2000. Both growth in total
average earning assets outstanding from $214,419 to $269,192, and in the net
interest margin from 4.21% to 4.55% contributed to the increase.
The following table shows the average balance sheets for each of the three
months ended March 31, 2000 and 1999. In addition, the amounts of interest
earned on earning assets, with related yields, 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 loans fees included
in interest income on loans totaled $111 and $96 for 2000 and 1999,
respectively.
<TABLE>
<CAPTION>
2000 1999
- -------------------------------------------------------------------------------------------------
Interest Average Interest Average
Average Income Yields Average Income- Yields
(Dollars in thousands) Balance Expense /Rates Balance Expense /Rates
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- -------------------------------------------------------------------------------------------------
Securities $ 46,976 $ 735 6.26% $ 51,398 $ 788 6.13%
- -------------------------------------------------------------------------------------------------
Loans, before allowance for
losses 213,335 4,775 8.95% 157,949 3,407 8.63%
- -------------------------------------------------------------------------------------------------
Interest-bearing deposits
with other banks 2,418 35 5.79% -- -- --
- -------------------------------------------------------------------------------------------------
Federal funds sold 6,463 92 5.69% 5,072 60 4.73%
- -------------------------------------------------------------------------------------------------
Total Earning Assets $269,192 $5,637 8.38% $214,419 $4,255 7.94%
- -------------------------------------------------------------------------------------------------
Non-earning assets 16,687 14,162
- -------------------------------------------------------------------------------------------------
TOTAL ASSETS $285,879 $228,581
- -------------------------------------------------------------------------------------------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------
Interest-bearing deposits $206,374 $2,348 4.55% $164,172 $1,828 4.45%
- -------------------------------------------------------------------------------------------------
Fed Funds purchased,
securities sold U/A to
repurchase and other
borrowed funds 20,110 230 4.57% 16,494 169 4.10%
- -------------------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING
LIABILITIES $226,484 $2,578 4.55% $180,666 $1,997 4.42%
- -------------------------------------------------------------------------------------------------
Demand deposits and other
non-interest bearing
liabilities 41,715 31,900
- -------------------------------------------------------------------------------------------------
TOTAL LIABILITIES
STOCKHOLDERS' EQUITY $268,199 $212,566
- -------------------------------------------------------------------------------------------------
Stockholders' equity 17,680 16,015
- -------------------------------------------------------------------------------------------------
Total Liabilities and $285,879 $228,581
- -------------------------------------------------------------------------------------------------
Interest rate spread 3.83% 3.52%
- -------------------------------------------------------------------------------------------------
Net interest income and
margin $3,059 4.55% $2,258 4.21%
- -------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
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 three months ending March 31, 2000
charge-offs totaled $21 compared to $12 for the same period ending March 31,
1999. The provision for loan loss expense in the first three months of 2000 was
$165 compared to $120 in 1999. The total allowance for loan losses of $2,035 at
March 31, 2000 increased 7.7% from $1,889 at December 31, 1999, and increased
$487, or 31.5% from March 31, 1999.
Management feels that the allowance for loan losses is adequate. There can be no
assurance, however, that additional provisions for loan losses will not be
required in the future, including in the event of 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 monthly analysis of the allowance for loan losses, with
the objective of quantifying portfolio risk into a dollar figure of potential
losses, thereby translating the subjective risk value into an objective number.
Emphasis is placed on independent external loan reviews and monthly internal
reviews. The determination of the allowance for loan losses is based on eight
qualitative factors, applying appropriate weight to separate types or categories
of loans. These 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, regulatory requirements, and the effect of
competition.
The following schedule summarizes the changes in the allowance for loan losses:
<TABLE>
<CAPTION>
Three Months Three Months Twelve Months
Ending Ending Ending
March 31, 1999 December 31, 1999 March 31, 2000
--------------- ----------------- ----------------
<S> <C> <C> <C>
(In Thousands of Dollars)
Allowance, at beginning of period 1,889 1,438 1,438
Provision charged against income 165 120 480
Recoveries 2 2 11
Losses charged to reserve (21) (12) (40)
-------- -------- ---------
Allowance, at end of period $ 2,035 $ 1,548 $ 1,889
======== ======== =========
</TABLE>
Risk Elements and Non-performing Assets
Non-performing assets consist of non-accrual loans, impaired loans, restructured
loans, and other real estate owned (foreclosed properties). The total
non-performing assets and loans that are 90 days or more past due and still
accruing interest decreased 20.5% from $317 at December 31, 1999 to $252 at
March 31, 2000.
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.
Non-performing assets consist of the following:
12
<PAGE>
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ------------
<S> <C> <C>
(In Thousands of Dollars)
Non-accrual loans $ 123 $ 106
Impaired loans 129 143
------- --------
Total non-performing assets 252 249
Loans past due 90 days and still accruing -- 68
Total non-performing assets and loans
past due 90 days and still accruing $ 252 $ 317
======= ========
</TABLE>
The ratio of non-performing assets and loans past due 90 days and still accruing
decreased from .11% at December 31, 1999 to .08% at March 31, 2000. This ratio
is expected to remain at its low level relative to the Company's peers. This
expectation is based on potential and identified problem loans on March 31,
2000. As of March 31, 2000, there were $307 of loans for which management has
identified risk factors which could have the potential to impair repayment in
accordance with their terms. These loans are primarily well-secured and
currently performing.
Non-Interest Income
Non-interest income increased $53, or 12.2% from $434 for the three months
ending March 31, 1999 to $487 for the same period ending March 31, 2000. Service
charges and other fees grew $50, or 29.8% due to growth in deposit accounts
while fees and net gains on loans held-for-sale increased only slightly from
$255 during the first three months of 1999 to $261 for the three months ended
March 31, 2000 as total originations of loans held-for sale declined from
$13,454 to $9,614.
Non-Interest Expense
For the three months ending March 31, 2000, non-interest expense increased $641,
or 35.7% compared to the same period in 1999. Salaries and benefits accounted
for $350 of the total increase while occupancy expense increased $145 due to the
addition of the Bank's ninth and tenth branch locations in March and July 1999.
Data processing expenses grew $33, or 23.2% from $142 during the first three
months of 1999 to $175 for the same period in 2000 due to growth in total
deposit and loan accounts.
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 34%.
Provision for income taxes totaled $265 and $323 for the three months ending
March 31, 1999 and 2000, respectively.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and reports on Form 8-K
a) Exhibits
11 Statement re: Computation of per share earnings (See Note 4)
27 Financial Data Schedule
b) Form 8-K - None
14
<PAGE>
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: May 3, 2000 BY /s/ Peter A. Converse
----------------------------------
Peter A. Converse, President & CEO
Date: May 3, 2000 BY /s/ William K. Beauchesne
--------------------------------
William K. Beauchesne , Exec. Vice President
& Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001099305
<NAME> Virginia Commerce Bancorp, Inc.
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 14,155
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10,407
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 30,155
<INVESTMENTS-CARRYING> 17,504
<INVESTMENTS-MARKET> 16,952
<LOANS> 220,500
<ALLOWANCE> 2,035
<TOTAL-ASSETS> 300,988
<DEPOSITS> 255,137
<SHORT-TERM> 23,705
<LIABILITIES-OTHER> 1,208
<LONG-TERM> 2,900
0
0
<COMMON> 1,969
<OTHER-SE> 16,069
<TOTAL-LIABILITIES-AND-EQUITY> 300,988
<INTEREST-LOAN> 4,775
<INTEREST-INVEST> 735
<INTEREST-OTHER> 127
<INTEREST-TOTAL> 5,637
<INTEREST-DEPOSIT> 2,348
<INTEREST-EXPENSE> 2,578
<INTEREST-INCOME-NET> 3,059
<LOAN-LOSSES> 165
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,435
<INCOME-PRETAX> 946
<INCOME-PRE-EXTRAORDINARY> 946
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 623
<EPS-BASIC> 0.32
<EPS-DILUTED> 0.30
<YIELD-ACTUAL> 8.38
<LOANS-NON> 252
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 307
<ALLOWANCE-OPEN> 1,889
<CHARGE-OFFS> 165
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 2,035
<ALLOWANCE-DOMESTIC> 2,035
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
