Virginia Commerce Bancorp, Inc., reported net income to common stockholders of nearly $7.5 million, for the second quarter of 2011, compared to net income to common stockholders of $4.3 million, for the same period in 2010.

"We are certainly pleased with our earnings performance this quarter. Net income to common stockholders experienced a year-over-year increase of 73.3%. Earnings were undoubtedly bolstered by a substantial decrease in loan loss provisioning. Nonetheless, the bottom line also benefited from non-interest income increasing more than 100% year-over-year and from ongoing cost containment efforts resulting in non-interest expense decreasing 1.8% from the same quarter last year." Peter A. Converse, Chief Executive Officer.

"The reserve release this quarter was deemed appropriate by management based on our quarterly analysis of loan loss reserve adequacy, our projection of near-term asset quality trends and the fact that recent charge-offs have been largely covered by specific reserves. That is not to imply that quarterly provisioning will remain at the second quarter level going forward. Rather, provisioning is more likely to range between the first and second quarter levels through the remainder of this year."

Converse continued, "Sequential asset quality progress was essentially flat for the quarter, with a net decrease of $4.2 million in other real estate owned mostly offset by a $4.1 million increase in non-accrual loans. Despite the lack of progress in reducing non-performing assets and loans 90+ days past due, it was encouraging that a shift of approximately $16 million in lingering impaired loans to non-accrual resulted in a net increase of only $4.1 million. Second quarter 2011 may represent the peak quarterly volume of remaining impaired loans migrating to non-accrual status. Regarding troubled debt restructurings, our continued aggressive efforts to reduce that category of impaired loans have resulted in a further quarterly reduction of $10.8 million."

Converse concluded, "Earnings momentum is on the right track and should continue to benefit from our strong core operating earnings and more manageable credit costs. On the other hand, loan growth remains a challenge as run-off, particularly in ADC loans as planned and non-farm, non-residential loans, is still exceeding new loan volume. However, our pipeline is building, our loan officers are heavily involved in prospecting and our focus on C&I lending is yielding positive growth. As a result, we expect a reversal of negative loan growth to emerge in the second half."

 By: Elizabeth Martinez, Editor
Mortgage Lending News, LLC
http://www.mortgagelendingnews.com
Miami, FL
Tel. (305) 280-7400

Bank of America reported the most horrible fallout in its history Tuesday, but chief executive Brian Moynihan sustained to insist his bank doesn’t need to raise more capital.

The Charlotte bank´s capital base was a boiling topic for analysts after the bank reported a second –quarter loss of $9.1 billion, including favored dividend payments. The loss was in line with estimates the bank gave last month when it disclosed plans to take more than $20 billion in mortgage –related charges.

 The river red ink, compared to a $ 2.8 billion gain a year earlier, again showed the nation´s biggest bank is laboring to bury mortgage-related troubles inherited from its 2008 Countrywide Financial purchase. A big chunk of the losses stem from an $ 8.5 billion settlement announced last month over investors claims linked to countrywide loans sold off during the housing boom.

 Bank of America´s huge loss contrasted with strong results Tuesday from San Francisco based Wells Fargo ,which earned $ 3.7 billion in the quarter despite slow revenue growth. New York based investment bank Goldman Sachs posted a profit of $ 1.05 billion, although the amount was less than analysts had expected.

The prospect of raising capital by issuing new shares worries existing shareholders, because it would dilute their holdings.

In a conference call with analyst, Moynihan noted the bank has higher capital ratios than a year ago despite its massive charges and contended it has plenty of ways to increase capital without issuing more stock. Those would include generating earnings each quarter and flaking riskier assets -¨ all of which give us comfort and demonstrate that we don’t need to raise capital´´ he said.

Capital concerns have clearly been weighing on bank´s share price, said Shannon Stemm , financial services analyst with Edward Jones in St. Louis. The bank´s shares have been trading at a two-year low, and fell an additional 1.5 percent on Tuesday to $ 9.57.

Even though the bank´s executives did a ´´ outstanding job´´ outlining ways they can raise capital, the bank doesn’t have a lot of ´´´room for error´´, Stemm said. To the point there would be a negative shock to the economy, people´s concerns are suitable that this company would have to raise additional capital´´ she said.

By: Elizabeth Martinez, Editor
Mortgage Lending News, LLC
http://www.mortgagelendingnews.com
Miami, FL
Tel. (305) 280-7400

The settlement of a major class-action suit is shedding new light on a controversial real estate practice that home buyers and sellers typically know little about  fees paid to realty brokers and agents for promoting home warranty policies.

The case involves potentially thousands of buyers and sellers who bought warranty coverage from American Home Shield Corp. between May 2008 and March of this year. American Home Shield is the dominant player in the home warranty field, with sales of $658 million in 2010, according to the company. Home warranty policies offer repairs and replacements for owners when specified home systems and appliances malfunction.

Attorneys representing the plaintiffs say as many as 500,000 consumers may be members of the class, though neither they nor American Home Shield would speculate on how many ultimately will file for and receive cash from the settlement.

In their suit, the plaintiffs alleged that American Home Shield violated federal law by paying kickbacks to realty brokerage firms and agents for promoting warranty policies to their customers. The Real Estate Settlement Procedures Act prohibits payments for referrals of "settlement services" in connection with most mortgage transactions. It also bans the giving or receiving of fees or other compensation when no substantive services are rendered.

American Home Shield denied any wrongdoing in the settlement, and said it sought to limit its exposure to litigation costs by resolving the dispute. The complaint, filed by homeowners in Alabama, involved payment of a $524 fee at closing for a one-year home warranty from American Home Shield. A portion of that amount allegedly was paid to the realty agent by American Home Shield.

Realtors and consumer groups say payments like these are rarely disclosed to buyers or sellers but have been common in the industry for years. Typical warranty policies cost from $399 to $499; fees to realty brokers and agents range from $59 to $89. Warranty companies took in an estimated $1.6 billion in sales during 2009, according to Warranty Week.

The fees have been controversial within the real estate brokerage industry itself, with some companies refusing to participate in payment plans, while others defend the practice. Glenn Kelman, chief executive of Redfin, a national online brokerage, said if his firm finds that any agent "accepts gifts or payments from any party in the transaction, we fire the agent."