Bank takes grocery page from competitor’s playbook

First Capital Bank’s downtown branch at 901 E. Cary. (Photo by Michael Schwartz)

For its first new branch in six years, a Glen Allen-based bank is doing some shopping on the Southside.

First Capital Bank wants to open an in-store branch at the Kroger grocery store at 13201 Rittenhouse Drive in Midlothian. The store is the anchor for the Village at Swift Creek shopping center and would give First Capital its first presence in that section of Chesterfield County.

“Where that store is is a huge a hole in our franchise,” said John Presley, CEO of First Capital Bancorp, the bank’s parent company.

Presley said First Capital is seeking approval from regulators for the expansion and hopes to have it open by June. The new location would be First Capital’s seventh branch and its third on the Southside.

Presley knows his way around a grocery store. As CEO of the former First Market Bank in 1997, he led the Richmond-bank’s charge into seven Ukrop’s stores.

“We were big into in-store banking,” he said. “We think it could be a great additive for our franchise.”

First Capital Bancorp CEO John Presley

This latest opportunity arose as Kroger is doing more than $1 million in remodeling on the store. The bank would get about 400 square feet in the store, Presley said.

First Capital also liked what it saw in the store’s foot traffic – between 17,000 to 20,000 people coming through its doors each week, Presley said.

In a time when banks are rethinking their standalone branch strategies because of the rise of online and mobile banking, the smaller in-store branches can serve as that trend continues to evolve.

“People are banking differently these days,” Presley said. “People still are buying food and still going into grocery stores. We believe that being in a place where you’re going to have people anyway will help us get in front of people we might not see otherwise.”

First Capital will foot the bill to construct the space and will lease it from Kroger on an initial five-year term. Presley would not say how much the bank plans to spend, but said in-store branches generally can be about a tenth of the cost of a traditional bank building.

“It’s very cost effective for us to go in,” he said.

The bank is still in the design phase for the new outpost. Presley said it hasn’t chosen a contractor.

The $547 million bank turned a profit of $3.52 million for the year 2013, a big swing back into the black after a $6.6 million loss the previous year.

Its loan portfolio grew to $423 million, up from $368 million. Its deposit base shrank by $4 million to $455 million.

First Capital’s level of nonperforming assets, consisting of delinquent loans and foreclosed real estate, fell about $6 million during the year from $13.12 million to $7.12 million.

Should it ever decide to shop around outside the Richmond market, the deal with Kroger could also help First Capital get a foot in the door with a large grocer that has a statewide presence.

“It’s not something that’s planned, but it would sure give us that opportunity to go statewide,” Presley said.