The purpose of this discussion is to focus on important factors affecting the Company's financial condition and results of operations. The discussion and analysis should be read in conjunction with the unaudited Consolidated Financial Statements included elsewhere in this report.

This report contains forward-looking statements with respect to the financial condition, results of operations and business of the Company. There forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management of the Company and on information available at the time these statements and disclosures were prepared. Factors that may cause actual results to differ materially from those expected included the following:

• General economic conditions may deteriorate and negatively impact the ability of borrowers to repay loans and depositors to maintain balances.

• Changes in interest rates could reduce income.

• Competitive pressures among financial institutions may increase.

• The businesses that the Company is engaged in may be adversely affected by legislative or regulatory changes, including changes in accounting standards.

• New products developed or new methods of delivering products could result in a reduction in business and income for the Company.

• Adverse changes may occur in the securities market.

OVERVIEW

Continued volatility and uncertainty in the economic environment impacted first quarter 2009 results. Our results reflect the impact of this environment with large increases in federal funds sold, a decline in loan growth, continued large additions to the loan loss provision, an increase in OREO, lower interest income as a result of the rapid rate declines in 2008 and increases in deposits as we restructure our balance sheet and investors look for safe havens to invest their cash.

Subsequent to quarter end, management announced on April 3, 2009, a definitive merger agreement with Eastern Virginia Bankshares, Inc. ("EVBS") in Tappahannock, Virginia. This will be a strategic alliance which will match up their strong retail experience with our strong commercial business. The merger is expected to close in late 2009.

On April 3, 2009 First Capital Bancorp, Inc, issued 10,958 shares of preferred stock to the U. S. Treasury. The Company had applied for funds under the TARP Capital Purchase Plan ("CPP"). The agreement requires us to pay a 5% dividend on the preferred stock for the first five years. The dividend increases to 9% for all periods after the first five years if we have not redeemed the preferred stock. In addition, we issued a warrant to the U. S. Treasury giving them the right to purchase 250,947 shares of our common stock at $6.55 per share for up to 10 years. These funds increased the capital ratios of an already well capitalized company.

Net income for the first quarter of 2009 was $102 thousand compared to $415 thousand in the first quarter of 2008. This decline was the result of several factors. Net interest income decreased $263 thousand. While average earning assets grew $80.4 million over their 2008 balances, rapid rate declines in late 2008 caused the average yield on loans to decrease 137 basis points. In addition, the average Federal funds sold earned 0.20% during the first quarter of 2009 as compared to 2.75% for the first quarter of 2008. Average

interest-bearing liabilities increased $76.4 million which was $5.3 million more than loan growth. Average cost of interest-bearing liabilities decreased 71 basis points as compared to the first quarter of 2008. Noninterest expenses increased due to the addition of our Bon Air Branch, increased FDIC assessments and increased Virginia franchise tax.

Financial Condition

Total assets at March 31, 2009 were $473.0 million, up $41.4 million, or 9.6%, from $431.6 million at year-end and up $80.3 million or 20.5% from March 31, 2008, when total assets were $392.6 million. This increase is the result of strong deposit growth, particularly in the first quarter of 2009. Loan growth for the first quarter of 2009 was $5.8 million, or 1.6% compared to the 2008 year-end balance. For the quarter, total average assets were $451.3 million, an increase of 21.8% compared to $370.7 million in the first quarter of 2008. For the quarter ending March 31, 2009, average total loans, net of unearned income, were $377.8 million, an increase $71.0 million, or 23.2% compared to $306.7 million in the first quarter of 2008.

At March 31, 2009, the Company's investment portfolio totaled $48.7 million, an increase of $15.7 million from $33.0 million at March 31, 2008 and an increase of $16.7 million from $32.0 million at year-end 2008. Interest rates during the first quarter of 2009 were low compared to the same quarter in the prior year. In addition, the Federal Home Loan Bank of Atlanta did not pay a dividend in the first quarter of 2009 on a required investment of $3.0 million in restricted investments. Most of the funds that are invested in the Company's investment portfolio are part of management's effort to balance interest rate risk and to provide liquidity.

Total deposits of $377.1 million at March 31, 2009 represent an increase of $42.8 million, or 12.8% from $334.0 million at year-end 2008 and an increase of $82.2 million, or 27.9%, from $294.9 million at March 31, 2008. The cost of deposits continues to decrease, and we anticipate that it will drop more as large blocks of certificates of deposit reprice and money market deposits reprice lower.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income represents a principal source of earnings for the Company. Changes in net interest income during 2009 to date are attributable primarily to the overall growth of the Company, offset by drastic actions of the Federal Reserve Bank's Open Market Committee (FOMC). The FOMC cut the federal funds targeted rate and the associated prime rate of interest by 400 basis points since January 1, 2008, resulting in a significant decline in the key rate that is tied to over 40% of the Company's loan portfolio having a daily rate change. Although the vast majority of our time deposits are set to reprice in the next twelve months and will lower funding costs, this rapid reduction in rates put pressure on our net interest margin.

Net interest margin decreased 22 basis points for the three months ended March 31, 2009 to 2.38% as compared to 2.60% for the fourth quarter of 2008, reflecting slow loan growth, fed funds growth at 0.20% earnings for the first quarter of 2009 and deposit growth as average rates on interest-bearing liabilities decreased 26 basis points from 3.84% for the fourth quarter of 2008 to 3.58% for the first quarter of 2009. Net interest margin is down 78 basis points for the three months ended March 31, 2009 as compared to the first quarter of 2008. The yield on earning assets decreased from 6.80% for the quarter ended March 31, 2008 to 5.46% for the quarter ended March 31, 2009. The cost of interest bearing liabilities decreased 71 basis points to 3.58% for the first quarter of 2009 as compared to 4.29% for the same period in 2008.

Total interest and fees on loans, the largest component of net interest income, decreased 1.1%, or $59 thousand to $5.4 million during the first quarter of 2009 compared to $5.5 million for the same period in 2008 due to the rapid decrease in interest rates during 2008.

Interest on investment securities increased 14.9% to $440 thousand for the first quarter of 2009 compared to $383 thousand for the same period of 2008 as average balances in investment securities increased to $37.8 million for the three months ended March 31, 2009 from $30.1 million for the comparable period in 2008. Interest on federal funds sold decreased $104 thousand for the first quarter of 2009 to $9 thousand from $113 thousand for the same period in 2008 as the FOMC decreased fed funds rates significantly since January 1, 2008.

Dividends on restricted equity securities decreased $43 thousand to $5 thousand for the three months ended March 31, 2009 as compared to $47 thousand in the first quarter of 2008, as a result of a significant decrease in the dividend rate during the quarter on Federal Home Loan Bank of Atlanta stock.

Interest expense on deposits increased $178 thousand to $2.8 million, or 6.8% for the first quarter of 2009 compared to the first quarter of 2008. The increase in deposit expense is due to the increase in average outstanding deposits, arising from the overall growth of the Company and offset by a decrease in the overall rates paid on deposits. Interest expense on borrowings totaled $543 thousand for the first quarter of 2009 an decrease of $64 thousand, or 10.6%, over the same period of 2008. Decreases in the average cost of Trust Preferred securities, which are tied to the three month LIBOR, from an average of 6.36% for the first quarter of 2008 to an average of 3.63% for the first quarter of 2009.

Average Balances, Income and Expenses, Yields and Rates

Net interest income represents our principal source of earnings. Net interest income is the amount by which interest generated from earning assets exceeds the expense of funding those assets. Changes in volume and mix of interest-earning assets and interest-bearing liabilities, as well as their respective yields and rates, have a significant impact on the level of net interest income

Earning assets consist primarily of loans, investment securities and other investments. Interest-bearing liabilities consist principally of deposits, Federal Home Loan Bank advances and other borrowings.

The following table illustrates average balances of total interest-earning assets and total interest-bearing liabilities for the periods indicated, showing the average distribution of assets, liabilities, shareholders' equity and related income, expense and corresponding weighted-average yields and rates. The average balances used in these tables were calculated using daily average balances.

Average Balances, Income and Expenses, Yields and Rates



                                                             Three Months Ended March 31,
                                                       2009                                2008
                                           Average      Income/    Yield/      Average      Income/    Yield/
                                           Balance      Expense     Rate       Balance      Expense     Rate
                                                                (Dollars in thousands)
Assets:
Loans, net of unearned income             $ 377,768     $  5,421     5.82 %   $ 306,723     $  5,480     7.19 %
Investment securities:
U.S. Agencies                                15,638          192     4.98 %      17,897          244     5.47 %
Mortgage backed securities                    8,571           98     4.62 %       8,176           89     4.36 %
CMO securities                                5,713           49     3.45 %          -            -      0.00 %
State and political subdivisions - tax
exempt (1)                                    3,778           60     6.41 %       1,411           20     5.67 %
State and political subdivisions -
taxable                                         720           10     5.87 %          -            -      0.00 %
Corporate bonds                               3,392           48     5.80 %       2,638           37     5.71 %
Other investments                             3,858            5     0.52 %       3,446           48     5.54 %

Total investment securities                  41,670          462     4.49 %      33,568          438     5.24 %
Federal funds sold                           17,747            9     0.20 %      16,541          113     2.75 %

Total earning assets                      $ 437,185     $  5,892     5.46 %   $ 356,832     $  6,031     6.80 %

Cash and cash equivalents                     5,919                              10,276
OREO                                          2,927                                  -
Allowance for loan losses                    (5,118 )                            (2,640 )
Fixed assets                                  7,192                               3,398
Other assets                                  3,197                               2,813

Total assets                              $ 451,302                           $ 370,679


Liabilities and Stockholders' Equity:
Interest bearing liabilities:
Interest checking                         $   8,471     $      7     0.35 %   $   9,513     $     19     0.81 %
Money market deposit accounts                53,652          310     2.35 %      44,067          272     2.48 %
Statement savings                               681            1     0.46 %         681            2     1.03 %
Certificates of deposit                     256,507        2,476     3.91 %     188,603        2,323     4.95 %

Total interest-bearing deposits             319,311        2,794     3.55 %     242,864        2,616     4.33 %

Fed funds purchased                              -            -      0.00 %       2,290           26     4.55 %
Repurchase agreements                         1,856            2     0.33 %       2,130           11     2.02 %
Subordinated debt                             7,155           78     4.41 %       7,155          113     6.36 %
FHLB advances                                50,000          463     3.76 %      47,527          457     3.87 %

Total interest-bearing liabilities          378,322        3,337     3.58 %     301,966        3,223     4.29 %


Noninterest-bearing liabilities:
Noninterest-bearing deposits                 35,608                              31,433
Other liabilities                             2,131                               2,189

Total liabilities                            37,739                              33,622
Shareholders' equity                         35,241                              35,091

Total liabilities and shareholders'
equity                                    $ 451,302                           $ 370,679


Net interest income                                     $  2,555                            $  2,808

Interest rate spread                                                 1.89 %                              2.51 %

Net interest margin                                                  2.38 %                              3.16 %

Ratio of average interest earning
assets to average interest-bearing
liabilities                                                        115.56 %                            118.17 %

(1) Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%.

Noninterest Income

Total noninterest income was $181 thousand for the first quarter of 2009, compared to $172 thousand for the same period of 2008. Fees on deposits decreased 4.1% to $61 thousand for the first quarter of 2009 compared to the same period in 2008. Other noninterest income increased $11 thousand, or 10.6% to $120 thousand for the first quarter of 2009 from $108 thousand for the first quarter of 2008. This change in other noninterest income is the result in increases in fees related to investment sales through Infinex and Bankers Title, LLC.

Noninterest Expense

Total noninterest expenses for the first quarter of 2009 totaled $2.4 million, an increase of $345 thousand, or 17.2%, compared to $2.0 million for the same period in 2007. These increases are attributable to the following factors: 1) an increase in salaries and benefits of $145 thousand for the quarter, primarily arising from additional salaries due to a new banking office in Bon Air, higher employee benefit costs, and additional 401-K match; 2) an increase of $18 thousand for the quarter in depreciation expense related to the additional banking office and the relocation of two offices to free standing owned facilities; 3) an $24 thousand increase in the Virginia Franchise tax for the quarter as the result of the additional equity infusion in First Capital Bank in the third quarter of 2008; 4) an increase in data processing expenses related to additional branches and services provided and 5) an increase in FDIC assessments of $62 thousand due to deposit increases and premium increases.

Income Taxes

The income tax expense was $51 thousand for the first quarter of 2009 on pretax income of $154 thousand compared to $228 thousand for the first quarter of 2008 on pretax income of $643 thousand. Income tax expense decreased as a percentage of pretax income from 35% for the first quarter of 2008 to 33% for the first quarter of 2009 as the result of additional nontaxable income on municipal securities acquired in the fourth quarter of 2008 and first quarter of 2009.

ASSET QUALITY

The Company's allowance for loan losses is an estimate of the amount needed to provide for possible losses in the loan portfolio. In determining adequacy of the allowance, management considers a number of factors, including, the Company's historical loss experience, the size and composition of the loan portfolio, specific impaired loans, the overall level of nonperforming loans, the value and adequacy of collateral and guarantors, experience and depth of lending staff, effects of credit concentrations and economic conditions. Because the risk of loan loss includes general economic trends as well as conditions affecting individual borrowers, the allowance for loan losses can only be an estimate.

While the Company believes it has sufficient allowance for its existing portfolio, there can be no assurances that an additional allowance for losses on existing loans may not be necessary in the future. The allowance for loan losses totaled $5.1 million and $2.8 million at March 31, 2009 and 2008, respectively. The ratio of the allowance for loan losses to total loans outstanding at March 31, 2009 and 2008 was 1.34% and 0.89%, respectively. Loans totaled $2.8 million that were more than 30 days but less than 89 days past due at March 31, 2009. No loans were past due 90 days or more and still accruing. Non-accrual loans, represented by four relationships, totaled $3.9 million.

Total nonperforming assets, which consist of nonaccrual loans and foreclosed properties, were $8.2 million at March 31, 2009, $6.6 million at December 31, 2008 and $116 thousand at March 31, 2008. This increase is the result of a depressed economy and a weak real estate market, which has slowed sales of homes.

LIQUIDITY

Management monitors and plans the Company's liquidity position for future periods. Liquidity is provided from cash, interest-bearing deposits in other banks, repayments of loans, increases in deposits, federal funds facility from three correspondent banks, term loans from a federal agency bank and maturing investments. Management is committed to maintaining liquidity at a level sufficient to protect depositors, provide for reasonable growth, and fully comply with all regulatory requirements.

At March 31, 2009, cash and cash equivalents totaled $30.7 million. Investment securities available-for-sale and not pledged totaled $34.1 million, for a total of 13.7% of total assets, which management believe is adequate to meet short-term liquidity needs. Management also has alternative sources of funding available, including unused unsecured federal funds facility with three banks totaling $27.7 million, unused secured federal funds facility totaling $1.2 million and unused available term loans through the Federal Home Loan Bank totaling $26.3 million.

Total liquidity and other alternative sources of liquidity total $92.5 million at March 31, 2009 if fully utilized, which represents 19.6% of assets.

Off-Balance Sheet Arrangements

In the normal course of business there are outstanding commitments for the extension of credit which are not reflected in the financial statements. At March 31, 2009, pre-approved but unused lines of credit for loans totaled approximately $80.3 million. In addition, we had approximately $8.8 million in financial and performance standby letters of credit at March 31, 2009. These commitments represent no more than the normal lending risk that we commit to borrowers. If these commitments are drawn, we will obtain collateral if it is deemed necessary based on our credit evaluation of the counterparty.

CAPITAL RESOURCES

The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of 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.

Management reviews the adequacy of the Company's capital on an ongoing basis with reference to the size, composition, and quality of the Company's resources and compliance with regulatory requirements and industry standards. Management seeks to maintain a capital structure that will assure an adequate level of capital to support anticipated asset growth and absorb potential losses.

Federal regulatory risk-based capital ratio guidelines require percentages to be applied to various assets including off-balance sheet assets in relation to their perceived risk. Tier 1 capital consists of stockholders' equity and minority interests in consolidated subsidiaries, less net unrealized gains on available-for-sale securities. Tier 2 capital, a component of total capital, consists of a portion of the allowance for loan losses, certain components of nonpermanent preferred stock and subordinated debt. The $5 million in trust preferred securities issued by the Company in September 2006 qualified as Tier 1 capital. First Capital Bank's ratios exceed regulatory requirements. As of March 31, 2009, First Capital Bancorp, Inc. had a Tier 1 risk-based capital ratio of 10.35% and a Total risk-based capital ratio of 12.12%. At December 31, 2008 these ratios were 10.62% and 12.40%, respectively.