Eastern Virginia Bankshares has completed the sale of 24,000 shares of the corporation’s fixed rate cumulative perpetual preferred stock, series A, under the US Treasury’s capital purchase programme of the Emergency Economic Stabilisation Act of 2008.
The preferred issue to the Treasury will pay a dividend of 5% for the first five years and 9% thereafter if they are not redeemed. The Treasury will also receive a 10-year warrant entitling it to purchase 373,832 shares of Eastern Virginia Bankshares common stock at an exercise price of $9.63 per.
The corporation received preliminary approval of the Treasury’s investment on in December 2008.
The company’s tier one and total capital ratios, a measure of financial strength and soundness, will increase to 13.5% and 14.5% well above the regulatory minimum of 6% and 10%, respectively. Although Eastern Virginia Bankshares was classified as well-capitalised by all regulatory measures prior to the sale of the preferred stock, this investment by the Treasury provides a low cost of capital to further strengthen the company.
Joe Shearin, president and CEO of Eastern Virginia Bankshares, said: This voluntary capital purchase programme (CPP) provides a low cost capital alternative for our company, further enabling us to supply the credit needs of our local communities and customers. We are pleased to be recognised among the strongest of financial institutions to help stabilize the financial system and restore public confidence in the local and national economy.
