Eastern Virginia Bankshares has reported a net income of $603,000, or $0.10 per diluted share, for the first quarter of 2009, compared to $2.7m, or $0.45 per diluted share, for the comparable quarter in 2008.
The company has attributed the decrease in first quarter earnings to: $989,000 rate impact from the decrease in loan to deposit spread, compared to first quarter 2008; $46,000 impact from interest-bearing deposit growth exceeding loan and securities growth and being invested in fed funds sold at a net rate of 0.20%, compared to the company’s average deposit cost of 2.69%; $784,000, or 11.9%, growth in noninterest expense; $176,000 decrease in investment income from cessation of dividends on FHLB stock holdings and agency preferred stock from the seizure of FNMA and FHLMC in September 2008; and $450,000, or 100%, increase in loan loss provision.
Net interest income for the first quarter of 2009 was $7.56m, compared to $8.2m in the same quarter of 2008. Noninterest income for first quarter of 2009 was $7.38m, compared to $6.59m in the same quarter of 2008.
Total assets of the company at March 31, 2009 were $1.1 billion, compared to $1.02 billion at March 31, 2008. Deposits at the end of March 2009 were $852.65m, compared to $763.4m at the end of March 2008.
Joe Shearin, president and CEO of Eastern Virginia Bankshares, said: We are disappointed in the subpar first quarter earnings, which have been adversely impacted by the prolonged economic recession. While more deposits are flowing in as depositors flee to safety from the capital markets, loan demand is soft. Therefore, we have not been able to re-deploy deposits to loans as banks traditionally do.
In addition, other options for investing these excess deposits do not provide favourable returns. The other factor that has impacted our earnings is management’s decision to increase loan loss provisions substantially to hedge against any further deterioration in the loan portfolio.
