It’s not your average bank

A tiny bank in Christiansburg is looking to open a branch in Richmond.

According to a notice this week from the State Corporation Commission, Community Capital Bank of Virginia has sought permission for a branch on West Franklin Street.

But Community Capital Bank of Virginia is not your typical bank, and the branch it wants to open isn’t of the usual sort.

CCBV is a $50 million, for-profit bank. But the bank’s parent company is Virginia Community Capital, a nonprofit community development financial institution founded in 2005.

The profits the bank makes are funneled back to the nonprofit parent. It’s a rare model in the U.S. banking system.

“It’s a relatively unique model, and we haven’t found one exactly like it elsewhere,” said Jane Henderson, president and CEO of VCC, the Christiansburg-based parent company. VCC is one of about six nonprofit bank holding companies in the nation, Henderson said.

Besides the rarity of its corporate structure, the bank itself, which has been around since 2008, is somewhat of an oddity.

“The bank is not what you would call a traditional community bank,” Henderson said. “We’re not a retail bank. You will not see ATMs. There’s no online banking and no drive-throughs. You could buy a CD from us, but you would have to transact that business through the mail. In our world, that’s a branch.”

CCBV’s lone branch in Christiansburg doesn’t even have any cash in it, nor will the branch here in Richmond once it opens.

The bank’s lending and deposit model is different, too. Because of its status as a community development financial institution, a designation that is approved by the U.S. Treasury, the loans VCC and the bank fund must go toward lending and investment in low- to moderate-income individuals in underserved markets.

There are more than 900 certified community development financial institutions in the United States, according to the Treasury Department, including banks, credit unions and other types of organizations. There are more than a dozen in Virginia, including five based in Richmond.

CCBV and its parent do the same type of lending. The difference: The bank does so in a regulated environment so it can offer federally insured deposit products to raise more funds for lending.

Its customers include local nonprofits such as the Richmond Better Housing Coalition and the Southside Community Development Corp. It also loans money to other affordable housing developers working in either low income neighborhoods or those targeted for revitalization.

The bank has made loans across the state and has some current projects going up in Petersburg.

It also does small-business lending and funds community medical facilities in designated underserved areas.

But its customers also include some of the country’s largest banks, such as Bank of America, BB&T, Capital One and Wells Fargo.

Those banks do business with VCC and CCBV through grants and deposits in part to help the community. They also do it to fulfill their Community Reinvestment Act requirements as mandated by federal regulators. CRA is in place to make sure banks invest in low-income areas.

Henderson said bigger banks also partner with VCC and CCBV on participation loans to share the risk.

CCBV, like any other bank, is FDIC insured, has to go through regulatory reviews and is subject to same capital ratio and liquidity standards.

According to its year-end filing with the FDIC, CCBV brought in $391,000 in profit in 2010. It has $50 million in assets, including $39.7 million in deposits and a $27 million loan portfolio.

Even rarer in the banking world: CCBV had no delinquent loans on its books at year’s end.

“We’ve been very fortunate,” Henderson said. “When the crisis hit, we were just getting open, so we didn’t have a portfolio of loans to go bad.

“The portfolio we have is performing very well, and we still have money to lend.”

The holding company has $70 million in assets and a $43 million loan portfolio. VCC has about $20 million in equity capital, $9 million of which is kept in the bank, Henderson said.

There are 20 employees between the bank and holding company in Richmond and Christiansburg.

The need for licensed branch in Richmond is in part due to an uptick in business and loan requests.

“In this downturn, people still need affordable housing,” Henderson said. “They may need it more now. As the traditional banks have struggled with credit issues, some have moved out of these markets until they can get their house back in order.”

VCC already has an office on Franklin Street, but the bank is unable to take deposits or process loan payments there.

Henderson expects to have a licensed branch in Richmond by the end of the first quarter or the beginning or the second quarter, pending regulatory approval.

And for the other banks in town, Henderson said there’s no reason to be worried about fresh competition.

“The community banks and the traditional banks of our world are our partners,” Henderson said. “We don’t believe we are their competitor.”

Michael Schwartz is a BizSense reporter and covers the bank industry. Please send news tips to [email protected]

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Michael Schewel

One other interesting thing to note about CCBV is that it was the brain child of then Governor Mark Warner who was looking for a way to make more debt capital available to economically struggling communities in Virginia. The Warner Administration then initiated the efforts and funding that led to the creation of VCC in 2005 and the eventual creation of CCBV a couple of years later.