A local bank can finally get the taste of the recession out of its mouth.
Midlothian-based Village Bank has been released from its so-called written agreement, a stringent pact it entered into with the Federal Reserve in 2012 in an effort to find a more stable footing in the wake of the downturn.
The agreement, which went into effect June 26, 2012, was terminated last week by the Federal Reserve on July 28. It was the last piece of extra regulatory oversight still lingering over the $422 million bank, which had already been released from an involuntary, more stringent consent order overseen by the FDIC in December and a voluntary memorandum of understanding with the FDIC in May.
Village was the last local bank still under written agreement, a tool used by regulators after the recession to prevent ailing banks from deteriorating further. The agreements required banks to adhere to strict capital ratios, to forcefully deals with problem loans and foreclosed real estate and to refrain from certain types of risky lending. Those banks were also prevented from paying dividends to their shareholders.
Village, a $422 million institution, was one of a handful of local banks hit with such agreements. It was late to the game, earning its agreement as much as three years after some of its local peers.
With most local banks securely now back in the black, Village’s lingering agreement had become a sort relic of the doldrums of the recession. All its Richmond peers had worked their way out of the agreements by 2013, either by working through their issues, being acquired or – in the case of the former Virginia Business Bank – being forced out of business.
Village itself has climbed back to stability after raising capital from outside investors and returning to profitability. It has turned a profit in five consecutive quarters and is in the black by $700,000 through the first half of this year, following a $6.5 million profit for the full year 2015.
The release from the written agreement comes on the heels of the completion of Village’s five-year effort to unload its 70,000-square-foot former Watkins Centre headquarters.
Village CEO Bill Foster said in June the $12.25 million transaction was likely the last step the bank needed to take to have the agreement washed away.
Messages left for Foster on Tuesday were not returned by press time.