Virginia Commerce Bancorp (VCBI) is delaying its planned exit from the Troubled Asset Relief Program following discussions with the Federal Reserve Bank of Richmond regarding its repayment plan.
The $3 billion-asset company in Arlington received $71 million from the Treasury Department program in late 2008 and had wanted to start paying off the investment in installments last month. In a news release Thursday, President and Chief Executive Peter A. Converse said the company has held discussions with Fed officials and "on their guidance, we have delayed our application until at least the end of the third quarter."
Virginia Commerce announced the postponement of the application alongside its second-quarter results. The company reported earnings of $6.4 million for the quarter, a 14% drop from a year earlier as its loan-loss provision and noninterest expenses increased.
The company added that it has not received any notification from the Treasury about whether the agency plans to sell Virginia Commerce's shares in a pooled auction. Such sales are for those companies the Treasury does not believe will be able to redeem their shares in the next year and a half.
Virginia Commerce is not particularly stressed. Its tangible common equity ratio was 7.79% at the end of the second quarter; analysts typically say that a ratio above 7% is healthy. Meanwhile, its nonperforming assets were $60 million, or 2% of assets. Nonperforming assets were down 17% from the first quarter, but up 27% from the end of 2011.
The company's health makes the delay curious, says one analyst.
"Although capital levels and asset quality appears satisfactory, we are concerned about the Federal Reserve's fresh guidance to delay the company's TARP repayment application — perhaps the regulators see something that we do not," said David C. Peppard, an analyst with Janney Montgomery Scott, in a research note.
Peppard did not change his neutral rating on the stock.