Tappannock-based EVB on Tuesday became the fifth local bank to enter into a written agreement with state and federal regulators in hopes of staving off further damage from tens of millions of dollars in loans gone bad.
EVB’s parent company, Eastern Virginia Bankshares, had previously announced that it expected to enter into the agreement by the end of the month. That announcement came after the bank reported a $12.3 million loss in 2010. That was on top of a $10.3 million loss in 2009.
EVB joins four of its local peers in the written agreement club: Bank of Virginia, Virginia Business Bank, Consolidated Bank & Trust and Central Virginia Bank.
A sixth will likely soon join them.
Essex Bank and its Glen Allen parent company, Community Bankers Trust Corp., disclosed last fall that it expects to enter a written agreement during the first quarter. (You can read more about that in an RBS story here.)
EVB’s agreement, like those of its peers, was signed with the Federal Reserve Bank of Richmond and the Virginia State Corporation Commission. It contains provisions designed to get the bank back on more stable ground with particular attention paid to identifying and managing troubled loans.
As part of the agreement, which can be read in full here, the bank must submit a written plan of how it will strengthen board oversight of management and operations.
It must also devise plans of how it will strengthen credit risk management, minimize credit losses, reduce problem assets and maintain sufficient capital.
Specifically related to its problem loans, the bank must include in its plans a method of more quickly identifying problem loans and those that have the potential to become problems. It must also create a system for grading loans.
The bank reported $39.3 million in non-performing assets at year’s end, an increase of about $12 million compared with 2009.
It is also prohibited from paying dividends on its stock without approval from regulators. EVB has already said it is suspending paying dividends to both common stock shareholders and to the federal government for money owed through the TARP Capital Purchase Program. EVB received $24 million in TARP capital in 2009.
You can read a recent BizSense report with comments from EVB’s CEO Joe Shearin here.
At the end of 2010, EVB had $1.11 billion in assets, down almost $7 million from the end of 2009. It had $774.7 million in loans, down from $853 million in 2009. Its deposits grew during the year, reaching $868.1 million, up from $856.64 million in 2009.
EVB has 24 branches across the Richmond region, the Middle Peninsula, Northern Neck and Western Tidewater. It controls about $350 million in local deposits, or about 0.61 percent of all deposits in the Richmond market, according to the most recent FDIC statistics.