EVB has reclaimed all of its TARP shares. Photo by Michael Schwartz.
Four years after the fact, a local bank has finally cut all ties to TARP.
EVB and its parent company Eastern Virginia Bankshares said Thursday that the company fully bought its way out of the last remnants of its participation in the TARP Capital Purchase Program.
The company spent $9 million to purchase the remaining 9,000 shares of its preferred stock from several groups of unidentified investors that bought them at a U.S. Department of Treasury auction in 2013.
Those preferred shares, along with warrants for 384,000 shares of its common stock that it bought back from the government last month for $115,000, were the two last pieces tying the bank to the CPP, part of the once-controversial Troubled Asset Relief Program.
Looking back on his bank’s involvement in TARP, EVB Chief Executive Joe Shearin said it has been a “love-hate relationship.”
“It was good at times, and other times I just hated it,” he said.
EVB received $24 million from TARP in 2009 in exchange for 24,000 shares of its preferred stock that went to the Treasury. It was one of eight local banks that participated in the program.
“Do I regret doing it? No,” Shearin said. “At the time, it was the right decision. I wish I could have gotten out of it earlier.”
EVB said the total payoff for the final batch of shares was $9.1 million, which included $1,000 per share for the preferred stock, plus unpaid dividends. The payoff was funded by proceeds from a $20 million bond offering the company completed in the spring.
Using the bonds’ more favorable interest rate allowed it to cut $810,000 off its long-term costs related to the shares. Under the provisions of TARP, the bank was paying a 9 percent quarterly dividend on the remaining shares. The bonds call for a 6.5 percent interest rate that is also tax-deductible.
The bank has said the remaining $11 million from the bond offering will be used as a capital cushion.
TARP and the CPP were intended to give banks a boost at the height of the recession.
Banks have exited the program in various ways over the last few years, some buying their way out at full price directly from the government, while others were able to get out at full price or at a discount after their TARP shares were auctioned off by the Treasury.
The Treasury sold the 24,000 EVB shares at auction in October 2013. EVB redeemed the first 15,000 shares from investors in two separate purchases in October and January.
EVB also previously paid $4.1 million to buy out the TARP shares of Virginia Company Bank, a Newport News-based institution it acquired last year.
Midlothian-based Village Bank is the lone remaining local bank with outstanding preferred TARP shares. Village’s shares were sold by the government at auction to unidentified investors at a discount of $348 per share.
Village CEO Bill Foster said the bank has 5,715 TARP-related shares outstanding and owned by those investors. It previously redeemed about 9,000 of the shares as part of a provision of its recent $14 million capital raise.
Village also has outstanding common stock warrants still owned by the Treasury.
EVB has reclaimed all of its TARP shares. Photo by Michael Schwartz.
Four years after the fact, a local bank has finally cut all ties to TARP.
EVB and its parent company Eastern Virginia Bankshares said Thursday that the company fully bought its way out of the last remnants of its participation in the TARP Capital Purchase Program.
The company spent $9 million to purchase the remaining 9,000 shares of its preferred stock from several groups of unidentified investors that bought them at a U.S. Department of Treasury auction in 2013.
Those preferred shares, along with warrants for 384,000 shares of its common stock that it bought back from the government last month for $115,000, were the two last pieces tying the bank to the CPP, part of the once-controversial Troubled Asset Relief Program.
Looking back on his bank’s involvement in TARP, EVB Chief Executive Joe Shearin said it has been a “love-hate relationship.”
“It was good at times, and other times I just hated it,” he said.
EVB received $24 million from TARP in 2009 in exchange for 24,000 shares of its preferred stock that went to the Treasury. It was one of eight local banks that participated in the program.
“Do I regret doing it? No,” Shearin said. “At the time, it was the right decision. I wish I could have gotten out of it earlier.”
EVB said the total payoff for the final batch of shares was $9.1 million, which included $1,000 per share for the preferred stock, plus unpaid dividends. The payoff was funded by proceeds from a $20 million bond offering the company completed in the spring.
Using the bonds’ more favorable interest rate allowed it to cut $810,000 off its long-term costs related to the shares. Under the provisions of TARP, the bank was paying a 9 percent quarterly dividend on the remaining shares. The bonds call for a 6.5 percent interest rate that is also tax-deductible.
The bank has said the remaining $11 million from the bond offering will be used as a capital cushion.
TARP and the CPP were intended to give banks a boost at the height of the recession.
Banks have exited the program in various ways over the last few years, some buying their way out at full price directly from the government, while others were able to get out at full price or at a discount after their TARP shares were auctioned off by the Treasury.
The Treasury sold the 24,000 EVB shares at auction in October 2013. EVB redeemed the first 15,000 shares from investors in two separate purchases in October and January.
EVB also previously paid $4.1 million to buy out the TARP shares of Virginia Company Bank, a Newport News-based institution it acquired last year.
Midlothian-based Village Bank is the lone remaining local bank with outstanding preferred TARP shares. Village’s shares were sold by the government at auction to unidentified investors at a discount of $348 per share.
Village CEO Bill Foster said the bank has 5,715 TARP-related shares outstanding and owned by those investors. It previously redeemed about 9,000 of the shares as part of a provision of its recent $14 million capital raise.
Village also has outstanding common stock warrants still owned by the Treasury.