In 2015, seasoned bank investor Ken Lehman agreed to front $8 million as part of a $14 million capital raise to help prop up Midlothian-based Village Bank.
At the time, the bank was struggling with recession-era baggage from soured loans, foreclosed real estate and dwindling capital levels.
Lehman bought in at $13.87 per share, giving the bank the capital it needed to begin a course back to its current state of stability, profitability and a rising stock price.
Nearly a decade later, Lehman is set to reap the rewards of his gamble on Village.
He’s due an eight-figure windfall thanks to the deal announced this week in which Village will be acquired in an all-cash deal by Hampton Roads-based TowneBank for $80.25 per share.
Ken Lehman
Lehman owns 768,622 shares of Village stock, equal to 51.4% of the bank’s outstanding shares, according to his most recent filings with the SEC. When the Towne-Village tie-up closes as expected next year, Lehman’s shares will be exchanged for $61.68 million in cash.
Lehman could not be reached for comment.
TowneBank Executive Chairman Bob Aston said this week that while Lehman no longer has a board seat at Village and therefore couldn’t be directly involved in the negotiations between the two banks, he is supportive of the deal. Filings show Lehman struck a pact with the banks to vote his shares in favor of the deal and to not use his majority position to block the deal in any way.
Lehman, who is based in Florida, first entered the Richmond banking market in 2012 when he bought a large stake in the former Henrico-based First Capital Bank. He successfully exited that investment when First Capital was acquired in 2016 by Park Sterling Bank, which since has been gobbled up by South State Bank.
His other investments in Virginia banks over the years included Fredericksburg-based Virginia Partners Bank and Arlington-based Virginia Commerce Bank. His investments elsewhere including Delmar Bancorp, Tower Bancorp, Four Oaks Bank & Trust, Marine Bank & Trust, and Liberty Bell Bank.
The math of Lehman’s return on his investment in Village isn’t quite as simple as the difference between his initial $13.87 per share investment and the $80.25 price Towne is paying. That’s because he purchased thousands more Village shares at various market prices in the years since that initial 2015 investment.
Other Village insiders stand to gain from the TowneBank deal as well, though no one comes anywhere close to Lehman.
Village CEO Jay Hendricks, who will stay on with Towne in a senior leadership role, owns 27,500 Village shares. They’ll be worth a total of approximately $2.2 million based on the deal’s $80.25 per share price.
And Lehman has at least one more local bank bet still playing out.
Earlier this year he led Henrico-based Blue Ridge Bank’s $150 million capital raise. The $3 billion bank sorely needed the influx to help it begin to get out from under regulatory scrutiny and deal with problem assets caused by its previous rapid growth and an overreliance on deposits and loans with fintech companies.
Lehman bought in at Blue Ridge for an initial 25% stake at $2.50 per share, making him its largest shareholder. He has since increased his holdings to 29.99 million shares, equal to 36% of Blue Ridge’s common stock.
That stake is now worth approximately $84 million based on the Blue Ridge’s closing price of $2.80 per share on Wednesday.
Both are good banks with good people. I think it is a good marriage. Best Wishes!