N@N

Virginia Heritage Bank Completes Sale of Securities in U.S. Treasury Small Business Lending Fund Program

^{Published on 2011-06-30 14:40:48 - Market Wire}
 

FAIRFAX, Va.--([ BUSINESS WIRE ])--Virginia Heritage Bank (OTCBB: VGBK) ([ www.virginiaheritagebank.com ]) announced today that it has issued to the U.S. Department of the Treasury, in exchange for aggregate consideration of $15.3million, a total of 15,300 shares of Senior Non-Cumulative Perpetual Preferred Stock, SeriesA, with a $1,000 per share liquidation preference. This issuance is part of the U.S. Treasurya™s Small Business Lending Fund program, which was established by Congress under the Small Business Jobs Act of 2010 (the Jobs Act).

Chief Executive Officer, David P. Summers, noted that, aWe are pleased to have qualified for the U.S. Treasury Small Business Lending Fund program. The capital which we receive under the program will allow us to continue to serve small business clients in the Washington, D.C. region through our commercial lending and owner occupied real estate lending programs. For small banks like ours, access to the equity markets has been essentially non-existent and therefore, raising new capital to support our balance sheet growth has not been an option. Our Bank is a prime example of how providing healthy community banks equity capital should result in continued lending to the small business community which should eventually lead to job growth in that sector.a

Because the Bank has grown its commercial loan balances by well over 10% relative to the base period, the Bank is required to initially pay a 1% dividend rate on the Series A Preferred Stock, which is the lowest rate available under the program. If the Bank had not increased its commercial loan balances so significantly relative to the base period, the Bank would have been obligated to initially pay a dividend rate of 5% per annum. Virginia Heritage Bank may redeem the preferred securities at any time. The preferred securities will be accounted for as a component of Virginia Heritage Banka™s regulatory Tier 1 capital.

Virginia Heritage Bank is a commercial bank incorporated in and chartered by the Commonwealth of Virginia and headquartered in the city of Fairfax, Virginia. The Bank opened for business on November 21, 2005 and is a member of the Federal Reserve System and its deposits are insured by the FDIC. In addition to its headquarters, there are currently four full service branches in Chantilly, Gainesville, Tysons Corner and Dulles, Virginia. Additionally, its mortgage division is headquartered in Chantilly, Virginia.

The Banka™s primary lending focus is real estate finance, as well as making loans to small businesses, professionals and other consumers in its local market area. Historically, commercial real estate loans have represented the largest segment of the Banka™s loan portfolio. The Banka™s primary lending activities are principally directed to its defined market area in the greater Washington, D.C. metropolitan area with an emphasis on Northern Virginia. The Bank seeks to maintain a loan portfolio that is adequately diversified between commercial and consumer activities. Additional investor information can be found on the internet at [ www.virginiaheritagebank.com ].

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 Companya™s Board of Governors of the Federal Reserve System reports, including but not limited to the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.