Forward-Looking Statements

This management's discussion and analysis and other portions of this report, contain forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as "may," "will," "anticipates," "believes," "expects," "plans," "estimates," "potential," "continue," "should," and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company's market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast, and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company's past results are not necessarily indicative of future performance.

Non-GAAP Presentations

This management's discussion and analysis refers to the efficiency ratio, which is computed by dividing non-interest expense by the sum of net interest income on a tax equivalent basis and non-interest income. This is a non-GAAP financial measure which we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate the efficiency ratio differently. The Company, in referring to its net income, is referring to income under accounting principles generally accepted in the United States, or "GAAP".

General

The following presents management's discussion and analysis of the consolidated financial condition and results of operations of Virginia Commerce Bancorp, Inc. and subsidiaries (the "Company") as of the dates and for the periods indicated. This discussion should be read in conjunction with the Company's Consolidated Financial Statements and the Notes thereto, and other financial data appearing elsewhere in this report. The Company is the parent bank holding company for Virginia Commerce Bank (the "Bank"), a Virginia state-chartered bank that commenced operations in May 1988. The Bank pursues a traditional community banking strategy, offering a full range of business and consumer banking services through twenty-seven branch offices, one residential mortgage office and one investment services office.

Headquartered in Arlington, Virginia, Virginia Commerce serves the Northern Virginia suburbs of Washington, D.C., including Arlington, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania and Stafford Counties and the cities of Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas and Manassas Park. Its service area also covers, to a lesser extent, Washington, D.C. and the nearby Maryland counties of Montgomery and Prince Georges. The Bank's customer base includes small-to-medium sized businesses including firms that have contracts with the U.S. government, associations, retailers and industrial businesses, professionals and their firms, business executives, investors and consumers.

Critical Accounting Policies

During the quarter ended March 31, 2009, there were no changes in the Company's critical accounting policies as reflected in the last report.

The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The financial information contained within our statements is, to a significant extent, financial information that is based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset or relieving a liability. We use historical loss factors as one factor in determining the inherent loss that may be present in our loan portfolio. Actual losses could differ significantly from the historical

factors that we use. In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of our transactions would be the same, the timing of events that would impact our transactions could change.

The allowance for loan losses is an estimate of the losses that are inherent in our loan portfolio. The allowance is based on two basic principles of accounting: (i) SFAS 5, Accounting for Contingencies, which requires that losses be accrued when they are probable of occurring and estimable and (ii) SFAS 114, Accounting by Creditors for Impairment of a Loan, which requires that losses be accrued based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance.

Our allowance for loan losses has two basic components: the specific allowance and the unallocated allowance. Each of these components is determined based upon estimates that can and do change when the actual events occur. The specific allowance is used to individually allocate an allowance for impaired loans. Impairment testing includes consideration of the borrower's overall financial condition, resources and payment record, support available from financial guarantors and the fair market value of collateral. These factors are combined to estimate the probability and severity of inherent losses based on the Company's calculation of the loss embedded in the individual loan. Large groups of smaller balance, homogeneous loans are collectively evaluated for impairment. Impaired loans which meet the criteria for substandard, doubtful and loss are segregated from performing loans within the portfolio. Internally classified loans are then grouped by loan type (commercial, commercial real estate, commercial construction, residential real estate, residential construction or installment). The unallocated formula is used to estimate the loss of non-classified loans. These un-criticized loans are also segregated by loan type and allowance factors are assigned by management based on delinquencies, loss history, trends in volume and terms of loans, effects of changes in lending policy, the experience and depth of management, national and local economic trends, concentrations of credit, quality of the loan review system and the effect of external factors (i.e. competition and regulatory requirements). The factors assigned differ by loan type. The unallocated allowance recognizes potential losses whose impact on the portfolio has yet to be recognized by a specific allowance. Allowance factors and the overall size of the allowance may change from period to period based on management's assessment of the above described factors and the relative weights given to each factor. Further information regarding the allowance for loan losses is provided under the caption: Allowance for Loan Losses/Provision for Loan Loss Expense, later in this report.

The Company's 1998 Stock Option Plan (the "Plan"), which is shareholder-approved, permits the grant of share options to its directors and officers for up to 2.4 million shares of common stock, as adjusted for the ten-percent stock dividend paid on May 7, 2008. Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant, generally vest based on 5 years of continuous service and have 10-year contractual terms. The fair value of each option award is estimated on the date of grant using a Black-Scholes option pricing model that currently uses historical volatility of the Company's stock based on a 7.2 year expected term, before exercise, for the options granted, and a risk-free interest rate based on the U.S. Treasury curve in effect at the time of the grant to estimate total stock-based compensation expense. This amount is then amortized on a straight-line basis over the requisite service period, currently 5 years, to salaries and benefits expense. See Note 5 to the Consolidated Financial Statements for additional information regarding the Stock Option Plan and related expense.

Results of Operations

For the three months ended March 31, 2009, the Company recorded a net operating loss of $2.4 million. After an effective dividend of $787 thousand on preferred stock, the Company reported a net loss to common stockholders of $3.2 million, or $0.12 per diluted common share, compared to earnings of $4.1 million, or $0.15 per diluted common share in the first quarter of 2008. Earnings for the quarter were significantly impacted by $13.4 million in loan loss provisions due to increases in the level of non-performing assets and $12.4 million in net charge-offs.

Total assets increased $57.0 million, or 2.1%, from $2.72 billion at December 31, 2008, to $2.77 billion at March 31, 2009, as total deposits grew $67.2 million, or 3.1%, from $2.17 billion to $2.24 billion, while loans, net of allowance for loan losses, were down $29.1 million, or 1.3%, with non-farm, non-residential real estate loans up $11.2 million, construction loans down $23.9 million, one-to-four family residential real estate loans mostly unchanged and commercial loans down $14.2 million. Loan production for the quarter was negatively impacted by declining demand in both the business and consumer sectors and higher than normal run-off. However, favorable

market rates enabled an increase in residential mortgage lending from $38.7 million in the first quarter of 2008 to $67.3 million for the quarter ending March 31, 2009, of which $61.1 million was available-for-sale.

Total deposit growth of $67.2 million included an increase in demand deposits of $23.8 million, or 12.2%, from $194.8 million at December 31, 2008, to $218.6 million at March 31, 2009, an increase in interest-bearing demand deposits of $130.2 million, or 25.1%, and a decrease in time deposits of $86.8 million, or 5.9%. The majority of the Bank's deposits are attracted from individuals and businesses in the Northern Virginia and the Metropolitan Washington, D.C. area. The decline in time deposits in the first quarter is reflective of a strategy to reduce the Bank's historically heavy reliance on certificates of deposit to achieve deposit growth. The proportionate share of time deposits relative to total deposits declined from 67.2% at year-end 2008 to 61.3% as of March 31, 2009. We anticipate a further decline in that percentage as our deposit gathering efforts are increasingly focused on demand deposits as well as cross-selling activities tied to the acquisition of savings and interest-bearing demand accounts. Repurchase agreements, the majority of which represent sweep funds of significant commercial demand deposit customers, and Fed funds purchased decreased $3.8 million from $188.0 million at December 31, 2008, to $184.2 million.

As noted, for the three months ended March 31, 2009, the Company recorded a net loss to common stockholders of $3.2 million compared to earnings of $4.1 million for the three months ended March 31, 2008, as net interest income increased $1.3 million, or 6.6%, non-interest income increased $189 thousand, or 11.6%, non-interest expense rose $2.2 million, or 20.7% and provisions for loan losses were up $9.3 million. The Company also paid an effective dividend on preferred shares of $787 thousand. Stockholders' equity decreased $3.4 million, or 1.3%, from $253.3 million at December 31, 2008, to $249.9 million at March 31, 2009.

Net Interest Income

Net interest income is the excess of interest earned on loans and investments over the interest paid on deposits and borrowings and is the Company's primary revenue source. Net interest income is thereby affected by overall balance sheet growth, changes in interest rates and changes in the mix of investments, loans, deposits and borrowings. Net interest income increased $1.3 million, or 6.6%, from $19.5 million for the three months ended March 31, 2008, to $20.8 million for the current three month period due to overall balance sheet growth as the Company's net interest margin declined nineteen basis points from 3.34% in the first quarter of 2008 to 3.15% for the current three-month period, and was down four basis points from 3.19% in the fourth quarter of 2008.

The year-over-year decline in the net interest margin is primarily the result of lower yields on loans due to reductions in the prime rate and increases in the level of non-performing loans. As a result, the yield on loans fell from 7.10% for the three months ended March 31, 2008, to 5.87% in the current period, and was down twenty-six basis points sequentially. On the funding side, strong competition for deposits in the local market did not allow for the same level of decline in the cost of interest-bearing liabilities year-over-year, which declined from 4.06% for the three months ended March 31, 2008, to 2.98% in the current period. Sequentially, the margin was affected by the reversal of $420 thousand in previously accrued interest on non-performing loans and the carrying of a high level of Fed funds sold as net loans outstanding declined by $29.1 million during the quarter. With market interest rates expected to remain mostly unchanged through the remainder of 2009, and high levels of time deposits declining while repricing downward, Management anticipates the margin to average 3.25% for the year.

The following table shows the average balance sheets for each of the three months ended March 31, 2009 and 2008. In addition, the amounts of interest earned on interest-earning assets, with related yields on a tax-equivalent basis, 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 $829 thousand and $1.29 million for 2009 and 2008, respectively.

                                                Three Months Ended March 31,
                                       2009                                     2008
                                       Interest     Average                     Interest     Average
(Dollars in              Average       Income-       Yields       Average       Income-       Yields
thousands)               Balance       Expense       /Rates       Balance       Expense       /Rates
Assets
Securities(1)          $   338,688    $    4,091        4.96 %  $   320,765    $    4,142        5.26 %
Loans, net of
unearned income          2,312,936        33,443        5.87 %    2,030,623        35,891        7.10 %
Interest-bearing
deposits in other
banks                          102             -        0.12 %        1,369            17        4.84 %
Federal funds sold          41,386            20        0.19 %        2,204            13        2.32 %
Total
interest-earning
assets                 $ 2,693,112    $   37,554        5.68 %  $ 2,354,961    $   40,063        6.85 %
Other assets                61,865                                   64,005
Total Assets           $ 2,754,977                              $ 2,418,966

Liabilities and
Stockholders'
Equity
Interest-bearing
deposits:
NOW accounts           $   190,817    $      610        1.30 %  $   146,319    $      512        1.40 %
Money market
accounts                   149,739           577        1.56 %      206,536         1,655        3.21 %
Savings accounts           241,424         1,439        2.42 %      164,836         1,441        3.51 %
Time deposits            1,424,332        12,005        3.42 %    1,215,738        14,422        4.76 %
Total
interest-bearing
deposits               $ 2,006,312    $   14,631        2.96 %  $ 1,733,429    $   18,030        4.17 %
Securities sold
under agreement to
repurchase and
federal funds
purchased                  185,210           620        1.36 %      234,194         1,683        2.88 %
Other borrowed
funds                       25,000           265        4.25 %       25,000           194        3.07 %
Trust preferred
capital notes               65,832         1,281        7.78 %       40,000           691        6.83 %
Total
interest-bearing
liabilities            $ 2,282,354    $   16,797        2.98 %  $ 2,032,623    $   20,598        4.06 %
Demand deposits and
other liabilities          219,344                                  213,240
Total liabilities      $ 2,501,698                              $ 2,245,863
Stockholders'
equity                     253,279                                  173,103
Total liabilities
and stockholders'
equity                 $ 2,754,977                              $ 2,418,966
Interest rate
spread                                                  2.70 %                                   2.79 %
Net interest income
and margin                            $   20,757        3.15 %                 $   19,465        3.34 %

Allowance for Loan Losses / Provision for Loan Loss Expense

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. For the three months ended March 31, 2009, provisions for loan losses were $13.4 million compared to $4.1 in the same period in 2008. This was due to a $37.2 million increase in non-performing assets and loans 90+ days past due from $124.9 million at December 31, 2008, to $162.1 million at March 31, 2009, and $12.4 million in net charge-offs during the quarter, or 0.53% of average loans outstanding. In addition, other potential problem loans, which, although well-secured and currently performing, are classified as impaired, and in some instances require higher reserve levels, increased from $49.3 million at December 31, 2008, to $53.8 million at March 31, 2009. As a result, the allowance for loan losses to total loans rose from 1.58% at December 31, 2008, to 1.64% as of March 31, 2009. See "Risk Elements and Non-performing Assets" for additional discussion relating to the increase in non-performing assets and potential problem loans.

Management feels that the allowance for loan losses is adequate at March 31, 2009. However, there can be no assurance that additional provisions for loan losses will not be required in the future, including as a result of 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 quarterly analysis of the allowance for loan losses, with the objective of quantifying portfolio risk into a dollar figure of inherent losses, thereby translating the subjective risk value into an objective number. Emphasis is placed on semi-annual independent external loan reviews and monthly internal reviews. The determination of the allowance for loan losses is based on applying and summing the results of eight qualitative factors and one quantitative factor to each category of loans along with any specific allowance for impaired and adversely classified loans within the particular category. Each factor is assigned a percentage weight and that total weight is applied to each loan category. The resulting sum from each loan category is then combined to arrive at a total allowance for all categories. Factors are different for each loan category. Qualitative 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, and regulatory requirements. The total allowance required thus changes as the percentage weight assigned to each factor is increased or decreased due to its particular circumstance, as the various types and categories of loans change as a percentage of total loans and as specific allowances are required on impaired loans.

The following schedule summarizes the changes in the allowance for loan losses:

                                         Three Months      Three Months        Twelve Months
                                             Ended             Ended               Ended
                                        March 31, 2009    March 31, 2008     December 31, 2008
                                                        (Dollars in thousands)

Allowance, at beginning of period       $        36,475   $        22,260   $            22,260
Provision charged against income                 13,390             4,112                25,378
Recoveries:
Consumer loans                                       46                 6                    65
Commercial                                            5                 -                    16
Real estate one-to-four family
residential:
Permanent first and second                            -                 -                    48
Home equity loans and liens                           -                 1                     2
Real estate-nonfarm, nonresidential                   -                 -                    27
Real estate-construction                            146                 -                     -
Losses charged to reserve:
Consumer loans                                      (77 )             (68 )                (392 )
Commercial loans                                 (2,102 )            (666 )              (3,436 )
Real Estate one-to-four family
residential:
Permanent first and second                         (115 )               -                  (769 )
Home equity loans and liens                        (826 )               -                  (314 )
Real estate-multi-family residential                  -                 -                   (95 )
Real estate-nonfarm, nonresidential                (211 )               -                    (2 )
Real estate-construction                         (9,237 )            (219 )              (6,313 )
Net recoveries (charge-offs)                    (12,371 )            (946 )             (11,163 )
Allowance, at end of period             $        37,494   $        25,426   $            36,475

Ratio of net charge-offs to average
total loans outstanding during period              0.53 %            0.05 %                0.51 %
Allowance for loan losses to total
loans                                              1.64 %            1.20 %                1.58 %

Risk Elements and Non-performing Assets

Non-performing assets consist of non-accrual loans, restructured loans, and other real estate owned (foreclosed properties). For the three months ended March 31, 2009, the total non-performing assets and loans 90+ days past due and still accruing interest increased by $37.2 million, or 29.7%, from $124.9 million at December 31, 2008, to $162.1 million at March 31, 2009. As a result, the ratio of non-performing assets and loans 90+ days past due and still accruing to total assets increased from 4.60% at December 31, 2008, to 5.84% at March 31, 2009.

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.

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 noted, non-performing assets and loans 90+ days past due increased during the quarter by $37.2 million, to 5.84% of total assets, with $17.7 million of the increase in loans 90+ days past due and a $19.5 million increase in non-performing assets. Of the total of $23.8 million in loans 90+ days past due, $15.4 million consisting of four credits represented problem loan workouts in the final stages of negotiation and/or documentation and $1.1 million represented loans in the process of renewal, not identified as a problem asset. The $19.5 million increase in non-performing assets included two land development loans totaling $18.8 million, which experienced defaults on lot

takedown contracts with national and regional builders; $7.8 million in residential construction loans with two infill builders where projects are ongoing but, forbearance agreements are required due to the inability to service interest carry; a $2.7 million commercial construction loan on a completed building experiencing slow lease up; and two non-farm, non-residential loans totaling $3.2 million on buildings occupied by businesses in financial distress.

Non-performing loans continue to be concentrated in residential and commercial construction and land development loans in outer sub-markets hardest hit by the residential downturn and commercial and consumer credits experiencing the after shocks in sub-contracting businesses and workforce employment. Overall, as of March 31, 2009, $107.2 million or 85.2% of non-performing loans represented acquisition, development and construction loans. Other sectors, including non-farm, non-residential real estate and inner sub-markets of the broader loan portfolio, continue to perform well, with low levels of delinquencies at the present time. Additionally, the increase in loans 30-89 days past due appears to be decelerating on a quarter-to-quarter basis, and was significantly comprised of loans in the process of renewal not identified as problem assets in the current quarter. The market decline remains dynamic and Management intends to pursue more aggressive strategies for problem loan resolution and is committed to utilizing operating earnings and, if necessary, our capital cushion, to significantly reduce them.

Total non-performing assets consist of the following:

                                       March 31, 2009    March 31, 2008     December 31, 2008
                                                       (Dollars in thousands)

Non-accrual loans:
Commercial                            $         10,433   $         4,635   $            12,178
Real estate-one-to-four family
residential:
Closed end first and seconds                       735               588                     -
Home equity lines                                  319               395                   320
. . .