Millennium Bank

Reston, VA: On July 14, 2006, a lawsuit was filed in the Circuit Court for the City of Alexandria, VA by a former management employee of Millennium Capital, Inc., an indirect subsidiary of Millennium Bankshares Corporation. The lawsuit claimed Millennium Capital, Millennium Bank, a direct wholly owned subsidiary of the Registrant, and Anita Shull, Executive Vice President and Chief Operating Officer of the Registrant and President and Chief Operating Officer of Millennium Bank, breached certain obligations to the former management employee related to the terms of his business and compensation arrangements. In the lawsuit, the former employee sought damages in the amount of $3.38 million, including rescission of an $880,000 personal loan from Millennium Bank and an accounting with respect to amounts allegedly owed him by Millennium Bank and Millennium Capital. The Board of Directors of the Registrant was investigating the allegations of the former employee.

Millennium announced recently that it has reached a settlement. In response to the lawsuit, Millennium had filed motions to dismiss or otherwise challenge all of the alleged claims that sought monetary relief. While those motions were pending, the parties reached a settlement under terms that did not result in a material charge to Millennium. As a result of the settlement, the lawsuit is being dismissed with prejudice. (Jan-25-07) [YAHOO BUSINESS: MILLENNIUM WHISTLEBLOWER]

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