Branching Out in Your Community
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2006 Annual report
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ABOUT OUR BANK Virginia Commerce Bank (VCB), a wholly owned subsidiary of Virginia Commerce Bancorp, Inc., is a full-service community bank headquartered in Northern Virginia. With our wide array of business and consumer products, we continue to be one of the fastest growing banks in our market, and for good reason. From 1988, when we opened our first branch in Clarendon, until today, with 20 branches and counting, two mortgage lending offices, two investment services offices and over $1.9 billion in assets, we have maintained a clear focus on providing “community banking at its best” through excellence in…People, Product, Pricing and Personal Service.
CONTENTS Five Year Financial Summary...................1 Letter to Stockholders..............................2 Commercial Banking Services..................5 Consumer Banking Services.....................6 Investment Services...................................7 Residential Mortgage Services..................8 Construction Lending Services................9 Operations Center...................................10 Advisory Boards of Directors..................12 Senior Management................................14 2006 Officers...........................................15 Board & Executive Officers....................16
20 LEESBURG
10 ASHBURN 7
15
DULLES
25 RESTON
15 50
23
27
28
WASHINGTON, DC TYSONS MCLEAN 28 32 CORNER 8 7 OAKTON 9 FALLS CHURCH ARLINGTON
VIENNA
13 CHANTILLY
14 29 16 FAIRFAX CITY
11 CENTREVILLE 12
29
18
21 31
GAINESVILLE
6
50
2
1 ALEXANDRIA
MANASSAS
29
3
ANNANDALE
SPRINGFIELD
22 NEWINGTON
4
5
24
WARRENTON
30
LAKE RIDGE
234
19 WOODBRIDGE
28
FREDERICKSBURG
26
17
BRANCH & DEPARTMENT LOCATIONS Alexandria 1
5140 Duke Street Alexandria, VA 22304 703.751.4400
2
506 King Street Alexandria, VA 22314 703.684.4390
3
4
5
2401 Mt.Vernon Avenue Alexandria, VA 22301 703.739.0203 1414 Prince Street Alexandria, VA 22314 703.739.3242 7901 Richmond Highway Alexandria, VA 22306 703.360.5760
Annandale 6
4230 John Marr Drive Annandale, VA 22003 703.256.8889
Arlington 7
8
9
Main Office/ Executive Office 5350 Lee Highway Arlington, VA 22207 703.534.1382 (Branch) 703.534.0700 (Main Office) 6500 Williamsburg Boulevard Arlington, VA 22213 703.237.8050 2930 Wilson Boulevard Arlington, VA 22201 703.525.4601
Ashburn 10 Ryan Park Center
Ashburn, VA 20147 Opening 2nd Quarter 2007
Centreville 11 14701 Lee Highway
Centreville, VA 20121 Opening 2nd Quarter 2007
12 6335 Multiplex Drive
Centreville, VA 20121 Opening 1st Quarter 2008
Chantilly
Leesburg
Tysons Corner
13 13881 G Metrotech Drive
20 314 East Market Street
27 8251 Greensboro Drive
14 4221 Walney Road
Manassas
Chantilly, VA 20151 703.378.9556 Chantilly, VA 20151 703.817.0690
Dulles 15 23510 Overland Drive
Dulles, VA 20166 Opening 1st Quarter 2008
Fairfax City 16 10777 Main Street
Fairfax, VA 22030 703.273.9111
Fredericksburg 17 10800-A Courthouse Road
Fredericksburg, VA 22408 Opening 2nd Quarter 2007
Gainesville 18 Heritage Hunt
Gainesville, VA 20155 Opening 1st Quarter 2008
Lake Ridge 19 2030 Old Bridge Road
Lake Ridge, VA 22192 703.492.7440
Leesburg, VA 20176 Opening 3rd Quarter 2007
21 10830 Balls Ford Road
Manassas, VA 20109 703.366.3351
22 9161 Liberia Avenue
Manassas, VA 20110 703.366.3584
McLean 23 1356 Chain Bridge Road
McLean, VA 22101 703.448.9800
Newington 24 7830 Backlick Road
Springfield, VA 22150 703.455.0339
Reston 25 11820 Spectrum Center
Reston, VA 20190 703.689.3399
South Woodbridge 26 Princeton Woods Center
Dumfries, VA 22026 Opening 4th Quarter 2007
McLean, VA 22102 703.356.0410
Vienna 28 374 Maple Avenue East
Vienna, VA 22180 703.319.4150
Residential Mortgage Lending 29 4221 Walney Road
Chantilly, VA 20151 703.961.0160
30 54 East Lee Street
Warrenton, VA 20186 540.341.3001
Investment Services 31 10830 Balls Ford Road
Manassas, VA 20109 703.366.3351
32 374 Maple Avenue East
Vienna, VA 22180 703.319.3385
FIVE YEAR FINANCIAL SUMMARY (Dollars in thousands, except per share amounts) December 31
2006
2005
2004
2003
2002
Selected Year-end Balances
Total assets
$ 1,949,082
Total stockholders’ equity
$ 1,518,425
139,851
$ 1,139,353
$ 881,694
$
663,457
111,818
91,324
55,092
41,850
Total loans (net) 1,629,827 1,270,255
925,782
654,851
516,900
Total deposits 1,605,941 1,243,506
970,968
773,511
566,996
Summary Results of Operations
Interest income
$
Interest expense
Net interest income
Provision for loan losses
125,292
86,478
$
57,998
$
45,968
$
38,998
56,487
29,811
16,331
13,893
14,128
$
68,805
56,667
41,667
32,075
24,870
Net interest income after provision for loan losses Non-interest income Non-interest expense Income before taxes Income tax expense Net income
$
$
$
4,406 64,399
$
3,772
$
52,895
$
$
2,989 38,678
$
$
1,575 30,500
1,678
$
23,192
7,323
6,676
5,759
7,746
5,593
34,289
29,466
22,807
20,820
17,217
21,630
17,426
11,568
$
37,433
$
30,105
12,925
10,438
$
$
24,508
$
19,667
$
14,229
$
7,401 $
$
5,880
3,892
11,546
$
7,676
Per Share Data (1)
Net income, basic
Net income, diluted Book value
$
1.14
$
0.93
$
0.72
$
0.63
$
0.46
$
1.08
$
0.87
$
0.66
$
0.57
$
0.41
$
6.49
$
5.31
$
4.41
$
2.99
$
2.39
Average number of shares outstanding:
Basic Diluted
21,455,239 21,016,032 19,818,932 18,250,208 16,686,362 22,685,748 22,483,714 21,495,254 19,951,070 18,736,562
Growth and Significant Ratios
% Change in net income
% Change in assets
% Change in loans (net) % Change in deposits % Change in equity
Equity to asset ratio
Return on average assets Return on average equity
Average equity to average assets Efficiency ratio (2)
24. 61%
38.22%
23.24%
50.42%
28.36%
33.27%
29.22%
32.89%
35.53%
37.21%
41.37%
26.69%
30.82%
28.31% 29.15% 25.07% 7.18% 1.40%
19.51% 7.19%
45.04%
64.54%
28.07%
25.53%
36.42%
39.34%
22.44%
65.77%
31.64%
59.61%
7.36%
8.02%
6.25%
6.31%
1.45%
1.39%
1.47%
1.32%
19.44%
19.28%
23.71%
23.06%
7.47%
7.22%
6.21%
5.71%
46.52%
48.01%
52.17%
56.52%
(1) Adjusted for all years presented giving retroactive effect to a five-for-four stock split in the form of a 25% stock dividend in 2002, a two-for-one split in the form of a 100% stock dividend in 2003, five-for-four stock splits in the form of 25% stock dividends in 2004 and 2005, and a three-for-two stock split in the form of a 50% stock dividend in 2006. (2) Computed by dividing non-interest expense by the sum of net interest income on a tax equivalent basis and non-interest income, net of securities gains or losses. This is a non-GAAP financial measure, which we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible, because other companies may calculate the efficiency ratio differently. Net Income
Total Assets
Net Loans
Total Deposits
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)
(Dollars in thousands)
24,508
1,949,082
1,629,827
1,605,941
19,667
1,518,425
1,270,255
1,243,506
925,782
970,968
14,229
1,139,353
11,546
881,694
773,511
654,851
566,996
7,676
516,900
663,457
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2006 annual Report
TO OUR STOCKHOLDERS, CUSTOMERS AND FRIENDS: A YEAR OF CHALLENGES AND REWARDS
In 2006, our business climate was characterized by intense competition for loans and deposits, a flat to inverted yield curve and a weakened residential real estate market. In view of these challenges, it is very gratifying to report that Virginia Commerce Bank enjoyed another year of robust growth, strong performance and sound asset quality. The year ending December 31, 2006, was our twelfth consecutive year of record earnings, with net income exceeding $24.5 million, an increase of 24.6% over the $19.7 million recorded in the prior fiscal year. As a result, diluted earnings per share for the year were $1.08, up 24.1% over 2005, as adjusted for a three-for-two stock split in May 2006. The Company’s return on average assets (ROA) and return on average equity (ROE) for 2006 were 1.40% and 19.51% compared to 1.45% and 19.44% in 2005. These earnings metrics together with further improvement in our efficiency ratio continue to rank Virginia Commerce among the top performing banks in the country. For the year, net interest income increased 21.4% to $68.8 million, due primarily to strong loan growth and despite a decline in the net interest margin from 4.30% in 2005 to 4.07% in 2006. The net interest margin compression, which impacted a majority of banks locally and nationally, resulted from significantly higher short-term rates on savings, money market and CD accounts (the aforementioned flat to inverted yield curve), a continuing shift of funds from lower rate interest-bearing checking accounts and fierce ongoing competition for deposits. These factors resulted in a 121 basis point increase in the cost of funds year-overyear, compared to an 84 basis point increase in the yield on interest-earning assets. Further margin decline is expected in the first half of 2007; however, the rate of compression on a quarterly basis is decelerating. Non-interest income grew 9.7% to $7.3 million in 2006, attributable to increases in service charges and fees, investment services commissions and other income sources, while fees and net gains from mortgage lending activities were down on a slightly lower level of total originations. Management expects mortgage lending and investment services activities to contribute marginally more noninterest income in 2007 with the recent addition of more production personnel in both areas. Non-interest expense increased 16.4% to $34.3 million for the year ended December 31, 2006, due to the opening of the Company’s
Virginia Commerce Bancorp, inc.
nineteenth and twentieth branch locations in January and August, the hiring of additional loan and business development officers and other staffing and facilities expansion to build infrastructure in support of significant loan and deposit growth. Nonetheless, net interest income growth and containment of expenses associated with this overall expansion resulted in the efficiency ratio improving from 46.5% in 2005, to 45.0% in 2006. It is anticipated that the efficiency ratio will increase slightly in 2007 with the planned addition of at least five new branch locations. In 2006, assets, deposits and loans again experienced significant growth of 28-29% each over the prior year. Total assets as of December 31, 2006, finished just under $2 billion at $1.949 billion, up 28.4% over the prior year-end level of $1.518 billion. Asset growth was funded primarily by a 29.1% increase in deposits to $1.606 billion. As noted earlier, deposit growth centered predominantly in higher rate CD, money market and savings accounts. Loans, net of allowance for loan losses, grew $359.6 million, or 28.3%, to $1.629 billion at year-end 2006. The majority of loan growth occurred in owner-occupied and investor commercial real estate and real estate construction lending; however, efforts to accelerate commercial lending also proved successful, resulting in a 55.9% year-over-year increase.
MAINTAINING ASSET QUALITY Consistent strong asset quality relative to our industry and peer banks continues to be a hallmark of Virginia Commerce and validates our ability to maintain prudent underwriting standards and manage loan portfolio risk while generating substantial loan volume year in, year out. Non-performing and 90-day past due loans were 0.20% of total assets as of December 31, 2006, compared to 0.13% as of the prior year-end. In 2006, the Company recorded net charge-offs of $126 thousand, or 0.01% of average loans outstanding, versus $352 thousand, or 0.03%, for 2005.
BRANCHING OUT Continuing the accelerated branching strategy launched by the Bank in 2004, we opened two more branches in 2006. With these offices, the Bank’s branch network has increased by more than 50% over a two and a half year period, from 13 to 20. In January 2006, we opened Newington, our nineteenth branch, at 7830 Backlick Road. This office, managed by Sunny Waite, who joined our Bank with inmarket experience, had impressive deposit growth from the start and already has topped $23 million in deposits and repurchase agreements. Our twentieth branch, Signal Hill, opened in August and has quickly grown to over $12 million in deposits and repurchase agreements. This office represents our second in Manassas and is located at 9161 Liberia Avenue. It is managed by Stephanie Lykins, a veteran VCB manager, who previously led a successful effort building the Annandale branch. She also helped to kick off the Newington branch before handing the operation to Sunny and redirecting her energies to her hometown Manassas market. Our branching efforts will continue in 2007, during which we anticipate opening at least five branches. Our first Loudoun County branch is set to open in Ashburn in May and will be followed a few months later by our Leesburg branch. We will also open a branch in Centreville and are heading south to Dumfries and Fredericksburg. Our new branches will fuel the Bank’s balance sheet growth as we capitalize on the many opportunities available in the vibrant Northern Virginia market and serve an increasingly larger number of businesses and residents in its communities.
STRENGTHENING OUR TEAM The growth of our Bank is much more than just bricks and mortar. The most important component of our formula for success is our outstanding team of professional bankers who serve the financial needs of our customers. We are fortunate to have such a talented staff and have developed a reputation among local bankers as an “employer of choice.” This past year, we added several key officers who are among the “best of the best” in their area of expertise. In February 2006, Tom Loomis joined the Bank as Senior Vice President, Construction Lending. He came to us with over sixteen years of real estate development and construction finance
experience with builder relationships in areas of the market that complement those of our incumbent construction lending team. To build administrative infrastructure for a growing loan portfolio, we added Teresa Peterson as Vice President, Loan Operations in February and Alice Haines as Vice President, Loan Administration in April. Together they have over forty years of bank operations experience. Debbie Cabala came on board in May as Vice President, Cash Management Services. She has over twelve years of cash management experience and has brought a new level of sophistication and product knowledge to that area. In August, we added Chris Messina as Vice President, Financial Consultant, expanding our Investment Services sales capability. Banking veteran Kevin Fastabend was hired in September as Senior Vice President, Commercial Lending, focusing on the Fredericksburg market where he has over fourteen years of commercial lending experience. We had not planned on entering the Fredericksburg market until 2008 or later; however, we could not pass up the opportunity to add a market leader like Kevin. We immediately opened a loan production office in Fredericksburg and will soon follow with a branch there by mid-year. In September, we were fortunate to hire Dave Stephens as Senior Vice President, Commercial Lending. Dave is a seasoned lender, well known in the Northern Virginia business community, and has made an immediate impact on our growth in commercial and industrial loans.
MEGA AND MORE More than ever we remain committed to excellence in People, Product, Pricing and Personal Service. Our “best of the best” bankers provide our customers with top-notch personal service while offering exceptional banking products and services at top-tier prices. In 2006, we introduced several new accounts that enhanced our product offerings. Our new MEGA Money Market and MEGA Savings accounts pay market-leading rates in balance tiers that start at $10,000 and go up to $1 million+. These accounts proved to be extremely popular, together generating over $200 million in deposits. We also added an Escrow Manager Account option for attorneys and other business customers who benefit from a streamlined and comprehensive means of opening and managing escrow accounts. In an effort to provide technology that delivers convenience beyond our
2006 annual Report
growing branch network, we introduced Deposit Express — our remote deposit capture solution that allows customers to scan checks and transmit deposits electronically from their offices. This web-based system is fully secure and, in 2006, “brought the Bank” to more than 70 businesses. Also in 2006, we completed our rollout of Instant Issue Visa Check Cards at every branch so that our consumer and commercial customers can receive new cards on the spot and not have to wait for mail delivery. Concurrently, we upgraded our merchant services program and now provide market-leading credit card processing services. We introduced the CDARS (Certificate of Deposit Account Registry Service) program which allows our customers to enjoy our top-tier CD pricing with the security of full FDIC insurance coverage on as much as $30 million in deposit balances per customer. Finally, to achieve greater product flexibility in our Residential Mortgage Lending department, we created first and second trust portfolio loan products which will enable us to offer terms beyond those available from the secondary market through a third party provider. As illustrated by these many enhancements, product innovation and pricing leadership continue to be a key part of our banking strategy.
A NEW LOOK At the bottom of this page we have printed the Bank’s new logo. The first thing we hope you notice is that we have kept our traditional lettering and color for the Bank’s name. We are proud of our history; however, we also want to evolve our look in the marketplace. That’s where our new logo comes into play. The new VCB logo is a star containing our initials. The VCB star signifies our commitment to star-level performance and appears to be in motion, symbolic of our continued growth and progress. For some, the shape of the star also evokes the image of a compass. That, too, is fitting since we seek to provide financial direction for our customers toward realization of their financial goals. We hope you share our enthusiasm for this new look.
STOCK HIGHLIGHTS • On May 12, 2006, the Company paid a three-for-two stock split in the form of a 50% stock dividend. This was the eleventh consecutive year for a stock split or dividend. • VCBI stock had an “off” year in 2006, experiencing 2.5% in appreciation as compared to its 28.4% increase in 2005 and its stellar rise of 958% for the ten years ended December 31, 2005. During 2006, the stock traded up as much as 32% representing almost four and a half times tangible book value. However, that lofty multiple proved unsustainable as the market increasingly pulled back on bank stocks, beginning at mid-year, over concerns for the potential negative effect of net interest margin compression and a worsening housing market on bank earnings. Virginia Commerce did experience some of these symptoms including margin pressure on its earnings, a concentration in residential construction lending, and a temporary but manageable asset quality bump at the end of the third quarter. Nevertheless, we finished the year with a record earnings performance and strong asset quality measures. We believe the fundamentals of VCBI’s underlying value remain strong. We continue to trade at a multiple that is at a premium to our peer group and our prospects for continued high performance are bright.
DEEP ROOTS, BROAD BRANCHES As challenging as 2006 was, we anticipate more of the same in 2007. Starting out the year, short-term interest rates remain high and competition for loans and deposits remains strong. However, we see an improving trend as the year progresses and are excited about the new opportunities we will have to build upon our franchise by further extending our roots into our existing communities and branching out into new neighborhoods with our progressive approach to personal and business banking. As always, thank you for your continued interest and support.
Peter A. Converse Chief Executive Officer March 20, 2007
Virginia Commerce Bancorp, inc.
Commercial Banking Services Everything A Business Needs, Under One Roof and Around the Corner Virginia Commerce Bank has charted a progressive and dynamic course of growth since its founding in 1988, and we’re committed to helping businesses in our local communities do the same. Our wide range of financial products and services enables all our customers — no matter what their business strategy — to assemble exactly the right tools they need to succeed. Our experienced staff and unflagging dedication to service ensure them access to timely, expert assistance in optimizing their business opportunities. Small-to-medium size businesses, nonprofit organizations and professional service firms can enjoy the face-to-face attention of a neighborhood bank as well as the very latest electronic tools to make finance and banking secure, fast and efficient. Our services include: • Working Capital Lines of Credit
• Lockbox
• Business Expansion Loans
• A CH Concentration and Disbursement
• Term Loans • Equipment Loans and Leases • SBA-Guaranteed Loans • Letters of Credit • Commercial Mortgage Loans • Government Contract Financing • Accounts Receivable Financing • C ommercial Checking and Money Market Accounts • Combined Account Analysis • R epurchase Agreements and Sweep Accounts • Online Banking • Escrow Management
• Account Reconciliation • Deposit Express (Remote Capture) • Merchant Bankcard Services • G roup Banking Packages for Business Employees
“
• I nstant Issue Visa® Check Card for Businesses
VCB offers good business
products with great personal
They had a sincere desire to help my business. service.
”
Trae T., Chantilly Branch Customer
2006 annual Report
Consumer Banking Services Exceptional Service, Every Customer, Every Time Whether someone is walking into one of our branches for the first time to inquire about our MEGA Money Market Account ad they saw in The Washington Post, or they have been banking with us for years, we are committed to providing exceptional service. In fact, we are so dedicated to providing this toplevel personalized service that we employ mystery shoppers — outside consultants who pose as customers — to measure how we’re doing. We also rely on direct feedback from our customers through our annual customer service survey. Time and time again, our customers tell us great stories of how VCB employees go above and beyond the call of duty. When our customers turn to VCB for guidance in making their financial decisions, whether it’s investing in one of our top-tier certificates of deposit or opening our premier interest checking account, they are confident we have the best solutions for their needs. Just as we conduct surveys to measure our service, we also survey competitor deposit interest rates each week and make changes to our rates as necessary to ensure we are the best deal in town. Our constant and unwavering emphasis on our People, Product, Pricing and Personal Service, allows us to achieve exceptional results in a fifth “P” — Performance. MEGA Deposit Accounts Our MEGA suite of deposit accounts is just another example of how VCB is meeting the financial needs of our customers. Each of our MEGA accounts (Savings, Money Market and CD) offers market-leading rates that are the best in town. Many banks offer special promotions from time to time. VCB is different…and better. Top-tier pricing is not a fad at VCB. It’s a core component of how we do business. It’s a strategy that is not only beneficial to customers who receive exceptional rates and service, it also serves our shareholders by creating profitable growth.
Virginia Commerce Bancorp, inc.
Our services include: • Checking and NOW Accounts • Money Market Accounts • Savings Accounts • Certificates of Deposit • IRAs • I nstant Issue Visa® Check Cards
• H ome Equity Loans and Lines of Credit • P ersonal and Overdraft Lines of Credit • Credit Cards • Auto Loans • F inancial Planning and Investment Services
• R esidential Construction and Mortgage Loans
To ensure easy access to these products and services, we maintain a convenient network that includes: • 20 Branch Locations, most with drive-thru windows and ATMs • At least five branches opening this year • I nstant Issue Visa® Check Cards are provided on-the-spot at every VCB branch • R eal-time, Online Banking and Bill Payment afford access from the comfort and security of home, office or anywhere with Internet access • T elebanking provides anytime telephone access to determine account balances or transfer funds between accounts
Certificate of Deposit Account Registry Service (CDARS) In keeping with our commitment to offer the best products in the market, Virginia Commerce Bank recently introduced its newest CD investment option: CDARS. Through CDARS, customers can take advantage of VCB’s top-tier CD pricing and receive full FDIC insurance coverage up to $30 million. How can we do this? VCB is a member of a special network of banks that work together to provide this additional insurance coverage. Customers who require full FDIC coverage save time by dealing only with VCB — plus they receive our special level of exceptional service, our top-tier CD pricing, one convenient monthly statement and unbeatable peace of mind.
Investment Services Trusted Investment Guidance Throughout a Lifetime No one appreciates the importance of careful planning and growth strategies for security and success better than Virginia Commerce Bank. That model has worked for us and we are dedicated to making it work personally for customers in our communities. Through our partnership with UVEST Financial Services*, we offer access to comprehensive investment services, from financial planning to asset management. Whether our customer is 25 or 65, just starting out or already a millionaire, VCB can provide the right investment choices. We will tailor your investment plan to meet your needs as your portfolio grows and life moves forward. Our services include: • Financial Planning • Retirement Planning
“
When it comes to investment advice, I begin
every new customer relationship with an overview of how we can work together. I review and assess their needs and goals, and then design a specialized investment plan. But it does not stop there. I continue to meet with them on a regular basis to provide recommendations and evaluations of their portfolios and the decisions we have made together. By focusing on
”
building trust and confidence with my clients,
I strive to build relationships that last a lifetime.
Michael F. Bolen, Vice President, Investment Services
• Estate and Tax Planning • Education Planning • Stocks, Bonds, Mutual Funds and Annuities • Fixed Income Investments • Asset-Management Services
*Virginia Commerce Bank and UVEST Financial Services do not provide tax or legal advice. Be sure to consult with a tax advisor before taking any action that would have tax consequences. Securities are offered by and Financial Consultants registered with UVEST Financial Services, member NASD, SIPC. UVEST and Virginia Commerce Bank are independent entities. NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE NOT GUARANTEED BY ANY GOVERNMENT AGENCY • NOT A BANK DEPOSIT
2006 annual Report
Residential Mortgage Services Offering Home Buyers the Latest Technology and a Personal Touch To thrive in a real estate market as dynamic as Northern Virginia’s, a mortgage lender must be nimble, flexible and competitive. Virginia Commerce Bank is all of these things, and then some. Our passion for excellence in People, Product, Pricing and Personal Service means our customers go home with the mortgage most suited to their unique needs. Our loan officers are not only up-to-date on the most cutting-edge lending programs, they take the time to really understand their customers. “One-sizefits-all” is simply not a part of the VCB vocabulary. Outstanding service also means respecting our customers’ busy schedules. To that end, we work hard to save our customers time, by scheduling appointments convenient to them, and employing the latest internet-based applications and automated underwriting engines to streamline the process. Our customers can choose from a wide range of services including: • Fixed Rate Mortgage Loans
• Low- and No-Documentation Loans
• Adjustable Rate Mortgages (ARMs)
• M ortgage Financing for Second Homes and Investment Properties
• No Point, No Closing Cost Programs
• Forward Rate Locks
• FHA, VA and VHDA Financing • M ortgages For First-Time Buyers and Self-Employed Individuals
“
• Construction-to-Permanent Financing
”
We used your mortgage lending service to purchase our present home in Leesburg —
it was an excellent working relationship.
Michelle M., Reston Branch Customer
Virginia Commerce Bancorp, inc.
Construction Lending Services Financial Backbone of Builders, Developers and New Home Buyers Mirroring the booming growth of Northern Virginia, Virginia Commerce Bank is branching out to serve new communities and businesses. We also stand ready to support growth within these communities, serving developers, builders, businesses and new home buyers with construction financing and expertise. Because we live and work in the communities we serve, we understand the market better than our large, national competitors. And we treat our customers like the neighbors they are, tailoring transactions to fit their unique needs and circumstances. Whether a customer is putting down roots in a custom home, or developing a neighborhood or business park, VCB is here to help. Our services include: • Construction-to-Permanent Financing • Commercial Construction Financing • Builder Construction Financing • Land Development Financing • Acquisition/Development Financing
Construction-to-permanent financing Not only do home builders work with VCB to finance their residential development projects, but individual home buyers do as well. Through the Bank’s Residential Mortgage Lending department, customers can obtain financing for the construction of their new home as well as a permanent mortgage loan, all at the same time. Our one-time closing option simplifies the process by combining the two financing programs, making the transaction quick and easy.
“
”
The most exciting and satisfying part of my day is
providing financial solutions for my customers. James R. Nalls, Senior Vice President, Construction Lending
2006 annual Report
Operations Center Corporate Training Develops and delivers curricula tailored to each department’s unique needs—in particular the Teller and New Account Schools, which enhance employees’ ability to recognize customer needs and provide solutions. Administers VCB University, our e-learning tool, which facilitates efficient learning in many areas, such as compliance, product knowledge and management skills.
Behind the Scenes but Indispensable In business, growth is good — but only if it’s done in a healthy and reasoned manner. At Virginia Commerce Bank, that means not only branching out in the fast-growing suburbs of Northern Virginia, but also being able to support those new branches and customers with service that is second to none. That’s why, over the past seven years, while VCB doubled the number of branches it operates, we also quintupled the size of our Operations Center. In 2006 alone, we acquired more than 10,000 square feet of new space. We’ve made room for more offices and more staff — deepening our teams in many departments while also creating new positions to specifically address new business functions. We added a larger training room, additional conference rooms, expanded facilities for Loan Operations and Deposit Operations, and a larger storage facility and mail room to service our branches. Invisible to our customers, our Operations Center is the backbone of VCB. It is the infrastructure that supports the daily business of the Bank, the branch network and the internal departments. It ensures our people have the tools and support they need to offer the very best products and services to our customers.
10 Virginia Commerce Bancorp, inc.
Internal Audit Supports the Board and Senior Management with oversight responsibilities by objectively evaluating the effectiveness of the Bank’s risk-management systems. Following a systematic and disciplined approach, reports on the adequacy of internal controls, particularly SOX 404, and on compliance with policies, laws and banking regulations.
FACILITIES Purchases and stores equipment, supplies and marketing materials. Directs maintenance service calls for all departments and branches. Coordinates new branch build-outs, office renovations and regular maintenance projects. Maintains mail and courier service for all bank locations and commercial customers and provides planning support for all corporate events.
Loan Operations Books and services commercial and consumer loans, including payment and payoff processing, renewals and modifications. Obtains credit reports, produces year-end reports and handles customer inquiries.
Loan Administration Reviews all loans to ensure compliance with approval terms, federal and state regulations and VCB policy. Monitors documentation exceptions and tracks, clears and releases collateral.
Human Resources Focuses on recruiting, employing and retaining the Bank’s most essential asset, our people. Orients new employees to the Bank’s culture and values, especially our commitment to service excellence. Establishes employee-friendly policies in alignment with the corporate vision and engages in organizational planning to meet future HR needs.
deposit operations Processes wire transfers, handles returned checks and administers instructions for stop payment requests. Manages Online Banking and Automated Clearing House functions. Assists the Cash Management department in establishing Repo and Sweep Accounts, Deposit Express (our remote deposit capture solution) and other specialized services for commercial customers.
Information Technology Operates and maintains the Bank’s servers and computer equipment. Through its IT Help Desk, supports more than 300 employees with equipment, system-related issues and general computer-related tasks. Participates in and supports company initiatives that streamline company processes and operations.
Departments in our Operations Center include: • Compliance
• Financial Accounting
• Corporate Training
• Human Resources
• Deposit Operations
• Information Technology
• Electronic Banking Services
• Internal Audit
• Facilities
• L oan Operations and Loan Administration • Marketing • Retail Administration • Security
2006 annual Report
11
ADVISORY BOARDS OF DIRECTORS LOCAL LEADERSHIP Mergers and acquisitions have just about done away with the local, hometown bank. But not quite. Virginia Commerce Bank, started and firmly rooted in Northern Virginia, is growing in parallel with its local communities. Our bankers live and work alongside the customers they serve. They haven’t forgotten the importance of a handshake and a first-name basis. Another invaluable asset to VCB are the business and community leaders who comprise our five advisory boards. These talented, dedicated and well-connected individuals are our “eyes and ears in the field,” providing us a unique, localized perspective we couldn’t garner any other way. Our newest board, representing central Fairfax County, joins
those in Arlington and Prince William Counties, the City of Alexandria and Reston/Herndon. Our advisory boards are a model of synergy: directors keep us abreast of the changing needs of their communities and industries, and we answer with specialized products, tools and solutions to make their businesses run smarter and more efficiently.
ALEXANDRIA John L. Albrigo, M.D., Anderson Orthopaedic Clinic
Daryl D. Reinke, Commercial Carpets of America
Peter V. Aliferis, Association of Government Accountants
Michele L. Richardson, Gallerie Michele
Mark S. Allen, Esq., Law Office of Mark S. Allen
Robert J. Test, Esq.
Engin Artemel, Artemel International, Inc.
Charles A. White, Jr., Business Leasing Associates, Inc.
Agnes Palmer-Artemel, Artemel & Associates, Inc.
William R. Wiygul, Wiygul Automotive Clinic
Robert F. Bobowski, International Sleep Products Association
Guido R. Zanni, Ph.D., Health Systems Consultant
James C. “Beau” Brincefield, Jr., Brincefield, Harnett, P.C. Jerald P. Cohen, Esq., Lainof, Cohen & Weinstein Katherine B. Cook, Direct Line Politics
ARLINGTON
Thomas J. Curcio, Esq., Law Office of Thomas J. Curcio, P.C.
Donald B. Bavely, Rosenthal/Geneva Companies
Kahan Singh Dhillon, Regent Company, L.L.C.
Stephen M. Bouchard, Glass Distributors, Inc.
Kerry J. Donley, Alexandria City Public Schools
Gregory P. Cahill, Whitlow’s on Wilson
Hon. William D. Euille, William D. Euille & Associates, Inc.
Stephen P. Caruthers, Belmont Bay, L.C.
Nick Fairbanks, Kenfair Manufacturing Company
T. Barrett Chamberlin, Jr., Barrett Development, L.L.C.
Mary Ellis Fannon, Fannon Fine Printing
Thomas J. Colucci, Esq., Walsh, Colucci, Lubeley, Emrich & Terpak, P.C.
Timothy R. Geary, Clarke & Sampson, Inc.
Joseph P. Corish, Esq., Bean, Kinney & Korman
J. Glenn Hopkins, Hopkins House
John E. Cowles, JCE, Inc.
Thomas A. Hulfish III, McEnearney Commercial
George E. Cranwell, G.E. Cranwell Associates
Clarence A. Johnson, Shiloh Baptist Church
David R. DeCamp, Grubb & Ellis; Highland Associates, L.L.C.
John R. Keegan, DeHart and Deming
Daniel S. Fiore, Esq., Law Office of Daniel S. Fiore
Franco N. Landini, Landini Brothers, Inc.
John R. Garrett, M.D., Cardiac Vascular & Thoracic Surgery
Thomas O. Langhorne, Jr., Alfred Street Baptist
Associates, P.C.
Beal Lowen, M.D., Mt.Vernon Internal Medicine
Margo E. Horner, Metropolitan Washington Airports Authority
Laura Machanic, New Target, Inc.
Margaret S. Lampe
Roger Machanic, MRE Properties, Inc.
Talal A. Munasifi, M.D., P.C., Virginia Hospital Center,
Michael Miller, America’s Development Foundation
Advanced Plastic Surgery Center
Bryant Mitchell, Bryant Mitchell Realty
Neal Nichols, Red Top Cab
Scott R. Mitchell, Federal City Group
Nancy S. Pallesen, Arlington Free Clinic
Hon. Brian J. Moran, Brian J. Moran, P.C.
Timothy A. Reese, Buck and Associates, Inc.
Beth Offenbacker, Waterford, Inc.
John Royall, Horizon Networking, L.L.C.
Said Oudghiri, Progress Management Group, Ltd.
David A. Sattler, Sattler & Fishman
James R. Parker, HT Acquisition, Inc. (Hard Times Cafe)
Mark H. Siciliano, Northwestern Mutual Life
Roger D. Parks, American Advertising Distributors of
Carol N. Singer, Arlington Promotional Products
Northern Virginia
Leslie J. Steele, InterImage, Inc.
12 Virginia Commerce Bancorp, inc.
Deborah L. Taylor, Vanguard Services Unlimited
Nancy Foor, The Engineering Groupe, Inc.
Martin J. Wells, Wells & Associates
Andrew S. Garrett, Garrett Development, Inc.
Robert M. White, M.D.
Gregory Garrison, Garrison Carpentry
James R. Whittaker, Columbia Pike Revitalization Organization
John S. Groupe, The Engineering Groupe, Inc.
Steven M. Zimmet, M.D., Pulmonary & Medical Associates
Richard A. Mangini, Richard A. Mangini, CPA Joseph L. Martin, Focus Point, Inc.
Fairfax/McLean
Thomas A. Morcom, Coldwell Banker Residential Real Estate Paul A. Nichols, Esq., Nichols, Zauzig & Sandler, P.C.
Mary B. Agee, Northern Virginia Family Service
Louis A. Padilla, PDC Properties
William M. Baskin Jr., Baskin, Jackson, Hansbarger
Kimberly Stubb Rogers, Rogers Brother, Inc.
Lynn Bays-Fuechsel, Jack Bays, Inc.
Rory Schick, Manassas Chrysler
James W. Bellas, Turning Point Associates
Kevin M. Sills, Mid-Atlantic Real Estate, Inc.
Jerry William Boykin, Esq., Womble, Carlyle, Sandridge & Rice
William C. Strachan, Johnson & Strachan, Inc.
Frank E. Brown, Saunders and Brown
Robert M. Tolson, Prince Wood Insurance, Inc.
Charles T. Chiang, Charlie Chiang’s Restaurant
Mark J. Tonnesen, Appliance Connection, Inc.
Sekwon K. Chung, Korean American Foundation-GW
Jack D. Warf
Louis J. Clemente, CH Builders, L.L.C.
Katherine Waters, Esq., Compton & Duling Law Firm
John L. Cooney, AIA, JCA Architects
Robert C. Wilcox, Calvert Homes, Inc.
James M. Cummings, CFP, CPA, Sole Proprietor William P. Daly, Rees, Broome, & Diaz, P.C. Pamela B. Danner, Danner & Associates
Reston
Jeffrey R. Dimeglio, Kwik Kopy Printing
Jerry William Boykin, Esq., Womble, Carlyle, Sandridge & Rice
Donald C. Evans, Jr., Evans & Associates, P.C.
Matthew A. Clary, Law Offices of Matthew A. Clary III
Philip “Todd” Fisher, Colchester Hunt Title & Escrow, Inc.
Louis J. Clemente, CH Builders, L.L.C.
Bernard Franks, Pantheon Builders
David A. Eiselle, Sr., Davelle for Men
Lane R. Gabeler-Millner, Gabeler, Batochi & Griggs, L.L.C.
Manuel B. Fierro, Esq., The Herndon Law Firm, P.L.C.
Frank T. Hardesty, Brothers Concrete Construction
David R. Gardy, TVWorldwide.Com
Karen L. Ioffredo, Ross, Langan & McKendree, L.L.P.
Wayne I. Greenfeld, Accounting Software Sales & Service
Jay K. Katyal, Home Loans, Inc.
Warren W. Grossman, Esq., Grossman & Associates, P.L.C.
Bradley S. Kerxton, Kerxton Insurance Agency, Inc.
Daryl Hall, Freddie Mac
John M. Lemen, Washington Group Sales
Patricia P. Houlihan, Houlihan Financial Resource Group, Ltd.
Roger J. McClure, Counselor & Attorney at Law
Kevin J. Kelleher, M.D., Generations/Executive Healthcare
Douglas B. Megill, McLean Insurance Agency
Richard J. Kowalick, Wall Street Financial Group
Timothy P. Morahan, Cardinal Title
Linda A. Mallison, Sugar Oak Realty
Robert G. Nath, Robert G. Nath, P.L.L.C.
Trey Mauck, Integrated Insurance Solutions
Gregory J. Praske, Association Resource Group
J. Scott McBride, Capital Executives Board, L.L.C.
Mark H. Siciliano, Northwestern Mutual Life
Steven M. Potter, Bernstein Investment Research and Management
Dr. Stephen D. Stork, McLean Veterinary Association, L.L.C.
Gerald J. Radican, Capitol Financial Partners
Rosemary Tran Lauer, Long & Foster
Ann B. Rodriguez, Fairfax County Council of the Arts
Ken Ulsaker, Long & Foster Commercial Division
Edward R. Stojakovich, Reston Hospital Center
Diane E. Waters, Diamond Properties, L.L.C.
Rosemary Tran Lauer, Long & Foster Bang H. Trinh, The BHT Group
Prince William
James T. Zelloe, Stahl, Forest & Zelloe, P.C.
Paul P. Battista, Brothers Paving & Concrete, Inc. Carlos A. Castro, Todo’s Supermarket, Inc. Anthony R. Clark, Prince William Pipeline, Inc. Stephen W. Daves, R.W. Murray, Inc. Paul G. Eskew, Executive Floors, Inc.
2006 annual Report
13
VIRGINIA COMMERCE BANK SENIOR MANAGEMENT
Seated, left to right: Michael G. Anzilotti President, Virginia Commerce Bancorp, Inc.
Standing, left to right: John P. Perseo, Jr.
William K. Beauchesne
Executive Vice President, Operations and Technology
Executive Vice President and Chief Financial Officer
Peter A. Converse
Steven A. Reeder
Patricia M. Ostrander
Chief Executive Officer, Virginia Commerce Bancorp, Inc. President and Chief Executive Officer, Virginia Commerce Bank
Executive Vice President, Retail Banking
Executive Vice President and Director of Human Resources
Richard B. Anderson, Jr. Executive Vice President and Chief Lending Officer
14 Virginia Commerce Bancorp, inc.
2006 OFFICERS Timothy M. Aldinger
Jeffrey H. Satterly
James N. Hottle
Michael W. O’Donnell
Ricardo Balcells
Byron K. Schulze
Edward M. Johnson
Mansur A. Rahim
Susan T. Johnson
Margaret Reeder
Edward W. Lull, Jr.
Patricia B. Smith
Stephanie D. Lykins
Linda L. Trout
Jennifer E. Manning
Sun Hee Waite
Christopher F. Messina
Steven A. Witt
Tamara M. Mitchell
Paul T. Yeloushan
Catherine A. Morris
Jose M. Arvelo
Senior Vice President Commercial Lending Senior Vice President Community Banking
Jo Ann Bell
Senior Vice President Community Banking
Kelly J. Bell
Senior Vice President Regional Manager
Marsha A. Bradshaw
Senior Vice President Residential Mortgage Lending
Christopher R. Broad Senior Vice President Community Banking
Matthew F. Cammarota Senior Vice President Consumer Lending
Wendy M. Clark
Senior Vice President Compliance & BSA Officer
Robin P. Coracci
Senior Vice President Marketing & Retail Administration
C. Kevin Curtis
Senior Vice President Commercial Lending
Lisa A. D’Ambrosio-Irons Senior Vice President Regional Manager
Pamela C. DeCandio Senior Vice President Community Banking
Kevin A. Fastabend Senior Vice President Commercial Lending
Eleanor E. Golden
Senior Vice President Government Contract Lending Senior Vice President Cash Management & Business Development Administrator
Suzie G. Spannuth Senior Vice President Deposit Operations
David K. Stephens Senior Vice President Commercial Lending
Thomas E. Williams Senior Vice President Construction Lending
Kevin D. Albrigo
Vice President Commercial Lending
Sally A. Aldridge
Vice President Community Banking
Brandon M. Barg Vice President Vienna Branch
Michael F. Bolen Vice President Investment Services
Dana A. Bomkamp Vice President Credit Administration
Deborah L. Cabala Vice President Cash Management
Karen M. Clinton Vice President Consumer Lending
Evelyn O. deLottinville Vice President Cameron Station Branch
Senior Vice President Loan Administration & Loan Operations
Wendy M. Dunham
George L. Greco
James C. Elliott
Gregory L. Jay
Mark W. Ellmore
Senior Vice President Senior Credit Officer Senior Vice President Commercial Lending
Stephen R. Lomicka Senior Vice President Commercial Lending
Thomas P. Loomis Senior Vice President Construction Lending
Linda K. Martin
Senior Vice President Regional Manager
Robert L. McCoy
Senior Vice President Regional Manager
Gregory A. Motheral Senior Vice President Commercial Lending
Sharon E. Moynihan
Senior Vice President Information Technology & Corporate Initiatives
James R. Nalls
Senior Vice President Construction Lending
Kenneth L. O’Shea
Senior Vice President Residential Mortgage Lending
Vice President Security & Retail Operations Vice President Commercial Lending Vice President Residential Mortgage Lending
Linda M. Fourney Vice President Human Resources
Jacqueline A. Freeman Vice President Training
Mark T. Friedman Vice President Internal Auditor
Lynn B. Gonzalez
Vice President Retail Technology & Project Management
Alice M. Haines
Vice President Loan Administration
James D. Holter
Vice President Information Technology
Nancy Hong
Vice President Clarendon Branch
Marcia J. Hopkins Vice President Accounting
Vice President Residential Mortgage Lending Vice President Commercial Lending Vice President Facilities
Vice President Commercial Lending Vice President Signal Hill Branch Vice President Finance
Vice President Investment Services Vice President McLean Branch
Vice President Commercial Lending
Robert J. Naden
Vice President Residential Mortgage Lending
Teresa L. Peterson Vice President Loan Operations
John J. Ragano
Vice President Residential Mortgage Lending
Kathleen T. Ryan
Assistant Vice President Reston Branch Assistant Vice President Chantilly Branch Assistant Vice President Lee-Harrison Branch Assistant Vice President Human Resources Assistant Vice President Loan Operations Assistant Vice President Newington Branch Assistant Vice President CentreLee Branch Assistant Vice President Cash Management
Information Security Officer
Lisa K. Bluntzer
Construction Lending Operations Officer
Karen U. Bogan
Assistant BSA Officer
Keshaun R. Clark-Heflin Branch Officer Del Ray Branch
Kimberly M. Clay
Loan Administration Officer
Vice President Credit Administration
Lynda S. Cornell
Stacey L. Sim
Wanda L. B. Gehring
Vice President Walney Branch
Amy M. Tanner Vice President Battlefield Branch
Karen B. Daniels
Assistant Vice President Training
Teresa I. Fields
Assistant Vice President Residential Mortgage Lending
Elizabeth S. Fike
Assistant Vice President Project Management Officer
Carol Hockensmith Assistant Vice President Deposit Operations
Deborah W. Hoover
Assistant to the President Marketing Officer
Denise A. Gillette
Branch Officer Mount Vernon Branch
Jeffrey W. Hall
Residential Mortgage Loan Officer
Jeffrey J. Jerge
Residential Mortgage Loan Officer
Laura M. Lawlor Branch Officer Lake Ridge Branch
Patricia E. Leugers Branch Officer Annandale Branch
Deborah A. Richter Branch Officer Prince Street Branch
Assistant Vice President Credit Administration
Monica C. Rodriquez
Barry L. Huitema
Lawrence E. Russ
Assistant Vice President Commercial Lending
Deborah A. Jones
Assistant Vice President Residential Mortgage Lending
Charles A. Kapur
Assistant Vice President Ryan Park Branch
Daniel E. Marks
Assistant Vice President King Street Branch
Amy W. Nocera
Assistant Vice President Fairfax Branch
Portfolio Administration Officer Residential Mortgage Loan Officer
Wanda L. Satterfield
Portfolio Administration Officer
Cynthia B. Scialdo
Portfolio Administration Officer
William A. Sikora
Residential Mortgage Loan Officer
Mary E. Slayton Auditing Officer
Ryan D. Vergara
Branch Officer Williamsburg Boulevard Branch
2006 annual Report
15
VIRGINIA COMMERCE BANCORP, INC. BOARD OF DIRECTORS
Seated, left to right: Peter A. Converse, Chief Executive Officer W. Douglas Fisher, Chairman Standing, left to right: Robert H. L’Hommedieu David M. Guernsey, Vice Chairman Leonard Adler Norris E. Mitchell Michael G. Anzilotti, President Arthur L. Walters, Vice Chairman
EXECUTIVE OFFICERS Left to right: Peter A. Converse Chief Executive Officer
Michael G. Anzilotti President
Design: Don Schaaf & Friends, Inc.
16 Virginia Commerce Bancorp, inc.
BANK SERVICES Checking Accounts
Government Contract Financing
NOW Accounts
Accounts Receivable Financing
Money Market Accounts
Combined Account Analysis
Savings Accounts
Repurchase Agreements and Sweep Accounts
Certificates of Deposit IRAs Financial Planning and Investment Services* Personal and Overdraft Lines of Credit
Escrow Management Lockbox ACH Concentration and Disbursement Account Reconciliation
Home Equity Loans and Lines of Credit
Deposit Express (Remote Capture)
Residential Construction and Mortgage Loans
Merchant Bankcard Services
Auto Loans
Group Banking Packages for Business Employees
Working Capital Lines of Credit
Online Banking and Bill Pay
Business Expansion Loans
Instant Issue Visa® Check Cards
Term Loans
Personal and Corporate Credit Cards
Equipment Loans and Leases
Safe Deposit Boxes
SBA-Guaranteed Loans
Automated Teller Machines
Letters of Credit
Telephone Banking
Commercial Mortgage Loans
Bank-by-Mail
Acquisition/Development Loans
Cashier’s Checks
Construction Loans
Traveler’s Checks
*Virginia Commerce Bank and UVEST Financial Services do not provide tax or legal advice. Be sure to consult with a tax advisor before taking any action that would have tax consequences. Securities are offered by and Financial Consultants registered with UVEST Financial Services, member NASD, SIPC. UVEST and Virginia Commerce Bank are independent entities. NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE NOT GUARANTEED BY ANY GOVERNMENT AGENCY • NOT A BANK DEPOSIT
Corporate Information
Annual Meeting
Corporate Headquarters
The Annual Meeting of Shareholders will be held at:
5350 Lee Highway Arlington, VA 22207 703.534.0700
Investor Relations Business Card
Web site: www.vcbonline.com
Stock Exchange Listing Common shares of Virginia Commerce Bancorp, Inc. are traded on the National Association of Security Dealers (NASDAQ) National Market under the symbol VCBI.
The Tower Club 8000 Towers Crescent Drive Suite 1700 Vienna, VA 22182 703.761.4250 On Wednesday, April 25, 2007 at 4:00 P.M.
Form 10-K The Company’s Form 10-K may be obtained free of charge by writing (if not included in this pocket): Lynda Cornell Assistant to the President Virginia Commerce Bancorp, Inc. 5350 Lee Highway Arlington, VA 22207
www.vcbonline.com