Village Bank enters written agreement

A fifth local bank is now under written agreement with its federal regulator.

Midlothian-based Village Bank said last week that it entered into a consent order with the FDIC aimed at requiring the bank to take steps to improve its finances.

Village has struggled over the past couple of years to deal with tens of millions of dollars worth of bad loans and foreclosed properties. It has been in the red and seen its capital diminished after taking losses on the bad loans and setting aside precious cash reserves to deal with other uncertain borrowers.

Village is far from alone. Four local banks are under written agreement with the Federal Reserve. The agreements are also enforced by the Virginia Bureau of Financial Institutions, the state’s bank regulator, which is part of the State Corporation Commission.

The consent order with the FDIC lays out steps Village must take to get on more stable financial footing.

The agreement includes a plan to shore up its capital reserves by setting strict thresholds. It must submit a plan that shows how it will reach and maintain those capital levels and a contingency plan.

Village can’t pay any dividend to shareholders while under the agreement, which also sets limits on the bank’s ability to grow its assets.

Village made big dollar loans on big local land developments that fueled the growth of Chesterfield County and other areas around Richmond. Its mortgage division also grew rapidly during the boom.

The bank has been caught up in the high-profile bankruptcies of such local developers as Hank Wilton and DuVal Development. It also is still owed money from the Tetra Companies, a defunct Virginia Beach developer that left several local banks hanging.
Village lost $4.3 million in 2011, according to reports filed with the FDIC.

It is trying to dig itself out of $56.8 million in past due and non-accrual loans as of the end of 2011. That level is up from $31 million from the end of 2010.

Village chief executive Tom Winfree could not be reached for comment by press time.

Winfree said in a prepared statement that the continued depressed economy has had a detrimental effect on the bank’s loan portfolio and borrowers’ ability to repay their loans.

“This in turn has heightened regulatory concern over our bank’s ability to recover all amounts owed to it and the effect on our bank’s capital,” Winfree said. “We believe that the terms of the consent order are prudent in this economic environment and we have and will devote substantial resources to complying with it.”

The main focus of the order is forcing the bank to more aggressively tackle its problem loans. That includes hiring employees with experience in dealing with such assets and then deploying a plan to manage and dispose of them.

The bank already has a section of its website devoted to promoting its portfolio of foreclosed real estate. http://www.villagebank.com/real_estate/realestate.html

Village must also continue to limit its exposure to land development loans, a thorn in the side of most struggling banks. Regulators are forcing many banks to stay away from those sorts of loans.

Written agreements and consent orders are not a death knell.
Village completes the handful of local banks under similar agreements, joining Essex Bank, Central Virginia Bank, EVB and Bank of Virginia. The former Consolidated Bank & Trust had also been under agreement prior to being merged into West Virginia-based Premier Bank.

The former Virginia Business Bank is the only one local bank that went into a written agreement since the recession that didn’t make it out alive. It was shut down in August by regulators and is the only local bank to fail during the recession.

Village will continue to take deposits and make new loans while under the consent order.

And customers’ deposits will continue to be federally insured by the FDIC.

“I want our customers to know that their money is safe,” Winfree said in his statement. “Our compliance with the consent order will not compromise our customer service. In the long run, we believe we will be a stronger bank.”

The bank as part of the agreement must hire a consultant to help it determine whether its current management has the skills necessary to work through its problems.

It also can’t accept any new brokered deposits, a method of cheaply buying into out-of-town deposits that many banks used to beef up their deposits levels during the real estate boom.

Village’s holding company, Village Bank & Trust Financial, has yet to file its fourth quarter and year-end financials.

The bank has 14 branches and slightly less than $600 million in assets.

 

A fifth local bank is now under written agreement with its federal regulator.

Midlothian-based Village Bank said last week that it entered into a consent order with the FDIC aimed at requiring the bank to take steps to improve its finances.

Village has struggled over the past couple of years to deal with tens of millions of dollars worth of bad loans and foreclosed properties. It has been in the red and seen its capital diminished after taking losses on the bad loans and setting aside precious cash reserves to deal with other uncertain borrowers.

Village is far from alone. Four local banks are under written agreement with the Federal Reserve. The agreements are also enforced by the Virginia Bureau of Financial Institutions, the state’s bank regulator, which is part of the State Corporation Commission.

The consent order with the FDIC lays out steps Village must take to get on more stable financial footing.

The agreement includes a plan to shore up its capital reserves by setting strict thresholds. It must submit a plan that shows how it will reach and maintain those capital levels and a contingency plan.

Village can’t pay any dividend to shareholders while under the agreement, which also sets limits on the bank’s ability to grow its assets.

Village made big dollar loans on big local land developments that fueled the growth of Chesterfield County and other areas around Richmond. Its mortgage division also grew rapidly during the boom.

The bank has been caught up in the high-profile bankruptcies of such local developers as Hank Wilton and DuVal Development. It also is still owed money from the Tetra Companies, a defunct Virginia Beach developer that left several local banks hanging.
Village lost $4.3 million in 2011, according to reports filed with the FDIC.

It is trying to dig itself out of $56.8 million in past due and non-accrual loans as of the end of 2011. That level is up from $31 million from the end of 2010.

Village chief executive Tom Winfree could not be reached for comment by press time.

Winfree said in a prepared statement that the continued depressed economy has had a detrimental effect on the bank’s loan portfolio and borrowers’ ability to repay their loans.

“This in turn has heightened regulatory concern over our bank’s ability to recover all amounts owed to it and the effect on our bank’s capital,” Winfree said. “We believe that the terms of the consent order are prudent in this economic environment and we have and will devote substantial resources to complying with it.”

The main focus of the order is forcing the bank to more aggressively tackle its problem loans. That includes hiring employees with experience in dealing with such assets and then deploying a plan to manage and dispose of them.

The bank already has a section of its website devoted to promoting its portfolio of foreclosed real estate. http://www.villagebank.com/real_estate/realestate.html

Village must also continue to limit its exposure to land development loans, a thorn in the side of most struggling banks. Regulators are forcing many banks to stay away from those sorts of loans.

Written agreements and consent orders are not a death knell.
Village completes the handful of local banks under similar agreements, joining Essex Bank, Central Virginia Bank, EVB and Bank of Virginia. The former Consolidated Bank & Trust had also been under agreement prior to being merged into West Virginia-based Premier Bank.

The former Virginia Business Bank is the only one local bank that went into a written agreement since the recession that didn’t make it out alive. It was shut down in August by regulators and is the only local bank to fail during the recession.

Village will continue to take deposits and make new loans while under the consent order.

And customers’ deposits will continue to be federally insured by the FDIC.

“I want our customers to know that their money is safe,” Winfree said in his statement. “Our compliance with the consent order will not compromise our customer service. In the long run, we believe we will be a stronger bank.”

The bank as part of the agreement must hire a consultant to help it determine whether its current management has the skills necessary to work through its problems.

It also can’t accept any new brokered deposits, a method of cheaply buying into out-of-town deposits that many banks used to beef up their deposits levels during the real estate boom.

Village’s holding company, Village Bank & Trust Financial, has yet to file its fourth quarter and year-end financials.

The bank has 14 branches and slightly less than $600 million in assets.

 

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Emmett Smith
Emmett Smith
10 years ago

Maybe the President should go.

tom
tom
10 years ago
Reply to  Emmett Smith

That is Winfree and I believe he has been given 90 days to find replacment

tom
tom
10 years ago

WINFREE and the board should have been gone years ago!!!!Hope shareholders go after them personally

probably
probably
10 years ago

I doubt Tom would be charged with finding his own replacement, that would be the responsibility of the Board of Directors. Not sure his departing is the answer.

t
t
10 years ago
Reply to  probably

It is a good start

t
t
10 years ago

Does Winfree know how to read? Did anyone see what his responsce that he did not think there would be shake up at senior level!!!!!!!!!!!!!!!!!Does he think it is the bank tellers fault that he is incompitant!!!!!!!!!!!!!!!!!

Roxanne
Roxanne
10 years ago

Good luck finding any banker “competent” enough to work through the current economic/regulatory environment to the satisfaction of the Feds. This is the worst economy since the depression so I’m sure we’d all like to know, T, who has the magic bullet to pull all the banks (and businesses who affect their bottom line) out of the hole we are all in. The Fed is on a witch hunt – instead of helping the banks recover as they try to work with their struggling borrowers, they are slapping them on the wrist – or rather beating them down, and insisting… Read more »

t
t
10 years ago
Reply to  Roxanne

I do KNOW. I am a major stockholder and former banker. Do u want the long list or short for replacment for winfree? Lets start with my dog. The only think winfree listens to is his own ego while he can do no wrong. Always blming someone or something other that his lack of leadership

Roxanne
Roxanne
10 years ago

I cannot speak to Winfree’s suitability (or lack of) personally, however, I DO know the contraints of the regulatory environment on the banking community, which in turn, is crippling new lending to worthy businesses and forcing current borrowers out passed on their industry. Unless you were in the board room and know of Winfree’s personal responsibility in whatever is going on at Village, making such a personal attack on him in a public forum is unconscionable. I also find it telling that as a former banker, you place your dog’s intelligence above your own, as being a possible resplacement.

t
t
10 years ago
Reply to  Roxanne

i was!!!!!!!!!!!!

t
t
10 years ago
Reply to  Roxanne

I was and still an in that board room

Roxanne
Roxanne
10 years ago

Wow T…if you are trying to say that you are on the Board then the president and CEO reports to you and the rest of the Board. In fact, other than the Fed and the shareholders, you and the other board members are the ONLY people that the president and CEO is accountable to. Interesting that you are now an armchair quarterback.

t
t
10 years ago
Reply to  Roxanne

The good news is that we will be rid of you within 90 days and maybe the the board will be able to do what is right for the shateholders and not your ego

t
t
10 years ago
Reply to  Roxanne

also the board and yourself are open to civil suitsby the shareholders. apparently the other board members dont have the balls to call u out.

Roxanne
Roxanne
10 years ago

As a banker, I am aware that all bank boards can be sued by the shareholders. As for getting rid of me, you certainly do not know me nor have any such power over me. I am simply a banker with knowledge and an opinion regarding what is really going on in the banking community today, which John Q Public is not privy to. I was enjoying this repartee; however, your responses have become boring and besides, I’ve said my piece. Sadly, though I am indeed female, I feel certain my “balls” are bigger than yours.

t
t
10 years ago
Reply to  Roxanne

Obviosly not a very good banker

C
C
10 years ago

Tom is a good banker. Obviously the critics live under a rock as most of our politicians. You didn’t predict the economy was going to hell. What makes you think he could have? What you need to do is use your energies to influence significant government changes to stop their over powering authority, and yes, their greed. Don’t blame Tom for doing his job. Blame the regulators and politicians.
Good luck Tom!

Ralph Kinsey
Ralph Kinsey
10 years ago

I was one of the first investors in Village Bank, and I’m not at all happy with the investment. From $10. a share to less than a dollar is pretty sad. I am now looking for a bank for my small business and I’m actually scared to bring it here. Sad.