Millennium Bankshares Reports Second Quarter and Six-Month Results

The loss for the second quarter of 2008 was significantly impacted by a loan loss provision of $1.9 million that was required due to a combination of residential and commercial charge-offs and further deterioration in the loan quality of the commercial real estate portfolio as the economic downturn continued to deepen. The Company took full or partial charge-offs totaling $1.7 million during the quarter. Included in the charge-offs were 10 mortgage loans totaling $592,000 that were in the process of foreclosure, $502,000 for a land development project and $584,000 for six additional commercial credits. Specific reserves had previously been established for $998,000 of the total charge-offs. Net charge-offs to total loans on an annualized basis increased to 3.03% for the quarter ended June 30, 2008 compared with 0.35% for the same period last year. Also impacting earnings for the quarter was a $252,000 write down (included as an offset to other income) of the carrying value of several OREO properties to current fair value. At June 30, the allowance for loan losses, as a percentage of total loans, increased to 1.94% compared with 1.30% one year ago.

At June 30, 2008, the Company had total assets of $360.1 million, loans of $214.6 million, capital of $40.5 million and a tangible book value per share of $4.54. Millennium Bank's capital ratios June 30, 2008, continued to exceed the Tier 1 Leverage ratio and Total Risk Based Capital ratio mandates of 10% and 14%, respectively, set forth in the Formal Agreement with the Office of the Comptroller of the Currency signed in January 2008.

As of June 30, 2008 non-performing loans were $16.1 million, up from $12.6 million at March 31. The increase is primarily due to one loan of $2.8 million, which the Company first identified as a potential problem loan last year. The loan migrated to nonperforming status in the second quarter of this year when interest reserves were fully utilized and the borrower filed for bankruptcy. This loan is for the development of a commercial piece of property for which a current appraisal has indicated an as is value of $9.2 million. This credit is cross-collateralized and cross-defaulted with our largest nonperforming loan, a $4.2 million land development loan, recognized as a non-performing credit last year. These two nonperforming loans were made to development LLC's which have substantially identical principals. The remainder of the increase in nonperforming loans is due to two residential mortgage loans totaling $763,000 where the foreclosure process was started in the second quarter and $764,000 due to the repurchase of the guaranteed portion of an SBA loan from an investor. This SBA guarantee is still in place. The residential loans were seasoned mortgage loans that we originated for portfolio, not the sub-prime loans that the Company sold in a bulk sale earlier this year. The increases from these additional loans were partially offset by the effect of the aforementioned charge-offs.

At June 30 the Company had $3.1 million in OREO properties compared to $3.5 million at March 31. The drop in balances reflects the aforementioned write-down to current fair value. Of the $3.1 million at June 30, the largest piece of property with a carrying value of $1.6 million was sold on July 29th at no additional loss.

A comparison of our past-due and non-performing loans and other non-performing assets at June 30 and March 31 are as follows:

(in thousands) June 30, 2008 Mar. 31, 2008 ------------- ------------- Past-due 31-59 days $ 2,497 $ 3,280 Past-due 60-89 days $ 0 $ 4,120 Over 90-days/Non-performing loans $ 16,147 $ 12,742 OREO $ 3,099 $ 3,450 Allowance $ 4,164 $ 3,892

Operating expenses also continue to be higher than normal due in large measure to significant credit and collection costs incurred in managing the nonperforming loans and OREO properties. Legal expenses and OREO expenses for the second quarter of 2008 were $307,000 and $153,000, respectively compared to $140,000 and $4,000 in the same period last year. Legal expenses and OREO expenses for the six months ended June 30, 2008 were $446,000 and $346,000, compared to $213,000 and $24,000 for the same period last year. FDIC insurance premiums have also increased in correlation with higher risk-based assessments that became effective after the Formal Agreement was signed.

The Company's financial highlights follow.

Non-GAAP Presentations

This press release also refers to the efficiency ratio, which is computed by dividing noninterest expense by the sum of fully taxable equivalent net interest income and noninterest income. This is a non-GAAP financial measure that we believe provides investors with important information regarding our operating efficiency. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate the efficiency ratio differently.

Forward-Looking Statements

This news release contains comments, information and guidance that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include a failure to maintain effective systems of internal and disclosure control, management changes, the ability of the Bank to comply with the capital requirements and other requirements of the formal agreement with the OCC; the ability of the Bank to successfully effect the transformation of the Bank to a community oriented commercial bank; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies and litigation; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by Millennium Bankshares with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2007. Millennium Bankshares undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

About Millennium Bankshares

Millennium Bankshares Corporation is a financial holding company headquartered in Reston, Virginia. It was incorporated in 1998 and began operations in April 1999. Millennium provides commercial and consumer banking services through Millennium Bank, National Association. Millennium Bank is a nationally chartered community bank with four banking offices in Northern Virginia (Reston, Herndon, Sterling and Warrenton). The bank provides a broad range of commercial and retail banking services designed to meet the needs of businesses and consumers in the communities it serves. The Company's Internet address is www.millenniumbankshares.com.

Millennium Bankshares Corporation Financial Highlights (Unaudited) (Dollars in thousands, except per Three Months Ended Six Months Ended share data) June 30, June 30, --------------------- % ----------------- % 2008 2007 Change 2008 2007 Change ----------------------------- --------------------------- Operations Interest income (1) $ 4,744 $ 6,813 (30.4) 10,124 13,668 (25.9) Interest expense (1) 3,331 4,705 (29.2) 7,120 9,132 (22.0) --------------------- ----------------- Net interest income 1,413 2,108 (33.0) 3,004 4,536 (33.8) Provision for loan losses (1) 1,946 618 214.9 1,946 873 122.9 --------------------- ----------------- Net interest income after provision for loan losses (533) 1,490 (135.8) 1,058 3,663 (71.1) Other income (1) 118 318 (62.9) 1,108 665 66.6 Operating expense (1) 2,962 2,535 16.8 5,953 4,868 22.3 --------------------- ----------------- Loss from continuing operations before income taxes (3,377) (727) 364.5 (3,787) (540) 601.3 Income tax benefits (1) (1,222) (452) 170.4 (1,422) (551) 158.1 --------------------- ----------------- Income (loss) from continuing operations (2,155) (275) 683.6 (2,365) 11 (21600.0) Income from discontinued operations (net of tax) 0 24 (100.0) 5,332 319 1571.5 --------------------- ----------------- Net income (loss) (2,155) (251) 758.6 2,967 330 799.1 ===================== ================= Per Share Data Basic earnings (loss) per share from continuing operations (0.24) (0.03) 700.0 (0.26) 0.00 - Diluted earnings (loss) per share from continuing operations (0.24) (0.03) 700.0 (0.26) 0.00 - Basic earnings (loss) per share from discontinued operations 0.00 0.00 - 0.60 0.04 1400.0 Diluted earnings (loss) per share from discontinued operations 0.00 0.00 - 0.60 0.03 1900.0 Basic earnings (loss) per share (0.24) (0.03) 700.0 0.33 0.04 725.0 Diluted earnings (loss) per share (0.24) (0.03) 700.0 0.33 0.04 725.0 Book value per share 4.54 5.11 (11.2) Closing stock price 4.50 8.55 (47.4) Selected Average Balance Sheet Data Investments 88,980 203,368 (56.2) 104,941 194,920 -46.2 Loans, net of deferred fees (including loans held for sale) 222,103 325,528 (31.8) 252,447 326,421 -22.7 Total assets 373,525 555,664 (32.8) 420,024 561,906 -25.3 Deposits 252,747 393,127 (35.7) 298,524 423,175 -29.5 Borrowings 75,350 111,931 (32.7) 77,931 86,929 -10.4 Shareholders' equity 43,632 47,271 (7.7) 41,696 47,301 (11.8) Performance Ratios Return on average assets (2.32)% (0.18)% 1.42% 0.12% Return on average equity (19.86)% (2.13)% 14.31% 1.41% Net interest margin(3) 1.70% 2.04% 1.73% 2.23% Efficiency ratio (4) 188.03% 91.77% 169.01% 84.08% Nonperforming assets to total assets (2) 5.34% 4.24% Net charge- offs to average loans (annualized) 3.03% 0.35% 1.30% 0.17% Allowance for loan losses to loans held for investment 1.94% 1.30% Selected December Balance June 30, 31, Sheet Data 2008 2007 --------------------- Investments 80,228 173,476 (53.8) Loans, net of allowance for loan losses 210,469 243,376 (13.5) Allowance for loan losses 4,164 3,853 8.1 Assets of discontinued operations 0 58,361 (100.0) Total assets 360,140 518,314 (30.5) Deposits 244,401 293,453 (16.7) Borrowings 73,926 100,624 (26.5) Liabilities of discontinued operations 0 83,574 (100.0) Shareholders' equity 40,498 38,480 5.2

(1) Conforms prior periods for discontinued operations presentation. (2) 2007 includes $14.0 million in nonperforming held for sale loans for which separate fair value reserves had been established. (3) Includes continuing and discontinued operations. (4) Excludes securities gains.

SOURCE: Millennium Bankshares Corporation

Millennium Bankshares Corporation Richard I. Linhart, Chairman, President and CEO 703-464-1966 or Dale G. Phelps, EVP and CFO 703-464-1962