EVB is fourth local bank to exit the TARP program. (Photo by Michael Schwartz)
Another local bank said “so long” to TARP last week and has at least one new mystery shareholder as a result.
Shares of EVB parent company Eastern Virginia Bankshares were sold at auction by the U.S. Treasury to an unknown buyer as part of a winding-down process of the TARP Capital Purchase Program.
“We don’t know if it was one investor or 20. It’s a big mystery,” said EVB chief executive Joe Shearin.
Whoever it was paid $26.49 million for 24,000 shares of EVB’s preferred stock, or about $1,104 per share.
The Treasury took ownership of the preferred shares in 2009 in exchange for $24 million as part of the controversial TARP process, which was designed to give banks a cushion as the recession set in. Looking to finally put the program to rest, Treasury last year began auctioning the shares of certain banks that had yet to buy their way out.
Banks have the option of bidding on their own shares, but Shearin said the Tappahannock-based bank decided not to do so. Its shares were sold in a three-day auction in which the TARP stock of eight banks was up for grabs.
In some instances, the auctions have allowed banks to buy their way out at a discount. EVB’s ended up selling at a premium. “We were just waiting to see who buys it,” Shearin said. “It went a lot higher than we expected.”
EVB is fourth local bank to exit the TARP program. Between 2008 and 2009, eight local banks participated, receiving a combined $191 million. Three local banks – Union First Market, First Capital, and C&F – have already bought their way out.
Essex Bank in July spent $4.5 million to pay back about a quarter of the $17.6 million in received. Central Virginia Bankshares was able to exit TARP this month after it was acquired by C&F Financial.
C&F cut a deal with Treasury to buy the shares back at a steep discount. Midlothian-based Village Bank and Trust has yet to repay any of the $14.7 million it received.
Although the sale gets the government off its back, EVB will still be beholden to the new investors. That includes paying dividends on the shares that run at 5 percent until 2014, when they jump to 9 percent.
EVB will likely look to buy the shares back from the mystery shareholder by then, Shearin said.
“We anticipate trying to pay this off in the very near future,” he said.
The $1 billion bank has the funds to do it. It closed this year on a $50 million capital raise, part of which was intended to be used on TARP. The bank must still receive regulatory approval to buy back those shares.
Shearin said the bank should find out this week who bought the TARP shares.
Buyers at the auctions have typically been private equity firms or large investment funds, Shearin said.
“Someone had to come up with $24 million – if they bought it all – within five days. You have to have some pretty deep pockets,” he said.
EVB is fourth local bank to exit the TARP program. (Photo by Michael Schwartz)
Another local bank said “so long” to TARP last week and has at least one new mystery shareholder as a result.
Shares of EVB parent company Eastern Virginia Bankshares were sold at auction by the U.S. Treasury to an unknown buyer as part of a winding-down process of the TARP Capital Purchase Program.
“We don’t know if it was one investor or 20. It’s a big mystery,” said EVB chief executive Joe Shearin.
Whoever it was paid $26.49 million for 24,000 shares of EVB’s preferred stock, or about $1,104 per share.
The Treasury took ownership of the preferred shares in 2009 in exchange for $24 million as part of the controversial TARP process, which was designed to give banks a cushion as the recession set in. Looking to finally put the program to rest, Treasury last year began auctioning the shares of certain banks that had yet to buy their way out.
Banks have the option of bidding on their own shares, but Shearin said the Tappahannock-based bank decided not to do so. Its shares were sold in a three-day auction in which the TARP stock of eight banks was up for grabs.
In some instances, the auctions have allowed banks to buy their way out at a discount. EVB’s ended up selling at a premium. “We were just waiting to see who buys it,” Shearin said. “It went a lot higher than we expected.”
EVB is fourth local bank to exit the TARP program. Between 2008 and 2009, eight local banks participated, receiving a combined $191 million. Three local banks – Union First Market, First Capital, and C&F – have already bought their way out.
Essex Bank in July spent $4.5 million to pay back about a quarter of the $17.6 million in received. Central Virginia Bankshares was able to exit TARP this month after it was acquired by C&F Financial.
C&F cut a deal with Treasury to buy the shares back at a steep discount. Midlothian-based Village Bank and Trust has yet to repay any of the $14.7 million it received.
Although the sale gets the government off its back, EVB will still be beholden to the new investors. That includes paying dividends on the shares that run at 5 percent until 2014, when they jump to 9 percent.
EVB will likely look to buy the shares back from the mystery shareholder by then, Shearin said.
“We anticipate trying to pay this off in the very near future,” he said.
The $1 billion bank has the funds to do it. It closed this year on a $50 million capital raise, part of which was intended to be used on TARP. The bank must still receive regulatory approval to buy back those shares.
Shearin said the bank should find out this week who bought the TARP shares.
Buyers at the auctions have typically been private equity firms or large investment funds, Shearin said.
“Someone had to come up with $24 million – if they bought it all – within five days. You have to have some pretty deep pockets,” he said.