Virginia Heritage Bank Exceeds $300 Million in Total Assets While Positive Earnings Trend Continues

http://www.businesswire.com/news/home/20091026005909/en

FAIRFAX, Va.--(Business Wire)--
Virginia Heritage Bank (OTCBB:VGBK), reported net income of $323 thousand for
the third quarter of 2009, compared to a $(422) thousand net loss for the same
period in 2008. On a per share basis, the third quarter income was $0.09 per
share (basic and diluted), compared to a loss of $(0.11) per share (basic and
diluted) for the third quarter of 2008.

The net income for the nine months ended September 30, 2009 was $805 thousand,
compared to a net loss of $(1.5) million for the nine months ended September 30,
2008. The income per share was $0.21 per share (basic and diluted) for the nine
months ended September 30, 2009, compared to a loss of $(0.40) per share (basic
and diluted) for the nine months ended September 30, 2008.

The Bank had significant balance sheet growth with total assets of $318.8
million at September 30, 2009, representing an increase of $103.2 million
compared to total assets at September 30, 2008. Total gross loans were $282.6
million, excluding loans held for sale, at September 30, 2009, representing an
increase of $103.0 million over total gross loans at September 30, 2008. Total
deposits were $243.2 million at September 30, 2009 compared to $153.8 million at
September 30, 2008.

Nonperforming assets, including other real estate owned, as a percentage of
total assets, increased to 0.68% at September 30, 2009, compared to 0.09% at
September 30, 2008. Annualized net charge-offs were 0.30% of average loans for
2009, up from 0.02% in 2008.

The allowance for loan losses was $3.3 million as of September 30, 2009, or
1.17% of gross loans outstanding, excluding loans held for sale. Asset quality
remains strong with one loan past due 90 days or more but still accruing
interest, total non-accrual loans of $1.4 million and other real estate owned of
$813 thousand. The Bank`s capital ratios, as set forth in the attached Financial
Highlights schedule, are in excess of regulatory requirements.

David P. Summers, Chairman and Chief Executive Officer of the Company said:

"In spite of the severe recession we have experienced over the past 18 months,
Virginia Heritage Bank has had three consecutive quarters of improving earnings.
The current year net interest margin has expanded by 12 basis points over 2008
while our operating efficiency has improved to 78%. Asset quality continues to
exceed that of our national and local peer groups and we do not anticipate
significant additional credit deterioration in our loan portfolio over the next
several quarters. Balance sheet growth has met expectations in what has been the
most difficult economic period in recent memory.

Our mortgage division production continues to build as home sales increase from
the historically low levels experienced the past two years. Our emphasis on
first time home buyers has contributed to our higher volume of closed loans with
mortgage division earnings becoming a more significant component of bank
performance.

The Board of Directors and management are continuing to execute on our revised
operating strategy adopted in mid 2007. We see continuing opportunities for the
community banking sector as the larger regional banks appear to be distracted
with the challenges they are experiencing with deteriorating credit quality in
their loan portfolios. We intend to continue the expansion of the VHB franchise
in an effort to take advantage of this unique set of circumstances. In view of
this, we are excited to announce that our Tysons Corner branch will be opening
in the coming weeks."

Virginia Heritage Bank is headquartered in Fairfax City, Virginia. The Bank has
three full service offices in Fairfax City, Chantilly and Gainesville, Virginia
and a new branch in Tysons Corner coming soon. The Bank also has a mortgage
division located in Chantilly, Virginia.

This release contains forward-looking statements, including our expectations
with respect to future events that are subject to various risks and
uncertainties.Factors that could cause actual results to differ materially from
management`s projections, forecasts, estimates and expectations include:
fluctuation in market rates of interest and loan and deposit pricing, adverse
changes in the overall national economy as well as adverse economic conditions
in our specific market areas, maintenance and development of well-established
and valued client relationships and referral source relationships, and
acquisition or loss of key production personnel.Other risks that can affect the
Bank are detailed from time to time in our quarterly and annual reports filed
with the Board of Governors of the Federal Reserve System.We caution readers
that the list of factors above is not exclusive.The forward-looking statements
are made as of the date of this release, and we may not undertake steps to
update the forward-looking statements to reflect the impact of any circumstances
or events that arise after the date the forward-looking statements are made.In
addition, our past results of operations are not necessarily indicative of
future performance.

VIRGINIA HERITAGE BANK
FINANCIAL HIGHLIGHTS (Unaudited)
($ in thousands except per share data)

At or For the Quarter Ended At or For the Nine Months Ended
September 30, September 30,
2009 2008 % Change 2009 2008 % Change
Statement of Operations Data:
Interest income $4,075 $2,909 40.08 % $11,180 $7,298 53.19 %
Interest expense 1,330 1,224 8.66 % 3,810 3,032 25.66 %
Net interest income 2,745 1,685 62.91 % 7,370 4,266 72.76 %
Provision for loan losses 762 598 27.42 % 1,595 1,348 18.32 %
Total noninterest income 1,088 746 45.84 % 3,496 1,657 110.98 %
Total noninterest expense 2,748 2,255 21.86 % 8,466 6,098 38.83 %
Net income (loss) 323 (422 ) N/M 805 (1,523 ) N/M

Per Share Data and Shares Outstanding:
Net income (loss) (basic and diluted) $0.09 ($0.11 ) N/M $0.21 ($0.40 ) N/M
Book value at period end 8.04 7.83 2.68 % 8.04 7.83 2.68 %
Weighted average shares (basic and diluted) 3,791,633 3,791,633 3,791,633 3,791,633

Selected Balance Sheet Data:
Assets $318,808 $215,584 47.88 %
Total gross loans (3) 282,572 179,591 57.34 %
Loans held for sale 5,711 5,140 11.11 %
Securities available for sale, at fair value 17,088 17,068 0.12 %
Deposits 243,152 153,780 58.12 %
Federal funds purchased 20,400 9,190 121.98 %
Repurchase agreements 5,636 3,980 41.61 %
FHLB advances 18,000 18,000 0.00 %
Stockholders' equity 30,472 29,706 2.58 %

Asset Quality:
Non-performing assets (1)
to total assets 0.68 % 0.09 %
Non-performing loans and past due loans (2)
to total assets 0.44 % 0.09 %
to total loans 0.48 % 0.10 %
Allowance for loan losses to total loans (3) 1.17 % 1.19 %
Net charge-offs to average loans outstanding 0.28 % 0.02 % 0.30 % 0.02 %

Performance Ratios:
Return (loss) on average assets 0.43 % (0.85 )% 0.39 % (1.22 )%
Return (loss) on average stockholders' equity 4.25 % (5.66 )% 3.55 % (6.65 )%
Net interest rate spread 3.22 % 2.58 % 3.08 % 2.36 %
Net interest margin 3.71 % 3.49 % 3.62 % 3.50 %
Efficiency ratio 71.69 % 92.76 % 77.91 % 102.95 %

Regulatory Capital Ratios: Actual Minimum To
Be Well
Capitalized
Total risk-based capital ratio 11.86 % 10.00 %
Tier 1 risk-based capital ratio 10.70 % 6.00 %
Tier 1 capital to average assets 10.16 % 5.00 %

(1) Includes non-accrual loans and other real estate owned.
(2) Includes non-accrual loans and loans past due 90 days or more and still accruing interest.
(3) Excludes loans held for sale.
N/M - Not meaningful

Virginia Heritage Bank
David Summers or Chris Brockett
703-359-4100

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