Eastern Virginia Bankshares (EVBS) in Tappahannock plans to raise $50 million through a private placement and a rights offering.
The $1.1 billion-asset company said in a press release late Tuesday that it has entered into securities purchase agreements with affiliates of Castle Creek Capital Partners, GCP Capital Partners and other institutional investors to sell 4.6 million shares of common stock and 5.2 million shares of preferred stock for $45 million.
Castle Creek and GCP Capital will each own about 9.9% of the company's voting common stock. Castle Creek would hold about 32% of the company's total equity, while GCP would hold 14.1%. An unnamed investor would hold another 9% of the voting common stock and 6.1% of total equity. Castle Creek and GCP would each get to appoint a representative to Eastern Virginia's board.
Eastern Virginia will also conduct a $5 million rights offering to allow existing shareholders to buy common stock at the same price as shares sold as part of the private placement.
"We are excited about the capital raise and our partnership with Castle Creek and GCP Capital," Joe Shearin, the company's president and chief executive, said in the release. "This capital raise significantly strengthens our balance sheet and will allow for the resolution of our most significant remaining problem assets."
The capital will also put Eastern Virginia in a better position to emerge from a written agreement it reached with the Federal Reserve Board in February 2011, Shearin said.
Eastern Virginia said the capital will allow it to accelerate the disposition of problematic assets, including $13 million in classified loans and $3 million in foreclosed properties. The company said it has another $7.5 million in adversely classified assets that it plans to keep on its balance sheet and work out over the next 12 months.
The company also expects to restructure $117.5 million in Federal Home Loan Bank advances. The company would prepay $94 million in FHLB advances, funded in part by asset sales. Though the plan would include a $14 million penalty fee, Eastern Virginia said that the moves would also add 60 basis points to its net interest margin and boost annual pretax net interest income by $2.9 million.
Eastern Virginia also announced on Tuesday that it earned $2 million last year, including $554,000 during the fourth quarter. Those figures include payments on preferred stock. The company sold the Treasury Department $24 million in preferred stock under the Troubled Asset Relief Program.
