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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB/A

AMENDMENT NO. 1

ANNUAL REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF
1934

For the fiscal year ended December 31, 2006

Commission file number 000-52219

FIRST CAPITAL BANCORP, INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Virginia                                                       |  | 11-3782033                          
|(State or other jurisdiction of Incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|4222 Cox Road, Suite 200 Glen Allen, Virginia                  |  | 23060                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code (804)-273-1160

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Act:

Common Stock, $4.00 par value

(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days  x  Yes ̈No

Check if no disclosure of delinquent filers in response to Item 405 of Regulation S-B is contained in this form, and no disclosure will be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ̈Yes    x  No

State issuers revenues for its most recent fiscal year: $15,728,256.

State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days. The aggregate market value of the voting stock held by non-affiliates
computed based on a sale price of $16.38 for the Banks common stock on June 7, 2007 is approximately $21,860,000.



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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check
whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ̈No ̈

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of
shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: 1,796,021 Shares of Common Stock, $4.00 par value

DOCUMENTS INCORPORATED BY REFERENCE

None

Transitional Small Business Disclosure Format (Check One): Yes ̈No  x



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REASON FOR FILING THIS AMENDMEND NO. 1 TO 10-KSB.

This
Amendment No. 1 to the registrants report on Form 10-KSB for the year ended December 31, 2006 is being filed (i) to respond to comments received from the Commission with respect to a registration statement on Form SB-2 filed by
the registrant on March 15, 2007, and (ii) to include certain disclosures that the registrant had originally intended to incorporate by reference from its Proxy Statement for its 2007 Annual Meeting of Stockholders. For ease of reference
and clarity, the amended Form 10-KSB is being filed in its entirety.



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FIRST CAPITAL BANCORP, INC.

FORM 10-KSB/A

Fiscal Year Ended December 31, 2006

TABLE OF CONTENTS



|           |  |                                                                                                |  |   
|---------- |  | ---------------------------------------------------------------------------------------------- |  | --
|PART I     |  |                                                                                                |  |   
|           |  |                                                                                               
|Item 1.    |  | Description of Business                                                                        |  | 5 
|           |  |                                                                                               
|Item 2.    |  | Description of Property                                                                        |  | 22
|           |  |                                                                                               
|Item 3.    |  | Legal Proceedings                                                                              |  | 22
|           |  |                                                                                               
|Item 4.    |  | Submission or Matters to a Vote of Security Holders                                            |  | 23
|           |  |                                                                                               
|PART II    |  |                                                                                                |  |   
|           |  |                                                                                               
|Item 5.    |  | Market for Common Equity and Related Stockholder Matters                                       |  | 23
|           |  |                                                                                               
|Item 6.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations          |  | 25
|           |  |                                                                                               
|Item 7.    |  | Financial Statements                                                                           |  | 39
|           |  |                                                                                               
|Item 8.    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           |  | 40
|           |  |                                                                                               
|Item 8A.   |  | Controls and Procedures                                                                        |  | 40
|           |  |                                                                                               
|Item 8B.   |  | Other Information                                                                              |  | 40
|           |  |                                                                                               
|PART III   |  |                                                                                                |  |   
|           |  |                                                                                               
|Item 9.    |  | Directors and Executive Officers of the Registrant                                             |  | 40
|           |  |                                                                                               
|Item 10.   |  | Executive Compensation                                                                         |  | 43
|           |  |                                                                                               
|Item 11.   |  | Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters |  | 44
|           |  |                                                                                               
|Item 12.   |  | Certain Relationships and Related Transactions, and Director Independence                      |  | 46
|           |  |                                                                                               
|Item 13.   |  | Exhibits                                                                                       |  | 47
|           |  |                                                                                               
|Item 14.   |  | Principal Accountant Fees and Services                                                         |  | 48
|           |  |                                                                                               
|SIGNATURES |  |                                                                                                |  | 50
|           |  |                                                                                               
|EXHIBITS   |  |                                                                                                |  |   



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PART I

Company

First Capital Bancorp, Inc. is a bank holding company headquartered in Glen Allen, Virginia. We conduct our primary
operations through our wholly-owned subsidiary, First Capital Bank, which opened for business in 1998.

We emphasize personalized service,
access to decision makers and a quick turn around time on lending decisions. Our slogan is Where People Matter. We have a management team, officers and other employees with extensive experience in our primary market which is the
Richmond, Virginia metropolitan area. We strive to develop personal, knowledgeable relationships with our customers, while at the same time offering products comparable to those offered by larger banks in our market area.

First Capital Bank operates six full service branch offices (alternatively referred to herein as branches and offices),
throughout the greater Richmond metropolitan area. Our bank engages in a general commercial banking business, with a particular focus on the needs of small and medium-sized businesses and their owners and key employees and the professional
community. We also offer a wide range of investment products and services through First Capital Investment Group in association with BI Investments, LLC, a registered brokerage firm formed as a joint venture with other Virginia based community
banks.

We continue to experience growth in both assets and profitability. As of December 31, 2006, we had assets of $257.2 million, a
$47.7 million, or 22.8%, increase from December 31, 2005. This followed an increase in assets during 2005 of 37.3% over our December 31, 2004 balance of $152.6 million. For 2006, our net income was $1.6 million, an increase of 20.3%
compared to our net income for 2005. Our earnings per diluted share for 2006 was $0.83 compared to $0.70 and $0.31 for 2005 and 2004, respectively. During the period from December 31, 2002 to December 31, 2006, we had compound annual
growth rates of 26.4% in assets, 38.4% in loans, 21.6% in deposits, and 28.2% in net income.



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CAUTION ABOUT FORWARD-LOOKING STATEMENTS

Certain information contained in this Report on Form 10-KSB/A may include forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are generally identified by phrases such as we expect, we believe or words
of similar import.

Such forward-looking statements involve known and unknown risks including, but not limited to, the following factors:



| |  |  | the ability to successfully manage our growth or implement our growth strategies if we are unable to identify attractive markets, locations or opportunities to
expand in the future;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to continue to attract low cost core deposits to fund asset growth;
| | - |  | -------------------------------------------------------------------------------



| |  |  | changes in interest rates and interest rate policies and the successful management of interest rate risk;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | maintaining cost controls and asset quality as we open or acquire new locations;
| | - |  | --------------------------------------------------------------------------------



| |  |  | maintaining capital levels adequate to support our growth and operations;
| | - |  | -------------------------------------------------------------------------



| |  |  | changes in general economic and business conditions in our market area;
| | - |  | -----------------------------------------------------------------------



| |  |  | reliance on our management team, including our ability to attract and retain key personnel;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | risks inherent in making loans such as repayment risks and fluctuating collateral values;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | competition with other banks and financial institutions, and companies outside of the banking industry, including those companies that have substantially greater
access to capital and other resources;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | demand, development and acceptance of new products and services;
| | - |  | ----------------------------------------------------------------



| |  |  | problems with technology utilized by us;
| | - |  | ----------------------------------------



| |  |  | changing trends in customer profiles and behavior;
| | - |  | --------------------------------------------------



| |  |  | changes in banking and other laws and regulations applicable to us; and
| | - |  | -----------------------------------------------------------------------



| |  |  | other factors described in Risk Factors above.
| | - |  | ------------------------------------------------

Although we believe that our expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance
that our actual results, performance or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.



|ITEM 1. | DESCRIPTION OF BUSINESS
|------- | -----------------------

General

First Capital Bancorp, Inc. is a bank holding company that was incorporated under Virginia law in 2006. Pursuant to a statutory share exchange that was
effective on September 8, 2006, we became a bank holding company. We conduct our primary operations through our wholly owned subsidiary, First Capital Bank, which is chartered under Virginia law. We have one other wholly owned subsidiary, FCRV
Statutory Trust 1, which is a Delaware Business Trust that we formed in connection with the issuance of trust preferred debt in September, 2006.

Our principal executive offices are located at 4222 Cox Road, Suite 200, Glen Allen, Virginia 23060, and our telephone number is (804) 273-1160. We maintain a website at www.1capitalbank.com.



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First Capital Bank, a Virginia banking corporation headquartered in Glen Allen, Virginia, was
incorporated under the laws of the Commonwealth of Virginia as a state-chartered bank in 1997. The bank is a member of the Federal Reserve System and began banking operations in late 1998. The bank is a community oriented financial institution that
offers a full range of banking and related financial services to small and medium-sized businesses, professionals and individuals located in its market area. This market area consists of the Richmond, Virginia metropolitan area, with a current
emphasis on western Henrico County, Chesterfield County, the City of Richmond, and the Town of Ashland, and the surrounding vicinity. The banks goal is to provide its customers with high quality, responsive and technologically advanced banking
services. In addition, the bank strives to develop personal, knowledgeable relationships with its customers, while at the same time it offers products comparable to those offered by larger banks in its market area. We believe that the marketing of
customized banking services has enabled the bank to establish a niche in the financial services marketplace in the Richmond metropolitan area.

The bank currently conducts business from its executive offices and six branch locations. See Item 2  Description of Property.

Products and Services

We offer a full range of deposit services that are typically available in most banks including
checking accounts, NOW accounts, savings accounts and other time deposits of various types, ranging from daily money market accounts to longer-term certificates of deposit. The transaction accounts and time certificates are tailored to our market
area at rates competitive to those offered in the area. In addition, we offer certain retirement account services, such as Individual Retirement Accounts (IRAs). All deposit accounts are insured by the FDIC up to the maximum amount allowed by law
(generally, $100,000 per depositor, subject to aggregation rules).

We also offer a full range of short-to-medium term commercial and
consumer loans. Commercial loans include both secured and unsecured loans for working capital (including inventory and receivables), business expansion (including acquisition of real estate and improvements) and purchase of equipment and machinery.
Consumer loans include secured (and unsecured loans) for financing automobiles, home improvements, education and personal investments. Additionally, we originate fixed and floating-rate mortgage and real estate construction and acquisition loans.

Other services offered by us include safe deposit boxes, certain cash management services, travelers checks, direct deposit of
payroll and social security checks and automatic drafts for various accounts, selected on-line banking services and a small and medium-sized businesses courier service. We also have become associated with a shared network of automated teller
machines (ATMs) that may be used by our customers throughout Virginia and other states located in the Mid-Atlantic region.

In late
September, 2004, First Capital Bank introduced First Capital Investment Group, a division of the bank that provides full service investment services through licensed representatives as well as supporting annuity sales through our retail bank group.
The bank owns a minority interest (approximately 1%) in BI Investments, LLC, a joint venture with the Virginia Bankers Association and many other community banks in Virginia, which provides support to First Capital Investment Group. This
interest in BI Investments, LLC is not material to our operations.



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Our Market Area

Our primary market is the Richmond, Virginia metropolitan area, which includes Chesterfield County, Henrico County, Hanover County, the Town of Ashland and the City of Richmond. Richmond is the capital of Virginia.
All of our branches are located in the Richmond metropolitan area.

The Richmond metropolitan area is the third-largest metropolitan area
in Virginia and is one of the states top growth markets based on population and median household income. The population of the Richmond metropolitan area has continued to increase in recent years, with current information from the Virginia
Employment Commission showing a population in excess of 1,150,000 persons. According to the U.S. Census Bureau, the population in the Richmond metropolitan area grew by over 15% from 1990 to 2000, and an increase of 12% is projected for the period
between 2000 and 2010. In addition, median household income for the Richmond metropolitan area grew 23% from 2000 to 2006 and is projected to grow an additional 17% through 2011. In 2006, the Richmond metropolitan area had a median household income
approximately 9% higher than the national median household income.

Our market area enjoys a balanced and diversified economy with a broad
array of employers and industries which shield the area from any recessions specific to one sector. Nearly all sectors of the local economy are currently sharing in the areas economic growth, with the driving force behind the economy being
private education and healthcare. The unemployment rate for the Richmond metropolitan area is less than 3%, and has consistently ranked among the five areas with the lowest unemployment rate among the nations 50-largest metropolitan areas.

The population of Henrico County, the location of our headquarters and first branch office, increased by 20% between 1990 and 2000 and an
additional 10% between 2000 and 2006 to around 290,000 persons. The median household income for Henrico County in 2006 was approximately $60,000, or 17% above the national median, and increased 23% since 2000. Chesterfield and Hanover Counties each
had 2006 median incomes of approximately $72,000. Together with Henrico County, we expect to focus our growth in Chesterfield and Hanover Counties as we build our branch system. Chesterfield and Hanover Counties have also experienced significant
growth in median household income and population from 2000 to 2006, with both counties median household income growing 22% and population growing 16%. Population growth in the City of Richmond has historically been slow as residents continue
to move to the suburbs, but the median household income projections for the City of Richmond are positive with median household income projected to increase 17% from 2006 to 2011.

Major employers in the Richmond metropolitan area include federal and state agencies, major health facilities, educational institutions, and various
medium-sized and large corporations. Philip Morris USA, Universal Corporation, Dominion Resources, CarMax, and Circuit City Group are some of the larger corporations headquartered in Richmond. Other major employers in the private sector include
Alcoa, CSX Corporation, DuPont, Honeywell, Tyson Foods and Wyeth Pharmaceuticals, as well as Bon Secours, CJW and Henrico Doctors medical institutions. Richmond also serves as headquarters for the Fifth Federal Reserve District.

Our market area has been subject to large scale consolidation of local banks, primarily by larger, out-of-state financial institutions. We believe that
there is a large customer base in our market area that prefers doing business with a local institution. We seek to fill this banking need by offering timely personalized service, while making it more convenient by continuing to build our branch
network throughout the Richmond metropolitan area where our customers live and work. To that end, in 2002, we initiated a branching strategy to better ensure that our branch network covers more of the markets in which our customers live and conduct
business. We have made significant investments in our infrastructure and believe our current operating platform is sufficient to support a substantially larger banking institution without incurring meaningful additional expenses.



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Business Strategy

Hire experienced, local bankers.Our strategy has revolved around the hiring of experienced, local banking professionals and relationship managers to originate loans and deposits, call on customers and lead our
branches. These officers have been able to attract customers with which they have built relationships over the years, typically allowing the officers to enhance our deposit and loan production immediately. We currently have 13 commercial loan
officers who have an average of 18 years of experience in the Richmond metropolitan banking market and have operated in our market area through a wide range of economic cycles and lending market conditions. We intend to continue to grow and build
our franchise by hiring experienced local lenders and other bankers. We recently enhanced our market presence by hiring additional lenders in the private banking, business lending and construction lending arenas.

Continue the growth of our delivery system.Due to the economic growth in the Richmond metropolitan area and the consolidation of our local
competitors, management believes that continued expansion of our delivery system will contribute to long-term growth and increased value. Accordingly, we expect to continue to open branches in the Richmond metropolitan area and anticipate that we
will open one to two additional branches each year over the next five years, with the goal of having a total of 10 to 12 branches open at the end of this time frame. In the past eight months, we opened our Forest Office Park branch and our James
Center office. The Forest Office Park branch is located in the center of a business complex with approximately 260 businesses that fit our small to medium-sized business profile. In addition, the James Center office is located in the heart of
downtown Richmonds financial and professional district, strategically placing us within a significant core of clients and prospects uniquely suited for the expansion of our Private Client Group.

A principal component of this expansion program has been to identify attractive locations for opening new branches that either complement our existing
branch system, provide access to new customers within our market area or strategically match the addition of a key lender/leader to our team (as was the case with the James Center Office). We believe that the demographics and growth characteristics
of the Richmond metropolitan area should also provide significant opportunities for us to continue to grow loan and deposit relationships within our existing branch network. We complement this branch network with free online banking services (for
businesses and individuals), our remote deposit initiative and our business courier service.

Diversify our product and service
offerings with the goal of increasing our non-interest income.The strength of the Richmond metropolitan area has allowed us to more effectively realize contributions to earnings from non-interest sources, primarily document preparation fees,
monthly core deposit service charges and origination fees from our mortgage operations. We would expect our fees in these areas to grow significantly in 2007 and beyond. In particular, monthly core deposit service charges should see a material
increase given our aggressive commitment to capturing small to medium-sized business deposits through our 2007 remote deposit initiative and our recent key hires in the Private Client Group and Business Banking arenas. We are becoming increasingly
sophisticated in our ability to analyze customer relationships, which improves our ability to recognize opportunities to offer additional products and services that will expand these relationships and our non-interest income. We also expect to
continue to grow non-interest income from the sale of investment products and services through First Capital Investment Group and in association with BI Investments, LLC, a registered brokerage firm formed as a joint venture with other Virginia
based community banks.



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Maintain our excellent asset quality.While our loan portfolio has experienced rapid growth, we
have consistently maintained excellent asset quality. We believe that our strong asset quality is the result of a stable local economy, prudent underwriting standards, effective lending processes, timely follow-up on delinquencies, and the
experience of our loan officers. We have the unique advantage of having four former Senior Lending Officers within our lending ranks, each having their own distinct market expertise. At December 31, 2006, we had one nonaccrual loan in the
amount of $120,000 and no ninety-day past due loans. The nonaccrual loan is well secured by a primary residence and no loss is anticipated. We have also experienced minimal net charge offs over the last five years. Sound asset quality will always
remain one of our strategic business objectives.

Emphasize relationship banking.A cornerstone of our business strategy is a
commitment to customer service that is built around a personalized relationship. We hire local bankers with extensive business relationships who have experience in the Richmond community in originating and administering loans. In fact, all of our
senior officers have spent most if not all their lives and banking careers in Richmond. We leverage our core relationships by providing our customers access to decision makers, customized loan products, and quick turn around time on lending
decisions. Our experience indicates that by focusing on the relationship, Where People Matter, we are able to make good quality, profitable loans which will continue to be the foundation of our approach to business.

Employees

As of March 31, 2007, we had a total
of 62 full time equivalent employees. We consider relations with our employees to be excellent. Our employees are not represented by a collective bargaining unit.

Competition

We compete as a financial intermediary with other commercial banks, savings and loan associations, credit
unions, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds and other financial institutions operating in the Richmond metropolitan area and elsewhere. Many of our non-bank
competitors are not subject to the same extensive federal regulations that govern federally-insured banks and state regulations governing state chartered banks. As a result, such non-bank competitors may have certain advantages over us in providing
certain services.

Our primary market area is a highly competitive, highly branched banking market. Competition in the market area for
loans to small and medium-sized businesses and professionals is intense, and pricing is important. Many of our competitors have substantially greater resources and lending limits than us and offer certain services, such as extensive and established
branch networks, that we are not currently providing. Moreover, larger institutions operating in the Richmond metropolitan area have access to borrowed funds at lower cost than the funds that are presently available to us. Deposit competition among
institutions in the market area also is strong. Competition for depositors funds comes from U.S. Government securities, private issuers of debt obligations and suppliers of other investment alternatives for depositors, among other sources. As
a result, we have paid, and may in the future pay, above-market rates to attract deposits.

Governmental Monetary Policies

Our earnings and growth are affected not only by general economic conditions, but also by the monetary policies of various governmental regulatory
authorities, particularly the FRB. The FRB implements national monetary policy by its open market operations in United States Government



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securities, control of the discount rate and establishment of reserve requirements against both member and nonmember financial institutions deposits.
These actions have a significant effect on the overall growth and distribution of loans, investments and deposits, as well as the rates earned on loans, or paid on deposits.

Our management is unable to predict the effect of possible changes in monetary policies upon our future operating results.

Lending Activities

Credit Policies

The principal risk associated with each of the categories of loans in our portfolio is the creditworthiness of our borrowers. Within each category, such
risk is increased or decreased, depending on various factors. The risks associated with real estate mortgage loans, commercial loans and consumer loans vary based on employment levels, consumer confidence, fluctuations in the value of real estate
and other conditions that affect the ability of borrowers to repay indebtedness. The risk associated with real estate construction loans varies based on the supply and demand for the type of real estate under construction. In an effort to manage
these risks, we have loan amount approval limits for individual loan officers based on their position and level of experience.

We have
written policies and procedures to help manage credit risk. We use a loan review process that includes a portfolio management strategy, guidelines for underwriting standards and risk assessment, procedures for ongoing identification and management
of credit deterioration, and annual independent third party portfolio reviews to establish loss exposure and to monitor compliance with policies. Our loan approval process includes our Management Loan Committee, the Loan Committee of the Board of
Directors and, for larger loans, the Board of Directors. Our Senior Credit Officer is responsible for reporting to the Directors monthly on the activities of the Management Loan Committee and on the status of various delinquent and non-performing
loans. The Loan Committee of the Board of Directors also reviews lending policies proposed by management. Our Board of Directors establishes our total lending limit and approves proposed lending policies approved by the Loan Committee of the Board.

Loan Originations

Real estate loan
originations come primarily through direct solicitations by our loan officers, continued business from current customers, and through referrals. Construction loans are obtained by solicitations of our construction loan officers and continued
business from current customers. Commercial real estate loan originations are obtained through broker referrals, direct solicitation by our loan officers and continued business from current customers. We may also purchase loan participations from
other community banks in Virginia.

Our loan officers, as part of the application process, review all loan applications. Information is
obtained concerning the income, financial condition, employment and credit history of the applicant. If commercial real estate is involved, information is also obtained concerning cash flow available for debt service. Loan quality is analyzed based
on our experience and credit underwriting guidelines. Real estate collateral for loans in excess of $250 thousand are appraised by independent appraisers who have been pre-approved by meeting the requirement of providing a current and valid license
certification and based on the lenders experience with these appraisers. Evaluations for real estate collateral for loans less than $250 thousand are made by the loan officer.



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In the normal course of business, we make various commitments and incur certain contingent liabilities
that are disclosed but not reflected in our annual financial statements including commitments to extend credit. At December 31, 2006, commitments to extend credit totaled $121.9 million.

Construction Lending

We make local construction and
land acquisition and development loans. Residential houses and commercial real estate under construction and the underlying land secure construction loans. At December 31, 2006, construction, land acquisition and land development loans
outstanding were $51.5 million, or 25.5% of total loans. These loans are concentrated in our local markets. The average life of a construction loan is less than one year. Because the interest rate charged on these loans usually floats with the
market, these loans assist us in managing our interest rate risk. Construction lending entails significant additional risks, compared to residential mortgage lending. Construction loans often involve larger loan balances concentrated with single
borrowers or groups of related borrowers. In addition, the value of the building under construction is only estimable when the loan funds are disbursed. Thus, it is more difficult to evaluate accurately the total loan funds required to complete a
project and related loan-to-value ratios. To mitigate the risks associated with construction lending, we generally limit loan amounts to 80% of appraised value in addition to analyzing the creditworthiness of the borrowers. We also obtain a first
lien on the property as security for construction loans and typically require personal guarantees from the borrowers principal owners.

Commercial
Business Loans

Commercial business loans generally have a higher degree of risk than loans secured by real property but have higher
yields. To manage these risks, we generally obtain appropriate collateral and personal guarantees from the borrowers principal owners and monitor the financial condition of its business borrowers. Residential mortgage loans generally are made
on the basis of the borrowers ability to make repayment from employment and other income and are secured by real estate whose value tends to be readily ascertainable. In contrast, commercial business loans typically are made on the basis of
the borrowers ability to make repayment from cash flow from its business and are secured by business assets, such as commercial real estate, accounts receivable, equipment and inventory. As a result, the availability of funds for the repayment
of commercial business loans is substantially dependent on the success of the business itself. Furthermore, the collateral for commercial business loans may depreciate over time and generally cannot be appraised with as much precision as residential
real estate. We have a loan review and monitoring process to regularly assess the repayment ability of commercial borrowers. At December 31, 2006, commercial loans totaled $22.6 million, or 11.2% of the total loan portfolio.

Commercial Real Estate Lending

Commercial real
estate loans are secured by various types of commercial real estate in our market area including commercial buildings and offices, recreational facilities, small shopping centers, churches and hotels. At December 31, 2006, commercial real
estate loans totaled $63.1 million, or 31.3% of our total loans. We may lend up to 80% of the secured propertys appraised value. Commercial real estate lending entails significant additional risk, compared with residential mortgage lending.
Commercial real estate loans typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. Additionally, the payment experience on loans secured by income producing properties is typically dependent on the
successful operation of a business or a real estate project and thus may be subject, to a greater extent, to adverse conditions in the real estate market or in the economic environment. Our commercial real estate loan underwriting criteria requires
an examination of debt service coverage ratios, the borrowers creditworthiness and prior credit history and reputation, and we typically require personal guarantees or endorsements of the borrowers principal owners. In addition, we
carefully evaluate the location of the security property.



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Residential Real Estate Lending

Residential one-to-four mortgage loans at December 31, 2006, accounts for $62.2 million, or 30.8% of our total loan portfolio. Residential first mortgage loans represent $46.3 million or 74.5% of total
residential real estate loans. Multifamily and home equity loans represent $5.9 million and $7.2 million, respectively, and junior liens account for $2.8 million of total residential real estate loans.

All residential mortgage loans originated by us contain a due-on-sale clause providing that we may declare the unpaid principal balance due
and payable upon sale or transfer of the mortgaged premises. In connection with residential real estate loans, we require title insurance, hazard insurance and if required, flood insurance. We do not require escrows for real estate taxes and
insurance.

Consumer Lending

We offer
various secured and unsecured consumer loans, including unsecured personal loans and lines of credit, automobile loans, boat loans, deposit account loans, installment and demand loans and credit cards. At December 31, 2006, we had consumer
loans of $2.4 million or 1.2% of total loans. Such loans are generally made to customers with whom we have a pre-existing relationship. We currently originate all of our consumer loans in our market area.

Consumer loans may entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured, such as loans
secured by rapidly depreciable assets such as automobiles. Any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment as a result of the greater likelihood of damage, loss or depreciation. Due to the
relatively small amounts involved, any remaining deficiency often does not warrant further substantial collection efforts against the borrower. In addition, consumer loan collections are dependent on the borrowers continuing financial
stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

The underwriting
standards we employ to mitigate the risk for consumer loans include a determination of the applicants payment history on other debts and an assessment of their ability to meet existing obligations and payments on the proposed loan. The
stability of the applicants monthly income may be determined by verification of gross monthly income from primary employment and from any verifiable secondary income. Although creditworthiness of the applicant is of primary consideration, the
underwriting process also includes an analysis of the value of the security in relation to the proposed loan amount.

SUPERVISION AND
REGULATION

General

As a bank
holding company, we are subject to regulation under the Bank Holding Company Act of 1956, as amended, and the examination and reporting requirements of the Board of Governors of the FRB. As a state-chartered commercial bank, First Capital Bank is
subject to regulation, supervision and examination by the Virginia State Corporation Commissions Bureau of Financial Institutions (the BFI). It is also subject to regulation, supervision and examination by the FRB. Other federal
and state laws, including various consumer and compliance laws, govern the activities of the bank, the investments that it makes and the aggregate amount of loans that it may grant to one borrower.



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The following description summarizes the significant federal and state laws applicable to us and our
subsidiary. To the extent that statutory or regulatory provisions are described, the description is qualified in its entirety by reference to that particular statutory or regulatory provision.

First Capital Bancorp, Inc.

Bank Holding Company
Act. As a bank holding company, we are subject to regulation under the Bank Holding Company Act of 1956, as amended (BHC Act), and we are registered as such with, and are subject to examination by, the FRB. Pursuant to the BHC Act,
we are subject to limitations on the kinds of business in which we can engage directly or through subsidiaries. We are permitted to manage or control banks. Generally, however, we are prohibited, with certain exceptions, from acquiring direct or
indirect ownership or control of more than five percent of any class of voting shares of an entity engaged in non-banking activities, unless the FRB finds such activities to be so closely related to banking as to be deemed a proper
incident thereto within the meaning of the BHC Act. Activities at the bank holding company level are limited to:



| |  |  | banking, managing or controlling banks;
| | - |  | ---------------------------------------



| |  |  | furnishing services to or performing services for its subsidiaries; and
| | - |  | -----------------------------------------------------------------------



| |  |  | engaging in other activities that the FRB has determined by regulation or order to be so closely related to banking as to be a proper incident to these activities.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

Bank acquisitions by bank holding companies are also regulated. A bank holding company may not acquire more than five
percent of the voting shares of another bank without prior approval of the FRB. The BHC Act subjects bank holding companies to minimum capital requirements. Regulations and policies of the FRB also require a bank holding company to serve as a source
of financial and managerial strength to its subsidiary banks. The FRBs policy is that a bank holding company should stand ready to use available resources for assisting a subsidiary bank. Under certain conditions, the FRB may conclude that
certain actions of a bank holding company, such as a payment of a cash dividend, would constitute an unsafe and unsound banking practice. Some of the activities that the FRB has determined by regulation to be proper incidents to the business of a
bank holding company include making or servicing loans and specific types of leases, performing specific data processing services and acting in some circumstances as a fiduciary or investment or financial adviser. The only activity in which we are
engaged is the operation of First Capital Bank. We have no present intention to engage in any other permitted activities. However, we may determine to engage in additional activities if it is deemed to be in our best interests.

With some limited exceptions, the BHC Act requires every bank holding company to obtain the prior approval of the FRB before:



| |  |  | acquiring substantially all the assets of any bank;
| | - |  | ---------------------------------------------------



| |  |  | acquiring direct or indirect ownership or control of any voting shares of any bank if after such acquisition it would own or control more than 5% of the voting
shares of such bank (unless it already owns or controls the majority of such shares); or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | merging or consolidating with another bank holding company.
| | - |  | -----------------------------------------------------------

In addition, and subject to some exceptions, the BHC Act and the Change in Bank Control Act, together with their regulations, require FRB approval prior to any person or company acquiring control of a bank
holding company. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of the bank holding company. Control is rebuttably presumed to exist if a person acquires 10% or more, but
less than 25%, of any class of voting



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securities and either has registered securities under Section 12 of the Securities Exchange Act of 1934 or no other person owns a greater percentage of
that class of voting securities immediately after the transaction. The regulations provide a procedure for challenging this rebuttable control presumption.

Financial Holding Companies and Financial Activities. The Gramm-Leach-Bliley Act established a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms, and
other financial service providers by revising and expanding the BHC Act framework to permit a holding company system to engage in a full range of financial activities through qualification as a new entity known as a financial holding company. We
have not determined whether to become a financial holding company, but we may consider such a conversion in the future if it appears to be in our best interest.

Dividends. No Virginia corporation may make any distribution to stockholders if, after giving it effect, (i) the corporation would not be able to pay its existing and reasonably foreseeable debts,
liabilities and obligations, whether or not liquidated, matured, asserted or contingent, as they become due in the usual course of business; or (ii) the corporations total assets would be less than the sum of its total liabilities plus,
the amount that would be needed if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution.

In a policy statement, the FRB has advised bank holding companies that it believes that payment of cash dividends in excess of current
earnings from operations is inappropriate and may be cause for supervisory action. As a result of this policy, banks and their holding companies may find it difficult to pay dividends out of retained earnings from historical periods prior to the
most recent fiscal year or to take advantage of earnings generated by extraordinary items such as sales of buildings or other large assets in order to generate profits to enable payment of future dividends.

The primary source of funds for payment of dividends by us to our stockholders will be the receipt of dividends and interest from First Capital Bank. Our
ability to receive dividends from First Capital Bank will be limited by applicable law. The power of the board of directors of an insured depository institution to declare a cash dividend or other distribution with respect to capital is subject to
statutory and regulatory restrictions which limit the amount available for such distribution, depending upon the earnings, financial condition and cash needs of the institution, as well as general business conditions. Federal law prohibits insured
depository institutions from making capital distributions, including dividends, if after such transaction, the institution would be undercapitalized. A bank is undercapitalized for this purpose if its leverage ratio, Tier 1 risk-based capital ratio
and total risk-based capital ratio are not at least 5%, 6% and 10%, respectively. See Regulatory Capital Requirements below.

The FRB has authority to prohibit a bank holding company from engaging in practices which are considered to be unsafe and unsound. Depending upon the financial condition of First Capital Bank and upon other factors, the FRB could determine
that the payment of dividends or other payments by us or First Capital Bank might constitute an unsafe or unsound practice. Finally, any dividend that would cause a bank to fall below required capital levels could also be prohibited.

Regulatory Capital Requirements. State banks and bank holding companies are required to maintain a minimum risk capital ratio of 10% (at least 5%
in the form of Tier 1 capital) of risk-weighted assets and off-balance sheets items. Tier 1 capital consists of common equity, noncumulative perpetual preferred stock and minority interest in the equity accounts of consolidated subsidiaries and
excludes goodwill. Tier 2 capital consists of cumulative perpetual preferred stock, limited-life preferred stock, mandatory convertible securities, subordinated debt and (subject to a limit of 1.25% of risk-weighted



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assets) general loan loss reserves. In calculating the relevant ratio, a banks assets and off-balance sheet commitments are risk-weighted: thus, for
example, most commercial loans are included at 100% of their book value while assets considered less risky are included at a percentage of their book value (e.g., 20% for interbank obligations and 0% for vault cash and U.S. treasury securities).

We are subject to leverage ratio guidelines as well. The leverage ratio guidelines require maintenance of a minimum ratio of 3% Tier 1
capital to total assets for the most highly rated organizations. Institutions that are less highly rated, anticipating significant growth or subject to other significant risks will be required to maintain capital levels ranging from 1% to 2% above
the 3% minimum.

Recent federal regulation established five tiers of capital measurement ranging from well capitalized to
critically undercapitalized. Federal bank regulatory authorities are required to take prompt corrective action with respect to inadequately capitalized banks. If a bank does not meet the minimum capital requirement set by its regulators,
the regulators are compelled to take certain actions, which may include prohibition on payment of dividends to its holding company or requiring the adoption of a capital restoration plan which must be guaranteed by the banks holding company.

Cross-Institution Assessments. Any insured depository institution owned by us can be assessed for losses incurred by the FDIC in
connection with assistance provided to, or the failure of, any other depository institution owned by us.

First Capital Bank

First Capital Bank is subject to various state and federal banking laws and regulations that impose specific requirements or restrictions on and provide
for general regulatory oversight with respect to virtually all aspects of its operations. The following is a brief summary of the material provisions of certain statutes, rules and regulations that affect First Capital Bank. This summary is
qualified in its entirety by reference to the particular statutory and regulatory provisions referred to below.

General. First
Capital Bank is under the supervision of, and subject to regulation and examination by, the BFI and FRB. As such, First Capital Bank is subject to various statutes and regulations administered by these agencies that govern, among other things,
required reserves, investments, loans, lending limits, acquisitions of fixed assets, interest rates payable on deposits, transactions among affiliates and First Capital Bank, the payment of dividends, mergers and consolidations, and establishment of
branch offices. As noted previously, First Capital Bank is a member of the Federal Reserve System. As such, the FRB, as the primary federal regulator of First Capital Bank, has the authority to impose penalties, initiate civil and administrative
actions, and take other steps to prevent First Capital Bank from engaging in unsafe and unsound practices.

Mergers and
Acquisitions. Under federal law, previously existing restrictions on interstate bank acquisitions were abolished effective September 29, 1995, and since such date bank holding companies from any state have been able to acquire banks and
bank holding companies located in any other state. Effective June 1, 1997, the law allows banks to merge across state lines, subject to earlier opt-in or opt-out action by individual states. The law also allows
interstate branch acquisitions and de novo branching if permitted by the host state. Effective July 1, 1995, Virginia adopted early opt-in legislation which permits interstate bank mergers. Virginia law also permits
interstate branch acquisitions and de novo branching if reciprocal treatment is accorded Virginia banks in the state of the acquirer.



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Although the above laws had the potential to have a significant impact on the banking industry, it is not
possible for our management to determine, with any degree of certainty, the impact such laws have had on First Capital Bank.

Financial
Services Legislation. On November 1, 1999, then President Clinton signed into law the Gramm-Leach-Bliley Act of 1999 (the GLB Act). The GLB Act implemented fundamental changes in the regulation of the financial services industry
in the United States, further transforming the already converging banking, insurance and securities industries by permitting further mergers and affiliations which will combine commercial banks, insurers and securities firms under one holding
company. Many of these changes are discussed above.

The provisions of the GLB Act have had a significant impact on the banking industry in
general. However, it is not possible for us to determine, with any degree of certainty at this time, the impact that such provisions have had on First Capital Bank and its operations.

Dividends. The amount of dividends payable by First Capital Bank depends upon its earnings and capital position, and is limited by federal and
state law, regulations and policy. In addition, Virginia law imposes restrictions on the ability of all banks chartered under Virginia law to pay dividends. Under such law, no dividend may be declared or paid that would impair a banks paid-in
capital. Each of the BFI and the FDIC have the general authority to limit dividends paid by First Capital Bank if such payments are deemed to constitute an unsafe and unsound practice. In particular, Section 38 of the Federal Deposit Insurance
Act (FDIA) would prohibit First Capital Bank from making a dividend if it were undercapitalized or if such dividend would result in the institution becoming undercapitalized.

Under current supervisory practice, prior approval of the FRB is required if cash dividends declared in any given year exceed the total of First Capital
Banks net profits for such year, plus its retained profits for the preceding two years. In addition, First Capital Bank may not pay a dividend in an amount greater than its undivided profits then on hand after deducting current losses and bad
debts. Federal law further provides that no insured depository institution may make any capital distribution (which would include a cash dividend) if, after making the distribution, the institution would not satisfy one or more of its minimum
capital requirements.

Insurance of Accounts, Assessments and Regulation by the FDIC

The deposits of the bank are insured by the FDIC up to the limits set forth under applicable law. The deposits of First Capital Bank are subject to the
deposit insurance assessments of the Deposit Insurance Fund of the FDIC.

The FDIC recently amended its risk-based deposit assessment
system for 2007 to implement authority granted by the Federal Deposit Insurance Reform Act of 2005. Under the revised system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital
levels and certain other factors. An institutions assessment rate depends upon the category to which it is assigned. Risk Category I, which contains the least risky depository institutions, is expected to include more than 90% of all
institutions. Unlike the other categories, Risk Category I contains further risk differentiation based on the FDICs analysis of financial ratios, examination component ratings and other information. Assessment rates are determined by the FDIC
and currently range from five to seven basis points for the healthiest institutions (Risk Category I) to 43 basis points of assessable deposits for the riskiest (Risk Category IV). The FDIC may adjust rates uniformly from one quarter to the next,
except that no single adjustment can exceed three basis points.



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The FDIC is authorized to prohibit any insured institution from engaging in any activity that the FDIC
determines by regulation or order to pose a serious threat to the Deposit Insurance Fund. Also, the FDIC may initiate enforcement actions against a bank, after first giving the institutions primary regulatory authority an opportunity to take
such action. The FDIC may terminate the deposit insurance of any depository institution if it determines, after a hearing, that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to
continue operations, or has violated any applicable law, regulation, order or any condition imposed in writing by the FDIC. It also may suspend deposit insurance temporarily during the hearing process for the permanent termination of insurance, if
the institution has no tangible capital. If deposit insurance is terminated, the deposits at the institution at the time of termination, less subsequent withdrawals, shall continue to be insured for a period from six months to two years, as
determined by the FDIC. We are not aware of any existing circumstances that could result in termination of any of First Capital Banks deposit insurance.

Capital Requirements. The various federal bank regulatory agencies, including the FRB, have adopted risk-based capital requirements for assessing the capital adequacy of banks and bank holding companies.
Virginia chartered banks must also satisfy the capital requirements adopted by the BFI. The federal capital standards define capital and establish minimum capital requirements in relation to assets and off-balance sheet exposure, as adjusted for
credit risk. The risk-based capital standards currently in effect are designed to make regulatory capital requirements more sensitive to differences in risk profile among bank holding companies and banks, to account for off-balance sheet exposure
and to minimize disincentives for holding liquid assets. Assets and off-balance sheet items are assigned to broad risk categories, each with appropriate risk weights. The resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance sheet items.

The minimum requirement for the ratio of total capital to risk-weighted assets
(including certain off-balance sheet obligations, such as stand-by letters of credit) is 8%. At least half of the risk-based capital must consist of common equity, retained earnings and qualifying perpetual preferred stock, less deductions for
goodwill and various other tangibles (Tier 1 capital). Tier 2 capital includes the hybrid capital instruments and other debt securities, preferred stock and a limited amount of the general valuation allowance for loan losses. The sum of
Tier 1 capital and Tier 2 capital is total risk-based capital.

The FRB also has adopted regulations which supplement the
risk-based guidelines to include a minimum leverage ratio of Tier 1 capital to quarterly average assets (Leverage Ratio) of 3%. The FRB has emphasized that the foregoing standards are supervisory minimums and that a banking organization
will be permitted to maintain such minimum levels of capital only if it receives the highest rating under the regulatory rating system and the banking organization is not experiencing or anticipating significant growth. All other banking
organizations are required to maintain a Leverage Ratio of at least 4% to 5% of Tier 1 capital. These rules further provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain capital positions
substantially above the minimum supervisory levels and comparable to peer group averages, without significant reliance on intangible assets. The FRB continues to consider tangible Tier 1 Leverage Ratio as the ratio of a banking organizations
Tier 1 capital, less deductions for intangibles otherwise includable in Tier 1 capital, to total tangible assets.

The Federal Financial
Institutions Examination Council establishes the guidelines which banks follow in preparing their quarterly Reports of Condition and Income (Call Report) which are filed with their supervisory agency. The guidelines in most respects
follow accounting principles generally accepted in the United States (GAAP) in presenting the financial condition of each institution. An exception exists in the manner that recognition of deferred tax asset balances are treated for the
purpose of calculating capital adequacy. In preparing the Call Report schedules dealing with regulatory capital, an institution can recognize only that portion of its deferred tax asset balance which equates to projected



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earnings for the ensuing 12 month period. Any amount in excess of that is disallowed when calculating the institutions capital ratios. All capital
ratios reported by First Capital Bank following recognition of its deferred tax asset balance at June 30, 2003, will be in accordance with the Regulatory Accounting Principles (RAP) noted above. All other financial statements
presented by the Bank, including all other Call Report presentations, will be in accordance with GAAP.

Section 38 of the FDIA, as
amended by the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), requires that the federal banking agencies establish five capital levels for insured depository institutions  well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized  and requires or permits such agencies to take certain supervisory actions as an insured
institutions capital level falls.

As of December 31, 2006, we and First Capital Bank both exceeded all capital requirements
under all applicable regulations.

Safety and Soundness. The federal banking agencies have broad powers under current federal law to
take prompt corrective action to resolve problems of insured depository institutions. The extent of these powers depends upon whether the institutions in question are well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, or critically undercapitalized, all such terms are defined under uniform regulations defining such capital levels issued by each of the federal banking agencies.

On December 19, 1991, FDICIA was enacted into law. FDICIA requires each federal banking regulatory agency to prescribe, by regulation
or guideline, standards for all insured depository institutions and depository institution holding companies relating to: (i) internal controls, information systems and audit systems; (ii) loan documentation; (iii) credit
underwriting; (iv) interest rate risk exposure; (v) asset growth; (vi) compensation, fees and benefits; and (vii) such other operational and managerial standards as the agency determines to be appropriate. On July 10, 1995,
the federal banking agencies, including the FRB, adopted final rules and proposed guidelines concerning standards for safety and soundness required to be prescribed by regulation pursuant to Section 39 of the FDIA. In general, the standards
relate to (1) operational and managerial matters; (2) asset quality and earnings; and (3) compensation. The operational and managerial standards cover (a) internal controls and information systems; (b) internal audit
systems; (c) loan documentation; (d) credit underwriting; (e) interest rate exposure; (f) asset growth; and (g) compensation, fees and benefits.

Activities and Investments of Insured State-Chartered Banks. The activities and equity investments of FDIC-insured, state-chartered banks are generally limited to those that are permissible for national banks.
Under regulations dealing with equity investments, an insured state bank generally may not directly or indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank. An insured state bank
is not prohibited from, among other things, (i) acquiring or retaining a majority interest in a subsidiary; (ii) investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition,
rehabilitation or new construction of a qualified housing project, provided that such limited partnership investments may not exceed 2% of the banks total assets; (iii) acquiring up to 10% of the voting stock of a company that solely
provides or reinsures directors, trustees and officers liability insurance coverage or bankers blanket bond group insurance coverage for insured depository institutions; and (iv) acquiring or retaining the voting shares
of a depository institution if certain requirements are met. In addition, an insured state-chartered bank may not, directly, or indirectly through a subsidiary, engage as principal in any activity that is not permissible for a national
bank unless the FDIC has determined that such activities would pose no risk to the insurance fund of which it is a member and the bank is in compliance with applicable regulatory capital requirements. Any insured state-chartered bank directly or
indirectly engaged in any



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activity that is not permitted for a national bank must cease the impermissible activity. The scope of permissible activities available to FDIC-insured,
state chartered banks may be expanded by the recently enacted financial services legislation. See Supervision and Regulation  First Capital Bank  Financial Services Legislation.

Regulatory Enforcement Authority. Applicable banking laws include substantial enforcement powers available to federal banking regulators. This
enforcement authority includes, among other things, the ability to assess civil monetary penalties, to issue cease-and-desist or removal orders and to initiate injunctive actions against banking organizations and institution-affiliated parties, as
defined. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports
filed with regulatory authorities.

Monetary Policy

The commercial banking business is affected not only by general economic conditions but also by the monetary policies of the FRB. The instruments of monetary policy employed by the FRB include open market operations
in United States government securities, changes in the discount rate on member bank borrowing and changes in reserve requirements against deposits held by all federally insured banks. The FRBs monetary policies have had a significant effect on
the operating results of commercial banks in the past and are expected to continue to do so in the future. In view of changing conditions in the national and international economy and in the money markets, as well as the effect of actions by
monetary fiscal authorities, including the FRB, no prediction can be made as to possible future changes in interest rates, deposit levels, loan demand or the business and earnings of the bank.

Federal Reserve System

In 1980, Congress enacted
legislation that imposed reserve requirements on all depository institutions that maintain transaction accounts or non-personal time deposits. NOW accounts, money market deposit accounts and other types of accounts that permit payments or transfers
to third parties fall within the definition of transaction accounts and are subject to these reserve requirements, as are any non-personal time deposits at an institution. For net transaction accounts in 2006, the first $7.8 million, the same amount
as in 2005, will be exempt from reserve requirements. A 3% reserve ratio will be assessed on net transaction accounts over $7.8 million up to and including $40.5 million, also the same amount as in 2005. A 10% reserve ratio will be applied above
$40.5 million. These percentages are subject to adjustment by the FRB. Because required reserves must be maintained in the form of vault cash or in a non-interest-bearing account at, or on behalf of, a Federal Reserve Bank, the effect of the reserve
requirement is to reduce the amount of the institutions interest-earning assets.

Transactions with Affiliates

Transactions between banks and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate of a bank is any bank or
entity that controls, is controlled by or is under common control with such bank. Generally, Sections 23A and 23B:



| |  |  | limit the extent to which the bank or its subsidiaries may engage in covered transactions with any one affiliate to an amount equal to 10% of such
institutions capital stock and surplus, and maintain an aggregate limit on all such transactions with affiliates to an amount equal to 20% of such capital stock and surplus; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | require that all such transactions be on terms substantially the same, or at least as favorable, to the association or subsidiary as those provided to a
nonaffiliate.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The term covered transaction includes the making of loans, purchase of assets, issuance of a
guarantee and other similar types of transactions.

Loans to Insiders

The Federal Reserve Act and related regulations impose specific restrictions on loans to directors, executive officers and principal shareholders of banks. Under Section 22(h) of the Federal Reserve Act, loans to
a director, an executive officer and to a principal shareholder of a bank, and some affiliated entities of any of the foregoing, may not exceed, together with all other outstanding loans to such person and affiliated entities, the banks
loan-to-one borrower limit. Loans in the aggregate to insiders and their related interests as a class may not exceed two times the banks unimpaired capital and unimpaired surplus until the banks total assets equal or exceed $100,000,000,
at which time the aggregate is limited to the banks unimpaired capital and unimpaired surplus. Section 22(h) also prohibits loans, above amounts prescribed by the appropriate federal banking agency, to directors, executive officers and
principal shareholders of a bank or bank holding company, and their respective affiliates, unless such loan is approved in advance by a majority of the board of directors of the bank with any interested director not participating in the
voting. The FDIC has prescribed the loan amount, which includes all other outstanding loans to such person, as to which such prior board of director approval is required, as being the greater of $25,000 or 5% of capital and surplus (up to $500,000).
Section 22(h) requires that loans to directors, executive officers and principal shareholders be made on terms and underwriting standards substantially the same as offered in comparable transactions to other persons.

Community Reinvestment Act

Under the Community
Reinvestment Act and related regulations, depository institutions have an affirmative obligation to assist in meeting the credit needs of their market areas, including low and moderate-income areas, consistent with safe and sound banking practice.
The Community Reinvestment Act requires the adoption by each institution of a Community Reinvestment Act statement for each of its market areas describing the depository institutions efforts to assist in its communitys credit needs.
Depository institutions are periodically examined for compliance with the Community Reinvestment Act and are assigned ratings in this regard. Banking regulators consider a depository institutions Community Reinvestment Act rating when
reviewing applications to establish new branches, undertake new lines of business, and/or acquire part or all of another depository institution. An unsatisfactory rating can significantly delay or even prohibit regulatory approval of a proposed
transaction by a bank holding company or its depository institution subsidiaries.

The GLB Act and federal bank regulators have made
various changes to the Community Reinvestment Act. Among other changes, Community Reinvestment Act agreements with private parties must be disclosed and annual reports must be made to a banks primary federal regulatory. A bank holding company
will not be permitted to become a financial holding company and no new activities authorized under the GLB Act may be commenced by a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a
satisfactory rating in its latest Community Reinvestment Act examination. First Capital Bank received a satisfactory rating during its latest examination.



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Fair Lending; Consumer Laws

In addition to the Community Reinvestment Act, other federal and state laws regulate various lending and consumer aspects of the banking business. Governmental agencies, including the Department of Housing and Urban
Development, the Federal Trade Commission and the Department of Justice, have become concerned that prospective borrowers experience discrimination in their efforts to obtain loans from depository and other lending institutions. These agencies have
brought litigation against depository institutions alleging discrimination against borrowers. Many of these suits have been settled, in some cases for material sums, short of a full trial.

Recently, these governmental agencies have clarified what they consider to be lending discrimination and have specified various factors that they will
use to determine the existence of lending discrimination under the Equal Credit Opportunity Act and the Fair Housing Act, including evidence that a lender discriminated on a prohibited basis, evidence that a lender treated applicants differently
based on prohibited factors in the absence of evidence that the treatment was the result of prejudice or a conscious intention to discriminate, and evidence that a lender applied an otherwise neutral non-discriminatory policy uniformly to all
applicants, but the practice had a discriminatory effect, unless the practice could be justified as a business necessity.

Banks and other
depository institutions also are subject to numerous consumer-oriented laws and regulations. These laws, which include the Truth in Lending Act, the Truth in Savings Act, the Real Estate Settlement Procedures Act, the Electronic Funds Transfer Act,
the Equal Credit Opportunity Act, and the Fair Housing Act, require compliance by depository institutions with various disclosure requirements and requirements regulating the availability of funds after deposit or the making of some loans to
customers.

Bank Secrecy Act

Under the
Bank Secrecy Act (BSA), a financial institution is required to have systems in place to detect certain transactions, based on the size and nature of the transaction. Financial institutions are generally required to report cash
transactions involving more than $10,000 to the United States Treasury. In addition, financial institutions are required to file suspicious activity reports for transactions that involve more than $5,000 and which the financial institution knows,
suspects or has reason to suspect, involves illegal funds, is designed to evade the requirements of the BSA or has no lawful purpose. The USA PATRIOT Act of 2001, enacted in response to the September 11, 2001 terrorist attacks, requires bank
regulators to consider a financial institutions compliance with the BSA when reviewing applications from a financial institution. As part of its BSA program, the USA PATRIOT Act also requires a financial institution to follow recently
implemented customer identification procedures when opening accounts for new customers and to review lists of individuals and entities that are prohibited from opening accounts at financial institutions.

Future Regulatory Uncertainty

Because federal
regulation of financial institutions changes regularly and is the subject of constant legislative debate, we cannot forecast how federal regulation of financial institutions may change in the future and impact our operations. Although Congress in
recent years has sought to reduce the regulatory burden on financial institutions with respect to the approval of specific transactions, we fully expect that the financial institution industry will remain heavily regulated in the near future and
that additional laws or regulations may be adopted further regulating specific banking practices.



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|I
TEM 2. | DESCRIPTION OF PROPERTY
|-------- | -----------------------

Our banking offices are
listed below. We conduct our business from the properties listed below. Except for our Ashland office, which we own, we lease our other offices under long term lease arrangements. All of such leases are at market rental rates and they are all with
unrelated parties having no relationship or affiliation with us.



|                                                                                      |  |           
|------------------------------------------------------------------------------------- |  | ----------
|Office Location                                                                       |  | DateOpened
|                                                                                      | 
|Innsbrook Office 4101 Dominion Boulevard Glen Allen, Virginia 23060                   |  | 1998      
|                                                                                      | 
|Ashland Office 409 South Washington Highway
Ashland, Virginia 23005                   |  | 2000      
|                                                                                      | 
|Chesterfield Towne Center Office 1580 Koger Center
Boulevard Richmond, Virginia 23235 |  | 2003      
|                                                                                      | 
|Staples Mill Road Office 1776 Staples Mill
Road Richmond, Virginia 23230              |  | 2003      
|                                                                                      | 
|Forest Office Park Branch 1504 Santa Rosa
Road Richmond, Virginia 23229               |  | 2006      
|                                                                                      | 
|James Center Office One James Center 901 East Cary Street Richmond, Virginia 23219    |  | 2007      

Our corporate office, which we opened in 2003, is located at 4222 Cox Road, Suite 200,
Glen Allen, Virginia 23060.

All of our properties are in good operating condition and are adequate for our present and anticipated
future needs.



|I
TEM 3. | LEGAL PROCEEDINGS
|-------- | -----------------

We are not involved in any
pending legal proceedings other than legal proceedings occurring in the ordinary course of business. Our management does not believe that such legal proceedings, individually or in the aggregate, are likely to have a material adverse effect on our
results of operations or financial condition.



22



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##### Table of Contents

|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders of the Company.

PART II



|ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- | --------------------------------------------------------

Our common stock was approved for listing on the Nasdaq Capital Markets as of June 7, 2007 under the symbol FCVA. Trading under that symbol began June 14, 2007. Prior to listing on Nasdaq, our
common stock traded over the counter and under the symbol FPBX, although no established trading market developed.

The
following table shows high and low sale prices for our common stock, as reported to us, for the periods indicated.



|           |  |      |       |     |   |      
|---------- |  | ---- | ----- | --- | - | -----
|           |  | High |       | Low
|2005       |  |      |       |     |   |      
|1stQuarter |  | $    | 12.83 |     | $ | 11.83
|2ndQuarter |  |      | 14.00 |     |   | 11.93
|3rdQuarter |  |      | 14.33 |     |   | 13.40
|4thQuarter |  |      | 22.00 |     |   | 13.87
|2006       |  |      |       |     |   |      
|1stQuarter |  | $    | 20.00 |     | $ | 16.66
|2ndQuarter |  |      | 20.00 |     |   | 16.25
|3rdQuarter |  |      | 18.50 |     |   | 17.50
|4thQuarter |  |      | 18.10 |     |   | 17.95
|2007       |  |      |       |     |   |      
|1stQuarter |  | $    | 20.00 |     | $ | 16.80

The foregoing transactions may not be representative of all transactions during the indicated
periods or of the actual fair market value of our common stock at the time of such transaction due to the infrequency of trades and the limited market for our common stock.

As of March 5, 2007, there were approximately 744 shareholders of record of our common stock.

Effective December 28, 2005, First Capital Bank completed a three-for-two stock split with respect to the outstanding shares of its common stock.
The information set forth in this prospectus regarding common stock reflects the changes resulting from the stock split.



23



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##### Table of Contents

SUMMARY FINANCIAL INFORMATION

The following consolidated summary sets forth our selected financial data for the periods and at the dates indicated. The selected financial data for
fiscal years have been derived from our audited financial statements for each of the five years that ended December 31, 2006, 2005, 2004, 2003 and 2002. You also should read the detailed information and the financial statements for all of such
periods included elsewhere in this prospectus.



|                                                    |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|--------------------------------------------------- |  | -------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                    |  | At or For the Years Ended December 31, |        
|                                                    |  | 2006                                   |         |   | 2005 |   |         | 2004 |  |   | 2003    |   |  | 2002 |        
|Balance Sheet Data:                                 |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Assets                                              |  | $                                      | 257,241 |   |      | $ | 209,529 |      |  | $ | 152,647 |   |  | $    | 115,148 |   |  | $ | 100,656 |  
|Gross loans, net of unearned income                 |  |                                        | 201,585 |   |      |   | 156,062 |      |  |   | 108,698 |   |  |      | 72,641  |   |  |   | 54,981  |  
|Deposits                                            |  |                                        | 194,302 |   |      |   | 162,388 |      |  |   | 128,658 |   |  |      | 104,726 |   |  |   | 88,878  |  
|Stockholders equity                                |  |                                        | 15,659  |   |      |   | 13,970  |      |  |   | 12,990  |   |  |      | 9,234   |   |  |   | 6,921   |  
|Average shares outstanding, basic                   |  |                                        | 1,796   |   |      |   | 1,796   |      |  |   | 1,796   |   |  |      | 1,488   |   |  |   | 1,147   |  
|Average shares outstanding, diluted                 |  |                                        | 1,889   |   |      |   | 1,860   |      |  |   | 1,849   |   |  |      | 1,530   |   |  |   | 1,162   |  
|Income Statement Data:                              |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Interest income                                     |  | $                                      | 15,263  |   |      | $ | 10,533  |      |  | $ | 6,740   |   |  | $    | 5,164   |   |  | $ | 4,277   |  
|Interest expense                                    |  |                                        | 7,691   |   |      |   | 4,134   |      |  |   | 2,388   |   |  |      | 2,235   |   |  |   | 2,270   |  
|                                                    |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income                                 |  |                                        | 7,572   |   |      |   | 6,399   |      |  |   | 4,352   |   |  |      | 2,929   |   |  |   | 2,007   |  
|Provision for loan losses                           |  |                                        | 404     |   |      |   | 408     |      |  |   | 346     |   |  |      | 250     |   |  |   | 320     |  
|                                                    |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income after provision for loan losses |  |                                        | 7,168   |   |      |   | 5,991   |      |  |   | 4,006   |   |  |      | 2,679   |   |  |   | 1,687   |  
|Noninterest income                                  |  |                                        | 465     |   |      |   | 272     |      |  |   | 270     |   |  |      | 284     |   |  |   | 277     |  
|Noninterest expense                                 |  |                                        | 5,261   |   |      |   | 4,293   |      |  |   | 3,406   |   |  |      | 2,590   |   |  |   | 1,842   |  
|                                                    |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Income before income taxes                          |  |                                        | 2,372   |   |      |   | 1,970   |      |  |   | 870     |   |  |      | 373     |   |  |   | 122     |  
|Income tax expense (benefit)                        |  |                                        | 801     |   |      |   | 664     |      |  |   | 296     |   |  |      | 127     |   |  |   | (459    | )
|                                                    |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income                                          |  | $                                      | 1,571   |   |      | $ | 1,306   |      |  | $ | 574     |   |  | $    | 246     |   |  | $ | 581     |  
|                                                    |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Per Share Data: 1                                   |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Basic earnings per share                            |  | $                                      | 0.87    |   |      | $ | 0.73    |      |  | $ | 0.32    |   |  | $    | 0.17    |   |  | $ | 0.51    |  
|Diluted earnings per share                          |  |                                        | 0.83    |   |      |   | 0.70    |      |  |   | 0.31    |   |  |      | 0.16    |   |  |   | 0.50    |  
|Book value per share                                |  |                                        | 8.72    |   |      |   | 7.78    |      |  |   | 7.23    |   |  |      | 6.19    |   |  |   | 6.00    |  
|Asset Quality Ratios:                               |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Non-performing loans to total loans                 |  |                                        | 0.06    | % |      |   | 0.00    | %    |  |   | 0.00    | % |  |      | 0.01    | % |  |   | 0.11    | %
|Non-performing assets to total assets               |  |                                        | 0.05    |   |      |   | 0.00    |      |  |   | 0.00    |   |  |      | 0.01    |   |  |   | 0.06    |  
|Net loan charge-offs (recoveries) to average loans  |  |                                        | 0.02    |   |      |   | 0.02    |      |  |   | 0.00    |   |  |      | 0.11    |   |  |   | 0.86    |  
|Allowance for loan losses to total loans            |  |                                        | 0.91    |   |      |   | 0.94    |      |  |   | 1.00    |   |  |      | 1.01    |   |  |   | 1.00    |  
|Selected Performance Ratios:                        |  |                                        |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Return on average assets                            |  |                                        | 0.69    | % |      |   | 0.72    | %    |  |   | 0.42    | % |  |      | 0.23    | % |  |   | 0.70    | %
|Return on average equity                            |  |                                        | 10.74   |   |      |   | 9.69    |      |  |   | 5.87    |   |  |      | 2.67    |   |  |   | 9.04    |  
|Efficiency ratio                                    |  |                                        | 65.46   |   |      |   | 64.35   |      |  |   | 73.69   |   |  |      | 80.61   |   |  |   | 80.65   |  
|Net interest margin                                 |  |                                        | 3.41    |   |      |   | 3.68    |      |  |   | 3.39    |   |  |      | 2.84    |   |  |   | 2.51    |  
|Equity to assets                                    |  |                                        | 6.09    |   |      |   | 6.67    |      |  |   | 8.51    |   |  |      | 8.02    |   |  |   | 6.88    |  
|Tier 1 risk-based capital ratio                     |  |                                        | 10.39   |   |      |   | 9.13    |      |  |   | 12.46   |   |  |      | 12.01   |   |  |   | 9.41    |  
|Total risk-based capital ratio                      |  |                                        | 12.28   |   |      |   | 11.36   |      |  |   | 13.51   |   |  |      | 12.42   |   |  |   | 10.43   |  
|Leverage ratio                                      |  |                                        | 8.80    |   |      |   | 6.98    |      |  |   | 8.74    |   |  |      | 7.86    |   |  |   | 6.42    |  

---

|1 | Amounts have been adjusted to reflect the three-for-two stock split on December 28, 2005.
|- | -----------------------------------------------------------------------------------------



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##### Table of Contents

|ITEM 6. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

The following discussion provides information about the results of operations and financial condition, liquidity and capital resources. This discussion
should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements.

Overview

We are headquartered in Glen Allen, Virginia and conduct our primary operations through our wholly owned subsidiary, First Capital Bank. Through its six
full service branch offices and courier service, the bank serves the greater Richmond metropolitan area which includes the counties of Henrico, Chesterfield and Hanover, the Town of Ashland and the City of Richmond, Virginia. We target small to
medium-sized businesses and consumers in our market area and emerging suburbs outside of the greater Richmond metropolitan area. In addition, we strive to develop personal, knowledgeable relationships with our customers, while at the same time
offering products comparable to statewide regional banks located in our market area. We believe that the marketing of customized banking services has enabled us to establish a niche in the financial services marketplace in the Richmond metropolitan
area.

We generate a significant amount of our income from the net interest income earned by the bank. Net interest income is the
difference between interest income and interest expense. Interest income depends on the amount of interest-earning assets outstanding during the period and the interest rates earned thereon. Interest expense is a function of the average amount of
deposits and borrowed money outstanding during the period and the interest rates paid thereon. The quality of the assets further influences the amount of interest income lost and the amount of additions to the allowance for loan losses.

For the years ended December 31, 2006 and 2005, we continued to realize the benefit of high growth rates in both assets and net interest income.
Our total assets increased to $257.2 million at December 31, 2006, compared to $209.5 million at December 31, 2005, representing an increase of $47.7 million or 22.8%. Our total assets of $209.5 million on December 31, 2005 increased
37.3% from our December 31, 2004 balance of $152.6 million.

Gross loans, net of unearned income, at December 31, 2006 were
$201.6 million, an increase of $45.5 million, or 29.1%, from the December 31, 2005 amount of $156.1 million. For the year 2005, gross loans, net of unearned income, increased $47.4 million or 43.6%. Loan growth of approximately $92.9 million
over the last two years was accomplished without sacrificing credit quality. Nonaccrual loans totaled $120 thousand and $2 thousand at December 31, 2006 and 2005, respectively. Excluding nonaccrual loans, there were no loans delinquent 90 days
or more at December 31, 2006 and at December 31, 2005. Additional loan officers, a solid local economy and strong underwriting contributed to the superior loan growth we experienced.

Deposits increased $31.9 million to $194.3 million at December 31, 2006 from the balance at December 31, 2005. Certificates of deposit
increased $21.0 million or 21.0% and represent 62.5% of deposits with maturities ranging from six months to five years. Money market accounts and NOW accounts increased $8.4 million with the introduction of the Capital Reserve Account during 2006
which has a variable rate tied to the stated Fed funds rate. Low cost demand deposits increased 8.1% or $2.5 million to $32.9 million at December 31, 2006. The steady rise in short term interest rates over the last two years contributed to the
86.1% increase in interest expense in 2006.



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##### Table of Contents

The net interest margin was 3.41% for the year ended December 31, 2006 compared to 3.68% for the
same period in 2005. The decline is attributed to both the flattening of the yield curve and the steady rise in shorter interest rates on deposits and borrowed money to fund the growth in earning assets.

Total non-interest expense increased 22.5% or $967 thousand from $4.3 million for the year ended December 31, 2005 to $5.3 million for the year
ended December 31, 2006. Additions to staff to support business development and retail branching contributed to the increase in salaries and employee benefits. Two experienced lenders were hired to support development of the construction
division and loan origination function. Occupancy and depreciation expense increased as the result of the opening of the new Forest Office Park branch. Professional services increased 71.3% to $148 thousand for the year ended December 31, 2006
as the result of formation of the holding company First Capital Bancorp, Inc. and filings with the Securities and Exchange Commission.

As
of December 31, 2006, our regulatory capital levels exceeded those established for well-capitalized financial institutions.

Critical Accounting
Policies

The financial condition and results of operations presented in the consolidated financial statements, the accompanying notes
to the consolidated financial statements and this section are, to a large degree, dependent upon our accounting policies. The selection and applications of these accounting policies involve judgments, estimates, and uncertainties that are
susceptible to change.

First Capital Banks critical accounting policy relates to the evaluation of the allowance for loan losses
which is based on managements opinion of an amount that is adequate to absorb loss in the banks existing portfolio. The allowance for loan losses is established through a provision for loan loss based on available information including
the composition of the loan portfolio, historical loan losses (to the extent available due to limited history), specific impaired loans, availability and quality of the collateral, age of the various portfolios, changes in local economic conditions,
and loan performance and quality of the portfolio. Different assumptions used in evaluating the adequacy of the banks allowance for loan losses could result in material changes in its financial condition and results of operations. The
banks policies with respect to the methodology for determining the allowance for loan losses involve a high degree of complexity and require management to make subjective judgments that often require assumptions or estimates about certain
matters. This critical policy and its assumptions are periodically reviewed with the banks Board of Directors.

The bank evaluates
various loans individually for impairment as required by Statement of Financial Accounting Standard (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan, and SFAS No. 118, Accounting by Creditors for Impairment of a
Loan  Income Recognition and Disclosures. Loans evaluated individually for impairment include non-performing loans, loans past due by 30 days or more, and other loans selected by management. The evaluations are based upon discounted expected
cash flows or collateral valuations. If the evaluation shows that a loan is individually impaired, then a specific reserve is established for the amount of impairment. If a loan evaluated individually is not impaired, then the loan is assessed for
impairment under SFAS No. 5, Accounting for Contingencies, with a group of loans that have similar characteristics.

For loans without
individual measures of impairment, the bank makes estimates of losses for groups of loans as required by SFAS No. 5. Loans are grouped by similar characteristics, including the type of loan and general collateral type. A loss rate range
reflecting the expected loss inherent in a group of loans is derived based upon estimates of default rates for a given collateral type, terms of the loan, borrower and industry concentrations, levels and trends in delinquencies and charge-off and
recovery experience.



26



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##### Table of Contents

The amount of estimated impairment of individually evaluated loans and the range of estimated losses for
groups of loans are added together for a total range of estimated loan losses. This range of estimated losses is compared to the allowance for loan losses of the bank as of the evaluation date and, if the range of estimated losses is greater than
the allowance, an additional provision to the allowance would be make. If the range of estimated losses is less than the allowance, the degree to which the allowance exceeds the range of estimated losses is evaluated to determine whether a reduction
to the allowance would be necessary. If different assumptions or conditions were to prevail and it is determined that the allowance is not adequate to absorb the new estimate of probable losses, an additional provision for loan losses would be make,
which amount may be material to the consolidated financial statements.

Results of Operations

Net Income

Net income for the year ended
December 31, 2006 increased 20.3% to $1.6 million from $1.3 million for the year ended December 31, 2005. Returns on equity and assets for the year ended December 31, 2006 were 10.74% and 0.69%, respectively, compared to 9.69% and
0.72% for the year ended December 31, 2005. Our continued focus on loan growth resulted in an increase in interest income. Interest on loans increased $4.3 million to $13.3 million for the year ended December 31, 2006, compared to $9.0
million for the comparable period in 2005. Operations have been impacted by increased funding costs. Total interest expense was $7.7 million for the year ended December 31, 2006, compared to $4.1 million for the year ended December 31,
2005.

For 2006, earnings per diluted share were $0.83 compared to $0.70 and $0.31 for 2005 and 2004, respectively.

The following table reflects an analysis of our net interest income using the daily average balance of our assets and liabilities as of the periods
indicated.



|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|------------------------------------------ |  | ----------------------- | ------- | - | -------------- | - | ---------- | ---- | ---- | -------------- |  | - | -------------- | - | ---------- | - | ------ | -------------- | ---- | - | -------------- | - | ---------- | - |  | - | ----- |  | ---- | -
|                                           |  | Year Ended December 31, |        
|                                           |  | 2006                    |         |   | 2005           |   |            | 2004 |     
|                                           |  | AverageBalance          |         |   | Income/Expense |   | Yield/Rate |      |      | AverageBalance |  |   | Income/Expense |   | Yield/Rate |   |        | AverageBalance |      |   | Income/Expense |   | Yield/Rate |  
|                                           |  | (Dollars in thousands)  |        
|Assets:                                    |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Loans, net of unearned income(1)           |  | $                       | 177,050 |   |                | $ | 13,263     |      | 7.49 | %              |  | $ | 133,392        |   |            | $ | 8,971  |                | 6.73 | % |                | $ | 92,467     |   |  | $ | 5,537 |  | 5.99 | %
|Investment securities:                     |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|U.S. Agencies                              |  |                         | 25,307  |   |                |   | 1,125      |      | 4.45 |                |  |   | 18,386         |   |            |   | 746    |                | 4.06 |   |                |   | 9,747      |   |  |   | 330   |  | 3.3  |  
|Mortgage backed securities                 |  |                         | 12,702  |   |                |   | 521        |      | 4.10 |                |  |   | 17,070         |   |            |   | 626    |                | 3.67 |   |                |   | 22,902     |   |  |   | 793   |  | 3.46 |  
|Municipal securities                       |  |                         | 1,012   |   |                |   | 41         |      | 4.05 |                |  |   | 838            |   |            |   | 34     |                | 4.06 |   |                |   |           |   |  |   |      |  | 0.00 |  
|Other investments                          |  |                         | 1,955   |   |                |   | 115        |      | 5.88 |                |  |   | 1,211          |   |            |   | 57     |                | 4.71 |   |                |   | 763        |   |  |   | 34    |  | 4.46 |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Total investment securities                |  |                         | 40,976  |   |                |   | 1,802      |      | 4.40 |                |  |   | 37,505         |   |            |   | 1,463  |                | 3.90 |   |                |   | 33,412     |   |  |   | 1,157 |  | 3.46 |  
|Federal funds sold                         |  |                         | 3,884   |   |                |   | 198        |      | 5.10 |                |  |   | 2,971          |   |            |   | 99     |                | 3.33 |   |                |   | 3,132      |   |  |   | 46    |  | 1.47 |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Total earning assets                       |  | $                       | 221,910 |   |                | $ | 15,263     |      | 6.88 |                |  | $ | 173,868        |   |            | $ | 10,533 |                | 6.06 |   |                | $ | 129,011    |   |  | $ | 6,740 |  | 5.22 |  
|Cash and cash equivalents                  |  |                         | 6,313   |   |                |   |            |      |      |                |  |   | 5,911          |   |            |   |        |                |      |   |                |   | 5,161      |   |  |   |       |  |      |  
|Allowance for loan losses                  |  |                         | (1,666  | ) |                |   |            |      |      |                |  |   | (1,276         | ) |            |   |        |                |      |   |                |   | (912       | ) |  |   |       |  |      |  
|Other assets                               |  |                         | 2,018   |   |                |   |            |      |      |                |  |   | 2,235          |   |            |   |        |                |      |   |                |   | 2,000      |   |  |   |       |  |      |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Total assets                               |  | $                       | 228,575 |   |                |   |            |      |      |                |  | $ | 180,738        |   |            |   |        |                |      |   |                | $ | 135,260    |   |  |   |       |  |      |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Liabilities and Stockholders Equity:      |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Interest bearing liabilities:              |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Interest checking                          |  | $                       | 6,666   |   |                | $ | 34         |      | 0.51 | %              |  | $ | 6,288          |   |            | $ | 31     |                | 0.49 | % |                | $ | 5,246      |   |  | $ | 31    |  | 0.59 | %
|Money market deposit accounts              |  |                         | 24,829  |   |                |   | 754        |      | 3.04 |                |  |   | 23,612         |   |            |   | 401    |                | 1.70 |   |                |   | 26,959     |   |  |   | 359   |  | 1.33 |  
|Statement savings                          |  |                         | 734     |   |                |   | 11         |      | 1.50 |                |  |   | 1,039          |   |            |   | 9      |                | 0.87 |   |                |   | 1,091      |   |  |   | 10    |  | 0.92 |  
|Certificates of deposit                    |  |                         | 119,838 |   |                |   | 5,505      |      | 4.59 |                |  |   | 90,336         |   |            |   | 3,164  |                | 3.50 |   |                |   | 61,735     |   |  |   | 1,865 |  | 3.02 |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Total interest-bearing deposits            |  |                         | 152,067 |   |                |   | 6,304      |      | 4.15 |                |  |   | 121,275        |   |            |   | 3,605  |                | 2.97 |   |                |   | 95,031     |   |  |   | 2,265 |  | 2.38 |  
|Federal funds purchased                    |  |                         | 1,760   |   |                |   | 94         |      | 5.34 |                |  |   | 2,261          |   |            |   | 89     |                | 3.94 |   |                |   | 620        |   |  |   | 10    |  | 1.61 |  
|Repurchase agreements                      |  |                         | 1,041   |   |                |   | 46         |      | 4.42 |                |  |   | 698            |   |            |   | 19     |                | 2.72 |   |                |   | 360        |   |  |   | 3     |  | 0.83 |  
|Subordinated debt                          |  |                         | 3,440   |   |                |   | 227        |      | 6.60 |                |  |   | 93             |   |            |   | 6      |                | 6.45 |   |                |   |           |   |  |   |      |  |      |  
|FHLB advances                              |  |                         | 25,460  |   |                |   | 1,020      |      | 4.01 |                |  |   | 11,827         |   |            |   | 415    |                | 3.51 |   |                |   | 7,587      |   |  |   | 110   |  | 1.45 |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Total interest-bearing liabilities         |  |                         | 183,768 |   |                |   | 7,691      |      | 4.19 |                |  |   | 136,154        |   |            |   | 4,134  |                | 3.04 |   |                |   | 103,598    |   |  |   | 2,388 |  | 2.31 |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Noninterest-bearing liabilities:           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Noninterest-bearing deposits               |  |                         | 27,783  |   |                |   |            |      |      |                |  |   | 29,168         |   |            |   |        |                |      |   |                |   | 19,923     |   |  |   |       |  |      |  
|Other liabilities                          |  |                         | 2,393   |   |                |   |            |      |      |                |  |   | 1,943          |   |            |   |        |                |      |   |                |   | 1,959      |   |  |   |       |  |      |  
|Stockholders equity                       |  |                         | 14,631  |   |                |   |            |      |      |                |  |   | 13,473         |   |            |   |        |                |      |   |                |   | 9,780      |   |  |   |       |  |      |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Total liabilities and stockholders equity |  | $                       | 228,575 |   |                |   |            |      |      |                |  | $ | 180,738        |   |            |   |        |                |      |   |                | $ | 135,260    |   |  |   |       |  |      |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  
|Interest rate spread                       |  |                         |         |   |                |   |            |      | 2.69 | %              |  |   |                |   |            |   |        |                | 3.02 | % |                |   |            |   |  |   |       |  | 2.91 | %
|Net interest margin                        |  |                         |         |   |                |   |            |      | 3.41 | %              |  |   |                |   |            |   |        |                | 3.68 | % |                |   |            |   |  |   |       |  | 3.39 | %
|Net interest income                        |  |                         |         |   |                | $ | 7,572      |      |      |                |  |   |                |   |            | $ | 6,399  |                |      |   |                |   |            |   |  | $ | 4,352 |  |      |  
|                                           |  |                         |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |       |  |      |  



|(1) | For purposes of these
computations, nonaccrual loans are included in average loans.
|--- | -----------------------------------------------------------------------------------



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##### Table of Contents

Net Interest Income

Year ended December 31, 2006 compared to year ended December 31, 2005

Net interest income for 2006 increased to
$7.6 million, a $1.2 million increase over the $6.4 million reported for 2005. The increase in our net interest income in 2006 resulted from the 27.6% increase in average earning assets and 82 basis points increase in the average rate earned on
average earning assets. The 82 basis points increase in earning assets yield was offset by a 115 basis point increase in the cost of funding. The net interest margin decreased during 2006 by 27 basis points to 3.41%. The average balance in our
securities portfolio increased by $3.5 million, while the yield increased 50 basis points to 4.40%. Our average loan portfolio volume increase $43.7 million or 32.7%. The average yield on the loan portfolio increased 76 basis points to 7.49%. Loan
demand was strong throughout most of 2006. Growth in the loan portfolio coupled with the increase in loan yields produced a 47.8% increase in loan interest income.

The average balance of interest-bearing deposits increased $30.8 million as the cost of deposits increased 118 basis points. Interest expense on deposits increased $2.7 million or 74.9%, to $6.3 million for the year
ended December 31, 2006. Average balance of certificates of deposit increased $29.5 million as the cost of certificates increased 109 basis points. The percentage of certificates of deposits to total deposits increased from 61.9% in 2005 to
62.5% in 2006. The cost of money market accounts increased 134 basis points from 1.70% for the year 2005 to 3.04% for the year 2006. Higher short term rates and the introduction of the Capital Reserve Account with a variable rate tied to fed funds,
resulted in the increase in cost. The Capital Reserve Account, which was introduced in June 2006, had a balance of $16.1 million at December 31, 2006.



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##### Table of Contents

Average advances from the FHLB increased $13.6 million during 2006. Average cost of those advances
increased 50 basis points. Advances from the FHLB were used to augment deposits in supporting the loan growth of the bank. Interest expense of FHLB advances increased $605 thousand or 145.9% over 2005 to $1.0 million for the year ended
December 31, 2006.

Average subordinated debt and other borrowed money increased $3.3 million during 2006. During September 2006, $5.2
million of Trust Preferred Capital Notes were issued at a LIBOR-indexed floating rate of interest (three-Month LIBOR plus 1.70%) which adjusts quarterly. The rate was 7.06% at December 31, 2006, down from 7.09% upon issuance in September 2006.

The following table summarizes changes in net interest income attributable to changes in the volume of interest-earning assets and
interest-bearing liabilities compared to changes in interest rates.



|                                   |  |                                                      |       |                                                      |      |   |       |       |  |        |       |  |      |       |   |       |   |       |   |  |   |       |  
|---------------------------------- |  | ---------------------------------------------------- | ----- | ---------------------------------------------------- | ---- | - | ----- | ----- |  | ------ | ----- |  | ---- | ----- | - | ----- | - | ----- | - |  | - | ----- | -
|                                   |  | 2006 vs. 2005 Increase (Decrease) Due to Changes
in: |       | 2005 vs. 2004 Increase (Decrease) Due to Changes
in: |     
|                                   |  | Volume                                               |       |                                                      | Rate |   |       | Total |  | Volume |       |  | Rate |       |   | Total |  
|                                   |  | (Dollars in thousands)                               |      
|Earning Assets:                    |  |                                                      |       |                                                      |      |   |       |       |  |        |       |  |      |       |   |       |   |       |   |  |   |       |  
|Loans, net of unearned income      |  | $                                                    | 2,936 |                                                      |      | $ | 1,356 |       |  | $      | 4,292 |  | $    | 2,451 |   |       | $ | 982   |   |  | $ | 3,433 |  
|Investment securities              |  |                                                      | 163   |                                                      |      |   | 176   |       |  |        | 339   |  |      | 138   |   |       |   | 168   |   |  |   | 306   |  
|Federal funds sold                 |  |                                                      | 30    |                                                      |      |   | 69    |       |  |        | 99    |  |      | (2    | ) |       |   | 55    |   |  |   | 53    |  
|                                   |  |                                                      |       |                                                      |      |   |       |       |  |        |       |  |      |       |   |       |   |       |   |  |   |       |  
|Total earning assets               |  | $                                                    | 3,129 |                                                      |      | $ | 1,601 |       |  | $      | 4,730 |  | $    | 2,587 |   |       | $ | 1,205 |   |  | $ | 3,792 |  
|                                   |  |                                                      |       |                                                      |      |   |       |       |  |        |       |  |      |       |   |       |   |       |   |  |   |       |  
|Interest-Bearing Liabilities:      |  |                                                      |       |                                                      |      |   |       |       |  |        |       |  |      |       |   |       |   |       |   |  |   |       |  
|Interest checking                  |  | $                                                    | 2     |                                                      |      | $ | 1     |       |  | $      | 3     |  | $    | 6     |   |       | $ | (7    | ) |  | $ | (1    | )
|Money market deposit accounts      |  |                                                      | 21    |                                                      |      |   | 332   |       |  |        | 353   |  |      | (44   | ) |       |   | 87    |   |  |   | 43    |  
|Statement savings                  |  |                                                      | (3    | )                                                    |      |   | 5     |       |  |        | 2     |  |      | (1    | ) |       |   | (1    | ) |  |   | (2    | )
|Certificates of deposit            |  |                                                      | 1,033 |                                                      |      |   | 1,308 |       |  |        | 2,341 |  |      | 864   |   |       |   | 435   |   |  |   | 1,299 |  
|Federal funds purchased            |  |                                                      | (20   | )                                                    |      |   | 25    |       |  |        | 5     |  |      | 27    |   |       |   | 52    |   |  |   | 79    |  
|Repurchase agreements              |  |                                                      | 9     |                                                      |      |   | 18    |       |  |        | 27    |  |      | 3     |   |       |   | 12    |   |  |   | 15    |  
|Subordinated debt                  |  |                                                      | 216   |                                                      |      |   | 5     |       |  |        | 221   |  |      |      |   |       |   | 6     |   |  |   | 6     |  
|FHLB advances                      |  |                                                      | 478   |                                                      |      |   | 127   |       |  |        | 605   |  |      | 62    |   |       |   | 244   |   |  |   | 306   |  
|                                   |  |                                                      |       |                                                      |      |   |       |       |  |        |       |  |      |       |   |       |   |       |   |  |   |       |  
|Total interest-bearing liabilities |  | $                                                    | 1,736 |                                                      |      | $ | 1,821 |       |  | $      | 3,557 |  | $    | 917   |   |       | $ | 828   |   |  | $ | 1,745 |  
|                                   |  |                                                      |       |                                                      |      |   |       |       |  |        |       |  |      |       |   |       |   |       |   |  |   |       |  
|Change in net interest income      |  | $                                                    | 1,393 |                                                      |      |   | ($220 | )     |  | $      | 1,173 |  | $    | 1,670 |   |       | $ | 377   |   |  | $ | 2,047 |  
|                                   |  |                                                      |       |                                                      |      |   |       |       |  |        |       |  |      |       |   |       |   |       |   |  |   |       |  

Year ended December 31, 2005 compared to year ended December 31, 2004

The Federal Open Market Committee increased federal funds rates eight times during 2005 resulting in prime increases from 5.25% to 7.25% as of
December 31, 2005. Net interest income for 2005 increased $2.0 million to $6.4 million or 47.0% from net interest income of $4.4 million in 2004. The growth in net interest income was due to the increase in average interest-earning assets which
was the result of growth in the loan portfolio funded by the growth in deposits and other borrowings and an increase in the net interest margin. The net interest margin increased to 3.68% for the year ended December 31, 2005 from 3.38% for
2004. The average rate on earning assets increased 83 basis points from 5.23% in 2004 to 6.06% in 2005 and the average rate on interest-bearing liabilities increased 73 basis points from 2.31% in 2004 to 3.04% in 2005. The ratio of average interest
earning assets to average interest-bearing liabilities increased from 124.37% for the year 2004 to 127.70% for the year 2005.



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##### Table of Contents

Provision for Loan Losses

The provision for loan losses for the year ended December 31, 2006 was $404 thousand compared to $408 thousand for the year ended December 31, 2005. We are committed to making loan loss provisions that
maintain an allowance that adequately reflects the risk inherent in our loan portfolio. This commitment is more fully discussed in the Asset Quality section below.

Noninterest Income

Year ended December 31, 2006 compared to year ended December 31, 2005

Noninterest income has been and will continue to be an important factor for increasing profitability. Management continues to consider
areas where noninterest income can be increased.

Noninterest income increased 70.8% to $465 thousand for the year ended December 31,
2006 compared to $272 thousand for the same period in 2005.

Fees on deposits increased 75.6% to $166 thousand for the year ended
December 31, 2006 compared to $95 thousand for the same period in 2005. NSF and Returned Check fees increased from $74 thousand for the year ended December 31, 2005 to $132 thousand for the year ended December 31, 2006 an 79.6%
increase. Other noninterest income increased $75 thousand or 39.8% to $264 thousand as compared to $189 thousand for the comparable period in 2005. ATM fees increased 100.0% to $64 thousand for the year ended December 31, 2006 as compared to
$32 thousand for the comparable period in 2005. Fees on mortgage loans were $34 thousand for the year ended December 31, 2006. A new mortgage origination division was established in September 2006 to increase noninterest income.

Year ended December 31, 2005 compared to year ended December 31, 2004

Noninterest income increased to $272 thousand in 2005 from $270 thousand in 2004. Excluding security transactions, noninterest income increased 44.8%. Fees on deposit accounts increased $27 thousand or 39.5% as
deposit accounts increased. The banks income from ownership of limited liability companies that issue title insurance policies and provide investment opportunities to our customers increased 26.7% from $33 thousand in 2004 to $41 thousand in
2005. ATM fees increased 32.2% over 2004 to $32 thousand due to additional branches and volume of deposit accounts. The noninterest income for 2004 represented gains on sale of securities of $74 thousand. Due to raising interest rates, security
sales in 2005 resulted in a loss of $12 thousand.

Noninterest Expense

Year ended December 31, 2006 compared to year ended December 31, 2005

Total noninterest
expense increased 22.5% to $5.3 million for the year ended December 31, 2006, compared to $4.3 for 2005. When taken as a percentage of total average assets for the year, noninterest expense was 2.3% of average assets for 2006 compared to 2.4%
for 2005.

Salaries and employee benefits increased 29.3% to $2.6 million compared to $2.0 million for 2005. Additions to staff to support
business development, retail branching and the formation of a construction division team have contributed to the increase in salaries and employee benefits. The staffing and opening of the Forest Office Park branch in 2006 also contributed to the
increases in 2006.



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##### Table of Contents

Occupancy expense increased 0.93% during 2006 to $602 thousand as compared to $596 thousand for 2005. The
addition of the Forest Office Park branch in September 2006 resulted in additional occupancy expense for 2006.

Data processing expense
increased 1.02% to $428 thousand for 2006 as compared to $423 thousand for 2005. The increase is related to increase cost for the new branch opened in 2006 and volume increases at existing branches.

Other expense increased $163 thousand or 20.2% for 2006 as compared to $807 thousand for 2005. The increase resulted from increases in various expense
categories, including advertising, insurance, director fees and office supplies, due to our growth.

Professional fees which include legal,
accounting and audit increased 71.3% to $148 thousand for the year ended December 31, 2006 from $86 thousand for 2005. Formation of the holding company, registration with the Securities and Exchange Commission and compliance with the
Sarbanes-Oxley Act contributed to the increase in professional fees.

Virginia capital stock tax increased 43.6% to $184 thousand for 2006
as compared to $128 thousand for 2005. An additional $4.5 million of capital in the bank resulted in the increase in the capital stock tax.

Depreciation expense increased $86 thousand or 36.5% to $323 thousand for the year ended December 31, 2006 as compared to $237 thousand for the comparable period in 2005. The addition of fit-up of the new branch and related equipment
and the relocation of the leased Ashland branch to an owned, free standing building in Ashland accounted for the increase in depreciation expense. Additional equipment depreciation associated with employee infrastructure also contributed to the
increase.

Year ended December 31, 2005 compared to year ended December 31, 2004

Noninterest expenses were $4.3 million in 2005 compared to $3.4 million in 2004, and increase of $887 thousand, or 26.1%. Salaries and employee benefits
represented the largest increase, increasing from $1.5 million in 2004 to $2.0 million, a $522 thousand or 34.9% increase. This increase as well as other increases in noninterest expenses was primarily attributable to the growth of the bank, a full
year of operating expenses related to the opening of the Staples Mill office in 2004 and the relocation of the leased Ashland branch to an owned free standing office in 2005.

While the banks growth necessitated an increase in staff, space and operating expenses, the bank was able to increase its productivity and improve
its efficiency ratio (that is, the cost of producing each dollar of revenue) from 73.7% in 2004 to 64.4% in 2005.

Income Taxes

Our reported income tax expense was $801 thousand for 2006 and $664 thousand for 2005. Our effective tax rate for 2006 was 33.8% compared to 33.7% for
2005. Note 10 of our consolidated financial statements provides a reconciliation between the amount of income tax expense computed using the federal statutory rate and our actual income tax expense. Also included in Note 10 to the consolidated
financial statements is information regarding the principal items giving rise to deferred taxes for the two years ended December 31, 2006 and 2005.



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##### Table of Contents

Financial Condition

Assets

Our total assets increased to $257.2 million at December 31, 2006, compared to $209.5 million at
December 31, 2005 representing an increase of $47.7 million or 22.8%. Total average assets increased 26.5% from $180.7 million for the year ended December 31, 2005 to $228.6 million for the same period of 2006. Average stockholders
equity increased 8.6% or $1.2 million over the same period.

Our total assets were $209.5 million as of December 31, 2005, up $56.9
million or 37.3% from the $152.6 million level at December 31, 2004. Securities increased $11.1 million or 37.3% from 2004 to 2005. Total loans, net of allowances for loan losses and deferred loan fees, increased by $47.0 million or 43.7% from
2004 to 2005, while deposits increased $33.7 million or 26.2% during the same period. Borrowings from the Federal Home Loan Bank and subordinated debt increased $12.0 million during 2005.

Loans

Our loan portfolio is the largest and most
profitable component of our earning assets. Total loans, which exclude the allowance for loan losses and deferred loans fees, at December 31, 2006 were $201.7 million, an increase of $45.7 million from December 31, 2005 amount of $156.0
million. We continue to see increases in real estate construction loans, which were $51.4 million at December 31, 2006 or 25.5% of total loans. Residential and commercial real estate increased $17.7 million during 2006 and represent 62.1% of
total loans. Additional lenders and a solid local economy have contributed to the loan growth. The allowance for loan losses was $1.8 million or 0.91% of total loans outstanding at December 31, 2006.

Major classifications of loans are as follows:



|                           |  |                        |         |      |   |         |      |  |   |         |   |      |   |        |  |   |       
|-------------------------- |  | ---------------------- | ------- | ---- | - | ------- | ---- |  | - | ------- | - | ---- | - | ------ |  | - | ------
|                           |  | 2006                   |         | 2005 |   |         | 2004 |  |   | 2003    |   | 2002
|                           |  | (Dollars in thousands)
|Commercial                 |  | $                      | 22,619  |      | $ | 15,312  |      |  | $ | 13,651  |   |      | $ | 14,275 |  | $ | 12,269
|Real estate - residential  |  |                        | 62,166  |      |   | 57,708  |      |  |   | 48,451  |   |      |   | 26,604 |  |   | 13,336
|Real estate - commercial   |  |                        | 63,062  |      |   | 49,775  |      |  |   | 30,741  |   |      |   | 23,907 |  |   | 22,766
|Real estate - construction |  |                        | 51,450  |      |   | 31,442  |      |  |   | 14,324  |   |      |   | 6,165  |  |   | 4,001 
|Consumer                   |  |                        | 2,387   |      |   | 1,799   |      |  |   | 1,494   |   |      |   | 1,690  |  |   | 2,609 
|                           |  |                        |         |      |   |         |      |  |   |         |   |      |   |        |  |   |       
|Total loans                |  | $                      | 201,684 |      | $ | 156,036 |      |  | $ | 108,661 |   |      | $ | 72,641 |  | $ | 54,981
|                           |  |                        |         |      |   |         |      |  |   |         |   |      |   |        |  |   |       
|Less:                      |  |                        |         |      |   |         |      |  |   |         |   |      |   |        |  |   |       
|Allowance for loan losses  |  | $                      | 1,834   |      | $ | 1,460   |      |  | $ | 1,084   |   |      | $ | 736    |  | $ | 552   
|Net deferred fees (costs)  |  |                        | 99      |      |   | (26     | )    |  |   | (37     | ) |      |   | 19     |  |   | 34    
|                           |  |                        |         |      |   |         |      |  |   |         |   |      |   |        |  |   |       
|Loans, net                 |  | $                      | 199,751 |      | $ | 154,602 |      |  | $ | 107,614 |   |      | $ | 71,886 |  | $ | 54,395
|                           |  |                        |         |      |   |         |      |  |   |         |   |      |   |        |  |   |       

Our loan portfolio totaled 79.8% of average earning assets in 2006, up from 76.7% in 2005. At
December 31, 2006, we had no concentration of loans in any one industry exceeding 10%. However, because of the nature of our market, loan collateral is predominantly real estate.



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|                         |  |                        |        |                                  |   |                 |  |       |       |  |   |       
|------------------------ |  | ---------------------- | ------ | -------------------------------- | - | --------------- |  | ----- | ----- |  | - | ------
|                         |  | December 31, 2006     
|                         |  | OneYear orLess         |        | After One YearThrough Five Years |   | AfterFive Years |  | Total
|                         |  | (Dollars in thousands)
|Commercial               |  | $                      | 7,409  |                                  | $ | 12,364          |  | $     | 2,846 |  | $ | 22,619
|Real estate construction |  |                        | 45,137 |                                  |   | 5,306           |  |       | 1,007 |  |   | 51,450
|                         |  |                        |        |                                  |   |                 |  |       |       |  |   |       
|Total                    |  | $                      | 52,546 |                                  | $ | 17,670          |  | $     | 3,853 |  | $ | 74,069
|                         |  |                        |        |                                  |   |                 |  |       |       |  |   |       
|Loans with:              |  |                        |        |                                  |   |                 |  |       |       |  |   |       
|Fixed Rates              |  | $                      | 4,692  |                                  | $ | 13,565          |  | $     | 904   |  | $ | 19,161
|Variable Rates           |  |                        | 47,854 |                                  |   | 4,105           |  |       | 2,949 |  |   | 54,908
|                         |  |                        |        |                                  |   |                 |  |       |       |  |   |       
|                         |  | $                      | 52,546 |                                  | $ | 17,670          |  | $     | 3,853 |  | $ | 74,069
|                         |  |                        |        |                                  |   |                 |  |       |       |  |   |       

Asset Quality

We have policies and procedures designed to control credit risk and to maintain the quality of our loan portfolio. These include underwriting standards for new originations and ongoing monitoring and reporting of
asset quality and adequacy of the allowance for loan losses. Nonaccrual loans were $120 thousand at December 31, 2006 compared to $2 thousand at December 31, 2005.

Non-performing Assets

We place loans on non-accrual when the collection of principal and interest is
doubtful, generally when a loan becomes 90 days past due. There are three negative implications for earnings when we place a loan on non-accrual status. First, all interest accrued but unpaid at the date that the loan is placed on non-accrual status
is either deducted from interest income or written off as a loss. Second, accruals on interest are discontinued until it becomes certain that both principal and interest can be repaid. Finally, there may be actual losses that require additional
provisions for loan losses to be charged against earnings.



|                                             |  |                        |      |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  
|-------------------------------------------- |  | ---------------------- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | - |  | ---- | ---- | - |  | - | ---- | -
|                                             |  | December 31,           |     
|                                             |  | 2006                   |      |   | 2005 |   |      | 2004 |  |   | 2003 |   |  | 2002 |     
|                                             |  | (Dollars in thousands) |     
|Non-accrual loans                            |  | $                      | 120  |   |      | $ | 2    |      |  | $ | 3    |   |  | $    | 6    |   |  | $ | 64   |  
|Accruing loans greater than 90 days past due |  |                        |     |   |      |   |     |      |  |   |     |   |  |      |     |   |  |   |     |  
|Non-performing assets to period end loans    |  |                        | 0.06 | % |      |   | 0.00 | %    |  |   | 0.00 | % |  |      | 0.01 | % |  |   | 0.12 | %

Allowance for Loan Losses

For a discussion of our accounting policies with respect to the allowance for loan losses, see Critical Accounting Policies  Allowance for Loan Losses above.



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##### Table of Contents

The following table depicts the transactions, in summary form, that occurred to the allowance for loan
losses in each year presented:



|                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|------------------------------------------------------------------------------------ |  | ---------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ---- | - |  | - | ---- | -
|                                                                                     |  | December 31,           |      
|                                                                                     |  | 2006                   |       |   | 2005 |   |       | 2004 |  |   | 2003  |   |  | 2002 |     
|                                                                                     |  | (Dollars in thousands) |      
|Balance, beginning of year                                                           |  | $                      | 1,460 |   |      | $ | 1,084 |      |  | $ | 736   |   |  | $    | 552  |   |  | $ | 604  |  
|Loan charge-offs:                                                                    |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|Commercial                                                                           |  |                        | 21    |   |      |   | 31    |      |  |   |      |   |  |      | 62   |   |  |   | 370  |  
|Real estate - residential                                                            |  |                        |      |   |      |   |      |      |  |   |      |   |  |      |     |   |  |   |     |  
|Real estate - commercial                                                             |  |                        |      |   |      |   |      |      |  |   |      |   |  |      |     |   |  |   |     |  
|Real estate - construction                                                           |  |                        | 10    |   |      |   |      |      |  |   |      |   |  |      |     |   |  |   |     |  
|Consumer                                                                             |  |                        |      |   |      |   | 1     |      |  |   |      |   |  |      | 12   |   |  |   | 2    |  
|                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|Total loans charged-off                                                              |  | $                      | 31    |   |      | $ | 32    |      |  | $ | 0     |   |  | $    | 74   |   |  | $ | 372  |  
|                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|Recoveries:                                                                          |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|Commercial                                                                           |  | $                      | 1     |   |      | $ |      |      |  | $ | 3     |   |  | $    | 8    |   |  | $ |     |  
|Real estate - residential                                                            |  |                        |      |   |      |   |      |      |  |   |      |   |  |      |     |   |  |   |     |  
|Real estate - commercial                                                             |  |                        |      |   |      |   |      |      |  |   |      |   |  |      |     |   |  |   |     |  
|Real estate - construction                                                           |  |                        |      |   |      |   |      |      |  |   |      |   |  |      |     |   |  |   |     |  
|Consumer                                                                             |  |                        |      |   |      |   |      |      |  |   | 1     |   |  |      |     |   |  |   |     |  
|                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|Total recoveries                                                                     |  | $                      | 1     |   |      | $ | 0     |      |  | $ | 2     |   |  | $    | 8    |   |  | $ | 0    |  
|                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|Net charge-offs                                                                      |  |                        | 30    |   |      |   | 32    |      |  |   | (2    | ) |  |      | 66   |   |  |   | 372  |  
|Additions charge to operations                                                       |  |                        | 404   |   |      |   | 408   |      |  |   | 346   |   |  |      | 250  |   |  |   | 320  |  
|                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|Balance, end of year                                                                 |  | $                      | 1,834 |   |      | $ | 1,460 |      |  | $ | 1,084 |   |  | $    | 736  |   |  | $ | 552  |  
|                                                                                     |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |      |   |  |   |      |  
|Ratio of allowance for loan losses to loans outstanding at end of period             |  |                        | 0.91  | % |      |   | 0.94  | %    |  |   | 1.00  | % |  |      | 1.01 | % |  |   | 1.01 | %
|Ratio of new charge-offs (recoveries) to average loans outstanding during the period |  |                        | 0.02  | % |      |   | 0.02  | %    |  |   | 0.00  | % |  |      | 0.11 | % |  |   | 0.86 | %

The allowance for loan losses at December 31, 2006 was $1.8 million compared to $1.5 million
at December 31, 2005. The allowance for loan losses was 0.91% of total loans outstanding at December 31, 2006 compared to 0.94% at December 31, 2005. The provision for loan losses was $404 thousand for 2006 compared to $408 thousand
for 2005. The provision for loan losses decreased slightly due to the decrease in net new loans during 2006 as compared to 2005. Net charge-offs were $31 thousand and $32 thousand for the years ended December 31, 2006 and 2005, respectively.

The allowance for loan losses at December 31, 2005 was $1.5 million, a $376 thousand increase over December 31, 2004. The
provision for loan losses increased from $346 thousand for the year ended December 31, 2004 to $408 thousand for the comparable period in 2005. Net new loans increased from $36.0 million in 2004 to $47.4 million in 2005 resulting in an increase
in the provision for loan losses. Net recoveries during 2004 were $2 thousand.

The following table shows the balance and percentage of our
allowance for loan losses allocated to each major category of loan:



|     |  |                        |     |                                         |                      |   |                       |                         |                                         |  |          |                       |  |                                         |     |  |                       |   |                                         |   |   |  |      |  
|---- |  | ---------------------- | --- | --------------------------------------- | -------------------- | - | --------------------- | ----------------------- | --------------------------------------- |  | -------- | --------------------- |  | --------------------------------------- | --- |  | --------------------- | - | --------------------------------------- | - | - |  | ---- | -
|     |  | Commercial &Industrial |     |                                         | Real Estate Mortgage |   |                       | Real EstateConstruction |                                         |  | Consumer |                      
|     |  | Allowancefor LoanLoss  |     | Percent ofLoans inCategoryto TotalLoans |                      |   | Allowancefor LoanLoss |                         | Percent ofLoans inCategoryto TotalLoans |  |          | Allowancefor LoanLoss |  | Percent ofLoans inCategoryto TotalLoans |     |  | Allowancefor LoanLoss |   | Percent ofLoans inCategoryto TotalLoans |  
|     |  | (Dollars in thousands) |    
|2006 |  | $                      | 762 |                                         | 11.22                | % |                       | $                       | 633                                     |  | 62.09    | %                     |  | $                                       | 437 |  | 25.51                 | % |                                         | $ | 2 |  | 1.18 | %
|2005 |  |                        | 556 |                                         | 9.82                 |   |                       |                         | 627                                     |  | 68.88    |                       |  |                                         | 275 |  | 20.15                 |   |                                         |   | 2 |  | 1.15 |  
|2004 |  |                        | 453 |                                         | 12.56                |   |                       |                         | 469                                     |  | 72.88    |                       |  |                                         | 160 |  | 13.18                 |   |                                         |   | 2 |  | 1.38 |  
|2003 |  |                        | 389 |                                         | 19.65                |   |                       |                         | 280                                     |  | 69.54    |                       |  |                                         | 65  |  | 8.49                  |   |                                         |   | 2 |  | 2.32 |  
|2002 |  |                        | 290 |                                         | 22.31                |   |                       |                         | 200                                     |  | 65.66    |                       |  |                                         | 60  |  | 7.28                  |   |                                         |   | 2 |  | 4.75 |  



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We have allocated the allowance according to the amount deemed reasonably necessary to provide for the
possibility of losses being incurred within each of the above categories of loans. The allocation as shown in the table should not be interpreted as an indication that loan losses in future years will occur in the same proportions that they may have
in prior years or that the allocation indicates future loan loss trends.

Securities

We account for securities under FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities. We have designated
all securities in the investment portfolio as available for sale as further defined in Note 3 to our consolidated financial statements. Available for sale securities are required to be carried on the financial statements at fair value.
The unrealized gains or losses, net of deferred income taxes, are reflected in stockholders equity.

The market value of the
available for sale securities at December 31, 2006 and 2005 was $38.7 million and $39.6 million, respectively. The unrealized loss on the available for sale securities was $312 thousand at December 31, 2006 as compared to $424 thousand at
December 31, 2005. The net market value loss at December 31, 2006 is reflective of the continued rise in market interest rates.

The carrying values of securities available for sale at the dates indicated were as follows:



|                                            |  |                        |        |      |   |        |  |   |       
|------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------ |  | - | ------
|                                            |  | December 31,          
|                                            |  | 2006                   |        | 2005 |   | 2004  
|                                            |  | (Dollars in thousands)
|U.S. Government securities                  |  | $                      | 26,705 |      | $ | 24,687 |  | $ | 9,481 
|Mortgage-backed securities                  |  |                        | 11,011 |      |   | 13,944 |  |   | 19,577
|State and political subdivision obligations |  |                        | 1,015  |      |   | 990    |  |   |      
|                                            |  |                        |        |      |   |        |  |   |       
|                                            |  | $                      | 38,731 |      | $ | 39,621 |  | $ | 29,058
|                                            |  |                        |        |      |   |        |  |   |       

Restricted equity securities consist primarily of Federal Reserve Bank stock, FHLB stock and
Community Bankers Bank Stock. An increase in stock of the Federal Reserve Bank was due to increased capital at the subsidiary bank. Increased in stock in the FHLB was due to increased borrowing from the FHLB during 2006.



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Deposits

The following table is a summary of average deposits and average rates paid on those deposits:

Average Deposits and Rates Paid



|                             |  |                        |         |             |      |   |        |      |             |  |      |        |  |             |         |  |      |  
|---------------------------- |  | ---------------------- | ------- | ----------- | ---- | - | ------ | ---- | ----------- |  | ---- | ------ |  | ----------- | ------- |  | ---- | -
|                             |  | 2006                   |         |             | 2005 |   |        | 2004 |            
|                             |  | Amount                 |         | AverageRate |      |   | Amount |      | AverageRate |  |      | Amount |  | AverageRate |        
|                             |  | (Dollars in thousands) |        
|Noninterest-bearing deposits |  |                        |         |             |      |   |        |      |             |  |      |        |  |             |         |  |      |  
|Demand deposits              |  | $                      | 27,783  |             | 0.00 | % |        | $    | 29,168      |  | 0.00 | %      |  | $           | 19,923  |  | 0.00 | %
|Interest-bearing deposits    |  |                        |         |             |      |   |        |      |             |  |      |        |  |             |         |  |      |  
|Interest checking            |  |                        | 6,666   |             | 0.51 |   |        |      | 6,288       |  | 0.49 |        |  |             | 5,246   |  | 0.59 |  
|Savings                      |  |                        | 734     |             | 1.50 |   |        |      | 1,039       |  | 0.87 |        |  |             | 1,091   |  | 0.92 |  
|Money market accounts        |  |                        | 24,829  |             | 3.04 |   |        |      | 23,612      |  | 1.70 |        |  |             | 26,959  |  | 1.33 |  
|Certificates of deposit      |  |                        | 119,838 |             | 4.59 |   |        |      | 90,336      |  | 3.50 |        |  |             | 61,735  |  | 3.02 |  
|                             |  |                        |         |             |      |   |        |      |             |  |      |        |  |             |         |  |      |  
|                             |  | $                      | 179,850 |             |      |   |        | $    | 150,443     |  |      |        |  | $           | 114,954 |  |      |  
|                             |  |                        |         |             |      |   |        |      |             |  |      |        |  |             |         |  |      |  

Deposits increased $31.9 million to $194.3 million at December 31, 2006 from $162.4 million
at December 31, 2005. Average deposits for the year ended December 31, 2006 increased 19.6% or $29.4 million compared to average deposits for the year ended December 31, 2005. Average certificates of deposits grew $29.5 million for
the year ended December 31, 2006 to $119.8 million.

During 2006, a new money market product was developed resulting in an increase in
money market accounts of $8.5 million to $32.1 million at December 31, 2006. Certificate of deposits increased $21.0 million or 21.0% to $121.5 million at December 31, 2006 from $100.5 million at December 31, 2005. Non-interest
bearing accounts increased $2.5 million or 8.1% to $32.9 million at year end 2006 as compared to $30.4 million at year end 2005.

The
following table is a summary of the maturity distribution of certificates of deposit equal to or greater than $100,000 as of December 31, 2006:



|                     |  |                        |       |                      |   |             |  |       |        |                         |   |        |  |      |  
|-------------------- |  | ---------------------- | ----- | -------------------- | - | ----------- |  | ----- | ------ | ----------------------- | - | ------ |  | ---- | -
|                     |  | WithinThreeMonths      |       | Three toTwelveMonths |   | OverOneYear |  | Total |        | Percentof TotalDeposits |  
|                     |  | (Dollars in thousands) |      
|At December 31, 2006 |  | $                      | 8,929 |                      | $ | 32,775      |  | $     | 11,173 |                         | $ | 52,877 |  | 27.2 | %



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Borrowings

At December 31, 2006 and 2005, our borrowings and the related weighted average interest rate were as follows:



|                                |  |                        |        |                      |      |   |        |      |                      |  |      |        |  |                      |        |  |      |  
|------------------------------- |  | ---------------------- | ------ | -------------------- | ---- | - | ------ | ---- | -------------------- |  | ---- | ------ |  | -------------------- | ------ |  | ---- | -
|                                |  | 2006                   |        |                      | 2005 |   |        | 2004 |                     
|                                |  | Amount                 |        | Weighted-AverageRate |      |   | Amount |      | Weighted-AverageRate |  |      | Amount |  | Weighted-AverageRate |       
|                                |  | (Dollars in thousands) |       
|Federal funds purchased         |  | $                      | 6,026  |                      | 5.35 | % |        | $    | 10,270               |  | 2.43 | %      |  | $                    | 1,609  |  | 4.20 | %
|Repurchase agreements           |  |                        | 1,667  |                      | 4.83 |   |        |      | 680                  |  | 3.51 |        |  |                      | 519    |  | 1.80 |  
|Federal Home Loan Bank advances |  |                        | 30,000 |                      | 3.94 |   |        |      | 18,000               |  | 3.75 |        |  |                      | 8,000  |  | 1.42 |  
|Subordinated debt               |  |                        | 7,155  |                      | 6.86 |   |        |      | 2,000                |  | 6.33 |        |  |                      |       |  | 0.00 |  
|                                |  |                        |        |                      |      |   |        |      |                      |  |      |        |  |                      |        |  |      |  
|                                |  | $                      | 44,848 |                      |      |   |        | $    | 30,950               |  |      |        |  | $                    | 10,128 |  |      |  
|                                |  |                        |        |                      |      |   |        |      |                      |  |      |        |  |                      |        |  |      |  

Federal funds purchased have been a source of funds for the bank. We have various lines of credit
available from certain of our correspondent banks in the aggregate amount of $18.0 million. These lines of credit, which bear interest at prevailing market rates, permit us to borrow funds in the overnight market, and are renewable annually.
Advances from the FHLB constitute convertible advances with contractual maturities of five to ten years. All convertible advances have a call option remaining of two to three and one half years. Two advances of $5 million each are callable in
January 2007 and February 2007. It is anticipated that both advances will be called.

Interest Rate Sensitivity

The most important element of asset/liability management is the monitoring of our sensitivity to interest rate movements. Our income stream is subject to
risk resulting from interest rate fluctuations to the extent there is a difference between the amount of our interest earning assets and the amount of interest bearing liabilities that are prepaid, mature or repriced in specific periods. Our goal is
to maximize net interest income within acceptable levels of risk to changes in interest rates. We seek to meet this goal by influencing the maturity and re-pricing characteristics of the various lending and deposit taking lines of business and by
managing discretionary balance sheet asset and liability portfolios.

We monitor interest rate levels on a daily basis. The following
reports and/or tools are used to assess the current interest rate environment and its impact on our earnings and liquidity: monthly and year to date net interest margin and spread calculations, monthly and year to date balance sheet and income
statements versus budget, quarterly net portfolio value analysis, a weekly survey of rates offered by other local competitive institutions and GAP analysis (matching maturities or repricing dates of interest sensitive assets to those of interest
sensitive liabilities by periods) and a Risk Manager model used to measure earnings at risk and economic value of equity at risk.

The data
in the following table reflects repricing or expected maturities of various assets and liabilities. The gap analysis represents the difference between interest-sensitive assets and liabilities in a specific time interval. Interest sensitivity gap
analysis presents a position that existed at one particular point in time, and assumes that assets and liabilities with similar repricing characteristics will reprice at the same time and to the same degree.



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|                                                                    |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|------------------------------------------------------------------- |  | ---------------------- | ------ | - | ----------------- | -- | ------- | ----------- |  | - | ----------- | - |  | ----------- | ------- | - | ----- | - | ------- | - |  | - | -------
|                                                                    |  | December 31, 2006     
|                                                                    |  | 1 to 90Days            |        |   | 90 Days to 1 Year |    |         | 1 to 3Years |  |   | 3 to 5Years |   |  | Over 5Years |         |   | Total
|                                                                    |  | (Dollars in thousands)
|Earning Assets:                                                     |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Loans, net of deferred loan fees                                    |  | $                      | 81,889 |   |                   | $  | 18,283  |             |  | $ | 30,467      |   |  | $           | 50,329  |   |       | $ | 20,617  |   |  | $ | 201,585
|Investment securities                                               |  |                        | 8,429  |   |                   |    | 1,589   |             |  |   | 15,587      |   |  |             | 6,796   |   |       |   | 11,800  |   |  |   | 44,201 
|                                                                    |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Total rate sensitive assets                                         |  | $                      | 90,318 |   |                   | $  | 19,872  |             |  | $ | 46,054      |   |  | $           | 57,125  |   |       | $ | 32,417  |   |  | $ | 245,786
|                                                                    |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Cumulative totals                                                   |  | $                      | 90,318 |   |                   | $  | 110,190 |             |  | $ | 156,244     |   |  | $           | 213,369 |   |       | $ | 245,786 |   |  |   |        
|                                                                    |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Interest-Bearing Liabilities:                                       |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Interest checking                                                   |  | $                      |       |   |                   | $  |        |             |  | $ | 3,200       |   |  | $           | 3,200   |   |       | $ |        |   |  | $ | 6,400  
|Money market accounts                                               |  |                        | 16,111 |   |                   |    | 5,000   |             |  |   | 4,000       |   |  |             | 5,279   |   |       |   | 1,752   |   |  |   | 32,142 
|Savings deposits                                                    |  |                        |       |   |                   |    |        |             |  |   | 1,382       |   |  |             |        |   |       |   |        |   |  |   | 1,382  
|Certificates of deposit                                             |  |                        | 28,648 |   |                   |    | 69,548  |             |  |   | 15,689      |   |  |             | 7,615   |   |       |   |        |   |  |   | 121,500
|FHLB Borrowing and Subordinated Debt                                |  |                        | 15,155 |   |                   |    |        |             |  |   | 15,000      |   |  |             | 7,000   |   |       |   |        |   |  |   | 37,155 
|Other liabilities                                                   |  |                        | 7,693  |   |                   |    |        |             |  |   |            |   |  |             |        |   |       |   |        |   |  |   | 7,693  
|                                                                    |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Total rate sensitive liabilities                                    |  | $                      | 67,607 |   |                   | $  | 74,548  |             |  | $ | 39,271      |   |  | $           | 23,094  |   |       | $ | 1,752   |   |  | $ | 206,272
|                                                                    |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Cumulative totals                                                   |  | $                      | 67,607 |   |                   | $  | 142,155 |             |  | $ | 181,426     |   |  | $           | 204,520 |   |       | $ | 206,272 |   |  |   |        
|                                                                    |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Interest sensitivity gap                                            |  | $                      | 22,711 |   |                   | ($ | 54,676  | )           |  | $ | 6,783       |   |  | $           | 34,031  |   |       | $ | 30,665  |   |  |   |        
|                                                                    |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Cumulative interest sensitivity gap                                 |  | $                      | 22,711 |   |                   | $  | (31,965 | )           |  | $ | (25,182     | ) |  | $           | 8,849   |   |       | $ | 39,514  |   |  |   |        
|                                                                    |  |                        |        |   |                   |    |         |             |  |   |             |   |  |             |         |   |       |   |         |   |  |   |        
|Cumulative interest sensitive gap as a percentage of earning assets |  |                        | 9.2    | % |                   |    | -13.0   | %           |  |   | -10.2       | % |  |             | 3.6     | % |       |   | 16.1    | % |  |   |        

Capital Resources and Dividends

We have an ongoing strategic objective of maintaining a capital base that supports the pursuit of profitable business opportunities, provides resources to
absorb risk inherent in our activities and meets or exceeds all regulatory requirements.

The Federal Reserve Board has established minimum
regulatory capital standards for bank holding companies and state member banks. The regulatory capital standards categorize assets and off-balance sheet items into four categories that weight balance sheet assets according to risk, requiring more
capital for holding higher risk assets. At December 31, 2006 and 2005, our Tier 1 leverage ratio (Tier 1 capital to average total assets) was 8.80% and 6.98% respectively. Tier 1 risk based capital ratios at December 31, 2006 and 2005 were
10.39% and 9.13% respectively. Total risk based capital to risk weighted assets at December 31, 2006 and 2005 were 12.28% and 11.36%. Our capital structure exceeds regulatory guidelines established for well capitalized institutions, which
affords us the opportunity to take advantage of business opportunities while ensuring that we have the resources to protect against risk inherent in our business.



|                          |  |                        |         |   |      |   |         |  
|------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                          |  | December 31,           |        
|                          |  | 2006                   |         |   | 2005 |  
|                          |  | (Dollars in thousands) |        
|Tier 1 capital:           |  |                        |         |   |      |   |         |  
|Common stock              |  | $                      | 7,184   |   |      | $ | 7,184   |  
|Retained earnings         |  |                        | 8,786   |   |      |   | 6,938   |  
|                          |  |                        |         |   |      |   |         |  
|Total equity              |  |                        | 15,970  |   |      |   | 14,122  |  
|Trust preferred debt      |  |                        | 5,155   |   |      |   |        |  
|                          |  |                        |         |   |      |   |         |  
|Total Tier 1 capital      |  |                        | 21,125  |   |      |   | 14,122  |  
|                          |  |                        |         |   |      |   |         |  
|Tier 2 capital:           |  |                        |         |   |      |   |         |  
|Allowance for loan losses |  |                        | 1,834   |   |      |   | 1,460   |  
|Subordinated debt         |  |                        | 2,000   |   |      |   | 2,000   |  
|                          |  |                        |         |   |      |   |         |  
|Total Tier 2 capital      |  |                        | 3,834   |   |      |   | 3,460   |  
|                          |  |                        |         |   |      |   |         |  
|Total risk-based capital  |  | $                      | 24,959  |   |      | $ | 17,582  |  
|                          |  |                        |         |   |      |   |         |  
|Risk-weighted assets      |  | $                      | 203,258 |   |      | $ | 154,715 |  
|Capital ratios:           |  |                        |         |   |      |   |         |  
|Tier 1 leverage           |  |                        | 8.80    | % |      |   | 6.98    | %
|Tier 1 risk based capital |  |                        | 10.39   |   |      |   | 9.13    |  
|Total risk based capital  |  |                        | 12.28   |   |      |   | 11.36   |  



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Liquidity

Liquidity represents an institutions ability to meet present and future financial obligations through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. Liquid assets
include cash, interest-bearing deposits with banks, federal funds sold, short-term investments, securities classified as available for sale as well as loans and securities maturing within one year. As a result of our management of liquid assets and
the ability to generate liquidity through liability funding, management believes we maintain overall liquidity sufficient to satisfy our depositors requirements and meet our clients credit needs.

We also maintain additional sources of liquidity through a variety of borrowing arrangements. The bank maintains federal funds lines with a large
regional money-center banking institution and a local community bankers bank. These available lines currently total approximately $11.5 million, of which $6.0 was outstanding at December 31, 2006. In addition, securities have been pledged
to the local community bankers bank allowing for an additional line of approximately $6.8 million.

We have a credit line at the
Federal Home Loan Bank of Atlanta in the amount of approximately $42.0 million which may be utilized for short and/or long-term borrowing. Advances from the Federal Home Loan Bank totaled $30.0 million at December 31, 2006.

At December 31, 2006, cash, federal funds sold, short-term investments, securities available for pledge or sale were 17.3% of total deposits. At
December 31, 2005, cash, federal funds sold, short-term investments, securities available for pledge or sale were 23.4% of total deposits.



|ITEM 7. | FINANCIAL STATEMENTS
|------- | --------------------

The following 2006
Financial Statements of First Capital Bancorp, Inc. are included after the signature pages to this Report on Form 10-KSB/A:



|                                                                                                                        |  |    
|----------------------------------------------------------------------------------------------------------------------- |  | ---
|Report of Independent Registered Public Accounting Firm                                                                 |  | F-1
|Consolidated Statements of Financial Condition December 31, 2006 and 2005                                               |  | F-2
|Consolidated Statements of Income for the Years Ended December 31, 2006 and 2005                                        |  | F-3
|Consolidated Statements of Stockholders Equity and Comprehensive Income for the Years Ended December 31, 2006 and 2005 |  | F-4
|Consolidated Statements of Cash Flows for the Years ended December 31, 2006 and 2005                                    |  | F-5
|Notes to Consolidated Financial Statements                                                                              |  | F-6



39



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##### Table of Contents

|ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTINGAND FINANCIAL DISCLOSURE
|------- | -----------------------------------------------------------------------------------

There were no changes in or disagreements with accountants on accounting and financial disclosure during the last fiscal year.



|ITEM 8A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

As of the end of
the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Companys Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the
Companys periodic filings with the Securities and Exchange Commission.

The Companys management is also responsible for
establishing and maintaining adequate internal control over financial reporting. There were no changes in the Companys internal control over financial reporting identified in connection with the evaluation of it that occurred during the
Companys last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting.



|ITEM 8B. | OTHER INFORMATION
|-------- | -----------------

None

PART III



|ITEM 9. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
|------- | --------------------------------------------------

Our Board of Directors is divided into three classes (I, II and III). Directors are elected on a staggered basis for three-year terms, with approximately one-third of the directors having terms expiring each year. Four
(4) directors in Class II are to be elected at the 2007 Annual Meeting of Stockholders to serve for a term of three years expiring at the Annual Meeting of Stockholders to be held in 2010.

With respect to the election of directors, a majority of the outstanding shares of Company Common Stock entitled to vote on the matter present at the
meeting in person or by proxy will constitute a quorum. Shares for which the holder has elected to abstain or withhold the proxys authority to vote (including broker nonvotes) will count toward a quorum.

Proxies received from stockholders will be voted in favor of the nominees unless stockholders specify otherwise on their proxies. Although the Board of
Directors does not expect that any of the persons named will be unable to serve as a director, should any of them be unable to accept nomination or election, it is intended that shares represented by any proxies will be voted by the proxy holders
for such other person or persons as may be designated by the present Board of Directors.

Certain information concerning the four
(4) nominees for election at the 2007 meeting, and the directors who will continue in office after the meeting, is set forth below. Unless otherwise specified, each director has held his or her current position for at least five years.



40



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##### Table of Contents

NOMINEES FOR ELECTION AS DIRECTORS

FOR THREE-YEAR TERMS EXPIRING IN 2010



|                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name, Age and Year First Became Director      |  | Principal Occupation                                                                                                                                                                                                                                                                                                                                                                                                                                 
|P.C. Amin, 61 Director since 1998             |  | President of Shamin, Inc., Hospitality One, Inc. and Innsbrook Hospitality; Mr. Amin also is the developer and owner of several hotels in the Richmond area, including Comfort Suites, Holiday Inn
Express, Hampton Inn, Travelodge, Ramada Inn and Comfort Inn.                                                                                                                                                                                     
|                                              | 
|Yancey S. Jones, 56 Director since 1998       |  | President/CEO of TSRC, Inc. (formerly, The Supply Room Companies, Inc.), a Richmond based office supply Company.                                                                                                                                                                                                                                                                                                                                     
|                                              | 
|Joseph C. Stiles, Jr., 85 Director since
1998 |  | Owner of Luck Motor Company, Ashland, Virginia, a long-standing Chevrolet dealership. Mr. Stiles was appointed a member of the Board of Directors of Hanover National Bank in 1965 and served in
that capacity until the merger with First Virginia Bank-Colonial in 1986, and remained on the Board of First Virginia Bank-Colonial until December, 1995.                                                                                           
|                                              | 
|Richard W. Wright, 72 Director since
1998     |  | Current Chairman of James River Group, a property and casualty insurance holding company. Mr. Wright is also the former Chairman of Peoples Security Insurance Company and the former Chairman and
Director of Front Royal, Inc., a property casualty insurance holding company headquartered in Morrisville, North Carolina. Mr. Wright is also the President and Director of the Wright Group, an insurance consulting company located in
Richmond.

DIRECTORS WHOSE TERMS EXPIRE IN 2008

CLASS I



|                                                            |  |                                                                                                                                                                                                                                                                                                           
|----------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name, Age and Year First Became Director                    |  | Principal Occupation                                                                                                                                                                                                                                                                                      
|Gerald Blake, 53 Director since 1998                        |  | Owner and President of Select Office Systems, a Richmond
based company that sells and markets office equipment.                                                                                                                                                                                           
|                                                            | 
|Dr. Kamlesh N. Dave, M.D., F.A.C.C., 51 Director since 2005 |  | Cardiologist and Former Chief of Staff of the Southside Regional Medical Center. Dr. Dave serves as co-chair and trustee to the Cultural Center of India and serves as Vice Chairman of the
Commonwealth Health Research Board. He is also a member of the Workman Compensation Medical Board of Virginia.
|                                                            | 
|Grant S. Grayson, 54 Director since 1998                    |  | Partner in the law firm of Cantor Arkema, P.C., located in Richmond, Virginia.                                                                                                                                                                                                                            
|                                                            | 
|Gerald H. Yospin, 66 Director since 1998                    |  | Partner in Triangle Development Group of Richmond, Mr. Yospin is a former Senior associate and member of the Retail Brokerage Department of Grubb & Ellis/Harrison & Bates, Inc., located
in Richmond.                                                                                                    



41



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##### Table of Contents

DIRECTORS WHOSE TERMS EXPIRE IN 2009

CLASS III



|                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                             | 
|Jay M. Weinberg, 74 Director since 1998      |  | Chairman, Emeritus of the law firm of Hirschler Fleischer, located in Richmond, Virginia. Prior to assuming this position in 2004, Mr. Weinberg had been a partner in such firm for over 40 years.                                                                                                                                                                                                                                                                                
|                                             | 
|Robert G. Watts, Jr., 46 Director since
2001 |  | President and CEO of First Capital Bancorp, Inc. and First Capital Bank. From June 1, 1999 until taking a position with the bank on December 20, 2000, Mr. Watts was Senior Vice President and
Senior Lending Officer of The Bank of Richmond.                                                                                                                                                                                                                                    
|                                             | 
|Debra L. Richardson, 44 Director since
2003  |  | President and owner of Business and Healthcare Solutions, PLC which specializes in financial strategies for businesses and healthcare providers. Prior to forming Business and Healthcare
Solutions in 2005, Ms. Richardson served as President of MMR Holdings, a supplier of health care imaging services, for two years. Prior to that she worked for 15 years at the accounting firm of Keiter Stephens, the last 10 years as the partner in
charge of the Healthcare practice

No director is related to any other director or executive officer by blood, marriage or adoption.

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

Information with respect to Robert G. Watts, Jr., our President and Chief Executive Officer, is set forth above. Information with respect to certain other executive officers is as follows:

K. Bradley Hildebrandt, Executive Vice President and Senior Credit Officer of the Bank:Prior to joining us, Mr. Hildebrandt served as Senior
Vice President, Commerce Bank (now SouthTrust), Richmond, Virginia.

William W. Ranson, CPA, Senior Vice President and Chief Financial
Officer of the Bank and Treasurer and Chief Financial Officer of First Capital Bancorp, Inc.:Prior to joining us, Mr. Ranson was a Senior Manager with Cherry, Bekaert and Holland, L.L.P., the Banks independent registered public
accounting firm. While employed by Cherry, Bekaert and Holland, Mr. Ranson did not participate in any attest functions related to the Bank. Prior to joining Cherry, Bekaert and Holland, Mr. Ranson served as Executive Vice President and
Chief Financial Officer of CommonWealth Bank, (now First Community Bank), Richmond, Virginia.

Katherine K. Wagner, Senior Vice
President and Chief Operating Officer of the Bank:Prior to joining us, Ms. Wagner served as Senior Vice President  Commercial Lending at Citizens & Commerce Bank, Richmond, Virginia.



42



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##### Table of Contents

Section 16(a) of the Exchange Act requires the directors, executive officers, and persons who own
more than ten percent (10%) of a registered class of our equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors, and greater than ten percent (10%) stockholders are required by Commission regulation to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of reports furnished to us, we believe that all filings applicable to its executive
officers, directors and ten percent (10%) beneficial owners complied with applicable regulations during the last fiscal year.

Audit Committee

Our Board of Directors has established a standing Audit Committee currently composed of four directors who
are not officers of the Company and are independent as defined by the listing standards of NASDAQ. The members of the Audit Committee are: Jay M. Weinberg, Yancey S. Jones, and Debra L. Richardson. During the 2006 fiscal year, the Audit Committee
held three meetings.

The Audit Committee charter requires that the committee include at least one member who qualifies as an audit
committee financial expert, meaning that such person must (i) have an understanding of GAAP and its application to financial statements; (ii) have experience in preparing, auditing, analyzing or evaluating financial statements with issues
similar to those applicable to the Companys financial statements; (iii) understand audit committee functions; and (iv) understand internal controls and procedures for financial reporting. Debra L. Richardson is the member of the
Audit Committee who meets these requirements. As noted above, Ms. Richardson is independent as defined by the listing standards of NASDAQ.

In 2006, we engaged the accounting firm of Cherry Bekaert & Holland, L.L.P. to audit our financial statements for 2006.



|ITEM 10. | EXECUTIVE COMPENSATION.
|-------- | -----------------------

The following table
sets forth a summary of certain information concerning the cash compensation paid by us for services rendered in all capacities during the year ended December 31, 2006, to the President and Chief Executive Officer (the Companys Principal
Executive Officer) and certain other executive officers who had total compensation during the 2006 fiscal year which exceeded $100,000. The following table does not include certain prerequisites that do not exceed $10,000 each:

Summary Compensation Table



|                                                                                         |  |                     |  |              |         |                           |   |        |       |  |   |   |  |   |   |  |   |       |  |   |        
|---------------------------------------------------------------------------------------- |  | ------------------- |  | ------------ | ------- | ------------------------- | - | ------ | ----- |  | - | - |  | - | - |  | - | ----- |  | - | -------
|                                                                                         |  | Annual Compensation |  | OptionAwards |         | All OtherCompensation (1) |   | Total 
|Name and Principal Position                                                              |  | Year                |  | Salary       |         | Bonus                     |   |        | Other |  |   |  
|Robert G. Watts, Jr. President and Chief Executive Officer (Principal Executive Officer) |  | 2006                |  | $            | 145,438 |                           | $ |       | (2)   |  | $ |  |  | $ |  |  | $ | 8,900 |  | $ | 154,338
|K. Bradley Hildebrandt Executive Vice President and Senior Credit Officer                |  | 2006                |  | $            | 109,725 |                           | $ | 11,500 |       |  | $ |  |  | $ |  |  | $ | 4,937 |  | $ | 126,162
|Katherine K. Wagner, Chief Operating Officer and Senior Vice President                   |  | 2006                |  | $            | 107,232 |                           | $ | 5,700  |       |  | $ |  |  | $ |  |  | $ | 4,824 |  | $ | 117,756



|(1) | Includes company match benefits received by these individuals in connection with contributions made
under the Contributory Thrift Plan, which is our 401(k) plan.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|(2) | Mr. Watts declined the cash
bonus (approximately $17,500) offered to him for 2006.
|--- | ----------------------------------------------------------------------------------



|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|-------- | -----------------------------------------------------------------------------------------------

The following table shows the shares of our Common Stock beneficially owned by (i) each director or nominee for director, (ii) each executive
officer of the Company named in the Summary Compensation Table, and (iii) all of our directors and executive officers as a group, as of December 31, 2006. As of June 7, 2007, based on information available to us, no person (including
any group as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) beneficially owned 5% or more of the Companys Common Stock, except as set forth below.
Beneficial ownership includes shares, if any, held in the name of the spouse, minor children or other relatives of a director or executive officer living in such persons home, as well as shares, if any, held in the name of another person under
an arrangement whereby the director or executive officer can vest title in himself at once or at some future time.



|                                                                 |  |                     |  |                     |  
|---------------------------------------------------------------- |  | ------------------- |  | ------------------- | -
|Name                                                             |  | Number ofShares (1) |  | Percent ofClass (%) |  
|P.C. Amin                                                        |  | 122,004             |  | 6.8                 | %
|Gerald Blake                                                     |  | 32,287              |  | 1.8                 |  
|Dr. Kamlesh N. Dave                                              |  | 81,036              |  | 4.5                 |  
|Grant S. Grayson                                                 |  | 37,838              |  | 2.1                 |  
|K. Bradley Hildebrandt                                           |  | 13,500              |  | *                   |  
|Yancey S. Jones                                                  |  | 36,975              |  | 2.1                 |  
|Debra L. Richardson                                              |  | 7,650               |  | *                   |  
|Joseph C. Stiles, Jr.                                            |  | 33,100              |  | 1.8                 |  
|Katherine K. Wagner                                              |  | 7,500               |  | *                   |  
|Robert G. Watts, Jr.                                             |  | 35,775              |  | 2.0                 |  
|Jay M. Weinberg                                                  |  | 43,842              |  | 2.4                 |  
|Richard W. Wright                                                |  | 108,375             |  | 6.0                 |  
|Gerald Yospin                                                    |  | 29,962              |  | 1.7                 |  
|                                                                 |  |                     |  |                     |  
|Current directors and executive officers as a group (20 persons) |  | 632,520             |  | 32.1                | %
|                                                                 |  |                     |  |                     |  



|(1) | Amounts reflect shares of common stock issuable upon the exercise of stock options exercisable within 60 days of June 7, 2007, as follows: Mr. Amin 9,225 shares;
Mr. Blake 10,725 shares; Dr. Dave 3,000 shares; Mr. Grayson 18,225 shares; Mr. Hildebrandt 12,000 shares; Mr. Jones 6,975 shares; Ms. Richardson 3,000 shares; Mr. Stiles 10,725 shares; Ms. Wagner 7,500 shares;
Mr. Watts 25,725 shares; Mr. Weinberg 6,975 shares; Mr. Wright 15,225 shares; Mr. Yospin 8,475 shares.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|* | Ownership interest less than 1%.
|- | --------------------------------

Stock Option Plan

On March 15, 2000 the Board of Directors of the First Capital Bank (the Bank) adopted the First Capital Bank 2000
Stock Option Plan (the Plan), which was approved by the stockholders of the Bank at the annual meeting of stockholders held on May 24, 2000. The Plan originally made available up to 77,000 shares of Common Stock for the granting of
stock options to employees, directors, consultants and other



44



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##### Table of Contents

persons who have provided services to the Bank in the form of incentive stock options (employees only) and non-qualified stock options (collectively,
Options). On March 19, 2003, the Board of Directors of the Bank approved an amendment to the Plan increasing the number of shares reserved for issuance upon exercise of options to be granted under the Plan by 52,170 shares. The
amendment was approved by the stockholders of the Bank at the annual meeting held on May 22, 2003, as a result of which the Plan now made up to 129,170 shares available for issuance upon the exercise of options granted under the Plan. On
February 16, 2005, the Board of Directors of the Bank approved an additional amendment to the Plan increasing the number of shares reserved for issuance upon exercise of options to be granted under the Plan by 26,486 shares. The amendment was
approved by the stockholders of the Bank at the annual meeting held on May 18, 2005, as a result of which the Plan now makes up to 233,484 shares available for issuance upon the exercise of options granted under the Plan (after adjustment for
the 3 for 2 stock that was effective December 28, 2005).

The Plan was adopted and approved as the First Capital Bancorp, Inc. 2000
Stock Option Plan in connection with the consummation of the Share Exchange on September 8, 2006. In connection therewith, any and all options thereunder were automatically converted into options to acquire shares of stock in us. Unless sooner
terminated, the Plan shall continue in effect for a period of ten years from the adoption of the Plan by the Board.

The Plan is
administered by the Board of Directors, or a Committee thereof, which has the power to determine the persons to whom Options are to be granted. In administering the Plan, the Board of Directors or the Committee, as applicable, has the authority to
determine the terms and conditions upon which Options may be made and exercised, to construe and interpret the Plan and to make all determinations and actions with respect to the Plan. Pursuant to the provisions of the Plan, the exercise price of
incentive stock options awarded in the future shall not be less than the fair market value of the Banks Common Stock on the date the Option is granted. The exercise price of all other options awarded in the future will not be less than 85% of
the fair market value of the stock on the date the option is granted. Furthermore, all Options may be subject to various vesting requirements that must first be satisfied in order for the Options to be exercisable. All Options to be granted to our
executive officers and directors will be granted in accordance with Rule 16b-3 under the Exchange Act.

Option Grants

There were no individual grants of stock options made during the last fiscal year to any persons named in the Summary Compensation Table. However, on
January 17, 2007, Mr. Watts was granted an option to purchase 2,275 shares and Ms. Wagner was granted an option to purchase 1,500 shares. No stock options were granted during the last fiscal year to the Companys non-employee
directors.

Effective as of December 21, 2005, the Board of Directors of the Bank voted to accelerate the vesting of all outstanding
options under the Plan as a result of which all such outstanding options are now fully vested and exercisable. A total of 34,500 options received accelerated vesting, which included the following number of options held by the executive officers
named in the compensation table: Mr. Watts  5,075 options having a value of $34,000; Mr. Hildebrandt  1,750 options having a market value of $13,122; and Ms. Wagner  7,500 options having a market value of $35,450.

Year End Option Values

The following table sets forth information concerning the total number of securities underlying unexercised options held at the end of the fiscal year by the persons named in the Summary Compensation Table. No stock awards have been made to
any of these individuals.



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Outstanding Option Awards At Fiscal Year End



|                       |  |                                                                      |  |                                                                |  |                |         |               |                  |       |   |       |      |  |              |  
|---------------------- |  | -------------------------------------------------------------------- |  | -------------------------------------------------------------- |  | -------------- | ------- | ------------- | ---------------- | ----- | - | ----- | ---- |  | ------------ | -
|                       |  | Number of SecuritiesUnderlying UnexercisedOptions at Fiscal Year End |  | Value of UnexercisedIn-the-Money Options atFiscal Year End (1) |  | OptionExercise |         |               | OptionExpiration |      
|Name                   |  | Exercisable                                                          |  | Unexercisable                                                  |  | Exercisable    |         | Unexercisable |                  | Price |   |       | Date | 
|Robert G. Watts, Jr.   |  | 25,725                                                               |  |                                                               |  | $              | 250,474 |               |                 |       |   | *     |      |  | *            |  
|K. Bradley Hildebrandt |  | 12,000                                                               |  |                                                               |  |                | 130,625 |               |                 |       |   | *     | *    |  | *            | *
|Katherine K. Wagner    |  | 7,500                                                                |  |                                                               |  |                | 45,125  |               |                 |       | $ | 11.93 |      |  | May 20, 2015 |  



|(1) | The value of in-the-money options at fiscal year end was calculated by determining the difference
between the price of a share of common stock and the exercise price of the options.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|* | (i) 8,250 shares with an exercise price of $5.32 expiring on December 31, 2010; (ii) 2,250 shares with an exercise price of $7.00 expiring on December 11, 2012;
(iii) 225 shares with an exercise price of $7.33 expiring on March 19, 2013; and (iv) 15,000 shares with an exercise price of $10.00 expiring on December 17, 2013.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|** | (i) 6,750 shares with an exercise price of $5.43 expiring date of January 18, 2012; (ii) 1,500 shares with an exercise price of $7.07 expiring February 13, 2013;
and (iii) 3,750 shares and an exercise price of $10.00 expiring December 17, 2013.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management is not aware of any
arrangements including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change of control of the Company.



|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
|-------- | -----------------------------------------------

There are no legal proceedings to which any director, executive officer or shareholder, or any affiliate thereof, is a party that would be material and adverse to the Company.

During fiscal 2006, we extended credit to certain of our Directors. All such loans were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the Company, and did not involve more than the normal risk of collectibility or present
other unfavorable features. The Company is prohibited from making loans, with the exception of residential mortgages and educational loans, to executive officers in excess of certain dollar limits fixed by federal banking laws. The balance of loans
to Company directors and executive officers totaled $7.5 million at December 31, 2006, or 47.8% of the Companys equity as of such date.

There are no existing or proposed transactions between us and our Directors outside of those contemplated in the ordinary course of its banking business. In accordance with the foregoing, we currently employ the law firm of Cantor Arkema,
P.C. with which Grant S. Grayson, the Chairman of our Board of Directors, is affiliated, as our counsel.



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##### Table of Contents

|ITEM 13. | EXHIBITS.
|-------- | ---------

The following exhibits are filed
as part of this Form 10-KSB/A.



|     |  |                                                                                                                                        
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|No.  |  | Description                                                                                                                            
|2.1  |  | Agreement and Plan of Reorganization dated as of September 5, 2006, by and between First Capital Bancorp, inc. and First Capital Bank.1
|     | 
|3.1  |  | Articles of Incorporation of First Capital Bancorp, Inc.2                                                                              
|     | 
|3.2  |  | Amended and Restated Bylaws of First Capital Bancorp, Inc.3                                                                            
|     | 
|4.1  |  | Specimen Common Stock Certificate of First Capital Bancorp, Inc.4                                                                      
|     | 
|10.1 |  | 2000 Stock Option Plan (formerly First Capital Bank 2000 Stock Option Plan.5                                                           
|     | 
|10.2 |  | Employment Agreement dated December 20, 2000, between First Capital Bank and Robert G. Watts, Jr.5                                     
|     | 
|10.3 |  | Change in Control Agreement dated April 15, 2004 between First Capital Bank and William W. Ranson5                                     
|     | 
|21.1 |  | List of Subsidiaries.4                                                                                                                 
|     | 
|31.1 |  | Certification of Robert G. Watts, Jr., Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated March 21, 2007                 
|     | 
|31.2 |  | Certification of William W. Ranson, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated March 21, 2007                    
|     | 
|32.1 |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                 
|     | 
|99.1 |  | A Bankers Professional Code of Ethics as adopted by the Bank                                                                          
|     | 
|99.2 |  | Code of Conduct and Conflict of Interest as adopted by the Bank                                                                        

---

|1 | Expressly incorporated herein by reference from the Registrants Current Report on Form 8-K12g-3
filed with the Securities and Exchange Commission on September 12, 2006. The Exhibit numbers set forth above correspond to the Exhibit numbers in the Form 8-K12g-3.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2 | Expressly incorporated herein by reference from the Registrants report on Form 10-QSB filed with
the Securities and Exchange Commission on November 13, 2006. The Exhibit number set forth above corresponds to the Exhibit number in the Form 10-QSB.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3 | Expressly incorporated herein by reference from the Registrants Current Report on Form 8-K filed
with the Securities and Exchange Commission on May 22, 2007. The Exhibit numbers set forth above correspond to the Exhibit numbers in the Form 8-K.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4 | Expressly incorporated herein by reference from the Registrants Registration Statement on Form
SB-2 filed with the Securities and Exchange Commission on March 16, 2007. The Exhibit number set forth above corresponds to the Exhibit number in the Form SB-2.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5 | Expressly incorporated herein by reference from the Registrants Amendment No. 1 to
Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on April 26, 2007. The Exhibit number set forth above corresponds to the Exhibit number in the Amendment No. 1.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|I
TEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|--------- | --------------------------------------

2006 AUDIT COMMITTEE REPORT

The Audit Committee of our Board of Directors has adopted a formal written charter,which was included as an appendix to the proxy statement for the Banks 2005 Annual Meeting of Stockholders. In connection with the performance of its responsibilities, the Audit Committee has:



| |  |  | Reviewed and discussed the audited financial statements of FCB with management;
| | - |  | -------------------------------------------------------------------------------



| |  |  | Discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (required communication by external
auditors with audit committees);
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Received from the independent auditors disclosures regarding the auditors, independence required by Independence Standards Board Standard No. 1 and discussed
with the auditors the auditors independence; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Recommended, based on the review and discussion noted above, to the Board of Directors that the audited financial statements be included in the Companys
Annual Report on Form 10-KSB for the year ended December 31, 2006 for filing with the Securities and Exchange Commission.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



AUDIT COMMITTEEJay M. Weinberg Yancey S. Jones Debra C. Richardson




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Audit Fees

The following table sets forth the professional fees paid to Cherry Bekaert & Holland, L.L.P by us for professional services rendered for the calendar years 2006 and 2005:

FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



|               |  |      |        |      |   |       
|-------------- |  | ---- | ------ | ---- | - | ------
|               |  | 2006 |        | 2005
|Audit Fees (1) |  | $    | 41,000 |      | $ | 33,000
|Tax Fees (2)   |  |      | 4,000  |      |   | 3,550 
|               |  |      |        |      |   |       
|Total Fees     |  | $    | 45,000 |      | $ | 36,550
|               |  |      |        |      |   |       



|(1) | These are fees paid for professional services rendered for the audit of our annual financial statements and for the reviews of the financial statements included in our quarterly
reports on Form 10-QSB.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | These are fees paid on professional services rendered for the preparation of our tax returns.
|--- | ---------------------------------------------------------------------------------------------

Financial Information Systems Design and Implementation Fees and All Other Fees

No fees for
professional services were billed to us by Cherry, Bekaert & Holland during the fiscal year ended December 31, 2006, except for the fees described above. The Audit Committee pre-approved the audit and tax services.

Exhibits to Form 10-KSB/A

A copy of any of the
exhibits to this Report on Form 10-KSB/A will be furnished without charge to the stockholders as of the record date, upon written request to William W. Ranson, Senior Vice President & Chief Financial Officer, 4222 Cox Road, Suite 200, Glen
Allen, Virginia 23060



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##### Table of Contents

SIGNATURE AND POWER OF ATTORNEY

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                    |  |  |  |                             |  |                          |  |                                      
|------------------- |  |  |  | --------------------------- |  | ------------------------ |  | -------------------------------------
|                    |  |  |  | FIRST CAPITAL BANCORP, INC.
|                    |  |  | 
|Date: June 13, 2007 |  |  |  | By:                         |  | /s/ Robert G. Watts, Jr.
|                    |  |  |  |                             |  |                          |  | Robert G. Watts, Jr.                 
|                    |  |  |  |                             |  |                          |  | President and Chief Executive Officer

Pursuant to the requirements of Securities Exchange Act of 1934, as amended, this report has been
signed below by the following persons on behalf of the registrant, in the capacities and on the dates indicated.



|                    |  |  |  |                                                                                 
|------------------- |  |  |  | --------------------------------------------------------------------------------
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Robert G. Watts, Jr.                                                        
|                    |  |  |  | Robert G. Watts, Jr. President, Chief Executive
Officer and Director            
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ William W. Ranson                                                           
|                    |  |  |  | William W. Ranson Treasurer and CFO (Principal
Accounting and Financial Officer)
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ P. C. Amin*                                                                 
|                    |  |  |  | P. C. Amin, Director                                                            
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Gerald Blake*                                                               
|                    |  |  |  | Gerald Blake, Director                                                          
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Grant S. Grayson*                                                           
|                    |  |  |  | Grant S. Grayson, Director                                                      



50



---

##### Table of Contents

|                    |  |  |  |                                
|------------------- |  |  |  | -------------------------------
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Yancey S. Jones*           
|                    |  |  |  | Yancey S. Jones, Director      
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Jay M. Weinberg*           
|                    |  |  |  | Jay M. Weinberg, Director      
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Joseph C. Stiles, Jr.*     
|                    |  |  |  | Joseph C. Stiles, Jr., Director
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Richard W. Wright*         
|                    |  |  |  | Richard W. Wright, Director    
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Gerald H. Yospin*          
|                    |  |  |  | Gerald H. Yospin, Director     
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Debra L. Richardson*       
|                    |  |  |  | Debra L. Richardson, Director  
|                    |  | 
|Date: June 13, 2007 |  |  |  | /s/ Kamlesh N. Dave, Director  
|                    |  |  |  | Kamlesh N. Dave, Director      



|      |  |                                   
|----- |  | ----------------------------------
|      | 
|* By: |  | /s/ William W. Ranson             
|      |  | William W. Ranson Attorney-in-fact



51



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##### Table of Contents

FIRST CAPITAL BANCORP, INC. AND SUBSIDIARY

Consolidated Financial Statements

For the Years Ended

December 31, 2006 and 2005



---

##### Table of Contents

FIRST CAPITAL BANCORP, INC. AND SUBSIDIARY

Contents



|                                                                                                                        |  |     
|----------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                        |  | Page
|                                                                                                                        | 
|Report of Independent Registered Public Accounting Firm                                                                 |  | F-1 
|                                                                                                                        | 
|Consolidated Statements of Financial Condition December 31, 2006 and 2005                                               |  | F-2 
|                                                                                                                        | 
|Consolidated Statements of Income For the Years Ended December 31, 2006 and 2005                                        |  | F-3 
|                                                                                                                        | 
|Consolidated Statements of Stockholders Equity and Comprehensive Income For the Years Ended December 31, 2006 and 2005 |  | F-4 
|                                                                                                                        | 
|Consolidated Statements of Cash Flows For the Years Ended December 31, 2006 and 2005                                    |  | F-5 
|                                                                                                                        | 
|Notes to Consolidated Financial Statements                                                                              |  | F-6 



---

##### Table of Contents

LOGO

Report of Independent Registered Public Accounting Firm

The Board of Directors

and Stockholders

First Capital Bancorp, Inc.

Richmond, Virginia

We have audited the accompanying consolidated statements
of financial condition of First Capital Bancorp, Inc. and Subsidiary (the Company) as of December 31, 2006 and 2005, and the related consolidated statements of income, stockholders equity and comprehensive income, and cash
flows for the years then ended. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial condition of First Capital
Bancorp, Inc. and Subsidiary, as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of
America.

LOGO

Richmond, Virginia

March 5,
2007



F-1



---

##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Consolidated Statements of Financial Condition

December 31, 2006 and 2005



|                                                                                                                                    |  |      |             |   |      |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                    |  | 2006 |             |   | 2005 |  
|ASSETS                                                                                                                              |  |      |             |   |      |   |             |  
|Cash and due from banks                                                                                                             |  | $    | 7,034,047   |   |      | $ | 7,185,823   |  
|Short term debt securities                                                                                                          |  |      | 4,997,979   |   |      |   | 2,995,800   |  
|                                                                                                                                    |  |      |             |   |      |   |             |  
|Total cash and cash equivalents                                                                                                     |  |      | 12,032,026  |   |      |   | 10,181,623  |  
|Investment securities:                                                                                                              |  |      |             |   |      |   |             |  
|Available for sale, at fair value                                                                                                   |  |      | 38,730,975  |   |      |   | 39,621,418  |  
|Restricted, at cost                                                                                                                 |  |      | 2,389,139   |   |      |   | 1,595,267   |  
|Loans, net of allowance for losses                                                                                                  |  |      | 199,751,483 |   |      |   | 154,601,518 |  
|Premises and equipment, net                                                                                                         |  |      | 2,119,379   |   |      |   | 1,982,314   |  
|Accrued interest receivable                                                                                                         |  |      | 1,425,364   |   |      |   | 1,100,887   |  
|Deferred tax asset                                                                                                                  |  |      | 308,503     |   |      |   | 272,216     |  
|Other assets                                                                                                                        |  |      | 483,776     |   |      |   | 173,565     |  
|                                                                                                                                    |  |      |             |   |      |   |             |  
|Total assets                                                                                                                        |  | $    | 257,240,645 |   |      | $ | 209,528,808 |  
|                                                                                                                                    |  |      |             |   |      |   |             |  
|LIABILITIES                                                                                                                         |  |      |             |   |      |   |             |  
|Deposits                                                                                                                            |  |      |             |   |      |   |             |  
|Noninterest-bearing                                                                                                                 |  | $    | 32,878,408  |   |      | $ | 30,425,438  |  
|Interest-bearing                                                                                                                    |  |      | 161,424,027 |   |      |   | 131,962,114 |  
|                                                                                                                                    |  |      |             |   |      |   |             |  
|Total deposits                                                                                                                      |  |      | 194,302,435 |   |      |   | 162,387,552 |  
|Accrued expenses and other liabilities                                                                                              |  |      | 2,431,031   |   |      |   | 2,221,451   |  
|Securities sold under repurchase agreements                                                                                         |  |      | 1,667,064   |   |      |   | 680,191     |  
|Federal funds purchased                                                                                                             |  |      | 6,026,000   |   |      |   | 10,270,000  |  
|Subordinated debt                                                                                                                   |  |      | 7,155,000   |   |      |   | 2,000,000   |  
|Federal Home Loan Bank advances                                                                                                     |  |      | 30,000,000  |   |      |   | 18,000,000  |  
|                                                                                                                                    |  |      |             |   |      |   |             |  
|Total liabilities                                                                                                                   |  |      | 241,581,530 |   |      |   | 195,559,194 |  
|                                                                                                                                    |  |      |             |   |      |   |             |  
|STOCKHOLDERS EQUITY                                                                                                                |  |      |             |   |      |   |             |  
|Common stock, $4.00 par value (authorized 5,000,000 shares; shares issued and outstanding, 1,796,021 at December 31, 2006 and
2005) |  |      | 7,184,084   |   |      |   | 7,184,084   |  
|Additional paid-in capital                                                                                                          |  |      | 6,010,352   |   |      |   | 6,004,655   |  
|Retained earnings                                                                                                                   |  |      | 2,776,277   |   |      |   | 1,205,058   |  
|Accumulated other comprehensive (loss), net of tax                                                                                  |  |      | (311,598    | ) |      |   | (424,183    | )
|                                                                                                                                    |  |      |             |   |      |   |             |  
|Total stockholders equity                                                                                                          |  |      | 15,659,115  |   |      |   | 13,969,614  |  
|                                                                                                                                    |  |      |             |   |      |   |             |  
|Total liabilities and stockholders equity                                                                                          |  | $    | 257,240,645 |   |      | $ | 209,528,808 |  
|                                                                                                                                    |  |      |             |   |      |   |             |  

See notes to consolidated financial statements.



F-2



---

##### Table of Contents

First Capital Bancorp Inc. and Subsidiary

Consolidated Statements of Income

Years Ended December 31, 2006 and 2005



|                                                  |  |      |            |      |   |            |  
|------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                                                  |  | 2006 |            | 2005 |  
|Interest income                                   |  |      |            |      |   |            |  
|Loans                                             |  | $    | 13,262,936 |      | $ | 8,970,672  |  
|Investments:                                      |  |      |            |      |   |            |  
|Taxable interest income                           |  |      | 1,646,071  |      |   | 1,371,836  |  
|Tax exempt interest income                        |  |      | 41,055     |      |   | 34,027     |  
|Dividends                                         |  |      | 115,054    |      |   | 57,405     |  
|Federal funds sold                                |  |      | 198,313    |      |   | 98,875     |  
|                                                  |  |      |            |      |   |            |  
|Total interest income                             |  |      | 15,263,429 |      |   | 10,532,815 |  
|Interest expense                                  |  |      |            |      |   |            |  
|Deposits                                          |  |      | 6,303,839  |      |   | 3,605,096  |  
|FHLB advances                                     |  |      | 1,020,170  |      |   | 414,838    |  
|Federal funds purchased                           |  |      | 93,959     |      |   | 88,782     |  
|Subordinated debt and other borrowed money        |  |      | 273,250    |      |   | 24,847     |  
|                                                  |  |      |            |      |   |            |  
|Total interest expense                            |  |      | 7,691,218  |      |   | 4,133,563  |  
|Net interest income                               |  |      | 7,572,211  |      |   | 6,399,252  |  
|Provision for loan loss                           |  |      | 404,300    |      |   | 407,874    |  
|                                                  |  |      |            |      |   |            |  
|Net interest income after provision for loan loss |  |      | 7,167,911  |      |   | 5,991,378  |  
|Noninterest income                                |  |      |            |      |   |            |  
|Loss on sale of securities                        |  |      |           |      |   | (11,660    | )
|Fees on deposits                                  |  |      | 166,392    |      |   | 94,765     |  
|Fees on mortgage loans                            |  |      | 34,135     |      |   |           |  
|Other                                             |  |      | 264,300    |      |   | 189,044    |  
|                                                  |  |      |            |      |   |            |  
|Total noninterest income                          |  |      | 464,827    |      |   | 272,149    |  
|                                                  |  |      |            |      |   |            |  
|Noninterest expenses                              |  |      |            |      |   |            |  
|Salaries and employee benefits                    |  |      | 2,606,344  |      |   | 2,015,972  |  
|Occupancy expense                                 |  |      | 601,684    |      |   | 596,120    |  
|Data processing                                   |  |      | 427,599    |      |   | 423,288    |  
|Professional services                             |  |      | 147,890    |      |   | 86,346     |  
|Virginia capital stock tax                        |  |      | 184,425    |      |   | 128,472    |  
|Depreciation                                      |  |      | 323,020    |      |   | 236,654    |  
|Other expenses                                    |  |      | 969,557    |      |   | 806,548    |  
|                                                  |  |      |            |      |   |            |  
|Total noninterest expense                         |  |      | 5,260,519  |      |   | 4,293,400  |  
|Net income before provision for income taxes      |  |      | 2,372,219  |      |   | 1,970,127  |  
|Income tax expense                                |  |      | 801,000    |      |   | 663,800    |  
|                                                  |  |      |            |      |   |            |  
|Net income                                        |  | $    | 1,571,219  |      | $ | 1,306,327  |  
|                                                  |  |      |            |      |   |            |  
|Basic income per share                            |  | $    | 0.87       |      | $ | 0.73       |  
|                                                  |  |      |            |      |   |            |  
|Diluted income per share                          |  | $    | 0.83       |      | $ | 0.70       |  
|                                                  |  |      |            |      |   |            |  

See notes to consolidated financial statements.



F-3



---

##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Consolidated Statements of Stockholders Equity and
Comprehensive Income

Years Ended December 31, 2006 and 2005



|                                                                            |  |             |           |                          |   |            |                                      |  |   |                                     |   |  |                          |           |   |  |   |            |  
|--------------------------------------------------------------------------- |  | ----------- | --------- | ------------------------ | - | ---------- | ------------------------------------ |  | - | ----------------------------------- | - |  | ------------------------ | --------- | - |  | - | ---------- | -
|                                                                            |  | CommonStock |           | AdditionalPaid-inCapital |   |            | RetainedEarnings(AccumulatedDeficit) |  |   | AccumulatedOtherComprehensive(Loss) |   |  | TotalStockholdersEquity |          
|Balance at December 31, 2004                                                |  | $           | 4,789,420 |                          | $ | 8,399,319  |                                      |  | $ | (101,269                            | ) |  | $                        | (97,185   | ) |  | $ | 12,990,285 |  
|Three-for-two stock split                                                   |  |             | 2,394,664 |                          |   | (2,394,664 | )                                    |  |   |                                    |   |  |                          |          |   |  |   |           |  
|Net income                                                                  |  |             |          |                          |   |           |                                      |  |   | 1,306,327                           |   |  |                          | 1,306,327 |   |  |   | 1,306,327  |  
|Other comprehensive loss                                                    |  |             |           |                          |   |            |                                      |  |   |                                     |   |  |                          |           |   |  |   |            |  
|Unrealized holding (losses) arising during period, (net of tax, ($172,418)) |  |             |          |                          |   |           |                                      |  |   |                                    |   |  |                          | (334,694  | ) |  |   | (334,694   | )
|Reclassification adjustment, (net of tax $ 3,964)                           |  |             |          |                          |   |           |                                      |  |   |                                    |   |  |                          | 7,696     |   |  |   | 7,696      |  
|                                                                            |  |             |           |                          |   |            |                                      |  |   |                                     |   |  |                          |           |   |  |   |            |  
|Total comprehensive income                                                  |  |             |           |                          |   |            |                                      |  |   |                                     |   |  | $                        | 979,329   |   |  |   |            |  
|                                                                            |  |             |           |                          |   |            |                                      |  |   |                                     |   |  |                          |           |   |  |   |            |  
|Balance at January 1, 2006                                                  |  | $           | 7,184,084 |                          | $ | 6,004,655  |                                      |  | $ | 1,205,058                           |   |  | $                        | (424,183  | ) |  | $ | 13,969,614 |  
|Net income                                                                  |  |             |          |                          |   |           |                                      |  |   | 1,571,219                           |   |  |                          | 1,571,219 |   |  |   | 1,571,219  |  
|Other comprehensive income                                                  |  |             |          |                          |   |           |                                      |  |   |                                    |   |  |                          |           |   |  |   |            |  
|Unrealized holding gains arising during period, (net of tax, $ 57,998)      |  |             |          |                          |   |           |                                      |  |   |                                    |   |  |                          | 112,585   |   |  |   | 112,585    |  
|                                                                            |  |             |           |                          |   |            |                                      |  |   |                                     |   |  |                          |           |   |  |   |            |  
|Total comprehensive income                                                  |  |             |           |                          |   |            |                                      |  |   |                                     |   |  | $                        | 1,683,804 |   |  |   |            |  
|                                                                            |  |             |           |                          |   |            |                                      |  |   |                                     |   |  |                          |           |   |  |   |            |  
|Stock based compensation expense                                            |  |             |          |                          |   | 5,697      |                                      |  |   |                                    |   |  |                          |          |   |  |   | 5,697      |  
|                                                                            |  |             |           |                          |   |            |                                      |  |   |                                     |   |  |                          |           |   |  |   |            |  
|Balance at December 31, 2006                                                |  | $           | 7,184,084 |                          | $ | 6,010,352  |                                      |  | $ | 2,776,277                           |   |  | $                        | (311,598  | ) |  | $ | 15,659,115 |  
|                                                                            |  |             |           |                          |   |            |                                      |  |   |                                     |   |  |                          |           |   |  |   |            |  

See notes to consolidated financial statements.



F-4



---

##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2006 and 2005



|                                                                                 |  |      |             |   |      |   |             |  
|-------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                 |  | 2006 |             |   | 2005 |  
|Cash flows from operating activities                                             |  |      |             |   |      |   |             |  
|Net income                                                                       |  | $    | 1,571,219   |   |      | $ | 1,306,327   |  
|Adjustments to reconcile net income to net cash provided by operating activities |  |      |             |   |      |   |             |  
|Provision for loan losses                                                        |  |      | 404,300     |   |      |   | 407,874     |  
|Depreciation of premises and equipment                                           |  |      | 323,020     |   |      |   | 236,655     |  
|Deferred taxes                                                                   |  |      | (94,626     | ) |      |   | 55,341      |  
|Loss on disposal of equipment                                                    |  |      |            |   |      |   | 22,027      |  
|Loss (gain) on sale of available-for-sale securities                             |  |      |            |   |      |   | 11,660      |  
|Stock based compensation expense                                                 |  |      | 5,697       |   |      |   |            |  
|Reduction in equity in VBA Investment Services, Inc.                             |  |      | 1,900       |   |      |   | 4,187       |  
|Net amortization of bond premiums/discounts                                      |  |      | 31,587      |   |      |   | 93,102      |  
|(Increase) in other assets                                                       |  |      | (155,210    | ) |      |   | (60,409     | )
|Decrease (increase) in accrued interest receivable                               |  |      | (324,477    | ) |      |   | (531,679    | )
|Increase in accrued expenses and other liabilities                               |  |      | 209,580     |   |      |   | 1,350,350   |  
|                                                                                 |  |      |             |   |      |   |             |  
|Net cash provided by operating activities                                        |  |      | 1,972,990   |   |      |   | 2,895,435   |  
|                                                                                 |  |      |             |   |      |   |             |  
|Cash flows from investing activities                                             |  |      |             |   |      |   |             |  
|Purchases of securities available-for-sale                                       |  |      | (4,992,500  | ) |      |   | (28,025,712 | )
|Proceeds from maturities and calls of securities                                 |  |      | 3,040,000   |   |      |   | 10,486,109  |  
|Proceeds from sale of securities                                                 |  |      |            |   |      |   | 1,000,000   |  
|Proceeds from paydowns of securities available-for-sale                          |  |      | 2,981,939   |   |      |   | 5,376,717   |  
|Purchase of Federal Reserve Stock                                                |  |      | (141,000    | ) |      |   | (112,650    | )
|Purchase of FHLB Stock                                                           |  |      | (653,800    | ) |      |   | (525,200    | )
|Purchase securities in FCRV Statutory Trust 1                                    |  |      | (155,000    | ) |      |   |            |  
|Purchases of property and equipment                                              |  |      | (460,717    | ) |      |   | (1,057,937  | )
|Net increase in loans                                                            |  |      | (45,554,265 | ) |      |   | (47,395,883 | )
|                                                                                 |  |      |             |   |      |   |             |  
|Net cash used in investing activities                                            |  |      | (45,935,343 | ) |      |   | (60,254,556 | )
|                                                                                 |  |      |             |   |      |   |             |  
|Cash flows from financing activities                                             |  |      |             |   |      |   |             |  
|Net increase in demand, savings and money market accounts                        |  |      | 10,867,625  |   |      |   | 9,222,005   |  
|Net increase in certificates of deposit                                          |  |      | 21,047,258  |   |      |   | 24,507,926  |  
|Advances from FHLB                                                               |  |      | 12,000,000  |   |      |   | 10,000,000  |  
|Proceeds from issuance of subordinated debt                                      |  |      | 5,155,000   |   |      |   | 2,000,000   |  
|(Decrease) increase in Federal funds purchased                                   |  |      | (4,244,000  | ) |      |   | 8,661,000   |  
|Net increase in repurchase agreements                                            |  |      | 986,873     |   |      |   | 161,337     |  
|                                                                                 |  |      |             |   |      |   |             |  
|Net cash provided by financing activities                                        |  |      | 45,812,756  |   |      |   | 54,552,268  |  
|                                                                                 |  |      |             |   |      |   |             |  
|Net increase (decrease) in cash and cash equivalents                             |  |      | 1,850,403   |   |      |   | (2,806,853  | )
|Cash and cash equivalents, beginning of period                                   |  |      | 10,181,623  |   |      |   | 12,988,476  |  
|                                                                                 |  |      |             |   |      |   |             |  
|Cash and cash equivalents, end of period                                         |  | $    | 12,032,026  |   |      | $ | 10,181,623  |  
|                                                                                 |  |      |             |   |      |   |             |  
|Supplemental disclosure of cash flow information                                 |  |      |             |   |      |   |             |  
|Interest paid during the period                                                  |  | $    | 7,591,939   |   |      | $ | 4,051,518   |  
|                                                                                 |  |      |             |   |      |   |             |  
|Taxes paid during the period                                                     |  | $    | 1,304,910   |   |      | $ | 25,000      |  
|                                                                                 |  |      |             |   |      |   |             |  

See notes to consolidated financial statements.



F-5



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 1 
Summary of significant accounting policies

First Capital Bancorp, Inc. (the Company) is the holding company of and successor to First
Capital Bank (the Bank). Effective September 8 , 2006, the Company acquired all of the outstanding stock of the Bank in a statutory share exchange transaction (the Share Exchange) pursuant to an Agreement and Plan of
Reorganization dated September 5, 2006, between the Company and the Bank (the Agreement). The Agreement was approved by the shareholders of the Bank at the annual meeting of shareholders held on May 16, 2006. Under the terms of
the Agreement, the shares of the Banks common stock were exchanged for shares of the Companys common stock, par value $4.00 per share, on a one-for-one basis. As a result, the Bank became a wholly owned subsidiary of the Company, the
Company became the holding company of the Bank and the shareholders of the Bank became shareholders of the Company. All references to the Company in this annual report for dates or periods prior to September 8, 2006 are references to the Bank.

The Company conducts all of its business activities through the branch offices of its wholly owned subsidiary bank, First Capital Bank. The Company exists
primarily for the purpose of holding the stock of its subsidiary, the Bank, and such other subsidiaries as it may acquire or establish.

The accounting and
reporting policies of the Company and its wholly owned subsidiary conform to accounting principles generally accepted in the United States of America and general practices within the financial services industry. The following is a summary of the
more significant of these policies.

Consolidation  The consolidated financial statements include the accounts of First Capital Bancorp, Inc.
and its wholly owned subsidiary. All material intercompany balances and transactions have been eliminated.

Use of estimates - The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses. The estimation process may
include management obtaining independent appraisals for significant collateral properties, but the ultimate collectibility and recovery of carrying amounts are susceptible to changes in the local real estate market and other local economic
conditions.

Management uses available information to recognize losses on loans; future additions to the allowances may be necessary based on changes in
local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Banks allowance for losses on loans. Such agencies may require the Bank to recognize additions to the
allowances based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for losses on loans may change in the near term.

Cash equivalents - Cash equivalents include short-term highly liquid investments with maturities of three months or less at the date of purchase, including
Federal funds sold.

Securities - Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities, requires certain securities to be classified as held to maturity, trading or available-for-sale, according to managements intent and ability, at the time of purchase.



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 1  Summary of significant accounting policies (continued)



Debt securities that are purchased with the positive intent and ability to hold to maturity or call date are
classified as held-to-maturity. They are carried and reported at amortized cost. The amortization of premium and accretion of discount are recognized as adjustments to interest income using the interest method.

Debt and equity securities classified as available-for-sale are those needed to meet liquidity needs, provide portfolio restructuring, or to minimize interest rate
market risk. They are carried at their market value, with unrealized gains and losses excluded from income and reported net of tax effect as a separate component of stockholders equity.

Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities.

The Company as a matter of policy does not trade securities and therefore does not classify any of its securities as such. Realized gains and losses on the sale of
available-for-sale securities are determined using the specific-identification method and recognized on a trade-date basis. Premiums and discounts are recognized in interest income using the interest method over the period to maturity or to call
dates.

Due to the nature of, and restrictions placed upon the Companys common stock investment in the Federal Reserve Bank, Federal Home Loan Bank
of Atlanta and Community Bankers Bank, these securities have been classified as restricted equity securities and carried at cost. These restricted securities are not subject to the investment security classifications of SFAS 115.

Loans and allowances for loan losses - Loans are concentrated to borrowers in the Richmond metropolitan area and are stated at the amount of unpaid principal
reduced by an allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances on the principal amount outstanding. The accrual of interest on loans is discontinued when, in the opinion of management,
there is an indication that the borrower may be unable to meet payments as they become due. The Company defers loan origination and commitment fees, net of certain direct loan origination costs, and the net deferred fees are amortized into interest
income over the lives of the related loans as yield adjustments.

Loans that are 90 days or more past due are individually reviewed for ultimate
collectibility. Interest determined to be uncollectible on loans that are contractually past due is charged off, or an allowance is established based on managements periodic evaluation. The allowance is established by a charge to interest
income equal to all interest previously accrued, and income is subsequently recognized only to the extent that cash payments are received until, in managements judgment, the borrowers ability to make periodic interest and principal
payments is returned to normal, in which case the loan is returned to accrual status.

The allowance for loan losses is maintained at a level considered by
management to be adequate to absorb known and expected loan losses currently inherent in the loan portfolio. Managements assessment of the adequacy of the allowance is based upon type and volume of the loan portfolio, existing and anticipated
economic conditions, and other factors which deserve current recognition in estimating loan losses. The allowance is increased by a provision for loan losses, which is charged to expense, and reduced by charge-offs, net of recoveries.
Managements assessment of the adequacy of the allowance is subject to evaluation and adjustment by the Banks regulators.

The Company follows
Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan. A loan is defined as impaired when, based on current information and events, it is probable that the creditor will be unable to
collect all amounts of principal and interest due according to the



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 1  Summary of significant accounting policies (continued)



contractual terms of the loan agreement. Impairment is measured either by discounting the expected future cash flows at the loans effective interest
rate, based on the net realizable value of the collateral or based upon an observable market price where applicable.

Bank premises and equipment -
Company premises and equipment are stated at cost, less accumulated depreciation. Depreciation of Company premises and equipment is computed on the straight-line method over estimated useful lives of 10 to 50 years for premises and 5 to 20 years for
equipment, furniture and fixtures. Maintenance and repairs are charged to expense as incurred and major improvements are capitalized. Upon sale or retirement of depreciable properties, the cost and related accumulated depreciation are netted against
the proceeds and any resulting gain or loss is included in the determination of income.

Income taxes - Income taxes are accounted for under the
asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

Advertising costs -Advertising costs are
expensed in the period they are incurred and amounted to $81,830 and $62,670 for December 31, 2006 and 2005, respectively.

Stock Split 
In December 2005, the Bank approved and paid a three for two stock split effected in the form of a stock dividend. A total of 598,666 shares were issued as a result of the three for two stock split. All per share calculations have been restated to
reflect the split.

Stock Based Compensation In October 1995, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, which encouraged companies to recognize expense for stock-based awards based on their estimated value on the date of grant. SFAS 123
permitted companies to account for stock-based compensation based on provisions prescribed in SFAS 123, or based on the authoritative guidance in Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to
Employees. The Bank elected to account for its stock-based compensation in accordance with APB 25, which used the intrinsic value method; however, as required by SFAS 123, the Bank disclosed the pro forma impact on the financial statements
assuming the measurement provisions of SFAS 123 had been adopted.

In December 2004, the FASB issued Statement No. 123R, Shared-Based Payment
(SFAS 123R). SFAS 123R is a revision of SFAS No. 123, Accounting for Stock Based Compensation, supersedes APB Opinion No. 25 and amends FASB Statement No. 95, Statement of Cash Flows. SFAS 123R eliminates the
ability to account for share-based compensation using APB Opinion No. 25 and requires that all share-based payments to employees, including grants of employee stock options, to be recognized as compensation in the financial statements using a
fair value-based method. SFAS 123R is effective for nonpublic companies as of the beginning of the first annual reporting period that begins after December 15, 2005. SFAS 123R was adopted by the Bank beginning with the year ended
December 31, 2006.

SFAS 123R requires public companies to adopt the recognition requirements using either a modified prospective method
or a modified retrospective method. Under the modified prospective method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all
shared-based payments granted after that date, and based on the



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 1  Summary of significant accounting policies (continued)



requirements of SFAS 123R for all unvested awards granted prior to the effective date of SFAS 123R. Under the modified retrospective method, the
requirements are the same as under the modified prospective method, but also permits entities to restate financial statements of previous periods based on pro forma disclosures made in accordance with SFAS 123.

The Bank adopted SFAS 123R under the modified prospective method effective January 1, 2006. The Bank has begun to recognize compensation expense for
options that have been issued but not yet vested as of January 1, 2006. In addition, options issued after January 1, 2006 will increase compensation expense for 2006 and afterward. In December 2005, the Board of Directors approved the
acceleration of vesting of all unvested stock options outstanding prior to December 31, 2005. The Board agreed to accelerate the vesting of options in order to eliminate the recognition of compensation expense associated with the affected
unvested options under SFAS No. 123R. Management determined that the acceleration of vesting did not represent a renewal or extension which increased the life of the stock options as contemplated by FIN 44, Accounting for Certain
Transactions involving Stock Compensation and consequently did not result in a new measurement date for purposes of determining compensation expense. Options that were granted during 2006 resulted in additional compensation expense of $5,697.
Future levels of compensation cost recognized related to share-based compensation awards may be impacted by new awards and/or modification, repurchases and cancellations of existing awards after the adoption of this standard.

The following table illustrates the effect on net income and earnings per share if the Bank had applied the fair value recognition provisions of SFAS 123 to options
granted under the Banks stock option plan. For the purposes of this pro forma disclosure, the value of the options is estimated using a Black-Scholes option-pricing formula and amortized to expense over the options vesting periods.

Pro forma information regarding net income and earnings per share have been determined as if the Company had accounted for its employee stock options
using the fair value method, and is presented below for the year ended December 31, 2005.



|                                                                                                           |  |                            |           |  
|---------------------------------------------------------------------------------------------------------- |  | -------------------------- | --------- | -
|                                                                                                           |  | Year EndedDecember 31,2005 |          
|Net income, as reported                                                                                    |  | $                          | 1,306,327 |  
|Total stock-based compensation expense determined under fair value based method for all awards, net of tax |  |                            | (172,466  | )
|                                                                                                           |  |                            |           |  
|Pro forma net income                                                                                       |  | $                          | 1,133,861 |  
|                                                                                                           |  |                            |           |  
|Earnings per share:                                                                                        |  |                            |           |  
|Basic - as reported                                                                                        |  | $                          | 0.73      |  
|                                                                                                           |  |                            |           |  
|Basis - pro forma                                                                                          |  | $                          | 0.63      |  
|                                                                                                           |  |                            |           |  
|Diluted - as reported                                                                                      |  | $                          | 0.70      |  
|                                                                                                           |  |                            |           |  
|Diluted - pro forma                                                                                        |  | $                          | 0.61      |  
|                                                                                                           |  |                            |           |  



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 1  Summary of significant accounting policies (continued)



Comprehensive income - SFAS No. 130, Reporting Comprehensive Income, requires the Company to
classify items of Other Comprehensive Income (such as net unrealized gains (losses) on available-for-sale securities) by their nature in a financial statement and present the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the equity section of a statement of financial position. The Companys other comprehensive income consists of net income and net unrealized gains (losses) on securities
available-for-sale, net of income taxes.

Reclassification -Certain reclassifications have been made in the prior years financial statements
to conform to the 2006 presentation.

Note 2  Restrictions of cash

To comply with Federal Reserve regulations, the Company is required to maintain certain average cash reserve balances. The daily average cash reserve requirements were approximately $739,000 for the week including
December 31, 2006 and $763,000 for the week including December 31, 2005.

Note 3  Investment Securities

The amortized costs, gross unrealized gains, gross unrealized losses and fair values for securities are as follows: The amortized cost and estimated fair value of debt
securities at December 31, 2006, by contractual maturity, were as follows:



|                           |  |                   |            |                  |        |             |  |   |         |  |   |           
|-------------------------- |  | ----------------- | ---------- | ---------------- | ------ | ----------- |  | - | ------- |  | - | ----------
|                           |  | December 31, 2006
|                           |  | Amortized Costs   |            | Gross Unrealized |        | Fair Values
|                           |  |                   | Gains      |                  | Losses |            
|Available-for-sale         |  |                   |            |                  |        |             |  |   |         |  |   |           
|U.S. Government agencies   |  | $                 | 26,976,555 |                  | $      |            |  | $ | 271,398 |  | $ | 26,705,157
|Mortgage-backed securities |  |                   | 11,214,822 |                  |        | 5,501       |  |   | 209,881 |  |   | 11,010,442
|Tax-exempt municipal bonds |  |                   | 1,011,202  |                  |        | 4,790       |  |   | 616     |  |   | 1,015,376 
|                           |  |                   |            |                  |        |             |  |   |         |  |   |           
|                           |  | $                 | 39,202,579 |                  | $      | 10,291      |  | $ | 481,895 |  | $ | 38,730,975
|                           |  |                   |            |                  |        |             |  |   |         |  |   |           
|                           | 
|                           |  | December 31, 2005
|                           |  | Amortized Costs   |            | Gross Unrealized |        | Fair Values
|                           |  |                   | Gains      |                  | Losses |            
|Available-for-sale         |  |                   |            |                  |        |             |  |   |         |  |   |           
|U.S. Government agencies   |  | $                 | 25,005,206 |                  | $      |            |  | $ | 317,832 |  | $ | 24,687,374
|Mortgage-backed securities |  |                   | 14,241,552 |                  |        | 7,341       |  |   | 304,876 |  |   | 13,944,017
|Tax-exempt municipal bonds |  |                   | 1,013,572  |                  |        |            |  |   | 23,545  |  |   | 990,027   
|                           |  |                   |            |                  |        |             |  |   |         |  |   |           
|                           |  | $                 | 40,260,330 |                  | $      | 7,341       |  | $ | 646,253 |  | $ | 39,621,418
|                           |  |                   |            |                  |        |             |  |   |         |  |   |           



F-10



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 3  Investment Securities (continued)



The amortized cost, weighted average yield and estimated fair value of debt securities at December 31, 2006, by
contractual maturity, were as follows:



|                                       |  |               |            |                      |      |   |            |   |           
|-------------------------------------- |  | ------------- | ---------- | -------------------- | ---- | - | ---------- | - | ----------
|                                       |  | AmortizedCost |            | WeightedAverageYield |      |   | Fair Value
|Due in one year or less                |  | $             | 2,999,429  |                      | 4.22 | % |            | $ | 2,997,188 
|Due after one year through five years  |  |               | 18,578,620 |                      | 4.41 | % |            |   | 18,332,433
|Due after five years through ten years |  |               | 6,491,919  |                      | 5.72 | % |            |   | 6,447,344 
|Due after ten years                    |  |               | 11,132,611 |                      | 4.52 | % |            |   | 10,954,010
|                                       |  |               |            |                      |      |   |            |   |           
|                                       |  | $             | 39,202,579 |                      | 4.64 | % |            | $ | 38,730,975
|                                       |  |               |            |                      |      |   |            |   |           

The following table details unrealized losses and related fair values in the Companys available-for-sale
investment securities portfolios. All unrealized losses on investment securities are a result of volatility in the market during 2006 and 2005. At December 31, 2006 there were 27 out of 33 mortgage-backed securities with fair values less than
amortized cost. All unrealized losses are considered by management to be temporary given investment security credit ratings, the short duration of the unrealized losses and the intent to hold debt securities in an unrealized loss position greater
than twelve months for the foreseeable future. This information is aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2006 and 2005:



|                           |  |                     |            |                   |   |            |  |                  |            |  |   |        
|-------------------------- |  | ------------------- | ---------- | ----------------- | - | ---------- |  | ---------------- | ---------- |  | - | -------
|                           |  | December 31, 2006  
|                           |  | Less than 12 Months |            | 12 Months or More
|                           |  | Fair Value          |            | UnrealizedLosses  |   | Fair Value |  | UnrealizedLosses
|U.S. Government agencies   |  | $                   | 4,981,250  |                   | $ | 11,358     |  | $                | 21,723,907 |  | $ | 260,040
|Mortgage-backed securities |  |                     | 514,282    |                   |   | 801        |  |                  | 9,221,048  |  |   | 209,080
|Tax-exempt municipal bonds |  |                     | 174,386    |                   |   | 616        |  |                  |           |  |   |       
|                           |  |                     |            |                   |   |            |  |                  |            |  |   |        
|Total                      |  | $                   | 5,669,918  |                   | $ | 12,775     |  | $                | 30,944,955 |  | $ | 469,120
|                           |  |                     |            |                   |   |            |  |                  |            |  |   |        
|                           | 
|                           |  | December 31, 2005  
|                           |  | Less than 12 Months |            | 12 Months or More
|                           |  | Fair Value          |            | UnrealizedLosses  |   | Fair Value |  | UnrealizedLosses
|U.S. Government agencies   |  | $                   | 24,200,498 |                   | $ | 304,711    |  | $                | 486,875    |  | $ | 13,125 
|Mortgage-backed securities |  |                     | 3,969,372  |                   |   | 73,813     |  |                  | 8,635,950  |  |   | 231,059
|Tax-exempt municipal bonds |  |                     | 990,027    |                   |   | 23,545     |  |                  |           |  |   |       
|                           |  |                     |            |                   |   |            |  |                  |            |  |   |        
|Total                      |  | $                   | 29,159,897 |                   | $ | 402,069    |  | $                | 9,122,825  |  | $ | 244,184
|                           |  |                     |            |                   |   |            |  |                  |            |  |   |        



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 3  Investment Securities (concluded)



Restricted equity securities consist of Federal Reserve Bank stock in the amount of $530,700 and $389,700, Federal
Home Loan Bank of Atlanta stock in the amount of $1,769,100 and $1,115,300, and Community Bankers Bank stock in the amount of $62,750 and $62,750 as of December 31, 2006 and 2005. Restricted equity securities are carried at cost. The Federal
Home Loan Bank requires the Bank to maintain stock in an amount equal to 4.5% of outstanding borrowings and a specific percentage of the members total assets. The Federal Reserve Bank of Richmond requires the Company to maintain stock with a par
value equal to 3% of its outstanding capital.

The remainder of restricted securities consists of investments in Limited Liability Companies that provide
title insurance and investment services to the Banks customers. Investment in these Limited Liability Companies was $26,589 and $27,517 as of December 31, 2006 and 2005, respectively. These investments are carried using the equity method.

Securities with a market value of approximately $17,235,900 and $14,707,900 were pledged as collateral at December 31, 2006 and 2005, respectively to
secure purchases of federal funds, repurchase agreements, collateral for customers deposits and collateral to secure public deposits.

Note 4
 Loans

Major classifications of loans are as follows:



|                           |  |             |             |             |   |             |  
|-------------------------- |  | ----------- | ----------- | ----------- | - | ----------- | -
|                           |  | 2006 Amount |             | 2005 Amount |  
|Commercial                 |  | $           | 22,619,140  |             | $ | 15,312,466  |  
|Real estate - residential  |  |             | 62,165,461  |             |   | 57,707,508  |  
|Real estate - commercial   |  |             | 63,062,146  |             |   | 49,774,973  |  
|Real estate - construction |  |             | 51,449,972  |             |   | 31,441,791  |  
|Consumer                   |  |             | 2,387,287   |             |   | 1,798,580   |  
|                           |  |             |             |             |   |             |  
|Total loans                |  |             | 201,684,006 |             |   | 156,035,318 |  
|                           |  |             |             |             |   |             |  
|Less:                      |  |             |             |             |   |             |  
|Allowance for loan losses  |  |             | 1,833,604   |             |   | 1,460,230   |  
|Net deferred fees (costs)  |  |             | 98,919      |             |   | (26,430     | )
|                           |  |             |             |             |   |             |  
|Loans, net                 |  | $           | 199,751,483 |             | $ | 154,601,518 |  
|                           |  |             |             |             |   |             |  

A summary of the transactions affecting the allowance for loan losses follows:



|                           |  |      |           |   |      |   |           |  
|-------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                           |  | 2006 |           |   | 2005 |  
|Balance, beginning of year |  | $    | 1,460,230 |   |      | $ | 1,084,000 |  
|Provision for loan losses  |  |      | 404,300   |   |      |   | 407,874   |  
|Recoveries                 |  |      | 550       |   |      |   | 300       |  
|Charge-offs                |  |      | (31,476   | ) |      |   | (31,944   | )
|                           |  |      |           |   |      |   |           |  
|Balance, end of year       |  | $    | 1,833,604 |   |      | $ | 1,460,230 |  
|                           |  |      |           |   |      |   |           |  



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 4  Loans (concluded)



The following is a summary of information pertaining to impaired loans:



|                                                           |  |      |         |      |   |        
|---------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                           |  | 2006 |         | 2005
|Impaired loans with related allowance                      |  | $    | 862,360 |      | $ | 845,407
|                                                           |  |      |         |      |   |        
|Allowance on impaired loans                                |  | $    | 718,212 |      | $ | 537,335
|                                                           |  |      |         |      |   |        
|Average balance of impaired loans                          |  | $    | 873,810 |      | $ | 879,166
|                                                           |  |      |         |      |   |        
|Interest income recognized and collected on impaired loans |  | $    | 72,947  |      | $ | 59,804 
|                                                           |  |      |         |      |   |        

No additional funds are committed to be advanced in connection with impaired loans. Nonaccrual loans excluded from
impaired loan disclosure under SFAS 114 amounted to $120,000 and $1,795 at December 31, 2006 and 2005. If interest on these loans had been accrued such income would have approximated $7,090 and $39, respectively. Excluding the nonaccrual loan,
there were no loans past due 90 days or more at December 31, 2006 and 2005.

Note 5  Premises and equipment

Major classifications of these assets are summarized as follows:



|                              |  |      |           |      |   |          
|----------------------------- |  | ---- | --------- | ---- | - | ---------
|                              |  | 2006 |           | 2005
|Land                          |  | $    | 228,005   |      | $ | 228,005  
|Building                      |  |      | 719,434   |      |   | 719,434  
|Furniture and equipment       |  |      | 1,581,005 |      |   | 1,288,922
|Leasehold improvements        |  |      | 661,739   |      |   | 493,739  
|                              |  |      |           |      |   |          
|                              |  |      | 3,190,183 |      |   | 2,730,100
|Less acculumated depreciation |  |      | 1,070,804 |      |   | 747,786  
|                              |  |      |           |      |   |          
|Premises and equipment, net   |  | $    | 2,119,379 |      | $ | 1,982,314
|                              |  |      |           |      |   |          

Accumulated depreciation and amortization at December 31 was as follows:



|                        |  |      |           |      |   |        
|----------------------- |  | ---- | --------- | ---- | - | -------
|                        |  | 2006 |           | 2005
|Building                |  | $    | 23,059    |      | $ | 4,612  
|Furniture and equipment |  |      | 816,190   |      |   | 595,750
|Leasehold improvements  |  |      | 231,555   |      |   | 147,424
|                        |  |      |           |      |   |        
|                        |  | $    | 1,070,804 |      | $ | 747,786
|                        |  |      |           |      |   |        

Certain Company premises and equipment are leased under various operating leases. Rental expense was $507,391 and
$513,407 in 2006 and 2005, respectively.



F-13



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 5  Premises and equipment (concluded)



Future minimum payments, by year and in the aggregate for operating leases with initial or remaining terms in excess
of one year as of December 31, 2006 as follows:



|           |  |              |          
|---------- |  | ------------ | ---------
|           |  | BankPremises
|2007       |  |              | 543,397  
|2008       |  |              | 483,631  
|2009       |  |              | 176,244  
|2010       |  |              | 176,244  
|Thereafter |  |              | 213,970  
|           |  |              |          
|           |  | $            | 1,593,486
|           |  |              |          

Note 6 - Deposits

Major categories of deposits at December 31, 2006 and 2005 follow:



|                              |  |        |             |             |      |   |        |   |             |  |      |  
|----------------------------- |  | ------ | ----------- | ----------- | ---- | - | ------ | - | ----------- |  | ---- | -
|                              |  | 2006   |             |             | 2005 |  
|                              |  | Amount |             | AverageRate |      |   | Amount |   | AverageRate | 
|Noninterest-bearing deposits  |  |        |             |             |      |   |        |   |             |  |      |  
|Demand deposits               |  | $      | 32,878,408  |             | 0.00 | % |        | $ | 30,425,438  |  | 0.00 | %
|Interest-bearing deposits     |  |        |             |             |      |   |        |   |             |  |      |  
|Money market and NOW accounts |  |        | 39,923,566  |             | 2.56 | % |        |   | 31,508,911  |  | 1.66 | %
|Certificates of deposit       |  |        |             |             |      |   |        |   |             |  |      |  
|Less than $100,000            |  |        | 68,623,426  |             | 4.95 | % |        |   | 59,025,498  |  | 3.89 | %
|Greater than $100,000         |  |        | 52,877,035  |             | 5.10 | % |        |   | 41,427,705  |  | 4.06 | %
|                              |  |        |             |             |      |   |        |   |             |  |      |  
|                              |  | $      | 194,302,435 |             |      |   |        | $ | 162,387,552 |  |      |  
|                              |  |        |             |             |      |   |        |   |             |  |      |  

Time deposits will mature as follows:



|     |  |   |            
|---- |  | - | -----------
|2007 |  | $ | 98,196,057 
|2008 |  |   | 8,756,718  
|2009 |  |   | 6,932,532  
|2010 |  |   | 2,297,887  
|2011 |  |   | 5,317,267  
|     |  |   |            
|     |  | $ | 121,500,461
|     |  |   |            

The aggregate amount of deposits exceeding $100,000 was $96,841,976 and $73,806,423 at December 31, 2006 and
2005, respectively.

In the normal course of business, the Company has received deposits from directors and executive officers. At December 31, 2006
and 2005, deposits from directors and executive officers were approximately $11.9 million



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 6  Deposits (concluded)



and $6.6 million. All such deposits were received in the ordinary course of business on substantially the same terms and conditions, including interest
rates, as those prevailing at the same time for comparable transactions with unrelated persons.

Note 7  FHLB advances, securities sold under
repurchase agreements and federal funds purchased

The Company uses both short-term and long-term borrowings to supplement deposits when they are
available at a lower overall cost to the Company or they can be invested at a positive rate of return.

As a member of the Federal Home Loan Bank of
Atlanta, the Company is required to own capital stock in the FHLB and is authorized to apply for advances from the FHLB. Each FHLB credit program has its own interest rate, which may be fixed or variable, and range of maturities. The FHLB advances
are secured by the pledge of FHLB stock and a blanket lien on qualified 1 to 4 family residential real estate loans and a blanket lien on qualified commercial mortgages.

Advances from the FHLB at December 31, 2006 consist of $5.0 million at 3.17% with a contractual maturity of January 14, 2015 with a January 16, 2007 call provision, $5.0 million at 3.71% with a
contractual maturity of June 24, 2015 with a June 24, 2010 one time call provision, $5.0 million at 3.95% with a contractual maturity of April 14, 2015 with a April 14, 2008 call provision, $5.0 million at 4.27% with a
contractual maturity of January 27, 2016 with a January 27, 2009 call provision, $5.0 million at 4.02% with a contractual maturity of February 16, 2016 with a February 16, 2007 call provision and $5.0 million at 4.50% with a
contractual maturity of December 1, 2011 with a December 2, 2008 call provision.

Aggregate annual maturities of FHLB advances (based on final
maturity dates) are as follows:



|      |  |   |           
|----- |  | - | ----------
|2011  |  | $ | 5,000,000 
|2015  |  |   | 15,000,000
|2016  |  |   | 10,000,000
|      |  |   |           
|Total |  | $ | 30,000,000
|      |  |   |           

The Bank has outstanding securities sold under repurchase agreements. These agreements are generally corporate
cash management accounts for the Banks larger corporate depositors. These agreements are settled on a daily basis and the securities underlying the agreements remain under the Banks control.

The Company uses federal funds purchased for short-term borrowing needs. Federal funds purchased represent unsecured and borrowings secured with securities from other
banks and generally mature daily.



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 7  FHLB advances, securities sold under repurchase agreements and federal funds purchased
(concluded)



|                                           |  |   |            |   |  |   |            |  
|------------------------------------------ |  | - | ---------- | - |  | - | ---------- | -
|Maximum outstanding during the year        |  |   |            |   |  |   |            |  
|FHLB advances                              |  | $ | 39,000,000 |   |  | $ | 18,000,000 |  
|Federal funds purchased                    |  |   | 14,716,000 |   |  |   | 10,317,000 |  
|Repurchase agreements                      |  |   | 3,090,798  |   |  |   | 1,620,142  |  
|Balance outstanding at end of year         |  |   |            |   |  |   |            |  
|FHLB advances                              |  |   | 30,000,000 |   |  |   | 18,000,000 |  
|Federal funds purchased                    |  |   | 6,026,000  |   |  |   | 10,270,000 |  
|Repurchase agreements                      |  |   | 1,667,064  |   |  |   | 680,191    |  
|Average amount outstanding during the year |  |   |            |   |  |   |            |  
|FHLB advances                              |  |   | 25,871,233 |   |  |   | 11,827,397 |  
|Federal funds purchased                    |  |   | 1,861,260  |   |  |   | 2,275,959  |  
|Repurchase agreements                      |  |   | 1,060,508  |   |  |   | 697,635    |  
|Average interest rate during the year      |  |   |            |   |  |   |            |  
|FHLB advances                              |  |   | 3.94       | % |  |   | 3.51       | %
|Federal funds purchased                    |  |   | 5.05       | % |  |   | 3.83       | %
|Repurchase agreements                      |  |   | 4.33       | % |  |   | 2.70       | %
|Average interest rate at end of year       |  |   |            |   |  |   |            |  
|FHLB advances                              |  |   | 3.94       | % |  |   | 3.75       | %
|Federal funds purchased                    |  |   | 5.35       | % |  |   | 4.20       | %
|Repurchase agreements                      |  |   | 4.83       | % |  |   | 3.51       | %

Note 8  Subordinated debt

On December 15, 2005, $2.0 million of subordinated debt was issued through a pooled underwriting. The securities have a fixed rate for five years and is payable quarterly. The interest rate at December 31,
2006 was 6.33%. The securities may be redeemed at par beginning December 2010 and each quarter after such date until the securities mature on December 31, 2015.

The Subordinated Debt may be included in Tier 2 capital for regulatory capital adequacy determination purposes up to 50% of Tier 1 capital.

Note 9  Trust Preferred Securities

On September 9, 2006, FCRV Statutory Trust (the Trust), a
wholly-owned subsidiary of the Company, was formed for the purpose of issuing redeemable capital securities. On September 21, 2006, $5,155,000 of Trust Preferred Capital Notes were issued through a pooled underwriting. The Trust issued $155,000
in common equity to the Company. The securities have a LIBOR-indexed floating rate of interest (three-month LIBOR plus 1.70%) which adjusts, and is payable quarterly. The interest rate at December 31, 2006 was 7.06%. The securities may be
redeemed at par beginning on September 15, 2011 and each quarter after such date until the securities mature on September 15, 2036. The principal asset of the Trust is $5,155,000 of the Companys junior subordinated debt securities
with like maturities and like interest rates to the Trust Preferred Capital Notes.

The trust preferred securities issued by the Company may be included in
Tier 1 capital for regulatory adequacy determination purposes up to 25% of Tier 1 capital after its inclusion. The portion of the trust preferred securities, not considered as Tier 1 capital, may be included in Tier 2 capital.



F-16



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 9  Trust Preferred Securities (concluded)



The obligations of the Company with respect to the issuance of the Trust Preferred Capital Notes constitute a full
and unconditional guarantee by the Company of the Trusts obligations with respect to the Trust Preferred Capital Notes. Subject to certain exceptions and limitations, the Company may elect from time to time to defer interest payments on the
junior subordinated debt securities, which would result in a deferral of distribution payments on the related Trust Preferred Capital Notes and require a deferral of common dividends.

Pursuant of FASB Interpretation No. 46R, the Company does not consolidate the Trust.

Note 10  Income taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting
purposes and the amounts reported for income tax purposes. Significant components of the Companys deferred income tax liabilities and assets are as follows:



|                                                         |  |      |         |      |   |        
|-------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                         |  | 2006 |         | 2005
|Deferred tax assets:                                     |  |      |         |      |   |        
|Allowance for Loan Losses                                |  | $    | 536,328 |      | $ | 399,445
|Unrealized holding loss on available-for-sale securities |  |      | 160,005 |      |   | 218,344
|                                                         |  |      |         |      |   |        
|                                                         |  |      | 696,333 |      |   | 617,789
|                                                         |  |      |         |      |   |        
|Deferred tax liabilities:                                |  |      |         |      |   |        
|Depreciation                                             |  |      | 164,050 |      |   | 166,982
|Deferred loan costs                                      |  |      | 202,494 |      |   | 178,591
|Prepaids                                                 |  |      | 21,286  |      |   |       
|                                                         |  |      |         |      |   |        
|                                                         |  |      | 387,830 |      |   | 345,573
|                                                         |  |      |         |      |   |        
|Net deferred tax asset                                   |  | $    | 308,503 |      | $ | 272,216
|                                                         |  |      |         |      |   |        

A reconciliation of the federal taxes at statutory rates to the tax provision for the year ended December 31,
2006 and 2005 is as follows:



|                                   |  |      |         |   |      |   |         |  
|---------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                   |  | 2006 |         |   | 2005 |  
|Federal statutory rate             |  | $    | 806,554 |   |      | $ | 669,843 |  
|Tax-exempt interest income         |  |      | (13,959 | ) |      |   | (9,603  | )
|Nondeductible expenses             |  |      | 6,715   |   |      |   | 2,550   |  
|Miscellaneous                      |  |      | 1,690   |   |      |   | 1,010   |  
|                                   |  |      |         |   |      |   |         |  
|Provision for income taxes expense |  | $    | 801,000 |   |      | $ | 663,800 |  
|                                   |  |      |         |   |      |   |         |  

Income tax attributable to income before income tax expense is summarized as follows:



|                                              |  |      |         |   |      |   |        
|--------------------------------------------- |  | ---- | ------- | - | ---- | - | -------
|                                              |  | 2006 |         |   | 2005
|Current federal income tax expense            |  | $    | 895,626 |   |      | $ | 608,459
|Deferred federal income tax expense (benefit) |  |      | (94,626 | ) |      |   | 55,341 
|                                              |  |      |         |   |      |   |        
|Total                                         |  | $    | 801,000 |   |      | $ | 663,800
|                                              |  |      |         |   |      |   |        



F-17



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 11  Related party transactions



In the normal course of business, the Company has made loans to its officers and directors. Total loans at
December 31, 2006 amounted to approximately $9,206,114 (including a $1,250,000 loan made to a director in 2002, prior to becoming a director in 2004 and a $50,000 loan made to an officer prior to becoming an employee in 2005) of which
approximately $1,695,651 represents unused lines of credit. Total loans to these persons at December 31, 2005 amounted to $7,610,836 of which $997,177 represented unused lines of credit. During 2006, new loans to officers and directors amounted
to $2,461,019 and repayments amounted to $1,564,215. In the opinion of management, such loans are consistent with sound banking practices and are within applicable regulatory bank lending limitations.

During the years ended December 31, 2006 and 2005, the Company utilized the services of a law firm for advice on various legal matters. The Chairman of the Board of
Directors is also a principal in this law firm. The law firm was approved to provide various legal services to the Company at a cost of $60,824 and $33,924 for the years ended December 31, 2006 and 2005, respectively.

The Company also utilized services of other businesses to acquire office space, furniture and office supplies. Several Board members are involved with the daily activity
of these businesses. Total purchases for the years ended December 31, 2006 and 2005 were $22,628 and $35,972, respectively.

Note 12 - Regulatory
requirements and restrictions

The Company is subject to various federal and state regulatory requirements, including regulatory capital requirements
administered by the federal banking agencies to ensure capital adequacy. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary, actions by regulators that, if undertaken, could have a
direct material effect on the Companys financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of
the Companys assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Companys capital amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

The most recent notification from the regulatory agencies categorized the Banks capital position as
well-capitalized, and meets the definition of well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage
ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed this category.



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 12  Regulatory requirements and restrictions (concluded)



The Companys actual capital amounts and ratios are also presented in the table.



|                                          |  |                        |        |       |                           |   |        |                                                                     |        |  |      |        |  |       |        |  |       |  
|----------------------------------------- |  | ---------------------- | ------ | ----- | ------------------------- | - | ------ | ------------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                          |  | Actual                 |        |       | MinimumCapitalRequirement |   |        | Minimum To BeWell CapitalizedUnder PromptCorrective ActionProvision |       
|                                          |  | Amount                 |        | Ratio |                           |   | Amount |                                                                     | Ratio  |  |      | Amount |  | Ratio |       
|                                          |  | (dollars in thousands) |       
|As of December 31, 2006                   |  |                        |        |       |                           |   |        |                                                                     |        |  |      |        |  |       |        |  |       |  
|Total capital to risk weighted assets     |  |                        |        |       |                           |   |        |                                                                     |        |  |      |        |  |       |        |  |       |  
|Consolidated                              |  | $                      | 24,959 |       | 12.28                     | % |        | $                                                                   | 16,261 |  | 8.00 | %      |  | $     | 20,326 |  | 10.00 | %
|First Capital Bank                        |  | $                      | 24,402 |       | 12.01                     | % |        | $                                                                   | 16,241 |  | 8.00 | %      |  | $     | 20,301 |  | 10.00 | %
|Tier 1 capital to risk weighted assets    |  |                        |        |       |                           |   |        |                                                                     |        |  |      |        |  |       |        |  |       |  
|Consolidated                              |  | $                      | 21,125 |       | 10.39                     | % |        | $                                                                   | 8,130  |  | 4.00 | %      |  | $     | 12,195 |  | 6.00  | %
|First Capital Bank                        |  | $                      | 20,568 |       | 10.13                     | % |        | $                                                                   | 8,120  |  | 4.00 | %      |  | $     | 12,181 |  | 6.00  | %
|Tier 1 capital to average adjusted assets |  |                        |        |       |                           |   |        |                                                                     |        |  |      |        |  |       |        |  |       |  
|Consolidated                              |  | $                      | 21,125 |       | 8.80                      | % |        | $                                                                   | 9,606  |  | 4.00 | %      |  | $     | 12,007 |  | 5.00  | %
|First Capital Bank                        |  | $                      | 20,568 |       | 8.50                      | % |        | $                                                                   | 9,679  |  | 4.00 | %      |  | $     | 12,099 |  | 5.00  | %
|As of December 31, 2005                   |  |                        |        |       |                           |   |        |                                                                     |        |  |      |        |  |       |        |  |       |  
|Total capital to risk weighted assets     |  |                        |        |       |                           |   |        |                                                                     |        |  |      |        |  |       |        |  |       |  
|First Capital Bank                        |  | $                      | 17,581 |       | 11.36                     | % |        | $                                                                   | 12,381 |  | 8.00 | %      |  | $     | 15,476 |  | 10.00 | %
|Tier 1 capital to risk weighted assets    |  |                        |        |       |                           |   |        |                                                                     |        |  |      |        |  |       |        |  |       |  
|First Capital Bank                        |  | $                      | 14,121 |       | 9.13                      | % |        | $                                                                   | 6,187  |  | 4.00 | %      |  | $     | 9,280  |  | 6.00  | %
|Tier 1 capital to average adjusted assets |  |                        |        |       |                           |   |        |                                                                     |        |  |      |        |  |       |        |  |       |  
|First Capital Bank                        |  | $                      | 14,121 |       | 6.98                      | % |        | $                                                                   | 8,092  |  | 4.00 | %      |  | $     | 10,115 |  | 5.00  | %

The amount of dividends payable by the Company depends upon its earnings and capital position, and is limited by
federal and state law, regulations and policy. In addition, Virginia law imposes restrictions on the ability of all banks chartered under Virginia law to pay dividends. Under such law, no dividend may be declared or paid that would impair a
banks paid-in capital. Each of the Commission and the FDIC has the general authority to limit dividends paid by the Bank if such payments are deemed to constitute an unsafe and unsound practice.

Note 13  Commitments and contingent liabilities

The Company is
a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers in the Richmond metropolitan area. These financial instruments include unused lines of credit. These
instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the statement of financial condition. Financial instruments with off-balance-sheet risk are summarized as follows:



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 13  Commitments and contingent liabilities (concluded)



|                                                                    |  |      |             |      |   |           
|------------------------------------------------------------------- |  | ---- | ----------- | ---- | - | ----------
|                                                                    |  | 2006 |             | 2005
|Financial instruments whose contract amounts represent credit risk: |  |      |             |      |   |           
|Unused commercial lines of credit                                   |  | $    | 72,265,492  |      | $ | 31,313,355
|Unused consumer lines of credit                                     |  |      | 8,016,853   |      |   | 8,368,553 
|Standby Letter of Credit                                            |  |      | 3,478,112   |      |   | 1,854,381 
|Loan commitments                                                    |  |      | 38,169,398  |      |   | 15,506,601
|                                                                    |  |      |             |      |   |           
|                                                                    |  | $    | 121,929,855 |      | $ | 57,042,890
|                                                                    |  |      |             |      |   |           

The Companys exposure to credit loss in the event of nonperformance by the other party to the financial
instrument for unused lines of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Unused lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. The Company
evaluates each customers creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on managements credit evaluation of the counterparty. Collateral
held varies but may include personal property, commercial property, residential property, land, and accounts receivable.

Note 14  Concentration
of credit risk

The Company has a diversified loan portfolio consisting of commercial, real estate and consumer (installment) loans. Substantially all
of the Companys customers are residents or operate business ventures in its market area consisting primarily of the Richmond metropolitan area. Therefore, a substantial portion of its debtors ability to honor their contracts and the
Companys ability to realize the value of any underlying collateral, if needed, is influenced by the economic conditions in this market area.

At
times, cash balances at financial institutions are in excess of FDIC insurance coverage. The cash balances are maintained at financial institutions with high credit - quality ratings and the Bank believes no significant risk of loss exists with
respect to those balances.

Note 15  Disclosures about fair value of financial instruments

The following methods and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein:

Cash and due from banks  The carrying amounts of cash and due from banks approximate their fair value.

Available-for-sale securities  Fair values for securities, excluding restricted equity securities, are based on quoted market prices. The carrying values of
restricted equity securities approximate fair values.

Loans receivable  Fair values are based on carrying values for variable-rate loans that
reprice frequently and have no significant change in credit risk. Fair values for certain mortgage loans (for example, one-to-four family residential) and other consumer loans are based on quoted market prices of similar loans sold in conjunction
with securitization transactions, adjusted for differences in loan characteristics. Fair values for



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 15  Disclosures about fair value of financial instruments (concluded)



commercial real estate and commercial loans are estimated using discounted cash flow analyses and interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality. The interest rates on loans at December 31, 2006 and 2005 are current market rates for their respective terms and associated credit risk.

Deposit liabilities  The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is,
their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts approximate their fair values at the reporting date. Fair values for fixed-rate CDs are estimated using a discounted cash flow calculation that applies
interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Accrued interest
 The carrying amounts of accrued interest approximate their fair values.

Advances from Federal Home Loan BankThe carrying
value of advances from the Federal Home Loan Bank due within ninety days from the balance sheet date approximate fair value. Fair values for convertible advances are estimated using a discounted cash flow calculation that applies interest rates
currently being offered on convertible advances with similar remaining maturities.

Federal Funds purchased and repurchase agreements The
carrying value of federal funds purchased and repurchase agreements due within ninety days from the balance sheet date approximate fair value.

Off-balance-sheet instruments  Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and
counterparties credit standings. These are not deemed to be material at December 31, 2006 and 2005.

The estimated fair values of the
Companys financial instruments as of December 31, 2006 and 2005 are as follows:



|                                   |  |                |             |            |   |                |  |            |             |  |   |            
|---------------------------------- |  | -------------- | ----------- | ---------- | - | -------------- |  | ---------- | ----------- |  | - | -----------
|                                   |  | 2006           |             | 2005      
|                                   |  | CarryingAmount |             | Fair Value |   | CarryingAmount |  | Fair Value
|Financial assets                   |  |                |             |            |   |                |  |            |             |  |   |            
|Cash and cash equivalents          |  | $              | 12,032,026  |            | $ | 12,032,026     |  | $          | 10,181,623  |  | $ | 10,181,623 
|Investment securities              |  |                | 38,730,975  |            |   | 38,730,975     |  |            | 39,621,418  |  |   | 39,621,418 
|Loans receivable, net              |  |                | 199,751,483 |            |   | 199,329,500    |  |            | 154,601,518 |  |   | 153,413,176
|Accrued interest                   |  |                | 1,425,364   |            |   | 1,425,364      |  |            | 1,100,887   |  |   | 1,100,887  
|Financial liabilities              |  |                |             |            |   |                |  |            |             |  |   |            
|Deposits                           |  | $              | 194,302,435 |            | $ | 194,004,189    |  | $          | 162,387,552 |  | $ | 162,087,787
|FHLB advances                      |  |                | 30,000,000  |            |   | 29,507,904     |  |            | 18,000,000  |  |   | 17,878,621 
|Federal funds purchased            |  |                | 6,026,000   |            |   | 6,026,000      |  |            | 10,270,000  |  |   | 10,270,000 
|Subordinated debt                  |  |                | 7,155,000   |            |   | 7,119,026      |  |            | 2,000,000   |  |   | 2,000,000  
|Repurchase agreements              |  |                | 1,667,064   |            |   | 1,667,064      |  |            | 680,191     |  |   | 680,191    
|Unrecognized financial instruments |  |                |             |            |   |                |  |            |             |  |   |            
|Standby letters of credit issued   |  | $              |            |            | $ |               |  | $          |            |  | $ |           



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 16  Stock option plan



The Company has a First Capital Bancorp, Inc. 2000 Stock Option Plan (the Plan) pursuant to which options may be
granted to Directors, officers and key employees. The Plan authorizes grants of options to purchase up to 233,484 shares of the Companys authorized, but unissued common stock. All stock options have been granted with an exercise price equal to
the stocks fair market value at the date of grant. Stock options generally have 10-year terms, vest at the rate of 50 percent per year for Directors and 33 1/3 percent per year for employees. In December 2005, the Board of Directors approved
the acceleration of vesting of all unvested stock options outstanding prior to December 31, 2005.

A summary of the status of the Companys
unvested stock options as of December 31, 2006 and changes during the year then ended is presented below:



|                              |  |        |  |                                      |     
|----------------------------- |  | ------ |  | ------------------------------------ | ----
|Unvested Stock Options        |  | Shares |  | Weighted AverageGrantDate Fair Value
|Unvested at January 1, 2006   |  |       |  | $                                    |    
|Granted                       |  | 6,000  |  |                                      | 7.59
|Vested                        |  |       |  |                                      |    
|Forfeitures                   |  |       |  |                                      |    
|                              |  |        |  |                                      |     
|Unvested at December 31, 2006 |  | 6,000  |  | $                                    | 7.59
|                              |  |        |  |                                      |     

As of December 31, 2006, there was $39,871of total unrecognized compensation costs related to unvested stock
options. That cost is expected to be recognized over a period of 2.67 years.

The weighted-average option price and weighted-average remaining term of
stock options awarded and not exercised were as follows as of December 31:



|                                 |  |      |      |      |   |     
|-------------------------------- |  | ---- | ---- | ---- | - | ----
|                                 |  | 2006 |      | 2005
|Weighted-average price           |  | $    | 9.02 |      | $ | 8.74
|Weighted-average term (in years) |  |      | 6.20 |      |   | 7.08

A summary of the stock option activity is as follows:



|                                      |  |         |  |                                |      
|------------------------------------- |  | ------- |  | ------------------------------ | -----
|                                      |  | Options |  | Weighted-AverageExercise Price
|Balance at January 1, 2005            |  | 182,250 |  | $                              | 8.06 
|Granted                               |  | 23,625  |  |                                | 14.01
|                                      |  |         |  |                                |      
|Options outstanding December 31, 2005 |  | 205,875 |  |                                | 8.74 
|Granted                               |  | 6,000   |  |                                | 18.50
|                                      |  |         |  |                                |      
|Options outstanding December 31, 2006 |  | 211,875 |  | $                              | 9.02 
|                                      |  |         |  |                                |      



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 16  Stock option plan (concluded)



The following table summarizes information about stock options outstanding as December 31, 2006:



|                  |  |                                                     |  |                                         |  |                               |      
|----------------- |  | --------------------------------------------------- |  | --------------------------------------- |  | ----------------------------- | -----
|                  |  | Options Outstanding and Exercisable                
|Exercise Prices   |  | NumberOutstandingand Exercisableat December 31,2006 |  | WeightedAverageRemainingContractualLife |  | Weighted-AverageExercisePrice
|$5.32 to $ 7.00   |  | 84,750                                              |  | 4.4 years                               |  | $                             | 6.20 
|$7.07 to $ 10.00  |  | 83,250                                              |  | 6.8 years                               |  | $                             | 9.45 
|$10.57 to $ 18.50 |  | 43,875                                              |  | 8.4 years                               |  | $                             | 13.62
|                  |  |                                                     |  |                                         |  |                               |      
|                  |  | 211,875                                             |  |                                         |  |                               |      
|                  |  |                                                     |  |                                         |  |                               |      

The aggregate intrinsic value of options outstanding was approximately $3.8 million, options exercisable was
approximately $3.7 million, and options unvested and expected to vest was approximately $107,700 at December 31, 2006.

No options were exercised
during the years ended December 31, 2006 and 2005.

The Company estimates the fair value of each option grant on the date of the grant using the
Black-Scholes option-pricing model. Additional valuation and related assumption information for the Companys stock option plan is presented below:



|                                                                         |  |                         |         |   |      |   |         |  
|------------------------------------------------------------------------ |  | ----------------------- | ------- | - | ---- | - | ------- | -
|                                                                         |  | Year Ended December 31, |        
|                                                                         |  | 2006                    |         |   | 2005 |  
|Weighted average per share fair value of options granted during the year |  | $                       | 7.59    |   |      | $ | 4.77    |  
|Dividend yield                                                           |  |                         | 0.00    | % |      |   | 0.00    | %
|Expected life                                                            |  |                         | 6 years |   |      |   | 6 years |  
|Expected volatility                                                      |  |                         | 31.96   | % |      |   | 15.75   | %
|Average Risk-free interest rate                                          |  |                         | 4.96    | % |      |   | 4.30    | %

Note 17  Other employee benefit plans

During April 1999, the Company instituted a contributory thrift plan through the Virginia Bankers Association, covering all eligible employees. Participants may make contributions to the plan during the year, with
certain limitations. During 2006 and 2005, the Company contributed to the plan an amount equal to seventy-five percent of the first six percent contributed. The participants are 100% vested upon three years of service to the Company. Expenses
amounted to $91,252 and $76,779 in 2006 and 2005, respectively.



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 18  Earnings per share



BasicEPS excludes dilution and is computed by dividing net income available to common shareholders by the
weighted-average number of common shares outstanding for the period. DilutedEPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, or
resulted in the issuance of common stock that then shared in the earnings of the entity.

The basic and diluted earnings per share calculations are as
follows:



|                                                            |  |                                 |           |      |   |          
|----------------------------------------------------------- |  | ------------------------------- | --------- | ---- | - | ---------
|                                                            |  | For the Years EndedDecember 31,
|                                                            |  | 2006                            |           | 2005
|Net income (numerator, basic and diluted)                   |  | $                               | 1,571,219 |      | $ | 1,306,327
|Weighted average number of shares outstanding (denominator) |  |                                 | 1,796,021 |      |   | 1,796,021
|Earnings per common share - basic                           |  | $                               | 0.87      |      | $ | 0.73     
|                                                            |  |                                 |           |      |   |          
|Effect of dillutive securities:                             |  |                                 |           |      |   |          
|Weighted average number of shares outstanding               |  |                                 | 1,796,021 |      |   | 1,796,021
|Effect of stock options                                     |  |                                 | 92,731    |      |   | 63,489   
|                                                            |  |                                 |           |      |   |          
|Diluted average shares outstanding (denominator)            |  |                                 | 1,888,752 |      |   | 1,859,510
|Earnings per common share - assuming dilution               |  | $                               | 0.83      |      | $ | 0.70     
|                                                            |  |                                 |           |      |   |          

Note 19  Impact of Recently Issued Accounting Standards

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and
140. This Statement amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities and
resolves issues in Statement No. 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. The provisions of this Statement are effective for all financial instruments acquired
or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006. The adoption of SFAS No. 155 is not expected to have a material impact on the financial statements of the Bank.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140. This Statement
amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement 125 with respect to the accounting for separately recognized servicing assets and
servicing liabilities. The provisions of this Statement are effective for fiscal years beginning after September 15, 2006. The adoption of SFAS No. 156 is not expected to have a material impact on the financial statements of the Bank.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 19  Impact of Recently Issued Accounting Standards (concluded)



interim periods within those fiscal years. The Company does not expect the adoption of this new standard to have a material effect on the Banks results
of operations or consolidated financial position.

In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R), which requires a business entity to recognize the overfunded or underfunded status of a single-employer defined benefit
postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in comprehensive income in the year in which the changes occur. SFAS No. 158 also requires a business entity to
measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. The provisions of this statement are effective as of the end of the first fiscal year ending after December 15, 2006.
The adoption of SFAS No. 158 is not expected to have a material impact on the financial statements of the Bank.

In June 2006, the FASB issued FASB
Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109, which establishes that the financial statement effects of a tax position taken or expected to
be taken in a tax return are to be recognized in the financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Company does not expect the adoption of this new standard to have a material effect on the Banks results of operations or consolidated financial position.

Note 20  Condensed Financial Information  Parent Company Only

FIRST CAPITAL BANCORP, INC.

(Parent Corporation Only)

Balance Sheet

December 31, 2006



|                                         |  |   |            |  
|---------------------------------------- |  | - | ---------- | -
|Assets                                   |  |   |            |  
|Cash on deposit with subsidiary bank     |  | $ | 366,640    |  
|Investment is subsidiary                 |  |   | 20,256,983 |  
|Investment is special purpose subsidiary |  |   | 155,000    |  
|Other assets                             |  |   | 50,656     |  
|                                         |  |   |            |  
|                                         |  | $ | 20,829,279 |  
|                                         |  |   |            |  
|Liabilities and Stockholders Equity     |  |   |            |  
|Trust preferred debt                     |  | $ | 5,155,000  |  
|Other liabilities                        |  |   | 15,164     |  
|                                         |  |   |            |  
|Total liabilities                        |  |   | 5,170,164  |  
|                                         |  |   |            |  
|Stockholders Equity                     |  |   |            |  
|Common stock                             |  |   | 7,184,084  |  
|Additional paid-in capital               |  |   | 6,010,352  |  
|Accumulated other comprehensive (loss)   |  |   | (311,598   | )
|Retained earnings                        |  |   | 2,776,277  |  
|                                         |  |   |            |  
|Total stockholders equity               |  |   | 15,659,115 |  
|                                         |  |   |            |  
|                                         |  | $ | 20,829,279 |  
|                                         |  |   |            |  



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 20  Condensed Financial Information  Parent Company Only (continued)



FIRST CAPITAL BANCORP, INC.

(Parent Corporation Only)

Statement of Income

Period From Inception to December 31, 2006



|                                                   |  |   |           |  
|-------------------------------------------------- |  | - | --------- | -
|Income                                             |  |   |           |  
|Dividends                                          |  | $ | 3,051     |  
|                                                   |  |   |           |  
|Expenses                                           |  |   |           |  
|Interest                                           |  |   | 101,460   |  
|Legal                                              |  |   | 42,659    |  
|Other expenses                                     |  |   | 7,000     |  
|                                                   |  |   |           |  
|Total Expenses                                     |  |   | 151,119   |  
|                                                   |  |   |           |  
|Net income before tax benefit                      |  |   | (148,068  | )
|Income tax benefit                                 |  |   | (50,200   | )
|                                                   |  |   |           |  
|Net loss before undistributed equity in subsidiary |  |   | (97,868   | )
|Undistributed equity in subsidiary                 |  |   | 1,669,087 |  
|                                                   |  |   |           |  
|Net income                                         |  | $ | 1,571,219 |  
|                                                   |  |   |           |  



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##### Table of Contents

First Capital Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 20  Condensed Financial Information  Parent Company Only (concluded)



FIRST CAPITAL BANCORP, INC.

(Parent Corporation Only)

Statement of Cash Flows

Period from Inception to December 31, 2006



|                                                                                 |  |   |            |  
|-------------------------------------------------------------------------------- |  | - | ---------- | -
|Cash Flows from Operating Activities                                             |  |   |            |  
|Net income                                                                       |  | $ | 1,571,219  |  
|Adjustments to reconcile net income to net cash provided by operating activities |  |   |            |  
|Undistributed earnings of subsidiary                                             |  |   | (1,669,087 | )
|Increase in other assets                                                         |  |   | (50,656    | )
|Increase in other liabilities                                                    |  |   | 15,164     |  
|                                                                                 |  |   |            |  
|Net cash used in operations                                                      |  |   | (133,360   | )
|                                                                                 |  |   |            |  
|Cash Flows from Investing Activities                                             |  |   |            |  
|Investment in FCRV Statutory Trust 1                                             |  |   | (155,000   | )
|Capital contribution to subsidiary                                               |  |   | (4,500,000 | )
|                                                                                 |  |   |            |  
|Net cash used in investing activities                                            |  |   | (4,655,000 | )
|                                                                                 |  |   |            |  
|Cash Flows from Financing Activities                                             |  |   |            |  
|Proceeds for issuance of subordinated debt                                       |  |   | 5,155,000  |  
|                                                                                 |  |   |            |  
|Net cash provided by financing activities                                        |  |   | 5,155,000  |  
|                                                                                 |  |   |            |  
|Net increase in cash                                                             |  |   | 366,640    |  
|Cash and cash equivalents, beginning of year                                     |  |   |           |  
|                                                                                 |  |   |            |  
|Cash and cash equivalents, end of year                                           |  | $ | 366,640    |  
|                                                                                 |  |   |            |  



F-27