Eastern Virginia Bankshares, Inc. Releases Fourth Quarter and Full Year 2012 Results

 Eastern Virginia Bankshares, Inc. Releases Fourth Quarter and Full Year 2012
                                   Results

PR Newswire

TAPPAHANNOCK, Va., March 26, 2013

TAPPAHANNOCK, Va., March 26, 2013 /PRNewswire/ -- Eastern Virginia Bankshares,
Inc. (NASDAQ: EVBS) (the "Company") reported today its results of operations
for the three and twelve months ended December 31, 2012.

Net income available to common shareholders during 2012 was $2.0 million, or
$0.32 per diluted share, compared to net income of $281 thousand, or $0.05 per
diluted share during 2011. Net income available to common shareholders during
the three months ended December 31, 2012 was $554 thousand, or $0.09 per
diluted share, compared to net income of $217 thousand, or $0.04 per diluted
share during the same period in 2011. For the three months ended December 31,
2012, the Company reported net income of $929 thousand, an increase of $338
thousand over the net income of $591 thousand reported for the same period of
2011. For the twelve months ended December 31, 2012, the Company reported net
income of $3.5 million, an increase of $1.7 million over the net income of
$1.8 million reported for the same period of 2011. The difference between net
income and net income to common shareholders is the deduction for the
effective dividend to the U.S. Treasury on preferred stock.

Fourth Quarter Highlights:

  oNet income to common shareholders increased to $554 thousand or $0.09 per
    share for the quarter ended December 31, 2012, compared to $217 thousand
    or $0.04 per share for the same period in 2011.
  oNonperforming assets decreased $2.8 million to $16.6 million, or 2.41% of
    total loans and OREO at December 31, 2012, down from 2.73% one quarter
    ago.
  oTotal shareholders equity increased $1.9 million to $99.7 million during
    the fourth quarter of 2012. Book value per share increased $0.32 per
    share to $12.56 per common share over the same time period.
  oProvision expense for the allowance for loan losses decreased to $875
    thousand for the three months ended December 31, 2012, compared to $3.6
    million for the same period in 2011.

Full Year 2012 Highlights:

  oNet income to common shareholders increased to $2.0 million or $0.32 per
    share for the year ended December 31, 2012, compared to $281 thousand or
    $0.05 per share for the same period of 2011.
  oNonperforming assets decreased $21.2 million to $16.6 million, or 2.41% of
    total loans and OREO at December 31, 2012, down from 5.09% a year ago.
  oTotal shareholders equity increased $4.6 million to $99.7 million during
    2012. Book value per share increased $0.73 per share to $12.56 per common
    share over the same time period.
  oProvision expense for the allowance for loan losses decreased to $5.7
    million for the year ended December 31, 2012, compared to $8.8 million for
    the same period in 2011.

For the three months ended December 31, 2012, the following key points were
significant factors in the Company's reported results:

  oProvision expense for the allowance for loan losses of $875 thousand
    compared to $3.6 million for the same period in 2011;
  oNet charge-offs of $2.6 million to write off uncollectible balances on
    nonperforming assets;
  oDecrease in nonperforming assets by $2.8 million during the fourth quarter
    of 2012;
  oGain on the sale of available for sale securities of $377 thousand
    resulting from adjustments in the composition of the investment portfolio
    as part of the Company's overall asset/liability management strategy;
  oDecrease in net interest income by $66 thousand from the same period in
    2011;
  oImpairment losses of $47 thousand related to valuation adjustments on
    other real estate owned;
  oLosses of $122 thousand on the sale of other real estate owned;
  oExpenses related to salaries and employee benefits of $4.1 million,
    compared to $2.8 million for the same period in 2011;
  oExpenses related to FDIC insurance premiums of $568 thousand, compared to
    $478 thousand for the same period in 2011; and
  oExpenses related to collection, repossession and other real estate owned
    of $270 thousand, compared to $323 thousand for the same period in 2011.

For the twelve months ended December 31, 2012, the following key points were
significant factors in the Company's reported results:

  oProvision expense for the allowance for loan losses of $5.7 million
    compared to $8.8 million for the same period in 2011;
  oNet charge-offs of $9.4 million to write off uncollectible balances on
    nonperforming assets;
  oDecrease in nonperforming assets by $21.2 million during 2012;
  oGain on the sale of available for sale securities of $3.9 million
    resulting from adjustments in the composition of the investment portfolio
    as part of our overall asset/liability management strategy;
  oGain of $197 thousand on the sale of the credit card loan portfolio;
  oDecrease in net interest income by $1.4 million from the same period in
    2011;
  oImpairment losses of $1.7 million related to valuation adjustments on
    other real estate owned;
  oLosses of $227 thousand on the sale of other real estate owned;
  oExpenses related to FDIC insurance premiums of $2.3 million, compared to
    $2.7 million for the same period in 2011; and
  oExpenses related to collection, repossession and other real estate owned
    of $1.1 million, compared to $1.7 million for the same period in 2011.

The return on average assets (ROA) and return on average equity (ROE), on an
annualized basis, for the three months ended December 31, 2012 were 0.21% and
2.94%, respectively compared to 0.08% and 1.19%, respectively for the three
months ended December 31, 2011. For the twelve months ended December 31, 2012
ROA and ROE were 0.18% and 2.66%, respectively compared to 0.03% and 0.40%,
respectively for the same period of 2011.

In announcing these results, Mr. Shearin commented, "Despite a global economy
consisting of slow growth, high unemployment and low interest rates, I am very
pleased to report the continuation of our improved results for the quarter and
year just ended. Our net operating income increased by over 57% during the
fourth quarter of 2012, as compared to the same period one year earlier, and
we had another very successful quarter in liquidating our troubled assets and
improving our overall asset quality." Shearin further commented, "During the
fourth quarter of 2012 we were able to reduce our nonperforming assets by
another 14.3%, bringing our year to date reduction to 56.0%. Our loan and
asset quality metrics continue to improve as evidenced by end of year
nonperforming loans to total loans of 1.73% and nonperforming assets to total
assets of 1.55%. In addition, our allowance for loan losses continues to
remain quite healthy at year end producing a ratio of allowance for loan
losses to nonperforming loans of 171.29% and a ratio of allowance for loan
losses to total loans of 2.97%." Shearin concluded, "I am also excited to
announce that in December 2012 we moved our Colonial Heights branch to a new
building. This new branch will offer expanded features and conveniences that
will enable us to provide our customers in Colonial Heights with an
unparalleled banking experience."

Operations Analysis

Net interest income for the three months ended December 31, 2012 was $8.4
million, a decrease of $66 thousand or 0.8% from the same period of 2011.
This decrease was due to an 8 basis point decrease in the net interest margin
(tax equivalent basis) from 3.40% (includes a tax equivalent adjustment of
$161 thousand) in the fourth quarter of 2011 to 3.32% (includes a tax
equivalent adjustment of $13 thousand) in the fourth quarter of 2012. The
year over year decline in interest income was driven by the impact of
declining loan balances due to weak loan demand, charge-offs, and the natural
amortization of the portfolio. While the average investment securities
balance increased $44.9 million to $268.1 million during the three months
ended December 31, 2012, the yield on investment securities declined 47 basis
points from 2.74% to 2.27% for the fourth quarter of 2012. The lower yield
resulted from portfolio restructurings, accelerated prepayments on the
Company's Agency mortgage-backed and Agency CMO securities, and investing in
lower risk, shorter duration investments. As a result, the yield on our
average interest-earning assets declined 35 basis points to 4.38% for the
three months ended December 31, 2012 as compared to the same period in 2011.
This decline in interest income was largely offset by a lower cost of
funding. The Company's lower cost of funding was driven by the continuation
of its 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, the average cost of interest-bearing deposits
decreased 36 basis points to 0.76% for the three months ended December 31,
2012 as compared to the same period in 2011.

Net interest income for the twelve months ended December 31, 2012 was $33.5
million, a decrease of $1.4 million or 4.0% from the $34.9 million for the
same period of 2011. The net interest margin (tax equivalent basis) decreased
15 basis points from 3.52% (includes a tax equivalent adjustment of $505
thousand) for the year ended December 31, 2011 to 3.37% (includes a tax
equivalent adjustment of $205 thousand) in the same period of 2012. The tax
equivalent yield on average interest-earning assets declined 45 basis points
in the twelve months ended December 31, 2012 compared with the same period of
2011, but was partially offset by a 32 basis point decrease in the cost of
interest-bearing liabilities over the same period. Average interest-earning
assets were $999.0 million in the twelve months ended December 31, 2012, which
was a decrease of $6.1 million or 0.6% from the same period of 2011. Total
average loans were 71.5% of total interest-earning assets in the twelve months
ended December 31, 2012, compared to 75.3% in the twelve months ended December
31, 2011. This decline was driven by the impact of declining loan balances
due to the items discussed in the quarterly analysis above and the Company's
desire to increase liquidity through the expansion of the investment
portfolio.

Noninterest income for the three months ended December 31, 2012 was $1.9
million, a decrease of $903 thousand or 31.9% over the same period of 2011.
Net gains on the sale of available for sale securities decreased $1.1 million
to $377 thousand for the three months ended December 31, 2012, down from $1.4
million for the same period in 2011.

Noninterest income for the twelve months ended December 31, 2012 was $9.9
million, an increase of $380 thousand or 4.0% over the same period of 2011.
Other operating income decreased $148 thousand, or 12.6% in 2012, which was
driven by lower rental income on OREO properties, lower earnings from our
subsidiary EVB Financial Services, Inc. (Mortgage) and increased write downs
of investments in community and housing development funds. Net gains on the
sale of available for sale securities increased $689 thousand to $3.9 million
for the twelve months ended December 31, 2012, up from $3.2 million for the
same period of 2011. The twelve months ended December 31, 2012 includes a
$197 thousand gain on the sale of our credit card loan portfolio, which was
not present during the same period of 2011. In addition to the aforementioned
items, the twelve months ended December 31, 2011 included a $256 thousand gain
on the sale of our former Aylett branch office, which was not present during
the same period of 2012.

Noninterest expense for the three months ended December 31, 2012 was $8.1
million, an increase of $1.0 million or 15.5% over noninterest expense of $7.1
million for the three months ended December 31, 2011. Salaries and employee
benefits increased $1.3 million, or 45.7% in the fourth quarter of 2012 due to
an increase in group term insurance costs in the current period and a decrease
in employee-related benefits expense during the same period of 2011 which was
the result of the Company taking action to freeze the pension plan with no
additional contributions for grandfathered participants. Other operating
expenses decreased $192 thousand, or 10.7% in the fourth quarter of 2012, due
to a decrease of $170 thousand or 57.2% in telephone expenses and a decrease
of $183 thousand or 56.8% in consultant fees. For the fourth quarter of 2012,
noninterest expense includes $47 thousand in impairment losses related to
valuation adjustments on OREO compared to losses of $183 thousand for the same
period of 2011.

Noninterest expense for the twelve months ended December 31, 2012 was $33.3
million, a decrease of $693 thousand or 2.0% over noninterest expense of $34.0
million for the twelve months ended December 31, 2011. FDIC insurance expense
decreased $367 thousand, or 13.6% in the twelve months ended December 31, 2012
due to modifications of the risk-based assessment system and the base
assessment rates beginning in the second quarter of 2011. Expenses related to
collection, repossession and OREO decreased $582 thousand, or 34.3% in the
twelve months ended December 31, 2012 primarily due to the overall decrease in
the carrying balance of OREO and the Company's efforts to focus resources
internally to more efficiently manage collection and repossession activities.
For the twelve months ended December 31, 2012, noninterest expense includes
$1.7 million in impairment losses related to valuation adjustments on OREO
compared to $1.4 million for the same period in 2011. In addition,
noninterest expense for the twelve months ended December 31, 2012 includes
losses on the sale of OREO of $227 thousand compared to $787 thousand for the
same period of 2011.

Balance Sheet and Asset Quality

Total assets increased $12.5 million or 1.2% between December 31, 2011 and
December 31, 2012, and are up $17.8 million from September 30, 2012. Between
December 31, 2011 and December 31, 2012, investment securities increased $40.1
million or 16.9% to $276.9 million, and are up $30.8 million from September
30, 2012. Loans, net of unearned income decreased $49.9 million or 6.8% from
December 31, 2011 to $684.7 million at December 31, 2012, and are down $18.5
million from $703.2 million as of September 30, 2012. Total deposits
increased $8.4 million or 1.0% from December 31, 2011 to $838.4 million at
December 31, 2012, and are up $19.1 million from $819.3 million as of
September 30, 2012. Year to date average investment securities were $251.8
million as of December 31, 2012, an increase of $36.8 million or 17.1%
compared to the same period in 2011. Year to date average loans were $714.3
million as of December 31, 2012, a decrease of $42.9 million or 5.7% compared
to the same period in 2011. Year to date average total deposits were $831.2
million as of December 31, 2012, a decrease of $14.4 million or 1.7% compared
to the same period in 2011.

The asset quality measures depicted below continue to reflect the Company's
efforts to prudently charge-off loans and maintain an appropriate allowance
for potential future loan losses.

The following table depicts the net charge-off activity for the three and
twelve months ended December 31, 2012 and 2011.



                                  Three months ended   Twelve months ended
(dollars in thousands)          December 31,           December 31,
                                  2012     2011          2012         2011
Net charge-offs                  $     $   5,222  $          $  
                                  2,640                 9,422       9,986
Net charge-offs to average loans  1.51%    2.78%         1.32%        1.32%



The following table depicts the level of the allowance for loan losses for the
periods presented.



(dollars in thousands)                      December 31,     December 31,
                                              2012             2011
Allowance for loan losses                     $    20,338  $    24,102
Allowance for loan losses to period end       2.97%            3.28%
loans
Allowance for loan losses to nonaccrual       171.29%          79.56%
loans
Allowance for loan losses to nonperforming    171.29%          79.12%
loans



The following table depicts the level of nonperforming assets for the periods
presented.

(dollars in thousands)                      December 31,     December 31,
                                              2012             2011
Nonaccrual loans                              $    11,874  $    30,293
Loans past due 90 days and accruing interest  -                168
 Total nonperforming loans                   $    11,874  $    30,461
Other real estate owned ("OREO")              4,747            7,326
 Total nonperforming assets                  $    16,621  $    37,787
Nonperforming assets to total loans and OREO  2.41%            5.09%

The following tables present the change in the balances of OREO and nonaccrual
loans for the twelve months ended December 31, 2012.



OREO:                                Nonaccrual Loans:
(dollars in thousands)               (dollars in thousands)
Balance at December 31,   $  7,326  Balance at December 31, 2011  $  30,293
2011
Transfers from loans      5,032      Loans returned to accrual     (9,286)
                                     status
Capitalized costs         -          Net principal curtailments    (10,614)
Sales proceeds            (5,661)    Charge-offs                   (7,587)
Impairment losses on      (1,723)    Loan collateral moved to OREO (5,032)
valuation adjustments
Loss on disposition       (227)      Loans placed on nonaccrual    14,100
                                     during period
Balance at December 31,   $  4,747  Balance at December 31, 2012  $  11,874
2012



In general, the modification or restructuring of a loan constitutes a troubled
debt restructuring ("TDR") when we grant a concession to a borrower
experiencing financial difficulty. The following table depicts the balances
of TDRs for the periods presented.

                                   December 31,      December 31,
(dollars in thousands)             2012              2011
Performing TDRs                    $     4,433  $     5,517
Nonperforming TDRs*                5,089             13,378
 Total TDRs                       $     9,522  $    18,895
* Included in nonaccrual loans.



Forward-Looking Statements

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. In addition, certain statements may be
contained in the Company's future filings with the SEC, in press releases, and
in oral and written statements made by or with the approval of the Company
that are not statements of historical fact and constitute forward-looking
statements within the meaning of the Act. Examples of forward-looking
statements include, but are not limited to: (i) statements of future economic
performance; (ii) statements regarding the impact of the Written Agreement on
our financial condition, operations and capital strategies, including
strategies related to payment of dividends on the Company's outstanding common
and preferred stock and to payment of interest on the Company's outstanding
Junior Subordinated Debentures related to the Company's trust preferred debt;
(iii) statements regarding the adequacy of the allowance for loan losses; (iv)
statements regarding the effect of future sales of investment securities or
foreclosed properties; (v) statements regarding the Company's liquidity; (vi)
statements of management's expectations regarding future trends in interest
rates, real estate values, and economic conditions generally and in the
Company's markets; (vii) statements regarding future asset quality, including
expected levels of charge-offs; (viii) statements regarding potential changes
to laws, regulations or administrative guidance; and (ix) statements of
assumptions underlying such statements. 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.

Forward-looking statements involve risks and uncertainties that may cause
actual results to differ materially from those in such statements. Factors
that could cause actual results to differ from those discussed in the
forward-looking statements include, but are not limited to:

  othe Company's ability and efforts to assess, manage and improve its asset
    quality;
  othe strength of the economy in the Company's target market area, as well
    as general economic, market, political or business factors;
  ochanges in the quality or composition of the Company's loan or investment
    portfolios, including adverse developments in borrower industries, decline
    in real estate values in its markets, or in the repayment ability of
    individual borrowers or issuers;
  othe effects of the Company's adjustments to the composition of its
    investment portfolio;
  othe impact of government intervention in the banking business;
  oan insufficient allowance for loan losses;
  othe Company's ability to meet the capital requirements of its regulatory
    agencies;
  ochanges in laws, regulations and the policies of federal or state
    regulators and agencies;
  oadverse reactions in financial markets related to the budget deficit of
    the United States government;
  ochanges in the interest rates affecting the Company's deposits and loans;
  othe loss of any of the Company's key employees;
  ochanges in the Company's competitive position, competitive actions by
    other financial institutions and the competitive nature of the financial
    services industry and the Company's ability to compete effectively against
    other financial institutions in its banking markets;
  othe Company's potential growth, including its entrance or expansion into
    new markets, the opportunities that may be presented to and pursued by it
    and the need for sufficient capital to support that growth;
  ochanges in government monetary policy, interest rates, deposit flow, the
    cost of funds, and demand for loan products and financial services;
  othe Company's ability to maintain internal control over financial
    reporting;
  othe Company's ability to raise capital as needed by its business;
  othe Company's reliance on secondary sources, such as Federal Home Loan
    Bank advances, sales of securities and loans, federal funds lines of
    credit from correspondent banks and out-of-market time deposits, to meet
    its liquidity needs;
  othe Company's ability to comply with the Written Agreement, which requires
    it to designate a significant amount of resources to complying with the
    agreement and may have a material adverse effect on the Company's
    operations and the value of its securities; and
  oother circumstances, many of which are beyond the Company's control.

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 report. 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.

Selected Financial     Three months ended         Twelve months ended
Information
(dollars in
thousands, except per  December 31,                 December 31,
share data)
Statement of           2012           2011          2012          2011
Operations
Interest and dividend  $         $           $           $  
income                11,012         11,783       45,071       49,538
Interest expense       2,657          3,362         11,568        14,651
 Net interest        8,355          8,421         33,503        34,887
income
Provision for loan     875            3,650         5,658         8,800
losses
 Net interest
income after           7,480          4,771         27,845        26,087
provision for loan
losses
Service charges and
fees on deposit        865            818           3,239         3,443
accounts
Other operating        269            226           1,031         1,179
income
Debit/credit card      414            349           1,557         1,452
fees
Gain on sale of
available for sale     377            1,435         3,875         3,186
securities, net
(Loss) gain on sale
of bank premises and   -              -             (1)           258
equipment
Gain on sale of loans  -              -             197           -
Noninterest income     1,925          2,828         9,898         9,518
Salaries and employee  4,146          2,846         15,770        14,978
benefits
Occupancy and          1,381          1,292         5,165         5,209
equipment expenses
FDIC expense           568            478           2,329         2,696
Collection,
repossession and       270            323           1,115         1,697
other real estate
owned
Loss on sale of other  122            130           227           787
real estate owned
Impairment losses on
other real estate      47             183           1,723         1,386
owned
Other operating        1,601          1,793         7,017         7,286
expenses
Noninterest expenses   8,135          7,045         33,346        34,039
Income before income   1,270          554           4,397         1,566
taxes
Income tax expense     341            (37)          945           (211)
(benefit)
 Net income         $        $        $          $   
                        929         591           3,452        1,777
 Less: Effective
dividend on preferred  375            374           1,500         1,496
stock
 Net income          $        $        $          $     
available to common     554         217           1,952        281
shareholders
Income per common      $        $         $         $    
share: basic and        0.09         0.04         0.32         0.05
diluted
Selected Ratios
Return on average      0.21%          0.08%         0.18%         0.03%
assets
Return on average      2.94%          1.19%         2.66%         0.40%
common equity
Net interest margin
(tax equivalent        3.32%          3.40%         3.37%         3.52%
basis)
Period End Balances
Loans, net of          $          $  734,530  $  684,668  $  734,530
unearned income        684,668
Total assets           1,075,553      1,063,034     1,075,553     1,063,034
Total deposits         838,373        829,951       838,373       829,951
Total borrowings       130,752        131,813       130,752       131,813
Total shareholders'    99,711         95,123        99,711        95,123
equity
Book value per common  12.56          11.83         12.56         11.83
share
Average Balances
Loans, net of          $          $  744,063  $  714,254  $  757,123
unearned income        696,060
Total earning assets   1,001,542      1,001,939     998,969       1,005,028
Total assets           1,071,312      1,071,258     1,068,028     1,077,360
Total deposits         831,928        838,464       831,239       845,667
Total borrowings       132,422        132,120       131,777       132,817
Total shareholders'    98,865         96,485        97,474        94,656
equity
Asset Quality at
Period End
Allowance for loan     $         $           $           $  
losses                 20,338         24,102       20,338       24,102
Nonperforming assets   16,621         37,787        16,621        37,787
Net charge-offs       2,640          5,222         9,422         9,986
Net charge-offs to     1.51%          2.78%         1.32%         1.32%
average loans
Allowance for loan
losses to period end   2.97%          3.28%         2.97%         3.28%
loans
Allowance for loan
losses to nonaccrual   171.29%        79.56%        171.29%       79.56%
loans
Nonperforming assets   1.55%          3.55%         1.55%         3.55%
to total assets
Nonperforming assets
to total loans and     2.41%          5.09%         2.41%         5.09%
other real estate
owned
Other Information
Number of shares
outstanding - period   6,069,551      6,025,478     6,069,551     6,025,478
end
Average shares
outstanding - basic    6,069,551      6,020,985     6,050,969     6,007,743
and diluted



                                  Contact: Adam Sothen
Eastern Virginia Bankshares, Inc.
                                  Chief Financial Officer
330 Hospital Road
                                  Voice: (804) 443-8404
Tappahannock, VA 22560
                                  Fax: (804) 445-1047



SOURCE Eastern Virginia Bankshares, Inc.

Website: http://www.bankevb.com
 
Press spacebar to pause and continue. Press esc to stop.