Eastern Virginia Bankshares, Inc. Announces $45.0 Million Capital Raise and Strategic Initiatives

 Eastern Virginia Bankshares, Inc. Announces $45.0 Million Capital Raise and
                            Strategic Initiatives

- $45.0 million investment by Castle Creek Capital Partners, GCP Capital
Partners and other institutional investors.

- Company also intends to conduct $5.0 million rights offering for existing
shareholders.

PR Newswire

TAPPAHANNOCK, Va., March 26, 2013

TAPPAHANNOCK, Va., March 26, 2013 /PRNewswire/ --Eastern Virginia Bankshares,
Inc. (NASDAQ: EVBS) (the "Company") announced today that it has entered into
securities purchase agreements with affiliates of Castle Creek Capital
Partners ("Castle Creek") and GCP Capital Partners ("GCP Capital") and certain
other institutional investors pursuant to which it expects to raise aggregate
gross proceeds of $45.0 million through private placements of approximately
4.6 million shares of common stock and 5.2 million shares of a new series of
non-voting mandatorily convertible non-cumulative preferred stock, each at
$4.55 per share. The closing of the private placements is subject to
shareholder approval and other conditions. The Company also announced plans to
conduct a $5.0 million rights offering to allow existing shareholders to
purchase common stock at the same purchase price per share as the investors in
the private placements. The closing of the rights offering will be conditioned
on the closing of the private placements. The Company intends to use the gross
proceeds from these capital raises for general corporate purposes, including
strengthening its balance sheet and pursuing certain strategic initiatives
discussed below.

Joe A. Shearin, President and Chief Executive Officer commented, "We are
excited about the capital raise and our partnership with Castle Creek and GCP
Capital. This capital raise significantly strengthens our balance sheet and
will allow for the resolution of our most significant remaining problem assets
and better position the Bank and the Company to expeditiously exit the Written
Agreement, which currently restricts us from paying dividends to our
shareholders, and TARP. Additionally, we are excited about the financial and
strategic flexibility this capital will provide us."

Continuing, Shearin said, "I am very pleased that representatives of Castle
Creek and GCP Capital will be joining our Board of Directors, and believe that
their expertise and guidance will help contribute to the future success of the
Company."

Strategic Initiatives

The Company plans to use the gross proceeds from the private placements and
the rights offering for general corporate purposes, including strengthening
its balance sheet, the accelerated resolution and disposition of assets
adversely classified by the Company and the optimization of its balance sheet
through the restructuring of FHLB advances, with ultimate goals of
repurchasing its preferred stock and warrants issued to the U.S. Treasury
through the Troubled Asset Relief Program and exiting from the previously
disclosed Written Agreement with the Federal Reserve Bank of Richmond and the
Virginia Bureau of Financial Institutions. 

The Company intends to remove risk from its balance sheet by accelerating the
disposition of a portion of the assets adversely classified by the Company,
including approximately $13 millionin classified loans through a combination
of asset sales and "A/B note" structures and approximately $3 million in other
real estate owned ("OREO"). Management has also identified approximately $7.5
million in additional adversely classified assets that it expects the Company
to retain on the balance sheet and work out over the next twelve months. The
ultimate effect of disposing and working out the $23.5 million of adversely
classified assets on the Company's after-tax earnings will depend on ongoing
market conditions and other factors.

Given currently favorable market conditions, the Company also intends to
optimize its balance sheet by restructuring the $117.5 million in FHLB
advances on its balance sheet as of December31, 2012. The Company currently
anticipates pre-paying approximately $94 million in FHLB advances, funded in
part by the sale of assets in the Company's securities portfolio, which
pre-payment would result in an estimated pre-tax penalty fee of approximately
$14 million. With respect to the balance of the FHLB advances, the Company
intends to either pay off the remaining advances at scheduled maturities or to
lower existing interest rates through "blend and extend" transactions. Under
current market and interest rate conditions, the Company estimates that the
restructuring could increase the net interest margin by approximately 60 basis
points and annual pre-tax net interest income by approximately $2.9 million.

Investment by Castle Creek, GCP Capital and Other Institutional Investors

The Company has entered into securities purchase agreements with Castle Creek
and GCP Capital and certain other institutional investors pursuant to which it
expects to raise aggregate gross proceeds of $45.0 million through the
issuance and sale of approximately 4.6 million shares of common stock and 5.2
million shares of a new series of non-voting mandatorily convertible
non-cumulative preferred stock, each at $4.55 per share. No investor will
own more than 9.9% of the Company's voting securities (or securities that
convert into voting securities in the hands of such investor) or 33.3% of the
Company's total equity outstanding, each as calculated under the applicable
regulations of the Board of Governors of the Federal Reserve System. The
investments are subject to shareholder approval and satisfaction of certain
other conditions, which the Company presently expects to be satisfied in the
second quarter of 2013.

Pro forma for these private placements, excluding the impact of the rights
offering, Castle Creek and GCP Capital will each beneficially own
approximately 9.9% of the Company's voting common stock and 32.0% and 14.1% of
the Company's total equity, respectively. One other investor will beneficially
own approximately 9.0% of the Company's voting common stock and 6.1% of the
Company's total equity. The remainder of the investors will each beneficially
own varying ownership interests, in all cases below 4.9% of the Company's
voting common stock and total equity. 

The common stock and preferred stock will be issued pursuant to exemptions
from the registration requirements of the Securities Act of 1933, as amended.
The Company has agreed to promptly file a registration statement with respect
to the shares of common stock and preferred stock being issued in the private
placement and the shares of common stock issuable upon conversion of the
shares of preferred stock being issued. The shares of preferred stock to be
issued will convert into shares of common stock in the hands of a transferee
immediately upon the consummation of certain permitted transfers and under
certain other circumstances, each as detailed in the terms of the preferred
stock.

Upon closing of the private placements, each of Castle Creek and GCP Capital
are entitled to have one representative appointed to both the Company's and
Bank's Board of Directors, subject to applicable regulatory approvals and
corporate governance requirements. In the event one or both of these investors
exercise such rights and the requisite approvals are received, these
representatives will serve alongside the 13 current directors. 

As soon as practicable, the Company will call a meeting of its shareholders
for the purpose of approving the issuance and conversion of the privately
placed securities under stock exchange rules and approving an amendment of the
Company's bylaws to expand the permitted range of the size of the Board of
Directors. The Company intends to hold its annual meeting to elect directors
at the same time. The directors and executive officers of the Company have
entered into support agreements pursuant to which they have generally agreed
to vote their shares in favor of the proposals to be voted upon in connection
with the private placements.

Rights Offering to Current Shareholders

The Company also announced plans to conduct a $5.0 million rights offering to
allow existing shareholders to purchase common stock at the same purchase
price per share as the investors in the capital raise described above. The
rights will be non-transferable and will have customary oversubscription
privileges, provided that purchases through the rights offering will not be
permitted to cause an individual shareholder's aggregate ownership of the
Company's common stock to exceed 4.9% of the Company's common stock if the
shareholder's ownership did not previously exceed 4.9%. If the rights
offering is oversubscribed, subscriptions will be reduced proportionally based
on the pro rata ownership of the common stock. The investors in the private
placements are not providing a "back stop" to the rights offering in the event
it is undersubscribed. The closing of the rights offering will be conditioned
on the closing of the transactions contemplated by the securities purchase
agreements.

Mr. Shearin noted, "Our legacy shareholders have stood by our side during the
prolonged economic downturn. This rights offering provides these shareholders
the opportunity to purchase additional Company shares at the same price as the
investment made by Castle Creek, GCP Capital and the other institutional
investors and continue to support the Company."

For additional information regarding the terms and conditions of the capital
raise and the securities purchase agreements, please refer to the current
report on Form 8-K which the Company expects to file with the Securities and
Exchange Commission on March27, 2013.

Troutman Sanders acted as legal advisor to the Company. Wachtell, Lipton,
Rosen & Katz acted as legal advisor to Castle Creek. DLA Piper acted as legal
advisor to GCP Capital.

Additional Information

Certain investments discussed above involve the sale of securities in private
transactions that will not be registered under the Securities Act of 1933, as
amended, and will be subject to the resale restrictions under that Act. Such
securities may not be offered or sold absent registration or an applicable
exemption from registration. This news release does not constitute an offer to
sell or a solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state or jurisdiction.

The Company plans to file with the Securities and Exchange Commission (the
"SEC") and mail to its shareholders a proxy statement in connection with the
transactions contemplated herein (the "Proxy Statement"). The Company and its
respective directors and executive officers may be deemed to be participants
in the solicitation of proxies. The Proxy Statement will contain important
information about the Company and related matters, including the current
security holdings of the Company's respective officers and directors. Security
holders are urged to read the Proxy Statement carefully when it becomes
available. This news release is not intended to, and does not, constitute a
solicitation of proxies.

The written materials described above and other documents filed by the Company
with the SEC will be available free of charge from the SEC's website at
www.sec.gov. In addition, free copies of these documents may also be obtained
by directing a written request to: Patricia Gallagher, Eastern Virginia
Bankshares, Inc., 330 Hospital Road, P.O. Box 1455, Tappahannock, Virginia
22560.

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) projections of FHLB advance
repayment penalty fees, net interest margins, pre-tax net interest income,
revenues, expenses, income or loss, earnings or loss per share, the payment or
nonpayment of dividends, capital structure and other financial items; (ii)
statements of plans, objectives and expectations of the Company or its
management or Board of Directors, including those relating to future events in
connection with the private placements, including the consummation thereof,
the conduct and terms of the rights offering, the use of gross proceeds from
the private placements and the rights offering, restructuring of FHLB advances
and the effects thereof, strategic initiatives, repurchasing preferred stock
and warrants issued to the U.S. Treasury through the Troubled Asset Relief
Program, exiting from the Written Agreement, products or services, the
performance or disposition of portions of the Company's asset portfolio, the
payment of dividends or the ability to realize deferred tax assets; (iii)
statements of future economic performance; (iv) 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; (v) statements regarding the adequacy
of the allowance for loan losses; (vi) statements regarding the effect of
future sales of investment securities or foreclosed properties; (vii)
statements regarding the Company's liquidity; (viii) statements of
management's expectations regarding future trends in interest rates, real
estate values, and economic conditions generally and in the Company's markets;
(ix) statements regarding future asset quality, including expected levels of
charge-offs; (x) statements regarding potential changes to laws, regulations
or administrative guidance; and (xi) 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:

  ofailure to obtain shareholder approval of the private placements or to
    satisfy any other condition to the closing of the private placements;
  ofailure to consummate the rights offering;
  ochanges in market conditions that adversely affect the Company's ability
    to dispose of or work out assets adversely classified by it on
    advantageous terms or at all;
  ochanges in market and interest rate conditions that adversely affect the
    Company's ability to restructure its FHLB advances on advantageous terms;
  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;
  opossible changes to the Company's Board of Directors, including in
    connection with the private placements and deferred dividends on the
    Company's Capital Purchase Program preferred stock; 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.

Contact: Adam Sothen
         Chief Financial Officer
         Voice: (804) 443-8404
         Fax: (804) 445-1047

SOURCE Eastern Virginia Bankshares, Inc.

Website: http://www.bankevb.com
 
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