Eastern Virginia Bankshares, Inc. Releases Third Quarter 2013 Results

    Eastern Virginia Bankshares, Inc. Releases Third Quarter 2013 Results

PR Newswire

TAPPAHANNOCK, Va., Oct. 29, 2013

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:

  oNonperforming 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.
  oProvision 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:

  oNet charge-offs of $1.3 million to write off uncollectible balances on
    nonperforming assets;
  oIncrease in net interest income by $324 thousand from the same period in
    2012;
  oGain of $224 thousand on the sale of our former Bowling Green branch
    office;
  oImpairment losses of $437 thousand related to valuation adjustments on
    other real estate owned, compared to $769 thousand for the same period in
    2012;
  oLosses of $668 thousand on the sale of other real estate owned, compared
    to gains of $12 thousand for the same period in 2012;
  oExpenses related to FDIC insurance premiums of $225 thousand, compared to
    $586 thousand for the same period in 2012;
  oExpenses related to collection, repossession and other real estate owned
    of $195 thousand, compared to $190 thousand for the same period in 2012;
    and
  oLoss of $11.5 million on the extinguishment of $107.5 million in long-term
    Federal Home Loan Bank advances.

Year to Date Highlights:

  oNonperforming 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.
  oProvision 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:

  oNet charge-offs of $5.0 million to write off uncollectible balances on
    nonperforming assets;
  oGain 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;
  oDecrease in net interest income by $252 thousand from the same period in
    2012;
  oGain of $224 thousand on the sale of our former Bowling Green branch
    office;
  oImpairment losses of $580 thousand related to valuation adjustments on
    other real estate owned, compared to $1.7 million for the same period in
    2012;
  oLosses of $823 thousand on the sale of other real estate owned, compared
    to $105 thousand for the same period in 2012;
  oExpenses related to FDIC insurance premiums of $1.4 million, compared to
    $1.8 million for the same period in 2012;
  oExpenses related to collection, repossession and other real estate owned
    of $447 thousand, compared to $845 thousand for the same period in 2012;
    and
  oLoss 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.

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 nine
months ended September 30, 2013 and 2012.

                              Three months ended        Nine months ended
(dollars in thousands)      September 30,               September 30,
                              2013          2012          2013          2012
Net charge-offs              $   1,289  $   1,387  $   4,994  $  
                                                                        6,782
Net charge-offs to average    0.77%         0.77%         0.99%         1.26%
loans



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

(dollars in thousands)        September 30,    December 31,  September 30,
                                2013             2012          2012
Allowance for loan losses       $    16,894  $         $    22,103
                                                 20,338
Allowance for loan losses to    2.55%            2.97%         3.14%
period end loans
Allowance for loan losses to    265.95%          171.29%       205.15%
nonaccrual loans
Allowance for loan losses to    265.95%          171.29%       172.37%
nonperforming loans



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

(dollars in thousands)       September 30,     December 31,  September 30,
                               2013              2012          2012
Nonaccrual loans               $     6,352  $         $    10,774
                                                 11,874
Loans past due 90 days and     -                 -             2,049
accruing interest
 Total nonperforming loans    $     6,352  $         $    12,823
                                                 11,874
Other real estate owned        1,203             4,747         6,577
("OREO")
 Total nonperforming assets   $     7,555  $         $    19,400
                                                 16,621
Nonperforming assets to total  1.14%             2.41%         2.73%
loans and OREO



The following tables present the change in the balances of OREO and nonaccrual
loans for the nine months ended September 30, 2013.

OREO:                               Nonaccrual Loans:
(dollars in thousands)              (dollars in thousands)
Balance at December      $  4,747  Balance at December 31, 2012  $  11,874
31, 2012
Transfers from loans     1,675      Loans returned to accrual     (5,741)
                                    status
Capitalized costs        -          Net principal curtailments    (6,247)
Sales proceeds           (3,816)    Charge-offs                   (1,718)
Impairment losses on     (580)      Loan collateral moved to OREO (1,675)
valuation adjustments
Loss on disposition      (823)      Loans placed on nonaccrual    9,859
                                    during period
Balance at September     $  1,203  Balance at September 30, 2013 $   6,352
30, 2013



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.

                               September 30,     December 31,  September 30,
(dollars in thousands)         2013              2012          2012
Performing TDRs                $     2,767  $        $    
                                                 4,433        4,483
Nonperforming TDRs*            2,630             5,089         7,301
 Total TDRs                   $     5,397  $        $    11,784
                                                 9,522
* 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)projections of 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 products or
services, the performance or disposition of portions of the Company's asset
portfolio, future changes to EVB's (the "Bank") branch network, the payment of
dividends, the ability to realize deferred tax assets; (iii)statements of
future economic performance; (iv) statements regarding the impact of the
written agreement, dated February 17, 2011 (the "Written Agreement"), among
the Company, the Bank, the Federal Reserve Bank of Richmond (the "Reserve
Bank") and the Virginia State Corporation Commission Bureau of Financial
Institutions (the "Bureau"), the termination of the Written Agreement or the
entry into a memorandum of understanding among the Company, the Bank, the
Reserve Bank and the Bureau, dated September 5, 2013 (the "Memorandum of
Understanding") on our financial condition, operations and capital strategies,
including strategies related to payment of dividends on the Company's
outstanding common and preferred stock, to redemption of the Company's fixed
rate cumulative perpetual preferred stock, Series A, par value $2.00 per
share, having a liquidation value of $1,000 per share (the "Series A Preferred
Stock") issued to the U.S. Department of the Treasury through the Capital
Purchase Program 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; (xi) statements
regarding business initiatives related to and the use of proceeds from the
private placements (the "Private Placements") and the Company's recently
completed rights offering (the "Rights Offering"); and (xii) 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:

  ofactors that adversely affect the business initiatives related to and the
    use of proceeds from the Rights Offering and the Private Placements,
    including, without limitation, changes in market conditions that adversely
    affect the Company's ability to dispose of or work out assets adversely
    classified by us on advantageous terms or at all;
  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, including rules to implement the Basel III
    capital framework and for calculating risk-weighted assets;
  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 Memorandum of Understanding and the terms thereof;
  opossible changes to the Company's Board of Directors, including in
    connection with the Private Placements and deferred dividends on the
    Company's Series A 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.



Selected Financial Information                          Three months ended   Nine months ended
(dollars in thousands, except per share data)         September 30,          September 30,
Statement of Operations                                 2013        2012       2013        2012
Interest and dividend income                           $         $        $         $ 
                                                        10,552     11,229    31,762     34,059
Interest expense                                        1,821       2,822      6,866       8,911
 Net interest income                                  8,731       8,407      24,896      25,148
Provision for loan losses                               350         625        1,550       4,783
 Net interest income after provision for loan losses  8,381       7,782      23,346      20,365
Service charges and fees on deposit accounts            847         815        2,342       2,374
Other operating income                                  334         275        978         762
Debit/credit card fees                                  391         463        1,099       1,143
Gain on sale of available for sale securities, net      -           135        525         3,498
Gain (loss) on sale of bank premises and equipment      223         (1)        249         (1)
Gain on sale of loans                                   -           197        -           197
Noninterest income                                      1,795       1,884      5,193       7,973
Salaries and employee benefits                          4,418       3,910      12,713      11,624
Occupancy and equipment expenses                        1,333       1,273      3,860       3,784
FDIC expense                                            225         586        1,408       1,761
Collection, repossession and other real estate owned    195         190        447         845
Loss (gain) on sale of other real estate owned          668         (12)       823         105
Impairment losses on other real estate owned            437         769        580         1,676
Loss on extinguishment of debt                          11,453      -          11,453      -
Other operating expenses                                1,826       1,820      5,432       5,416
Noninterest expenses                                    20,555      8,536      36,716      25,211
Income (loss) before income taxes                       (10,379)    1,130      (8,177)     3,127
Income tax expense (benefit)                            (3,733)     269        (3,284)     604
 Net income (loss)                                   $         $      $         $  
                                                        (6,646)     861      (4,893)    2,523
 Less: Effective dividend on preferred stock          376         375        1,128       1,125
 Net income (loss) available to common shareholders   $         $      $         $  
                                                        (7,022)     486      (6,021)    1,398
Income (loss) per common share: basic                   $        $      $        $   
                                                        (0.60)     0.08      (0.72)     0.23
  $        $      $        $   
diluted                                                 (0.41)     0.08      (0.58)     0.23
Selected Ratios
Return on average assets                                -2.59%      0.18%      -0.74%      0.18%
Return on average common shareholders' equity           -31.51%     2.62%      -9.84%      2.56%
Net interest margin (tax equivalent basis)              3.54%       3.36%      3.33%       3.39%
Period End Balances
Loans, net of unearned income                           $          $         $          $
                                                        662,625    703,156   662,625    703,156
Total assets                                            1,033,057   1,057,770  1,033,057   1,057,770
Total deposits                                          827,017     819,289    827,017     819,289
Total borrowings                                        69,369      133,332    69,369      133,332
Total shareholders' equity                              130,633     97,817     130,633     97,817
Book value per common share                             7.22        12.24      7.22        12.24
Average Balances
Loans, net of unearned income                           $          $         $          $
                                                        668,011    713,125   672,184    720,362
Total earning assets                                    988,937     995,291    1,007,976   998,104
Total assets                                            1,073,749   1,063,135  1,084,354   1,066,258
Total deposits                                          838,253     825,216    843,816     831,007
Total borrowings                                        95,079      133,030    119,010     131,560
Total shareholders' equity                              133,962     97,956     114,562     97,007
Asset Quality at Period End
Allowance for loan losses                               $         $        $         $ 
                                                        16,894     22,103    16,894     22,103
Nonperforming assets                                    7,555       19,400     7,555       19,400
Net charge-offs                                        1,289       1,387      4,994       6,782
Net charge-offs to average loans                        0.77%       0.77%      0.99%       1.26%
Allowance for loan losses to period end loans           2.55%       3.14%      2.55%       3.14%
Allowance for loan losses to nonaccrual loans           265.95%     205.15%    265.95%     205.15%
Nonperforming assets to total assets                    0.73%       1.83%      0.73%       1.83%
Nonperforming assets to total loans and other real      1.14%       2.73%      1.14%       2.73%
estate owned
Other Information
Number of shares outstanding - period end               11,824,367  6,069,551  11,824,367  6,069,551
Average shares outstanding - basic                      11,776,067  6,069,483  8,316,246   6,044,730
Average shares outstanding - diluted                    17,016,259  6,069,483  10,446,874  6,044,730



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

SOURCE Eastern Virginia Bankshares, Inc.

Website: http://www.bankevb.com