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EVB issues annual report, dividend

Eastern Virginia Bankshares Inc., holding company of EVB, recently reported its results for the three and 12 months ended December 31, 2016.

The company’s results were directly impacted by increases in the average balances of loans, deposits and short-term borrowings and for the 12 months ended December 31, 2016, senior subordinated debt.

Results also were affected by decreases in average balances of and yields earned on tax exempt investment securities as compared to the same periods in 2015, partially offset by increases in average balances of taxable investment securities during the same periods. Loan yields increased 3 basis points for the three months ended December 31, 2016, as compared to the same period in 2015, but decreased 9 basis points for the 12 months ended December 31, 2016, which was largely due to lower fair value adjustments related to the acquisition of Virginia Company Bank.

In connection with the previously disclosed pending merger of equals with Southern National Bancorp of Virginia Inc., approximately $617,000 in merger and merger related expenses were incurred during the three and 12 months ended December 31, 2016.

Also, as previously disclosed, the company engaged an independent consultant to conduct a comprehensive assessment of its operations during the first half of 2015. The assessment identified operating efficiencies and revenue enhancement opportunities.

The company has leveraged the assessment’s findings and since the second half of 2015, has continued to realize targeted increases in revenues and declines in certain non-interest expenses, particularly certain salaries and employee benefits expense. However, increases in group insurance costs due to claims and in incentive compensation have largely offset the aforementioned realized declines in salaries and employee benefits expense.

Related to the company’s continued commitment to drive operating efficiencies and reduce non-interest expenses, during the fourth quarter of 2016 the company implemented a hiring freeze.  In connection with this hiring freeze, through attrition and other job eliminations, the company reduced the number of its full-time equivalent employees by 10 during December 2016 and by an additional 14 during January 2017. The Company expects this initiative to reduce salaries and employee benefits expense by approximately $1.3 million on an annualized basis.

“I am pleased with our company’s results for the fourth quarter and full year 2016, reported president and chief executive officer Joe A. Shearin.

For 2016, as compared to 2015, the company reported an increase in net income available to common shareholders of 12.3%, an increase in return on average assets of 3 basis points to 0.60%, and an increase in return on average common shareholders’ equity of 24 basis points to 7.00%, said Shearin.

Net income decreased by 18.8% during the fourth quarter of 2016 as compared to the third quarter of 2016 and was primarily driven by higher current period expenses, including those related to our pending merger with Southern National, as discussed above and partially offset by higher interest and fees on loans and a higher net interest margin, he said.

Salaries and employee benefits as well as occupancy and equipment expenses in the current period were again impacted by higher group insurance expense due to elevated claims and the relocation of our corporate headquarters, continued Shearin. Excluding these merger and merger related expenses, overall profitability for the fourth quarter of 2016 improved when compared to the third quarter of 2016.

The increase in interest and fees on loans and the higher net interest margin were driven primarily by strong loan growth and higher yields on loans. During the fourth quarter of 2016, the company generated loan growth of 10.3% as compared to 17.3% during 2016, which outpaced internal targets.

“Given our current pipeline of loan opportunities and our continued focus on total relationship banking, we believe that we are positioned to again deliver meaningful net interest income improvement in 2017,” he said. “2016 was a very exciting year for our company.

“We have accomplished a number of the objectives identified in our strategic plan. Among our many accomplishments, perhaps the most exciting is the pending merger of equals with Southern National and the combination of EVB with Southern National’s wholly owned subsidiary Sonabank.

“This combination brings together two successful yet distinct banking companies with complementary business lines, and will create one of the premier banking institutions headquartered in the Commonwealth of Virginia,” said Shearin. “We are very excited about the future prospects of our combined organization and look forward to maximizing the potential of this combined franchise.”

Shearin also announced the board of directors declared a cash dividend of $0.03 per share of common stock and Series B Preferred Stock payable on March 3, 2017, to shareholders of record as of February 17, 2017.

Rappahannock Record Staff
Rappahannock Record Staff
From the Rappahannock Record news team

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