While still keeping its eye on growth via acquisition, a Henrico-based bank also is reviving a habit it hasn’t kept since the wake of the recession: paying a dividend.
Essex Bank and parent company Community Bankers Trust Corp. last month announced it would pay a quarterly common stock dividend – its first in eight years.
The bank had stopped paying such dividends in 2010, when it was entering into a so-called written agreement with regulators. It was one of a handful of local banks at the time to come under the added oversight, which was designed to steer banks out of the choppy financial waters of the day.
“We needed to keep all the capital we could keep at that juncture,” said Essex CEO Rex Smith. “We’ve been doing very well since 2012,” the year the bank was released from the agreement.
Essex has continued to grow in the years since, opening new branches around the Richmond region, as well as elsewhere in Virginia and Maryland.
Smith said the time was now right to reward patient shareholders with a dividend. They’ll receive 3 cents per share on April 1.
“It was a decision we’ve discussed about when was the right time and what kind of return we want to give to shareholders,” Smith said.
He said the bank plans to continue to grow, possibly by acquiring another bank. He said he and Essex leadership wanted to make sure they had the capital in place to do so, while still bringing back a dividend to reward patient shareholders.
“It gives the shareholders a good chance at a dividend, but it’s not so strenuous that it would preclude us from doing acquisitions,” Smith said. “And I think it opens up a new shareholder base.”
Smith wouldn’t go into detail about any specific acquisition targets or markets the bank has looked into.
“We are always actively looking around,” he said. “It’s a question of timing, when it works for other banks, other bank boards.”
He said there are plenty of sellers shopping their banks around, fueled in part by aging CEOs looking for a succession plan and smaller banks that may have peaked in their current markets and don’t have the wherewithal to expand on their own.
“You could look on the map and there are a couple places we’d want to be,” he said. “In-market mergers are always good, but contiguous-market mergers are also considered.”