Virginia Commerce Bancorp, Inc.

                                                              2000 Annual Report

              [Graphic with branch addresses interspersed omitted]







                                           Growing Just Right.
                                           One Community at a Time.


<PAGE>


Virginia Commerce Bancorp, Inc.



                                                                      Contents

                                                 Five Year Financial Summary 1
                               Letter to Stockholders, Customers and Friends 2
                                       Management's Discussion and Analysis of
                              Financial Condition and Results of Operations  9
                                          Consolidated Financial Statements 20
                                 Notes to Consolidated Financial Statements 25
                                               Independent Auditor's Report 40
                       Executive Officers, and Officers Board of Directors, 41


           [photo omitted]

                                       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 and 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 eleven  branches,  two
mortgage  loan  offices and over $370  million in assets,  we have  maintained a
clear focus of providing "community banking at its best" while delivering. . .

                            EXCEPTIONAL SERVICE.  EVERY CUSTOMER.  EVERY TIME.

<PAGE>



<TABLE>
<CAPTION>

FIVE YEAR FINANCIAL SUMMARY

------------------------------------------------------------------------------------------------------------------------------------
                                                    2000             1999             1998               1997             1996
------------------------------------------------------------------------------------------------------------------------------------
SELECTED YEAR-END BALANCES
<S>                                               <C>             <C>                <C>               <C>             <C>
Total assets                                      $371,181,550    $282,575,486       $222,441,910      $165,119,350    $122,721,355
Total stockholders' equity                          21,165,714      17,488,753         15,831,660        11,272,937      10,054,023
Total loans (net)                                  305,717,469     205,171,188        149,440,296       100,917,408      76,313,031
Total deposits                                     310,934,498     243,044,377        188,742,543       142,427,529     103,722,575
------------------------------------------------------------------------------------------------------------------------------------

SUMMARY RESULTS OF OPERATIONS
Interest income                                    $26,775,568     $18,851,366        $15,265,826      $ 11,134,572      $8,589,578
Interest expense                                    12,861,148       8,678,859          7,511,338         5,167,969       3,825,756
   Net interest income                             $13,914,420     $10,172,507        $ 7,754,488        $5,966,603      $4,763,822
Provision for loan losses                              946,500         480,000            450,950           261,500         182,500
   Net interest income after
   provision for loan losses                      $ 12,967,920     $ 9,692,507        $ 7,303,538       $ 5,705,103      $4,581,322
Non-interest income                                  2,599,146       1,998,570            631,950           477,751         447,393
Non-interest expense                                10,636,015       8,397,190          5,647,915         4,464,727       3,420,597
   Income before taxes                             $ 4,931,051     $ 3,293,887        $ 2,287,573       $ 1,718,127     $ 1,608,118
Income tax expense                                   1,681,217       1,128,143            783,961           585,747         552,269
   Net income                                      $ 3,249,834     $ 2,165,744         $1,503,612       $ 1,132,380     $ 1,055,849
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA (1)
   Net income, basic                                  $   1.50        $   1.00           $   0.71          $   0.60         $  0.56
   Net income, diluted (2)                            $   1.41        $   0.94           $   0.66          $   0.56         $  0.54
   Book Value                                          $  9.77        $   8.08           $   7.32          $   5.95         $  5.31
   Average number of shares outstanding              2,165,687       2,164,392          2,116,631         1,894,718       1,894,718
------------------------------------------------------------------------------------------------------------------------------------
GROWTH AND SIGNIFICANT RATIOS
   % Change in net income                                50.06%         44.04%           32.78%            7.25%             61.62%
   % Change in assets                                    31.36%         27.03%           34.72%           34.55%             35.88%
   % Change in loans                                     49.01%         37.29%           48.08%           32.24%             34.76%
   % Change in deposits                                  27.93%         28.77%           32.52%           37.32%             40.60%
   % Change in equity                                    21.02%         10.47%           40.44%           12.12%              8.24%
   Equity to asset ratio                                  5.70%          6.19%            7.12%            6.83%              8.19%
   Return on average assets                               1.00%          0.87%            0.75%            0.81%              0.98%
   Return on average equity                              17.04%         13.03%           10.37%           10.53%             11.05%
   Average equity to average assets                       5.87%          6.65%            7.25%            7.74%              8.91%
   Efficiency ratio (3)                                  64.41%         68.99%           67.35%           69.28%             65.64%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Restated  for all years  presented  giving  retroactive  effect to10% stock
     dividends  paid in 1996,  1997 and 2000, 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.

(3)  Computed by dividing non interest expense by the sum of net interest income
     on a tax equivalent basis and non interest income,  net of securities gains
     or losses.

                  Graphic presentation of following data omitted:
<TABLE>
<CAPTION>
 -------------------------------------------------------------------------------------------------------------------
 Net Income                    Total Assets                 Net Loans                   Total Deposits
 (Dollars in thousands)        (Dollars in thousands)       (Dollars in thousands)      (Dollars in thousands)
<S>      <C>                   <C>     <C>                  <C>     <C>                 <C>     <C>
 2000    3,250                 2000    371,182              2000    305,717             2000    310,934
 1999    2,166                 1999    282,575              1999    205,171             1999    243,044
 1998    1,504                 1998    222,442              1998    149,440             1998    188,743
 1997    1,132                 1997    165,119              1997    100,917             1997    142,428
 1996    1,056                 1996    122,721              1996    76,313              1996    103,723
 -------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       1
<PAGE>
To Our Stockholders, Customers and Friends

                                  It is most  gratifying to report that Virginia
                                  Commerce  Bancorp,  Inc. (the "Company") began
                                  the new millennium with a strong  performance,
                                  continuing   the  trend  in  recent  years  of
                                  significant earnings and growth.

                                  The  year  ending  December  31,  2000 was our
                                  sixth  straight year of record  earnings.  Net
                                  income was  $3,249,834,  a 50.1% increase over
                                  the  $2,165,744  earned the prior  year.  As a
                                  result, diluted earnings per share were $1.41,
                                  up $.47 or 50.0% over the comparable period in
                                  1999.  Return on average  assets  reached 1.0%
                                  for the first  time,  while  return on average
                                  equity rose to 17.0%.

                                  Net   interest   income   for  the   year  was
                                  $13,914,420,   a  gain  of  36.8%  over  1999,
                                  primarily due to a large increase in loans and
                                  a rise in the net  interest  margin from 4.35%
                                  to  4.54%.  Non-interest  income  for  the  12
                                  months  rose  30.1%  to   $2,599,146   due  to
                                  increases  of 25.4%  in fees and net  gains on
                                  mortgage  loans  held-for-sale  and  42.2%  in
                                  deposit service charges and other fees. On the
                                  other  hand,  non-interest  expense  grew to a
                                  lesser extent,  increasing  26.7% for the year
                                  and thereby enabling the Company's  efficiency
                                  ratio to improve from 68.9% to 64.4%.

Graphic Omitted:                  Total  assets  as of  December  31,  2000 were
                                  $371,181,550,   an   increase  of  31.4%  from
CHANGE IN DEPOSITS:50.06%         $282,575,486 a year earlier,  funded primarily
CHANGE IN NET INCOME:31.36%       by a 27.9% rise in deposits  to  $310,934,498.
CHANGE IN ASSETS:49.01%           Loans, net of allowance for loan losses,  grew
CHANGE IN LOANS:27.93%            by over $100 million to $305,717,469, a record
                                  increase  of 49.0%  over the  prior  year end.
The financial results of
2000 were achieved in the         This  marked the seventh  consecutive  year of
face of an increasingly           loan growth in excess of 30% while maintaining
competitive banking               asset quality ratios significantly better than
environment.                      our peer group.

                                  The financial results of 2000 were achieved in
                                  the  face  of  an   increasingly   competitive
                                  banking   environment.   While   meeting   the
                                  challenges   posed  by  a  growing  number  of
                                  diverse  financial  services  providers in our
                                  market,   Virginia   Commerce   continued   to
                                  experience  both a greater market  penetration
                                  and  a  growing   reputation   for  delivering
                                  community  banking  at its best.  Our  overall
                                  success  is   attributable  to  an  unwavering
                                  commitment to  excellence in people,  product,
                                  pricing and personal  service,  while pursuing
                                  contiguous    geographic   expansion   through
                                  prudent  branching.  Several highlights of the
                                  implementation  of this  strategy  during  the
                                  year include:

                                  o In January,  Tom Williams,  a senior banking
                                  executive  and  lender in  Northern  Virginia,
                                  joined    the    Bank's     commercial    real
                                  estate/construction  lending  division,  which
                                  made a major  contribution  to our loan growth
                                  and earnings in 2000.

                                       2
<PAGE>

[Photo omitted]  Virginia Commerce Bancorp, Inc. began the new millennium
                 with a strong performance, continuing the trend in recent years
                 of significant earnings and growth.

o In the  first  half of 2000,  the  Bank's  Web site at  www.vcbonline.com  was
redesigned in  conjunction  with the  introduction  of our new Internet  banking
service,  which is accessed  through the Web site.  Initially,  online financial
services were offered to consumers,  enabling them to access account statements,
make  transfers  between  accounts,  place stop  payments and pay bills.  By the
second quarter we made Internet banking available to business  customers as well
with the added  features of ACH  origination  and wire transfer  capability.  In
providing   Internet   banking,   Virginia   Commerce  remains   technologically
competitive,  offering the convenience of accessing  banking services on demand.
Currently, more than 1,100 customers are using this service.

o In the fourth  quarter,  the Bank enhanced its business  product  offerings by
partnering with a major leasing company to provide  equipment lease financing to
our commercial  customers.  The affiliation allows us to generate additional fee
income  without  incurring  credit  risk or  start-up  costs.  This  service  is
complimentary  to  the  discounted  accounts  receivable  financing,  commercial
insurance products and sophisticated cash management services added in the prior
year.

o In late November, our eleventh branch office was opened in Chantilly at 13881G
Metrotech  Drive.  The  branch  was  another  strategic  addition  to the market
footprint we are pursuing in Northern  Virginia  and is already  approaching  $5
million in deposits.

o  Finally,  Virginia  Commerce  Bank was rated the top bank in the  region  for
customer service in the  spring/summer  edition of a well-known  consumer survey
publication.  This honor is a  validation  of the  Bank's  ongoing  emphasis  on
customer service as embodied in our motto:  Exceptional Service. Every Customer.
Every  Time.  We hope that you share our  pride in the  financial  and  business
accomplishments  of Virginia Commerce Bancorp,  Inc. this past year. None of our
success would have been  possible  without the  dedication  and hard work of our
employees,   the  wise  counsel  of  our   Directors  and  the  support  of  our
stockholders,   customers  and  friends.  We  will  continue  to  emphasize  the
strategies  and  strengths  responsible  for this  success  to  maximize  future
stockholder value.

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

/s/ Peter A. Converse

Peter A. Converse
President and Chief Executive Officer
March 28, 2001

                                       3
<PAGE>


[Photo Omitted]

        Defined by Our Committment

                      Set Apart by Our

         Virginia  Commerce  Bank  is  community  banking  at its  best.  We are
         committed  to  excellence  in people,  product,  pricing  and  personal
         service -- and this  commitment  has led Virginia  Commerce to be rated
         the top bank in the region for customer service.

         EXCEPTIONAL SERVICE.  EVERY CUSTOMER.  EVERY TIME.



                                                        [Photo omitted]



                                       4
<PAGE>



         The four Ps of our success:  People. Product. Pricing Personal Service.

SERVICE

                                  You might think that a  financial  institution
                                  would  be  focused  only on the  bottom  line,
                                  concentrating on maximizing  profitability and
                                  using   research   data  to  determine   which
                                  services   to  offer   and   where  to  locate
                                  branches.    While    these   are    important
                                  considerations -- for us, people count most.

                                  We've  put  aside  the  traditional   banker's
                                  mind-set  of quotas,  statistics  and  balance
                                  sheets,  and replaced it with a commitment  to
                                  meet the needs of our customers. We constantly
                                  challenge  ourselves.  How  can we  serve  our
                                  customers  better?  How  can  we  consistently
                                  exceed their  expectations?  Our answer is our
                                  greatest asset.

                                  PROFIT FROM OUR PEOPLE PERSPECTIVE

                                  The   secret  to  our   continued   growth  is
                                  attracting  and retaining  exceptional  people
                                  with a commitment to Virginia  Commerce Bank's
                                  active,  dynamic approach to customer service.
                                  We choose our  associates for their talent and
                                  professionalism  -- and because they share our
                                  vision:  to deliver  community  banking at its
                                  best.  The results speak for  themselves.  Our
                                  reputation for service excellence,  as well as
                                  our significant growth and earnings,  have set
                                  us   apart   in   our    highly    competitive
                                  marketplace.

                                  [photo omitted]


                                       5
<PAGE>

                                  For  some of our  customers  "convenience"  is
                                  measured in internet time; and "close to home"
                                  means their personal computer.

More Services Than Ever
To Help You Grow

THE SERVICES YOU'VE ASKED FOR-- IN THE NEIGHBORHOOD WHERE YOU LIVE.

For our business customers, we've added an array of cash management and
transactional services that help reduce the time they spend on administrative
tasks, improve their cash flow and increase their yield on idle funds. Plus, our
e-commerce solutions and merchant services (such as check verification and
credit card transaction processing) help them serve their own customers better.
They can also rely on us for business insurance and equipment leasing, available
through our strategic partnerships.

We understand that not every plan fits every customer. Flexibility is key. If a
customer's financial needs extend beyond the conventional reach of our programs,
our creative staff will work to meet their requirements.

Virginia Commerce Bank now has eleven convenient, full-service branches in
communities throughout Northern Virginia. However, for some of our customers,
"convenience" is measured in Internet time and "close to home" means their
personal computer. So we offer 24/7 electronic banking in three ways: via the
Internet, through specialized software or by TeleBanking using a touch-tone
telephone.

[photos omitted]

               Visit Virginia Commerce Bank online
               at www.vcbonline.com


                                       6
<PAGE>


Like Never Before

WE'LL EARN YOUR INTEREST WITH WELL-PRICED PRODUCTS


Our  interest-bearing  consumer  checking  accounts offer high market yields and
other  amenities as well.  Enjoy the convenience of direct deposit or the safety
of an overdraft  line of credit that's  activated  automatically  when any check
presented for payment exceeds your available account balance. With our Medallion
interest checking  account,  you'll also receive free custom checks; a free safe
deposit box; free cashier's checks and traveler's  checks;  free ATM withdrawals
at any STAR - or Cirrus - member ATM worldwide; a bonus rate on a certificate of
deposit and personal loan; and you'll  experience no monthly  maintenance or per
item fees.

When  it  comes   to   residential         We have among the highest yielding
loans,  we offer very  competitive         deposit  products  in the market -
first   and   second    mortgages,         while  offering some of the lowest
construction   financing   and   a         pricin on loan products.
wealth of home equity  credit line
programs  (some with  special loan
products       incentives      for
owner-occupied dwellings).

Whether  it's  competitive  pricing,  flexible  terms or a creative  approach to
banking,  customers look to Virginia  Commerce Bank for products that meet their
unique requirements today -- and in the future.

[photo omitted]



                                       7
<PAGE>

[Photo omitted]

                                  For   the   past   seven    years,    Virginia
                                  CommerceBank has been the fastest growing bank
                                  in Northern Virginia



Competitively Priced Products
Unmatched
Personal Service

YOU HAVE A BANK YOU CAN COUNT ON.

Virginia Commerce Bank has been recognized by a respected  consumer magazine and
local press for our outstanding customer service.  Within the Bank, we encourage
each other at quarterly  customer service meetings and service awards ceremonies
to:  "Know your  customers  by name and your  products  by heart." "Go the extra
mile." "Deliver exceptional service, every customer,  every time." These are not
unique customer  service  standards.  But they work for us because we understand
the difference between lip service and customer service. We are, and always will
remain, a community bank. And we thank you for letting us serve you.

At Virginia Commerce Bank, we understand the
difference  between lip service and customer service.

[photo omitted]


                                       8
<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 portion of this report
include forward looking statements,  such as: statements of the Company's goals,
intentions,  and  expectations;  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  and  other  economic
conditions;  statements by suppliers of data processing  equipment and services,
government agencies, and other third parties; 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 the report.

On December 22, 1999,  Virginia Commerce  Bancorp,  Inc (the "Company") became a
bank holding  company  when it acquired  all of the shares of Virginia  Commerce
Bank (the "Bank") in a mandatory share  exchange.  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 as 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 ten branch  locations in McLean,  Arlington
(two branches),  Alexandria (three branches),  Annandale,  Fairfax , Vienna, and
Chantilly,  Virginia  and two  mortgage  loan  offices in Vienna and  Warrenton,
Virginia.  The Company's  common stock is traded on the Nasdaq  National  Market
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  and
construction  loans,  generally  on  income-producing  properties.  Services for
individuals include a wide array of deposit account products,  home equity loans
and lines of credit,  internet  banking  and bill  payment  services,  telephone
banking,  consumer  installment  loans for the purchase of automobiles and other
personal uses, overdraft and revolving lines of credit, and residential mortgage
and 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, and ATM machines at ten of its branch locations.

RESULTS OF OPERATIONS

During 2000,  the Company  continued to experience  significant  growth as total
assets  increased  31.4%  from  $282,575,486  to  $371,181,550  over  the  prior
year-end. Growth was driven by a 27.9% increase in deposits from $243,044,377 to
$310,934,498, an $11,260,046 increase in repurchase agreements and federal funds
purchased from  $17,836,965 to $29,097,011,  and a $4,500,000  increase in other
borrowed funds from $2,900,000 to $7,400,000.  Earnings for 2000 were $3,249,834
an increase of 50.1% compared to earnings of $2,165,744 in 1999, and an increase
of 116.1% compared to earnings of $1,503,612 in 1998. Diluted earnings per share
were $1.41,  $0.94, and $0.66 in 2000, 1999, and 1998,  respectively.  Return on
average assets was 1.00% for 2000, as compared to .87% in 1999 and .75% in 1998.
Return on average  equity  increased to 17.04% in 2000, as compared to 13.03% in
1999, and 10.37% in 1998.

Loan  demand  was  strong as total  loans,  net of  allowance  for loan  losses,
increased  49.0% from  $205,171,188  at  December  31, 1999 to  $305,717,469  at
December 31, 2000 and representing  98.3% of total deposits at December 31, 2000
compared to 84.4% the prior  year-end.  While loan growth  occurred in all major
classifications of loans,  growth in real estate  construction loans represented
the largest increase, rising $48,222,166, or 279.7% from $17,238,159 at December
31, 1999 to $65,460,325 at December 31, 2000.

The growth in loans  utilized the majority of deposit and  repurchase  agreement
funding  sources  as  cash  and  cash  equivalents   declined  $11,763,136  from
$22,714,721   at  December  31,  1999  to  $10,951,585  at  December  31,  2000.
Available-for-sale  and  held-to-maturity   investment  securities,   which  are
maintained as additional  liquidity  sources and for various  collateral  needs,
decreased  $1,070,449,  or 2.3% from a combined $46,324,676 at December 31, 1999
to $45,254,227 at December 31, 2000.

Deposit  growth,  the  Company's  main funding  source,  included a  $12,684,687
increase in  non-interest  bearing demand  deposits,  a $16,134,168  increase in
savings and interest bearing demand deposits, and a $39,071,266 increase in time
deposits from  $113,107,104 at December 31, 1999 to $152,178,370 at December 31,
2000.

Stockholders'  equity increased $3,676,961 from $17,488,753 at December 31, 1999
to  $21,165,714  at December 31, 2000 with earnings of $3,249,834 and a decrease
in unrealized losses on available-for-sale  securities of $429,878,  net of tax.
The total number of common  shares  outstanding  increased  196,702 due to a ten
percent stock dividend paid on May 26, 2000.

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 2000, the Company's net
interest income was $13,914,420  compared to $10,172,507 for 1999 and $7,754,488
for 1998. This is an increase of $3,741,913,  or 36.8%,  from 1999 to 2000. This
increase was primarily due to the 49.0% increase in net loans  outstanding  from
$205,171,188  at year-end 1999 to  $305,717,469  at year-end 2000. For 2000, the
average  yield on earning  assets  increased  to 8.73% from 8.05% in 1999 due to
higher  interest  rates and  growth in loans as a  percentage  of total  earning
assets, while the rate on interest-bearing  liabilities  increased from 4.43% to
5.00%,  also due to higher interest rates.  During 2000, the Company's  interest
expense on other  borrowed  funds  increased  $304,456  from  $55,182 in 1999 to
$359,588  as a result of  increased  outstandings  under the  Company's  line of
credit  with a  correspondent  bank and an  increased  rate on a portion of such
outstandings.  Net interest income in 1999,  increased 31.2% to $10,172,507 from
$7,754,488 in 1998 primarily as a result of increased volumes of earning assets.

                                       9
<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, 2000,  1999, and 1998. 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 loan fees and late
 charges included in interest income on loans totaled (in thousands) $702, $378,
 and $243, for 2000, 1999, and 1998, respectively.
<TABLE>
<CAPTION>
                                                2000                               1999                              1998
                                             ----------                       ------------                        ----------
                                              Interest     Average              Interest    Average                Interest  Average
                                  Average     Income-      Yields     Average    Income-     Yields     Average    Income-    Yields
(Dollars in thousands)            Balance     Expense      /Rates     Balance    Expense     /Rates     Balance    Expense    /Rates
------------------------------------------- ---------- ---------------------- ----------- ---------- ------------ ------------------
<S>                                <C>         <C>         <C>     <C>          <C>         <C>        <C>          <C>        <C>
ASSETS
Securities                         $ 49,348    $ 3,125     6.33%   $ 46,682     $ 2,855     6.12%      $ 57,497     $ 3,711    6.45%
Loans, before allowance for
losses                              250,289     23,215     9.28%    176,676      15,447     8.74%       118,116      10,867    9.20%
Interest-bearing   deposits
with other banks                        601         36     5.99%        795          46     5.97%           540          31    5.74%
Federal funds sold                    6,377        400     6.27%      9,930         503     5.07%        12,178         657    5.39%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL EARNING ASSETS               $306,615    $26,776     8.73%   $234,083     $18,851     8.05%      $188,331     $15,266    8.11%
------------------------------------------------------------------------------------------------------------------------------------
Non-earning assets                   18,457                          15,796                              11,573
------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                       $325,072                        $249,879                            $199,904
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS'
 EQUITY
Interest-bearing deposits
NOW accounts                       $ 61,010     $2,499     4.10%   $ 49,673      $1,933     3.89%     $ 30,841       $1,213    3.93%
Money market accounts                23,282        900     3.87%     17,275         534     3.09%       15,214          484    3.18%
Savings accounts                     12,771        439     3.44%     11,526         409     3.55%        8,167          308    3.77%
Certificates of deposit             132,263      7,588     5.74%    102,140       5,177     5.07%       88,824        4,778    5.38%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING DEPOSITS    $229,326    $11,426     4.98%   $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                       27,966     1,435     5.13%     15,429         626     4.06%       15,952          728    4.56%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING LIABILITIES $257,292     12,861     5.00%    $196,043      $8,679    4.43%     $158,998       $7,511    4.72%
------------------------------------------------------------------------------------------------------------------------------------
Demand deposits and other
non-interest
   bearing liabilities               48,703                          37,219                             26,404
------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                  $305,995                        $233,262                           $185,402
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                 19,077                          16,617                             14,502
------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY                             $325,072                        $249,879                           $199,904
------------------------------------------------------------------------------------------------------------------------------------
Interest rate spread                                       3.73%                            3.62%                              3.39%
Net interest income and margin                 $13,915     4.54%                $10,172     4.35%                    $7,755    4.12%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       10
<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>
                                              2000 compared to 1999                           1999 compared to 1998
                                              ---------------------                           ---------------------
                                          Increase      (Decrease)        Total          Increase       (Decrease)         Total
                                                  Due to                Increase                  Due to                 Increase
(Dollars in thousands)                     Volume          Rate        (Decrease)         Volume           Rate         (Decrease)
------------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
<S>                                        <C>              <C>           <C>              <C>             <C>             <C>
Loans                                       $6,828           $ 940        $7,768           $5,072          $  (492)         $4,580
Securities                                     167             103           270             (669)            (187)           (856)
Federal funds sold                            (223)            120          (103)            (116)             (38)           (154)
Interest-bearing deposits in other banks       (10)             --           (10)              15               --              15
------------------------------------------------------------------------------------------------------------------------------------
Total interest income                       $6,762          $1,163        $7,925           $4,302          $  (717)         $3,585
------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest-bearing deposits
   NOW accounts                              $ 462           $ 104         $ 566            $ 734           $  (14)          $ 720
   Money market accounts                       231             135           366               63              (13)             50
   Savings accounts                             43             (13)           30              118              (17)            101
   Certificates of deposit                   1,691             720         2,411              650             (251)            399
------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits             $2,427           $ 946        $3,373           $1,565           $ (295)         $1,270
Other borrowings                               717              92           809              (24)             (78)           (102)
------------------------------------------------------------------------------------------------------------------------------------
Total interest expense                      $3,144          $1,038        $4,182           $1,541           $ (373)         $1,168
------------------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET INTEREST INCOME               $3,618           $ 125        $3,743           $2,761           $ (344)         $2,417
------------------------------------------------------------------------------------------------------------------------------------
</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 on a monthly
basis is the static gap analysis  which  measures  the level of  repricing  risk
between interest sensitive assets and liabilities,  at a specific point in time.
A gap  analysis  is shown in Table 3 below,  and  reflects  the  earlier  of the
maturity or repricing  dates for various assets and  liabilities at December 31,
2000. At that point in time,  the Company had a cumulative  net asset  sensitive
twelve-month  gap position  with a $31.0  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. The ALCO has set a limit for the one-year cumulative
gap at plus or minus 10% of total earnings assets.

In addition to the gap analysis, the Company uses earnings simulation models, on
a quarterly basis, to measure  earnings at risk (short-term  interest rate risk)
and the economic  value of equity at risk  (long-term  interest  rate risk) from
changes in interest  rates.  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 a sudden 200 basis
point  increase  or  decrease  in  interest  rates.  By using the  models,  ALCO
substantiates  the  appropriateness  of its one-year  cumulative gap policy and,
further, its policy on earnings at risk and the economic value of equity at risk
to a maximum of a negative 20%. The Company's  most recent  earnings  simulation
model  forecasts  earnings  at risk of a negative  20.3% from a 200 basis  point
decline in  interest  rates and  economic  value of equity at risk of a negative
4.9% from a 200 basis point increase in interest rates.



                                       11
<PAGE>


TABLE 3: INTEREST SENSITIVITY-GAP ANALYSIS

<TABLE>
<CAPTION>
                                                                        Interest  Sensitivity Periods
   December 31, 2000                                  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                                       $    10,475            $  4,714         $     20,351      $    9,902      $  45,442
Loans, net of unearned income                        126,697              39,426              121,829          20,568        308,520
------------------------------------------------------------------------------------------------------------------------------------
Total earning assets                             $   137,172            $ 44,140         $    142,180      $   30,470      $ 353,962
------------------------------------------------------------------------------------------------------------------------------------
INTEREST-BEARING LIABILITIES
NOW accounts                                     $     5,293            $ 16,541         $     44,329              --         66,163
Money market accounts                                  4,310              12,676                8,365              --         25,351
Savings accounts                                         987               3,085                8,271              --         12,343
Certificates of deposit                                6,534              64,822               80,822              --        152,178
Other borrowings                                      36,097                  --                  400              --         36,497
------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities               $    53,221              97,124         $    142,187      $       --        292,532
------------------------------------------------------------------------------------------------------------------------------------
Cumulative maturity / interest sensitivity
gap                                              $    83,951            $ 30,967         $     30,960      $   61,430         61,430
------------------------------------------------------------------------------------------------------------------------------------
As % of total earnings assets                          23.7%                 8.8%                 8.8%           17.4%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

NON-INTEREST INCOME

Non-interest  income increased  $600,576,  or 30.1%,  from $1,998,570 in 1999 to
$2,599,146 and increased $1,366,620 from $631,950 in 1998 to $1,998,570 in 1999.
Fees and net gains on  mortgage  loans  held-for-sale  of  $1,586,569  increased
$321,541,   or  25.4%,   from  $1,265,028  in  1999  and  represented  61.0%  of
non-interest income for the year 2000. 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
$290,952,  or 42.2%,  in 2000,  and increased  $98,455,  or 16.7%,  in 1999 as a
result of a 27.9% and a 28.8%  increase  in total  deposits  for the year  ended
December 31, 2000 and 1999, respectively.

NON-INTEREST EXPENSE

In 2000, non-interest expense was $10,636,015 compared to $8,397,190 in 1999 and
$5,647,915  in  1998.  Salaries  and  benefits  accounted  for  54.7%  of  total
non-interest  expense  in  2000,  54.1% in 1999,  and  51.4% in 1998.  Occupancy
expenses increased $328,033,  or 20.3%, from $1,618,427 in 1999 to $1,946,460 in
2000, and increased $492,071, or 43.8%, in 1999 due to additional facilities for
the Company's mortgage lending division,  operations  department,  and continued
branch  expansion.  Data processing  costs increased  $138,619,  or 22.7%,  from
$611,173 in 1999 to 749,792 in 2000 and increased  $149,003,  or 32.2%,  in 1999
due to  growth in loan and  deposit  accounts.  Other  operating  expenses  were
$2,127,265 compared to $1,623,252 in 1999 and $1,157,488 in 1998.

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 $1,681,217,  $1,128,143, and $783,961 for the
years ended December 31, 2000, 1999, and 1998, respectively.



                                       12
<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 2000,  charge-offs totaled $36,003 compared
to $39,513 and $22,712 in 1999 and 1998,  respectively.  The  provision for loan
loss expense in 2000 was $946,500, compared to $480,000 in 1999, and $450,950 in
1998.  The total  allowance  for loan losses of $2,803,161 at December 31, 2000,
increased 48.4% from $1,889,007 at December 31, 1999.

Management feels that the allowance for loan losses is adequate. There can be no
assurance,  however,  that  additional  provisions  for loan  losses will not be
required in the future,  including possible 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)                          2000            1999         1998                1997              1996
<S>                                           <C>              <C>         <C>                <C>              <C>
--------------------------------------------------------------------------------------------------------------------------
Allowance, beginning of period                 $1,889         $1,438        $  990              $ 748           $    552
--------------------------------------------------------------------------------------------------------------------------
CHARGE-OFFS

  Real estate loans                            $   --         $   --        $   --              $  --           $     --

  Commercial loans                                 --             --            --                 23                 --

  Consumer loans
                                                   36             40            23                 --                 32
--------------------------------------------------------------------------------------------------------------------------
Total charge-offs                              $   36             40        $   23              $  23           $     32
--------------------------------------------------------------------------------------------------------------------------
RECOVERIES

  Real estate loans                            $   --         $   --        $   --              $  --           $     43

  Commercial loans                                                                                  3                  3
                                                    1              7             3

  Consumer loans                                                                                   --                 --
                                                    2              4            17

Total recoveries                               $    3             11        $   20              $   3           $     46
--------------------------------------------------------------------------------------------------------------------------
Net charge-offs (recoveries)                   $   33         $   29        $    3              $  20           $    (14)
--------------------------------------------------------------------------------------------------------------------------
Provisions for loan losses                        947            480           451                262                182

--------------------------------------------------------------------------------------------------------- ----------------
Allowance, end of period                       $2,803         $1,889        $1,438              $ 990           $    748
--------------------------------------------------------------------------------------------------------------------------
Ratio of net charges-offs to average total
  loans outstanding during period               0.01%           0.02%        0.003%              0.02%          -   0.02%
--------------------------------------------------------------------------------------------------------------------------

</TABLE>
                                       13

<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)                                              2000           1999          1998      1997        1996
----------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>             <C>      <C>          <C>
ALLOCATION OF ALLOWANCE FOR POSSIBLE LOAN LOSSES:

Real estate - mortgage                                            $1,571         $1,206          $870     $ 683        $516
Real estate - construction                                           518            132           101        33          25
Commercial                                                           628            477           409       262         198
Consumer                                                              86             74            58        12           9
----------------------------------------------------------------------------------------------------------------------------
Balance, December 31,                                             $2,803         $1,889        $1,438      $990        $748
----------------------------------------------------------------------------------------------------------------------------
RATIO OF LOANS TO TOTAL YEAR-END LOANS:
Real estate - mortgage                                                64%            76%           73%       75%         71%
Real estate - construction                                            21%             8%            8%        4%          4%
Commercial                                                            12%            13%           16%       19%         22%
Consumer                                                               3%             3%            3%        2%          3%
----------------------------------------------------------------------------------------------------------------------------
                                                                     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  increased  70.9% from
$317,031 at year-end 1999 to $541,772 at year-end  2000, and decreased 5.0% from
$333,847 at year-end 1998 to $317,031 at year-end 1999.

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,  2000,  the  Bank has  $41,882,274  of  construction  loans to
commercial  builders of single family housing in the Northern  Virginia  market,
representing 13.5% of total loans. These loans are made to a number of unrelated
entities and generally have a term of less than one year.  Adverse  developments
in the Northern  Virginia  real estate  market or economy  could have an adverse
impact on this portfolio of loans and the Bank's income and financial  position.
At December 31, 2000,  the Company had no other  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  $138,526,770  at December 31, 2000 and represent  45.0% 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, 2000 and 1999,  the Company held
no foreclosed real properties.

The ratio of  non-performing  assets and past due loans to total loans increased
from .15% at December 31, 1999 to .18% at December 31, 2000 and  decreased  from
 .22% at December 31, 1998 to .15% at December  31, 1999.  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, 2000.  As of
December 31,  2000,  there were  $1,169,223  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 performing.

                                       14
<PAGE>
<TABLE>
<CAPTION>

TABLE 6: NON-PERFORMING ASSETS

(Dollars in thousands)                                2000             1999               1998           1997          1996
----------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>                <C>                <C>            <C>           <C>
Non-accrual loans                                 $    117           $  106             $  121         $  111        $   --
Impaired loans                                         107              143                213            140            80
Restructured loans                                      --               --                 --             --            --
Foreclosed properties                                   --               --                 --             --            --
----------------------------------------------------------------------------------------------------------------------------
     Total non-performing assets                  $    224           $  249             $  334         $  251        $   80
----------------------------------------------------------------------------------------------------------------------------
Loans past due 90 days and still accruing              318               68                 --             --            --
----------------------------------------------------------------------------------------------------------------------------
TOTAL NON-PERFORMING ASSETS AND PAST DUE LOANS    $    542           $  317             $  334         $  251        $   80
----------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses to total loans               .91%             .91%               .95%           .97%          .97%
Allowance for loan losses to                       1,251.3            758.6              430.5          394.4         935.0
  non-performing loans
Non-performing assets and past due loans to           0.18             0.15               0.22           0.25          0.10
  total loans
Non-performing assets and past due loans to           0.15             0.11               0.15           0.15          0.07
  total assets
----------------------------------------------------------------------------------------------------------------------------

</TABLE>
LOAN PORTFOLIO

At December 31,  2000,  loans  including  loans  held-for-sale,  net of unearned
income and allowance for loan losses, totaled $305,717,469, an increase of 49.0%
over the 1999 year-end total of $205,171,188. In 1999, net loans increased 37.3%
from a  year-end  1998  total of  $149,440,296.  The  increase  in loans in 2000
included an increase in real estate  construction loans of $48,222,166 or 279.7%
over the level of real estate construction loans in 1999. This increase resulted
from the Company's  increased focus on this area and the hiring of loan officers
specializing in residential construction mortgage lending. At December 31, 2000,
$41,882,274  of real estate  construction  loans were to commercial  builders of
single  family homes,  $15,081,618  to  individuals  and  $8,496,433  related to
construction of commercial properties. The Company does expect that the level of
real estate  construction loans will continue to grow at the rate experienced in
2000, although there can be no assurance.

The Company's lending activities are its principal source of income. Real estate
loans,  including  residential  permanents  and  construction,   and  commercial
permanents, represent the major portion of the Company's loan portfolio although
commercial and 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)                           2000              1999              1998            1997                      1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>               <C>              <C>                       <C>
Real estate - mortgage                       $198,541          $156,998          $109,774         $76,458                   $54,750
Real estate -construction                      65,460            17,238            12,794           4,081                     3,324
Commercial                                     37,406            26,423            23,514          19,076                    16,611
Consumer                                        7,995             6,968             4,983           2,588                     2,566
----------------------------------------------------------------------------------------------------------------------------------
Total loans                                  $309,403          $207,627          $151,065        $102,203                   $77,251
Less unearned income                              883               567               187             296                       190
Less allowance for loan losses                  2,803             1,889             1,438             990                       748
------------------------------------------------------------------------ -----------------------------------------------------------
Loans, net                                   $305,717          $205,171          $149,440        $100,917                   $76,313
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

TABLE 8: MATURITY/REPRICING SCHEDULE OF SELECTED LOANS

<TABLE>
<CAPTION>

As of December 31, 2000
(Dollars in thousands)                                      Commercial                            Real estate-construction
----------------------------------------------------------------------------------------------------------------------------
Variable Rate:
<S>                                                           <C>                                                  <C>
     Within 1 year                                             $23,668                                              $40,939
     1 to 5 years                                                1,564                                                6,289
Fixed Rate:
    Within 1 year                                                2,470                                               13,163
     1 to 5 years                                                6,759                                                2,205
     After 5 years                                               2,945                                                2,864
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       15
<PAGE>

SECURITIES

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

The securities portfolio consists of two components, 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 2000, total  securities  decreased  $1,070,449,  or 2.3%, to $45,254,227 from
$46,324,676 at year-end 1999. Securities of U.S. Government agencies represent a
major  portion of the  portfolio.  Table 9 details the  maturities  and weighted
average  yields of the securities  portfolio as of December 31, 2000,  1999, and
1998.

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

Year-end December 31,                                      2000                      1998                         1999
                                                           ----                      ----                         ----


                                                                Weighted                       Weighted                   Weighted
                                               Book             Average     Book                Average       Book        Average
(Dollars in thousands)                         Value             Yield     Value                 Yield       Value         Yield
----------------------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES

<S>                                           <C>                  <C>       <C>                  <C>        <C>             <C>
Maturing within one year                      $ 3,725              6.07%     $   --                  --      $   242         6.50%

Maturing after one through five years          22,314              5.87%     19,226               5.79%        17,721        5.84%
Maturing after  five through ten years          8,113              6.87%     11,858               6.43%        21,856        6.46%

Maturing after 10 years                        11,102              6.66%     15,241               6.87%        14,986        6.53%
----------------------------------------------------------------------------------------------------------------------------------
                                              $45,254              6.26%    $46,325               6.31%       $54,805        6.27%
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                       16
<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  businesses  located  within the  communities
served.

Total deposits  increased  $67,890,121,  or 27.9%,  in 2000 to  $310,934,498  at
year-end from $243,044,377 at year-end 1999. In 2000, growth by deposit category
included a 30.1% increase in non-interest bearing deposits, an 18.4% increase in
savings accounts and interest-bearing  demand deposits,  and a 34.5% increase in
time deposits.  In 1999, total deposits  increased  $54,301,834,  or 28.8%, over
1998.  Table 10 presents the average deposit balances and average rates paid for
the years 2000, 1999, and 1998.  Table 11 details  maturities of certificates of
deposit with balances of $100,000 and over.

TABLE 10: AVERAGE DEPOSITS AND RATES PAID
<TABLE>
<CAPTION>

                                                    2000                               1999                         1998
                                      ---------------------------------  ----------------------------- ---------------------------
(Dollars in thousands)                 Average               Average      Average           Average     Average          Average
                                       Balance                 Rate       Balance             Rate      Balance           Rate
----------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                   <C>         <C>                 <C>        <C>              <C>
Non-interest bearing demand deposits     $47,119                    --      $36,167                --    $ 25,558              --
INTEREST-BEARING DEPOSITS

NOW accounts                              61,010                 4.10%       49,673             3.89%      30,841           3.93%
Money Market accounts                     23,282                 3.87%       17,275             3.09%      15,214           3.18%
Savings accounts                          12,771                 3.44%       11,526             3.55%       8,167           3.77%
Certificates of deposit and
     other time deposits                 132,263                 5.74%      102,140             5.07%      88,824           5.38%
Total interest-bearing deposits          229,326                 4.98%      180,614             4.46%     143,046           4.74%
----------------------------------------------------------------------------------------------------------------------------------
Total deposits                          $276,445                 4.13%     $216,781             3.71%    $168,604           4.02%
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

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

 (Dollars in thousands)                        2000                         1999                            1998
-----------------------------------------------------------------------------------------------------------------
<S>                                         <C>                          <C>                             <C>
3 months or less                            $ 2,159                      $ 2,470                         $ 3,710

3-6 months                                    3,960                        3,904                           6,272

6-12 months                                  22,509                        7,390                          14,365

Over 12 months                               27,730                       27,109                           7,365
-----------------------------------------------------------------------------------------------------------------
Total                                      $ 56,358                     $ 40,873                        $ 31,172
-----------------------------------------------------------------------------------------------------------------
</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  cash  equivalents,  securities  available-for-sale,   mortgage  loans
held-for-sale,  other loans and investment  securities maturing within one year,
less the  amoritized  cost of securities  pledged as collateral  for  repurchase
agreements,   public  deposits  and  other  purposes,  and  less  federal  funds
purchased. The Company's liquidity position is actively managed on a daily basis
and monitored regularly by the Asset/Liability Management Committee (ALCO).

Cash  and  cash  equivalents,  securities  available-for-sale,   mortgage  loans
held-for-sale,  other loans and investment  securities maturing within one year,
less the  amoritized  cost of securities  pledged as collateral  for  repurchase
agreements, public deposits and other purposes and less federal funds purchased,
totaled $98,392,395 and $45,315,828 at December 31, 2000 and 1999, 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.

                                       17
<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.

The capital  position of the Company and its wholly-owned  subsidiary,  Virginia
Commerce  Bank (the  "Bank),  continues  to meet  regulatory  requirements.  The
primary  indicators  relied  on by bank  regulators  in  measuring  the  capital
position  are the Tier I  risk-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 I capital to total average assets. The
Bank's Tier I risk-based capital ratio was 6.90% at December 31, 2000,  compared
to 8.17% at December 31, 1999. The total risk-based  capital ratio was 10.07% at
December 31, 2000,  compared to 10.15% at December 31, 1999. These ratios are in
excess of the mandated minimum requirement of 4.00% and 8.00%, respectively. The
Bank's  leverage  ratio was 5.82% at  December  31,  2000  compared  to 6.59% at
December  31,  1999.  The  Company's  Tier I  risk-based  capital  ratio,  total
risk-based  capital  ratio,  and  leverage  ratio was  6.88%,  7.79% and  5.81%,
respectively, at December 31, 2000.

During 2000, the Company continued to borrow funds under its line of credit with
a correspondent bank in order to provide capital to fund growth and expansion at
the Bank. At December 31, 2000, the amount  outstanding under the line of credit
was $7.0 million,  as compared to $2.0 million at December 31, 1999. The Company
believes that borrowing under the line of credit results in enhanced  results of
operations and returns for existing shareholders as compared to those that would
result from the sale of additional common stock. The Company will be required to
refinance  $2.0  million of the amount  outstanding,  as well as any  additional
advances  taken during 2001,  by December 31, 2001.  While the Company  believes
that  alternative  sources  of  financing  will be  available,  there  can be no
assurance that the Company will be able to fund growth with borrowed funds, that
funds will continue to be available on attractive  terms.  or that the Company's
financing costs will not increase.

The  ability of the Company to continue  growth is  dependent  on its ability to
obtain  additional  funds  for  contribution  to  the  Bank's  capital,  through
additional borrowing,  the sale of additional common stock, or otherwise. In the
event that the Company is unable to obtain additional  capital for the Bank on a
timely basis,  including the  refinancing  of existing  debt,  the growth of the
Company  and the  Bank may be  curtailed,  and the  Company  and the Bank may be
required to reduce  their level of assets in order to maintain  compliance  with
regulatory capital  requirements.  Under those  circumstances net income and the
rate of growth of net income may be adversely affected.

DIVIDENDS

The Company has not paid cash dividends since 1995,  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.

                                       18

<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 represent  information for the Bank,  which traded on
the NASDAQ National Market under the symbol "VCBK."

MARKET PRICE OF STOCK AND DIVIDENDS
<TABLE>
<CAPTION>


                                                           2000                          1999
Quarter                                         High                 Low       High                  Low
-------------------------------------------------------------------------------------------------------------
<S>                                               <C>                 <C>        <C>                  <C>
First                                             $13.50              $11.81     $13.10               $11.46

Second                                             14.00               12.75      12.68                10.41

Third                                              14.00               13.13      13.50                12.83

Fourth                                             14.00               13.25      13.95                12.04
</TABLE>


The  approximate  number of the Company's  stockholders  at December 31, 2000 is
750. Information regarding dividends and splits in 2000, 1999, 1998, and 1997 is
as follows:

1.   A stock dividend of 10% was declared on April 26, 2000, for stockholders of
     record on May 12, 2000, and was paid on May 26, 2000.

2.   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.

3.   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.

4.   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.

5.   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.

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  25,  2001 at "The
Washington Golf and Country Club", 3017 North Glebe Road, Arlington, Virginia.

ANNUAL REPORT ON FORM 10-K

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

                                       19

<PAGE>



CONSOLIDATED FINANCIAL STATEMENTS

  CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

DECEMBER 31,                                                          2000                                  1999
---------------------------------------------------- ---------------------- -------------- ----------------------
ASSETS

<S>                                                           <C>                                   <C>
Cash and due from banks                                       $ 10,951,585                          $ 10,757,721

Interest-bearing deposits with other banks                              --                             5,000,000

Securities (fair value: 2000, $45,264,889; 1999,
  $45,850,848)                                                  45,254,227                             46,324,676

Federal funds sold                                                      --                             6,957,000

Loans held-for-sale                                              4,918,068                             1,460,303

Loans, net of allowance for loan losses of
  $2,803,161 in 2000 and $1,889,007 in 1999                    300,799,401                           203,710,885
Bank premises and equipment, net                                 5,740,854                             5,718,710

Accrued interest receivable                                      2,042,116                             1,306,509

Other assets                                                     1,475,299                             1,339,682
-----------------------------------------------------------------------------------------------------------------
   Total assets                                              $ 371,181,550                         $ 282,575,486
-----------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS

   Non-interest bearing demand deposits                       $ 54,899,176                          $ 42,214,489

   Savings and interest-bearing demand deposits                103,856,952                            87,722,784
   Time deposits                                               152,178,370                           113,107,104

-----------------------------------------------------------------------------------------------------------------
   Total deposits                                             $310,934,498                          $243,044,377

Securities sold under agreement to repurchase and
  federal funds purchased                                       29,097,011                            17,836,965

Other borrowed funds                                             7,400,000                             2,900,000

Accrued interest payable                                         1,309,015                               675,847

Other liabilities                                                1,275,312                               629,544

Commitments and contingent liabilities                                  --                                    --
-----------------------------------------------------------------------------------------------------------------
   Total liabilities                                          $350,015,836                          $265,086,733
-----------------------------------------------------------------------------------------------------------------
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 outstanding 2000,                       2,165,687                             1,968,985
  2,165,687; 1999, 1,968,985
Surplus                                                         13,648,064                            11,090,938

Retained earnings                                                5,475,820                             4,982,565

Accumulated other comprehensive income (loss)*                   (123,857)                             (553,735)
-----------------------------------------------------------------------------------------------------------------
   Total stockholders' equity                                 $ 21,165,714                          $ 17,488,753
-----------------------------------------------------------------------------------------------------------------
   Total liabilities and stockholders' equity                $ 371,181,550                         $ 282,575,486
-----------------------------------------------------------------------------------------------------------------
</TABLE>

* Representing unrealized losses on securities available-for-sale.

See Notes to Consolidated Financial Statements.

                                       20

<PAGE>


  CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>


YEARS ENDED DECEMBER 31,                                                     2000                         1999                  1998
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                   <C>                          <C>                  <C>
INTEREST INCOME:

   Interest and fees on loans                                         $23,214,864                  $15,447,314          $ 10,866,892

   Interest on investment securities:

        U.S. Treasury securities and agency obligations                 3,034,627                    2,783,225             3,651,839

        Other securities                                                   90,150                       72,266                59,045

   Interest on federal funds sold                                         399,996                      502,782               656,883

   Interest on deposits with other banks                                   35,931                       45,779                31,167
------------------------------------------------------------------------------------------------------------------------------------
   Total interest income                                              $26,775,568                  $18,851,366          $ 15,265,826
------------------------------------------------------------------------------------------------------------------------------------

INTEREST EXPENSE:

   Deposits                                                          $ 11,425,936                  $ 8,053,004           $ 6,782,822

   Securities sold under agreement to repurchase and
     federal funds purchased                                            1,075,624                      570,723               644,675

   Other borrowed funds                                                   359,588                       55,132                83,841
------------------------------------------------------------------------------------------------------------------------------------
   Total interest expense                                            $ 12,861,148                  $ 8,678,859           $ 7,511,338
------------------------------------------------------------------------------------------------------------------------------------
   Net interest income                                                $13,914,420                  $10,172,507           $ 7,754,488

   Provision for loan losses                                              946,500                      480,000               450,950
------------------------------------------------------------------------------------------------------------------------------------
   Net interest income after provision for loan losses               $ 12,967,920                  $ 9,692,507           $ 7,303,538
------------------------------------------------------------------------------------------------------------------------------------

NON-INTEREST INCOME:

     Service charges and other fees                                    $  979,720                   $  688,768            $  590,313

     Fees and net gains on loans held-for-sale                          1,586,569                    1,265,028                19,069

     Other                                                                 32,857                       44,774                22,568
------------------------------------------------------------------------------------------------------------------------------------
     Total non-interest income                                        $ 2,599,146                  $ 1,998,570            $  631,950
------------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE:

     Salaries and employee benefits                                   $ 5,812,498                  $ 4,544,238           $ 2,902,531

     Occupancy expense                                                  1,946,460                    1,618,427             1,125,726

     Data processing                                                      749,792                      611,173               462,170

     Other operating expense                                            2,127,265                    1,623,352             1,157,488
------------------------------------------------------------------------------------------------------------------------------------
     Total non-interest expense                                      $ 10,636,015                  $ 8,397,190           $ 5,647,915
------------------------------------------------------------------------------------------------------------------------------------
     Income before taxes on income                                    $ 4,931,051                  $ 3,293,887           $ 2,287,573
------------------------------------------------------------------------------------------------------------------------------------
   Provision for income taxes                                           1,681,217                    1,128,143               783,961
------------------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                            $ 3,249,834                  $ 2,165,744           $ 1,503,612
------------------------------------------------------------------------------------------------------------------------------------
   Earnings per common share, basic                                     $    1.50                    $    1.00              $   0.71

   Earnings per common share, diluted                                   $    1.41                    $    0.94              $   0.66
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

  See Notes to Consolidated Financial Statements.

                                       21

<PAGE>


<TABLE>
<CAPTION>


   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY



                                           Preferred   Common
                                           Stock       Stock         Surplus



<S>                                         <C>       <C>           <C>
--------------------------------------------------------------------------------
BALANCE, DECEMBER 31,1997                    $  --    $7,120,360    $2,947,740
--------------------------------------------------------------------------------
Comprehensive Income:

Net Income 1998

Other comprehensive income, net of tax,

Unrealized holding gains arising
  during the period (net of
  tax of $51,820)
--------------------------------------------------------------------------------
Total comprehensive income
--------------------------------------------------------------------------------
Issuance of 200,000 common shares-
  rights offering                               --     1,000,000       1,956,73

Change in par value and
  capital restructure                           --    (6,334,120)     6,334,120

Cash paid in lieu of fractional shares          --            --             --

Stock options exercised                                      394          1,706

--------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                   $  --    $1,786,634    $11,240,289
--------------------------------------------------------------------------------
Comprehensive Income:

Net Income 1999


Other comprehensive income, net of tax,

Unrealized holding losses arising during
 the period (net of tax of $277,322)
--------------------------------------------------------------------------------
Total comprehensive income
--------------------------------------------------------------------------------
Capital restructure                             --       178,692      (178,692)

Cash paid in lieu of fractional shares          --            --             --

Stock options exercised                         --         3,659         29,341

---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                  $   --    $1,968,985    $11,090,938
--------------------------------------------------------------------------------

Comprehensive Income:

Net Income 2000

Other comprehensive income, net of tax,
Unrealized holding gains arising during
 the period (net of tax of $221,452)
--------------------------------------------------------------------------------
Total comprehensive income
--------------------------------------------------------------------------------
10% stock dividend                                --     196,702      2,557,126

Cash paid in lieu of fractional shares            --          --             --

--------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2000                 $      --  $2,165,687    $13,648,064
--------------------------------------------------------------------------------
</TABLE>

  See Notes to Consolidated Financial Statements.
<PAGE>

<TABLE>
<CAPTION>



                                                              Accumulated                 Total
                                                              Other                       Stock-
                                                 Retained     Comprehensive  Comprehen-   holders'
                                                 Earnings     Income (Loss)  sive         Equity
                                                                             Income
-------------------------------------------------------------------------------------------------
<S>                                              <C>             <C>         <C>      <C>
 BALANCE, DECEMBER 31,1997                       $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     100,592    100,592
--------------------------------------------------------------------------------------------------
 Total comprehensive income                                                  1,604,204
--------------------------------------------------------------------------------------------------
 Issuance of 200,000 common shares-
   rights offering                                       --             --              2,956,723

 Change in par value and
   capital restructure                                   --             --                     --

 Cash paid in lieu of fractional shares              (4,304)            --                 (4,304)

 Stock options exercised                                 --             --                  2,100

 -------------------------------------------------------------------------------------------------
 BALANCE, DECEMBER 31, 1998                      $2,820,173       $(15,436)             5,831,660
--------------------------------------------------------------------------------------------------
 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)   (538,299)  (538,299)
--------------------------------------------------------------------------------------------------
 Total comprehensive income                                                 $1,627,445
--------------------------------------------------------------------------------------------------
 Capital restructure                                     --             --

 Cash paid in lieu of fractional shares              (3,352)            --                 (3,352)

 Stock options exercised                                 --             --                 33,000

--------------------------------------------------------------------------------------------------
 BALANCE, DECEMBER 31, 1999                      $4,982,565      $(553,735)            17,488,753
--------------------------------------------------------------------------------------------------

 Comprehensive Income:

 Net Income 2000                                  3,249,834             --  $3,249,834  3,249,834

 Other comprehensive income, net of tax,

 Unrealized holding gains arising during
  the period (net of tax of $221,452)                              429,878     429,878    429,878
--------------------------------------------------------------------------------------------------
 Total comprehensive income                                                 $3,679,712
--------------------------------------------------------------------------------------------------
 10% stock dividend                              (2,753,828)            --

 Cash paid in lieu of fractional shares              (2,751)            --                 (2,751)

--------------------------------------------------------------------------------------------------
 BALANCE, DECEMBER 31, 2000                      $5,475,820      $(123,857)           $21,165,714
--------------------------------------------------------------------------------------------------
  See Notes to Consolidated Financial Statements.
</TABLE>



                                       22
<PAGE>



<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                              2000                   1999                  1998

------------------------------------------------------------------------------------------------------------------------------------
  CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                                   <C>                      <C>                  <C>
 Interest received                                                    $ 26,065,262             $ 18,763,094         $  15,327,426

 Other income received                                                   2,599,146                1,998,570               612,881

 Net change in loans held-for-sale                                     (3,457,765)                 (658,303)             (802,000)

 Interest paid                                                        (12,227,980)               (8,630,980)           (7,432,558)

 Cash paid to suppliers and employees                                  (9,709,022)               (7,746,344)           (5,039,712)

 Income taxes paid                                                      (1,518,653)              (1,261,716)             (773,000)

    Net cash provided by operating activities                          $ 1,750,988              $ 2,464,321         $   1,893,037

 CASH FLOWS FROM INVESTING ACTIVITIES:


 Proceeds from maturities and principal payments on
    securities held-to-maturity                                        $ 4,039,708             $ 12,433,085         $  28,336,313

 Proceeds from maturities and principal payments
    on  securities available-for-sale                                    5,155,803                1,267,829            41,587,366

 Purchases of securities held-to-maturity                                 (743,084)              (4,932,500)          (21,075,395)

 Purchases of securities available-for-sale                             (6,755,950)              (1,171,438)          (56,616,242)

 Net increase in loans made to customers                               (98,035,016)             (55,552,589)          (48,171,838)

 Purchase of bank premises and equipment                                  (823,001)              (1,387,586)             (777,464)

------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities                            $   (97,161,540)           $ (49,343,199)        $ (56,717,260)
------------------------------------------------------------------------------------------------------------------------------------

 CASH FLOWS FROM FINANCING ACTIVITIES:

 Net increase in demand, NOW, money market and                     $    28,818,855             $ 35,745,569         $  28,500,083
    savings  accounts

 Net increase in time deposits                                          39,071,266               18,556,265            17,814,931

 Net increase in securities sold under agreement
    to repurchase and federal                                           11,260,046                2,110,432             7,769,324
    funds purchased

 Net increase (decrease) in other borrowed funds                         4,500,000                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                                     (2,751)                  (3,352)               (4,304)

 Net cash provided by financing
 activities                                                        $    83,647,416             $ 58,341,914         $  55,238,857
------------------------------------------------------------------------------------------------------------------------------------

    Increase (decrease) in cash and cash equivalents               $   (11,763,136)            $ 11,463,036           $   414,634
 -----------------------------------------------------------------------------------------------------------------------------------


  CASH AND CASH EQUIVALENTS:

    Beginning                                                           22,714,721               11,251,685            10,837,051

    Ending                                                            $ 10,951,585             $ 22,714,721         $  11,251,685
 -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.
                                       23

<PAGE>



CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>

RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED  BY OPERATING ACTIVITIES:                                         2000                    1999                      1998
 -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                     <C>                      <C>
Net income                                                           $3,249,834              $2,165,744               $ 1,503,612
------------------------------------------------------------------------------------------------------------------------------------

Adjustments   to  reconcile  net  income  to  net  cash  provided
   by  operating activities:

   Depreciation and amortization                                        800,857                 646,364                   433,560

   Provision for loan losses                                            946,500                 480,000                   450,950

   Deferred tax expense (benefit)                                      (338,728)               (191,579)                 (159,748)

   Amortization of security premiums and
     accretion  of discounts                                             25,302                  67,447                    75,085

   Origination of loans held-for-sale                               (79,830,733)            (73,738,370)                 (802,000)

   Sale of loans                                                     76,372,968              73,080,067                        --

   (Increase) in other assets                                           (18,341)                (50,244)                  (55,748)

   Increase in other liabilities                                        645,768                 112,732                   401,100

   (Increase) in accrued interest receivable                           (735,607)               (155,719)                  (32,173)

   Increase in accrued interest payable                                 633,168                  47,879                    78,399
 -----------------------------------------------------------------------------------------------------------------------------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                           $ 1,750,988             $ 2,464,321               $ 1,893,037
 -----------------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
ACTIVITIES:

Unrealized gain (loss) on securities                                  $ 651,330             $ (815,621)                 $ 152,412

Transfer of securities from held-to-maturity
  to available-for-sale                                                 $    --                $     --                 1,165,925
 -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements

                                       24

<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 "Bank").  The Company  acquired
the Bank through a share exchange in which the stockholders of the Bank received
one share of the Company for each share of the 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 the Company and
its  wholly-owned  subsidiaries,  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, 2000, 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.

                                       25
<PAGE>


LOANS

The Company  grants  mortgage,  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
the 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.

                                       26
<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

Accounting principles generally require that recognized revenue, expenses, gains
and losses be  included in net income.  Although  certain  changes in assets and
liabilities,   such  as  unrealized  gains  and  losses  on   available-for-sale
securities,  are reported as a separate  component of the equity  section of the
balance  sheet,   such  items,   along  with  net  income,   are  components  of
comprehensive income.

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 activities 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  outstanding into one
and one-tenth  shares.  This transaction was recorded by increasing common stock
by $178,692 and decreasing surplus by $178,692.

A stock  dividend of 10% was declared on April 26, 2000.  This  transaction  was
recorded  by  increasing  common  stock  by  $196,702,   increasing  surplus  by
$2,557,126 and decreasing retained earnings by $2,753,828.

                                       27
<PAGE>

    Annual Report to Stockholders for the year ended December 31, 2000

NOTE 2.  SECURITIES

Amortized  cost  and  fair  value  of  the  securities   available-for-sale  and
held-to-maturity as of December 31, 2000 and 1999, are as follows:
<TABLE>
<S>                                                         <C>               <C>                 <C>               <C>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                              GROSS               GROSS
                                                             AMORTIZED        UNREALIZED          UNREALIZED
DECEMBER 31, 2000                                            COST             GAINS               (LOSSES)          FAIR VALUE
-----------------------------------------------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE:

Obligations of U.S. government corporations and agencies    $ 29,593,165         $28,333          $ (215,996)         $ 29,405,502
Obligations of states and political subdivisions                 270,000              --                  --               270,000
Federal Reserve Bank stock                                       391,800              --                  --               391,800
Federal Home Loan Bank stock                                     667,400              --                  --               667,400
Community Bankers' Bank stock                                     55,250              --                  --                55,250
------------------------------------------------------------------------------------------------------------------------------------
                                                            $ 30,977,615          $28,333         $ (215,996)          $30,789,952
------------------------------------------------------------------------------------------------------------------------------------
HELD-TO-MATURITY:
Obligations of U.S. government corporations and agencies    $ 13,991,742          $58,969         $  (61,904)          $13,988,807
Domestic Corporate Debt Obligations                              472,533           13,597                 --               486,130
------------------------------------------------------------------------------------------------------------------------------------
                                                            $ 14,464,275          $72,566            $(61,904)         $14,474,937
------------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1999
------------------------------------------------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE:
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
------------------------------------------------------------------------------------------------------------------------------------
Amortized  cost and fair value of the  securities  as of December 31,  2000,  by contractual maturity, are shown below.
</TABLE>

<TABLE>
<S>                                                                 <C>                                    <C>
------------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2000                                                 AMORTIZED COST                             FAIR VALUE
------------------------------------------------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE:
Due under one year                                                   $ 3,730,000                           $  3,724,748
Due after one year through five years                                 20,465,399                             20,294,073
Due after five years through ten years                                 3,700,673                              3,699,496
Due after ten years                                                    1,967,093                              1,957,185
Federal Reserve Bank stock                                               391,800                                391,800
Federal Home Loan Bank stock                                             667,400                                667,400
Community Bankers' Bank stock                                             55,250                                 55,250
------------------------------------------------------------------------------------------------------------------------------------
                                                                     $30,977,615                           $ 30,789,952
------------------------------------------------------------------------------------------------------------------------------------
HELD-TO-MATURITY:
Due after one year through five years                                  2,020,000                               2,020,184
Due after five years through ten years                                 4,414,155                               4,464,590
Due after ten years                                                    8,030,120                               7,990,163
------------------------------------------------------------------------------------------------------------------------------------
                                                                     $14,464,275                             $14,474,937
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The  amortized   cost  of  securities   pledged  as  collateral  for  repurchase
agreements,  certain public  deposits,  and other purposes were  $33,596,369 and
$21,336,272 at December 31, 2000 and 1999, respectively.

                                       28
<PAGE>



NOTE 3. LOANS

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

<TABLE>
<S>                                                                             <C>                   <C>
-------------------------------------------------------------------------------------------------------------------
                                                                                     2000                  1999
-------------------------------------------------------------------------------------------------------------------
Commercial                                                                       $ 37,406              $ 26,423

Real estate - 1-4 family residential                                               36,532                23,892

Real estate - multifamily residential                                              18,565                14,540

Real estate - nonfarm, nonresidential                                             138,527               117,106

Real estate - construction                                                         65,460                17,238

Consumer                                                                            7,995                 6,968
-------------------------------------------------------------------------------------------------------------------
Total Loans                                                                     $ 304,485             $ 206,167
-------------------------------------------------------------------------------------------------------------------
Less unearned income                                                                  883                   567
Less allowance for loan losses                                                      2,803                 1,889
-------------------------------------------------------------------------------------------------------------------
Loans, net                                                                      $ 300,799             $ 203,711
-------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 4.  ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses for the years ended December 31, is
shown below:
<TABLE>
<S>                                                <C>                       <C>                        <C>
------------------------------------------------------------------------------------------------------------------
                                                         2000                       1999                     1998
------------------------------------------------------------------------------------------------------------------
Allowance, at beginning of period                 $ 1,889,007                $ 1,437,514                $ 989,815
Provision charged against income                      946,500                    480,000                  450,950
Recoveries added to reserve                             3,657                     11,006                   19,461
Losses charged to reserve                            (36,003)                   (39,513)                 (22,712)
------------------------------------------------------------------------------------------------------------------
Allowance, at end of period                       $ 2,803,161                $ 1,889,007               $1,437,514
------------------------------------------------------------------------------------------------------------------
</TABLE>

Information about impaired loans as of and for the years ended December 31, 2000
and 1999, is as follows:
<TABLE>
<S>                                                                           <C>                       <C>
------------------------------------------------------------------------------------------------------------------
                                                                                   2000                      1999
------------------------------------------------------------------------------------------------------------------
Impaired loans for which an allowance has been provided                       $ 106,914                 $ 142,688
Impaired loans for which no allowance has been provided                              --                        --
------------------------------------------------------------------------------------------------------------------
    Total impaired loans                                                      $ 106,914                 $ 142,688
------------------------------------------------------------------------------------------------------------------
Allowance provided for impaired loans, included in the allowance for loan
losses                                                                           16,500                    13,106
Average balance in impaired loans                                             $ 124,801                 $ 177,874
------------------------------------------------------------------------------------------------------------------
Interest income recognized                                                           --                        --
------------------------------------------------------------------------------------------------------------------
</TABLE>

Non-accrual loans excluded from impaired loan disclosure under FASB 114 amounted
to  $117,395  and  $106,508  at December  31,  2000 and 1999,  respectively.  If
interest on these loans had been accrued as interest  income,  such income would
have approximated  $12,963 and $10,440 for the years ended December 31, 2000 and
December 31, 1999.
                                       29
<PAGE>




NOTE 5. BANK PREMISES AND EQUIPMENT, NET

Premises  and  equipment  are stated at cost less  accumulated  depreciation  at
December 31, 2000 and 1999, as follows:
<TABLE>
<S>                                                                   <C>                         <C>
------------------------------------------------------------------------------------------------------------------
                                                                             2000                        1999
------------------------------------------------------------------------------------------------------------------
Land                                                                   $1,838,790                  $1,838,790

Buildings                                                               2,117,168                   2,017,704

Furniture, fixtures and equipment                                       3,832,045                   3,192,321

Leasehold improvements                                                  1,007,050                     923,237
------------------------------------------------------------------------------------------------------------------
Total Cost                                                             $8,795,053                  $7,972,052

Less accumulated depreciation and amortization                          3,054,199                   2,253,342
------------------------------------------------------------------------------------------------------------------
Net premises and equipment                                             $5,740,854                  $5,718,710
------------------------------------------------------------------------------------------------------------------
</TABLE>

Depreciation  and  amortization  expense on premises and  equipment  amounted to
$800,857, $646,364 and $433,560 in 2000, 1999 and 1998, respectively.

NOTE 6. TIME DEPOSITS

The aggregate amount of time deposits,  with a minimum  denomination of $100,000
each, was  approximately  $56,358,441  and  $40,873,137 at December 31, 2000 and
1999,  respectively.  Scheduled  maturities of all time deposits at December 31,
2000 are as follows:

-------------------------------------------------------------------------------
                                                             2000
-------------------------------------------------------------------------------
       2001                                            $  71,355,266

       2002                                               74,636,252

       2003                                                2,561,433

       2004                                                1,895,567

       2005 and thereafter                                 1,729,852
-------------------------------------------------------------------------------
                                                       $ 152,178,370

-------------------------------------------------------------------------------

                                       30

<PAGE>

NOTE 7. INCOME TAXES

Net deferred tax assets consist of the following components at December 31, 2000
and 1999:

-----------------------------------------------------------------------
                                                 2000             1999
-----------------------------------------------------------------------
-----------------------------------------------------------------------
DEFERRED TAX ASSETS:

Allowance for loan losses                    $923,418         $601,608
Non-accrual loans                              26,869           41,086
Organization Costs                              7,955            9,944
Deferred loan fees                             82,850           82,850
Bank premises and equipment                    66,046           32,922
Securities available-for-sale                  63,805          285,257
-----------------------------------------------------------------------
                                           $1,170,943       $1,053,667
-----------------------------------------------------------------------
-----------------------------------------------------------------------
DEFERRED TAX LIABILITIES:

Federal Home Loan Bank stock                $  2,142          $  2,142
NET DEFERRED TAX ASSETS                   $1,168,801        $1,051,525
-----------------------------------------------------------------------

The provision for income tax and its  components  for the years ending  December
31, 2000, 1999, and 1998 are as follows:

-----------------------------------------------------------------------
DECEMBER 31,                          2000         1999         1998
-----------------------------------------------------------------------
Current tax expense              $ 2,019,945  $ 1,319,722    $ 943,709
Deferred tax expense (benefit)     (338,728)    (191,579)    (159,748)
-----------------------------------------------------------------------
                                 $ 1,681,217  $ 1,128,143    $ 783,961
-----------------------------------------------------------------------

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, 2000,  1999,  and 1998, due to the
following:

--------------------------------------------------------------------------
DECEMBER 31,                            2000          1999          1998
--------------------------------------------------------------------------
Computed "expected" tax expense   $ 1,676,557    $ 1,119,922    $ 777,775
Increase (decrease) in income
     taxes resulting from:
  Nondeductible expense                 4,940          8,221        6,186
  Nontaxable income                     (280)             --           --
--------------------------------------------------------------------------
                                  $ 1,681,217    $ 1,128,143    $ 783,961
--------------------------------------------------------------------------

                                       31
<PAGE>


NOTE 8. EARNINGS PER SHARE

The  following  shows the  weighted  average  number of shares used in computing
earnings  per share and the effect on the 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>
<S>                             <C>             <C>            <C>            <C>             <C>      <C>
-----------------------------------------------------------------------------------------------------------------------
                                           2000                          1999                           1998
-----------------------------------------------------------------------------------------------------------------------
                                                 Per Share                     Per Share                     Per Share
                                    Shares          Amount        Shares          Amount        Shares          Amount
-----------------------------------------------------------------------------------------------------------------------

Basic earnings per share         2,165,687           $1.50     2,164,392           $1.00    2,116,631            $0.71

Effect of dilutive
securities:

  Stock options                     64,078                        63,231                       67,094
  Warrants                          73,459                        76,030                       82,418
-----------------------------------------------------------------------------------------------------------------------
Diluted earnings per share       2,303,223           $1.41     2,303,743           $0.94    2,266,143            $0.66
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

The following  transactions  occurred after December 31, 2000,  which would have
changed the numbers of shares used in the  computations  of earnings  per share:
options to purchase  44,000 common shares were issued to the Bank's officers and
directors.

NOTE 9. COMMITMENTS AND CONTINGENCIES

The  Company  leases  office  space  for  eight  of its  branch  locations,  its
operations  department,  and mortgage  lending  division.  These  noncancellable
agreements  which expire through May 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 through February 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, 2000,  is  $3,319,824,
which is due as follows:

-------------------------------------------------------------------------------
Due in the year ending December 31,    2001             $ 642,340

                                       2002               615,581

                                       2003               462,246

                                       2004               423,432

                                       2005               413,747

                                       Thereafter         762,478
-------------------------------------------------------------------------------

The total lease expense was $650,961,  $547,159 and $308,497, in 2000, 1999, and
1998, 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.

                                       32
<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, 2000 and 1999,  was  $1,785,866  and
$1,974,548,  respectively.  During  2000,  new loans and  advances  amounted  to
$2,547,015 and repayments of $2,735,697 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:

-----------------------------------------------------------------------------
                                       2000             1999            1998
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
NET INCOME:

As reported                     $ 3,249,834      $ 2,165,744      $ 1,503,612
Pro forma                       $ 2,861,252      $ 1,992,875      $ 1,412,390


BASIC EARNINGS PER SHARE:

As reported                     $      1.50      $      1.00      $      0.71
Pro forma                       $      1.32      $      0.92      $      0.67

DILUTED EARNING PER SHARE:

As reported                     $      1.41      $      0.94      $      0.66
Pro forma                       $      1.24      $      0.86      $      0.62
-----------------------------------------------------------------------------

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 121,000 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, 2000,
104,785 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  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 2000, 1999, and 1998,  respectively:  price volatility
of 27.83%,  29.79% and 32.32 %,  risk-free  interest  rates of 6.95%,  6.50% and
4.50%, dividend rate of .02% and expected lives of 10 years.

                                       33
<PAGE>


A summary of the status of the plan at December  31,  2000,  1999 and 1998,  and
changes during the years ended on those dates is as follows:
<TABLE>
<S>                                   <C>             <C>          <C>            <C>             <C>            <C>
-------------------------------------------------------------------------------------------------------------------------------
                                                 2000                      1999                            1998
                                                       Weighted                      Weighted                     Weighted
                                         Number         Average      Number           Average        Number        Average
                                      of Shares        Exercise   of Shares          Exercise     of Shares       Exercise
                                                          Price                         Price                        Price
-------------------------------------------------------------------------------------------------------------------------------
Outstanding at beginning of year       139,632            $7.97     116,782            $ 6.96        87,241         $ 5.50
Granted                                 75,250           $12.99      27,719            $12.38        29,974        $ 11.27
Exercised                                   --               --       3,659            $ 9.02           433         $ 4.85
Forfeited                                   --               --       1,210            $12.29            --         $   --
Outstanding at end of year             214,882            $9.73     139,632            $ 7.97       116,782         $ 6.96
Exercisable at end of year             121,953                      114,774                         113,767
Pro forma weighted-average fair
value per option of options
granted during the year                  $8.56                        $9.24                           $9.13
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

   A further  summary about the options outstanding and exercisable at December
31, 2000 is as follows:

<TABLE>
<CAPTION>

                                                Options Outstanding                                  Options Exercisable

                             ----------------------------------------------------------      ---------------------------------
                                 Number                                        Weighted           Number              Weighted
                             Outstanding at          Remaining                 Average        Exercisable at           Average
                              December 31,          Contractual                Exercise        December 31,           Exercise
 Range of Exercise Prices         2000                  Life                    Price              2000                 Price
--------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                 <C>                       <C>                <C>                   <C>
 $4.53 to $6.09                 84,480              4.3 years                 $ 5.43             84,480                $ 5.43
 $11.27 to $12.39               56,142              6.3 years                  11.87             36,704                 11.57
 $12.81 to $13.86               74,260              7.6 years                  12.99                769                 13.33
--------------------------------------------------------------------------------------------------------------------------------
 $4.53 to $13.86               214,882              5.9 years                 $ 9.73            121,953                $ 7.33
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

   All options  granted,  available  under the Plan, and  exercisable  have been
   restated  for all  three  years  giving  retroactive  effect to the 10% stock
   restructuring in 1998 and 1999 and the 10% stock dividend in 2000.

   NOTE 12. DIRECTOR COMPENSATION PLAN

   In April 1996, the Company granted  118,584  warrants at an exercise price of
   $5.57 to six outside  Directors.  In January 1998, the Company granted 13,310
   warrants at an exercise  price of $11.27 to an additional  outside  Director.
   All warrants have been restated for both years giving  retroactive  effect to
   the 10% stock  restructuring  in 1999 and 1998 and the 10% stock  dividend in
   2000.

                                       34
<PAGE>

   NOTE 13. OTHER BORROWED MONEY AND LINES OF CREDIT

   The Bank  maintains 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 Bank's  qualifying first lien loans on one-to-four unit
   single  family  dwellings.  As of December 31, 2000,  the book value of these
   loans totaled  approximately $ 8,020,998.  The amount of available  credit is
   limited to seventy-five percent of the qualifying loans. Advances on the line
   of credit in excess of the qualifying  loans requires  pledging of additional
   assets.  The  Company  also  maintains  an  $8,000,000  line of credit from a
   nonaffiliated  bank with $3,000,000 of the line of credit  expiring  December
   31, 2001 and the remaining $5,000,000 expiring December 31, 2002. Advances on
   the line are secured by 1,968,685  shares of common stock in the Bank.  As of
   December 31, 2000, the Company had the following advances outstanding:

-------------------------------------------------------------------------------
         Creditor Advance Date  Interest Rate  Maturity  Outstanding Principal
-------------------------------------------------------------------------------
FHLB                  11-16-93     5.93%       11-16-03       $ 400,000
                                                                -------
Non Affiliated Bank   12-31-99     8.25%       12-31-02     $ 2,500,000
                      06-30-00     8.25%       12-31-02       2,500,000
                      06-30-00     9.00%       12-31-01         500,000
                      12-29-00     9.00%       12-31-01       1,500,000
                                                              ---------
                                                            $ 7,000,000
-------------------------------------------------------------------------------

   The  Bank  has  additional   short  term  unused  lines  of  credit  totaling
   $22,602,582 with nonaffiliated banks at December 31, 2000.

   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, 2000 and 1999, is as follows:

 -------------------------------------------------------------------------------
                                                  2000             1999
 -------------------------------------------------------------------------------
 Financial instruments whose contract
    amounts represent credit risk:

 Commitments to extend credit                  $ 9,004,850      $ 5,285,000

 Standby letters of credit and financial
    guarantees written                         $ 3,256,032      $ 2,591,747

 Unfunded lines of credit                     $ 60,635,260     $ 44,720,367
 -------------------------------------------------------------------------------

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.
                                       35
<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.

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 are  restricted  by Federal and State  regulatory
authorities. As of December 31, 2000, the aggregate amount of unrestricted funds
which could be transferred totaled approximately $ 5,475,820,  or 25.87%, 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, 2000 and 1999,  the aggregate  amounts of daily average
required balances were approximately $489,000 and $5,715,000 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,  whichever  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  $107,498,  $74,014,  and $42,409 for the years ended December 31, 2000,
1999, and 1998, respectively.

NOTE 17.  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
          AND INTEREST RATE RISK

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.
                                       36

<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, 2000 and 1999,  the  carrying  amounts of loan  commitments  and
stand-by letters of credit approximate fair values.

The  carrying  amounts  and  estimated  fair values of the  Company's  financial
instruments are as follows:
<TABLE>
<S>                                           <C>                       <C>             <C>                      <C>
-----------------------------------------------------------------------------------------------------------------------------
                                                                 2000                                     1999
                                                                          Estimated                                Estimated
 (Dollars in thousands)                        Carrying Amount           Fair Value     Carrying Amount           Fair Value
----------------------------------------------------------------------------------------------------------------------------
FINANCIAL ASSETS:
Cash and short-term investments                       $ 10,952             $ 10,952            $ 22,715              $ 22,715
Securities                                              45,254               45,265              46,325                45,850
Loans held-for-sale                                      4,918                4,918               1,460                 1,460
Loans                                                  300,799              307,798             203,711               204,660
Accrued interest receivable                              2,042                2,042               1,307                 1,307
----------------------------------------------------------------------------------------------------------------------------
   Total Financial assets                            $ 363,965            $ 370,975           $ 275,518             $ 275,992
-----------------------------------------------------------------------------------------------------------------------------
FINANCIAL LIABILITIES:
Deposits                                             $ 310,934            $ 312,608           $ 243,044             $ 239,187
Securities sold under agreement to                      29,097               29,097              17,837                17,837
  repurchase and federal funds purchased
Other borrowed funds                                     7,400                8,075               2,900                 2,559
Accrued interest payable                                 1,309                1,309                 676                   676
----------------------------------------------------------------------------------------------------------------------------
   Total Financial liabilities                       $ 348,740            $ 351,089           $ 264,457             $ 260,259
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Company  assumes  interest  rate risk (the risk that general  interest  rate
levels will change) as a result of it's normal operations. As a result, the fair
values of the  Company's  financial  instruments  will change when interest rate
levels  change and that change may be either  favorable  or  unfavorable  to the
Company.  Management  attempts to match  maturities of assets and liabilities to
the extent believed necessary to minimize interest rate risk. However, borrowers
with  fixed  rate  obligations  are less  likely  to  prepay  in a  rising  rate
environment.  Conversely,  depositors  who are  receiving  fixed  rates are more
likely to withdraw funds before  maturity in a rising rate  environment and less
likely to do so in a falling rate  environment.  Management  monitors  rates and
maturities of assets and liabilities and attempts to minimize interest rate risk
by adjusting terms of new loans and deposits and by investing in securities with
terms that mitigate the Company's overall interest rate risk.

                                       37
<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   their   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  capital and Tier 1 capital to  risk-weighted
assets  (as  defined),  and of Tier 1  capital  to  average  assets.  Management
believes,  as of  December  31,  2000,  that the Bank met all  capital  adequacy
requirements to which they are subject.

As of December 31, 2000, 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>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Minimum To Be
                                                                           Minimum Capital           Well-Capitalized Under Prompt
                                                   Actual Capital          Requirement (1)          Corrective Active Provisions
(Dollars in thousands)                         Amount      Ratio       =>Amount      =>Ratio          =>Amount          =>Ratio
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>           <C>        <C>           <C>             <C>             <C>
As of December 31, 2000:
Total Capital
(to Risk-Weighted Assets)
     Company                                  $ 24,059      7.79%      $ 24,701      8.00%           $   N/A             N/A%
     Bank                                       31,099     10.07%        24,705      8.00%            30,881            10.00%

Tier 1 Capital
(to Risk-Weighted Assets)
     Company                                  $ 21,256      6.88%      $ 12,350      4.00%           $   N/A             N/A%
     Bank                                       21,296      6.90%        12,352      4.00%            18,528            6.00%

Tier 1 Capital
(to Average Assets)
     Company                                  $ 21,256      5.81%      $ 14,634      4.00%           $   N/A             N/A%
     Bank                                       21,296      5.82%        14,636      4.00%            18,296            5.00%
------------------------------------------------------------------------------------------------------------------------------------

 As of December 31 1999:
 Total Capital
 (to Risk-Weighted Assets)
      Company                                 $ 19,888      9.01%      $ 17,652      8.00%           $   N/A             N/A%
      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%           $   N/A            N/A%
      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%           $   N/A             N/A%
      Bank                                      18,021     6.59%         10,938      4.00%            13,673            5.00%
------------------------------------------- -------------- --------------- -------------- --------------- -------------- -----------
</TABLE>
 (1) The minimum capital requirement for the Company is a guideline.

                                       38
<PAGE>

NOTE 19. CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

Financial  information  pertaining  to Virginia  Commerce  Bancorp,  Inc.(Parent
Company only) which was formed December 22, 1999, is as follows:

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
BALANCE SHEETS (in thousands)                                       DECEMBER 31, 2000         DECEMBER 31, 1999

         Assets:
<S>                                                                         <C>                        <C>
         Cash and due from banks                                           $   3                       $   --
         Investment in Virginia Commerce Bank                             21,205                       17,510
         Subordinated Debt in Virginia Commerce Bank                       7,000                        2,500
         Other Assets                                                        143                           12
-------------------------------------------------------------- ------------------------- ---------------------------
           Total Assets                                                 $ 28,351                     $ 20,022
-------------------------------------------------------------- ------------------------- ---------------------------

         Liabilities and Stockholders' Equity:
         Long Term Debt                                                  $ 7,000                      $ 2,500
         Other Liabilities                                                   185                           33
-------------------------------------------------------------- ------------------------- ---------------------------
           Total Liabilities                                             $ 7,185                      $ 2,533
-------------------------------------------------------------- ------------------------- ---------------------------
           Stockholders' Equity                                           21,166                       17,489
-------------------------------------------------------------- ------------------------- ---------------------------
           Total Liabilities and Stockholders' Equity                   $ 28,351                     $ 20,022
-------------------------------------------------------------- ------------------------- ---------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                                      YEARS ENDED DECEMBER 31,
STATEMENTS OF INCOME (in thousands)                                              2000                     1999
<S>                                                                     <C>                            <C>
         Income:
         Interest on subordinated debt                                  $    333                       $    1
-------------------------------------------------------------- ------------------------- ---------------------------
           Total Income                                                      333                            1
-------------------------------------------------------------- ------------------------- ---------------------------
         Expenses:
         Interest on long term debt                                          336                            1
         Organizational expense                                               --                           29
         Other operating expense                                              20                            3
-------------------------------------------------------------- ------------------------- ---------------------------
           Total Expenses                                                    356                           33
-------------------------------------------------------------- ------------------------- ---------------------------
         Loss before income taxes and equity in
           undistributed earnings of Virginia Commerce Bank              $   (23)                     $   (32)
         Income Tax (Benefit)                                                 (8)                         (11)
-------------------------------------------------------------- ------------------------- ---------------------------
                                                                             (15)                         (21)
         Equity in undistributed net income of
           Virginia Commerce Bank                                          3,265                        2,187
-------------------------------------------------------------- ------------------------- ---------------------------
           Net Income                                                   $  3,250                     $  2,166
-------------------------------------------------------------- ------------------------- ---------------------------

<PAGE>

STATEMENTS OF CASH FLOWS (in thousands)
         Cash Flows from Operating Activities

           Net Income                                                   $  3,250                     $  2,166
         Adjustments to reconcile net income to net cash
           provided by operating activities:
         Equity in undistributed net income of
           Virginia Commerce Bank                                         (3,265)                      (2,187)
         (Increase) in other assets                                         (131)                         (12)
         Increase in other liabilities                                       152                           33
-------------------------------------------------------------- ------------------------- ---------------------------
         Net cash provided by operating activities                        $    6                       $    0
-------------------------------------------------------------- ------------------------- ---------------------------

         Cash Flows from Investing Activities

           Purchases of debt securities                                   (4,500)                      (2,500)
-------------------------------------------------------------- ------------------------- ---------------------------
         Net cash (used in) investing activities                        $ (4,500)                    $ (2,500)
-------------------------------------------------------------- ------------------------- ---------------------------
         Cash Flows from Financing Activities

           Net increase in long term debt                                  4,500                        2,500
           Cash paid in lieu of fractional shares                             (3)                          --
-------------------------------------------------------------- ------------------------- ---------------------------
         Net cash provided by financing activities                      $  4,497                     $  2,500
-------------------------------------------------------------- ------------------------- ---------------------------

         Change in cash and cash equivalents                              $    3                       $    0
         Beginning                                                             0                           --
         Ending                                                           $    3                       $    0
</TABLE>
                                       39
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

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,  Inc. and Subsidiaries as of December 31, 2000 and
1999,   and  the  related   consolidated   statements  of  income,   changes  in
stockholder's equity and cash flows for the years ended December 31, 2000, 1999,
and 1998.  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, 2000 and
1999,  and the  results of their  operations  and their cash flows for the years
ended December 31, 2000,  1999, and 1998, in conformity with generally  accepted
accounting principles.

/s/ Yount, Hyde & Barbour, P.C.

Winchester Virginia
February 15, 2001

                                       40
<PAGE>

                                                    Virginia Commerce Bank, Inc.


Board of Directors
<TABLE>
<CAPTION>

<S>                                     <C>
[photo omitted]                            Peter A. Converse, President and Chief Executive Officer,
                                           W. Douglas Fisher, Chairman, David M. Guernsey, Vice Chairman


Executive Officers

[photo omitted]                     William K. Beauchesne, Executive Vice President and Chief
                                    Financial Officer, Laurie P. Barnwell, Executive Vice President,
                                    Retail Banking, Richard B. Anderson, Jr., Executive Vice President
                                    and Chief Lending Officer, Peter A. Converse, President and
                                    Chief Executive Officer
</TABLE>
<TABLE>
<CAPTION>
<S>                         <C>                       <C>                           <C>

Timothy M. Aldinger          Thomas E. Williams          Marcia J. Hopkins           Deborah A. Jones
Senior Vice President        Senior Vice President       Vice President              Assistant Vice President
Commercial Lending           Real Estate Lending         Accounting                  Residential Mortgage Lending

Kerry J. Donley              Ricardo Balcells            Edward W. Lull, Jr.         Pamela D. McConnell
Senior Vice President        Vice President              Vice President              Assistant Vice President
Regional Manager             Regional Manager            Commercial Lending          Community Banking

George L. Greco              Jo Ann Bell                 Suzie G. Spannuth           Stacey L. Sim
Senior Vice President        Vice President              Vice President              Assistant Vice President
Senior Credit Officer        Regional Manager            Deposit Operations          McLean Branch

Gregory A. Motheral          Jose A. Castillo            Lisa K. Bluntzer            Patrick E. Carmichael
Senior Vice President        Vice President              Assistant Vice President    Branch Officer
Commercial Lending           Electronic Banking Services Loan Servicing              King Street Branch

James R. Nalls               Leslie E. Cerino            James L. Caison             Jill E. S. Cochones
Senior Vice President        Vice President              General Auditor             Loan Officer
Construction Lending         Regional Manager

Kenneth L. O'Shea            Wendy M. Clark              Nancy K. Clements           Karen R. Daniels
Senior Vice President        Vice President              Assistant Vice President    Branch Officer
Residential Mortgage Lending Consumer Lending            Credit Administration       Williamsburg Blvd. Branch

Patricia M. Ostrander        Robin P. Coracci            Jacqueline A. Freeman       James D. Holter
Senior Vice President        Vice President              Assistant Vice President    Information Services Officer
Director of Human Resources  Branch Coordinator          Training Officer

Michele K. Parker            James C. Elliott            Sharon L. Jackson           Barry L. Huitema
Senior Vice President        Vice President              Assistant Vice President    Branch Officer
Cash Management Services     Consumer Lending            Fairfax Branch              Chantilly Branch

                             Lynn B. Gonzalez            Susan T. Johnson            Kelly J. Perrault
                             Vice President              Assistant Vice President    Branch Officer
                             Electronic Banking Services Facilities Manager          Cameron Station Branch

</TABLE>

<PAGE>


VIRGINIA COMMERCE BANCORP, INC.

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------

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


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

                                                [Map of Northern Virginia and
                                                   office locations omitted]

1414 Prince Street
Alexandria, Virginia

703-739-3242

5140 Duke Street
Alexandria, Virginia  22304
703-751-4400

506 King Street
Alexandria, Virginia  22314
703-684-4390

4230 John Marr Drive
Annandale, Virginia  22003
703-256-8889

<TABLE>
<CAPTION>
<S>                                <C>                                <C>                        <C>
MAIN OFFICE/                       13881G Metrotech Drive             1356 Chain Bridge Road
EXECUTIVE OFFICE                   Chantilly, Virginia  20151         McLean, Virginia  22101    374 Maple Avenue East
5350 Lee Highway                   703-378-9556                       703-448-9800               Vienna, Virginia  22180
Arlington, Virginia  22207                                                                       703-319-4001
703-534-1382 (Branch)
703-564-0700 (Switchboard)          10777 Main Street                374 Maple Avenue East       54 E. Lee Street, Suite 120
                                    Fairfax, Virginia  22030         Vienna, Virginia  22180     Warrenton,
Virginia  20186
2930 Wilson Boulevard               703-273-9111                     703-319-4150                540-341-3001
Arlington, Virginia  22201
703-525-4601
                                    2030 Old Bridge Road
6500 Williamsburg Boulevard         Lake Ridge, Virginia  22192
Arlington, Virginia  22213         (Opening Spring 2001)
703-237-8050

VCBI                                                                                 [FDIC Insurance Logo Omitted]
----
NASDAQ
LISTED
</TABLE>