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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2007

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 000-23565



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EASTERN VIRGINIA BANKSHARES,
INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|VIRGINIA                                                       |  | 54-1866052                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                          |  |           
|----------------------------------------- |  | ----------
|330 Hospital Road, Tappahannock, Virginia |  | 22560     
|(Address of principal executive offices)  |  | (Zip Code)

(804) 443-8423

(Registrants telephone number, including area code)



---

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 ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

The number of shares of the registrants Common Stock outstanding as of July 31, 2007 was 6,051,161.



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##### Table of Contents

EASTERN VIRGINIA BANKSHARES, INC.

FORM 10-Q

For the Quarter Ended June 30, 2007



|           |  |                                                                                       |  |     
|---------- |  | ------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                       |  | Page
|Part I     |  | Financial Information                                                                 |  | 1   
|Item 1.    |  | Financial Statements                                                                  |  | 1   
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 10  
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 20  
|Item 4.    |  | Controls and Procedures                                                               |  | 20  
|           |  |                                                                                      
|Part II    |  | Other Information                                                                     |  | 20  
|Item 1.    |  | Legal Proceedings                                                                     |  | 20  
|Item 1A.   |  | Risk Factors                                                                          |  | 20  
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 20  
|Item 3.    |  | Defaults Upon Senior Securities                                                       |  | 20  
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                   |  | 21  
|Item 5.    |  | Other Information                                                                     |  | 21  
|Item 6.    |  | Exhibits                                                                              |  | 21  
|Signatures |  | 22                                                                                   



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##### Table of Contents

PART IFINANCIAL INFORMATION

Item 1. Financial Statements

Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(Dollars in
thousands)



|                                                                                                                                   |  |             |         |   |                 |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | - | --------------- | - | ------- | -
|                                                                                                                                   |  | June 302007 |         |   | December 312006 |  
|                                                                                                                                   |  | (unaudited) |         |   |                 |  
|Assets:                                                                                                                            |  |             |         |   |                 |   |         |  
|Cash and due from banks                                                                                                            |  | $           | 16,269  |   |                 | $ | 14,004  |  
|Federal funds sold                                                                                                                 |  |             | 178     |   |                 |   | 22,411  |  
|Securities available for sale, at fair value                                                                                       |  |             | 144,340 |   |                 |   | 127,167 |  
|Loans, net of unearned income                                                                                                      |  |             | 682,799 |   |                 |   | 650,492 |  
|Allowance for loan losses                                                                                                          |  |             | (7,205  | ) |                 |   | (7,051  | )
|                                                                                                                                   |  |             |         |   |                 |   |         |  
|Total loans, net                                                                                                                   |  |             | 675,594 |   |                 |   | 643,441 |  
|Deferred income taxes                                                                                                              |  |             | 4,545   |   |                 |   | 4,498   |  
|Bank premises and equipment, net                                                                                                   |  |             | 17,262  |   |                 |   | 16,906  |  
|Other real estate                                                                                                                  |  |             |        |   |                 |   |        |  
|Goodwill                                                                                                                           |  |             | 5,725   |   |                 |   | 5,725   |  
|Other assets                                                                                                                       |  |             | 13,739  |   |                 |   | 13,114  |  
|                                                                                                                                   |  |             |         |   |                 |   |         |  
|Total assets                                                                                                                       |  | $           | 881,903 |   |                 | $ | 851,398 |  
|                                                                                                                                   |  |             |         |   |                 |   |         |  
|                                                                                                                                   |  |            
|Liabilities and Shareholders Equity:                                                                                              |  |             |         |   |                 |   |         |  
|Liabilities                                                                                                                        |  |             |         |   |                 |   |         |  
|Noninterest-bearing demand accounts                                                                                                |  | $           | 99,433  |   |                 | $ | 99,253  |  
|Interest-bearing deposits                                                                                                          |  |             | 560,396 |   |                 |   | 554,726 |  
|                                                                                                                                   |  |             |         |   |                 |   |         |  
|Total deposits                                                                                                                     |  |             | 659,829 |   |                 |   | 653,979 |  
|Federal funds purchased                                                                                                            |  |             | 6,978   |   |                 |   |        |  
|Federal Home Loan Bank advances                                                                                                    |  |             | 99,786  |   |                 |   | 90,500  |  
|Trust preferred debt                                                                                                               |  |             | 10,310  |   |                 |   | 10,310  |  
|Accrued interest payable                                                                                                           |  |             | 3,481   |   |                 |   | 2,278   |  
|Other liabilities                                                                                                                  |  |             | 10,960  |   |                 |   | 6,524   |  
|                                                                                                                                   |  |             |         |   |                 |   |         |  
|Total liabilities                                                                                                                  |  |             | 791,344 |   |                 |   | 763,591 |  
|                                                                                                                                   |  |            
|Shareholders Equity                                                                                                               |  |             |         |   |                 |   |         |  
|Common stock of $2 par value per share, authorized 50,000,000 shares, issued and outstanding 6,089,020 and 6,083,294,
respectively |  |             | 12,189  |   |                 |   | 12,166  |  
|Surplus                                                                                                                            |  |             | 21,309  |   |                 |   | 21,276  |  
|Retained earnings                                                                                                                  |  |             | 61,518  |   |                 |   | 58,731  |  
|Accumulated other comprehensive (loss), net                                                                                        |  |             | (4,457  | ) |                 |   | (4,366  | )
|                                                                                                                                   |  |             |         |   |                 |   |         |  
|Total shareholders equity                                                                                                         |  |             | 90,559  |   |                 |   | 87,807  |  
|                                                                                                                                   |  |            
|Total liabilities and shareholders equity                                                                                         |  | $           | 881,903 |   |                 | $ | 851,398 |  
|                                                                                                                                   |  |             |         |   |                 |   |         |  

See Notes to Consolidated Financial Statements



1



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##### Table of Contents

Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income(Unaudited)

(Dollars in thousands except per share amounts)



|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|--------------------------------------------------- |  | ------------------------- | ------ | ----------------------- | - | ------ |  | ---- | ------ |  | - | ------
|                                                    |  | Three Months EndedJune 30 |        | Six Months EndedJune 30
|                                                    |  | 2007                      |        | 2006                    |   | 2007   |  | 2006
|Interest and Dividend Income                        |  |                           |        |                         |   |        |  |      |        |  |   |       
|Loans and fees on loans                             |  | $                         | 12,564 |                         | $ | 10,876 |  | $    | 24,654 |  | $ | 20,972
|Interest on investments:                            |  |                           |        |                         |   |        |  |      |        |  |   |       
|Taxable interest income                             |  |                           | 1,164  |                         |   | 1,106  |  |      | 2,264  |  |   | 2,240 
|Tax exempt interest income                          |  |                           | 335    |                         |   | 364    |  |      | 664    |  |   | 731   
|Dividends                                           |  |                           | 125    |                         |   | 87     |  |      | 207    |  |   | 131   
|Interest on federal funds sold                      |  |                           | 186    |                         |   | 36     |  |      | 500    |  |   | 76    
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Total interest and dividend income                  |  |                           | 14,374 |                         |   | 12,469 |  |      | 28,289 |  |   | 24,150
|                                                    |  |                           |        |                        
|Interest Expense                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Deposits                                            |  |                           | 4,801  |                         |   | 3,481  |  |      | 9,392  |  |   | 6,757 
|Federal funds purchased                             |  |                           | 5      |                         |   | 39     |  |      | 5      |  |   | 79    
|Interest on FHLB advances                           |  |                           | 1,094  |                         |   | 782    |  |      | 2,096  |  |   | 1,474 
|Interest on trust preferred debt                    |  |                           | 207    |                         |   | 204    |  |      | 415    |  |   | 386   
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Total interest expense                              |  |                           | 6,107  |                         |   | 4,506  |  |      | 11,908 |  |   | 8,696 
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Net interest income                                 |  |                           | 8,267  |                         |   | 7,963  |  |      | 16,381 |  |   | 15,454
|Provision for Loan Losses                           |  |                           | 150    |                         |   | 204    |  |      | 303    |  |   | 317   
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Net interest income after provision for loan losses |  | $                         | 8,117  |                         | $ | 7,759  |  | $    | 16,078 |  | $ | 15,137
|Noninterest Income                                  |  |                           |        |                         |   |        |  |      |        |  |   |       
|Service charges and fees on deposit accounts        |  |                           | 907    |                         |   | 825    |  |      | 1,737  |  |   | 1,543 
|Gain on sale of available for sale securities, net  |  |                           |       |                         |   | 27     |  |      |       |  |   | 31    
|Gain on sale of OREO or fixed assets                |  |                           |       |                         |   | 26     |  |      |       |  |   | 26    
|Other operating income                              |  |                           | 570    |                         |   | 427    |  |      | 1,089  |  |   | 854   
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Total noninterest income                            |  |                           | 1,477  |                         |   | 1,305  |  |      | 2,826  |  |   | 2,454 
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Noninterest Expenses                                |  |                           |        |                         |   |        |  |      |        |  |   |       
|Salaries and benefits                               |  |                           | 3,516  |                         |   | 3,591  |  |      | 7,180  |  |   | 7,324 
|Net occupancy and equipment expense                 |  |                           | 1,029  |                         |   | 986    |  |      | 2,039  |  |   | 1,957 
|Consultant fees                                     |  |                           | 158    |                         |   | 188    |  |      | 296    |  |   | 441   
|Telephone                                           |  |                           | 150    |                         |   | 138    |  |      | 297    |  |   | 279   
|Marketing and advertising                           |  |                           | 296    |                         |   | 345    |  |      | 495    |  |   | 492   
|Other operating expenses                            |  |                           | 1,225  |                         |   | 1,315  |  |      | 2,345  |  |   | 2,443 
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Total noninterest expenses                          |  |                           | 6,374  |                         |   | 6,563  |  |      | 12,652 |  |   | 12,936
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Income before income taxes                          |  |                           | 3,220  |                         |   | 2,501  |  |      | 6,252  |  |   | 4,655 
|Income Tax Expense                                  |  |                           | 905    |                         |   | 700    |  |      | 1,829  |  |   | 1,303 
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Net income                                          |  | $                         | 2,315  |                         | $ | 1,801  |  | $    | 4,423  |  | $ | 3,352 
|                                                    |  |                           |        |                         |   |        |  |      |        |  |   |       
|Earnings per share, assuming dilution               |  | $                         | 0.38   |                         | $ | 0.37   |  | $    | 0.73   |  | $ | 0.68  
|Dividends per share                                 |  | $                         | 0.16   |                         | $ | 0.16   |  | $    | 0.32   |  | $ | 0.31  

See Notes to Consolidated Financial Statements



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Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Statement of Cash Flows (Unaudited)

(Dollars in thousands)



|                                                                                                |  |                         |         |   |      |   |         |  
|----------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                |  | Six Months EndedJune 30 |        
|                                                                                                |  | 2007                    |         |   | 2006 |  
|Cash Flows from Operating Activities                                                            |  |                         |         |   |      |   |         |  
|Net income                                                                                      |  | $                       | 4,423   |   |      | $ | 3,352   |  
|Adjustments to reconcile net income to net cash provided by operating activities:               |  |                         |         |   |      |   |         |  
|Depreciation and investment amortization/accretion, net                                         |  |                         | 990     |   |      |   | 1,215   |  
|Provision for loan losses                                                                       |  |                         | 303     |   |      |   | 317     |  
|(Gain) realized on available for sale securities                                                |  |                         |        |   |      |   | (31     | )
|(Gain on sale of fully depreciated fixed assets                                                 |  |                         |        |   |      |   | (26     | )
|(Increase) in other assets                                                                      |  |                         | (672    | ) |      |   | (1,216  | )
|Increase in other liabilities                                                                   |  |                         | 5,639   |   |      |   | 990     |  
|                                                                                                |  |                         |         |   |      |   |         |  
|Net cash provided by operating activities                                                       |  |                         | 10,683  |   |      |   | 4,601   |  
|Cash Flows from Investing Activities                                                            |  |                         |         |   |      |   |         |  
|Proceeds from sales of securities available for sale                                            |  |                         |        |   |      |   | 1,298   |  
|Proceeds from maturities, calls, and paydowns of securities                                     |  |                         | 3,552   |   |      |   | 5,288   |  
|Purchase of debt securities                                                                     |  |                         | (20,597 | ) |      |   |        |  
|Purchase of restricted stock                                                                    |  |                         | (375    | ) |      |   | (1,436  | )
|Net increase in loans                                                                           |  |                         | (32,456 | ) |      |   | (37,930 | )
|Sale of fixed assets                                                                            |  |                         |        |   |      |   | 26      |  
|Purchases of bank premises and equipment                                                        |  |                         | (1,309  | ) |      |   | (684    | )
|                                                                                                |  |                         |         |   |      |   |         |  
|Net cash used in investing activities                                                           |  |                         | (51,185 | ) |      |   | (33,438 | )
|Cash Flows from Financing Activities                                                            |  |                         |         |   |      |   |         |  
|Net (decrease) in noninterest bearing and interest bearing demand deposits and savings accounts |  |                         | 4,646   |   |      |   | (18,791 | )
|Net increase in certificates of deposit                                                         |  |                         | 1,204   |   |      |   | 15,252  |  
|Issuance of common stock under dividend reinvestment plan                                       |  |                         | 205     |   |      |   | 194     |  
|Stock based compensation                                                                        |  |                         | 126     |   |      |   | 100     |  
|Stock options exercised                                                                         |  |                         | 37      |   |      |   | 13      |  
|Dividends declared                                                                              |  |                         | (1,948  | ) |      |   | (1,522  | )
|Increase in federal funds purchased                                                             |  |                         | 6,978   |   |      |   | (6,822  | )
|Increase in FHLB advances                                                                       |  |                         | 9,286   |   |      |   | 39,286  |  
|                                                                                                |  |                         |         |   |      |   |         |  
|Net cash provided by financing activities                                                       |  |                         | 20,534  |   |      |   | 27,710  |  
|                                                                                                |  |                         |         |   |      |   |         |  
|Increase (decrease) in cash and cash equivalents                                                |  |                         | (19,968 | ) |      |   | (1,127  | )
|Cash and cash equivalents                                                                       |  |                         |         |   |      |   |         |  
|Beginning of period                                                                             |  |                         | 36,415  |   |      |   | 21,516  |  
|                                                                                                |  |                         |         |   |      |   |         |  
|End of period                                                                                   |  | $                       | 16,447  |   |      | $ | 20,389  |  
|                                                                                                |  |                         |         |   |      |   |         |  
|Supplemental Disclosures of Cash Flow Information                                               |  |                         |         |   |      |   |         |  
|Cash paid for:                                                                                  |  |                         |         |   |      |   |         |  
|Interest on deposits and other borrowings                                                       |  | $                       | 13,112  |   |      | $ | 8,801   |  
|Income taxes                                                                                    |  | $                       | 2,084   |   |      | $ | 1,832   |  
|Loans transferred to other real estate owned                                                    |  | $                       |        |   |      | $ |        |  

See Notes to Consolidated Financial Statements



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EASTERN VIRGINIA BANKSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



| | 1. | The accompanying unaudited consolidated financial statements, prepared in accordance with instructions for Form 10-Q, do not include all of the information and notes required by
accounting principles generally accepted in the United States of America (GAAP) 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 of Eastern Virginia Bankshares, Inc. (we, us, or our) at June 30, 2007. The statements should be read in
conjunction with the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2006 (the 2006 Form 10-K). Certain previously reported amounts have been reclassified to
conform to current period presentation.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We were 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 and Bank of Northumberland, Inc. became our wholly owned subsidiaries. The transaction was accounted for using the pooling-of-interest method of
accounting. We opened our third subsidiary in May 2000 when Hanover Bank began operations in Hanover County, Virginia. On April 24, 2006, we completed the conversion to a one-bank holding company by merging the three banking subsidiaries. The
new bank began operating under the name EVB on April 24, 2006. All significant inter-company transactions and accounts have been eliminated in consolidation.

The results of operations for the three and six month periods ended June 30, 2007 are not necessarily indicative of the results to be expected for
the full year.



| | 2. | Our amortized cost and estimated fair values of securities at June 30, 2007 and December 31, 2006 were as follows:
| | -- | ------------------------------------------------------------------------------------------------------------------



|                                        |  |                   |         |                      |   |                       |  |                     |       |  |   |        
|--------------------------------------- |  | ----------------- | ------- | -------------------- | - | --------------------- |  | ------------------- | ----- |  | - | -------
|                                        |  | June 30, 2007    
|(dollars in thousands)                  |  | AmortizedCost     |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedFair Value
|Available for Sale:                     |  |                   |         |                      |   |                       |  |                     |       |  |   |        
|Obligations of U.S. Government agencies |  | $                 | 38,754  |                      | $ | 13                    |  | $                   | 526   |  | $ | 38,241 
|Mortgage-backed securities              |  |                   | 26,699  |                      |   | 1                     |  |                     | 1,009 |  |   | 25,691 
|State and political subdivisions        |  |                   | 36,503  |                      |   | 142                   |  |                     | 564   |  |   | 36,081 
|Corporate, CMO and other securities     |  |                   | 39,095  |                      |   | 26                    |  |                     | 1,956 |  |   | 37,165 
|Restricted securities                   |  |                   | 7,162   |                      |   |                      |  |                     |      |  |   | 7,162  
|                                        |  |                   |         |                      |   |                       |  |                     |       |  |   |        
|Total                                   |  | $                 | 148,213 |                      | $ | 182                   |  | $                   | 4,055 |  | $ | 144,340
|                                        |  |                   |         |                      |   |                       |  |                     |       |  |   |        
|                                        | 
|                                        |  | December 31, 2006
|(dollars in thousands)                  |  | AmortizedCost     |         | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedFair Value
|Available for Sale:                     |  |                   |         |                      |   |                       |  |                     |       |  |   |        
|Obligations of U.S. Government agencies |  | $                 | 31,596  |                      | $ | 32                    |  | $                   | 496   |  | $ | 31,132 
|Mortgage-backed securities              |  |                   | 29,253  |                      |   | 5                     |  |                     | 701   |  |   | 28,557 
|State and political subdivisions        |  |                   | 32,429  |                      |   | 352                   |  |                     | 1,844 |  |   | 30,937 
|Corporate, CMO and other securities     |  |                   | 30,836  |                      |   | 37                    |  |                     | 1,119 |  |   | 29,754 
|Restricted securities                   |  |                   | 6,787   |                      |   |                      |  |                     |      |  |   | 6,787  
|                                        |  |                   |         |                      |   |                       |  |                     |       |  |   |        
|Total                                   |  | $                 | 130,901 |                      | $ | 426                   |  | $                   | 4,160 |  | $ | 127,167
|                                        |  |                   |         |                      |   |                       |  |                     |       |  |   |        

There are no securities classified as Held to Maturity.



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At June 30, 2007, investments in an unrealized loss position that were temporarily impaired were as
follows:



|                                                 |  |                     |        |                   |   |           |  |                |        |           |   |                |  |   |        |  |   |      
|------------------------------------------------ |  | ------------------- | ------ | ----------------- | - | --------- |  | -------------- | ------ | --------- | - | -------------- |  | - | ------ |  | - | -----
|                                                 |  | June 30, 2007      
|                                                 |  | Less than 12 months |        | 12 months or more |   | Total    
|(dollars in thousands) Description of Securities |  | FairValue           |        | UnrealizedLoss    |   | FairValue |  | UnrealizedLoss |        | FairValue |   | UnrealizedLoss
|Obligations of U. S. Government agencies         |  | $                   | 3,638  |                   | $ | 9         |  | $              | 27,611 |           | $ | 517            |  | $ | 31,249 |  | $ | 526  
|Mortgage-backed securities                       |  |                     | 483    |                   |   | 10        |  |                | 35,093 |           |   | 1,385          |  |   | 35,576 |  |   | 1,395
|State and political subdivisions                 |  |                     | 10,649 |                   |   | 73        |  |                | 7,952  |           |   | 491            |  |   | 18,601 |  |   | 564  
|Corporate, CMO and other securities              |  |                     | 1,774  |                   |   | 278       |  |                | 9,548  |           |   | 1,292          |  |   | 11,322 |  |   | 1,570
|                                                 |  |                     |        |                   |   |           |  |                |        |           |   |                |  |   |        |  |   |      
|                                                 |  | $                   | 16,544 |                   | $ | 370       |  | $              | 80,204 |           | $ | 3,685          |  | $ | 96,748 |  | $ | 4,055
|                                                 |  |                     |        |                   |   |           |  |                |        |           |   |                |  |   |        |  |   |      

Bonds with unrealized loss positions of less than 12 months duration at June 30, 2007
included 4 federal agencies, 1 corporate bond, 2 mortgage-backed securities, 2 federal agency preferred stocks and 31 municipal bonds. Securities with losses of 12 months or greater duration included 30 federal agencies, 44 mortgage-backed
securities, 12 corporate bonds, 23 municipal bonds, 3 collateralized mortgage obligations (CMO) and 1 federal agency preferred stock. The unrealized loss positions at June 30, 2007 were primarily related to interest rate movements.
Holdings of GMAC and Ford Motor Credit Corp. contained unrealized loss positions because these securities have been downgraded by Moodys and Standard & Poors rating agencies to levels below investment grade. As of June 30, 2007, we
held $3.3 million in GMAC bonds and $250 thousand in Ford Motor Credit Corp. bonds. These holdings are monitored regularly by our Chief Financial Officer and reported to the EVB Board on a monthly basis. Given the attractive yield, our ability and
intent to hold until maturity or principal recovery and the belief that the risk of default is remote, we have not recommended sale of the holdings and believe the unrealized loss is temporary.

At December 31, 2006, investments in an unrealized loss position that were temporarily impaired were as follows:



|                                                 |  |                     |       |                   |   |           |  |                |        |           |   |                |  |   |        |  |   |      
|------------------------------------------------ |  | ------------------- | ----- | ----------------- | - | --------- |  | -------------- | ------ | --------- | - | -------------- |  | - | ------ |  | - | -----
|                                                 |  | December 31, 2006  
|                                                 |  | Less than 12 months |       | 12 months or more |   | Total    
|(dollars in thousands) Description of Securities |  | FairValue           |       | UnrealizedLoss    |   | FairValue |  | UnrealizedLoss |        | FairValue |   | UnrealizedLoss
|Obligations of U. S. Government agencies         |  | $                   |      |                   | $ |          |  | $              | 29,123 |           | $ | 496            |  | $ | 29,123 |  | $ | 496  
|Mortgage-backed securities                       |  |                     |      |                   |   |          |  |                | 28,016 |           |   | 728            |  |   | 28,016 |  |   | 728  
|State and political subdivisions                 |  |                     | 3,680 |                   |   | 22        |  |                | 4,718  |           |   | 1,822          |  |   | 8,398  |  |   | 1,844
|Corporate, CMO and other securities              |  |                     |      |                   |   |          |  |                | 20,756 |           |   | 1,092          |  |   | 20,756 |  |   | 1,092
|                                                 |  |                     |       |                   |   |           |  |                |        |           |   |                |  |   |        |  |   |      
|                                                 |  | $                   | 3,680 |                   | $ | 22        |  | $              | 82,613 |           | $ | 4,138          |  | $ | 86,293 |  | $ | 4,160
|                                                 |  |                     |       |                   |   |           |  |                |        |           |   |                |  |   |        |  |   |      



5



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##### Table of Contents

| | 3. | Our loan portfolio was composed of the following at the dates indicated:
| | -- | ------------------------------------------------------------------------



|                                              |  |                        |         |   |                           |   |         |                         |  |   |         |  
|--------------------------------------------- |  | ---------------------- | ------- | - | ------------------------- | - | ------- | ----------------------- |  | - | ------- | -
|(Dollars in thousands)                        |  | (unaudited)June 302007 |         |   | (audited) December 312006 |   |         | (unaudited) June 302006 | 
|Commercial, industrial and agricultural loans |  | $                      | 58,028  |   |                           | $ | 59,859  |                         |  | $ | 58,792  |  
|Residential real estate mortgage loans        |  |                        | 303,509 |   |                           |   | 288,114 |                         |  |   | 267,323 |  
|Real estate construction loans                |  |                        | 90,220  |   |                           |   | 85,910  |                         |  |   | 71,173  |  
|Commercial real estate loans                  |  |                        | 178,034 |   |                           |   | 164,948 |                         |  |   | 162,824 |  
|Consumer loans                                |  |                        | 51,655  |   |                           |   | 51,446  |                         |  |   | 51,717  |  
|All other loans                               |  |                        | 1,404   |   |                           |   | 305     |                         |  |   | 240     |  
|                                              |  |                        |         |   |                           |   |         |                         |  |   |         |  
|Total loans                                   |  |                        | 682,850 |   |                           |   | 650,582 |                         |  |   | 612,069 |  
|Less unearned income                          |  |                        | (51     | ) |                           |   | (90     | )                       |  |   | (180    | )
|                                              |  |                        |         |   |                           |   |         |                         |  |   |         |  
|Total loans net of unearned discount          |  |                        | 682,799 |   |                           |   | 650,492 |                         |  |   | 611,889 |  
|Less allowance for loan losses                |  |                        | (7,205  | ) |                           |   | (7,051  | )                       |  |   | (6,792  | )
|                                              |  |                        |         |   |                           |   |         |                         |  |   |         |  
|Net loans                                     |  | $                      | 675,594 |   |                           | $ | 643,441 |                         |  | $ | 605,097 |  
|                                              |  |                        |         |   |                           |   |         |                         |  |   |         |  

We had $2.2 million in non-performing loans at June 30, 2007 that included $1.1 million in
loans past due 90 days or more but still accruing and $1.0 million in nonaccrual loans.



| | 4. | Our allowance for loan losses was as follows at the dates indicated:
| | -- | --------------------------------------------------------------------



|                                 |  |                         |       |   |                           |   |       |                         |  |   |       |  
|-------------------------------- |  | ----------------------- | ----- | - | ------------------------- | - | ----- | ----------------------- |  | - | ----- | -
|(Dollars in thousands)           |  | (unaudited) June 302007 |       |   | (audited) December 312006 |   |       | (unaudited) June 302006 | 
|Balance January 1                |  | $                       | 7,051 |   |                           | $ | 6,601 |                         |  | $ | 6,601 |  
|Provision charged against income |  |                         | 303   |   |                           |   | 725   |                         |  |   | 317   |  
|Recoveries of loans charged off  |  |                         | 261   |   |                           |   | 495   |                         |  |   | 265   |  
|Loans charged off                |  |                         | (410  | ) |                           |   | (770  | )                       |  |   | (391  | )
|                                 |  |                         |       |   |                           |   |       |                         |  |   |       |  
|Balance at end of period         |  | $                       | 7,205 |   |                           | $ | 7,051 |                         |  | $ | 6,792 |  
|                                 |  |                         |       |   |                           |   |       |                         |  |   |       |  

Following is a summary pertaining to impaired loans:



|                                                        |  |                |       |                 |   |       
|------------------------------------------------------- |  | -------------- | ----- | --------------- | - | ------
|                                                        |  | June 302007    |       | December 312006
|                                                        |  | (in thousands)
|Impaired loans for which an allowance has been provided |  | $              | 4,014 |                 | $ | 3,653 
|                                                        |  |                |       |                 |   |       
|Allowance related to impaired loans                     |  | $              | 713   |                 | $ | 601   
|                                                        |  |                |       |                 |   |       
|Average balance of impaired loans                       |  | $              | 4,031 |                 | $ | 11,927
|                                                        |  |                |       |                 |   |       

No additional funds are committed to be advanced in connection with impaired loans. Nonaccrual
loans excluded from impaired loan disclosure under Statement of Financial Accounting Standards (SFAS) No. 114 amounted to $485 thousand and $103 thousand at June 30, 2007 and December 31, 2006, respectively.



6



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##### Table of Contents

| | 5. | Borrowings from the Federal Home Loan Bank of Atlanta are disclosed below. We utilize FHLB borrowings for two purposes: (a) to match funds for specific loans or investments as
an interest rate risk management tool and (b) for general funding of loan growth when the cost of borrowing is substantially below that of aggressive deposit funding.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                     |  |                        |        |                          |   |                        |  |   |       
|-------------------- |  | ---------------------- | ------ | ------------------------ | - | ---------------------- |  | - | ------
|                     |  | (unaudited)June 302007 |        | (audited)December 312006 |   | (unaudited)June 302006
|Amortizing advances  |  | $                      | 4,286  |                          | $ | 5,000                  |  | $ | 5,714 
|Convertible advances |  |                        | 95,500 |                          |   | 85,500                 |  |   | 85,500
|                     |  |                        |        |                          |   |                        |  |   |       
|Total advances       |  | $                      | 99,786 |                          | $ | 90,500                 |  | $ | 91,214
|                     |  |                        |        |                          |   |                        |  |   |       

The table presented below shows the maturities and potential call dates of FHLB advances. All but
$4.3 million of the FHLB borrowings are convertible advances that have a call provision.



|      |  |                  |        |          |      |   |                 |   |          |  |      |  
|----- |  | ---------------- | ------ | -------- | ---- | - | --------------- | - | -------- |  | ---- | -
|      |  | MaturitiesAmount |        | Avg Rate |      |   | Callable Amount |   | Avg Rate | 
|2007  |  | $                | 714    |          | 3.15 | % |                 | $ | 22,000   |  | 4.77 | %
|2008  |  |                  | 1,429  |          | 3.15 | % |                 |   | 30,000   |  | 4.43 | %
|2009  |  |                  | 1,429  |          | 3.15 | % |                 |   | 25,000   |  | 4.32 | %
|2010  |  |                  | 5,714  |          | 5.57 | % |                 |   | 18,500   |  | 4.02 | %
|2011  |  |                  | 10,000 |          | 5.01 | % |                 |   |         |  |      |  
|2015  |  |                  | 20,500 |          | 3.78 | % |                 |   |         |  |      |  
|2016  |  |                  | 10,000 |          | 4.85 | % |                 |   |         |  |      |  
|2017  |  |                  | 50,000 |          | 4.36 | % |                 |   |         |  |      |  
|      |  |                  |        |          |      |   |                 |   |          |  |      |  
|Total |  | $                | 99,786 |          | 4.38 | % |                 | $ | 95,500   |  | 4.40 | %
|      |  |                  |        |          |      |   |                 |   |          |  |      |  



| | 6. | The following table shows the weighted average number of shares used in computing per share earnings and the effect on the weighted average number of shares of diluted potential
common stock. Potential dilutive common stock had no effect on earnings per share otherwise available to shareholders for the three and six month periods ended June 30, 2007 and June 30, 2006.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                             |  |                    |  |                 |      |        |           |                 |   |     
|-------------------------------------------- |  | ------------------ |  | --------------- | ---- | ------ | --------- | --------------- | - | ----
|                                             |  | Three Months Ended
|                                             |  | June 30, 2007      |  | June 30, 2006  
|                                             |  | Shares             |  | Per ShareAmount |      | Shares |           | Per ShareAmount
|Basic earnings per share                     |  | 6,092,168          |  | $               | 0.38 |        | 4,912,868 |                 | $ | 0.37
|Effect of dilutive securities, stock options |  | 7,891              |  |                 | 0.00 |        | 15,036    |                 |   | 0.00
|                                             |  |                    |  |                 |      |        |           |                 |   |     
|Diluted earnings per share                   |  | 6,100,059          |  | $               | 0.38 |        | 4,927,904 |                 | $ | 0.37
|                                             | 
|                                             |  | Six Months Ended  
|                                             |  | June 30, 2007      |  | June 30, 2006  
|                                             |  | Shares             |  | Per ShareAmount |      | Shares |           | Per ShareAmount
|Basic earnings per share                     |  | 6,089,030          |  | $               | 0.73 |        | 4,910,342 |                 | $ | 0.68
|Effect of dilutive securities, stock options |  | 8,494              |  |                 | 0.00 |        | 14,443    |                 |   | 0.00
|                                             |  |                    |  |                 |      |        |           |                 |   |     
|Diluted earnings per share                   |  | 6,097,524          |  | $               | 0.73 |        | 4,924,785 |                 | $ | 0.68

At June 30, 2007 and 2006, respectively, options to acquire 145,112 shares and 29,525 shares
of common stock were not included in computing diluted earnings per common share because their effects were anti-dilutive.



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| | 7. | On September 21, 2000, we adopted the Eastern Virginia Bankshares, Inc. 2000 Stock Option Plan to provide a means for selected key employees and directors to increase their
personal financial interest in our company, thereby stimulating their efforts and strengthening their desire to remain with us. Under the Plan, up to 400,000 shares of Company common stock may be granted. No options may be granted under the Plan
after September 21, 2010. On April 17, 2003, the shareholders approved the 2003 Stock Incentive Plan, amending and restating the 2000 Plan while still authorizing the issuance of up to 400,000 shares of common stock. There are 151,243
shares still available under that Plan.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On April 19, 2007, our shareholders approved the Eastern Virginia Bankshares,
Inc. 2007 Equity Compensation Plan to enhance our ability to recruit and retain officers, directors and employees with ability and initiative and to encourage such persons to have a greater financial interest in the company. That Plan authorizes the
Company to issue up to 400,000 additional shares of common stock. No awards have been issued under this Plan.

In December 2004, the
Financial Accounting Standards Board (FASB) issued SFAS No. 123R, Share-Based Payment. SFAS 123R requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, such
as stock options, based on the fair value of those awards at the date of grant. We had already adopted SFAS No. 123 in 2002 and began recognizing compensation expense for stock option grants in that year, as all such grants had an exercise
price not less than the fair market value on the date of the grant.

SFAS 123R also requires that new awards to employees eligible for
retirement prior to the awards becoming fully vested be recognized as compensation cost over the period through the date that the employee first becomes eligible to retire and is no longer required to provide service to earn the award. Our stock
options granted to eligible participants prior to the adoption of SFAS 123R that had an accelerated vesting feature associated with employee retirement are being recognized, as required, as compensation cost over the vesting period except in the
instance of participants actual retirement.

For the three and six month periods ended June 30, 2007 and 2006, stock option
compensation expense of $63 thousand and $126 thousand for 2007, and $47 thousand and $100 thousand for 2006 were included in salary and benefit expense.

Stock option compensation expense is the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for each stock grant award. Through June 30, there have been
no awards issued in 2007. The weighted average estimated fair value of stock options granted in the years 2006, 2005 and 2004 was $5.40, $5.31 and $5.78, respectively. Fair value is estimated using the Black-Scholes option-pricing model with the
assumptions indicated in the table below:



|                        |  |          |   |  |          |   |  |          |  
|----------------------- |  | -------- | - |  | -------- | - |  | -------- | -
|                        |  | 2006     |   |  | 2005     |   |  | 2004     |  
|Dividend rate:          |  | 2.97     | % |  | 2.76     | % |  | 2.78     | %
|Price Volatility        |  | 22.94    | % |  | 23.61    | % |  | 24.99    | %
|Risk-free interest rate |  | 4.65     | % |  | 4.13     | % |  | 4.95     | %
|Expected life:          |  | 10 Years |   |  | 10 Years |   |  | 10 Years |  

The dividend rate is calculated as the average quarterly dividend yield on our stock since our
inception in December 1997 by dividing the quarterly dividend by the average closing price of the stock for the quarter. Volatility is a measure of the standard deviation of the daily closing stock price plus dividend yield for the same period. The
risk-free interest rate is the 10 year Treasury strip rate on the date of the grant. The expected life is 10 years, but could be shorter in the event of a change in control of the company or if a participant reaches his or her full retirement age of
65.



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|                                     |  |         |   |  |                              |       |                                                    |      |                                        |   |    
|------------------------------------ |  | ------- | - |  | ---------------------------- | ----- | -------------------------------------------------- | ---- | -------------------------------------- | - | ---
|                                     |  | Shares  |   |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractualLife (in years) |      | AggregateIntrinsicValue (in thousands)
|Outstanding at beginning of year     |  | 213,832 |   |  | $                            | 21.19 |                                                    |      |                                        |   |    
|Granted                              |  |        |   |  |                              |       |                                                    |      |                                        |   |    
|Exercised                            |  | (2,320  | ) |  |                              | 16.10 |                                                    |      |                                        |   |    
|Forfeited                            |  | (1,500  | ) |  |                              | 20.86 |                                                    |      |                                        |   |    
|                                     |  |         |   |  |                              |       |                                                    |      |                                        |   |    
|Outstanding at June 30 2007          |  | 210,012 |   |  | $                            | 21.25 |                                                    | 7.65 |                                        | $ | 352
|Options exercisable at June 30, 2007 |  | 22,625  |   |  |                              | 16.10 |                                                    | 4.75 |                                        | $ | 133

As of June 30, 2007, there was $477 thousand of unrecognized compensation expense related to
stock options that will be recognized over the remaining requisite service period of approximately 1.99 years. There were no options granted in the three- or six-month periods ended June 30, 2007 or 2006. There were 1,095 shares exercised in
the three months and 2,320 shares exercised in the six months ended June 30, 2007 at an average price of $16.10 providing cash proceeds of $18 thousand and $37 thousand, respectively. Those shares had an intrinsic value at time of exercise of
$7 thousand and $15 thousand, respectively. There were no shares exercised or exercisable in the first six months of 2006.



| | 8. | Components of net periodic benefit cost were as follows for the periods indicated:
| | -- | ----------------------------------------------------------------------------------



|                                             |  |                            |      |   |                          |   |      |      |  |   |      |   |  |   |      |  
|-------------------------------------------- |  | -------------------------- | ---- | - | ------------------------ | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                             |  | Three Months Ended June 30 |      |   | Six Months Ended June 30 |  
|                                             |  | 2007                       |      |   | 2006                     |   |      | 2007 |  |   | 2006 |  
|                                             |  | (in thousands)             |      |   | (in thousands)           |  
|Components of Net Periodic Benefit Cost      |  |                            |      |   |                          |   |      |      |  |   |      |   |  |   |      |  
|Service cost                                 |  | $                          | 373  |   |                          | $ | 350  |      |  | $ | 746  |   |  | $ | 700  |  
|Interest cost                                |  |                            | 196  |   |                          |   | 179  |      |  |   | 392  |   |  |   | 358  |  
|Expected return on plan assets               |  |                            | (189 | ) |                          |   | (163 | )    |  |   | (378 | ) |  |   | (326 | )
|Amortization of prior service cost           |  |                            | 6    |   |                          |   | 5    |      |  |   | 11   |   |  |   | 10   |  
|Amortization of net obligation at transition |  |                            | 1    |   |                          |   | 1    |      |  |   | 2    |   |  |   | 2    |  
|Recognized net actuarial loss                |  |                            | 20   |   |                          |   | 33   |      |  |   | 40   |   |  |   | 66   |  
|                                             |  |                            |      |   |                          |   |      |      |  |   |      |   |  |   |      |  
|Net periodic benefit cost                    |  | $                          | 407  |   |                          | $ | 405  |      |  | $ | 813  |   |  | $ | 810  |  
|                                             |  |                            |      |   |                          |   |      |      |  |   |      |   |  |   |      |  

We made our required 2007 fiscal year contribution to the pension plan in December 2006 in the
amount of $1.62 million. We anticipate that we will make our 2008 contribution in December 2007. The pension plan has a fiscal year ending September 30, providing us flexibility as to the calendar year in which we make pension plan
contributions. We estimate that our 2008 contribution to the plan in late 2007 will be approximately $1.62 million.



| | 9. | In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes
a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements but may change current practice for some entities.
This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those years. We do not expect the implementation of SFAS 157 to have a material impact on our consolidated
financial statements.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of this Statement is to improve
financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The fair value
option established by this Statement permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity shall report unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date. The fair value option may be applied instrument by instrument and is irrevocable. SFAS 159 is effective as of the beginning of an entitys first fiscal year that begins after
November 15, 2007. We are in the process of evaluating the impact SFAS 159 may have on our consolidated financial statements.



| | 10. | The following table displays detail of comprehensive income for the three and six month periods ended June 30, 2007 and 2006:
| | --- | -----------------------------------------------------------------------------------------------------------------------------



|                                                                         |  |                            |        |   |                          |   |        |      |  |   |       |   |  |   |        |  
|------------------------------------------------------------------------ |  | -------------------------- | ------ | - | ------------------------ | - | ------ | ---- |  | - | ----- | - |  | - | ------ | -
|(in thousands)                                                           |  | Three Months Ended June 30 |        |   | Six Months Ended June 30 |  
|                                                                         |  | 2007                       |        |   | 2006                     |   |        | 2007 |  |   | 2006  |  
|Net income                                                               |  | $                          | 2,315  |   |                          | $ | 1,801  |      |  | $ | 4,423 |   |  | $ | 3,352  |  
|Unrealized (losses) on securities available for sale, net of tax expense |  |                            | (1,073 | ) |                          |   | (1,578 | )    |  |   | (91   | ) |  |   | (1,979 | )
|Less: reclassification adjustment, net of tax                            |  |                            |       |   |                          |   | (18    | )    |  |   |      |   |  |   | (20    | )
|                                                                         |  |                            |        |   |                          |   |        |      |  |   |       |   |  |   |        |  
|Total comprehensive income                                               |  | $                          | 1,242  |   |                          | $ | 205    |      |  | $ | 4,332 |   |  | $ | 1,353  |  
|                                                                         |  |                            |        |   |                          |   |        |      |  |   |       |   |  |   |        |  



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

We present managements discussion and analysis of financial information to aid the reader in understanding and evaluating our financial condition and results of operations. This discussion provides information
about our major components of the results of operations, financial condition, liquidity and capital resources. This discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements
presented elsewhere in this report and in the 2006 Form 10-K. Operating results include those of all our operating entities combined for all periods presented.

We provide a broad range of personal and commercial banking services including commercial, consumer and real estate loans. We complement our lending operations with an array of retail and commercial deposit products and fee-based services.
Our services are delivered locally by well-trained and experienced bankers, whom we empower to make decisions at the local level so that they can provide timely lending decisions and respond promptly to customer inquiries. We believe that, by
offering our customers personalized service and a breadth of products, we can compete effectively as we expand within our existing markets and into new markets.

CRITICAL ACCOUNTING POLICIES

General

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial information contained within our statements is, to a significant extent, financial
information that is based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense,
recovering an asset or relieving a liability. For example, we use historical loss factors as one factor in determining the inherent loss that may be present in our loan portfolio. Actual losses could differ substantially from the historical factors
that we use. In addition, GAAP itself may change from one previously acceptable method to another method. Although the economics of our transactions would be the same, the timing of events that would impact our transactions could change.



10



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Allowance for Loan Losses

The allowance for loan losses is an estimate of the losses that may be sustained in our loan portfolio. The allowance is based on two basic principles of accounting: (i) SFAS No. 5, Accounting for
Contingencies, which requires that losses be accrued when their occurrence is probable and estimable, and (ii) SFAS No. 114, Accounting by Creditors for Impairment of a Loan, which requires that losses be accrued based on the
differences between the value of the collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance.

We evaluate non-performing loans individually for impairment as required by SFAS No. 114. The evaluations are based upon discounted expected cash flows or collateral valuations. If the evaluation shows that a loan is individually
impaired, then a specific reserve is established for the amount of the impairment. If a loan evaluated individually is not impaired, then the loan is assessed for impairment under SFAS No. 5.

For loans without individual measures of impairment, we make estimates of losses for groups of loans as required by SFAS No. 5. Loans are grouped by similar
characteristics, including the type of loan, the assigned loan grade and general collateral type. A loss rate reflecting the expected loss inherent in a group of loans is derived based upon historical loss rates for each loan type, the predominant
collateral type for the group and the terms of the loan. The resulting estimates of losses for groups of loans are adjusted for relevant environmental factors and other conditions of the portfolio of loans including: borrower or industry
concentrations; levels and trends in delinquencies, charge-offs and recoveries; changes in risk selection; level of experience, ability and depth of lending staff; and national and economic conditions.

The amounts of estimated losses for loans individually evaluated for impairment and groups of loans are added together for a total estimate of loan losses. The estimate
of losses is compared to our allowance for loan losses as of the evaluation date and, if the estimate of losses is greater than the allowance, an additional provision to the allowance would be made. If the estimate of losses is less than the
allowance, the degree to which the allowance exceeds the estimate is evaluated to determine whether a reduction to the allowance would be necessary. While management uses the best information available to establish the allowance for loan losses,
future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the valuations. Such adjustments would be made in the relevant period and may be material to the Consolidated
Financial Statements.

OVERVIEW

June 30, 2006
year-to-date net income increased $1.1 million or 32.0%. Net income for the quarter ended June 30, 2007 was a record $2.3 million, an increase of $514 thousand or 28.5% compared to second quarter 2006 net income of $1.8 million. Increases in
net interest income of 3.8% and noninterest income of 13.2% and a decline of 2.9% in noninterest expense aided the net income growth. Net interest income increased $304 thousand for the quarter ended June 30, 2007, compared to the same period
in 2006. This increase was the result of continued loan growth that increased interest income on loans by $1.7 million, to $12.6 million for the second quarter of 2007 compared to $10.9 million in the second quarter of 2006. Income from the
securities portfolio increased $67 thousand for the second quarter and $33 thousand year-to-date, the result of an increase in yield on the portfolio for both periods. Interest expense on deposits and other borrowings increased $1.6 million for the
second quarter of 2007 compared to the second quarter of 2006. Noninterest income increased $172 thousand largely as a result of increased deposit service charge fees of $82 thousand, an increase in debit/credit card fees of $67 thousand and a $46
thousand increase in income from the our investment in our mortgage and investment subsidiaries, all comparing the second quarter of 2007 to the second quarter of 2006. Noninterest expense decreased $189 thousand in the second quarter of 2007,
compared to the quarter ended June 30, 2006. Tax expense increased $205 thousand or 29.3% from the combination of decreased tax exempt income and an increase in our statutory tax rate in the second quarter of 2007, compared to the second
quarter of 2006. Earnings per share were $0.38 for the quarter ended June 30, 2007, compared to $0.37 for the comparable period last year, an increase of 2.7%. While net income for the quarter increased 28.5% and 32.0%, respectively, earnings
per share increased a lesser amount because of the dilutive effect of the December 2006 stock offering, discussed below.

Our underwritten stock offering
in December 2006 increased average earning assets in the second quarter of 2007 by $23.5 million, producing $308 thousand of increased interest income and net interest income in the second quarter of 2007. The after tax impact on net income was an
increase of $218 thousand while the impact on earnings per share was a decrease of $0.04. Much of the interest income impact from investment of the stock offering proceeds is reflected in the interest on federal funds sold line item, which increased
$150 thousand while interest expense on federal funds purchased decreased $34 thousand from the second quarter of 2006.



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A flat-to-sometimes-inverted yield curve continues to contribute to higher interest rates on deposits. Loan growth in the
second quarter of 2007 was funded by the combination of a $9.3 million increase in Federal Home Loan Bank borrowings and a $17.5 million decrease in federal funds sold, which also helped fund additions to the investment portfolio. Our Reward
Checking product introduced in the third quarter of 2006 continues to be an important tool in addressing a challenging deposit environment. While the 5.01% interest rate on that product has a detrimental impact on net interest income, it has
increased debit card fee income while decreasing operational expenses. We have also implemented a number of certificate of deposit and IRA deposit specials. Still, deposit growth continues to lag loan growth.

Total assets at June 30, 2007 were $881.9 million, up $87.9 million, or 11.1%, from $794.0 million at June 30, 2006 and up $30.5 million, or 3.6%, from $851.4
million at December 31, 2006. For the quarter, total assets averaged $871.7 million, 11.3% above the second quarter 2006 average of $783.0 million. Total loans, net of unearned income, amounted to $682.8 million at June 30, 2007, an
increase of $70.9 million, or 11.6%, from $611.9 million at June 30, 2006, and an increase of $32.3 million, or 5.0%, from $650.5 million at December 31, 2006. Net loans as a percent of total assets were 76.6% at June 30, 2007, as
compared to 76.2% at June 30, 2006 and 75.6% at 2006 year-end. Loan demand was strong in the second quarter of 2007, compared to the cyclical slowdown in first quarter of 2007.

At June 30, 2007, the investment portfolio totaled $144.3 million, an increase of $17.3 million from $127.0 million at June 30, 2006 and up $17.2 million, or 13.5%, from $127.2 million at December 31,
2006. In June we took advantage of attractive yields to add both taxable and tax exempt investments to the portfolio. Most of the funds that are invested in the investment portfolio are part of managements effort to balance interest rate risk
and to provide liquidity. There was a net of $6.8 million of federal funds purchased at June 30, 2007, while there was $2.3 million in federal funds sold at June 30, 2006 and $22.4 million in federal funds sold at December 31, 2006.

Total deposits of $659.8 million at June 30, 2007 represented an increase of $35.0 million, or 5.6%, from $624.8 million one year ago and an increase
of $5.9 million, or 0.9%, from $654.0 million at December 31, 2006. We offer attractive, yet competitive, rates to maintain a strong stable deposit base. At June 30, 2007, noninterest-bearing demand deposits of $99.4 million were down $4.1
million when compared to $103.5 million at June 30, 2006 and up $180 thousand from $99.3 million at year end 2006. At June 30, 2007, interest-bearing deposits were up $39.1 million, or 7.5%, at $560.4 million compared to $521.3 million at
June 30, 2006 and up $5.7 million, or 1.0%, compared to year end 2006. The quarter continues the pattern that we have seen for over a year with higher-cost certificates of deposit growing $37.2 million year-over-year while non-maturity
interest-bearing and non interest-bearing deposits have decreased $2.2 million.

FHLB borrowings at June 30, 2007 totaled $99.8 million, an $8.6
million, or 9.4%, increase over $91.2 million at June 30, 2006 and up $9.3 million from $90.5 million at December 31, 2006. With loan demand continuing to outpace deposit growth, we expect to continue to expand our earning asset base using
the funding source that provides the best risk/return reward characteristics.

SFAS No. 115, discussed in the 2006 Form 10-K, requires the Company to
show the effect of market changes in the value of securities available for sale. The effect of the change in market value of securities, net of income taxes, is reflected in a line titled Accumulated other comprehensive (loss), net in
the Shareholders Equity section of the Consolidated Balance Sheets and was ($2.6 million) at June 30, 2007, an improvement of $1.2 million from ($3.8 million) at June 30, 2006 and a deterioration of $91 thousand from ($2.5 million)
at December 31, 2006. The unrealized (loss) on securities is presented as a value at one specific point in time but fluctuates significantly over time depending on interest rate changes. In addition, adoption of SFAS No. 158, relative to
the difference in the fair value of pension assets and the expected benefits cost at the end of 2006, added a negative $1.9 million to the Accumulated other comprehensive (loss), net line on the Consolidated Balance Sheet in the fourth quarter of
2006.



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RESULTS OF OPERATIONS

Net Income

Net income increased 28.5% to $2.3 million for the three months ended June 30, 2007, compared to $1.8 million for the same
period in 2006. Diluted earnings per share increased 2.7% to $0.38 for the second quarter of 2007, compared to $0.37 for the same quarter in 2006. Net interest income increased $304 thousand for the quarter ended June 30, 2007, when compared to
the same period in 2006. This increase in net interest income for the second quarter 2007 was the result of higher earnings on the loan portfolio, the result of an increase in the loan portfolio balances and rates, an increase in investment income
and an increase of $150 thousand in interest on federal funds sold, all netted against a $1.6 million increase in total funding costs. Loan loss provision of $150 thousand for the quarter decreased $54 thousand compared to $204 thousand in the
second quarter of 2006, due to strong asset quality that decreased the calculated reserve in the risk-based allowance calculation. Noninterest income excluding securities gains was up $172 thousand, or 13.2%, for the quarter when compared to the
same period in 2006. This increase comes from an $82 thousand, or 9.9%, increase in service charge income resulting from both rate and volume increases and a $67 thousand, or 53.2%, increase in debit/credit card income and a $25 thousand, or 31.3%,
increase in investment services income compared to the second quarter 2006.

Noninterest expense for the three months ended June 30, 2007 decreased
$189 thousand or 2.9% to $6.4 million compared to $6.6 million for the same quarter of 2006. Salaries and benefits decreased $75 thousand or 2.1%, as a result of efficiencies from the 2006 conversion to a one-bank holding company. Net occupancy
expense rose $43 thousand to $1.0 million compared to $986 thousand in the second quarter of 2006. Occupancy expense was impacted by increased costs associated with the relocation of the leased Air Park branch to a new owned branch at Kings Charter.
Other expenses decreased $156 thousand with a $55 thousand decrease in data processing, a $51 thousand decrease in director fees and a $44 thousand decrease in marketing.

Net income for the six months ended June 30, 2007 increased $1.1 million, or 32.0%, to $4.42 million from $3.35 million in the first six months of 2006. Year-to-date net interest income increased $927 thousand or
6.0%. Provision for loan losses decreased $14 thousand or 4.4% based on improved credit quality impacting the risk-based allowance calculation. Noninterest income excluding securities gains and losses increased $403 thousand or 16.6%. Noninterest
expense decreased $284 thousand or 2.2%. The decrease in noninterest expense is a direct result of the April 2006 conversion to a one-bank holding company as salaries and benefits decreased $144 thousand and consulting fees decreased $145 thousand,
both compared to the six months ended June 30, 2006.

Return on average assets (ROA) increased to 1.07%, compared to 0.92% in the second quarter of
2006, and return on average equity (ROE) declined to 10.26% compared to 11.54% for the quarters ended June 30, 2007 and 2006, respectively. Year-to-date, ROA increased to 1.03%, compared to 0.87% in the six months ended June 30, 2006 while
ROE declined to 9.97% compared to 10.81% for the same six-month periods. As anticipated, the stock offering transaction in late 2006 had a current period positive impact on ROA and a negative impact on ROE.

Net Interest Income

Net interest income on a fully tax equivalent
basis totaled $8.4 million for the second quarter of 2007, a $291 thousand increase over the second quarter of 2006. When comparing the second quarter of 2007 to the same quarter in 2006, average earning assets increased 11.7% to $820.4 million
compared to $734.7 million, average loans increased 12.2%, average securities increased 0.7% and average federal funds sold increased $11.4 million, or 271.0%. The fully tax equivalent net interest margin for the three-month period ended
June 30, 2007 was 4.11% compared to 4.43% for the quarter ended June 30, 2006. For the quarter, the yield on earning assets was up 21 basis points to 7.10%, compared to 6.89% for the second quarter of 2006, and the cost of interest bearing
liabilities was up 70 basis points to 3.64% from 2.94% in the same period in 2006, narrowing the spread between the yield on earning assets and the cost of funds. This reflects continued intense competition in loan pricing even as the cost of
funding is increasing. Our increase in funding costs is more specifically related to year-over-year increases in interest checking, large dollar certificates of deposit and other certificates of deposit of 138, 73 and 75 basis points, respectively.
The cost of money market savings increased 28 basis points while the average balances declined $5.4 million. Savings deposit average balances fell $20.4 million with a 6 basis point decline in interest rate.

We believe that depositors resist committing their funds for more than a year, leaving our bank working hard to match longer term assets to the high rate deposits and
causing a continued decrease of the net interest margin. We are well



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aware of the challenge that we face and believe that wholesale funding and development/implementation of new deposit products are ways to manage the margin.
We anticipate that a return to a positively sloping yield curve would enhance the margin.

Comparing the six months ended June 30, 2007 to the same
period in 2006, net interest income on a fully tax-equivalent basis of $16.7 million increased $898 thousand, average earning assets increased $83.8 million, or 11.5% from $729.6 million to $813.4 million, and average loans increased $71.4 million,
or 12.0%, average securities decreased 2.5%, and federal funds sold increased $15.7 million to $18.9 million. The fully tax-equivalent net interest margin for the six-month period ended June 30, 2007 was 4.13%, compared to 4.36% for the six
months ended June 30, 2006. The decrease in net interest margin is a direct result of the cost of interest-bearing funds increasing 73 basis points while the yield on earning assets was increasing only 33 basis points. We anticipate continued
pressure on the net interest margin as we utilize more match-funding strategies and concentrate on bottom-line net income.

Tables that disclose fully tax
equivalent net interest income calculations for the three- and six-month periods ended June 30, 2007 and 2006 follow:



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##### Table of Contents

Average Balances, Income and Expense, Yields and Rates (1)



|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|------------------------------------------------------- |  | --------------------------- | ------- | - | -------------- | - | ---------- |  | ---- | -------------- |  | - | -------------- | - | ---------- | - | ------ |  | ---- | -
|                                                        |  | Three Months Ended June 30, |        
|                                                        |  | 2007                        |         |   | 2006           |  
|                                                        |  | AverageBalance              |         |   | Income/Expense |   | Yield/Rate |  |      | AverageBalance |  |   | Income/Expense |   | Yield/Rate |  
|Assets:                                                 |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Securities                                              |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Taxable                                                 |  | $                           | 98,240  |   |                | $ | 1,289      |  | 5.26 | %              |  | $ | 94,833         |   |            | $ | 1,193  |  | 5.05 | %
|Tax exempt (1)                                          |  |                             | 32,603  |   |                |   | 482        |  | 5.93 | %              |  |   | 35,158         |   |            |   | 524    |  | 5.98 | %
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total securities                                        |  |                             | 130,843 |   |                |   | 1,771      |  | 5.43 | %              |  |   | 129,991        |   |            |   | 1,717  |  | 5.30 | %
|Federal funds sold                                      |  |                             | 14,483  |   |                |   | 186        |  | 5.15 | %              |  |   | 3,075          |   |            |   | 36     |  | 4.70 | %
|Loans, net of unearned income (2)                       |  |                             | 675,107 |   |                |   | 12,564     |  | 7.46 | %              |  |   | 601,623        |   |            |   | 10,876 |  | 7.25 | %
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total earning assets                                    |  |                             | 820,433 |   |                |   | 14,521     |  | 7.10 | %              |  |   | 734,689        |   |            |   | 12,629 |  | 6.89 | %
|Less allowance for loan losses                          |  |                             | (7,205  | ) |                |   |            |  |      |                |  |   | (6,723         | ) |            |   |        |  |      |  
|Total non-earning assets                                |  |                             | 58,437  |   |                |   |            |  |      |                |  |   | 55,079         |   |            |   |        |  |      |  
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total assets                                            |  | $                           | 871,665 |   |                |   |            |  |      |                |  | $ | 783,045        |   |            |   |        |  |      |  
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|                                                        |  |                             |         |   |                |  
|Liabilities & Shareholders Equity:                     |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Interest bearing deposits                               |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Checking                                                |  | $                           | 100,389 |   |                | $ | 422        |  | 1.69 | %              |  | $ | 78,588         |   |            | $ | 60     |  | 0.31 | %
|Savings                                                 |  |                             | 83,090  |   |                |   | 248        |  | 1.20 | %              |  |   | 103,455        |   |            |   | 325    |  | 1.26 | %
|Money market savings                                    |  |                             | 40,358  |   |                |   | 241        |  | 2.40 | %              |  |   | 45,800         |   |            |   | 242    |  | 2.12 | %
|Large dollar certificates of deposit (3)                |  |                             | 120,017 |   |                |   | 1,452      |  | 4.85 | %              |  |   | 97,909         |   |            |   | 1,005  |  | 4.12 | %
|Other certificates of deposit                           |  |                             | 217,682 |   |                |   | 2,438      |  | 4.49 | %              |  |   | 198,215        |   |            |   | 1,849  |  | 3.74 | %
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total interest-bearing deposits                         |  |                             | 561,536 |   |                |   | 4,801      |  | 3.43 | %              |  |   | 523,967        |   |            |   | 3,481  |  | 2.66 | %
|Federal funds purchased                                 |  |                             | 336     |   |                |   | 5          |  | 0.00 | %              |  |   | 3,026          |   |            |   | 39     |  | 5.17 | %
|Other borrowings                                        |  |                             | 111,646 |   |                |   | 1,301      |  | 4.67 | %              |  |   | 87,747         |   |            |   | 986    |  | 4.51 | %
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total interest-bearing liabilities                      |  |                             | 673,518 |   |                |   | 6,107      |  | 3.64 | %              |  |   | 614,740        |   |            |   | 4,506  |  | 2.94 | %
|Noninterest-bearing liabilities                         |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Demand deposits                                         |  |                             | 96,850  |   |                |   |            |  |      |                |  |   | 99,306         |   |            |   |        |  |      |  
|Other liabilities                                       |  |                             | 10,770  |   |                |   |            |  |      |                |  |   | 6,393          |   |            |   |        |  |      |  
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total liabilities                                       |  |                             | 781,138 |   |                |   |            |  |      |                |  |   | 720,439        |   |            |   |        |  |      |  
|Shareholders equity                                    |  |                             | 90,527  |   |                |   |            |  |      |                |  |   | 62,606         |   |            |   |        |  |      |  
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total liabilities and shareholders equity              |  | $                           | 871,665 |   |                |   |            |  |      |                |  | $ | 783,045        |   |            |   |        |  |      |  
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Net interest income                                     |  |                             |         |   |                | $ | 8,414      |  |      |                |  |   |                |   |            | $ | 8,123  |  |      |  
|                                                        |  |                             |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Interest rate spread (4)                                |  |                             |         |   |                |   |            |  | 3.46 | %              |  |   |                |   |            |   |        |  | 3.95 | %
|Interest expense as a percent of average earning assets |  |                             |         |   |                |   |            |  | 2.99 | %              |  |   |                |   |            |   |        |  | 2.46 | %
|Net interest margin (5)                                 |  |                             |         |   |                |   |            |  | 4.11 | %              |  |   |                |   |            |   |        |  | 4.43 | %

---

Notes:

|(1) | Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%.
|--- | --------------------------------------------------------------------------------------------

The tax equivalent adjustment for the quarter is $147 thousand, compared to $160 thousand in the prior year.

|(2) | Nonaccrual loans have been included in the computations of average loan balances.
|--- | ---------------------------------------------------------------------------------

|(3) | Large dollar certificates of deposit are certificates issued in amounts of $100,000 or greater.
|--- | -----------------------------------------------------------------------------------------------

|(4) | Interest rate spread is the average yield on earning assets, calculated on a fully taxable basis, less the average rate incurred on interest-bearing liabilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Net interest margin is the net interest income, calculated on a fully taxable basis assuming a federal income tax rate of 34%, expressed as a percentage of average earning assets.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Average Balances, Income and Expense, Yields and Rates (1)



|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|------------------------------------------------------- |  | ------------------------ | ------- | - | -------------- | - | ---------- |  | ---- | -------------- |  | - | -------------- | - | ---------- | - | ------ |  | ---- | -
|                                                        |  | Six Months Ended June 30 |        
|                                                        |  | 2007                     |         |   | 2006           |  
|                                                        |  | AverageBalance           |         |   | Income/Expense |   | Yield/Rate |  |      | AverageBalance |  |   | Income/Expense |   | Yield/Rate |  
|Assets:                                                 |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Securities                                              |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Taxable                                                 |  | $                        | 97,044  |   |                | $ | 2,471      |  | 5.13 | %              |  | $ | 97,009         |   |            | $ | 2,371  |  | 4.93 | %
|Tax exempt (1)                                          |  |                          | 32,153  |   |                |   | 956        |  | 6.00 | %              |  |   | 35,448         |   |            |   | 1,052  |  | 5.98 | %
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total securities                                        |  |                          | 129,197 |   |                |   | 3,427      |  | 5.35 | %              |  |   | 132,457        |   |            |   | 3,423  |  | 5.21 | %
|Federal funds sold                                      |  |                          | 18,945  |   |                |   | 500        |  | 5.32 | %              |  |   | 3,255          |   |            |   | 76     |  | 4.71 | %
|Loans, net of unearned income (2)                       |  |                          | 665,276 |   |                |   | 24,654     |  | 7.47 | %              |  |   | 593,873        |   |            |   | 20,972 |  | 7.12 | %
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total earning assets                                    |  |                          | 813,418 |   |                |   | 28,581     |  | 7.09 | %              |  |   | 729,585        |   |            |   | 24,471 |  | 6.76 | %
|Less allowance for loan losses                          |  |                          | (7,160  | ) |                |   |            |  |      |                |  |   | (6,703         | ) |            |   |        |  |      |  
|Total non-earning assets                                |  |                          | 58,270  |   |                |   |            |  |      |                |  |   | 56,513         |   |            |   |        |  |      |  
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total assets                                            |  | $                        | 864,528 |   |                |   |            |  |      |                |  | $ | 779,395        |   |            |   |        |  |      |  
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|                                                        |  |                          |         |   |                |  
|Liabilities & Shareholders Equity:                     |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Interest bearing deposits                               |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Checking                                                |  | $                        | 97,638  |   |                | $ | 742        |  | 1.53 | %              |  | $ | 79,268         |   |            | $ | 144    |  | 0.37 | %
|Savings                                                 |  |                          | 84,329  |   |                |   | 504        |  | 1.21 | %              |  |   | 106,325        |   |            |   | 666    |  | 1.26 | %
|Money market savings                                    |  |                          | 40,917  |   |                |   | 483        |  | 2.38 | %              |  |   | 47,041         |   |            |   | 424    |  | 1.82 | %
|Large dollar certificates of deposit (3)                |  |                          | 119,752 |   |                |   | 2,861      |  | 4.82 | %              |  |   | 97,444         |   |            |   | 1,951  |  | 4.04 | %
|Consumer certificates of deposit                        |  |                          | 217,358 |   |                |   | 4,802      |  | 4.46 | %              |  |   | 196,566        |   |            |   | 3,572  |  | 3.66 | %
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total interest-bearing deposits                         |  |                          | 559,994 |   |                |   | 9,392      |  | 3.38 | %              |  |   | 526,644        |   |            |   | 6,757  |  | 2.59 | %
|Federal funds purchased                                 |  |                          | 169     |   |                |   | 5          |  | 5.97 | %              |  |   | 3,316          |   |            |   | 79     |  | 4.80 | %
|Other borrowings                                        |  |                          | 108,053 |   |                |   | 2,511      |  | 4.69 | %              |  |   | 83,878         |   |            |   | 1,860  |  | 4.47 | %
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total interest-bearing liabilities                      |  |                          | 668,216 |   |                |   | 11,908     |  | 3.59 | %              |  |   | 613,838        |   |            |   | 8,696  |  | 2.86 | %
|Noninterest-bearing liabilities                         |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Demand deposits                                         |  |                          | 96,167  |   |                |   |            |  |      |                |  |   | 96,823         |   |            |   |        |  |      |  
|Other liabilities                                       |  |                          | 10,639  |   |                |   |            |  |      |                |  |   | 6,201          |   |            |   |        |  |      |  
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total liabilites                                        |  |                          | 775,022 |   |                |   |            |  |      |                |  |   | 716,862        |   |            |   |        |  |      |  
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Shareholders equity                                    |  |                          | 89,506  |   |                |   |            |  |      |                |  |   | 62,533         |   |            |   |        |  |      |  
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Total liabilities and shareholders equity              |  | $                        | 864,528 |   |                |   |            |  |      |                |  | $ | 779,395        |   |            |   |        |  |      |  
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Net interest income                                     |  |                          |         |   |                | $ | 16,673     |  |      |                |  |   |                |   |            | $ | 15,775 |  |      |  
|                                                        |  |                          |         |   |                |   |            |  |      |                |  |   |                |   |            |   |        |  |      |  
|Interest rate spread (4)                                |  |                          |         |   |                |   |            |  | 3.49 | %              |  |   |                |   |            |   |        |  | 3.91 | %
|Interest expense as a percent of average earning assets |  |                          |         |   |                |   |            |  | 2.95 | %              |  |   |                |   |            |   |        |  | 2.40 | %
|Net interest margin (5)                                 |  |                          |         |   |                |   |            |  | 4.13 | %              |  |   |                |   |            |   |        |  | 4.36 | %

---

Notes:

|(1) | Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%.
|--- | --------------------------------------------------------------------------------------------

The tax equivalent adjustment for the six months is $292 thousand, compared to $321 thousand in the prior year.

|(2) | Nonaccrual loans have been included in the computations of average loan balances.
|--- | ---------------------------------------------------------------------------------

|(3) | Large dollar certificates of deposit are certificates issued in amounts of $100,000 or greater.
|--- | -----------------------------------------------------------------------------------------------

|(4) | Interest rate spread is the average yield on earning assets, calculated on a fully taxable basis, less the average rate incurred on interest-bearing liabilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Net interest margin is the net interest income, calculated on a fully taxable basis assuming a federal income tax rate of 34%, expressed as a percentage of average earning assets.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Noninterest Income

This category includes all income not related to interest on investments and interest and fees on loans. Noninterest income excluding net realized gains on securities sales was $1.5 million for the second quarter of 2007 compared to $1.3
million for the same quarter in 2006. Service charges on deposit accounts for the quarter ended June 30, 2007 were $907 thousand, compared to $825 thousand for the comparable period in 2006. Other operating income increased to $570 thousand for
the quarter, compared to $427 thousand for the three months ended June 30, 2006. Service charge increases were from a combination of rate and volume increases. Other operating income increases for the second quarter were highlighted by a $67
thousand, or 53.2%, increase in debit/credit card fee income and a $25 thousand, or 31.3%, increase in investment services income.

Noninterest income
excluding net realized gains on securities sales was $2.8 million for the six months ended June 30, 2007, compared to $2.4 million in the first half of 2006. This increase was primarily impacted by a $194 thousand, or 12.6%, increase in service
charges on deposit accounts, a $115 thousand, or 51.6%, increase in debit/credit card fees and a $93 thousand, or 110.7%, increase from our EVB Mortgage joint venture.

Noninterest Expense

This category includes all expenses other than interest paid on deposits and borrowings. Total
noninterest expense decreased $189 thousand, or 2.9%, from $6.6 million for the second quarter of 2006 to $6.4 million for the three months ended June 30, 2007. Noninterest expense changes included increases of $43 thousand in occupancy
expense, and $108 thousand in other expenses, more than offset by decreases of $75 thousand in salary and benefit expense, $55 thousand in data processing expense, $51 thousand in director fees, $49 thousand in marketing and $30 thousand in
consulting fees. Consulting fees and other expenses are down as a result of efficiencies from the 2006 conversion to a one-bank holding company. The occupancy expense increase was primarily from equipment enhancements and the new building for the
relocation of the Air Park branch in Hanover County.

For the six-month period ended June 30, 2007, noninterest expense was down $284 thousand or
2.20% to $12.65 million from $12.94 million in the first half of 2006. The primary expense decreases were $144 thousand in salaries and benefits, $145 thousand in consultant fees and $129 thousand in data processing. The largest category of increase
was occupancy expense, up $82 thousand, or 4.2%, from the relocation discussed in the previous paragraph.

Income Taxes

Income tax expense for the quarter ended June 30, 2007 was $905 thousand, compared to $700 thousand for the same period in 2006. The effective tax rate for the
quarter was 28.1%, a slight increase from 28.0% in the 2006 second quarter. On a year to date basis, tax expense has increased from $1.3 million to $1.8 million with the effective tax rate increasing from 28.0% to 29.3%. The increase in the
year-to-date effective tax rate is caused by a combination of growth that has increased our statutory tax rate from 34% on the first $10 million of taxable income to 35% on taxable income that exceeds $10 million and a decrease in the percentage of
tax-exempt income compared to total income.

ASSET QUALITY

The Companys allowance for loan losses is an estimate of the amount needed to provide for possible losses in the loan portfolio. In determining adequacy of the allowance, management considers the Companys historical loss
experience, the size and composition of the loan portfolio, specific impaired loans, the overall level of nonperforming loans, the value and adequacy of collateral and guarantors, experience and depth of lending staff, effects of credit
concentrations and economic conditions. The allowance is increased by a provision for loan losses, which is charged to expense and reduced by charge offs, net of recoveries. Because the risk of loan loss includes general economic trends as well as
conditions affecting individual borrowers, the allowance for loan losses can only be an estimate. (See the Allowance for Loan Losses discussion under Critical Accounting Policies earlier in this section.)

Total nonperforming assets, which consist of nonaccrual loans, loans past due 90 days and still accruing interest and foreclosed properties, were $2.2 million at
June 30, 2007, $2.9 million at December 31, 2006 and $1.8 million at June 30, 2006. Nonperforming assets are composed largely (89.6%) of 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 covered by the allowance for loan losses.



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Total loan charge-offs, less recoveries, amounted to $58 thousand for the second quarter of 2007 compared to $39 thousand
for the same quarter in 2006, while the annualized ratio of net charge-offs to total average loans, net of unearned income, was 0.03% for the second quarter of both 2007 and 2006. Year-to-date net charge-offs of $149 thousand, or 0.05% compared to
$126 thousand or, 0.04%, in the first six months of 2006. Full year 2006 net charge-offs were $275 thousand, or 0.04%, of average loans. The ratio of nonperforming loans to total loans at June 30, 2007 was 0.32%, down from 0.45% at
December 31, 2006 and up from 0.30% at June 30, 2006. These continued strong numbers reflect the emphasis that management places on credit quality management.

The allowance for loan losses of $7.21 million at June 30, 2007 increased $413 thousand when compared to $6.79 million at June 30, 2006 and was up moderately from $7.05 million at December 31, 2006.
This reasonably flat balance in the allowance reflects strong asset quality over the prior year and first half of 2007 as slight increases to the provision reflected the inherent strength of new loans as well as a decline in impaired loans and their
associated specific reserves from the June 30, 2006 level. Impaired loans of $4.03 million at June 30, 2007 were up slightly from $3.65 million at December 31, 2006. The ratio of allowance for loan losses to total loans was 1.06% at
June 30, 2007, 1.08% at 2006 year-end and 1.11% at June 30, 2006. The allowance for loan losses at June 30, 2007 included $713 thousand of specific impaired loan reserves.

At June 30, 2007, the Company reported $4.0 million in impaired loans, an increase of $361 thousand from $3.7 million at December 31, 2006 and a decrease of $9.1 million from $13.1 million at June 30,
2006. The average balance of impaired loans for the three months ended June 30, 2007 was $4.0 million.

The following table summarizes the
Companys nonperforming assets at the dates indicated.



|                                                          |  |             |        |   |                 |   |        |             |  |   |         |  
|--------------------------------------------------------- |  | ----------- | ------ | - | --------------- | - | ------ | ----------- |  | - | ------- | -
|Nonperforming Assets (Dollars in
thousands)               |  | June 302007 |        |   | December 312006 |   |        | June 302006 | 
|Nonaccrual loans                                          |  | $           | 1,019  |   |                 | $ | 1,400  |             |  | $ | 412     |  
|Restructured loans                                        |  |             |       |   |                 |   |       |             |  |   |        |  
|Loans past due 90 days and accruing interest              |  |             | 1,149  |   |                 |   | 1,504  |             |  |   | 1,395   |  
|                                                          |  |             |        |   |                 |   |        |             |  |   |         |  
|Total nonperforming loans                                 |  | $           | 2,168  |   |                 | $ | 2,904  |             |  | $ | 1,807   |  
|Other real estate owned                                   |  |             |       |   |                 |   |       |             |  |   |        |  
|                                                          |  |             |        |   |                 |   |        |             |  |   |         |  
|Total nonperforming assets                                |  | $           | 2,168  |   |                 | $ | 2,904  |             |  | $ | 1,807   |  
|Nonperforming assets to total loans and other real estate |  |             | 0.32   | % |                 |   | 0.45   | %           |  |   | 0.30    | %
|Allowance for loan losses to nonaccrual loans             |  |             | 706.90 | % |                 |   | 503.52 | %           |  |   | 1647.26 | %
|Net charge-offs to average loans for the year             |  |             | 0.05   | % |                 |   | 0.04   | %           |  |   | 0.04    | %
|Allowance for loan losses to period end loans             |  |             | 1.06   | % |                 |   | 1.08   | %           |  |   | 1.11    | %

LIQUIDITY

Liquidity represents our ability to meet present and future deposit withdrawals, to fund loans, to maintain reserve requirements and to operate the organization. To meet our liquidity needs, we maintain cash reserves and have an adequate
flow of funds from maturing loans, securities and short-term investments. In addition, our subsidiary bank maintains borrowing arrangements with major regional banks and with the Federal Home Loan Bank (FHLB). We consider our sources of
liquidity to be sufficient to meet our estimated liquidity needs.

During the second quarter of 2007, we executed a new FHLB borrowing of $25 million to
pre-fund $22 million of borrowings that we anticipated would be called in June and August. In June, $15 million was called. These new borrowings were laddered to have future calls in May 2008, 2009 and 2010. The average rate on these new borrowings
was 4.28%. We have made it a practice to fund growth at times with FHLB borrowings if the rates were below our interest bearing deposit costs. These borrowings have some potential long-term interest risk if rates fall significantly, but overall give
us an acceptable spread and funding rate. We have relied on FHLB borrowings to support our growth at times in the past and will continue to evaluate funding opportunities as necessary to support future growth. These were the only changes to our
contractual obligations that would impact liquidity since the 2006 Form 10-K disclosure. At June 30, 2007, we had immediate available credit with the FHLB of $73.1 million and with nonaffiliated banks of $13 million. See Note 5 for further FHLB
information.



18



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##### Table of Contents

There have been no material changes in off-balance sheet arrangements since the 2006 Form 10-K disclosure.

Management believes that we maintain overall liquidity sufficient to satisfy our depositors requirements and meet our customers credit needs.

CAPITAL RESOURCES

Our risk-based capital position at June 30,
2007 was $98.4 million, or 14.60% of risk-weighted assets, for Tier 1 capital and $105.6 million, or 15.67%, for total risk based capital. Our Tier 1 leverage ratio at June 30, 2007 was 11.37%. Our year end 2006 ratios were 15.04%, 16.15% and
11.57%, respectively. Enhancing our capital ratios to support future growth was the primary reason for the December 2006 stock offering. At June 30, 2006, these ratios were a much more modest 11.57%, 12.72% and 8.87%, respectively.

Tier 1 capital consists primarily of common shareholders equity, while total risk based capital adds a portion of 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 and bank holding companies, including us, are required to
have a Tier 1 capital of at least 4% and a total capital ratio of at least 8%.

INFLATION

In financial institutions, unlike most other industries, virtually all of the assets and liabilities are monetary in nature. As a result, interest rates have a more
significant impact on a banks performance than the effects of general levels of inflation. While interest rates are significantly impacted by inflation, neither the timing nor the magnitude of the changes are directly related to price level
movements. The impact of inflation on interest rates, loan demand, and deposits is reflected in the Consolidated Financial Statements.

FORWARD-LOOKING
STATEMENTS

Certain information contained in this discussion may include forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We caution you to be aware of the speculative nature of forward-looking statements. These statements are not guarantees
of performance or results. Statements that are not historical in nature, including statements that include the words may, anticipate, estimate, could, should, would,
will, plan, predict, project, potential, expect, believe, intend, continue, assume and similar expressions, are intended to
identify forward-looking statements. Although these statements reflect our good faith belief based on current expectations, estimates and projections about (among other things) the industry and the markets in which we operate, they are not
guarantees of future performance. Whether actual results will conform to our expectations and predictions is subject to a number of known and unknown risks and uncertainties, including the risks and uncertainties discussed in this Form 10-Q,
including the following:



| | q |  | changes in the interest rates affecting our deposits and our loans;
| | - |  | -------------------------------------------------------------------



| | q |  | the loss of any of our key employees;
| | - |  | -------------------------------------



| | q |  | changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries, decline in real estate values in
our markets, or in the repayment ability of individual borrowers or issuers;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | q |  | the strength of the economy in our target market area, as well as general economic, market, or business conditions;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| | q |  | changes in our competitive position, competitive actions by other financial institutions and the competitive nature of the financial services industry and our
ability to compete effectively against other financial institutions in our banking markets;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | q |  | an insufficient allowance for loan losses as a result of inaccurate assumptions;
| | - |  | --------------------------------------------------------------------------------



| | q |  | our ability to manage growth;
| | - |  | -----------------------------



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##### Table of Contents

| | q |  | our potential growth, including our entrance or expansion into new markets, the opportunities that may be presented to and pursued by us and the need for sufficient
capital to support that growth;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | q |  | our ability to assess and manage our asset quality;
| | - |  | ---------------------------------------------------



| | q |  | changes in government monetary policy, interest rates, deposit flow, the cost of funds, and demand for loan products and financial services;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| | q |  | our ability to maintain internal control over financial reporting;
| | - |  | ------------------------------------------------------------------



| | q |  | our ability to raise capital as needed by our business;
| | - |  | -------------------------------------------------------



| | q |  | our reliance on secondary sources, such as Federal Home Loan Bank advances, sales of securities and loans, federal funds lines of credit from correspondent banks
and out-of-market time deposits, to meet our liquidity needs;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | q |  | changes in laws, regulations and the policies of federal or state regulators and agencies; and
| | - |  | ----------------------------------------------------------------------------------------------



| | q |  | other circumstances, many of which are beyond our control.
| | - |  | ----------------------------------------------------------

All of the forward-looking statements made in this filing are qualified by these factors, and there can be no assurance that the actual results anticipated by us will be realized or, even if substantially realized, that they will have the
expected consequences to, or effects on, us or our business or operations. You should also refer to risks detailed under the Risk Factors section included in Form 10-K and otherwise included in our periodic and current reports filed with
the Securities and Exchange Commission for specific factors that could cause our actual results to be significantly different from those expressed or implied by our forward-looking statements.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

There
have been no material changes in market risk since 2006 year end as disclosed in the 2006 Form 10-K.



|Item 4. | Controls and Procedures
|------- | -----------------------

We maintain disclosure controls and
procedures that are designed to provide assurance that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time
periods required by the Securities and Exchange Commission. An evaluation of the effectiveness of the design and operations of our disclosure controls and procedures as of the end of the period covered by this report was carried out under the
supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based on such evaluation, such officers concluded that our disclosure controls and procedures were effective as of the end of
such period. In addition, while we have reorganized and centralized many functions over the last year, we have maintained the control points that had been previously established. There was no change in our internal control over financial reporting
that occurred during the quarter ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We believe that the merger of our subsidiary banks has had a
positive impact on internal controls by decreasing the number of banks, accounts and internal processes and procedures.

PART II OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

There are no material pending legal proceedings
to which the registrant or any of its subsidiaries is a party. The only litigation in which we and our subsidiaries are involved pertains to collection suits involving delinquent loan accounts in the normal course of business.



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes in risk factors
from those disclosed in the 2006 Form 10-K.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds(not applicable)
|------- | ---------------------------------------------------------------------------



|Item 3. | Defaults Upon Senior Securities(not applicable)
|------- | -----------------------------------------------



20



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##### Table of Contents

|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

The Company
held its annual meeting of shareholders on April 19, 2007. At this meeting, the shareholders approved the following proposals by the margins indicated:



|1. | To elect 10 directors to serve for terms of one year each, expiring at the 2008 annual meeting of shareholders:
|-- | ---------------------------------------------------------------------------------------------------------------



|                         |  |                  |  |                   
|------------------------ |  | ---------------- |  | ------------------
|                         |  | Number of Shares
|                         |  | For              |  | Withhold Authority
|W. Rand Cook             |  | 4,792,288        |  | 172,632           
|F. L. Garrett, III       |  | 4,793,596        |  | 171,324           
|Ira C. Harris            |  | 4,751,482        |  | 213,438           
|F. Warren Haynie, Jr.    |  | 4,754,412        |  | 210,508           
|William L. Lewis         |  | 4,251,541        |  | 713,379           
|Charles R. Revere        |  | 4,709,406        |  | 255,514           
|Joe A. Shearin           |  | 4,793,698        |  | 171,222           
|Howard R. Straughan, Jr. |  | 4,751,920        |  | 213,000           
|Leslie E. Taylor         |  | 4,744,912        |  | 220,008           
|J. T. Thompson, III      |  | 4,729,316        |  | 235,604           



|2. | To approve the Eastern Virginia Bankshares, Inc. 2007 Equity Compensation Plan:
|-- | -------------------------------------------------------------------------------



|          |  |         |  |           |  |                 
|--------- |  | ------- |  | --------- |  | ----------------
|For       |  | Against |  | Abstained |  | Broker Non-votes
|3,463,520 |  | 450,837 |  | 88,504    |  | 962,059         



|Item 5. | Other Information(not applicable)
|------- | ---------------------------------



|Item 6. | Exhibits
|------- | --------



|             |  |   |  |                                                                
|------------ |  | - |  | ---------------------------------------------------------------
|Exhibit 10.1 |  |  |  | Eastern Virginia Bankshares, Inc. 2007 Equity Compensation Plan
|             |  |  
|Exhibit 31.1 |  |  |  | Rule 13a-14(a) Certification of Chief Executive Officer        
|             |  |  
|Exhibit 31.2 |  |  |  | Rule 13a-14(a) Certification of Chief Financial Officer        
|             |  |  
|Exhibit 32.1 |  |  |  | Section 906 Certification of Chief Executive Officer           
|             |  |  
|Exhibit 32.2 |  |  |  | Section 906 Certification of Chief Financial Officer           



21



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##### Table of Contents

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/ Joe A. Shearin                    |  | 
|Joe A. Shearin                        |  | 
|President and Chief Executive Officer |  | 
|                                      | 
|/s/ Ronald L. Blevins                 |  | 
|Ronald L. Blevins                     |  | 
|Chief Financial Officer               |  | 

Date: August 2, 2007



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##### Table of Contents

Exhibit Index



|             |  |   |  |                                                                
|------------ |  | - |  | ---------------------------------------------------------------
|Exhibit 10.1 |  |  |  | Eastern Virginia Bankshares, Inc. 2007 Equity Compensation Plan
|             |  |  
|Exhibit 31.1 |  |  |  | Rule 13a-14(a) Certification of Chief Executive Officer        
|             |  |  
|Exhibit 31.2 |  |  |  | Rule 13a-14(a) Certification of Chief Financial Officer        
|             |  |  
|Exhibit 32.1 |  |  |  | Section 906 Certification of Chief Executive Officer           
|             |  |  
|Exhibit 32.2 |  |  |  | Section 906 Certification of Chief Financial Officer           



23