The wave of bank consolidation has come ashore in Richmond once again.
Midlothian-based Bank of Virginia and its parent company Cordia Bancorp announced on Friday a deal to be acquired by First Citizens Bank & Trust, one of the top 50 largest banks in the U.S.
The all-cash deal, which is expected to close by the fourth quarter, would give Cordia shareholders $5.15 per share of Cordia stock they own. That amounts to a value of approximately $35 million, based on Cordia’s 6.79 million shares outstanding. The per-share offer is a premium to the company’s current stock price, which closed Friday at $5.03, up 30 percent.
Bank of Virginia’s $348 million in assets and six branches will be added into Raleigh-based First Citizens’ $32 billion in assets and its swath of 550 branches nationwide. First Citizens would have eight branches in Richmond including its two current outposts in Short Pump and Midlothian.
Attracting First Citizens as a suitor marks a sudden end to the Cordia regime over Bank of Virginia, which began in 2010. The company, led by Jack Zoeller, brought an experienced group of bankers/investors from Northern Virginia bent on recapitalizing a then-troubled bank, cleaning up its balance sheet and bringing it back to profitability, and hit each of those marks. They also had hopes of growing through acquisition to take advantage of the statewide potential of the Bank of Virginia brand.
Zoeller and his group bought control of the bank in 2010 with a $10.3 million investment, put another $3 million into it in 2012 and raised an additional $15.4 million in 2014 from a combination of its executives, directors and about half a dozen investment firms.
Zoeller ultimately stepped away from Cordia and Bank of Virginia in March to spin off the company’s student lending startup, CordiaGrad, now known as Purefy.
Speaking of the First Citizens deal on Friday, Zoeller said: “I will say how proud I am of the team of people – some of whom stayed, many of whom came in new – and over the last five years turned from a problem bank into a great little community bank with no credit problems, a great management team and a great board.”
Ed Barham, who was lured out of retirement to replace Zoeller as president and CEO in March, would not comment beyond a prepared statement in a joint press release.
First Citizens spokeswoman Barbara Thompson said serious talks between the two sides started last month.
“We learned that Cordia was interested in finding a partner through an investment banker and opened a discussion,” she said.
Cordia enlisted investment banking firm Sandler O’Neill and law firm Kilpatrick, Townsend & Stockton for the deal. Ward and Smith P.A. represented First Citizens in the transaction.
First Citizens entered the Richmond market in 2001 with a loan production office. It added a branch a year later in the Pocono Green Shopping Center in North Chesterfield. Today it has two local branches at 11776 W. Broad St. and 13101 Midlothian Turnpike in Chesterfield County.
“Richmond is the capital city, a dynamic market,” Thompson said. “It’s where we excel as a company, especially with business and commercial lending.”
First Citizens has grown via acquisition over the years and has shown a steady appetite for deals recently, with big mergers in each of the last two years. It absorbed First Citizens Bank of South Carolina in 2015 and Mountain First Bank in 2014. It has also acquired the assets of nine failed banks since 2009.
First Citizens remains majority owned by the same family that founded it 118 years ago in Smithfield, North Carolina. Chairman and CEO Frank Holding Jr. is the third generation of his family to helm the bank. His sister is vice chairman, and the company’s president is also part of the family, Thompson said.
Its purchase of Bank of Virginia is the latest in a steady stream of bank M&A deals over the last few years both in Richmond and around the state. Locally based Xenith Bank is in the midst of a merger with Bank of Hampton Roads. Heritage Bank of Norfolk closed a deal with the larger Southern Bank earlier this year. And TowneBank and Monarch Bank, both of Hampton Roads, are nearing completion of a $220 million merger that would have some ripple effect in Richmond.
The Cordia and First Citizens deal marks the second time in less than a year that a North Carolina bank has struck a deal with a Richmond institution. Charlotte-based Park Sterling Bank closed its $87 million acquisition of First Capital Bank in Glen Allen on Jan. 1.
The continued consolidation is chipping away at the number of community banks in the state and leaves only a handful of banks headquartered in the core of the Richmond metro area: Union Bank and Xenith Bank downtown, Essex Bank in the West End and Village Bank in Midlothian.
There are also those headquartered on the outskirts that have a decent size branch presence in the denser part of the market, such as EVB in Tappahannock, C&F Bank in West Point, Virginia Commonwealth Bank in Petersburg, Bank of Lancaster and others.
First Citizens currently has 30 employees in Richmond. Bank of Virginia and Cordia have 55 employees. The companies said the Bank of Virginia brand will be eliminated in favor of First Citizens.
The acquisition has been approved by the boards of both companies and is still subject to approval from shareholders on both sides and state and federal regulators.