TAPPAHANNOCK, Va.–(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.”