Eastern Virginia Bankshares, Inc. Announces Prepayment of $107.5 Million of FHLB Advances

 Eastern Virginia Bankshares, Inc. Announces Prepayment of $107.5 Million of
                                FHLB Advances

PR Newswire

TAPPAHANNOCK, Va., Aug. 16, 2013

TAPPAHANNOCK, Va., Aug. 16, 2013 /PRNewswire/ --Eastern Virginia Bankshares,
Inc. (NASDAQ: EVBS) (the "Company"), the holding company for EVB (the "Bank"),
announced today the prepayment of $107.5 million of long-term Federal Home
Loan Bank ("FHLB") advances, successfully completing one of the Company's
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 borrowings 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. The repayment of the FHLB advances
triggered a prepayment penalty of $11.5 million, or $0.67 per fully diluted
share, all of which will be recognized in the third quarter of 2013 and which
the Company expects to be offset in future periods by a higher net interest
margin. The remaining $10.0 million of long-term FHLB advances will be paid
off at maturity in September 2013.

Joe A. Shearin, President and Chief Executive Officer commented, "We continue
to evaluate and implement strategies to strengthen our financial condition and
increase profitability going forward. In this low interest rate environment,
these high cost long-term borrowings have created a sizeable amount of
negative pressure on our balance sheet. Prepayment of these advances has
allowed us to utilize excess liquidity, modestly shrink the balance sheet,
improve our net interest margin and reduce our reliance on non-core funding
while maintaining a prudent interest rate risk profile."

Results of the Transaction

The Company expects the prepayment of these long-term FHLB advances to:

  oEliminate an estimated $4.5 million in annualized interest cost going
    forward, reducing the Company's overall future cost of funds.
  oImprove the Company's annualized net interest margin by approximately 65
    basis points.
  oReduce the Company's cash on hand and short-term investments, which earn
    only modest returns in the current interest rate environment.
  oBetter position the Company to compete in the current interest rate
    environment while maintaining a flexible liquidity position for future
    opportunities.

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 Securities Exchange
Commission ("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. Examples of forward-looking
statements contained in this release include, but are not limited to: (i)
statements of plans, objectives and expectations of the Company or its
management or Board of Directors, including those relating to current and
future financial and balance sheet management strategies and future repayments
of FHLB advances; (ii) projections or estimates of impacts of the Company's
balance sheet management strategies and FHLB prepayments, including impacts on
the Company's net interest margin, interest expense (including on an
annualized basis), sensitivity to changes in interest rates, and liquidity;
and (iii) 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 discussed in or implied by such
statements. Factors that could cause actual results to differ from those
discussed in or implied by the forward-looking statements include, but are not
limited to (a) changes in interest rates that adversely affect the Company's
net interest margin, liquidity, or interest rate sensitivity; (b) changes in
government monetary policy, interest rates, deposit flow, the cost of funds,
and demand for loan products and financial services that impact the Company's
financial condition or results of operations; (c) other circumstances that may
be out of the Company's control; and (d) other risk factors disclosed on the
Company's filings with the SEC including its Quarterly Report on Form 10-Q for
the quarter ended June 30, 2013.

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.

         Adam Sothen

         Chief Financial Officer
Contact:
         Voice: (804) 443-8404

         Fax: (804) 445-1047

SOURCE Eastern Virginia Bankshares, Inc.
 
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