Exhibit 13.1

       Annual Report to Stockholders for the year ended December 31, 1999

                         Virginia Commerce Bancorp, Inc

                               1999 Annual Report





Handwritten  Quote:  Thank you, Virginia Commerce Bank, for being a true partner
in our banking  relationship.  Your professional  staff,  personal attention and
responsiveness  have made a big difference in our ability to reach our financial
goals.

                          Community Banking at its Best


[Full page photo omitted]

Exceptional Service...Every Customer...Every Time.

Contents

<TABLE>

<S>      <C>
1        Five Year Financial Summary
2        Letter to Shareholders, Customers and friends
5        Management's Discussion and Analysis of Financial Condition and results of Operations
16       Consolidated Financial Statements
36       Independent Auditors' Report
37       Board of Directors, Executive Officers and Officers
</TABLE>

About Our Bank

Virginia  Commerce Bank, a wholly owned subsidiary of Virginia Commerce Bancorp,
Inc., is a full-service community bank headquartered in Northern Virginia.  With
our wide array of business ad  consumer  products,  we continue to be one of the
fastest  growing banks in our market,  and for good reason.  From 1988,  when we
opened our first  branch in  Clarendon,  until  today,  with ten  branches,  two
mortgage  loan  offices and over $280  million in assets,  we have  maintained a
clear  focus.  To  provide  "community  banking  at its best"  while  delivering
Exceptional Service. Every Customer. Every Time.

Handwritten  quotes appearing in this annual report are actual comments received
in writing from customers


FIVE YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                      1999            1998            1997            1996            1995
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>             <C>             <C>             <C>             <C>
SELECTED YEAR-END BALANCES:
Total assets                                       $282,575,486    $222,441,910    $165,119,350    $122,721,355    $ 90,313,343
Total stockholders' equity                           17,488,753      15,831,660      11,272,937      10,054,023       9,289,039
Total loans (net)                                   205,171,188     149,440,296     100,917,408      76,313,031      56,630,644
Total deposits                                      243,044,377     188,742,543     142,427,529     103,722,575      73,772,627
-------------------------------------------------------------------------------------------------------------------------------
SUMMARY RESULTS OF OPERATIONS:
Interest income                                    $ 18,851,366    $ 15,265,826    $ 11,134,572    $  8,589,578    $  6,214,522
Interest expense                                      8,678,859       7,511,338       5,167,969       3,825,756       2,622,137
     Net interest income                           $ 10,172,507    $  7,754,488    $  5,966,603    $  4,763,822    $  3,592,385
Provision for loan losses                               480,000         450,950         261,500         182,500         159,000
     Net interest income after
          provision for loan losses                $  9,692,507    $  7,303,538    $  5,705,103    $  4,581,322    $  3,433,385
Other income                                          1,998,570         631,950         477,751         447,393         519,018
Other expense                                         8,397,190       5,647,915       4,464,727       3,420,597       2,977,506
     Income before taxes                           $  3,293,887    $  2,287,573    $  1,718,127    $  1,608,118    $    974,897
Income tax expense                                    1,128,143         783,961         585,747         552,269         321,596
     Net income                                    $  2,165,744    $  1,503,612    $  1,132,380    $  1,055,849    $    653,301
-------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA (1) :
     Net income, basic                             $       1.10    $       0.78    $       0.66    $       0.61    $       0.38
     Net income, diluted (2)                       $       1.04    $       0.73    $       0.62    $       0.59    $       0.38
     Cash dividends                                          --              --              --              --    $       0.05
     Book Value                                    $       8.88    $       8.06    $       6.54    $       5.84    $       5.39
     Average number of
          shares outstanding                          1,967,808       1,924,604       1,722,649       1,722,649       1,722,649
-------------------------------------------------------------------------------------------------------------------------------
GROWTH AND SIGNIFICANT RATIOS
     % Change in net income                               44.04%          32.78%           7.25%          61.62%         159.97%
     % Change in assets                                   27.03%          34.72%          34.55%          35.88%          37.62%
     % Change in loans                                    37.29%          48.08%          32.24%          34.76%          38.30%
     % Change in deposits                                 28.77%          32.52%          37.32%          40.60%          38.93%
     % Change in equity                                   10.47%          40.44%          12.12%           8.24%           8.13%
     Equity to asset ratio                                 6.19%           7.12%           6.83%           8.19%          10.29%
     Return on average assets                              0.87%           0.75%           0.81%           0.98%           0.84%
     Return on average equity                             13.03%          10.37%          10.53%          11.05%           7.31%
     Average equity to average assets                      6.65%           7.25%           7.74%           8.91%          11.47%

-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)   Restated for all years presented  giving  retroactive  effect to 10% stock
      dividends  paid in 1996  and  1997,  a 35%  stock  split  in the form of a
      dividend  in  1997,  a  change  in  par  value  in  1998,  and  10%  stock
      restructurings in 1998 and 1999.

(2)   Adjusted for the dilutive  effect of  incremental  shares (the  difference
      between  the  number of shares  assumed  issued  and the  number of shares
      assumed purchased at market value) of stock options and warrants.

[Bar graphs omitted]
[Graphs show figures (in  thousands)  for 1999,  1998,  1997,  1996 and 1995 Net
Income, Total Assets, Net Loans and Total Deposits]


                                        1
<PAGE>

1999 ANNUAL REPORT

Letter To Our Shareholders, Customers And Friends

The capstone to the progress and achievements of Virginia  Commerce Bank in 1999
was the corporate  reorganization  of the Bank in December  into a  wholly-owned
subsidiary of its newly formed holding company,  Virginia Commerce Bancorp, Inc.
(the "Company").  Accordingly, this 1999 Annual Report presents the consolidated
financial statements of the Company and its subsidiary,  Virginia Commerce Bank.
Considering  that  the  reorganization  occurred  recently  and that the Bank is
currently  the only  operating  subsidiary  of Virginia  Commerce  Bancorp,  the
Company's earnings, assets and liabilities are substantially similar to those of
the Bank. I am pleased to report that the year ending  December  31,  1999,  was
especially noteworthy for the Company. A fifth straight year of record earnings,
strong balance sheet growth, two new

Handwritten Quote "Everyone has made it to a point where they know me on a first
name basis."

                                                 K.S., Falls Church, VA



branches,  a new mortgage operation with two loan offices,  and the introduction
of key new products  were the  highlights,  in addition to the  formation of the
holding  company.  This banner year of  accomplishment  was achieved despite the
challenges of  ever-increasing  competition,  continued pressure on net interest
margins and the diversion of resources to Y2K preparation.

Net  income  for 1999 was a record  $2,165,744,  an  increase  of 44.0% over the
$1,503,612  earned the prior year. As a result,  diluted earnings per share were
$1.04, up $.31 over the comparable period in 1998.

Net  interest  income  for the  year of  $10,172,507  was up  31.2%  over  1998,
primarily due to significant loan volume. Non-interest income more than tripled,
increasing 216.3% for 1999 to $1,998,570.  This substantial  increase was driven
by  $1,265,028  in fees and net  gains  from the  Bank's  new  mortgage  lending
division.  Non-interest  expense totalled $8,397,190 for 1999, rising 48.7% over
the prior  year due to  expenses  associated  with the new  mortgage  operation,
branch expansion,  product development,  the holding company formation and final
Y2K preparation.

As of December 31, 1999,  total assets were  $282,575,486,  an increase of 27.0%
from $222,441,910 a year earlier.  Deposits grew similarly over the twelve-month
period with a 28.8% increase from  $188,742,543 to  $243,044,377.  Loans, net of
allowance  for loan losses,  rose to  $205,171,188,  a 37.3%  increase  over the
$149,440,296  reported for the prior year-end.  The increase in loans marked the
sixth  consecutive year of loan growth in excess of 30% and asset quality ratios
that  were  significantly  better  than  peer  group  averages.   The  Company's
considerable  progress in 1999 was  facilitated  to a large  extent by continued
branch and product expansion.  The Bank's new residential  mortgage division was
officially  opened in February by Senior Vice  President Ken O'Shea at 374 Maple
Avenue East in Vienna,  Virginia.  The operation,  which also opened a satellite
office in  Warrenton,  Virginia,  not only  provides  Virginia  Commerce  with a
complete  array of competitive  residential  mortgage  products,  but also added
almost  $200,000 to the Company's  bottom line in its first year. In March,  our
ninth  branch  office was opened in Vienna in the same  building as the mortgage
operation. It has already exceeded expectations by achieving over $11 million in
combined deposits and repurchase agreements in its first twelve months. We added
a tenth  branch in July with the opening of our third  Alexandria  office in the
heart of Old Town at 506 King  Street.  This  branch  is on target  with  growth
expectations, having exceeded $5 million in deposits already.

In addition to full-service,  residential  mortgage lending which was introduced
at the beginning of the year, a number of new banking services were initiated in
the latter part of 1999.  In October,  the Bank  enhanced its  business  lending
capabilities by contracting with a third party vendor providing  PC-based online
support and lockbox  processing  services for financing small business  accounts
receivable on a discounted  basis.  This new loan product gives us a competitive
advantage in increasing


                                        2
<PAGE>

small business market share at an attractive yield, but with minimal  allocation
of resources.  In November, the Bank took a significant step to upgrade its cash
management  services  with the hiring of Michele K. Parker,  CCM, as Senior Vice
President in charge of a new Cash Management Services  department.  The expanded
service will provide a greater  level of  sophistication  in the  management  of
commercial  deposits through utilization of electronic banking and ACH services,
sweep  accounts  and other  products  such as lockbox.  We expect that this will
result in significant  deposit  generation and fee income  opportunities for the
Bank. Also in November,  the Bank began offering  commercial  insurance products
through a joint venture  arrangement which allows the Bank to offer all types of
business  insurance  and  bonding  services  to its  customers.  Life  insurance
products  are also  available.  Further  opportunities  to expand our  insurance
capabilities for both consumers and businesses are being explored.

As  Virginia  Commerce   continues  to  grow  and  serve  its  customers  in  an
increasingly  competitive market,  maintaining a technological edge in financial
services is critical. Our Web site, now at www.vcbonline.com, has been providing
updated  information  on the Bank and its products and services for over a year.
It is currently  undergoing a redesign that will greatly  enhance its navigation
and graphics. More importantly, the Web site now serves as the portal to our new
Internet banking service which was introduced last month.  Considerable time and
effort was  expended in the second half of 1999 to ensure that we could  provide
online financial services through the Internet by early 2000. Initially,  we are
offering  online  services that enable  consumers to access account  statements,
make transfers between accounts, place stop payments and pay bills.

In April, we will make Internet banking available to business customers with the
added features of ACH origination and wire transfer  capability.  Going forward,
we are committed to staying abreast of the latest technological  developments in
banking to provide more services to our customers with greater  convenience at a
reduced cost. By doing so, we will be better able to  successfully  compete as a
community bank in an ever-changing financial services industry.

As discussed earlier,  the reorganization of Virginia Commerce Bank into holding
company form was an important event in 1999. The holding company structure gives
Virginia  Commerce  Bancorp,  Inc.  opportunities not available to the Bank on a
stand-alone  basis.  For example,  a holding company has greater  flexibility in
diversifying into bank-related business activities, expanding banking operations
outside of the Bank's current market area, doing stock  repurchases and engaging
in various acquisitions.  In particular,  it enabled the Company to provide $2.5
million  in  additional  capital  to the  Bank  at the end of  December  without
diluting shareholders' interests. This was accomplished by the Company borrowing
against a $5 million credit facility from a correspondent bank and downstreaming
the proceeds to the Bank as contributed  capital.  It was a very  cost-effective
means to fund the Bank's continued growth without shareholder dilution.

Handwritten Quote; Its truly a pleasure to walk in the door.
M.W., Alexandria VA

Finally,  no  discussion  of 1999 would be complete  without  reference  to what
proved to be a non-event  at the end of the year...  Y2K.  Thankfully,  Virginia
Commerce  Bank,  like  a  majority  of  the  world's  businesses,  survived  the
millennium  change without any major glitches or  disruption.  However,  we must
acknowledge  that the relatively  smooth  transition to the Year 2000 was due to
the  significant  efforts and resources  committed  over the last three years to
prevent any mishaps. Special acknowledgment is warranted for CFO Bill Beauchesne
who headed a Y2K team of dedicated  employees  whose tireless  efforts ensured a
successful millennium transition.

Without question, this past year was one of significant progress and achievement
for the Company. Our continued success will depend on our unwavering  commitment
to

                                        3
<PAGE>

                                                       [photos omitted]


Handwritten quote:  Always a positive attitude!  Thanks!
                                            D.P., Fairfax, VA


provide  "community banking at its best." By doing so, we will enhance value for
customers,  employees  and  shareholders.  As for  shareholder  value,  Virginia
Commerce  Bancorp  stock  enjoyed a 21% gain in 1999,  when adjusted for the 10%
stock split in May. This  appreciation  compares  very  favorably to the overall
depreciation in bank industry stocks for the year.


As always, thank you for your continued support and interest.


[Photo Omitted]            /s/ Peter A. Converse
                           Peter A. Converse
                           President and Chief Executive Officer
                           March 28, 2000





Our Northern Virginia Locations


[Map Omitted]

                                        4

<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward  Looking  Statements.  This  management's  discussion  and  analysis  of
financial  condition,  results of operations,  and other portions of this report
include forward looking statements,  such as: statements of the Company's goals,
intentions,  and expectations regarding general economic trends, interest rates,
and other  matters,  estimates  of risks and of future costs and  benefits,  and
statements of the Company's ability to achieve financial and other goals.  These
forward looking statements are subject to significant uncertainties because they
are based upon  future  interest  rates,  federal  monetary  policy,  inflation,
consumer  confidence,  the  health of the real  estate  market in the  Company's
market area, and other economic  conditions,  future law and regulations,  and a
variety of other  matters.  Because of these  uncertainties,  the actual  future
results may be materially  different from the results indicated by these forward
looking  statements.  In addition,  the Company's past growth and performance do
not necessarily indicate its future results.

The following  discussion  provides  information about the results of operations
and financial condition,  liquidity,  and capital resources of Virginia Commerce
Bancorp,  Inc. and subsidiaries  (the  "Company").  This discussion and analysis
should be read in conjunction  with the  Consolidated  Financial  Statements and
Notes thereto, appearing elsewhere in this report.


On December 22, 1999, Virginia Commerce Bancorp,  Inc (the "Company") became the
bank holding  company for Virginia  Commerce Bank.  Virginia  Commerce Bank (the
"Bank") received its charter as a national  banking  association on May 16, 1988
from the  Comptroller  of the  Currency  and opened for  business at 3033 Wilson
Boulevard,  Arlington,  Virginia.  On June 1,  1995  the Bank  converted  from a
national  banking  association  to a Virginia  state  chartered  bank which is a
member of the Federal Reserve System.  The main office of the Company is located
at 5350 Lee Highway in  Arlington,  Virginia.  The Company  also  operates  nine
branch  locations  in  McLean,  Arlington  (two  branches),   Alexandria  (three
branches),  Annandale,  Fairfax,  and Vienna,  Virginia,  and two mortgage  loan
offices in Vienna and Warrenton,  Virginia. The Company's common stock is traded
on NASDAQ under the symbol "VCBI".

The  Company  provides a full  range of  banking  services  (other  than  trust,
securities, brokerage, and international services) to businesses,  professionals
and their firms,  trade  associations,  investors  and  individuals  in Northern
Virginia and increasingly to some extent throughout the Metropolitan Washington,
D.C. area. For  businesses,  the Company offers a complete  selection of deposit
accounts,  merchant  bankcard  services,  electronic  funds  transfer,  lock-box
services, PC banking,  lines of credit for working capital purposes,  term loans
for  expansion  and capital  expenditures,  and  commercial  real estate  loans,
generally on  income-producing  properties.  Services for individuals  include a
wide array of deposit account  products,  home equity loans and lines of credit,
telephone  banking,  consumer  installment loans for the purchase of automobiles
and  other  personal  uses,   overdraft  and  revolving  lines  of  credit,  and
residential mortgageand  construction loans. The Company also provides cashier's
checks,  travelers checks, wire transfers,  bank-by-mail services,  safe deposit
box facilities,  ATM cards, Visa debit cards, Internet Banking, and ATM machines
at nine of its branch locations.

RESULTS OF OPERATIONS

During 1999,  the Company  continued to  experience  significant  growth.  Total
assets  increased  27.0%  from  $222,441,910  to  $282,575,486  over  the  prior
year-end,  while loans increased 37.3% from  $149,440,296 to $205,171,188.  This
growth  was  funded  by a  28.8%  increase  in  deposits  from  $188,742,543  to
$243,044,377. Earnings for 1999 were $2,165,744 an increase of 44.1% compared to
earnings of $1,503,612 in 1998, and an increase of 91.3% compared to earnings of
$1,132,380 in 1997.  Diluted earnings per share were $1.04,  $0.73, and $0.62 in
1999, 1998, and 1997, respectively.

NET INTEREST INCOME

Net interest  income is the excess of interest  earned on loans and  investments
over the interest paid on deposits and  borrowings.  For 1999, the Company's net
interest income was  $10,172,507  compared to $7,754,488 for 1998 and $5,966,603
for 1997.  This is an increase of  $2,418,019  or 31.2% from 1998 to 1999.  This
increase was primarily due to the 37.3% increase in net loans  outstanding  from
$149,440,296  at year-end 1998 to  $205,171,188  at year-end 1999. For 1999, the
average  yield on earning  assets  decreased  to 8.05% from 8.11% in 1998 due to
growth  in  loans  at  rates  below  the  prior  years  average.   The  rate  on
interest-bearing  liabilities  decreased from 4.72% to 4.43% with lower rates in
all deposit account categories.  Net interest income in 1998, increased 30.0% to
$7,754,488 from $5,966,603 in 1997.

<PAGE>

TABLE 1: AVERAGE  BALANCES,  INCOME AND EXPENSE,  YIELDS AND RATES The following
table shows the average  balance sheets for each of the years ended December 31,
1999,  1998,  and 1997. In addition,  the amounts of interest  earned on earning
assets,   with  related  yields,   and  interest  expense  on   interest-bearing
liabilities, with related rates, are shown. Loans placed on a non-accrual status
are included in the average balances. Net loans fees included in interest income
on loans totaled (in thousands)  $378, $243, and $129, for 1999, 1998, and 1997,
respectively.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                       1999                                   1998
---------------------------------------------------------------------------------------------------------------------
                                                     Interest     Average                   Interest      Average
                                        Average       Income-     Yields       Average      Income-       Yields
(Dollars in thousands)                  Balance       Expense     /Rates       Balance      Expense       /Rates
---------------------------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>           <C>        <C>         <C>              <C>
ASSETS
Securities                                $ 46,682      $ 2,855       6.12%      $ 57,497    $   3,711        6.45%
Loans, before allowance for losses         176,676       15,447       8.74%       118,116       10,867        9.20%
Interest-bearing deposits
      with other banks                         795           46       5.79%           540           31        5.74%
Federal funds sold                           9,930          503       5.07%        12,178          657        5.39%
       TOTAL EARNING ASSETS               $234,083      $18,851       8.05%      $188,331      $15,266        8.11%
---------------------------------------------------------------------------------------------------------------------
Non-earning assets                          15,796                                 11,573
        TOTAL ASSETS                      $249,879                               $199,904
---------------------------------------------------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS' EQUITY
 Interest-bearing deposits
     NOW accounts                         $ 49,673       $1,933       3.89%      $ 30,841    $   1,213        3.93%
     Money  market accounts                 17,275          534       3.09%        15,214          484        3.18%
     Savings accounts                       11,526          409       3.55%         8,167          308        3.77%
     Certificates of deposit               102,140        5,177       5.07%        88,824        4,778        5.38%
    TOTAL INTEREST-BEARING DEPOSITS       $180,614       $8,053       4.46%      $143,046       $6,783        4.74%
---------------------------------------------------------------------------------------------------------------------
Fed Funds purchased, securities
     sold U/A to repurchase and
     other borrowed funds                   15,429          626       4.06%        15,952          728        4.56%
  TOTAL INTEREST-BEARING LIABILITIES      $196,043       $8,679       4.43%      $158,998       $7,511        4.72%

---------------------------------------------------------------------------------------------------------------------
Demand deposits and other
      non-interest  bearing liabilities     37,219                                 26,404
     TOTAL LIABILITIES                    $233,262                               $185,402
---------------------------------------------------------------------------------------------------------------------
Stockholders' equity                        16,617                                 14,502
     TOTAL LIABILITIES AND
          STOCKHOLDERS' EQUITY            $249,879                               $199,904
---------------------------------------------------------------------------------------------------------------------
Interest rate spread                                                  3.62%                                   3.39%
Net interest income and margin                          $10,172       4.35%                     $7,755        4.12%

<CAPTION>
----------------------------------------------------------------------------
                                                        1997
----------------------------------------------------------------------------
                                                      Interest     Average
                                         Average       Income-     Yields
(Dollars in thousands)                   Balance       Expense     /Rates
----------------------------------------------------------------------------
<S>                                       <C>            <C>           <C>
ASSETS
Securities                                $  36,243      $ 2,427       6.70%
Loans, before allowance for losses           89,502        8,389       9.37%
Interest-bearing deposits
      with other banks                          332           19       5.76%
Federal funds sold                            5,488          300       5.46%
       TOTAL EARNING ASSETS                $131,565      $11,135       8.46%
----------------------------------------------------------------------------
Non-earning assets                            7,391
        TOTAL ASSETS                       $138,956
----------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS' EQUITY
 Interest-bearing deposits
     NOW accounts                        $   15,793      $   543       3.44%
     Money  market accounts                  14,216          443       3.12%
     Savings accounts                         6,968          261       3.74%
     Certificates of deposit                 66,344        3,562       5.37%
    TOTAL INTEREST-BEARING DEPOSITS       $ 103,321       $4,809       4.65%
----------------------------------------------------------------------------
Fed Funds purchased, securities
     sold U/A to repurchase and
     other borrowed funds                     7,464          359       4.81%
  TOTAL INTEREST-BEARING LIABILITIES      $ 110,785       $5,168       4.66%

----------------------------------------------------------------------------
Demand deposits and other
      non-interest  bearing liabilities      17,413
     TOTAL LIABILITIES                    $ 128,198
----------------------------------------------------------------------------
Stockholders' equity                         10,758
     TOTAL LIABILITIES AND
          STOCKHOLDERS' EQUITY             $138,956
----------------------------------------------------------------------------
Interest rate spread                                                   3.80%
Net interest income and margin                            $5,967       4.54%

</TABLE>


                                        6
<PAGE>


TABLE 2: RATE-VOLUME VARIANCE ANALYSIS
Interest  income and expense  are  affected  by changes in  interest  rates,  by
changes in the volumes of earning assets and interest-bearing  liabilities,  and
by changes in the mix of these assets and  liabilities.  The following  analysis
shows the year-to-year changes in the components of net interest income.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                   1999    compared to 1998           1998 compared to   1997
--------------------------------------------------------------------------------------------------------------------------------
                                                                  Increase (Decrease)            Increase  (Decrease)
                                                                 --------------------    Total  ----------------------  Total
                                                                         Due to         Increase        Due to          Increase
(Dollars in thousands)                                             Volume       Rate   (Decrease)  Volume      Rate    (Decrease)
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>        <C>        <C>        <C>       <C>        <C>
INTEREST INCOME
Loans                                                             $ 5,072    $  (492)   $ 4,580    $ 2,629   $  (151)   $ 2,478
Securities                                                           (669)      (187)      (856)     1,368       (84)     1,284
Federal funds sold                                                   (116)       (38)      (154)       361        (4)       357
Interest-bearing deposits
     in other banks                                                    15         --         15         19        (7)        12
--------------------------------------------------------------------------------------------------------------------------------
Total interest income                                             $ 4,302    $  (717)   $ 3,585    $ 4,377   $  (246)   $ 4,131
--------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest-bearing deposits
     NOW accounts                                                 $   734    $   (14)   $   720    $   583   $    87    $   670
     Money market accounts                                             63        (13)        50         32         9         41
     Savings accounts                                                 118        (17)       101         45         2         47
    Certificates of deposit                                           650       (251)       399      1,204        12      1,216
--------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits                                   $ 1,565    $  (295)   $ 1,270    $ 1,864   $   110    $ 1,974
Other borrowings                                                      (24)       (78)      (102)       388       (19)       369
--------------------------------------------------------------------------------------------------------------------------------
Total interest expense                                            $ 1,541    $  (373)   $ 1,168    $ 2,252   $    91    $ 2,343
--------------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET INTEREST INCOME                                     $ 2,761    $  (344)   $ 2,417    $ 2,125   $  (337)   $ 1,788
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

INTEREST SENSITIVITY
Interest sensitivity refers to the volatility of net interest income as a result
of changes in interest  rates.  Interest  sensitivity  is  actively  managed and
monitored by the Asset/ Liability  Management  Committee (ALCO).  ALCO's overall
objective  is to optimize net interest  income  after  giving  consideration  to
capital adequacy,  liquidity needs, interest sensitivity,  the economic outlook,
market opportunities,  and customer needs. General strategies to accomplish this
objective include maintaining a strong balance sheet,  maintaining adequate core
deposit levels,  taking an acceptable  level of interest rate risk,  adhering to
conservative  financial  management  principles  and  practicing  sound dividend
policies.  The Company's goal is to limit interest sensitivity to prudent levels
as determined by the Company's ALCO.

One of the tools  used by the  Company  to assess  interest  sensitivity  is the
"gap",  or  mismatch  in  repricing   between  interest   sensitive  assets  and
liabilities,  which provides a general  indication of interest  sensitivity at a
specific  point in time. A gap schedule is shown in Table 3 below,  and reflects
the  earlier  of  the  maturity  or  repricing  dates  for  various  assets  and
liabilities  at  December  31,  1999.  At that point in time,  the Company had a
cumulative net asset sensitive  twelve-month  gap with a $35.8 million excess of
interest  sensitive assets over interest sensitive  liabilities.  This generally
indicates that earnings should improve in a rising interest rate  environment as
more assets would  reprice  than  liabilities.  The opposite  would be true of a
negative, or liability sensitive, gap.

In addition to the gap  schedule  the Company  uses  earnings  simulation  model
forecasts  to measure the impact on earnings  and the market  value of portfolio
equity  from  changes in interest  rates over a one-year  period.  These  models
utilize the Company's  financial  data,  various  management  assumptions  as to
growth  and  earnings,  and  duration  analysis  to  forecast  the effect on the
Company's future earnings from rising and falling rates.



                                        7
<PAGE>


TABLE 3: INTEREST SENSITIVITY ANALYSIS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                                    Interest  Sensitivity  Periods
December 31, 1999                              Within   91 to 365    1 to 5      Over
(Dollars in thousands)                        90 Days     Days        Years     5 Years    Total
--------------------------------------------------------------------------------------------------
<S>                                          <C>        <C>        <C>        <C>        <C>
EARNING ASSETS
Securities                                   $    521   $  3,484   $ 24,779   $ 18,380   $ 47,164
Loans, net of unearned income                  66,700     50,249     80,037     10,074    207,060
Federal funds sold and interest-               11,957         --         --         --     11,957
     bearing deposits in banks
          Total earning assets               $ 79,178   $ 53,733   $104,816   $ 28,454   $266,181
--------------------------------------------------------------------------------------------------
INTEREST-BEARING LIABILITIES
     NOW accounts                            $  4,695   $ 14,672   $ 39,320         --   $ 58,687
     Money market accounts                      2,943      8,655      5,712         --     17,310
     Savings accounts                             948      2,962      7,938         --     11,848
    Certificates of deposit                     9,796     32,104     71,207         --    113,107
    Other borrowings                           20,337         --        400         --     20,737
        Total interest-bearing liabilities   $ 38,719   $ 58,393   $124,577         --   $221,689
--------------------------------------------------------------------------------------------------
Cumulative maturity / interest               $ 40,459   $ 35,799   $ 16,038   $ 44,492   $ 44,492
sensitivity gap
--------------------------------------------------------------------------------------------------
</TABLE>

NON-INTEREST INCOME

Non-interest  income  increased  $1,366,620,  or 216.3% over 1998.  Fees and net
gains on mortgage loans  held-for-sale of $1,265,028  increased  $1,245,959 from
$19,069 in 1998 with the Company's  mortgage  lending  division which  commenced
operations in early 1999, having originated  $73,738,370 in loans held-for-sale.
Deposit  account  service  charges  and  fees,  which  include  monthly  account
maintenance charges, overdraft fees, ATM surcharges,  safe deposit box rents and
merchant discount fee income,  increased $98,455 or 16.7% in 1999, and increased
$142,282 or 31.8% in 1998.

NON-INTEREST EXPENSE

In 1999,  non-interest expense was $8,397,190 compared to $5,647,915 in 1998 and
$4,464,727  in  1997.  Salaries  and  benefits  accounted  for  54.1%  of  total
non-interest  expense in 1999 due to the Company's new mortgage lending division
and  the  staffing  of  two  additional  branch  locations.  Occupancy  expenses
increased  $492,701 or 43.8% from  $1,125,726 in 1998 to $1,618,427 in 1999, due
to  additional  facilities  for the  Company's  new mortgage  lending  division,
operations department,  and continued branch expansion, and decreased $83,091 or
6.9% in 1998  primarily  due to a one-time  write-down  of $224,860 in leasehold
improvements with the relocation of the Company's Clarendon branch in late 1997.
Data  processing  costs  increased  $149,003  or 32.2% from  $462,170 in 1998 to
$611,173 in 1999 and increased $71,977 or 18.5% in 1998 due to growth in deposit
accounts.  Other operating  expenses were  $1,623,352  compared to $1,157,488 in
1998 and $821,185 in 1997.

INCOME TAXES

The Company's income tax provisions are adjusted for non-deductible expenses and
non-taxable  interest  after  applying the U.S.  federal income tax rate of 34%.
Provision for income taxes totaled  $1,128,143,  $783,961,  and $585,747 for the
years ended December 31, 1999, 1998, and 1997, respectively.


                                        8
<PAGE>


ASSET QUALITY- PROVISION AND ALLOWANCE  FOR LOAN LOSSES

The provision for loan losses is based upon management's  estimate of the amount
required to maintain an adequate  allowance  for loan losses  reflective  of the
risks in the loan portfolio.  During 1999,  charge-offs totaled $39,513 compared
to $22,712 and $23,107 in 1998 and 1997,  respectively.  The  provision for loan
loss expense in 1999 was $480,000  compared to $450,950 in 1998, and $261,500 in
1997.  The total  allowance  for loan losses of  $1,889,007 at December 31, 1999
increased 31.4% from $1,437,514 at December 31, 1998.

Management feels that the allowance for loan losses is adequate. The coverage of
the provision for loan losses over net charge-offs was 16.8 times in 1999, 138.7
times in 1998, and 13.1 times in 1997. There can be no assurance,  however, that
additional  provisions  for loan  losses  will not be  required  in the  future,
including  in the  event  of  changes  in the  economic  assumptions  underlying
management's estimates and judgments,  adverse developments in the economy, on a
national basis or in the Company's market area, or changes in the  circumstances
of particular borrowers.

The Company generates a monthly analysis of the allowance for loan losses,  with
the objective of  quantifying  portfolio  risk into a dollar figure of potential
losses,  thereby translating the subjective risk value into an objective number.
Emphasis is placed on  independent  external  loan reviews and monthly  internal
reviews.  The  determination  of the allowance for loan losses is based on eight
qualitative factors, applying appropriate weight to separate types or categories
of  loans.  These  factors  include:  levels  and  trends in  delinquencies  and
non-accruals,  trends in volumes  and terms of loans,  effects of any changes in
lending policies, the experience, ability and depth of management,  national and
local economic trends and conditions,  concentrations of credit,  quality of the
Company's  loan  review  system,  regulatory  requirements,  and the  effect  of
competition.

TABLE 4: PROVISION AND ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
(Dollars in thousands)                         1999      1998      1997      1996      1995
-------------------------------------------------------------------------------------------
<S>                                          <C>       <C>       <C>       <C>       <C>
Allowance, beginning of period               $1,438    $  990    $  748    $  552    $  507
CHARGE-OFFS
     Real estate loans                       $   --    $   --    $   --    $   --    $   86
     Commercial loans                            --        --        23        --        34
     Consumer loans                              40        23        --        32         1
Total charge-offs                            $   40    $   23    $   23    $   32    $  121
-------------------------------------------------------------------------------------------
RECOVERIES
     Real estate loans                       $   --    $   --    $   --    $   43    $   --
     Commercial loans                             7         3         3         3         7
     Consumer loans                               4        17        --        --        --
Total recoveries                             $   11    $   20    $    3    $   46    $    7
-------------------------------------------------------------------------------------------
Net charge-offs (recoveries)                 $   29    $    3    $   20    $  (14)   $  114
Provisions for loan losses                      480       451       262       182       159
-------------------------------------------------------------------------------------------
Allowance, end of period                     $1,889    $1,438    $  990    $  748    $  552

Ratio of net charges-offs to average total     0.02%    0.003%     0.02%   ( 0.02%)    0.25%
    loans outstanding during period
</TABLE>


                                        9
<PAGE>


TABLE 5: ALLOCATION OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
The  allowance  for loan losses is a general  allowance  applicable  to all loan
categories;  however,  management  has  allocated  the  allowance  to provide an
indication  of the relative  risk  characteristics  of the loan  portfolio.  The
allocation is an estimate and should not be  interpreted  as an indication  that
charge-offs will occur in these amounts, or that the allocation indicates future
trends.  The allocation of the allowance at December 31 for the years  indicated
and the  ratio of  related  outstanding  loan  balances  to total  loans  are as
follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                      1999            1998             1997           1996          1995
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>              <C>               <C>           <C>            <C>
ALLOCATION OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
Real estate - mortgage                                         $1,206           $  870            $ 683         $516           $381
Real estate - construction                                        132              101               33           25             18
Commercial                                                        477              409              262          198            146
Consumer                                                           74              581               12            9              7
-----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31,                                          $1,889           $1,438             $990         $748           $552
-----------------------------------------------------------------------------------------------------------------------------------
RATIO OF LOANS TO TOTAL YEAR-END LOANS
Real estate - mortgage                                            76%              73%              75%          71%            74%
Real estate - construction                                         8%               8%               4%           4%             2%
Commercial                                                        13%              16%              19%          22%            20%
Consumer                                                           3%               3%               2%           3%             4%
-----------------------------------------------------------------------------------------------------------------------------------
                                                                 100%             100%             100%         100%           100%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

RISK ELEMENTS AND NON-PERFORMING ASSETS

The Company seeks to minimize its risk and enhance its profitability by focusing
on providing  community-based  financing and maintaining policies and procedures
ensuring safe and sound banking practices.

Non-performing assets consist of non-accrual loans, impaired loans, restructured
loans,  and  other  real  estate  owned  (foreclosed   properties).   The  total
non-performing  assets  and  loans  that are 90 days or more  past due and still
accruing  interest  decreased 5.0% from $333,847 at year-end 1998 to $317,031 at
year-end 1999, and increased 32.8% from $251,389 at year-end 1997 to $333,847 at
year-end 1998.

Loans are placed in  non-accrual  status when in the opinion of  management  the
collection  of  additional  interest is  unlikely  or a specific  loan meets the
criteria for  non-accrual  status  established  by  regulatory  authorities.  No
interest  is  taken  into  income  on  non-accrual  loans.  A  loan  remains  on
non-accrual  status until the loan is current as to both  principal and interest
or the borrower demonstrates the ability to pay and remain current, or both.

At December  31,  1999,  the Company had no  concentrations  of loans in any one
industry exceeding 10% of its total loan portfolio. An industry for this purpose
is defined as a group of counterparts that are engaged in similar activities and
have similar  economic  characteristics  that would cause their  ability to meet
contractual obligations to be similarly affected by changes in economic or other
conditions.  Loans  secured  by  nonfarm,  nonresidential  real  estate  totaled
$117,106,266 at December 31, 1999 and represent 56.4% of total loans.

Foreclosed  real  properties  include  properties  that have been  substantively
repossessed  or  acquired  in complete  or partial  satisfaction  of debt.  Such
properties,  which are held for resale, are carried at the lower of cost or fair
value,  including a reduction for the estimated selling  expenses,  or principal
balance of the related loan. As of December 31, 1999 and 1998,  the Company held
no foreclosed real properties.

The  ratio of  non-performing  assets  to total  loans  decreased  from  .22% at
December  31,  1998 to .15% at  December  31,  1999 and  decreased  from .25% at
December 31, 1997 to .22% at December 31, 1998. This ratio is expected to remain
at its low level relative to the Company's  peers.  This expectation is based on
potential and identified  problem loans on December 31, 1999. As of December 31,
1999,  there were $257,667 of loans for which  management  has  identified  risk
factors  which could have the potential to impair  repayment in accordance  with
their terms. These loans are primarily well-secured and currently peforming.



                                       10
<PAGE>

<TABLE>
<CAPTION>


TABLE 6: NON-PERFORMING ASSETS
----------------------------------------------------------------------------------------------------
(Dollars in thousands)                              1999        1998        1997        1996    1995
----------------------------------------------------------------------------------------------------
<S>                                                 <C>     <C>         <C>         <C>         <C>
Non-accrual loans                                   $106    $    121    $    111    $     --    $ 41
Impaired loans                                       143         213         140          80     154
Restructured loans                                    --          --          --          --      --
Foreclosed properties                                 --          --          --          --     717
----------------------------------------------------------------------------------------------------
     Total non-performing assets                    $249    $    334    $    251    $     80    $912
Loans past due 90 days and still accruing             68          --          --          --      --
----------------------------------------------------------------------------------------------------
TOTAL NON-PERFORMING ASSETS AND PAST DUE LOANS      $317    $    334    $    251    $     80    $912
Allowance for loan losses to total loans             .91%        .95%        .97%        .97%    .96%
Allowance for loan losses to                       758.6       430.5       394.4       935.0    60.5
     non-performing loans
Non-performing assets to total loans                0.15        0.22        0.25        0.10    1.60
Non-performing assets to total assets               0.11        0.15        0.15        0.07    1.01
----------------------------------------------------------------------------------------------------
</TABLE>

LOAN PORTFOLIO
At December 31,  1999,  loans,  net of unearned  income and  allowance  for loan
losses, totaled $205,171,188,  an increase of 37.3% over the 1998 year-end total
of  $149,440,296.  In 1998, net loans increased 48.1% from a year-end 1997 total
of $100,917,408.

The Company's lending activities are its principal source of income. Real estate
loans,  including  residential  permanents  and  construction,   and  commercial
mortgage/construction loans for income-producing properties, represent the major
portion of the Company's  loan  portfolio  although  consumer  loans continue to
increase.  Tables 7 and 8 present  information  pertaining to the composition of
the loan portfolio including unearned income, allowance for loan losses, and the
maturity/ repricing of selected loans.


TABLE 7: SUMMARY OF TOTAL LOANS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                                               Year - End  December 31,
(Dollars in thousands)                                              1999       1998       1997       1996       1995
--------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>        <C>        <C>        <C>        <C>
Real estate - mortgage                                          $156,998   $109,774   $ 76,458   $ 54,750   $ 43,071
Real estate - construction                                        17,238     12,794      4,081      3,324      1,065
Commercial                                                        26,423     23,514     19,076     16,611     11,215
Consumer                                                           6,968      4,983      2,588      2,566      2,036
--------------------------------------------------------------------------------------------------------------------
Total loans                                                     $207,627   $151,065   $102,203   $ 77,251   $ 57,387
Less unearned income                                                 567        187        296        190        204
Less allowance for loan losses                                     1,889      1,438        990        748        552
--------------------------------------------------------------------------------------------------------------------
Total loans, net                                                $205,171   $149,440   $100,917   $ 76,313   $ 56,631
--------------------------------------------------------------------------------------------------------------------
</TABLE>

TABLE 8: MATURITY/REPRICING SCHEDULE OF SELECTED LOANS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                                  As of December 31, 1999
(Dollars in thousands)                                          Commercial                                          Construction
--------------------------------------------------------------------------------------------------------------------------------
Variable Rate:
<S>                                                                <C>                                                   <C>
     Within 1 year                                                 $16,507                                               $11,574
     1 to 5 years                                                      267                                                    --
Fixed Rate:
     Within 1 year                                                   2,149                                                 3,169
     1 to 5 years                                                    6,054                                                   969
     After 5 years                                                   1,446                                                 1,526
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>




                                       11
<PAGE>


SECURITIES

The securities  portfolio plays a primary role in the management of the interest
rate sensitivity of the Company and it provides  additional interest income. The
portfolio  serves as a source of liquidity and is used as needed to meet certain
collateral requirements.

The  securities  portfolio  consists of two  components,  investment  securities
held-to-maturity and securities available-for-sale. Securities are classified as
held-to-maturity  based on management's intent and the Company's ability, at the
time of purchase,  to hold such  securities to maturity.  These  securities  are
carried at amortized cost.  Securities  which may be sold in response to changes
in market interest rates, changes in the securities'  prepayment risk, increased
loan demand,  general  liquidity needs, and other similar factors are classified
as available-for-sale and are carried at estimated fair value.

In 1999, total  securities  decreased  $8,480,027,  or 15.5% to $46,324,676 from
$54,804,703 at year-end 1998.  Securities of U.S.  Government agencies represent
the entire  portfolio  except for stock of the Federal Reserve Bank, the Federal
Home Loan Bank of Atlanta,  and Community Bankers' Bank required to be held as a
condition of membership.


TABLE 9: MATURITY OF SECURITIES
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------
                                                                           Year - End December 31,

                                              1999                               1998                         1997
                                   --------------------------     --------------------------------   ------------------------
                                   Book              Weighted      Book                   Weighted        Book      Weighted
                                   ----              --------      ----                   --------        ----      ---------
                                   Value             Average       Value                  Average         Value     Average
                                   -----             --------      -----                  -------         -----     ---------
(Dollars in thousands)                               Yield                                 Yield                     Yield
                                                     -----                                 -----                     --------
-----------------------------------------------------------------------------------------------------------------------------
<S>                                <C>               <C>          <C>                        <C>     <C>             <C>
TOTAL SECURITIES
Maturing within one year           $     --              --      $      242                 6.50%   $    1,496      5.74%
Maturing after one through
     five years                      19,226            5.79%          17,721                 5.84%       28,283      6.51%
Maturing after  five through
     ten years                       11,858            6.43%          21,856                 6.46%       12,877      6.77%
Maturing after 10 years              15,241            6.87%          14,986                 6.53%        4,303      6.19%
----------------------------------------------------------------------------------------------------------------------------
                                    $46,325            6.31%         $54,805                 6.27%     $ 46,959      6.53%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       12
<PAGE>

DEPOSITS

The  Company's  principal  source of funds is depository  accounts  comprised of
demand deposits, savings and money market accounts, and time deposits.  Deposits
are provided by individuals and business located within the communities served.

Total  deposits  increased  $54,301,834,  or  28.8% in 1999 to  $243,044,377  at
year-end from  $188,742,543  at year-end  1998. In 1999,  total dollar growth by
deposit category included a 35.6% increase in non-interest  bearing deposits,  a
39.1% increase in savings accounts and interest-bearing  demand deposits,  and a
19.6% increase in time deposits. In 1998, total deposits increased  $46,315,014,
or 32.5% over 1997.  Table 10 presents the average deposit  balances and average
rates paid for the years 1999,  1998, and 1997.  Table 11 details  maturities of
certificates of deposit with balances of $100,000 and over.

TABLE 10: AVERAGE DEPOSITS AND RATES PAID

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------
                                             1999                     1998                 1997
                                     --------------------     ---------------------  ------------------
                                       Average  Average         Average    Average   Average   Average
(Dollars in thousands)                 Balance   Rate           Balance     Rate     Balance     Rate
-------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>        <C>          <C>     <C>        <C>
NON-INTEREST BEARING DEMAND            $ 36,167      --      $ 25,558         --     $ 16,783      --
DEPOSITS
INTEREST-BEARING DEPOSITS
NOW accounts                             49,673    3.89%       30,841      3.93%       15,793   3.44%
Money Market accounts                    17,275    3.09%       15,214      3.18%       14,216   3.12%
Savings accounts                         11,526    3.55%        8,167      3.77%        6,968   3.74%
Certificates of deposit and other       102,140    5.07%       88,824      5.38%       66,344   5.37%
time deposits
TOTAL INTEREST-BEARING DEPOSITS         180,614    4.46%      143,046      4.74%      103,321   4.65%
------------------------------------------------------------------------------------------------------
Total deposits                         $216,781    3.71%     $168,604      4.02%      $120,10   4.00%
------------------------------------------------------------------------------------------------------
</TABLE>

TABLE 11: MATURITIES OF CERTIFICATES OF DEPOSIT WITH BALANCES $100,000 OR MORE

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                              1999                               1998                              1997
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                                <C>                               <C>
3 months or less                               $   2,470                          $   3,710                         $   4,193
3-6 months                                         3,904                              6,272                             5,851
6-12 months                                        7,390                             14,365                            13,066
Over 12 months                                    27,109                              7,365                             3,045
-----------------------------------------------------------------------------------------------------------------------------
Total                                           $ 40,873                           $ 31,172                           $26,155
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

LIQUIDITY

Liquidity is a measure of the ability to generate and maintain  sufficient  cash
flows to fund  operations  and to meet  financial  obligations to depositors and
borrowers promptly and in a cost-effective manner. Liquidity is provided through
cash and due from banks, securities available-for-sale,  federal funds sold, and
loans and other  investment  securities  maturing within one year. The Company's
liquidity position is actively managed on a daily basis and monitored  regularly
by the Asset/Liability Management Committee (ALCO).

Cash and due from banks, investment securities available-for-sale, federal funds
sold, and loans and other investment securities maturing within one year totaled
$66,652,100 and $74,063,608 at December 31, 1999 and 1998, respectively.

Additional sources of liquidity available to the Company include the capacity to
borrow funds  through  established  lines of credit with  various  correspondent
banks, and the Federal Home Loan Bank of Atlanta.


                                       13
<PAGE>

CAPITAL

The assessment of capital  adequacy depends on a number of factors such as asset
quality,  liquidity,  earnings performance,  and changing competitive conditions
and  economic  forces.  The  adequacy  of the  Company's  capital is reviewed by
management on an ongoing basis. Management seeks to maintain a capital structure
that will  assure an  adequate  level of capital to  support  anticipated  asset
growth and to absorb potential losses.

On March 1, 1998,  the Company  completed an offering of an  additional  200,000
shares of its common stock,  on a preemptive  rights basis, at a price of $15.00
per share. Net proceeds of the offering to the Company were $2,956,723.

The capital  position of the Company and its wholly-owned  subsidiary,  Virginia
Commerce  Bank (the "Bank")  continues to exceed  regulatory  requirements.  The
primary  indicators  relied  on by bank  regulators  in  measuring  the  capital
position are the Tier 1risk-based capital, total risk-based capital and leverage
ratios. Tier I capital consists of common and qualifying preferred stockholders'
equity  less  goodwill.  Total  risk-based  capital  consists of Tier I capital,
qualifying  subordinated  debt and a portion of the  allowance  for loan losses.
Risk-based capital ratios are calculated with reference to risk-weighted assets.
The leverage ratio compares Tier 1 capital to total average  assets.  The Bank's
Tier I risk-based  capital  ratio was 8.17% at December  31,  1999,  compared to
9.53% at December 31, 1998.  The total  risk-based  capital  ratio was 10.15% at
December 31, 1999,  compared to 10.40% at December 31, 1998.  The leverage ratio
was 6.59% at December  31, 1999,  compared to 7.15% at December 31, 1998.  These
ratios are in excess of the mandated minimum requirement.

DIVIDENDS

The Company has not paid cash  dividends  in the two most recent  fiscal  years,
electing  to retain  earnings  for  funding  the growth of the  Company  and its
business.  The Company currently anticipates  continuing the policy of retaining
earnings to fund growth. The ability of the Company to pay dividends,  should it
elect to do so, depends  largely upon the ability of the Bank to declare and pay
dividends to the Company,  as the principal  source of the Company's  revenue is
dividends  paid by the Bank.  Future  dividends  will depend  primarily upon the
Bank's  earnings,   financial  condition,   and  need  for  funds,  as  well  as
governmental  policies and  regulations  applicable to the Company and the Bank,
which limit the amount that may be paid as dividends without prior approval.

YEAR 2000

The Company has  experienced no adverse affects or impact on its operations as a
result of the century date rollover and it estimates the total expense from 1997
through  1999 for Year  2000  preparedness  to be  approximatley  $400,000.  The
Company anticipates no expense in the Year 2000 due to this event.


                                       14
<PAGE>

MARKET PRICE OF STOCK AND DIVIDENDS


The  Company's  stock is traded on the NASDAQ  National  Market under the symbol
"VCBI".  The  following  table sets forth the range of high and low sales prices
(adjusted  for stock  dividends  and splits)  known to the Company for each full
quarterly period within the two most recent fiscal years.  Information for dates
prior to December 23, 1999 represents  information for the Bank, which traded on
the NASDAQ National Market under the symbol "VCBK".


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                              1999                                   1998
Quarter                                           High                      Low          High                     Low
                                                  ----                      ---          ----                     ---
---------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                       <C>          <C>                      <C>
First                                               $14.55                    $12.73       $14.88                   $11.98
Second                                               14.09                     11.57        18.18                    14.16
Third                                                15.00                     14.25        17.95                    14.09
Fourth                                               15.50                     13.38        14.09                    12.05
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

The  approximate  number of the Company's  stockholders  at December 31, 1999 is
750. Information regarding dividends and splits in 1999, 1998, 1997, and 1996 is
as follows:

1.       On April 28,  1999,  stockholders  approved a change to the Articles of
         Incorporation  to  sudivide  each  share of common  stock  into one and
         one-tenth shares of common stock.

2.       On April 29,  1998,  stockholders  approved a change to the Articles of
         Incorporation  to  subdivide  each  share of common  stock into one and
         one-tenth shares of common stock.

3.       A 35% stock  split in the form of a dividend  was  declared  on May 28,
         1997, for stockholders of record on June 16, 1997, and was paid on June
         26, 1997.

4.       A  stock   dividend  of  10%  was  declared  on  March  26,  1997,  for
         stockholders  of record on April  14,  1997,  and was paid on April 30,
         1997.

5.       A  stock   dividend  of  10%  was  declared  on  March  20,  1996,  for
         stockholders  of  record  on April 1,  1996,  and was paid on April 30,
         1996.

ANNUAL MEETING OF STOCKHOLDERS

The annual  meeting of  stockholders  of Virginia  Commerce  Bancorp,  Inc. (the
"Company")  will be held at 4:00 pm on  Wednesday,  April 26,  2000 at  TheTower
Club, 8000 Towers Crescent Drive, Vienna, Virginia.

ANNUAL REPORT ON FORM 10-KSB

A copy of Form 10-KSB as filed with the  Securities  and Exchange  Commission is
available without charge to stockholders upon written request to:

William K. Beauchense
Treasurer and Chief Financial Officer
Virginia Commerce Bancorp, Inc.
14201 Sullyfield Circle #200
Chantilly, VA 20151


                                       15

<PAGE>

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                                              December 31,
                                                                          ---------------------
                                                                          1999             1998
                                                                          ----             ----
----------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>
ASSETS
Cash and due from banks                                               $  10,757,721    $  10,474,685
Interest-bearing deposits with other banks                                5,000,000               --
Securities (fair value: 1999, $45,850,848; 1998, $54,967,456)            46,324,676       54,804,703
Federal funds sold                                                        6,957,000          777,000
Loans held for sale                                                       1,460,303          802,000
Loans, net of allowance for loan losses of $1,889,007 in 1999           203,710,885      148,638,296
     and $1,437,514 in 1998
Bank premises and equipment, net                                          5,718,710        4,977,488
Accrued interest receivable                                               1,306,509        1,150,790
Other assets                                                              1,339,682          816,948
----------------------------------------------------------------------------------------------------
     Total assets                                                     $ 282,575,486    $ 222,441,910
----------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS:
     Non-interest bearing demand deposits                             $  42,214,489    $  31,120,839
     Savings and interest-bearing demand deposits                        87,722,784       63,070,865
     Time deposits                                                      113,107,104       94,550,839
----------------------------------------------------------------------------------------------------
     Total deposits                                                   $ 243,044,377    $ 188,742,543
Securities sold under agreement to repurchase                            17,836,965       15,726,533
Other borrowed funds                                                      2,900,000        1,000,000
Accrued interest payable                                                    675,847          627,968
Other liabilities                                                           629,544          513,206
Commitments and contingent liabilities                                           --               --
----------------------------------------------------------------------------------------------------
      Total liabilities                                               $ 265,086,733    $ 206,610,250
STOCKHOLDERS' EQUITY:
Preferred stock, $5.00 par, 1,000,000 shares authorized of which no   $          --    $          --
        shares have been issued
Common stock, $1.00 par, 5,000,000 shares authorized;  issued and         1,968,985        1,786,634
 outstanding 1999, 1,968,985; 1998, 1,786,634;
Surplus                                                                  11,090,938       11,240,289
Retained earnings                                                         4,982,565        2,820,173
Accumulated other comprehensive income (loss)*                             (553,735)         (15,436)
----------------------------------------------------------------------------------------------------
       Total stockholders' equity                                     $  17,488,753    $  15,831,660
----------------------------------------------------------------------------------------------------
       Total liabilities and stockholders' equity                     $ 282,575,486    $ 222,441,910
----------------------------------------------------------------------------------------------------
</TABLE>

* Representing unrealized losses on securities available-for-sale


See Notes to Consolidated Financial Statements.



                                       16
<PAGE>


CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                                 Years Ended December 31,
                                                                1999         1998          1997
----------------------------------------------------------------------------------------------------
<S>                                                         <C>           <C>           <C>
INTEREST INCOME:
    Interest and fees on loans                              $15,447,314   $10,866,892   $ 8,388,693
    Interest on investment securities:
        U.S. Treasury securities and agency obligations       2,783,225     3,651,839     2,375,934
        Other securities                                         72,266        59,045        51,317
    Interest on federal funds sold                              502,782       656,883       299,547
    Interest on deposits with other banks                        45,779        31,167        19,081
----------------------------------------------------------------------------------------------------
   Total interest income                                    $18,851,366   $15,265,826   $11,134,572
INTEREST EXPENSE:
     Deposits                                               $ 8,053,004   $ 6,782,822   $ 4,808,786
     Securities sold under agreement to repurchase              570,723       644,675       195,732
     Federal Home Loan Bank advances                             55,132        83,841       163,451
----------------------------------------------------------------------------------------------------
    Total interest expense                                  $ 8,678,859   $ 7,511,338   $ 5,167,969
----------------------------------------------------------------------------------------------------
    Net interest income                                     $10,172,507   $ 7,754,488   $ 5,966,603
Provision for loan losses                                       480,000       450,950       261,500
----------------------------------------------------------------------------------------------------
    Net interest income after provision for loan losses     $ 9,692,507   $ 7,303,538   $ 5,705,103
OTHER INCOME:
     Service charges and other fees                         $   688,768   $   590,313   $   448,031
     Fees and net gains on loans held for sale                1,265,028        19,069            --
     Security gains, net                                             --            --         5,625
     Other                                                       44,774        22,568        24,095
----------------------------------------------------------------------------------------------------
     Total other income                                     $ 1,998,570   $   631,950   $   477,751
OTHER EXPENSES:
     Salaries and employee benefits                         $ 4,544,238   $ 2,902,531   $ 2,044,532
     Occupancy expense                                        1,618,427     1,125,726     1,208,817
     Data processing                                            611,173       462,170       390,193
     Other operating expense                                  1,623,352     1,157,488       821,185
----------------------------------------------------------------------------------------------------
     Total other  expense                                   $ 8,397,190   $ 5,647,915   $ 4,464,727
     Income before taxes on income                          $ 3,293,887   $ 2,287,573   $ 1,718,127
----------------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES                                    1,128,143       783,961       585,747
----------------------------------------------------------------------------------------------------
     Net income                                             $ 2,165,744   $ 1,503,612   $ 1,132,380
Earnings per common share, basic                            $      1.10   $      0.78   $      0.66
Earnings per common share, diluted                          $      1.04   $      0.73   $      0.62
----------------------------------------------------------------------------------------------------
</TABLE>

  See Notes to Consolidated Financial Statements.


                                       17
<PAGE>

<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------
                                         Preferred  Common      Surplus      Retained   Accumulated    Comprehensive   Total
                                         ---------  ------      -------      --------   -----------    -------------   -----
                                         Stock      Stock                    Earnings   Other          Income          Stockholders'
                                         -----      -----                    --------   -----          ------          -------------
                                                                                        Comprehensive                  Equity
                                                                                        -------------                  ------
                                                                                        Income (Loss)
                                                                                        -------------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>     <C>        <C>        <C>            <C>             <C>
BALANCE, DECEMBER 31,1996                $     --   $4,796,150  $ 4,026,524  $1,438,471 $(207,122)     $       --      $10,054,023
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income:
 Net Income 1997                                                              1,132,380                $1,132,380        1,132,380
 Other comprehensive income, net of tax
  Unrealized holding gains
  arising during the period
  (net of tax of $45,016)                                                                                  87,381
  Reclassification adjustment
  (net of tax of $1,912)                                                                                    3,713
                                                                                                       ----------
 Other comprehensive income
  (net of tax of $46,928)                                                                  91,094      $   91,094           91,094
                                                                                                       ----------
 Total comprehensive income                                                                            $1,223,474
                                                                                                       ----------
Issuance of common stock-
 10% stock dividend                            --      479,010      766,416  (1,245,426)       --              --               --
Issuance of common stock-
 35% stock split                               --    1,845,200   (1,845,200)         --        --              --               --
Cash paid in lieu of fractional
 shares                                        --           --           --      (4,560)       --              --           (4,560)

BALANCE, DECEMBER 31, 1997               $     --   $7,120,360  $ 2,947,740 $ 1,320,865 $(116,028)             --      $11,272,937
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income:
 Net Income 1998                                                              1,503,612                $1,503,612        1,503,612
 Other comprehensive income, net of tax
  Unrealized holding gains
  arising during the period
  (net of tax of $51,820)                                                                                 100,592
  Reclassification adjustment                                                                                 --
 Other comprehensive income                                                                            ----------
  (net of tax of $51,820)                                                                 100,592      $  100,592          100,592
                                                                                                       ----------
 Total comprehensive income                                                                            $1,604,204
                                                                                                       ----------
Issuance of 200,000 common shares-
 rights offering                               --    1,000,000    1,956,723          --        --              --        2,956,723
Change in par value and
 capital restructure                           --   (6,334,120)   6,334,120          --        --              --               --
Cash paid in lieu of fractional
 shares                                        --           --           --      (4,304)       --              --           (4,304)
Stock options exercised                        --          394        1,706          --        --              --            2,100

BALANCE, DECEMBER 31, 1998               $     --  $ 1,786,634  $11,240,289 $ 2,820,173 $ (15,436)             --      $15,831,660
------------------------------------------------------------------------------------------------------------------------------------
Comprehensive Income:
 Net Income 1999                                                              2,165,744               $ 2,165,744        2,165,744
 Other comprehensive income, net of tax
  Unrealized holding losses
  arising during the period
  (net of tax of $277,322)                                                                               (538,299)
  Reclassification adjustment                                                                                  --
                                                                                                      -----------
 Other comprehensive income
  (net of tax of $277,322)                                                               (538,299)    $  (538,299)        (538,299)
                                                                                                      -----------
 Total comprehensive income                                                                           $ 1,627,445
                                                                                                      -----------
Capital restructure                            --      178,692     (178,692)         --        --              --              --
Cash paid in lieu of fractional
 shares                                        --           --           --      (3,352)       --              --           (3,352)
Stock options exercised                        --        3,659       29,341          --        --              --           33,000
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                 $   --  $ 1,968,985  $11,090,938  $4,982,565 $(553,735)             --     $ 17,488,753
</TABLE>

See Notes to Consolidated Financial Statements.



                                       18
<PAGE>



CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                              1999                       1998                   1997
CASH FLOWS FROM OPERATING ACTIVITIES:
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                        <C>                  <C>
Interest received                                                   $   18,763,094        $        15,327,426 $           10,807,007
Other income received                                                    1,998,570                    612,881                472,126
Net change in loans held-for-sale                                        (658,303)                  (802,000)                     --
Interest paid                                                          (8,630,980)                (7,432,558)            (4,975,588)
Cash paid to suppliers and employees                                   (7,746,344)                (5,039,712)            (3,797,835)
Income taxes paid                                                       (1,261,716                  (773,000)              (990,584)
                                                                        ----------                  ---------              ---------
     Net cash provided by operating activities                      $    2,464,321       $          1,893,037   $          1,515,126
------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and principal payments on
     securities held-to-maturity                                      $ 12,433,085        $        28,336,313    $        10,000,000
Proceeds from maturities and principal payments on                       1,267,829                 41,587,366              6,000,000
     securities available-for-sale
Proceeds from sales of securities available-for-sale                            --                         --              2,000,000
Purchases of securities held-to-maturity                               (4,932,500)               (21,075,395)           (18,500,469)
Purchases of securities available-for-sale                             (1,171,438)               (56,616,242)           (10,123,110)
Net increase in loans made to customers                               (56,210,892)               (48,973,838)           (24,865,877)

Purchase of bank premises and equipment                                (1,387,586)                  (777,464)            (3,441,580)
                                                                       -----------                  ---------            -----------
      Net cash (used in) investing activities                       $ (50,001,502)         $     (57,519,260)      $    (38,931,036)
------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand, NOW, money market and savings
       accounts                                                       $ 35,745,569         $       28,500,083      $      16,489,207
Net increase in time deposits                                           18,556,265                 17,814,931             22,215,747
Net increase in securities sold under agreement to
       repurchase                                                        2,110,432                  7,769,324              2,562,388
Net increase (decrease) in other borrowed funds                          1,900,000                (1,800,000)                     --
Net proceeds from issuance of capital stock                                 33,000                  2,958,823                     --

Cash paid in lieu of fractional shares                                     (3,352)                    (4,304)                (4,560)
                                                                           -------                    -------                -------
Net cash provided by financing activities                            $ 58,341,914          $      55,238,857       $     41,262,782
------------------------------------------------------------------------------------------------------------------------------------
      Increase in cash and cash equivalents                         $   11,463,036        $           414,634      $       3,846,872
CASH AND CASH EQUIVALENTS:
   Beginning                                                            11,251,685                 10,837,051              6,990,179
                                                                        ----------                -----------              ---------
   Ending                                                             $ 22,714,721          $      11,251,685      $      10,837,051
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.



                                       19
<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH                                  1999                     1998                  1997
PROVIDED  BY OPERATING ACTIVITIES:
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                       <C>                  <C>
Net income                                                            $2,165,744             $   1,503,612        $   1,132,380
Adjustments to reconcile net income to net cash
provided by operating activities:
     Depreciation and amortization                                       646,364                   433,560              314,345
     Provision for loan losses                                           480,000                   450,950              261,500
     Deferred tax expense (benefit)                                    (191,579)                 (159,748)            (118,204)
     (Gain) on sale of securities                                             --                        --              (5,625)
     Amortization of security premiums and
        accretion  of discounts                                           67,447                    75,085               58,509
     Origination of loans held-for-sale                             (73,738,370)                 (802,000)                   --
     Sale of loans                                                    73,080,067                        --                   --
     (Increase) decrease in other assets                                (50,244)                  (55,748)               63,187
     Increase (decrease) in other liabilities                            112,732                   401,100            (280,642)
     (Increase) in accrued interest receivable                         (155,719)                  (32,173)            (327,565)
     Increase in accrued interest payable                                 47,879                    78,399              192,381
     Loss on disposition of leasehold improvement                             --                        --              224,860
NET CASH PROVIDED BY OPERATING ACTIVITIES                            $ 2,464,321             $   1,893,037    $       1,515,126
------------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
ACTIVITIES:
Unrealized gain (loss) on securities                               $   (815,621)             $     152,412    $        138,022
Transfer of securities from held-to-maturity to
     available-for-sale                                      $                --                 1,165,925                   --
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       20
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. NATURE OF BANKING ACTIVITIES AND ACCOUNTING POLICIES

BUSINESS

On December 22, 1999, Virginia Commerce Bancorp, Inc. (the "Company") became the
holding  company for  Virginia  Commerce  Bank.  The Company  acquired  Virginia
Commerce  Bank through a share  exchange in which the  stockholders  of Virginia
Commerce  Bank  received  one share of the  Company  for each share of  Virginia
Commerce  Bank. The exchange was a tax-free  transaction  for federal income tax
purposes.   The   merger   was   accounted   for  on  the   same   basis   as  a
pooling-of-interests.  Financial  statements  for  all  prior  years  have  been
retroactively restated for the exchange.

The  Company  provides  loan and  deposit  products  to  commercial  and  retail
customers in the  Washington  Metropolitan  Area,  with the primary  emphasis on
Northern Virginia.  The loan portfolio is collateralized  generally by assets of
the  customers.  The loans are expected to be repaid from cash flows or proceeds
from the sale of selected assets of the borrowers.

PRINCIPLES OF CONSOLIDATION

The consolidated  financial statements include the accounts of Virginia Commerce
Bancorp,  Inc.  (the  "Company")  and  its  wholly-owned  subsidiaries,  Virgina
Commerce  Bank (the  "Bank")  and  Northeast  Land and  Investment  Company.  In
consolidation,  all significant intercompany accounts and transactions have been
eliminated.

RISKS AND UNCERTAINTIES

In its normal course of business,  the Company  encounters two significant types
of risk:  economic and  regulatory.  There are three main components of economic
risk: interest rate risk, credit risk and market risk. The Company is subject to
interest rate risk to the degree that its interest-bearing liabilities mature or
reprice more rapidly or on a different basis than its  interest-earning  assets.
Credit risk is the risk of default on the Company's  loan portfolio that results
from the borrowers'  inability or unwillingness to make  contractually  required
payments.  Market risk reflects  changes in the value of  collateral  underlying
loans receivable and the valuation of real estate held by the Company.

The  determination  of the allowance for loan losses is based on estimates  that
are particularly  susceptible to significant changes in the economic environment
and market  conditions.  Management  believes that, as of December 31, 1999, the
allowance for loan losses is adequate based on information  currently available.
A worsening or protracted  economic decline or substantial  increase in interest
rates,  would  increase the  likelihood of losses due to credit and market risks
and could create the need for  substantial  increases to the  allowance for loan
losses.  The  Company  is  subject  to the  regulations  of  various  regulatory
agencies,  which can change  significantly  from year to year. In addition,  the
Company  undergoes  periodic  examinations  by  regulatory  agencies,  which may
subject  it  to  further  changes  based  on  the  regulators'  judgments  about
information available to them at the time of their examination.

SECURITIES

Debt  securities  that management has the positive intent and ability to hold to
maturity are  classified  as  held-to-maturity  and recorded at amortized  cost.
Securities not classified as held-to-maturity,  including equity securities with
readily  determinable  fair values,  are  classified as  available-for-sale  and
recorded at fair value,  with unrealized gains and losses excluded from earnings
and reported in other comprehensive income.

Purchased  premiums and  discounts are  recognized in interest  income using the
interest method over the terms of the securities.  Declines in the fair value of
held-to-maturity  and  available-for-sale  securities  below their cost that are
deemed to be other than temporary are reflected in earnings as realized  losses.
Gains and losses on the sale of  securities  are  recorded on the trade date and
are determined using the specific identification method.

LOANS HELD-FOR-SALE

Loans  held-for-sale  are carried at the lower of cost or market,  determined in
the aggregate.  Market value considers commitment  agreements with investors and
prevailing  market prices.  Substantially  all loans  originated by the mortgage
banking operation are held- for-sale to outside investors.


                                       21
<PAGE>

LOANS

The Company grants real estate,  commercial  and consumer loans to customers.  A
substantial  portion of the loan  portfolio is represented by real estate loans.
The ability of the Company's  debtors to honor their contracts is dependent upon
the real estate and general economic conditions of the Company's market area.

Loans that  management  has the intent and  ability to hold for the  foreseeable
future or until maturity or pay-off  generally are reported at their outstanding
unpaid  principal  balances  adjusted for the  allowance for loan losses and any
deferred fees or costs on originated  loans.  Interest  income is accrued on the
unpaid  principal  balance.  Loan origination  fees, net of certain  origination
costs,  are deferred and  recognized  as an adjustment of the related loan yield
using the interest method.

The accrual of interest on real estate and commercial  loans is  discontinued at
the time the loan is 90 days delinquent unless the credit is well-secured and in
process of collection. Installment loans are typically charged-off no later than
180 days past due. In all cases,  loans are placed on nonaccrual or  charged-off
at an  earlier  date if  collection  of  principal  or  interest  is  considered
doubtful.

All interest  accrued but not  collected for loans that are placed on nonaccrual
or charged-off is reversed against interest income.  The interest on these loans
is accounted for on the cash-basis or cost-recovery method, until qualifying for
return to accrual.  Loans are returned to accrual  status when all principal and
interest amounts  contractually  due are brought current and future payments are
reasonably assured.

ALLOWANCE FOR LOAN LOSSES

The  allowance  for loan losses is  established  as losses are estimated to have
occurred  through a provision for loan losses  charged to earnings.  Loan losses
are charged against the allowance when management believes the  uncollectibility
of a loan balance is confirmed.  Subsequent recoveries,  if any, are credited to
the allowance.

The allowance for loan losses is evaluated on a regular basis by management  and
is based upon management's periodic review of the collectibility of the loans in
light of  historical  experience,  the nature and volume of the loan  portfolio,
adverse  situations that may affect the borrower's  ability to repay,  estimated
value of any  underlying  collateral and prevailing  economic  conditions.  This
evaluation  is  inherently   subjective  as  it  requires   estimates  that  are
susceptible to significant revision as more information becomes available.

A loan is considered  impaired when, based on current information and events, it
is probable that the Company will be unable to collect the scheduled payments of
principal or interest  when due according to the  contractual  terms of the loan
agreement.  Factors  considered by management in determining  impairment include
payment status,  collateral  value, and the probability of collecting  scheduled
principal and interest  payments when due. Loans that  experience  insignificant
payment delays and payment shortfalls  generally are not classified as impaired.
Management  determines the significance of payment delays and payment shortfalls
on a case-by-case  basis,  taking into  consideration  all of the  circumstances
surrounding  the loan and the borrower,  including the length of the delay,  the
reasons for the delay,  the borrower's  prior payment record,  and the amount of
the  shortfall in relation to the  principal  and interest  owed.  Impairment is
measured on a loan-by-loan basis for commercial and construction loans by either
the  present  value of  expected  future  cash  flows  discounted  at the loan's
effective  interest rate, the loan's  obtainable market price, or the fair value
of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for
impairment.  Accordingly,  the Company does not separately  identify  individual
consumer and residential loans for impairment disclosures.

BANK PREMISES AND EQUIPMENT

Premises and  equipment  are stated at cost less  accumulated  depreciation  and
amortization. Premises and equipment are depreciated over their estimated useful
lives;  leasehold  improvements  are amortized  over the lives of the respective
leases or the estimated useful life of the leasehold  improvement,  whichever is
less.  Depreciation  and  amortization  are  recorded on the  straight-line  and
declining-balance methods.

Costs of  maintenance  and repairs are charged to expense as  incurred.  Cost of
replacing  structural  parts of major units are considered  individually and are
expended or capitalized as the facts dictate.

INCOME TAXES

Deferred taxes are provided on a liability  method  whereby  deferred tax assets
are   recognized   for   deductible   temporary   differences,   operating  loss
carryforwards,  and tax  credit  carryforwards.  Deferred  tax  liabilities  are
recognized for taxable  temporary  differences.  Temporary  differences  are the
differences between the reported amounts of assets and liabilities and their tax
bases.  Deferred tax assets are reduced by a valuation  allowance  when,  in the
opinion of  management,  it is more likely than not that some  portion or all of
the  deferred  tax  assets  will  not  be  realized.  Deferred  tax  assets  and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.


                                       22
<PAGE>

LEASE ACQUISITION COSTS

Lease   acquisition   costs  are  being  amortized  over  ten  years  using  the
straight-line method.

ADVERTISING COST

The Company  follows the policy of charging the production  costs of advertising
to expense as incurred.

USE OF ESTIMATES

In preparing  consolidated  financial  statements in conformity  with  generally
accepted  accounting  principles,  management is required to make  estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
date of the balance  sheet and the  reported  amounts of revenues  and  expenses
during the reported  period.  Actual results could differ from those  estimates.
Material  estimates that are particularly  susceptible to significant  change in
the near term relate to the determination of the allowance for loan losses,  and
the valuation of foreclosed real estate and deferred tax assets.

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents  include cash on
hand, amounts due from banks, and federal funds sold.  Generally,  federal funds
are sold and purchased for one-day periods.

EARNINGS PER SHARE

Basic  earnings per share  represents  income  available to common  stockholders
divided by the  weighted-average  number of common shares outstanding during the
period.  Diluted earnings per share reflects additional common shares that would
have been outstanding if dilutive  potential  common shares had been issued,  as
well as any  adjustment  to income that would result from the assumed  issuance.
Potential  common  shares  that may be issued by the  Company  relate  solely to
outstanding  stock options and warrants,  and are determined  using the treasury
method.

COMPREHENSIVE INCOME

In 1998,  the Company  adopted  Financial  Accounting  Standards  (FAS) No. 130,
"Reporting  Comprehensive Income." The consolidated  statements of stockholders'
equity  have been  changed  to  include  columns  for  comprehensive  income and
accumulated other  comprehensive  income.  Comprehensive  income for the Company
includes net income plus the change in the unrealized gain or loss on securities
available-for-sale.   Accumulated  other   comprehensive   income  includes  the
cumulative changes in unrealized gain or loss on securities  available-for-sale.
Adoption of this  standard did not impact the Company's  consolidated  financial
position, results of operations or cash flows.

DERIVATIVE FINANCIAL INSTRUMENTS

As of October 1, 1998,  the Company  adopted  Statement of Financial  Accounting
Standards  (FAS) No. 133,  "Accounting  for Derivative  Instruments  and Hedging
Activities."  Statement 133 establishes  accounting and reporting  standards for
derivative  financial  instruments and other similar  financial  instruments and
hedging  activities.   The  Statement  also  allowed  securities  classified  as
held-to-maturity  to be  transferred to the  available-for-sale  category at the
date of initial  application  of this  standard.  The Company  does not have any
derivative instruments and hedging actives as defined under this Statement.

STOCKHOLDERS' EQUITY

On  March  1,  1998,  the  Company  completed  a  rights  offering  to  existing
stockholders  for  200,000  shares of common  stock at $15.00 per  share.  Gross
proceeds of $3,000,000 less offering expenses of $43,277 were recorded to common
stock and surplus.

On April 29,  1998,  the  stockholders  approved an amendment to the Articles of
Incorporation to increase the total number of authorized  shares of common stock
from 2,500,000 to 5,000,000 shares. Also, the stockholders approved an amendment
to the  Articles  of  Incorporation  to change the par value per share of common
stock from $5.00 to $1.00 and to  subdivide  each share of the common stock into
one and one-tenth shares.  These transactions were recorded by decreasing common
stock by $6,334,120 and increasing surplus by $6,334,120.

On April 28, 1999 the  stockholders  approved an  amendment  to the  Articles of
Incorporation  to subdivide each share of the common stock  oustanding  into one
and one-tenth  shares.  This transaction was recorded by increasing common stock
by $178,692 and decreasing surplus by $178,692.


                                       23
<PAGE>


NOTE 2.  SECURITIES

Amortized  cost  and  fair  value  of  the  securities   available-for-sale  and
held-to-maturity as of December 31, 1999 and 1998, are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                         DECEMBER 31, 1999
                                                    AMORTIZED           GROSS                        GROSS           FAIR VALUE
                                                    ---------           -----                        -----           ----------
                                                      COST           UNREALIZED                   UNREALIZED
                                                      ----           ----------                   ----------
AVAILABLE-FOR-SALE:                                                     GAINS                      (LOSSES)
                                                                        -----                      --------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                  <C>                        <C>               <C>
Obligations of U.S.  government corporations and
     agencies                                       $ 28,278,291        $     3,633                  $ (842,625)     $   27,439,299
Federal Reserve Bank stock                               390,850                 --                           --            390,850
Federal Home Loan Bank stock                             667,400                 --                           --            667,400
Community Bankers' Bank stock                             55,250                 --                           --             55,250
------------------------------------------------------------------------------------------------------------------------------------
                                                    $ 29,391,791        $     3,633                  $ (842,625)      $  28,552,799
------------------------------------------------------------------------------------------------------------------------------------
HELD-TO-MATURITY:
------------------------------------------------------------------------------------------------------------------------------------
Obligations of U.S.  government corporations and
     agencies                                       $ 17,771,877     $           --                  $ (473,828)      $ 17,298,049
------------------------------------------------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE:                                      DECEMBER 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
Obligations of U.S.  government corporations and    $ 28,573,602         $   63,657                 $   (76,752)      $ 28,560,507
      agencies
Federal Reserve Bank stock                               391,100                 --                           --           391,100
Federal Home Loan Bank stock                             495,400                 --                           --           495,400
Community Bankers' Bank stock                             55,250                 --                           --            55,250
------------------------------------------------------------------------------------------------------------------------------------
                                                    $ 29,515,352         $   63,657                  $  (76,752)      $ 29,502,257
------------------------------------------------------------------------------------------------------------------------------------
HELD-TO-MATURITY:
------------------------------------------------------------------------------------------------------------------------------------
Obligations of U.S. government corporations and
agencies                                            $ 25,302,446          $ 162,753              $            --      $ 25,465,199
------------------------------------------------------------------------------------------------------------------------------------
Amortized  cost and fair value of the  securities  as of December 31,  1999,  by
contractual maturity, are shown below.
------------------------------------------------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE:                                                                AMORTIZED COST                         FAIR VALUE
------------------------------------------------------------------------------------------------------------------------------------
Due after one year through five years                                              $   17,729,117                    $    17,206,321
Due after five years through ten years                                                  8,189,840                          7,923,605
Due after ten years                                                                     2,359,334                          2,309,373
Federal Reserve Bank stock                                                                390,850                            390,850
Federal Home Loan Bank stock                                                              667,400                            667,400
Community Bankers' Bank stock                                                              55,250                             55,250
------------------------------------------------------------------------------------------------------------------------------------
                                                                                    $  29,391,791                     $   28,552,799
HELD-TO-MATURITY:
------------------------------------------------------------------------------------------------------------------------------------
Due after one year through five years                                                   2,020,000                          1,999,964
Due after five years through ten years                                                  3,934,275                          3,822,650
Due after ten years                                                                    11,817,602                         11,475,435
------------------------------------------------------------------------------------------------------------------------------------
                                                                                    $  17,771,877                      $  17,298,049
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       24
<PAGE>

As   permitted   under  FAS  No.  133,   the  Company   transferred   securities
held-to-maturity  with  a  book  value  of  $1,165,925  and a  market  value  of
$1,158,688 to securities available-for-sale as of October 1, 1998.

The book value of securities  pledged to secure  deposits and for other purposes
were $24,825,891 and $21,520,748 at December 31, 1999 and 1998, respectively.


NOTE 3. LOANS

Major classifications of loans are summarized as follows (in thousands):

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                                                      1999             1998
-----------------------------------------------------------------------------------------------------------
<S>                                                                                <C>               <C>
Commercial                                                                     $    26,423      $    23,514
Real estate - 1-4 family residential                                                23,892           17,346
Real estate - multifamily residential                                               14,540           12,767
Real estate - nonfarm, nonresidential                                              117,106           78,859
Real estate - acquisition, development and construction                             17,238           12,794
Consumer                                                                             6,968            4,983
-----------------------------------------------------------------------------------------------------------
Total Loans                                                                      $ 206,167       $  150,263
Less unearned income                                                                   567              187
Less allowance for loan losses                                                       1,889            1,438
-----------------------------------------------------------------------------------------------------------
Loans, net                                                                       $ 203,711       $  148,638
-----------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 4.  ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses is shown below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                                  1999                         1998                      1997
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                         <C>                          <C>
Allowance, at beginning of period                          $ 1,437,514                   $  989,815                 $ 748,356
Provision charged against income                               480,000                      450,950                   261,500
Recoveries added to reserve                                     11,006                       19,461                     3,066
Losses charged to reserve                                     (39,513)                     (22,712)                  (23,107)
-----------------------------------------------------------------------------------------------------------------------------
Allowance, at end of period                                $ 1,889,007                   $1,437,514                 $ 989,815
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Information about impaired loans as of and for the years ended December 31, 1999
and 1998, is as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    1999                        1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>                         <C>
Impaired loans for which an allowance has been provided                                        $ 142,688                   $ 213,059
Impaired loans for which no allowance has been provided                                               --                          --
    Total impaired loans                                                                       $ 142,688                   $ 213,059
Allowance provided for impaired loans, included in the allowance for loan losses                  13,106                   $  54,117
Average balance in impaired loans                                                              $ 177,874                   $ 154,985
------------------------------------------------------------------------------------------------------------------------------------
Interest income recognized                                                                            --                          --
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Non-accrual loans excluded from impaired loan disclosure under FASB 114 amounted
to  $106,508  and  $120,788  at December  31,  1999 and 1998,  respectively.  If
interest on these loans had been accrued as interest  income,  such income would
have  approximated  $10,440 and $9,945 for the years ended December 31, 1999 and
December 31, 1998.


                                       25
<PAGE>


NOTE 5. BANK PREMISES AND EQUIPMENT, NET

Premises  and  equipment  are stated at cost less  accumulated  depreciation  at
December 31, 1999 and 1998, as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                               1999                         1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>                           <C>
Land                                                                                        $1,838,790                    $1,838,790
Buildings                                                                                    2,017,704                     1,994,423
Furniture, fixtures and equipment                                                            3,192,321                     2,306,284
Leasehold improvements                                                                         923,237                       444,969
------------------------------------------------------------------------------------------------------------------------------------
Total Cost                                                                                  $7,972,052                    $6,584,466
Less accumulated depreciation and amortization                                               2,253,342                     1,606,978
------------------------------------------------------------------------------------------------------------------------------------
Net premises and equipment                                                                  $5,718,710                    $4,977,488
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Depreciation  and  amortization  expense on premises and  equipment  amounted to
$646,364, $433,560 and $314,345 in 1999, 1998 and 1997, respectively.

NOTE 6. TIME DEPOSITS

The aggregate amount of time deposits,  with a minimum  denomination of $100,000
each,  was   approximately   $40,873,137  and  $31,712,406  in  1999  and  1998,
respectively.

Scheduled maturities of all time deposits at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                                                            <C>
                              2000                                                          $ 41,898,628
                              2001                                                            63,801,758
                              2002                                                             2,696,314
                              2003                                                             2,727,636
                              2004 and thereafter                                              1,982,768
------------------------------------------------------------------------------------------------------------------------------------
                                                                                           $ 113,107,104
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       26
<PAGE>

NOTE 7. INCOME TAXES

Net deferred tax assets  consist of the  following  components  for December 31,
1999 and 1998:

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                                                                                       1999                                   1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                                     <C>
DEFERRED TAX ASSETS:
Allowance for loan losses                                                          $  601,608                              $ 438,407
Non-accrual loans                                                                      41,086                                 48,979

Organization Costs                                                                      9,944                                     --
Deferred loan fees                                                                     82,850                                 82,850
Bank premises and equipment                                                            32,922                                  2,989
Securities available-for-sale                                                         285,257                                  7,952
                                                                                   ----------                            -----------
                                                                                   $1,053,667                              $ 581,177
DEFERRED TAX LIABILITIES:
Federal Home Loan Bank stock                                                           $2,142                              $   2,142
------------------------------------------------------------------------------------------------------------------------------------
NET DEFERRED TAX ASSETS                                                            $1,051,525                              $ 579,035
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


The income tax expense and its  components  for the years  ending  December  31,
1999, 1998, and 1997 are as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                         December 31,
                                                           1999                              1998                          1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                                 <C>                           <C>
Current tax expense                                    $ 1,319,722                         $ 943,709                     $ 703,951
Deferred tax expense (benefit)                           (191,579)                         (159,748)                     (118,204)
------------------------------------------------------------------------------------------------------------------------------------
                                                       $ 1,128,143                         $ 783,961                     $ 585,747
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The income tax  provision  differs from the amount of income tax  determined  by
applying  the U.S.  federal  income tax rate to pretax  income  from  continuing
operations  for the years ended  December 31, 1999,  1998,  and 1997, due to the
following:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                     1999                       1998                       1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                        <C>                        <C>
Computed "expected" tax expense                               $ 1,119,922                  $ 777,775                  $ 584,163
Increase (decrease) in income taxes resulting from:
Nondeductible expense                                               8,221                      6,186                      1,584
------------------------------------------------------------------------------------------------------------------------------------
                                                              $ 1,128,143                  $ 783,961                  $ 585,747
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       27
<PAGE>

NOTE 8. EARNINGS PER SHARE

The  following  shows the  weighted  average  number of shares used in computing
earning per share and the effect on weighted average number of shares of diluted
potential common stock. Weighted average number of shares for all years reported
have been  restated  giving  effect to  changes in par and stock  dividends  and
splits.  Potential  dilutive  common stock had no effect on income  available to
common stockholders.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                        1999                         1998                        1997
------------------------------------------------------------------------------------------------------------------------------------
                                Shares      Per Share       Shares       Per Share       Shares       Per Share
                                ------      ---------       ------       ---------       ------       ---------
                                              Amount                       Amount                       Amount
                                              ------                       ------                       ------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>           <C>         <C>              <C>              <C>
Basic earnings per share         1,967,808        $1.10      1,924,604         $0.78      1,722,649          $0.66
Effect of dilutive
securities:
Stock options                       50,553                      56,601                       42,267
Warrants                            64,043                      70,432                       55,938
------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share       2,082,404        $1.04      2,051,637         $0.73      1,820,854          $0.62
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The following  transactions  occurred  after  December 31, 1999 which would have
changed the numbers of shares used in the  computations  of earnings  per share:
options to purchase 67,000 common shares were issued to directors and officers.

NOTE 9. COMMITMENTS AND CONTINGENCIES

The  Company  leases  office  space  for  seven  of its  branch  locations,  its
operations  department,  and mortgage  lending  division.  These  noncancellable
agreements  which expire December 15, 2000, May 31, 2002,  March 1, 2003,  April
15, 2003, October 31, 2005, July 1, 2008,  February 1, 2009, and May 20, 2009 in
some instances require payment of certain operating charges.  All leases contain
renewal options of one to two additional five-year terms.

In addition,  the Company leases five pieces of equipment  under  noncancellable
agreements  which expire November 30, 2000,  January 31, 2003, July 6, 2003, and
January 25, 2004. All five leases contain  purchase  options which are available
at the end of the lease term.

The total  minimum  lease  commitment,  adjusted  for the effect of annual fixed
increases or the  Consumer  Price Index,  at December 31, 1999,  is  $3,310,947,
which is due as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Due in the year ending December 31,            2000                                                $ 570,897
------------------------------------------------------------------------------------------------------------
<S>                                            <C>                                                   <C>
                                               2001                                                  530,036
                                               2002                                                  499,939
                                               2003                                                  340,627
                                               2004 and beyond                                      1,369,448
------------------------------------------------------------------------------------------------------------
</TABLE>

The total lease expense was $547,159,  $308,497 and $423,147, in 1999, 1998, and
1997, respectively.

In the normal  course of business,  the Company makes  various  commitments  and
incurs certain contingent liabilities that are not presented in the accompanying
financial  statements.  The Company does not anticipate any material losses as a
result of the commitments and contingent liabilities.


                                       28
<PAGE>

NOTE 10: LOANS TO OFFICERS AND DIRECTORS

Officers,  directors and/or their related business  interests are loan customers
in the ordinary  course of business.  In management's  opinion,  these loans are
made on  substantially  the  same  terms  as  those  prevailing  at the time for
comparable  loans with other persons and do not involve more than normal risk of
collectibility  or present other  unfavorable  features.  The  aggregate  amount
outstanding  on such loans at December  31, 1999 and 1998,  was  $1,974,549  and
$2,769,022,  respectively.  During  1999,  new loans and  advances  amounted  to
$597,505 and repayments of $1,391,978 were made.



NOTE 11. STOCK-BASED COMPENSATION PLAN

The Company has a stock-based compensation plan which is described below. Grants
under this plan are  accounted  for  following  APB  Opinion  No. 25 and related
interpretations.  Accordingly,  no  compensation  cost has been  recognized  for
grants under the stock option plan. Had  compensation  cost for the  stock-based
compensation  plan been determined based on the grant date fair values of awards
(the method  described  in FASB  Statement  No.  123),  reported  net income and
earnings per common share would have been reduced to the pro forma amounts shown
below:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                              1999                             1998
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                              <C>
Net income:

As reported                                                                            $ 2,165,744                      $ 1,503,612
Pro forma                                                                              $ 2,015,437                      $ 1,424,400

Basic earnings per share:

As reported                                                                            $      1.10                       $     0.78
Pro forma                                                                              $      1.02                       $     0.74

Diluted earning per share:

As reported                                                                            $      1.04                       $     0.73
Pro forma                                                                              $      0.97                       $     0.69
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The current plan,  adopted May 29, 1998, is a qualified  Incentive  Stock Option
Plan which provides for the granting of options to purchase up to 110,000 shares
of common stock at a price to be  determined  by the Board at the date of grant,
but in  any  event,  no  less  than  100%  of the  fair  market  value.  Options
outstanding,  at the beginning of 1998,  were granted  under the Company's  plan
adopted in 1988 which was replaced by the current plan. As of December 31, 1999,
26,750  options had been granted under the new plan.  Options are awarded to key
employees  of the  Company  at the  discretion  of the Board of  Directors.  All
options expire ten years from the grant date. All options  granted to date under
the new plan vest over three years.

The  fair  value  of each  grant  is  estimated  at the  grant  date  using  the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions for grants in 1999 and 1998, respectively: price volatility of 29.79
% and 32.32 %, risk-free interest rates of 6.5% and 4.5 %, dividend rate of 0.02
% and expected lives of 10 years.


                                       29
<PAGE>

A summary of the status of the plan at  December  31,  1999 and 1998 and changes
during the years ended on those dates is as follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                             1999                                  1998
                                             Number of Shares     Weighted Average      Number of    Weighted Average
                                             ----------------     ----------------      ---------    ----------------
                                                                   Exercise Price         Shares     Exercise Price
                                                                   --------------         ------     --------------
---------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>               <C>             <C>               <C>
Outstanding at beginning of year                        106,504            $ 7.68          79,646            $ 6.02
Granted                                                  25,200            $13.60          27,252            $12.40
Exercised                                                 3,659            $ 9.02             394              5.33
Forfeited                                                 1,100            $13.52              --                --
Outstanding at end of year                              126,945            $ 8.77         106,504            $ 7.68
Exercisable at end of year                              101,012                           103,754
Weighted-average fair value per option of                 $8.85                             $8.72
options granted during the year
---------------------------------------------------------------------------------------------------------------------
</TABLE>

A further summary about the options  outstanding and exercisable at December 31,
1999 is as follows:

OPTIONS OUTSTANDING AND EXERCISABLE:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Range of Exercise Prices    Number Outstanding     Weighted-Average Remaining Contractual Life    Weighted-Average Exercise Price
--------------------------  ---------------------- ---------------------------------------------  ----------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                              <C>                                         <C>
      $4.98 to $6.68                76,803                           5.3 years                                   $ 5.98
          $12.40                    23,292                           7.7 years                                   $12.40
          $13.30                       917                             9 years                                   $13.30
     $4.98 to $13.30               101,012
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

All  options  granted,  available  under the  Plan,  and  exercisable  have been
restated   for  both  years   giving   retroactive   effect  to  the  10%  stock
restructurings in 1998 and 1999.

NOTE 12. DIRECTOR COMPENSATION PLAN

In April 1996,  the Company  granted  107,808  warrants at an exercise  price of
$6.12 to six outside  Directors.  In January 1998,  the Company  granted  12,100
warrants at an exercise price of $12.40 to an additional  outside Director.  All
warrants have been restated for both years giving  retroactive effect to the 10%
stock restructurings in 1998 and 1999.


                                       30
<PAGE>

NOTE 13. OTHER BORROWED MONEY AND LINES OF CREDIT

The Company has obtained a $19,000,000 line of credit from the Federal Home Loan
Bank of Atlanta.  The  interest  rate and term of each  advance from the line is
dependent upon the advance and commitment type. Advances on the line are secured
by all of the  Company's  first lien loans on  one-to-four  unit  single  family
dwellings.  As of  December  31,  1999,  the book value of these  loans  totaled
approximately  $6,899,963.   The  amount  of  available  credit  is  limited  to
seventy-five percent of qualifying  collateral.  Any borrowings in excess of the
qualifying collateral requires pledging of additional assets.

In  December  1999,  the  Company  obtained a  $5,000,000  line of credit from a
nonaffiliated  bank for a three-year  term.  Advances on the line are secured by
all of the  shares  of common  stock in the  Company's  wholly-owned  susidiary,
Virginia  Commerce  Bank. As of December 31, 1999, the Company had the following
advances outstanding:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
      Advance Date-Creditor                Interest Rate                  Term             Due              Outstanding Principal
      ---------------------                -------------                  ----             ---              ---------------------
------------------------------------------------------------------------------------------------------------------------------------
<S>   <C>                                      <C>                      <C>                <C>                    <C>
11-16-93 - FHLB                                5.93%                    10 years           2003                  $  400,000
12-31-99 - Other                               7.25%                    3 years            2002                   2,500,000
                                                                                                                 $2,900,000
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Company has  additional  unused lines of credit  totaling  $20,783,125  with
nonaffiliated banks at December 31, 1999.

NOTE 14. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Company is party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments include commitments to extend credit,  standby letters of
credit and financial guarantees.  Those instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount  recognized in
the balance sheet. The contract or notional amounts of those instruments reflect
the extent of  involvement  the Company has in  particular  classes of financial
instruments.

The  Company's  exposure  to credit loss in the event of  nonperformance  by the
other party to the financial  instrument  for  commitments  to extend credit and
standby letters of credit and financial guarantees written is represented by the
contractual or 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.


A summary of the  contract  or  notional  amount of the  Company's  exposure  to
off-balance-sheet risk as of December 31, 1999 and 1998, is as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                          1999                                  1998
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit                                           $  5,285,000                           $ 5,849,225
Standby letters of credit and financial guarantees written             $  2,591,747                           $ 2,405,562
Unfunded lines of credit                                               $ 44,720,367                           $35,611,498
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent  future cash  requirements.  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 customer.  Collateral held varies but may
include cash, marketable securities,  accounts receivable,  inventory,  property
and  equipment,   residential  real  estate,  and  income-producing   commercial
properties.


                                       31
<PAGE>

Standby  letters of credit and  financial  guarantees  written  are  conditional
commitments  issued by the Company to guarantee the performance of a customer to
a third party.  Those  guarantees  are  primarily  issued to support  public and
private borrowing arrangements,  including commercial paper, bond financing, and
similar  transactions.  The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
The Company holds certificates of deposit,  marketable securities,  and business
assets as collateral supporting those commitments for which collateral is deemed
necessary.  The extent of collateral held for those  commitments at December 31,
1999, varies from 0 percent to 100 percent; the average amount collateralized is
46 percent.

NOTE 15. FUND RESTRICTIONS AND RESERVE BALANCE

The  transfer  of  funds  from  the Bank to the  Company  in the form of  loans,
advances,  and cash  dividends  is  restricted  by Federal and State  regulatory
authorities. As of December 31, 1999, the aggregate amount of unrestricted funds
which could be  transfered  totaled  approximately  $4,823,124,  or 27.5% of the
consolidated net assets of the Company.

As members of the Federal  Reserve  System,  the Company is required to maintain
certain average reserve  balances.  For the final weekly reporting period in the
years ended December 31, 1999 and 1998,  the aggregate  amounts of daily average
required balances were approximately $5,715,000 and $2,928,000 respectively.

NOTE 16.  EMPLOYEE BENEFITS

The Company has a 401(k) defined  contribution  plan covering  substantially all
full-time   employees  and  provides  that  an  employee   becomes  eligible  to
participate  at the date he or she has reached  the age of 21 and has  completed
three months of service,  which ever occurs last.  Under the plan, a participant
may  contribute  up to 15% of his or her  covered  compensation  for  the  year,
subject to certain  limitations.  The Company may also make, but is not required
to make, a discretionary contribution for each participant out of its current or
accumulated net profits. The amount of contribution, if any, is determined on an
annual  basis  by the  Board of  Directors.  Contributions  made by the  Company
totaled  $74,014,  $42,409,  and $25,023 for the years ended  December 31, 1999,
1998, and 1997, respectively.

NOTE 17.  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

CASH AND SHORT-TERM INVESTMENTS

For those short-term  instruments,  the carrying amount is a reasonable estimate
of fair value.

SECURITIES

For  securities  held for investment  purposes,  fair values are based on quoted
market prices or dealer quotes.

LOANS HELD-FOR-SALE

Fair value is based on selling  price  arranged by  arms-length  contracts  with
third parties.


                                       32
<PAGE>

LOAN RECEIVABLES

For certain homogeneous categories of loans, such as some residential mortgages,
and other consumer loans, fair value is estimated using the quoted market prices
for  securities  backed by  similar  loans,  adjusted  for  differences  in loan
characteristics.  The  fair  value of other  types  of  loans  is  estimated  by
discounting the future cash flows using the current rates at which similar loans
would  be made  to  borrowers  with  similar  credit  ratings  and for the  same
remaining maturities.

DEPOSITS AND BORROWINGS

The fair value of demand deposits,  savings  accounts,  and certain money market
deposits is the amount  payable on demand at the reporting  date.  For all other
deposits and borrowings,  the fair value is determined using the discounted cash
flow  method.  The  discount  rate was equal to the rate  currently  offered  on
similar products.

ACCRUED INTEREST

The carrying amounts of accrued interest approximate fair value.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

The fair  value of  commitments  to extend  credit is  estimated  using the fees
currently charged to enter similar agreements, taking into account the remaining
terms of the agreements and the present  creditworthiness of the counterparties.
For  fixed-rate  loan  commitments,  fair value also  considers  the  difference
between current levels of interest rates and the committed rates.

The fair value of stand-by letters of credit is based on fees currently  charged
for similar  agreements or on the estimated  cost to terminate them or otherwise
settle the obligations with the counterparties at the reporting date.

At December  31,  1999 and 1998,  the  carrying  amounts and fair values of loan
commitments and stand-by letters of credit were immaterial.

The estimated fair values of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                           1999                                  1998
        (Dollars in thousands)             Carrying Amount        Fair Value       Carrying Amount       Fair Value
                                           ---------------        ----------       ---------------       ----------
---------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>                   <C>            <C>
FINANCIAL ASSETS:
Cash and short-term investments                       $ 22,715       $    22,715           $   11,252     $    11,252
Securities                                              46,325            45,850               54,805          54,967
Loans held-for-sale                                      1,460             1,460                  802             802
Loans                                                  203,711           204,660              148,638         154,885
Accrued interest receivable                              1,307             1,307                1,151           1,151
     Total Financial assets                          $ 275,518         $ 275,992            $ 216,648       $ 223,057
---------------------------------------------------------------------------------------------------------------------
FINANCIAL LIABILITIES:
Deposits                                             $ 243,044         $ 239,187            $ 188,743       $ 189,526
Securities sold under agreement to                      17,837            17,837               15,726          15,726
repurchase
Other borrowed funds                                     2,900             2,559                1,000             991
---------------------------------------------------------------------------------------------------------------------
Accrued interest payable                                   676               676                  628             628
---------------------------------------------------------------------------------------------------------------------
     Total Financial Liabilities                     $ 264,457         $ 260,259            $ 206,097       $ 206,871
---------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       33
<PAGE>

NOTE 18.  CAPITAL REQUIREMENTS

The Company and the Bank are subject to various regulatory capital  requirements
administered  by the federal banking  agencies.  Failure to meet minimum capital
requirements can initiate certain mandatory,  possibly additional discretionary,
actions by regulators  that, if undertaken,  could have a direct material effect
on the  Company's  and  Bank's  financial  statements.  Under  capital  adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Company  and the  Bank  must  meet  specific  capital  guidelines  that  involve
quantitative measures of the assets, liabilities,  and certain off-balance-sheet
items as calculated under regulatory accounting  practices.  The capital amounts
and classification  are also subject to qualitative  judgments by the regulators
about components,  risk weightings,  and other factors. Prompt corrective action
provisions are not applicable to bank holding companies.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Company  and the Bank to  maintain  minimum  amounts and ratios (set
forth in the table below) of total and Tier 1 capital to  risk-weighted  assets,
and of Tier 1 capital to average assets. Management believes, as of December 31,
1999 that the  Company  and the Bank met all capital  adequacy  requirements  to
which they are subject.

As of December 31, 1999, the Bank is categorized as "well-capitalized" under the
regulatory  framework  for  prompt  corrective  action.  To  be  categorized  as
"well-capitalized",  the Bank must  maintain  minimum total  risk-based,  Tier 1
risk-based,  and Tier 1 leverage ratios as set forth in the table. The Company's
and the Bank's  actual  capital  amounts  and ratios are also  presented  in the
table.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                    Actual Capital          Minimum Capital Requirement   Minimum To Be Well-Capitalized Under
                                    --------------          ---------------------------   -----------------------------------------
                                                                                          Prompt Corrective Active Provisions
(Dollars in thousands)                                             >=              >=                >=                 >=
                                   Amount         Ratio          Amount           Ratio            Amount             Ratio
-----------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>           <C>              <C>             <C>                    <C>
As of December 31, 1999:

Total Capital
 (to Risk-Weighted Assets)
  Company                        $19,888           9.01%           $17,652             8.00%            $    --                 --%
  Bank                            22,410          10.15%            17,654             8.00%             22,068              10.00%

Tier 1 Capital
(to Risk-Weighted Assets)
   Company                       $17,999           8.16%           $ 8,826             4.00%            $    --                 --%
   Bank                           18,021           8.17%             8,827             4.00%             13,241               6.00%

Tier 1 Capital
(to Average Assets)
   Company                       $17,999           6.58%           $10,937             4.00%            $    --                 --%
   Bank                           18,021           6.59%            10,938             4.00%             13,673               5.00%
-----------------------------------------------------------------------------------------------------------------------------------
As of December 31 1998:
(Bank Only)

Total Capital
(to Risk-Weighted Assets)        $17,231          10.40%          $ 13,260             8.00%            $16,575              10.00%

Tier 1 Capital
(to Risk-Weighted Assets)        $15,793           9.53%           $ 6,630             4.00%            $ 9,945               6.00%

Tier 1 Capital
(to Average Assets)              $15,793           7.15%           $ 8,835             4.00%            $11,044               5.00%
===================================================================================================================================
</TABLE>


                                       34
<PAGE>


NOTE 19. CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

Financial  information  pertaining to Virgina Commerce Bancorp,  Inc., which was
formed December 22, 1999 is as follows:

BALANCE SHEETS                                                DECEMBER 31, 1999
                                                                (in thousands)
         Assets:
         Investment in Virginia Commerce Bank                      $ 17,510
         Subordinated Debt in Virginia Commerce Bank                  2,500
         Other Assets                                                    12
                                                                   --------
           Total Assets                                            $ 20,022
                                                                   --------

         Liabilities and Stockholders' Equity:
         Long Term Debt                                            $  2,500
         Other Liabilities                                               33
                                                                   --------
           Total Liabilities                                       $  2,533
         Stockholders' Equity                                        17,489
                                                                   --------
           Total Liabilities and Stockholders' Equity              $ 20,022
                                                                   --------

STATEMENTS OF INCOME                                              YEAR ENDED
                                                               DECEMBER 31,1999
                                                                (in thousands)
         Income:
           Interest on subordinated debt                           $      1
                                                                   --------
             Total Income                                                 1
         Expenses:
           Interest on long term debt                                     1
           Organizational expense                                        29
           Other operating expense                                        3
                                                                   --------
              Total Expenses                                             33
                                                                   --------
         Loss  before income taxes and equity in                   $    (32)
            undistributed earnings of Virginia Commerce Bank
         Income Tax (Benefit)                                           (11)
                                                                   --------
                                                                       $    (21)
         Equity in undistributed net income of
            Virginia Commerce Bank                                    2,187
                                                                   --------
         Net Income                                                $  2,166
                                                                   --------

STATEMENTS OF CASH FLOWS

         Cash Flows from Operating Activities
           Net Income                                              $  2,166
           Adjustments to reconcile net income to net cash
              provided by operating activites:
                 Equity in undistributed net income of
                   Virginia Commerce Bank                            (2,187)
                 (Increase) in other assets                             (12)
                 Increase in other liabilities                           33
                                                                   --------
                  Net cash provided by operating activities        $      0

         Cash Flows from Investing Activities
           Purchases of debt securities                              (2,500)
                                                                   --------
                  Net cash (used in) investing activities          $ (2,500)

         Cash Flows from Financing Activites
           Net increase in long term debt                             2,500
                                                                   --------
                  Net cash provided by financing activities        $  2,500

         Change in cash and cash equivalents                       $      0
                                                                   --------


                                       35






                          INDEPENDENT AUDITOR'S REPORT


YOUNT, HYDE & BARBOUR, P.C.
  Certified Public Accountants
           and Consultants



To the Stockholders and Directors
Virginia Commerce Bancorp, Inc. and Subsidiaries
Arlington, Virginia

                  We have audited the accompanying  consolidated  balance sheets
of Virginia Commerce Bancorp, and Subsidiaries as of December 31, 1999 and 1998,
and the related  consolidated  statements  of income,  changes in  stockholder's
equity and cash flow for the years ended  December  31,  1999,  1998,  and 1997.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

                  We conducted our audits in accordance with generally  accepted
auditing  standards.  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  position of
Virginia  Commerce  Bancorp,  Inc. and  Subsidiaries as of December 31, 1999 and
1998,  and the  results of their  operations  and their cash flows for the years
ended December 31, 1999,  1998, and 1997, in conformity with generally  accepted
accounting principles.


Yount, Hyde & Barbour, P.C.

Winchester Virginia
February 16, 2000

<PAGE>


Board of Directors

<TABLE>
<S>                                <C>
[Photo of Board and numbered
 identification key omitted]        1  W. Douglas Fisher
                                       Chairman
                                    2  David M. Guernsey
                                       Vice Chairman
                                    3  Peter A. Converse
                                       President and Chief Executive Officer
                                    4  Leonard Adler
                                    5  Robert H. L'Hommedieu
                                    6  Frank L. Cowles, Jr.
                                    7  Norris E. Mitchell
                                    8  Arthur L. Walters
</TABLE>

<TABLE>
                                                                                                 Executive Officers
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                          <C>                             <C>
                                           [Officer photos omitted]

   Peter A. Converse             R.B. Anderson, Jr.              Laurie P. Barnwell                William K. Beauchesne
     President and          Executive Vice President and      Executive Vice President         Executive Vice President and
Chief Executive Officer        Chief Lending Officer               Retail Banking                 Chief Financial Officer

Officers
------------------------------------------------------------------------------------------------------------------------------------

Timothy M. Aldinger             Thomas E. Williams              Edward W. Lull, Jr.              Pamela D. McConnell
Senior Vice President           Senior Vice President           Vice President                   Assistant Vice President
Commercial Lending              Real Estate Lending             Commercial Lending               Cameron Station Branch

Kerry J. Donley                 Ricardo Balcells                Gregory A. Motheral              Rosemarie Reinhardt
Senior Vice President           Vice President                  Vice President                   Assistant Vice President
Regional Manager                Regional Manager                Commercial Lending               Williamsburg Boulevard Branch

George L. Greco                 Jose A. Castillo                James L. Caison                  Barbara A. Schival
Senior Vice President           Vice President                  Assistant Vice President         Assistant Vice President
Senior Credit Officer           Operations Manager              Internal Auditor                 King St. Branch

James R. Nalls                  Leslie E. Cerino                Robin P. Coracci                 Lisa K. Bluntzer
Senior Vice President           Vice President                  Assistant Vice President         Loan Servicing Officer
Construction Lending            Regional Manager                Lee-Harrison Branch              Loan Servicing Officer

Kenneth L. O'Shea               Wendy M. Clark                  Jacqueline A. Freeman            Gwendolyn B. Lane
Senior Vice President           Vice President                  Assistant Vice President         Credit Administration Officer
Residential Mortgage Lending    Consumer Lending                Training Officer

Patricia M. Ostrander           James C. Elliott                Lynn B. Gonzalez                 Stacy L. Sim
Senior Vice President           Vice President                  Assistant Vice President         Branch Officer
Director of Human Resources     Consumer Lending                Deposit Operations               McLean Branch

Michele K. Parker               Marcia J. Hopkins               Susan T. Johnson                 Bonnie J. Sung
Senior Vice President           Vice President                  Assistant Vice President         Branch Officer
Cash Management Services        Accounting                      Facilities Manager               Annandale Branch
</TABLE>


<PAGE>


VIRGINIA COMMERCE BANCORP, INC.


<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Checking Accounts                                                      Money Orders
NOW Accounts                                                           Travelers Checks
Money Market Accounts                                                  Bank-by-Mail
Savings Accounts                                                       Merchant Bankcard Services
Certificates of Deposit                                                Credit Cards
IRA's                                                                  Telephone Banking
Repurchase Agreements                                                  VISA Debit Card
Personal and Commercial Loans and Lines of Credit                      Lock Box Services
Home Equity Loans and Lines of Credit                                  Internet Banking
Mortgage Loans - Residential and Commercial/Investment                 PC-Based Banking for Business
Overdraft Lines of Credit                                              ACH
Letters of Credit                                                      Commercial Insurance
Safe Deposit Boxes
Automated Teller Machines and ATM Cards
   (HONOR/MOST, Cirrus)

</TABLE>

<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                               <C>                              <C>
Alexandria                          Arlington                          Fairfax                         Residential
                                                                                                       Mortgage Lending

1414 Prince Street                  MAIN OFFICE                        10777 Main Street               374 Maple Avenue East
Alexandria, Virginia  22314         5350 Lee Highway                   Fairfax, Virginia  22030        Vienna, Virginia  22180
703-739-3242                        Arlington, Virginia  22207         703-273-9111                    703-319-4001
                                  703-534-1382

5140 Duke Street                                                       McLean
Alexandria, Virginia  22304         2930 Wilson Boulevard                                              54 E. Lee Street, Suite 120
703-751-4400                        Arlington, Virginia  22201         1356 Chain Bridge Road          Warrenton, Virginia  20186
703-751-4400                        703-525-4601                       McLean, Virginia  22101         540-341-3001
                                                                       703-448-9800

506 King Street
Alexandria, Virginia  22314         6500 Williamsburg Boulevard        Vienna
703-684-4390                        Arlington, Virginia  22213
                                    703-237-8050                       374 Maple Avenue East
Annandale                                                              Vienna, Virginia  22180
                                    EXECUTIVE OFFICE                   703-319-4150
4230 John Marr Drive                5350 Lee Highway
Annandale, Virginia  22003          Arlington, Virginia  22207
703-256-8889                        703-534-0700

[NASD logo omitted]                 VCBI
                                     NASDAQ
                                     Listed

</TABLE>