Bank of Virginia (Nasdaq:BOVA) (www.bankofva.com) announced financial results for the year ended December 31, 2011.

For the year ended December 31, 2011, the Bank reported a net loss of $4.5 million, or ($0.39) per share, an improvement of $4.7 million when compared to the loss of $9.2 million for the year ended December 31, 2010. The loss in 2011 was primarily a result of a $2.7 million provision for loan losses recorded in the first three quarters and a $1.3 million decline in net interest income due to a winnowing of the loan portfolio while the Bank's new credit team was put in place.

"The Bank undertook a complete revamping in 2011, recruiting new executives to head credit, lending, finance and operations," stated Jack Zoeller, Chairman and CEO. "Our primary goals were to identify and address the Bank's asset quality issues and establish a new culture oriented to shareholder value. These objectives have been met. In the fourth quarter we turned our focus to restoring the Bank's profitability.  We launched a $40 million local business loan campaign,  hired two new commercial lenders, and realigned our marketing and technology resources to better target and serve the Bank's business borrowers," continued Mr. Zoeller.

Review of the income statement

The Bank's net interest income decreased by $1.3 million, or 20%, to $5.1 million in 2011, compared to $6.4 million in 2010, mainly due to the declining loan balances in 2011.  The Bank's net interest margin for 2011 also declined, decreasing 22 basis points to 2.87% from 3.09% in 2010.  The decline in net interest margin was primarily the result of a decrease of $28.3 million in average loans, from $155.9 million in 2010 to $127.6 million in 2011.

Non-interest income declined $365,000 to $492,000 in 2011 from $857,000 in 2010, mainly due to lower net gains realized on available-for-sale securities, which declined $415,000 from $544,000 in 2010 to $129,000 in 2011.  Non-interest expense totaled $7.3 million for 2011, a slight decline from $7.4 million in 2010.

Review of the balance sheet

The Bank's total assets decreased $43.7 million, or 20.9%, to $165.5 million at December 31, 2011 from December 31, 2010's total of $209.2 million.  The main element in the reduction of assets was the $36.2 million, or 24.7%, decline in loans from $146.6 million at December 31, 2010 to $110.3 million at December 31, 2010.  The decline in loan balances was attributable to loan pay downs, charge-offs and transfers to other real estate owned in the absence of significant new lending, as new management and lenders focused on addressing asset quality issues and regulatory demands.  Securities available for sale declined $9.4 million or 26.8% to $25.6 million at December 31, 2011 from $35 million at December 31, 2010. 

On the liability side of the balance sheet, total deposits were $147.2 million at December 31, 2011, down from $181.2 million at year end 2010, a drop of $34 million, or 18.8%. Time deposits balances fell $39.5 million from $140.2 million at December 31, 2010 to $100.7 million at December 31, 2011.  The Bank paid off a maturing $5 million borrowing in October.  These reductions in liabilities were intended to track with the Bank's decline in assets while reducing the average rates paid on deposits and other borrowings.  Total liabilities were $152.8 million and $192.2 million at December 31, 2011 and 2010, respectively.  

Stockholders' equity totaled $12.7 million at December 31, 2011, a decline of $4.3 million when compared to the December 31, 2010 balance of $17 million.  The Bank is considered well capitalized by federal regulatory standards.

About Bank of Virginia

Bank of Virginia, a Virginia state chartered bank headquartered in Midlothian, Virginia, currently operates four full-service offices in the counties of Chesterfield and Henrico, Virginia. Bank of Virginia's common stock is traded on the NASDAQ stock market under the quotation symbol "BOVA". Additional investor relations information can be found on the internet at www.bankofva.com. Bank of Virginia is a member of the FDIC and Equal Housing Lender.

DISCLAIMER

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Bank's periodic filings with the Board of Governors of the Federal Reserve System, including the Bank's annual report on Form 10-K as filed with the Board of Governors of the Federal Reserve. Pursuant to the Private Securities Litigation Reform Act of 1995, the Bank does not undertake to update forward-looking statements contained within this news release.

BANK OF VIRGINIA
Condensed Balance Sheets
     
(dollars in thousands)  December 31,  December 31,
Assets 2011 2010
Cash and due from banks  $ 4,152  $ 25,200
Federal funds sold and interest-bearing deposits with banks  22,544  484
Securities available for sale, at fair market value  25,578  34,956
Loans, net of allowance for loan losses of $5,672 and $6,832 in 2011 and 2010, respectively  104,662  139,740
Other real estate owned, net of valuation allowance  1,262  551
Other assets  7,267  8,259
Total assets  $ 165,465  $ 209,190
Deposits    
Non-interest-bearing  $ 16,833  $ 14,506
Savings and interest-bearing demand  29,686  26,489
Time Deposits  100,722  140,246
Total deposits  147,241  181,241
FHLB Borrowings  5,000  10,000
Accrued expenses and other liabilities  557  970
Total liabilities  152,798  192,211
Stockholders' Equity    
Preferred stock, $5 par value, 5,000,000 shares authorized, none issued  --   -- 
Common stock, $1 par value, 40,000,000 shares authorized, 11,333,182 (5,000 unvested) and 11,328,182 shares issued and outstanding in 2011 and 2010, respectively  11,328  11,328
Additional paid-in capital  24,622  24,611
Retained deficit  (23,729)  (19,278)
Accumulated other comprehensive income  446  318
Total stockholders' equity  12,667  16,979
Total liabilities and stockholders' equity  $ 165,465  $ 209,190
 
BANK OF VIRGINIA
Condensed Statements of Operations
For the Years Ended December 31, 2011 and 2010
     
(dollars in thousands, except per share data) 2011 2010
Interest Income:    
Interest and fees on loans  $ 7,497  $ 9,314
Investment securities  718  1,501
Interest on federal funds sold and deposits with banks  47  17
Total interest income  8,262  10,832
Interest Expense:    
 Interest on deposits  2,766  4,009
 Interest on FHLB borrowings  392  443
Total interest expense  3,158  4,452
Net Interest Income  5,104  6,380
Provision for loan losses  2,786  9,018
Net interest income (loss) after provision  2,318  (2,638)
Non-interest Income:    
Net gain on sale of available for sale securities  129  544
Service charges and other fee income  363  313
Total non-interest income  492  857
Non-interest Expense:    
Other operating expenses  3,915  3,944
Total non-interest expenses  7,262  7,370
     
Net loss  $ (4,452)  $ (9,151)
     
Loss per share, basic and diluted  $ (0.39)  $ (1.85)
   
  December 31, 
Capital ratios: 2011 2010
Tier 1 leverage 7.3 % 7.9 %
Tier 1 capital to risk-weighted assets 10.6 % 10.9 %
Total regulatory capital to risk-weighted assets 12.1 % 12.2 %
Total equity to total assets 7.7 % 8.1 %
Credit quality ratios:    
Allowance for loan losses to total loans  5.14 % 4.66 %
Nonperforming loans to total loans  8.05 % 4.72 %
Nonperforming assets to total assets 6.13 % 5.09 % 
CONTACT: Jack Zoeller,
         Chairman and CEO, 804-763-1333
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