Local bank gets a $15M cushion

The Bank of Virginia branch at 10501 Patterson Avenue.

The Bank of Virginia branch at 10501 Patterson Avenue.

Continuing its hot streak, a Midlothian-based bank has struck a deal to pad its coffers in a big way.

Bank of Virginia and its parent company, Cordia Bancorp, last week closed on a $15.4 million capital raise funded by a combination of its executives, directors and about half a dozen investment firms.

The $235 million bank plans to use the capital to continue to fund new loans and as an extra cushion as it carries out an expansion plan.

Jack Zoeller, the bank’s CEO, said it has two new branches in the works in the southern half of the region. One will be at 200 Temple Ave. in Colonial Heights, next to a planned Kroger grocery store.

The other will be a reopening of a previous Bank of Virginia branch at 15000 Hull Street Road. The bank closed the location as a branch about two years ago as a cost-cutting measure. It has since been used as an operations center.

The expansion will give it six branches and more ability to raise deposits.

“If you’re going to add a lot of loans, you have to fund them,” Zoeller said. “So we want to increase our deposit base.”

Last week’s raise marks at least the third round of new capital that the once struggling bank has secured since Zoeller and its new ownership group took over in 2010.

Zoeller and the Cordia group bought control of Bank of Virginia four years ago with a turnaround and growth plan in mind. Bank of Virginia turned a $696,000 profit in 2013, marking its first profitable full calendar year since 2007.

It has raised about $30 million in new capital since 2010, about $5 million of which has come from Cordia’s top executives and directors. 

Those insiders all participated in this latest raise and that skin in the game was an important part of the sell.

The bank was able to attract several investment firms to put up money, including New York-based Tricadia Capital Management, which invested $6.7 million of the total pool.

“They’re voting with the pocketbooks,” Zoeller said of the insiders’ commitment. “That makes it a lot easier to have these institutions put their money in because they’re doing it in parallel with us.”

Its ability to attract so many suitors for capital is also a sign that Cordia’s comeback plan has legs. Raising capital hasn’t been easy for community banks in recent years.

“It still is hard to raise, but we’ve made a lot of progress,” Zoeller said. “We found a lot of interest.”

As part of the deal, Cordia issued 362 shares of preferred stock at a purchase of price of $42,500 per share.

Pending a shareholder vote, the preferred shares will convert into common stock at a price of $4.25 per share.

At least two of the firms that invested in this round get seats on the Cordia board. Tricadia senior adviser Michael Rosinus joins the board. David Zlatin, COO of Cleveland-based Ramat Securities has also been nominated as a director.

Investment banking firm Sandler O’Neill + Partners worked the deal for Cordia. Kilpatrick Townsend & Stockton served as legal counsel.

The Bank of Virginia branch at 10501 Patterson Avenue.

The Bank of Virginia branch at 10501 Patterson Avenue.

Continuing its hot streak, a Midlothian-based bank has struck a deal to pad its coffers in a big way.

Bank of Virginia and its parent company, Cordia Bancorp, last week closed on a $15.4 million capital raise funded by a combination of its executives, directors and about half a dozen investment firms.

The $235 million bank plans to use the capital to continue to fund new loans and as an extra cushion as it carries out an expansion plan.

Jack Zoeller, the bank’s CEO, said it has two new branches in the works in the southern half of the region. One will be at 200 Temple Ave. in Colonial Heights, next to a planned Kroger grocery store.

The other will be a reopening of a previous Bank of Virginia branch at 15000 Hull Street Road. The bank closed the location as a branch about two years ago as a cost-cutting measure. It has since been used as an operations center.

The expansion will give it six branches and more ability to raise deposits.

“If you’re going to add a lot of loans, you have to fund them,” Zoeller said. “So we want to increase our deposit base.”

Last week’s raise marks at least the third round of new capital that the once struggling bank has secured since Zoeller and its new ownership group took over in 2010.

Zoeller and the Cordia group bought control of Bank of Virginia four years ago with a turnaround and growth plan in mind. Bank of Virginia turned a $696,000 profit in 2013, marking its first profitable full calendar year since 2007.

It has raised about $30 million in new capital since 2010, about $5 million of which has come from Cordia’s top executives and directors. 

Those insiders all participated in this latest raise and that skin in the game was an important part of the sell.

The bank was able to attract several investment firms to put up money, including New York-based Tricadia Capital Management, which invested $6.7 million of the total pool.

“They’re voting with the pocketbooks,” Zoeller said of the insiders’ commitment. “That makes it a lot easier to have these institutions put their money in because they’re doing it in parallel with us.”

Its ability to attract so many suitors for capital is also a sign that Cordia’s comeback plan has legs. Raising capital hasn’t been easy for community banks in recent years.

“It still is hard to raise, but we’ve made a lot of progress,” Zoeller said. “We found a lot of interest.”

As part of the deal, Cordia issued 362 shares of preferred stock at a purchase of price of $42,500 per share.

Pending a shareholder vote, the preferred shares will convert into common stock at a price of $4.25 per share.

At least two of the firms that invested in this round get seats on the Cordia board. Tricadia senior adviser Michael Rosinus joins the board. David Zlatin, COO of Cleveland-based Ramat Securities has also been nominated as a director.

Investment banking firm Sandler O’Neill + Partners worked the deal for Cordia. Kilpatrick Townsend & Stockton served as legal counsel.

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