WashingtonFirst Bankshares Inc. Announces Earnings for the First Quarter Ended March 31, 2014

WashingtonFirst Bankshares Inc. (NASDAQ: WFBI) (the “Company”), the holding company for WashingtonFirst Bank (the “Bank”), today reports unaudited consolidated net income to common shareholders for the three months ended March 31, 2014 of $1.6 million ($0.20 per diluted common share) compared to $1.4 million ($0.18 per diluted common share) for the three months ended March 31, 2013. The Company's increase in net income in 2014 is primarily the result of continued organic growth and the Millennium Transaction, defined below, which closed on February 28, 2014.

Shaza Andersen, President & CEO of the Company, said, “I am pleased to announce strong earnings for the first quarter 2014 for the Company. In addition, we closed on our first FDIC assisted transaction with the purchase and assumption of Millennium Bank, NA. Although the Millennium Transaction resulted in goodwill and was therefore dilutive to our tangible book value, we expect the resulting goodwill to be recovered within two years as the transaction is immediately accretive to earnings. Strategically, the Millennium Transaction enhanced the Bank’s Virginia franchise with the addition of a branch in Herndon, Virginia. We look forward to another strong year for the Bank as a result of this transaction and through continued organic growth.”

Ms. Andersen also said, “I am thrilled with the opening of our Rockville, Maryland branch as this is part of our strategy to enhance our presence in Montgomery County. We have recently hired several experienced lenders that we believe will contribute to the continued growth of the Company. In addition, I am pleased to announce that our new Mortgage Division is open for business and has started to generate additional income for the Bank.”

Millennium Transaction

On February 28, 2014, the Company entered into a purchase and assumption agreement with the Federal Deposit Insurance Corporation (“FDIC”) to assume all of the deposits and certain assets of Millennium Bank, a federally chartered commercial bank headquartered in Sterling, Virginia (the "Millennium Transaction"). Millennium Bank operated two branches in Virginia – Sterling and Herndon. These branches reopened Monday, March 3, 2014 as branches of WashingtonFirst.

The Millennium Transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration paid were recorded at their estimated fair values as of the transaction date. The excess of fair value of net liabilities assumed exceeded cash received resulting in goodwill of $2.6 million being recorded. The Company also recorded $0.5 million in core deposit intangibles which will be amortized over five to eight years, depending on the underlying instrument.

The consideration paid, and the fair value of identifiable assets acquired and liabilities assumed, as of the purchase and assumption agreement date are summarized in the following table:

In many cases, the fair values of assets acquired and liabilities assumed were determined by estimating the cash flows expected to result from those assets and liabilities and discounting them at appropriate market rates. The most significant category of assets for which this procedure was used was the acquired loans. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC 310-20.

Those loans for which specific credit-related deterioration since origination was identified were recorded at fair value, reflecting the present value of the amounts expected to be collected. Income recognition on these loans is based on reasonable expectation about the timing and amount of cash flows to be collected. Acquired loans deemed impaired and considered collateral dependent, with the timing of the sale of loan collateral indeterminate, remain on non-accrual status and have no accretable yield.

Balance Sheet and Capital

As of March 31, 2014, total assets were $1.3 billion, compared to $1.1 billion as of December 31, 2013. Total loans, net of allowance increased $59.9 million (7.2 percent) from December 31, 2013 to March 31, 2014. Of this $59.9 million increase, approximately $51.3 million is due to the result of the Millennium Transaction. Total deposits increased $147.3 million (15.5 percent) from December 31, 2013 to March 31, 2014. This increase of $147.3 million is primarily being driven by the Millennium Transaction which accounts for approximately $121.6 million of the increase, with the remaining increase of $25.7 million being the result of organic growth of the Bank's deposit portfolio. Tier 1 capital decreased $1.6 million to $111.2 million as of March 31, 2014, compared to $112.8 million as of December 31, 2013, as a result of the goodwill recorded in the Millennium Transaction.

Asset Quality

Non-performing assets totaled $25.3 million as of March 31, 2014, compared to $22.3 million as of December 31, 2013. Of the $25.3 million non-performing assets as of March 31, 2014, $2.5 million related to loans acquired in the Millennium Transaction. Net charge-offs were $1.2 million or 0.56 percent of average loans for the three months ended March 31, 2014, compared to $1.2 million or 0.63 percent of average loans for the three months ended March 31, 2013.

The Company’s allowance for loan losses was 0.88 percent of total gross loans as of March 31, 2014, compared to 1.02 percent as of December 31, 2013. In connection with the acquisition of Alliance Bankshares Corporation in December 2012 and the Millennium Transaction, the Company recorded the acquired loans at fair market value which consists of pricing and credit marks. The credit marks are negative purchase marks which are similar to an allowance for loan losses. Therefore, the Non-GAAP adjusted allowance for loan losses to Non-GAAP adjusted total loans held for investment, which considers these marks similar to allowance for loan losses, was 2.09 percent as of March 31, 2014 compared to 1.81 percent as of December 31, 2013.

About The Company

The Company is the parent company of the Bank, a $1.3 billion bank headquartered in Reston, VA. With 16 branches in the greater Washington, DC metropolitan area, WashingtonFirst is a community oriented bank that provides competitive financial services to local businesses and consumers.

Cautionary Statements About Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements of the goals, intentions, and expectations of the Company as to future trends, plans, events, results of operations and policies and regarding general economic conditions. These forward-looking statements include, but are not limited to, statements about the Company’s goals, intentions, earnings and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals. Additional forward-looking statements are included regarding the acquisitions made by the Company. 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 the beliefs of the management of the Company as to the expected outcome of future events, current and anticipated economic conditions, nationally and in the Company’s market, and their impact on the operations, assets and earnings of the Company, interest rates and interest rate policy, competitive factors, judgments about the ability of the Company to successfully integrate its operations following significant transactions including, but not limited to, mergers and acquisitions, the ability to avoid customer dislocation during the period leading up to and following such transactions, 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 in the future may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on such forward-looking statements. Past results are not necessarily indicative of future performance. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

Additional documents are available free of charge at the SEC’s web site, www.sec.gov and on the Company’s website at www.wfbi.com under the tab “About the Bank” and then under the heading “Investor Relations” or by contacting the Company’s Investor Relations Department at 11921 Freedom Drive, Suite 250, Reston, VA 20190. You may also read and copy any reports, statements and other information filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington DC. Information about the operation of the SEC Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

Information about the directors and executive officers of the Company is set forth in the Company’s proxy statement dated April 29, 2014 available on the SEC’s website at www.sec.gov.