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TYSONS CORNER, Va.--([ BUSINESS WIRE ])--Virginia Heritage Bank (OTCBB: VGBK), reported net income after taxes of $1.4 million for the first quarter of 2012, compared to $766 thousand for the same period in 2011. The increase in net income for the quarter ended March 31, 2012 was due to the $1.4 million increase in net interest income representing strong balance sheet growth. The increase of $1.7 million in noninterest income, which consists primarily of gain on sale of loans and security gains, also contributed to the increase in net income. Net income after taxes was $0.33 per share for the first quarter of 2012 (basic and diluted), compared to $0.18 per share (basic and diluted) for the first quarter of 2011.

"We continue to focus our energy on our core lines of business. As evidenced by the improved performance year-over-year, our efforts are generating good results as the local economy continues to show signs of increased business and investment activity."

Total assets at March 31, 2012 were $618 million, representing an increase of $40 million compared to total assets at December 31, 2011. Total gross loans were $473 million, excluding loans held for sale, at March 31, 2012, an increase of $33 million over total gross loans at December 31, 2011. Total deposits were $527 million at March 31, 2012 compared to $492 million at December 31, 2011.

Nonperforming assets, including other real estate owned, as a percentage of total assets, increased to 0.39% at March 31, 2012, compared to 0.38% at March 31, 2011. Net charge-offs were 0.02% of average loans for the quarter ended March 31, 2012, down from 0.10% for the same period in 2011.

The allowance for loan losses was $7.1 million as of March 31, 2012, or 1.49% of gross loans outstanding, excluding loans held for sale. Asset quality remained significantly better than peers at March 31, 2012 with non-accrual loans of $1.8 million, loans past due 90 days or more but still accruing interest totaling $62 thousand and other real estate owned of $659 thousand. At March 31, 2012, the Bankas nonperforming loans to total assets amounted to 0.29%.

The Bankas capital ratios, as set forth in the attached Financial Highlights schedule, are well in excess of regulatory minimums to be classified as well capitalized under the Federal Reserveas Risk-based Capital Guidelines.

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

aWe are extremely pleased to report significant improvement in VHBas first quarter 2012 operating performance when compared to the first quarter of 2011. After tax earnings increased 88% due to a $1.4 million expansion of net interest income coupled with a $1.2 million increase in mortgage banking revenue. Growth of $89 million in loans outstanding over the prior year contributed significantly to the increase in interest income while our funding costs declined 41 basis points year over year. The net effect of these favorable trends was an increase in the net interest margin of 12 basis points from the first quarter of 2011.

aThe quarter-end balance sheet exceeded $600 million for the first time, with overall growth of 28% over the prior year. Deposit growth of $115 million funded the loan growth from 2011 and allowed for the continued expansion of the securities portfolio. Asset quality and net charge-off experience remain significantly better than our peer group and all capital ratios exceed regulatory guidelines for a 'well capitalized' institution. The Bankas efficiency ratio continues to show improvement and remains one of the key drivers to continued earnings momentum.

aWe continue to focus our energy on our core lines of business. As evidenced by the improved performance year-over-year, our efforts are generating good results as the local economy continues to show signs of increased business and investment activity.a

Virginia Heritage Bank is headquartered in Tysons Corner, Virginia. The Bank has five full service offices in Fairfax City, Chantilly, Gainesville, Tysons Corner and Dulles, Virginia. 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 managementas 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.