The vote was made at the Powhatan-based bank holding company’s annual meeting on Thursday. The company has yet to file the official results of the shareholder vote, but interim chief operating officer Herb Marth confirmed in a phone interview yesterday that approval was granted.
“I don’t have exact numbers, but it was overwhelming support,” said Marth, who was assigned June 1 to serve as chief operating officer after CVB hired Strategic Risk Associates to help the company navigate its way out of its recent troubles.
The capital raise, details of which CVB revealed in a prospectus this month (read more here), was conditioned on shareholders voting to increase the number of shares CVB is authorized to sell from 6 million to 30 million.
Marth didn’t give many details of CVB’s plans, but he did say the company would have to get an underwriter lined up for the potential offering.
“There are a lot of good things happening,” Marth said.
The move makes CVB, the holding company of Central Virginia Bank, the second local bank in recent months to increase available shares to make room for a major transaction.
It joins Glen Allen-based First Capital Bank, which in recent weeks received the go-ahead from its shareholders to increase the number of shares it can offer. First Capital, unlike CVB, has not yet taken the next step to say exactly how it will utilize its newfound ability to sell more shares, but local bankers speculate it could be positioning itself for a future acquisition or merger.
Unlike the well-capitalized First Capital, CVB needs the money, both to shore up its balance sheet and to satisfy watchful regulators.
CVB’s announcement that it is looking to raise up to $15 million comes just weeks if not days before the struggling bank holding company expects to enter a turnaround plan to try and repair its financial condition, which has been battered by troubled loans and depleted capital reserves. The $471 million company has said it will enter the agreement with the Federal Reserve Bank of Richmond and the Virginia Bureau of Financial Institutions at the end of the second quarter.
Raising capital is typically a condition of such turnaround agreements.
CVB hasn’t raised capital since January 2009, when it received $11.3 million in capital from the U.S. Treasury through the Troubled Asset Relief Program.
Michael Schwartz covers banking for BizSense. Please send news tips to [email protected].