Enterprising Investor
10 years ago
Eastern Virginia Bankshares, Inc. Releases Second Quarter 2014 Results (7/25/14)
TAPPAHANNOCK, Va., July 25, 2014 /PRNewswire/ -- Eastern Virginia Bankshares, Inc. (NASDAQ: EVBS) (the "Company"), the one bank holding company of EVB (the "Bank"), reported today its results of operations for the three and six months ended June 30, 2014.
The Company's results continue to be positively impacted by asset quality improvements and the extinguishment of long-term Federal Home Loan Bank ("FHLB") advances in the third quarter of 2013, as discussed in greater detail below. The prepayment of these advances has significantly improved the Company's financial position and net interest margin for the three and six months ended June 30, 2014 as compared to the three and six months ended June 30, 2013.
In announcing these results, Joe A. Shearin, President and Chief Executive Officer commented, "I am pleased with our Company's results for the second quarter of 2014 and the continued focus and execution of our strategic plan. For the three and six months ended June 30, 2014 we are reporting a 145.9% and a 108.3% increase in net income compared to the same periods of the prior year. Much of our improvement continues to be driven by our asset quality improvements and the strengthening of our balance sheet through the execution of our previously disclosed strategic initiatives. Lower asset yields and margin compression continues to be a challenge in the historically low rate environment which has been compounded by competitive pressures. Although organic loan growth has been slower than we anticipated, I am very encouraged by the pockets of growth we are seeing in our markets that began late in the second quarter." Shearin further commented, "During the second quarter we hired two commercial and industrial lenders and opened a loan production office in Chesterfield County, Virginia. This will allow us to capitalize on an attractive, economically growing market that is under served, diversify risk in our loan portfolio and provide our customers with lending expertise they require."
Shearin concluded, "The first half of 2014 was a very exciting time for our Company. We have accomplished a number of the objectives identified in our strategic plan. After withstanding the last several years in a difficult economy, I am extremely proud of our employees and their continued focus on growing our franchise and increasing the long-term value of our Company. Among our many accomplishments, perhaps the most exciting is the pending acquisition of Virginia Company Bank. EVB and Virginia Company Bank are two great organizations which share similar dedication to their customers, shareholders and the communities they serve. We are very excited about the future prospects of our combined organization and the expansion of our branch network into the attractive and growing markets of the Virginia Peninsula."
For the three months ended June 30, 2014, the following were significant factors in the Company's reported results:
Increase in net interest income of $962 thousand from the same period in 2013, principally due to a $1.4 million decrease in interest expense;
Net interest margin (tax equivalent basis) increased 61 basis points to 3.82% during the second quarter of 2014 as compared to 3.21% for the same period in 2013;
No provision for loan losses during the second quarter of 2014 compared to $600 thousand for the same period in 2013, reflecting the Company's conservative approach to provisioning for the allowance for loan losses in prior periods and a reduction in net charge-offs to $288 thousand for the second quarter of 2014 from $2.3 million in the same period of 2013;
Increase in nonperforming assets of $1.6 million from March 31, 2014 to June 30, 2014 due primarily to the Company placing three loans on nonaccrual status as a result of the continued deteriorating financial condition of the borrowers in the second quarter of 2014;
Expenses related to FDIC insurance premiums declined to $305 thousand, compared to $596 thousand for the same period in 2013, as the Company faced lower FDIC insurance assessment rates following termination of its written agreement with its federal and state banking regulators (the "Written Agreement");
Other operating expenses increased $261 thousand during the second quarter of 2014 as compared to the same period in 2013 and was driven primarily by higher legal and professional fees; and
Increase in the effective dividend on preferred stock of $165 thousand from the same period in 2013 due primarily to the dividend rate of the Company's Series A Preferred Stock increasing from 5% to 9% in the first quarter of 2014.
For the six months ended June 30, 2014, the following were significant factors in the Company's reported results:
Increase in net interest income of $2.2 million from the same period in 2013, principally due to a $2.8 million decrease in interest expense;
Net interest margin (tax equivalent basis) increased 66 basis points to 3.88% for the six months ended June 30, 2014 as compared to 3.22% for the same period in 2013;
Provision for loan losses of $250 thousand compared to $1.2 million for the same period in 2013, reflecting a reduction in net charge-offs to $399 thousand for the six months ended June 30, 2014, from $3.7 million in the same period of 2013;
Decrease in nonperforming assets of $1.4 million during the first six months of 2014 as compared to the same period in 2013 due to the Company's continued focus on credit quality initiatives to improve its asset quality and resolve nonperforming assets;
Expenses related to FDIC insurance premiums of $637 thousand, compared to $1.2 million for the same period in 2013;
Other operating expenses increased $352 thousand during the first six months of 2014 as compared to the same period in 2013 and was driven primarily by higher legal and professional fees; and
Increase in the effective dividend on preferred stock of $307 thousand from the same period in 2013 due primarily to the dividend rate of the Company's Series A Preferred Stock increasing from 5% to 9% in the first quarter of 2014.
http://www.sec.gov/Archives/edgar/data/1047170/000114420414044840/v384655_ex99-1.htm
Enterprising Investor
10 years ago
Eastern Virginia Bankshares, Inc. to Acquire Virginia Company Bank (5/29/14)
--Expands EVB footprint along the I-64 corridor into the attractive and growing markets of the Virginia Peninsula
--Adds three branches, $103.4 million of loans and $108.9 million of deposits
TAPPAHANNOCK, Va., May 29, 2014 /PRNewswire/ -- Eastern Virginia Bankshares, Inc. (NASDAQ: EVBS) ("EVBS"), the one bank holding company for EVB, and Virginia Company Bank (OTCQB: VGNA) announced today that EVBS, EVB and Virginia Company Bank have entered into a definitive Agreement and Plan of Reorganization (the "Agreement") under which Virginia Company Bank will merge into EVB, with EVB being the surviving bank, in a mixed-consideration transaction with an aggregate deal value of approximately $9.6 million.
Under the terms of the Agreement, each share of common stock of Virginia Company Bank will be converted into and become the right to receive the following consideration, at the election of the shareholder:
•$6.25 in cash without interest, or
•0.9259 shares of common stock of EVBS (subject to the payment of cash in lieu of fractional shares).
The Agreement provides that no more than 25% of the outstanding common shares of Virginia Company Bank will be converted into cash consideration. If the aggregate number of cash-electing common shares of Virginia Company Bank is greater than 25%, then the number of cash-electing common shares will be subject to proration, as more fully described in the Agreement.
Each share of preferred stock of Virginia Company Bank outstanding at the effective time of the merger will be canceled in exchange for the right to receive one share of a new series of preferred stock of EVBS with substantially identical rights to the Virginia Company Bank preferred stock, including, without limitation, identical liquidation preferences and voting rights.
EVBS anticipates the transaction to be mid-single digits accretive, on a percentage basis, to diluted earnings per share. Tangible book value per share, pro forma for the conversion of EVBS's outstanding mandatorily convertible Series B Preferred Stock, is expected to be diluted less than 1.5% with an earnback period of less than two years.
Joe A. Shearin, President and Chief Executive Officer of EVBS and EVB, stated, "We are extremely pleased to announce this plan to combine our two great organizations which share such similar dedication to their customers, shareholders and the communities they serve. This transaction brings opportunity for growth in a very desirable market and is consistent with our strategic goals of expanding the EVB franchise into the greater Richmond area and toward Newport News and Norfolk. Virginia Company Bank has earned a reputation for exceptional client service, which is a testament to the strong leadership team in place. We are delighted to have Mark Hanna, Virginia Company Bank's President and Chief Executive Officer, join our team as President of Peninsula Region and look forward to welcoming him and the customers, employees and communities of Virginia Company Bank to the EVB family. We are very excited about the future prospects for our combined organization and the expanded branch network that Virginia Company Bank brings to the existing EVB organization."
Mark C. Hanna, President and Chief Executive Officer of Virginia Company Bank, added, "EVB is a long-standing, well-managed institution with deep roots in Virginia, and we are delighted to be joining forces with them. We believe this merger is in the best interests of all of our key constituents, including our shareholders, who will have an opportunity to benefit from being part of a larger, profitable and growing institution; our customers, who will have access to a wider variety of products, services and increased lending capacity; and our employees, who will have additional opportunities for growth."
The Agreement has been unanimously approved by the board of directors of each company, and all directors of Virginia Company Bank have entered into support and non-competition agreements with EVBS. The transaction is subject to customary closing conditions including the receipt of regulatory approvals and shareholder approval from Virginia Company Bank shareholders and is expected to close during the fourth quarter of 2014.
Under the terms of the Agreement, EVBS and EVB will add one Virginia Company Bank board member to their respective boards. Mark C. Hanna will be named an Executive Vice President of EVB and President of Peninsula Region of EVB.
Keefe, Bruyette & Woods, Inc., A Stifel Company, served as financial advisor and Troutman Sanders LLP served as legal counsel to EVBS and EVB. Raymond James & Associates, Inc. served as financial advisor and Williams Mullen served as legal counsel to Virginia Company Bank.
http://www.prnewswire.com/news-releases/eastern-virginia-bankshares-inc-to-acquire-virginia-company-bank-261148401.html
Enterprising Investor
10 years ago
Eastern Virginia Bankshares, Inc. Announces Termination of Memorandum of Understanding (3/26/14)
TAPPAHANNOCK, Va., March 26, 2014 /PRNewswire/ -- Eastern Virginia Bankshares, Inc. (NASDAQ: EVBS) (the "Company") announced today the termination of the informal memorandum of understanding, dated September 5, 2013 (the "MOU"), by and among the Company, EVB (the Company's wholly-owned bank subsidiary), the Federal Reserve Bank of Richmond (the "Reserve Bank") and the Virginia State Corporation Commission Bureau of Financial Institutions (the "Bureau"). The termination was effective as of March 13, 2014.
In announcing the news, Joe A. Shearin, President and Chief Executive Officer, commented, "The lifting of the MOU is the culmination of our hard work and execution of strategic initiatives over the last three years to improve asset quality, increase earnings, and strengthen the overall condition of the Company and EVB. We are pleased that our regulators have again acknowledged the significant improvement in our financial condition and operating results and thank them for their continued support and partnership." Shearin concluded, "I also wish to thank each of our talented and dedicated employees who contributed to this achievement and to the future success of our Company."
Forward-Looking Statements and Additional Information
Certain statements contained in this release that are not historical facts may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions and projections within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance, actions or achievements of the Company will not differ materially from any future results, performance, actions or achievements expressed or implied by such forward-looking statements. Readers should not place undue reliance on such statements, which speak only as of the date of this press release. The Company does not undertake any steps to update any forward-looking statement that may be made from time to time by it or on its behalf.
http://www.prnewswire.com/news-releases/eastern-virginia-bankshares-inc-announces-termination-of-memorandum-of-understanding-252490211.html
Enterprising Investor
10 years ago
Sonabank, Southern Trust Mortgage Management and EVB Enter Into Agreement to Purchase Middleburg Bank's Interests in Southern Trust Mortgage (3/26/14)
MCLEAN, Mar 26, 2014 (GLOBE NEWSWIRE via COMTEX) -- Southern National Bancorp of Virginia Inc. SONA+0.66% , the holding company for Sonabank, Jerry Flowers of Southern Trust Mortgage (STM), and Eastern Virginia Bankshares EVBS-0.80% the holding company for EVB announced today that the two banks and Jerry Flowers have reached an agreement to purchase the 62 percent of STM currently owned by Middleburg Bank. Upon the closing of the transaction, Jerry Flowers and other STM executives will own 51.1 percent of STM, Sonabank will own 44 percent and EVB will own 4.9 percent.
STM is a mortgage banking company headquartered in Virginia Beach. It was founded in 1998 by Jerry Flowers, and has mortgage banking originators in Virginia, Maryland, North Carolina and South Carolina. Southern Trust Mortgage only originates retail mortgage production.
STM is an approved Fannie Mae, Freddie Mac, VA and FHA lender. In addition Southern Trust Mortgage is one of a select few lenders to have received approval from Ginnie Mae to issue securities on its behalf. Having all agency approvals greatly expands the mortgage products and therefore expands Sonabank's ability to positively impact the lives of our customer base with mortgage products suited to every economic spectrum. Southern Trust Mortgage is experienced in originating FHLB first time homebuyer grants for low to moderate income borrowers in their lending footprint. Sonabank is particularly excited about the future of FHLB programs for underserved markets and low income borrowers.
This relationship will provide us a partnership in which to expand our consumer real estate services with STM loan officers assigned to various Sonabank branches. STM will originate non-conforming residential mortgage loans for Sonabank's portfolio in its footprint in accordance with credit criteria provided by Sonabank. Southern Trust Mortgage has a history of originating portfolio loans for their banking partners with a focus on compliance and risk management. This is similar to arrangements already in place with Middleburg Bank.
Georgia Derrico, CEO of Sonabank commented: "Since its inception, Sonabank has been oriented towards small and medium sized business lending. That will continue. However, now we will be able to provide our customers with a full array of residential mortgage products through our STM relationship. In addition, the investment in STM will allow Sonabank to use its very strong capital position, combined with the expertise of STM and its extraordinary team to expand in an entirely new direction at a time when the rules on residential mortgage lending have been rewritten to the benefit of bank affiliated mortgage lenders."
Jerry Flowers, President of STM commented: "We are very excited to have Sonabank as our new Banking partner along with EVB who we have been doing business with for the past 7 years. Having Sonabank and EVB as partners will allow us to expand in their market areas and gives us a banking partner that not only wants to be a part of STM's existing model but would like for us to expand our mortgage footprint."
The investment by Sonabank is subject to regulatory approval.
Southern National Bancorp of Virginia, Inc. is a bank holding company with assets of $716 million at year end. Sonabank provides a range of financial services to individuals and small and medium sized businesses. Sonabank has a total of twenty branches, with fifteen of those branches in Virginia, located in Fairfax County (Reston, McLean and Fairfax), in Charlottesville, Warrenton (2), Middleburg, Leesburg (2), South Riding, Front Royal, New Market, Haymarket, Richmond and Clifton Forge. Sonabank's other five branches are in Maryland, in Rockville, Shady Grove, Germantown, Frederick and Bethesda.
In January 2014, Southern National Bancorp signed a definitive agreement to acquire Prince George's Federal Savings Bank which is to be merged into its subsidiary, Sonabank. The merger will give Sonabank four additional branches in Upper Marlboro, Dunkirk, Brandywine and Huntingtown.
http://www.marketwatch.com/story/sonabank-southern-trust-mortgage-management-and-evb-enter-into-agreement-to-purchase-middleburg-banks-interests-in-southern-trust-mortgage-2014-03-26?reflink=MW_news_stmp
Enterprising Investor
10 years ago
Eastern Virginia Bankshares, Inc. Releases Third Quarter 2013 Results (10/29/13)
TAPPAHANNOCK, Va., Oct. 29, 2013 /PRNewswire/ -- Eastern Virginia Bankshares, Inc. (NASDAQ: EVBS) (the "Company") reported today its results of operations for the three and nine months ended September 30, 2013.
Net loss available to common shareholders during the three months ended September 30, 2013 was ($7.0) million, or ($0.41) per diluted share, compared to net income of $486 thousand, or $0.08 per diluted share during the same period of 2012. For the three months ended September 30, 2013, the Company reported a net loss of ($6.6) million, a decrease of $7.5 million over the net income of $861 thousand reported for the same period of 2012. Net loss available to common shareholders during the nine months ended September 30, 2013 was ($6.0) million, or ($0.58) per diluted share, compared to net income of $1.4 million, or $0.23 per diluted share during the same period of 2012. For the nine months ended September 30, 2013, the Company reported a net loss of ($4.9) million, a decrease of $7.4 million over the net income of $2.5 million reported for the same period of 2012. The difference between net income (loss) and net income (loss) available to common shareholders is the effective dividend to the U.S. Treasury on preferred stock.
Third Quarter Highlights:
•Nonperforming assets decreased $2.1 million to $7.6 million, or 1.14% of total loans and OREO at September 30, 2013, down from 1.44% at the end of the prior quarter.
•Provision for loan losses decreased to $350 thousand for the three months ended September 30, 2013, compared to $625 thousand for the same period in 2012.
For the three months ended September 30, 2013, the following key points also were significant factors in the Company's reported results:
•Net charge-offs of $1.3 million to write off uncollectible balances on nonperforming assets;
•Increase in net interest income by $324 thousand from the same period in 2012;
•Gain of $224 thousand on the sale of our former Bowling Green branch office;
•Impairment losses of $437 thousand related to valuation adjustments on other real estate owned, compared to $769 thousand for the same period in 2012;
•Losses of $668 thousand on the sale of other real estate owned, compared to gains of $12 thousand for the same period in 2012;
•Expenses related to FDIC insurance premiums of $225 thousand, compared to $586 thousand for the same period in 2012;
•Expenses related to collection, repossession and other real estate owned of $195 thousand, compared to $190 thousand for the same period in 2012; and
•Loss of $11.5 million on the extinguishment of $107.5 million in long-term Federal Home Loan Bank advances.
Year to Date Highlights:
•Nonperforming assets decreased $9.1 million to $7.6 million, or 1.14% of total loans and OREO at September 30, 2013, down from 2.41% at December 31, 2012.
•Provision for loan losses decreased to $1.6 million for the nine months ended September 30, 2013, compared to $4.8 million for the same period in 2012.
For the nine months ended September 30, 2013, the following key points also were significant factors in the Company's reported results:
•Net charge-offs of $5.0 million to write off uncollectible balances on nonperforming assets;
•Gain on the sale of available for sale securities of $525 thousand resulting from adjustments in the composition of the investment portfolio as part of the Company's overall asset/liability management strategy;
•Decrease in net interest income by $252 thousand from the same period in 2012;
•Gain of $224 thousand on the sale of our former Bowling Green branch office;
•Impairment losses of $580 thousand related to valuation adjustments on other real estate owned, compared to $1.7 million for the same period in 2012;
•Losses of $823 thousand on the sale of other real estate owned, compared to $105 thousand for the same period in 2012;
•Expenses related to FDIC insurance premiums of $1.4 million, compared to $1.8 million for the same period in 2012;
•Expenses related to collection, repossession and other real estate owned of $447 thousand, compared to $845 thousand for the same period in 2012; and
•Loss of $11.5 million on the extinguishment of $107.5 million in long-term Federal Home Loan Bank advances.
The return on average assets (ROA) and return on average common shareholders' equity (ROE), on an annualized basis, for the three months ended September 30, 2013 were (2.59%) and (31.51%), respectively compared to 0.18% and 2.62%, respectively for the three months ended September 30, 2012. For the nine months ended September 30, 2013, on an annualized basis, ROA and ROE were (0.74%) and (9.84%), respectively compared to 0.18% and 2.56%, respectively for the same period in 2012.
In announcing these results, Joe A. Shearin, President and Chief Executive Officer commented, "Eastern Virginia Bankshares continued to focus on asset quality and the strengthening of its balance sheet during the third quarter. As a Company we have successfully executed on our previously disclosed strategic initiatives including the accelerated resolution and disposition of adversely classified assets, the prepayment of higher rate long-term Federal Home Loan Bank advances and the closing of the rights offering to existing shareholders that raised approximately $5.0 million in aggregate gross proceeds. Although the Company recorded a net loss during the quarter due primarily to the prepayment penalty on the payoff of the Federal Home Loan Bank advances, this transaction immediately improves our financial position by increasing our net interest margin and is a critical step in our strategic progression towards optimizing our balance sheet. During the third quarter of 2013 we were able to reduce our nonperforming assets by another 22.1%, bringing our year to date reduction to 54.5%. As a result of our focus on this strategic plan, loan and asset quality metrics continue to improve as evidenced by end of quarter nonperforming loans to total loans of 0.96% and nonperforming assets to total assets of 0.73%. In addition, our allowance for loan losses continues to remain strong at quarter end producing a ratio of allowance for loan losses to nonperforming loans of 265.95% and a ratio of allowance for loan losses to total loans of 2.55%." Shearin further commented, "Throughout the balance of 2013 and into 2014, we plan to continue evaluating and implementing deliberate strategies to strengthen our financial condition and look forward to future growth and opportunities to further increase the value of our company."
Shearin concluded, "We are also very pleased with our announcement earlier this quarter regarding the termination of the formal written agreement with the Federal Reserve Bank of Richmond and the Virginia State Corporation Commission Bureau of Financial Institutions effective July 30, 2013. As previously indicated, we have been working very closely with our regulatory agencies to address the Company's and its subsidiary bank's challenges and improve financial performance. The termination of the formal written agreement was a momentous event for our company and reflects the culmination of a successful, multi-year effort by the board and the management team to address our deteriorating asset quality and associated challenges brought on during the economic recession. We are pleased that our regulatory agencies have acknowledged the significant improvement in the financial condition of our company over the past few years and we wish to thank our directors, officers and employees for their contribution to the future success of the Company."
Operations Analysis
Net interest income for the three months ended September 30, 2013 was $8.7 million, an increase of $324 thousand or 3.9% from the same period of 2012. This increase was due to an 18 basis point increase in the net interest margin (tax equivalent basis) from 3.36% (includes a tax equivalent adjustment of $11 thousand) in the third quarter of 2012 to 3.54% (includes a tax equivalent adjustment of $93 thousand) in the third quarter of 2013. The year over year decline in interest income was driven by declining loan balances due to weak loan demand in our market areas, charge-offs, the natural amortization of the portfolio, and the sale of our credit card loan portfolio in September 2012. The average investment securities balance increased $12.2 million to $278.4 million during the three months ended September 30, 2013 as compared to the same period in 2012, and the yield on investment securities increased 54 basis points from 1.86% to 2.40% for the third quarter of 2013. Average interest bearing deposits in other banks increased $26.6 million to $42.4 million during the three months ended September 30, 2013 as compared to the same period in 2012, while the yield on these assets increased 19 basis points from 0.15% for the third quarter of 2012 to 0.34% for the third quarter of 2013. This increase in excess funds was due largely to the closing of the private placements on June 12, 2013, the closing of the rights offering on July 5, 2013, the increase in our average deposits and the difficulty strategically deploying excess liquidity in the low interest rate environment. As a result, the yield on our average interest-earning assets declined 22 basis points to 4.27% for the three months ended September 30, 2013 as compared to the same period in 2012. Average interest-earning assets were $988.9 million for the three months ended September 30, 2013, which was a decrease of $6.4 million or 0.6% from the same period in 2012. Total average loans were 67.5% of total average interest-earning assets for the three months ended September 30, 2013, compared to 71.6% for the three months ended September 30, 2012. The decline in interest income from the third quarter of 2012 to the third quarter of 2013 was offset by a lower cost of funding. The Company's lower cost of funding was driven by the prepayment of $107.5 million in higher rate long-term borrowings during August 2013, the maturity of a $10.0 million higher rate long-term borrowing during September 2013, the continuation of our deposit re-pricing strategy, reductions in the level of time deposits, and increased levels of interest-bearing checking and savings accounts with lower rates. As a result, for the three months ended September 30, 2013 the average cost of interest-bearing deposits decreased 22 basis points to 0.63% while the average cost of interest-bearing liabilities decreased 43 basis points to 0.90%, both as compared to the same period in 2012.
Net interest income for the nine months ended September 30, 2013 was $24.9 million, a decrease of $252 thousand or 1.0% from the $25.1 million for the same period of 2012. The net interest margin (tax equivalent basis) decreased 6 basis points from 3.39% (includes a tax equivalent adjustment of $191 thousand) for the nine months ended September 30, 2012 to 3.33% (includes a tax equivalent adjustment of $198 thousand) in the same period of 2013. The tax equivalent yield on our average interest-earning assets declined 34 basis points in the nine months ended September 30, 2013 as compared to the same period of 2012, but was partially offset by a 30 basis point decrease in the cost of average interest-bearing liabilities over the same period. Average interest-earning assets were $1.0 billion in the nine months ended September 30, 2013, which was an increase of $9.9 million or 1.0% from the same period of 2012. Total average loans were 66.7% of total average interest-earning assets in the nine months ended September 30, 2013, compared to 72.2% in the nine months ended September 30, 2012. This decline was driven by the impact of declining loan balances due to the aforementioned items in the quarterly analysis above and our desire to deploy excess liquidity through the expansion of the investment portfolio.
Noninterest income for the three months ended September 30, 2013 was $1.8 million, a decrease of $89 thousand or 4.7% over the same period of 2012. For the three months ended September 30, 2013, the Company did not realize any net gains on the sale of available for sale securities after realizing net gains on the sale of available for sale securities of $135 thousand for the same period in 2012. Service charges and fees on deposit accounts increased $32 thousand, or 3.9% in the third quarter of 2013, which was primarily attributable to an increase in non-sufficient funds ("NSF") fees. Debit/credit card fee income decreased $72 thousand, or 15.6% in the third quarter of 2013, which was primarily attributable to a decrease in debit card income. Other operating income increased $59 thousand, or 21.5% in the third quarter of 2013, which was driven by higher earnings from EVB Financial Services, Inc. and increased earnings from bank owned life insurance due to our additional $10.0 million investment in the second quarter of 2013. For the three months ended September 30, 2013, noninterest income includes a $224 thousand gain on the sale of our former Bowling Green branch office, which was not present during the same period of 2012. In addition to the aforementioned items, the three months ended September 30, 2012 included a $197 thousand gain on the sale of our credit card loan portfolio, which was not present during the same period of 2013.
Noninterest income for the nine months ended September 30, 2013 was $5.2 million, a decrease of $2.8 million or 34.9% over the same period of 2012. Net gains on the sale of available for sale securities decreased $3.0 million to $525 thousand for the nine months ended September 30, 2013, down from $3.5 million for the same period in 2012. During the first nine months of 2012 the Company began to strategically adjust the composition of its investment portfolio by reducing its holdings of tax-exempt securities in an effort to increase the Company's source of taxable income. To implement this strategy the Company sold tax-exempt securities issued by state and political subdivisions during the first nine months of 2012, many of which were in an unrealized gain position at the time of sale, and deployed the proceeds into taxable investment securities issued by state and political subdivisions as well as Agency mortgage-backed and Agency CMO securities. Other operating income increased $216 thousand, or 28.3% during the first nine months of 2013, which was driven by higher earnings from EVB Financial Services, Inc., increased earnings from bank owned life insurance due to our additional $10.0 million investment in the second quarter of 2013 and revenue from sales of insurance products through Bankers Insurance, LLC, and offset by increased write downs of investments in community and housing development funds. As mentioned in the quarterly analysis above, the first nine months of 2013 include a $224 thousand gain on the sale of our former Bowling Green branch office. In addition to the aforementioned items, the nine months ended September 30, 2012 included a $197 thousand gain on the sale of our credit card loan portfolio.
Noninterest expense for the three months ended September 30, 2013 was $20.6 million, an increase of $12.0 million or 140.8% over noninterest expense of $8.5 million for the three months ended September 30, 2012. Noninterest expense was negatively impacted in the third quarter of 2013 by an $11.5 million prepayment penalty on the extinguishment of $107.5 million in long-term Federal Home Loan Bank advances. This prepayment penalty is the result of the Company successfully executing one of its previously disclosed strategic initiatives. This transaction immediately improves the Company's financial position by increasing the Company's net interest margin and is a significant step towards optimizing the Company's balance sheet. The advances extinguished were fixed rate advances with a weighted average remaining maturity of 3.5 years and a current weighted average interest rate of 4.14%; $94.0 million of the prepaid FHLB advances were callable quarterly by the FHLB. Salaries and employee benefits increased $508 thousand, or 13.0% in the third quarter of 2013 primarily due to annual merit pay increases, lower deferred compensation on loan originations and higher group term insurance costs. For the third quarter of 2013, noninterest expense includes losses on the sale of OREO of $668 thousand compared to gains of $12 thousand for the same period in 2012. This increase was due to the Company's strategic initiative to remove risk from its balance sheet by expediting the resolution and disposition of OREO during the third quarter of 2013. FDIC insurance expense decreased $361 thousand, or 61.6% in the third quarter of 2013 and was driven by lower base assessment rates due to the improvement in the Company's subsidiary bank's overall composite rating in connection with the termination of the Written Agreement in July 2013. In addition, noninterest expense for the third quarter of 2013 includes $437 thousand in impairment losses related to valuation adjustments on OREO compared to $769 thousand for the same period in 2012.
Noninterest expense for the nine months ended September 30, 2013 was $36.7 million, an increase of $11.5 million or 45.6% over noninterest expense of $25.2 million for the nine months ended September 30, 2012. As mentioned in the quarterly analysis above, noninterest expense was negatively impacted by an $11.5 million prepayment penalty on the extinguishment of $107.5 million in long-term Federal Home Loan Bank advances during the third quarter of 2013. Salaries and employee benefits increased $1.1 million, or 9.4% in the nine months ended September 30, 2013 due to the items described in the quarterly analysis above. For the nine months ended September 30, 2013, noninterest expense includes losses on the sale of OREO of $823 thousand compared to $105 thousand for the same period in 2012. In addition, noninterest expense for the nine months ended September 30, 2013 includes $580 thousand in impairment losses related to valuation adjustments on OREO compared to $1.7 million for the same period in 2012. Expenses related to collection, repossession and OREO decreased $398 thousand, or 47.1% in the nine months ended September 30, 2013 due to the decrease in the carrying balance of OREO as well as the amount of nonperforming loans and classified assets. FDIC insurance expense decreased $353 thousand, or 20.0% in the nine months ended September 30, 2013 due to the items described in the quarterly analysis above.
Balance Sheet and Asset Quality
Total assets decreased $24.7 million or 2.3% between September 30, 2012 and September 30, 2013, and are down $82.7 million from June 30, 2013. Between September 30, 2012 and September 30, 2013, investment securities increased $23.4 million or 9.5% to $269.5 million, but are down $6.3 million from June 30, 2013. Loans, net of unearned income decreased $40.5 million or 5.8% from September 30, 2012 to $662.6 million at September 30, 2013, and are down $8.7 million from $671.4 million as of June 30, 2013. Total deposits increased $7.7 million or 0.9% from September 30, 2012 to $827.0 million at September 30, 2013, but are down $15.3 million from $842.3 million as of June 30, 2013. Total shareholders' equity increased $32.8 million or 33.5% from September 30, 2012 to $130.6 million at September 30, 2013, but is down $4.5 million from $135.1 million as of June 30, 2013. Year to date average investment securities were $285.2 million as of September 30, 2013, an increase of $26.1 million or 10.1% compared to the same period in 2012. Year to date average loans were $672.2 million as of September 30, 2013, a decrease of $48.2 million or 6.7% compared to the same period in 2012. Year to date average total deposits were $843.8 million as of September 30, 2013, an increase of $12.8 million or 1.5% compared to the same period in 2012. Year to date average shareholders' equity was $114.6 million as of September 30, 2013, an increase of $17.6 million or 18.1% compared to the same period in 2012.
http://www.prnewswire.com/news-releases/eastern-virginia-bankshares-inc-releases-third-quarter-2013-results-229760781.html
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Penny Roger$
12 years ago
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