Eastern Virginia Bankshares in Tappahannock said Friday that it had suffered an $8.1 million loss in the fourth quarter as its borrowers struggled to make payments.
The $1.1 billion-asset company added that it expected to enter into a written agreement with regulators and has stopped paying quarterly dividends to the Treasury Department.
The net loss compared with net income of $389,000 a year earlier and largely stemmed from a huge boost in the loan-loss provision to cover persistent credit-quality deterioration.
Eastern increased its provision in the fourth quarter to $12.9 million, from $1.7 million the year earlier. Meanwhile, nonperforming assets grew 48%, to $39.3 million, during the year.
"During the fourth quarter, we saw a significant increase in the number of loans that were negatively impacted by continued weak economic conditions within our markets," Eastern Virginia's President and Chief Executive Joe A. Shearin said in the release. "We continue to see declining real estate values and increased stress on our customers' ability to pay their loans as agreed, due to very high unemployment levels."
Shearin said Eastern Virginia remains "well capitalized" and has been aggressively working on asset-quality issues.
But the company added that it expects to formally agree with the Federal Reserve Bank of Richmond and Virginia's Bureau of Financial Institutions to improve asset quality and reposition itself for "stronger financial performance."
Eastern also said that it was deferring its quarterly dividend payment to the Treasury related to its Troubled Asset Relief Program funds.