0000916641-98-00087710-Q EASTERN VIRGINIA BANKSHARES INC 1998081019980810110845110611000000 0

0000916641-98-000877 10-Q 2 19980630 19980810 NASD

EASTERN VIRGINIA BANKSHARES INC 0001047170 6022 VA 1231

10-Q 34 000-23565 98680361

307 CHURCH LANE PO BOX 1005 TAPPAHANNOCK VA 22560 8044434333

307 CHURCH LANE PO BOX 1005 TAPPAHANNOCK VA 22560

10-Q 1 EASTERN VIRGINIA BANKSHARES 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended June 30, 1998 OR [X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 333-37225 EASTERN VIRGINIA BANKSHARES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) VIRGINIA 54-1866052 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 307 CHURCH LANE, TAPPAHANNOCK, VIRGINIA 22560 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER (804) 443-4333 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No __ The number of shares of the registrant's Common Stock outstanding as of July 31, 1998 was 5,174,832. EASTERN VIRGINIA BANKSHARES, INC. FORM 10-Q For the Quarter Ended June 30, 1998 Part I Item 1. Financial Statements 2 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk 11 Part II Item 1. Legal Proceedings 11 Item 2. Changes in Securities 11 Item 3. Defaults Upon Senior Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 13 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EASTERN VIRGINIA BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) June 30 December 31 1998 (1) 1997 -------- ----------- ASSETS: Cash and due from banks $ 9,519 $ 9,319 Interest-bearing deposits, in other banks 100 100 Federal funds sold 5,295 2,642 Securities available for sale at fair value 44,172 38,912 Securities held to maturity at amortized cost fair value of $39,729 and $39,350 38,882 38,362 Loans, net 227,175 224,113 Deferred income taxes 1,228 1,243 Bank premises and equipment 4,737 4,200 Accrued interest receivable 2,410 2,479 Other real estate 43 86 Federal Home Loan Bank and Federal Reserve stock, at cost 956 824 Other assets 826 1,150 ------- ------- Total assets $335,343 $323,430 ------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Noninterest-bearing demand accounts $ 30,966 $ 29,095 Savings accounts and interest bearing deposits 122,727 118,111 Time deposits 137,831 133,676 -------- ------- Total deposits 291,524 280,882 Accrued interest payable 813 794 Other liabilities 1,968 2,489 ------- ------- Total liabilities 294,305 284,165 SHAREHOLDERS' EQUITY Common stock of $2 par value per share, authorized 50,000,000 shares, issued and outstanding 5,174,832 and 5,188,576 respectively 10,350 10,377 Surplus 221 221 Retained earnings 30,308 28,535 Accumulated other comprehensive income 159 132 ------ ------ Total shareholders' equity 41,038 39,265 Total liabilities and shareholders' equity $335,343 $323,430 -------- ------- (1) Unaudited SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EASTERN VIRGINIA BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands except share amounts) Three Months Ended Six Months Ended June 30 June 30 1998 1997 1998 1997 ---- ---- ---- ---- INTEREST INCOME: Loans $5,205 $4,929 $10,461 $9,634 Interest on investment securities: Taxable 73 24 142 41 Tax exempt 447 457 898 963 Interest on securities available for sale: Taxable 526 661 1,095 1,326 Tax exempt - - Dividends 18 8 31 10 Interest on federal funds sold 237 86 340 170 Interest on deposits in other banks 1 - 3 - ------ ------ ------- ------ Total interest income 6,507 6,165 12,970 12,144 INTEREST EXPENSE Deposits 2,960 2,738 5,830 5,421 Short-term borrowings - 1 - 6 ------ ------ ------- ------ Total interest expense 2,960 2,739 5,830 5,427 ------ ------ ------- ------ Net interest income 3,547 3,426 7,140 6,717 PROVISION FOR LOAN LOSSES 115 88 238 172 ------ ------ ------- ------ Net interest income after provision for loan losses $3,432 $3,338 $6,902 $6,545 OTHER INCOME - Service charges on deposit accounts 338 288 670 557 Gain (loss) on sale of available for sale securities - (25) 8 (25) Other operating income 193 149 381 302 ------ ------ ------ ----- 531 412 1,059 834 ------ ------ ------ ----- OTHER EXPENSES Salaries and benefits 1,100 821 2,018 1,613 Net occupancy expense of premises 316 292 615 561 Other operating expenses 732 675 1,437 1,212 ------ ---- ------- ------ 2,148 1,788 4,070 3,386 ------ ------ ------- ------ Income before income taxes 1,815 1,962 3,891 3,993 INCOME TAX EXPENSE 476 494 978 996 ------ ----- ----- ----- Net income $1,339 $1,468 $2,913 $2,997 ------ ------ ------ ----- Earnings Per Share, basic and assuming dilution(1) $0.26 $0.28 $ 0.56 $0.57 Dividends per share(1) 0.11 0.12 $ 0.22 $0.12 (1) Share and per share amounts for 1997 have been restated to reflect the December 29, 1997 reorganization whereby Southside Bank and Bank of Northumberland, Inc. shareholders exchanged their stock in those companies for stock of the Corporation. SEE NOTES TO FINANCIAL STATEMENTS PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EASTERN VIRGINIA BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Dollars in thousands) Six Months Ended ---------------- June 30 June 30 1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 2,913 $ 2,997 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 315 302 Accretion of discounts and amortization of premiums, net (15) - Provision for loan losses 238 172 Losses (gains) realized on available for sale securities (8) 25 (Increase) decrease in other assets 185 (456) Increase (decrease) in other liabilities (502) (1,057) ------ ------ Net cash provided by operating activities 3,126 1,983 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturities, calls, paydowns and sales of available for sale securities 9,926 11,090 Purchase of securities available for sale (15,102) (3,724) Proceeds from maturities of investment securities 2,829 1,555 Purchase of investment securities (3,364) (1,597) (Purchase) sale of FHLB and Federal Reserve Bank stock (66) (91) Net (increase) decrease in loans (3,062) (11,295) Purchases of bank premises and equipment (852) (428) Proceeds from sale of OREO 43 2 ------- ------- Net cash (used in) investing activities (9,648) (4,488) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in noninterest bearing and interest bearing demand deposits and savings accounts 14,797 6,612 Net increase in certificates of deposit (4,155) (2,273) Proceeds from sale of common stock - 53 Acquisition of common stock (27) Dividends declared (1,140) (620) ------- ------- Net cash provided by financing activities 9,475 3,772 ------ ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,953 1,267 CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 11,961 14,616 ------- ------ END OF PERIOD $ 14,914 $ 15,883 ------- ------ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for: Interest on deposits and other borrowings $ 5,830 $ 5,427 Income taxes $ 978 $ 997 See Notes to Financial Statements PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EASTERN VIRGINIA BANKSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (Dollars in thousands)

PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EASTERN VIRGINIA BANKSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The Consolidated Balance Sheet as of June 30, 1998, the Consolidated Statements of Income for the three-month and six month periods ended June 30, 1998, and June 30, 1997, the Consolidated Statement of Cash Flows for the six-month periods ended June 30, 1998, and June 30, 1997, and the Consolidated Statement of Changes in Shareholders' Equity for the six-month periods ended June 30, 1998, and June 30, 1997, are unaudited and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position as of June 30, 1998. The statements should be read in conjunction with the Notes to Consolidated Financial Statements included in Eastern Virginia Bankshares' Annual Report for the year ended December 31, 1997. 2. Eastern Virginia Bankshares (the "Company or EVB") was organized and chartered under the laws of the Commonwealth of Virginia on September 5, 1997 and commenced operations effective December 29,1997 when Southside Bank (SSB) and Bank of Northumberland, Inc. (BNI) became wholly owned subsidiaries of EVB. The transaction was accounted for using the pooling-of-interest method of accounting. Accordingly, the financial statements of EVB have been restated for all periods presented to reflect the consolidation of SSB and BNI into EVB. 3. The results of operations for the three-month and six-month periods ended June 30, 1998 and 1997, are not necessarily indicative of the results to be expected for the full year. 4. Earnings per share have been computed by dividing net income by the weighted average number of shares outstanding for the period. Weighted average shares used for the computation were 5,188,576 and 5,186,500 for the six months ended June 30, 1998 and 1997. 5. EVB's amortized cost and estimated fair values of securities at June 30, 1998 are as follows: (in thousands) June 30, 1998 ------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value ---- ----- -------- ----- Available for Sale: U.S. Government obligations $ 23,085 $ 95 $ (1) $ 23,179 Obligations of U.S. Government agencies 18,925 184 (52) 19,057 Obligations of state/political subdivisions 1,655 19 (2) 1,672 Other securities 264 - - 264 -------- ----- -- ------ 43,929 298 (55) 44,172 Held to Maturity: Obligations of state/political subdivisions 37,469 933 (90) 38,312 Corporate bonds 1,413 10 (6) 1,417 -------- ----- ----- ------ 38,882 943 (96) 39,729 -------- ----- ------ ------ Total $ 82,811 $1,241 $(151) $ 83,901 -------- ----- ----- ------ NOTE 6. EVB'S LOAN PORTFOLIO IS COMPOSED OF THE FOLLOWING: (in thousands) 30-Jun December 31 1998 1997 ---- ---- Real estate - construction $ 6,380 $ 6,430 Real estate - mortgage 124,021 118,639 Commercial real estate 22,583 27,324 Commercial, industrial and agricultural loans 30,606 32,901 Installment loans to individuals 50,485 45,723 All other loans 569 294 --------- --------- Total loans 234,644 231,311 Less unearned income (3,481) (3,330) Less allowance for loan losses (3,988) (3,868) --------- --------- Total net loans $ 227,175 $ 224,113 --------- --------- EVB has $2.90 million in non-performing loans at June 30, 1998 NOTE 7. ALLOWANCE FOR LOAN LOSSES 30-Jun December 31 1998 1997 ---- ---- Balance January 1 $ 3,868 $ 3,643 Provision charged against income 238 412 Recoveries of loans charged off 124 459 Loans charged off (242) (645) ------- ------- Balance at end of period $ 3,988 $ 3,869 ------- ------- PART 1 - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis of financial information is presented to aid the reader in understanding and evaluating the financial condition and results of operations of Eastern Virginia Bankshares, Inc. ("EVB" or "the Company"). This discussion provides information about the major components of the results of operations, financial condition, liquidity and capital resources of the Company. This discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements presented elsewhere in this report. Operating results include Southside Bank and Bank of Northumberland, Inc. combined for all periods presented. OVERVIEW AND FINANCIAL CONDITION On December 29, 1997, EVB brought together into one holding company two independent community banks, Southside Bank and Bank of Northumberland, Inc. Total assets on June 30, 1998 were $335.3 million, up $ 11.9 million or 3.7% from $ 323.4 million at December 31, 1997. For the first six months of 1998, total assets averaged $335.2 million, 7.4 % above the first six months of 1997 average of $312.1 million. Total loans, net of unearned income, amounted to $231.2 million at June 30, 1998, an increase of $ 3.2 million or 1.4 % from $ 228.0 million at December 31, 1997. At June 30, 1998 total loans net of unearned income and allowance for loan losses were $227.2 million. Net loans as a percent of total assets were 67.7% at June 30, 1998, as compared to 69.3% at December 31, 1997. Net loan volume for the first six months of 1998 was $ 3.1 million as compared to $ 11.2 million for the first six months of 1997. Slower loan growth in 1998 versus 1997 is related to a consumer trend toward secondary market, long-term, fixed-rate mortgages and away from the Company's variable rate mortgages. On June 30, 1998, the securities portfolio totaled $83.1 million, which was $5.8 million or 7.5% higher than at December 31, 1997. In the first six months of 1998, as funds became available they were utilized for lending activities and to the extent that deposit growth outpaced loan demand, funds were invested in the securities portfolio. Funds that are invested in the securities portfolio are part of the effort to balance the interest rate risk . Federal funds sold were $5.3 million on June 30, 1998, $2.7 million or 100.4% higher than the $2.6 million outstanding at December 31, 1997. This significant increase in Federal Funds Sold is primarily the result of management's intent to increase liquidity above December 31, 1997 levels and, to a lesser degree, a result of soft loan demand. Financial Accounting Standards Board Pronouncement # 115 requires the Company to show the effect of market changes in the value of securities available for sale (AFS). The market value of securities available for sale at June 30, 1998, was $44.2 million as compared to $38.9 million at year end 1997. The effect of the change in market value of AFS securities, net of income taxes, is reflected in a line titled Accumulated other comprehensive income in Stockholders' Equity, which was $159 thousand at June 30, 1998, an increase of $27 thousand from 1997 year end. Stable interest rates during the first quarter of 1998 have resulted in stable securities values with a minimal increase in value as compared to 1997 year end.. This $27 thousand increase in the unrealized gain on AFS securities is also reflected under the Other Comprehensive Income category on the Consolidated Statement of Changes in Shareholders' Equity Statement. Total deposits increased $10.6 million or 3.8% to $291.5 million at June 30, 1998, compared to $280.9 million at December 31, 1997. EVB offers attractive, yet competitive rates, that continue to contribute to increased deposits. RESULTS OF OPERATIONS Eastern Virginia Bankshares, Inc. reported lower earnings for the second quarter of 1998. Net income for the quarter was $1.3 million, a decrease of $128 thousand from the second quarter 1997 earnings of $1.5 million. Net income for the first six months of 1998 amounted to $2.9 million, decreasing $84 thousand or 2.8% from $3.0 million for the first six months of 1997. Net income for the first six months was negatively impacted by merger expenses of $93 thousand and differences in the timing of expense recognition compared to 1997 by $127 thousand. The yield on earning assets was 8.24% and 8.33% for the quarter and the first six months of 1998 respectively, as compared to 8.42% and 8.34% for the same periods in 1997. The cost of interest bearing liabilities for the three month and six month periods ended June 30, 1998 was 4.53% and 4.52% as compared to 4.45% and 4.43% for the comparable periods in 1997. Return on average assets was 1.64% for the quarter and 1.76% for the first six months of 1998, compared with 1.88% and 1.93% for the same periods in 1997, and 1.68% for the year 1997. EVB's return on average equity was 13.03% and 14.41% for the quarter and the first six months of 1998, compared to 15.63% and 16.24% for the same periods in 1997, and 13.97% for the year 1997. NET INTEREST INCOME Net interest income totaled $3.4 million for the quarter and $6.9 million for the first six months of 1998, a $94 thousand increase over the Company's performance for the second quarter of 1997 and a $357 thousand increase over the first six months of 1997. The net interest margin for the three month and six month periods ended June 30, 1998 was 4.56% and 4.65% compared to 4.77% and 4.69% for the comparable periods in the prior year. The deterioration in net interest margin results from a combination of small decreases in loan yield combined with a small increase in cost of interest bearing funds. Loan yield was negatively impacted by soft demand for the Company's variable rate residential mortgage product while interest cost increased because of the success of a newly introduced Super Saver product. NONINTEREST INCOME Total noninterest income was $531 thousand for the quarter and $1.1 million for the first six months, a 28.9% increase from the second quarter of 1997, and a 27.0% increase over the first six months of 1997. There were no gains or losses on securities sales during the quarter compared to a $25 thousand loss in 1997. For the six months ended June 30, 1998, securities gains totaled $8 thousand compared to a $25 thousand loss for the same period in 1997. Service charges on deposit accounts and other income increased $50 thousand for the quarter and $113 thousand for the first six months, compared to 1997. NONINTEREST EXPENSE Total noninterest expense increased $360 thousand or 20.2% from $1.79 million for the second quarter of 1997 to $2.15 million for the same quarter in 1998, and $684 thousand or 20.2% for the six months ended June 30, 1998. Salary expense increased $279 thousand or 34% for the quarter vs. 1997, and $405 thousand or 25.1% from the first six months of 1997, as the result of increases in salaries and benefits and increased staffing for new branches opened in Deltaville and Gloucester by Southside Bank in the fourth quarter of 1997 and second quarter of 1998. Merger expenses of $93 thousand were incurred in the first six months of 1998 compared to no comparable expense in the first six months of 1997. Advertising/Marketing/Donations/Public Relations expense increased $18 thousand for the quarter vs. same quarter of 1997, and $71 thousand or 86% for the first six months of 1998 as compared to the same period in 1997. The increase over 1997 was related to additional expenses associated with the opening of a new branch in Gloucester County, together with the early funding of budgeted expenses. Net occupancy expense increased $24 thousand or 8.2% compared to the same quarter of 1997 and increased $54 thousand or 9.6% from $561 thousand in the first six months of 1997 to $615 thousand for the first six months of 1998, again primarily impacted by the opening of the new Deltaville and Gloucester offices, and by depreciation expense related to investments in technology. All other noninterest expenses increased $39 thousand or 6.4% to $666 thousand for the second quarter of 1998 from $627 thousand for the same period in 1997, primarily related to increased data processing expense to achieve future savings. For the six month period ended June 30, 1998, all other expenses increased $61 thousand or 5.4% to $1.19 million from $1.13 million in 1997, again primarily related to data processing expenses incurred to achieve future savings. ASSET QUALITY Asset quality continues to be good based on management review. Loan quality is the result of management employing conservative loan underwriting standards while meeting the needs of customers. Total nonperforming assets, which consist of nonaccrual loans and foreclosed properties were $2.9 million at June 30, 1998, and $3.1 million at year end 1997, reflecting a 5.4% decrease from 1997 year end. Nonperforming assets are composed largely of commercial real estate mortgage loans secured by real estate in the Company's market area. Based on estimated fair values of the related real estate, management considers these amounts recoverable, with any individual deficiency well covered by the allowance for loan losses. NONPERFORMING ASSETS JUNE 30 DECEMBER 31 1998 1997 ---- ---- Nonaccrual loans $ 2,896 $ 3,022 Restructured loans - - Other real estate owned 43 86 -------- --------- Total nonperforming assets $ 2,939 $ 3,108 -------- --------- Loans past due 90 days and accruing interest $ 1,213 $ 927 Nonperforming assets to total loans and other real estate 1.27% 1.36% Allowance for loan losses to nonaccrual loans 137.71% 127.99% Allowance for loan losses to period end loans 1.73% 1.70% Total loan charge-offs, less recoveries, amounted to $26 thousand for the quarter and $118 thousand for the first six months of 1998, representing an annualized ratio of net charge-offs to total average loans, net of unearned income, of 0.01% and 0.05% for the three month and six month periods ended June 30, 1998. This compares to 1997 full year charge-offs of $187 thousand or 0.09% of average loans. Nonperforming loans at June 30, 1998 were $2.90 million, or 1.25% of total loans, compared to $3.02 million or 1.31% at 1997 year end Also included in nonperforming loans are loans considered impaired on which management is concerned about the ability of the customer to repay the loan and related interest at the original contractual terms. At June 30, 1998, impaired loans totaled $526 thousand upon which an allowance is included in the total loan portfolio allowance for loan losses. Interest income recognized on impaired loans as of June 30, 1998, was $12 thousand. The average balance of impaired loans for the first six months of 1998 was $1.07 million Loans past due 90 days or more and still accruing interest because they were well secured and in the process of collection were $1.21 million at June 30, 1998, and $927 thousand at December 31, 1997. The allowance for loan losses has increased to $3.99 million at June 30, 1998, as compared to $3.87 million at December 31, 1997. The allowance increased $120 thousand in the first six months of 1998 as compared to $98 thousand for the first six months of 1997. The increase in the allowance for loan losses during both periods was the result of increased lending activity in the loan portfolio. The ratio of allowance for loan losses to total loans was 1.73% at June 30, 1998, and 1.70% at year end 1997. EVB closely monitors those loans that are deemed to be potential problem loans. Loans are viewed as potential problem loans according to the ability of such borrowers to comply with current repayment terms. These loans are subject to constant management attention, and their status is reviewed on a regular basis. The potential problem loans identified at June 30, 1998 are generally secured by residential and commercial real estate with appraised values that exceed the principal balance. At June 30, 1998, potential problem loans were approximately $1.33 million including 3 lending relationships with principal balances in excess of $100,000 which had an aggregate principal balance outstanding of $626 thousand. LIQUIDITY Liquidity represents the Company's ability to meet present and future deposit withdrawals, to fund loans, to maintain reserve requirements and to operate the organization. To meet its liquidity needs, EVB maintains cash reserves, primarily as federal funds sold and has an adequate flow of funds from maturing loans, securities and short-term investments. In addition, EVB's subsidiary banks maintain borrowing arrangements with major regional banks and with the Federal Home Loan Bank. Management considers its sources of liquidity to be ample to meet its estimated liquidity needs. CAPITAL RESOURCES EVB's strong capital position provides the resources and flexibility to support asset growth, absorb potential losses and to expand the Company's franchise when appropriate. The Company's risk-based capital position at June 30, 1998 was $40.879 million, or 19.77% of risk-weighted assets, for Tier 1 capital and $43.464 million, or 21.16% for total risk based capital. Tier 1 capital consists primarily of common shareholders' equity, while total risk based capital adds the allowance for loan losses to Tier 1. Risk weighted assets are determined by assigning various levels of risk to different categories of assets and off-balance sheet activities. Under current risk based capital standards, all banks are required to have Tier 1 Capital of at least 4% and total capital of 8%. PART I - FINANCIAL INFORMATION ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in market risk since 1997 year end. FORM 10-Q PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are no material legal proceedings to which the registrant or any of its subsidiaries, directors or officers is a party or by which they, or any of them, are threatened. The only litigation in which EVB and its subsidiaries are involved are collection suits involving delinquent loan accounts in the normal course of business. ITEM 2. CHANGES IN SECURITIES (not applicable) ITEM 3. DEFAULTS UPON SENIOR SECURITIES (not applicable) ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders held on May 21, 1998, the following proposals were adopted by the margins indicated. 1. To elect a Board of Directors to hold office until the next annual meeting of shareholders and until their successors are elected and qualified. Number of Shares For Abstain Thomas M. Boyd, Jr. 3,264,469 4,977 W. Rand Cook 3,264,469 4,977 Robert L. Covington 3,264,469 4,977 L. Edelyn Dawson, Jr. 3,264,469 4,977 Lewis R. Reynolds 3,264,469 4,977 F. L. Garrett, III 3,264.469 4.977 G. Warren Haynie, Jr. 3,264,469 4,977 Eric A. Johnson 3,264,469 4,977 William L. Lewis 3,264,469 4,977 2. To ratify the appointment by the Board of Directors of Yount, Hyde & Barbour, P.C. as the Company's independent auditors for the ensuing year. For 3,234,565 Against 0 Abstain 34,881 ITEM 5. OTHER INFORMATION (not applicable) ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit No. Exhibit Name 11 Statement re: Computation of Per Share Earnings - Included under Part I, Item I, Note 4 of this Form 10-Q. 27 Financial Data Schedule - Included herein as Exhibit 27 on page 13 (b) No reports on Form 8-K were filed during the second quarter of 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Eastern Virginia Bankshares, Inc. /s/ Thomas M. Boyd, Jr. President and Chief Executive Officer ------------------------- /s/ Thomas E. Stephenson Vice President, Chief Financial Officer -------------------------- Date: July 31, 1998 EX-27 2 FINANCIAL DATA SCHEDULE
9 The schedule contains summary financial information extracted from consolidated balance sheet and consolidated incom statement and is qualified in its entirety by reference to such financial statements. YEAR 3-MOS DEC-31-1998 DEC-31-1998 JUN-30-1998 JUN-30-1998 9,519 9,519 100 100 5,295 5,295 0 0 44,172 44,172 38,882 38,882 39,729 39,729 231,281 231,281 3,901 3,901 335,343 335,343 291,524 291,524 0 0 2,781 2,781 0 0 0 0 0 0 10,350 10,350 30,688 30,688 335,343 335,343 10,461 5,205 2,166 1,064 343 238 12,970 6,507 5,830 2,960 5,830 2,960 6,902 3,432 238 115 8 0 4,070 2,148 3,891 1,815 2,913 1,339 0 0 0 0 2,913 1,339 0.56 0.26 0.56 0.26 4.50 4.42 2,896 2,896 1,213 1,213 0 0 1,327 1,327 3,868 3,900 242 121 124 95 3,988 3,988 3,988 3,988 0 0 0 0