The $217 million Midlothian-based bank and its potential Washington, D.C.-based suitor, Cordia Bancorp, now must wait for regulatory approval for the deal that would inject Bank of Virginia with at least $6 million and up to $15 million in capital.
According to Bank of Virginia spokesperson Michelle Hastings, the deal must receive approval from the Federal Reserve, though there is no official timeline on when approval can be expected.
The bank in its initial announcement of the deal said regulatory approval was expected during the third quarter. Hastings couldn’t give any details on dates except to say they hope approval will come before the end of the year.
Regulators have been slow to approve recent deals among banks. One such delay derailed a deal last year between the parents of First Capital Bank and EVB. (You can read more about how the regulatory delays ended that deal here. )
Bank of Virginia is one of three local banks, along with Central Virginia Bank and Virginia Business Bank, under an agreement with regulators to turn around precarious financial situations. Each is now looking to raise capital.
If the deal between Cordia and Bank of Virginia is approved, the bank will be giving up leadership and major ownership in exchange for capital. Cordia will buy up to 5 million shares of the bank’s stock for $3 per share and could own as much as 52 percent of the bank. Cordia’s CEO Jack Zoeller, would take over as chairman and CEO of the bank and Cordia executives and investors would also get six seats on the bank’s board.
“Management and the board look forward to solidifying the partnership with Cordia Bancorp. We feel this partnership will bring not only additional financial resources, but will also bring considerable banking experience to the team,” said Bank of Virginia’s President and CEO Frank Bell in a statement.
The deal came about after the bank lost $5.5 million through 2008 and 2009. It most recently reported a loss of $358,000 in the first quarter of 2010.
The losses have been fueled primarily by rising levels of non-performing loans. According to reports it filed with the FDIC at the end of the first quarter of 2010, the bank had $10.1 million in loans classified as past due or in non-accrual status. Those loans were primarily from commercial and land development lending.
The bank’s deposit base shrunk by almost $4 million in the first quarter to $189 million. Its loan portfolio also shrunk by $3 million in the first quarter to $168 million.
Michael Schwartz covers banking for BizSense. Please send news tips to [email protected]