Bank redeems preferred stock shares issued under TARP program

Tappahannock-based Eastern Virginia Bankshares Inc., the holding company of EVB, said Thursday that it paid $9.1 million to redeem the final 9,000 shares of preferred stock originally issued to the Treasury Department.

The shares were issued as part of the Troubled Asset Relief Program Capital Purchase Program (TARP), which was designed to boost the capital of banks throughout the country after the 2008 financial crisis.

In October, the Treasury Department sold to private investors all 24,000 shares of the company’s Series A preferred stock held by the government.

The $9.1 million paid by the company for the final 9,000 preferred shares included $1,000 per share, plus accrued and unpaid dividends.

The company previously had redeemed 15,000 shares of the preferred stock in two other transactions, 10,000 shares in October and 5,000 shares in January. 

With the latest redemption, no shares of the Series A preferred stock remain outstanding.

Last month, Eastern Virginia Bankshares paid $115,000 to repurchase from the Treasury a TARP warrant allowing the government to purchase 384,041 shares of the company’s common stock at a set price.

“This announcement, along with our repurchase of the TARP warrants from Treasury last month, eliminates the company's TARP financing and represents great progress in implementing our strategic plan,” Joe A. Shearin, the president and CEO of the holding company and the bank, said in a statement on Thursday. 

“This repayment fully eliminates a high cost source of capital and will improve our future financial results for our common shareholders,” he said.  “We are very pleased with the progress we have made over the past few years and look forward to continuing to build and strengthen our banking franchise.” 

The company said the final redemption will result in estimated annual savings of $810,000, or 4 cents per fully diluted common share, because of the elimination of dividend payments on the Series A preferred stock.

Eastern Virginia Bankshares in April reported first-quarter earnings of $1.6 million, or 8 cents per diluted share, down from $1.99 million, or 9 cents per diluted share, during the same period last year.

The company had total assets of $1.18 billion on March 31, up from $1.05 billion on the same date in 2014.