Alliance Bankshares Reports 2nd Quarter 2008 Results

"Needless to say, our management team is less than pleased with the performance levels as they are not reflective of our typical performance or long term expectations, however, we believe the second quarter results reflect several bright spots as we continue to deal with this very unusual and challenging real estate recession. During the quarter, we recorded a fair value gain of $166,000 which is a significant improvement over the first quarter fair value adjustment. This is the result of a restructuring of our balance sheet which has placed the company in a more balanced position relative to fair value. In addition, we sold several pieces of other real estate owned (OREO) which led to a reduction of nonperforming assets by $2.6MM and we have seen a more stable credit quality picture. Lastly, we continue to look closely at all of our expense areas and are making difficult decisions where necessary," said Thomas A. Young, Jr., President & CEO.

Total loans declined by approximately $17.4 million from June 30, 2007 to June 30, 2008. Total loans were $372.2 million as of June 30, 2008. Total assets were $569.6 million as of June 30, 2008 or $11.5 million less than the June 30, 2007 position of $581.1 million or $28.3 million greater than the December 31, 2007 level of $541.3 million. The modest year over year reduction in assets was primarily the result of the previously reported plan to reduce our investment portfolio and our exposure to mortgage related securities.

Our non-interest bearing deposits decreased by $24.1 million over the past year. Total non-interest bearing deposits were $89.2 million or 20.9% of total deposits as of June 30, 2008. Our non-interest bearing deposits increased by $23 million or 34.8%, over the December 31, 2007 level of $66.2 million. The growth is coming from both existing clients and the expansion of our title and escrow services client base which has led to significant amount of new accounts during 2008. Our total deposits grew to $426.3 million as of June 30, 2008 or $37.0 million greater than the June 30, 2007 level of $389.3 and $61.0 million greater than the December 31, 2007 level of $365.3 million.

Total non-performing assets amounted to $21.9 million as of June 30, 2008 which is down $2.7 million from the March 31, 2008 level of $24.6 million and $2.4 million down from the December 31, 2007 level of $24.3 million. During the quarter we had success in moving two residential properties out of the non-performing assets. The attached schedule reflects the individual properties in the non-performing status. We have expressions of interest in several of the OREO properties and we expect potential contracts in the near term. We recognize several of the development projects may have longer resolution time horizons due to the current real estate slowdown.

"The board and management remain committed to the vision of performance improvement. The management team has taken a variety of proactive steps over the year to improve core performance. As the newspapers, newscasts and the internet reflect each day, this is one of the toughest economic cycles America has faced in a long time. Our management team is working diligently to reduce the levels of non-performing assets as fast as can be reasonably expected. We anticipate the levels of non-performing assets to drop in a systematic fashion over the coming quarters. Our base franchise is an excellent banking company located in one of the key metropolitan areas in the United States. As the economy improves the metropolitan Washington, DC area we will clearly benefit. The support of shareholders during these trying times is greatly appreciated, said Harvey E. Johnson, Jr., Chairman of the Board.

Some of the matters discussed herein may include forward-looking statements. These forward-looking statements may include statements regarding profitability, balance sheet management goals and actions and financial and other goals. These statements are based on certain assumptions and analyses by the company and other factors it believes are appropriate in the circumstances. However, the company's expectations are subject to a number of risks and uncertainties such as changes in personnel, interest rates, accounting standards, economic conditions and other factors that could cause actual results, events and developments to differ materially from those contemplated by any forward-looking statements herein. Consequently, all forwarding-looking statements made herein are qualified by these cautionary statements and cautionary language in the company's most recent report on Form 10-K and other documents filed with the Securities and Exchange Commission.

More information on Alliance Bankshares Corporation can be found online at www.alliancebankva.com, or by phoning an Alliance office.

ALLIANCE BANKSHARES CORPORATION Consolidated Balance Sheets June 30, December June 30, 31, 2008* 2007 2007* --------- --------- --------- ASSETS (Dollars in thousands) Cash and due from banks $ 26,321 $ 10,121 $ 26,708 Federal funds sold 15,265 1,256 6,523 Trading securities, at fair value 98,514 84,950 112,017 Investment securities available-for- sale, at fair value 24,354 26,128 28,494 Investment securities held-to-maturity, at amortized cost - - 100 Loans held for sale 1,087 1,925 3,721 Loans, net of unearned discount and fees 372,169 398,224 389,575 Less: allowance for loan losses (5,502) (6,411) (4,899) --------- --------- --------- Loans, net 366,667 391,813 384,676 Premises and equipment, net 2,073 2,106 2,247 Other real estate owned (OREO) 14,495 4,277 367 Goodwill and intangibles 6,368 6,338 6,318 Other assets 14,418 12,348 9,949 --------- --------- --------- TOTAL ASSETS $569,562 $541,262 $581,120 ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Non-interest bearing deposits $ 89,173 $ 66,152 $113,332 Interest-bearing deposits ($78,964, $110,665 and $97,620 at fair value) 337,102 299,112 275,957 --------- --------- --------- Total deposits 426,275 365,264 389,289 Repurchase agreements, federal funds purchased and other borrowings 35,075 38,203 50,165 Federal Home Loan Bank advances ($25,871, $76,615 and $74,671 at fair value) 50,871 76,615 74,671 Trust Preferred Capital Notes 10,310 10,310 10,310 Other liabilities 4,752 5,137 4,025 Commitments and contingent liabilities - - - --------- --------- --------- TOTAL LIABILITIES 527,283 495,529 528,460 --------- --------- --------- Common stock, $4 par value; 15,000,000 shares authorized; 20,427 20,427 21,524 5,106,819, 5,106,819 and 5,380,981 shares issued and outstanding at June 30, 2008, December 31, 2007 and June 30, 2007, respectively. Capital surplus 25,223 25,082 27,115 Retained earnings (deficit) (2,766) 400 4,455 Accumulated other comprehensive (loss), net (605) (176) (434) --------- --------- --------- TOTAL STOCKHOLDERS' EQUITY 42,279 45,733 52,660 --------- --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $569,562 $541,262 $581,120 ========= ========= ========= ---------------------------------------------------------------------- * Unaudited financial results

ALLIANCE BANKSHARES CORPORATION Consolidated Income Statements Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2008* 2007* 2008* 2007* -------------------------------------------------- (Dollars in thousands, except per share) INTEREST INCOME: Loans $ 5,972 $ 7,877 $ 12,213 $ 15,619 Investment securities 298 338 597 686 Trading securities 987 1,525 2,096 3,393 Federal funds sold 40 21 86 102 -------------------------------------------------- Total interest income 7,297 9,761 14,992 19,800 INTEREST EXPENSE: Deposits 3,335 2,965 6,594 6,028 Purchased funds and other borrowings 807 2,236 2,074 4,479 -------------------------------------------------- Total interest expense 4,142 5,201 8,668 10,507 -------------------------------------------------- Net interest income 3,155 4,560 6,324 9,293 Provision for loan losses 610 580 1,160 885 -------------------------------------------------- Net interest income after provision for loan losses 2,545 3,980 5,164 8,408 -------------------------------------------------- OTHER INCOME: Insurance commissions 753 928 1,816 1,824 Deposit account service charges 66 67 144 177 Gain on sale of loans 32 223 92 883 Net gain on sale of securities 8 - 10 72 Trading activity and fair value adjustments 166 (784) (2,389) (641) Other operating income 24 37 67 90 -------------------------------------------------- Total other income 1,049 471 (260) 2,405 OTHER EXPENSES: Salaries and employee benefits 2,131 2,195 4,425 4,578 Occupancy expense 546 461 1,091 971 Equipment expense 242 258 477 508 Operating expenses 2,424 1,580 3,814 3,036 -------------------------------------------------- Total other expenses 5,343 4,494 9,807 9,093 -------------------------------------------------- INCOME (LOSS) BEFORE INCOME TAXES (1,749) (43) (4,903) 1,720 Income tax expense (benefit) (661) (47) (1,737) 509 -------------------------------------------------- NET INCOME (LOSS) $ (1,088) $ 4 $ (3,166) $ 1,211 ================================================== Net income (loss) per common share, basic $ (0.21) $ 0.00 $ (0.62) $ 0.22 ================================================== Net income (loss) per common share, diluted $ (0.21) $ 0.00 $ (0.62) $ 0.21 ================================================== Weighted average number of shares, basic 5,106,819 5,525,720 5,106,819 5,538,599 ================================================== Weighted average number of shares, diluted 5,106,819 5,837,885 5,106,819 5,881,570 ================================================== ---------------------------------------------------------------------- * Unaudited financial results

ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Performance Information June 30, June 30, 2008* 2007* ------------------- (Dollars in thousands, except per share) Performance Information: For The Three Months Ended: Average loans $375,545 $399,047 Average earning assets 502,857 556,224 Average assets 558,105 584,642 Average non-interest bearing deposits 69,049 86,408 Average total deposits 396,373 351,074 Average interest-bearing liabilities 443,079 442,084 Average equity 43,612 54,743 Return on average assets NM 0.00% Return on average equity NM 0.03% Net interest margin (1) 2.59% 3.34% Earnings per share, basic $ (0.21) $ 0.00 Earnings per share, diluted (0.21) 0.00 For The Six Months Ended: Average loans $382,565 $394,313 Average earning assets 505,234 572,684 Average assets 552,526 603,763 Average non-interest bearing deposits 67,186 93,163 Average total deposits 383,230 367,897 Average interest-bearing liabilities 437,807 451,067 Average equity 44,319 55,117 Return on average assets NM 0.40% Return on average equity NM 4.43% Net interest margin (1) 2.58% 3.33% Earnings per share, basic (2) $ (0.62) $ 0.22 Earnings per share, diluted (2) (0.62) 0.21 ---------------------------------------------------------------------- * Unaudited financial results (1) On a fully-tax equivalent basis assuming a 34% federal tax rate. NM = Not Meaningful

ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Credit Quality Information June March December June 30, 30, 31, 31, 2008* 2008* 2007 2007* --------------------------------- (Dollars in thousands) Credit Quality Information: Nonperforming assets: Impaired loans (performing loans with a specific allowance) $ 4,616 $ 6,385 $ 2,928 $1,555 Non-accrual loans 2,834 4,009 17,082 3,352 OREO 14,495 14,200 4,277 367 ------- ------- -------- -------- Total nonperforming assets & past due loans $21,945 $24,594 $24,287 $5,274 ======= ======= ======== ======== Specific reserves associated with impaired loans $ 1,283 $ 1,262 $ 2,163 $ 441 ======= ======= ======== ======== Largest components of the nonperforming assets listed above: June 30, 2008 impaired loans (94.6% of the total) $2.6 million which is a single family residence under construction in Northern Virginia. $932 thousand which is a first and second trust on an office condominium in Northern Virginia. $837 thousand which is a commercial office property in Fredericksbury, Virginia. June 30, 2008 non-accrual loans (100% of the total) $1.2 million which is a series of equipment loans and a line of credit to a single borrower involved in real estate development activities. (Impaired at $1.6 million as of 3/31/08) $962 thousand to six borrowers which are consumer HELOCs. $679 thousand which is secured by a commercial building and assets of a retail hardware and lumber company. June 30, 2008 OREO (98% of the total) $3.5 million which consists of three land loans all to one borrower in Northern Virginia. (Non-accrual as of 12/31/07; OREO 3/31/08) $2.6 million on building lots in Northern Virginia. (Non-accrual as of 12/31/07;OREO 3/31/08) $2.3 million which is farmland/development acreage in the Winchester Virginia area. (Non-accrual as of 12/31/07;OREO 3/31/08) $2.1 million which is secured by residential building lots in Northern Virginia. (Non-accrual as of 3/31/08; OREO 6/30/08) $2.0 million secured by a completed available for sale single family residence in Northern Virginia. (Non-accrual as of 12/31/07;OREO 3/31/08) $675 thousand which is a single family residence in Northern Virginia. (OREO as of 6/30/08) $585 thousand which is a two unit office condominium in Richmond, Virginia. (OREO as of 12/31/07) $435 thousand which is a single family residence for sale in Fredericksburg, Virginia. (OREO as of 12/31/07)

ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Credit Quality Information For The Six Months Ended: June 30, June 30, 2008* 2007* ---------------- (Dollars in thousands) Balance, beginning of period $ 6,411 $4,377 Provision for loan losses 1,160 885 Loans charged off (2,269) (420) Recoveries of loans charged off 200 57 -------- ------- Net charge-offs (2,069) (363) -------- ------- Balance, end of period $ 5,502 $4,899 ======== =======

June March December June 30, 30, 31, 31, 2008* 2008* 2007 2007* ----------------------------- Ratios: Allowance for loan losses to total loans 1.48% 1.43% 1.61% 1.26% Allowance for loan losses to non-accrual 1.9X 1.4X 0.4X 1.5X loans Allowance for loan losses to 0.3X 0.2X 0.3X 0.9X nonperforming assets Nonperforming assets to total assets 3.85% 4.44% 4.48% 0.91% Net charge-offs to average loans 0.54% 0.40% 0.95% 0.09% ---------------------------------------------------------------------- * Unaudited financial results (1) The allowance for loan losses includes a specific allocation for all impaired loans. Nonperforming assets are defined as impaired loans, non-accrual loans, OREO and loans past due 90 days or more and still accruing interest.

ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Trading Asset & Liability Summary June 30, 2008 December 31, June 30, 2007 2007 -------------- --------------- -------------- Fair Fair Fair Trading Securities Value Yield Value Yield Value Yield ---------------------------------------------------------------------- (Dollars in thousands) U.S. government corporations & agencies $ 46,037 5.42% $ 19,547 6.11% $ 19,623 4.87% U.S. government CMOs - 0.00% - 0.00% 9,810 4.47% U.S. government MBS - 0.00% - 0.00% 6,570 4.20% PCMOs (1) 13,159 5.39% 20,669 5.33% 43,102 5.23% SBA securities (2) 39,318 3.14% 44,734 5.65% 32,912 6.15% -------- -------- -------- Totals $ 98,514 4.55% $ 84,950 5.68% $112,017 5.28% ======== ======== ======== (1) All PCMOs are rated AAA by Moody's, S&P or Fitch. (2)SBA securities are U.S. government agency securities. For presentation purposes they are separated out on the table above. June 30, 2008 December 31, June 30, 2007 2007 -------------- --------------- -------------- Fair Fair Fair Fair Value Assets and Value Value Value Liabilities ---------------------------------------------------------------------- (Dollars in thousands) Trading securities $ 98,514 $ 84,950 $ 112,017 ============== ============== ============== Interest-bearing deposits (brokered certificates of deposit) $ 78,964 $ 110,665 $ 97,620 FHLB advances 25,871 76,615 74,671 -------------- -------------- -------------- Total fair value liabilities $ 104,835 $ 187,280 $ 172,291 ============== ============== ==============

ALLIANCE BANKSHARES CORPORATION Consolidated Statistical Information Capital Information June December June 30, 31, 30, 2008* 2007 2007* ---------------------- (Dollars in thousands, except per share) Capital Information: Book value per share $8.28 $8.96 $9.79 Tier I risk-based capital ratio 10.5% 11.7% 12.7% Total risk-based capital ratio 11.7% 12.9% 13.8% Leverage capital ratio 8.4% 9.0% 9.7% Total equity to total assets ratio 7.4% 8.5% 9.1% ---------------------------------------------------------------------- * Unaudited financial results

SOURCE: Alliance Bankshares Corporation

Alliance Bankshares Corporation Thomas A. Young, Jr. Paul M. Harbolick, Jr. 703-814-7200