On the market since 2011, the former headquarters building of a local bank is finally seeing some serious action.
Village Bank is working a deal to sell its Watkins Centre building, a 70,000-square-foot office that it built in 2008 as a sort of trophy at the height of the bank’s boom times and has since caused a hiccup as it’s rebounded after post-recession struggles.
The $426 million bank recently disclosed in an SEC filing that it is currently in negotiations with a “serious buyer” for the property. Village CEO Bill Foster confirmed the negotiations and said the potential buyers are local. It is aiming for the deal to close in the second quarter.
“It has a number of people seriously interested and we’ve narrowed it down,” Foster said.
Village vacated the four-story building, which sits on 6 acres at 15521 Midlothian Turnpike just off 288, in 2014 in favor of more modest digs about five miles up the road. Its current tenants include Pietech, James River Wealth Advisors and John Clair’s Evolution Advisors.
The Midlothian-based bank initially listed the property in 2011 at around $16 million, then lowered at one point last year to $14.25 million. Foster said it has since dropped below that level, but would not say what the most recent price was.
CBRE | Richmond has the listing on the property.
The building was put on the market after a kind of rules snafu, in which Village inadvertently failed to inform the Federal Reserve that it transferred ownership of the building from the holding company to the bank in 2010.
“It was a big enough transfer that it was required to get prior (regulatory) approval,” Foster said. “So that created a violation and to fix it, (a sale was) the best thing to do for us and shareholders.”
Under Foster’s regime, which began in 2014, the bank has swung back into the black in a big way in 2015. It turned a profit of $6.59 million for the year, according to recent filings, following years of consecutive losses dating back to 2011.
Foster put in place a focus on attracting small to medium-size businesses as clients, while reducing the bank’s concentration on the riskier side of big real estate lending.
“We’ve worked for a long time to update our products, and we’ve beefed up and built out our commercial banking team.”
While the sale of the Watkins Centre property would free up the bank to continue to focus on turning a profit, it made another move in recent weeks that further shows it is back on more stable ground.
In late February it began making interest payments on trust preferred securities, a practice it had put on hold during its lean times.
The securities were issued in years past by Village’s parent company, as a way to raise capital for the bank.
“During those high-growth years it was a way of raising very affordable capital,” Foster said. “The interest you pay is tax-deductible and it’s a much-cheaper alternative to common stock.”
The company has the option to defer the payments, which it had in recent years, and Foster said its ability to once again make those dividend payments is another bright spot for the bank. Its first payment was $1.33 million.
“It’s a signal that we’re back and putting all that behind us.”
The bank is still unable to pay regular dividends on its common stock, as per its written agreement that’s overseen by state and federal regulators. The sale of the Watkins building would be another check on the list to potentially help it get out from under the agreement, which was put in place in 2012 to force the bank into improving its financial condition.