A local bank is feeling flush.
EVB and its parent company closed last week on a $45 million capital raise. An additional $5 million is in the works through a separate offering to the bank’s shareholders.
The bank plans to use the newfound cash to continue to work out bad loans and foreclosed real estate and potentially to buy its way out of TARP later this year.
Those steps could help it get released from a restrictive written agreement it has been under since February 2011.
“This is a huge positive step for our company,” said EVB chief executive Joe Shearin. “We can move forward again. We’re not playing defense as much. Now we can go on offense.”
The capital was raised through investments from California investment firm Castle Creek Capital Partners and New York private equity fund GCP Capital Partners. Other unnamed large investors were also involved. They purchased 4.64 million shares of common stock and 5.24 million shares of preferred stock at $4.55 per share.
Investment banking firm Keefe, Bruyette & Woods worked the deal for EVB. It used Troutman Sanders as its legal adviser.
The bank’s Tappahannock-based holding company, Eastern Virginia Bankshares, announced the plan to raise the money in late March. The process was a year in the making.
The $1 billion bank reported a profit of $704,000 in the first quarter, continuing a recent streak of profitability after some tough times between 2009 and 2011.
It finished 2012 with a $1.95 million profit, its largest annual profit since 2008. It also cut its nonperforming assets by $21 million during 2012.
“We just needed some more capital to take these big bold steps forward.”
EVB continued to whittle down its portfolio of nonperforming assets, including bad loans and foreclosed property. That figure stood at $14.2 million at the end of the first quarter. It reached as high as $39 million in 2010.
The bank is awaiting the result of an ongoing offering to its shareholders that would raise up to $5 million in additional capital. The company had looked to close that offering last week but extended it to June 28 due to what it called a high level of interest from shareholders. Those shares are also being offered at $4.55 each.
The money will give EVB some power to buy back shares owned by the federal government as part of its participation in the TARP Capital Purchase Program. EVB received $24 million in TARP capital in 2009.
Shearin told BizSense in March that the U.S. Treasury will put its EVB TARP shares up for auction this year. That could give the bank a chance to get the shares at a discount, should it have a winning bid.
“The capital and cleaning up the balance sheet will give us the final push we need to get another exam and get out from under the written agreement,” he said.
EVB will also look to restructure and pay down its balance of more than $100 million with the Federal Home Loan Bank, a government-sponsored enterprise that banks use to fund loans.
EVB has 22 branches across the Richmond region, the Middle Peninsula, the Northern Neck and Western Tidewater. It controlled about $347 million in local deposits, or about 0.5 percent of all deposits in the Richmond market, according to the most recent FDIC statistics.