Central Virginia Bankshares has officially entered into a turnaround agreement with regulators, becoming the third local bank to do so since the recession took hold.
CVB, the Powhatan-based holding company of Central Virginia Bank, has said throughout the year that it expected to enter into an agreement with federal and state regulators whereby it must, among other things, comply with provisions to strengthen its lending practices, improve its asset quality and increase its capital reserves.
When the agreement went into effect June 30, CVB joined Bank of Virginia, Virginia Business Bank and several others across the state in having regulators step in.
CVB is still making loans, it said in a news release yesterday. As is typical with these agreements, CVB will be prevented from declaring dividends to share holders unless given permission by regulators. (You can read the full agreement here.)
The bank is trying to raise up to $15 million in capital, also a provision of the agreement. You can read more about that in a BizSense story here.
CVB hasn’t raised capital since it received $11.3 million from the U.S. Treasury in January 2009 through the Troubled Asset Relief Program.
The $470 million bank is being led mainly by veteran local banker Herb Marth, who was brought on as chief operating officer after CVB hired Richmond-based Strategic Risk Associates to take a closer look at its operations. Longtime CVB leader Larry Lyons said he would retire by year’s end.
In addition to Marth, the bank said in its release that as part of the agreement it has hired a team of workout specialists to handle troubled loans and foreclosed real estate.
Michael Schwartz covers banking for BizSense. Look for a followup story of possibly a Q&A in coming weeks.