Two years after a deal in Glen Allen, a Northern Virginia investor wants to buy a large chunk of another bank in the Richmond market.
Ken Lehman, a former SEC attorney who is known for buying into community banks, is looking to acquire a controlling interest in Midlothian-based Village Bank, according to a legal notice published this week.
Lehman intends to apply for permission with banking regulators to purchase 25 percent or more of the shares of Village Bank & Trust Financial Corp., the publicly traded holding company of Village Bank.
The move could provide Village with some needed capital as it looks to continue to carry out a turnaround plan aimed at fully shedding its lingering baggage from the downturn.
Details of Lehman’s full intentions are scant beyond the brief notice published by the Federal Reserve, which must approve his planned acquisition.
Village Bank CEO Bill Foster said the pending application is a matter between Lehman and the regulator.
“We support his application and look forward to working with him as he increases his investment in Village Bank and Trust,” Foster said in an email on Tuesday. “He brings resources and expertise that will help us execute our strategy and achieve our goals. That is really all we can say right now.”
Foster would not say how much capital the bank might raise if Lehman’s investment goes through.
A message left for Lehman was not returned by Tuesday evening. His application is subject to a comment period that will run through at least mid-November.
Lehman first leapt into the Richmond banking market in 2012 when he bought a large stake of First Capital Bancorp, the parent company of First Capital Bank in Glen Allen. His investment was part of a $17.8 million capital raise for First Capital at the time. Lehman owned 48 percent of First Capital’s stock, according to the company’s most recent proxy.
Village last raised capital in December when its executives and directors pitched in a combined $1.68 million as a vote of confidence from the inside. It also helped the bank stay in compliance with capital thresholds ordered by a regulatory agreement that the bank has been under for about two years.
The executives and directors bought 1.08 million shares of the bank’s common stock at $1.55 per share. Village’s stock is now trading at around $18.50 per share. Its share price took a leap in recent weeks after the company carried out a 1-for-16 reverse stock split in August aimed at getting its trading value out of the doldrums. Prior to the split, the stock had traded at around $1 per share.
Village lost $1.35 million through the first six months of 2014. The bank has $442 million in assets.
In December it announced a formal plan to cut expenses and get it firmly back in the black. That included shedding some real estate, more aggressively selling foreclosures off its books and focusing more on attracting business customers.
Bad loans have been one of Village’s main impediments in recent years. It had $25.8 million in nonperforming – made up soured loans and foreclosed real estate – on its books as of June 30. But that figure was an improvement from $31.2 million in June of 2013.