Jack Zoeller is going back full-on into startup mode.
The founder of Cordia Bancorp, parent of Midlothian-based Bank of Virginia, has relinquished his role as CEO of the company in conjunction with his purchase and independent spin-off of CordiaGrad, a student loan refinance company that launched within the bank last year.
The change was effective March 1, and Bank of Virginia CEO Ed Barham is now CEO of Cordia Bancorp, allowing Zoeller a full exit. Barham, a veteran Virginia banker, joined the company last year as it was considering its next steps.
The spin-off and Zoeller’s departure occurred for several reasons, Zoeller said, one of which is that he has a penchant for startups.
Zoeller, who turned 67 last week, has started seven companies in his more than three decades in finance. Most have involved loans, insurance and risk management.
“Someone labeled me many years ago as a startup and turnaround guy,” said Zoeller. “I’ve got the competitive and entrepreneurial juices in me for sure.”
He co-founded Cordia Bancorp out of the Washington, D.C., area in 2009 with the goal of taking over and turning around the then-struggling Bank of Virginia.
Six years later, the $340 million bank was back on steady ground and found itself with a student lending arm that was growing rapidly and had huge upside, both of which brought it to the point where it was no longer prudent to keep CordiaGrad in-house at a small community.
Zoeller said CordiaGrad is currently originating about $5 million a month of student loan refinances.
“And that’s while trying to hold it down,” within the confines of the bank, he said.
If CordiaGrad were unleashed, it could potentially do hundreds of millions of dollars in student loan refinances this year, he said.
“It has great opportunity, it’s fun and its growth trajectory would take it past what a Richmond-based community bank could reasonably expect to do,” he said. “I hoped that it would work within the bank and tried to make it work within the bank. But there are too many ways it didn’t match up with what a community bank does, what community bank investors want and what community bank regulators want. If it hadn’t been so successful, it would have fit just fine.”
As part of the agreement between CordiaGrad and the bank, Cordia Bancorp said in an SEC filing Wednesday that it transferred certain marketing agreements, Internet domains and intellectual property to a newly formed subsidiary that was then sold to Zoeller for “nominal consideration.”
Bank of Virginia will temporarily continue to originate student loans on behalf of CordiaGrad and will provide back-office services to the startup for a monthly fee through June 30.
Zoeller has brought five Bank of Virginia employees with him and is now running CordiaGrad full time out of its office in Washington, D.C. It will continue to have an outpost in Richmond for the time being, Zoeller said.
Zoeller said CordiaGrad will continue to try to win business from borrowers with good credit and high income who can take advantage of interest rates and payoff terms that may be more reasonable than their current loans.
That niche is part of a $1.3 trillion market of outstanding student loan debt in the U.S., Zoeller said.
“If we succeed, we’ll get our share of it,” he said.
Zoeller says he’ll miss being part of the bank and on its board. He also said he’s proud of the turnaround effort he led at the Midlothian institution.
“There may not be another example in the country of a private group of individuals, with their own money, taking no TARP, and fixing a bank on our own – totally,” he said. “That is a supreme example of a turnaround.”