The Bank of Virginia branch at 10501 Patterson Ave.
The search for growth and profit has a small local bank wading in with the big fish.
Midlothian-based Bank of Virginia has bought into large residential mortgage and student loan pool programs — to the tune of more than $80 million — that small community banks don’t typically get into.
The goal, according to chief executive Jack Zoeller, is to speed up the improvement of the $180 million bank’s bottom line and grow its total assets by $100 million by the end of the year.
“We’ve taken advantage of some of the relationships of our management and board that go beyond what you’d normally have at a community bank with two new programs that can add assets at a much faster pace,” Zoeller said.
The first is a residential loan program that allows Bank of Virginia to buy small mortgages from 30 states, hold them for 15 to 30 days until they’re purchased by Fannie Mae or Ginnie Mae, and collect the interest in the meantime.
The bank doesn’t make a ton of money per loan. But the goal is high volume with the comfort of knowing the government-sponsored enterprises will purchase the loans.
Bank of Virginia tried the program out through a company called Stonegate Mortgage Corp. late last year. It bought in with $30 million and doubled down after liking what it saw. The bank has since purchased close to 2,000 loans, Zoeller said.
Zoeller’s bank has also purchased $23 million worth of student loans that come with a government guarantee. The loans had previously been in default but were back into current status and in need of a new lender. Unlike on the mortgage side, the bank holds the loans on its books to maturity.
Bank of Virginia is working with Xerox Education Services, a student loan servicer.
“It’s generally a large bank opportunity,” Zoeller said of the two programs. “It just happens we have people on our board and management who grew up in large banks and are perfectly well suited to manage what we’re doing.”
Its board and management have bankers who have worked at Citigroup, SunTrust and other large institutions.
Zoeller wouldn’t share how much income the bank expects to reap from its new plan. And he said the plan isn’t a permanent part of the bank’s strategy.
“We’re not trying to turn into a bank that does primarily this kind of — almost a wholesale strategy — but our job is to make a profit for our shareholders and do it with quality loans,” he said.
After a tough couple of years, the bank doesn’t want to wait for the usual pace of gathering local deposits and making local loans.
“We’re still in a modest pace of recovery, and so even while we’ve been adding regular, organic loans at a pretty good rate, it still is much slower than you’d want it to be,” Zoeller said. “It’s a way to supplement that growth.”
Bank of Virginia did add $33 million in new loans last year, largely from borrowers across Central Virginia, Zoeller said.
It reported a slight loss in 2012 of $558,000, according to call reports filed with the FDIC. That was a big improvement from losses of $4.45 million in 2011 and $9.2 million in 2010.
The bank reported $5.56 million in nonperforming loans at year’s end, cut almost in half from the end of 2011. It remains under written agreement with state and federal regulators.
The bank also had two consecutive quarters of profitability in 2012 after almost three full years of losses.
Zoeller is at the head of an entirely new management team and board put together over the past couple of years. Cordia Bancorp, a group led by Zoeller, began a takeover of Bank of Virginia when it took a majority stake of the 11-year-old bank and invested $10.3 million in December 2010.
Cordia then brought in another $3 million in fresh capital last August.
Last week, the bank became a wholly owned subsidiary of Cordia.
Beginning today, the bank’s stock is replaced by the holding company’s stock with a new ticker symbol of BVA.
The Bank of Virginia branch at 10501 Patterson Ave.
The search for growth and profit has a small local bank wading in with the big fish.
Midlothian-based Bank of Virginia has bought into large residential mortgage and student loan pool programs — to the tune of more than $80 million — that small community banks don’t typically get into.
The goal, according to chief executive Jack Zoeller, is to speed up the improvement of the $180 million bank’s bottom line and grow its total assets by $100 million by the end of the year.
“We’ve taken advantage of some of the relationships of our management and board that go beyond what you’d normally have at a community bank with two new programs that can add assets at a much faster pace,” Zoeller said.
The first is a residential loan program that allows Bank of Virginia to buy small mortgages from 30 states, hold them for 15 to 30 days until they’re purchased by Fannie Mae or Ginnie Mae, and collect the interest in the meantime.
The bank doesn’t make a ton of money per loan. But the goal is high volume with the comfort of knowing the government-sponsored enterprises will purchase the loans.
Bank of Virginia tried the program out through a company called Stonegate Mortgage Corp. late last year. It bought in with $30 million and doubled down after liking what it saw. The bank has since purchased close to 2,000 loans, Zoeller said.
Zoeller’s bank has also purchased $23 million worth of student loans that come with a government guarantee. The loans had previously been in default but were back into current status and in need of a new lender. Unlike on the mortgage side, the bank holds the loans on its books to maturity.
Bank of Virginia is working with Xerox Education Services, a student loan servicer.
“It’s generally a large bank opportunity,” Zoeller said of the two programs. “It just happens we have people on our board and management who grew up in large banks and are perfectly well suited to manage what we’re doing.”
Its board and management have bankers who have worked at Citigroup, SunTrust and other large institutions.
Zoeller wouldn’t share how much income the bank expects to reap from its new plan. And he said the plan isn’t a permanent part of the bank’s strategy.
“We’re not trying to turn into a bank that does primarily this kind of — almost a wholesale strategy — but our job is to make a profit for our shareholders and do it with quality loans,” he said.
After a tough couple of years, the bank doesn’t want to wait for the usual pace of gathering local deposits and making local loans.
“We’re still in a modest pace of recovery, and so even while we’ve been adding regular, organic loans at a pretty good rate, it still is much slower than you’d want it to be,” Zoeller said. “It’s a way to supplement that growth.”
Bank of Virginia did add $33 million in new loans last year, largely from borrowers across Central Virginia, Zoeller said.
It reported a slight loss in 2012 of $558,000, according to call reports filed with the FDIC. That was a big improvement from losses of $4.45 million in 2011 and $9.2 million in 2010.
The bank reported $5.56 million in nonperforming loans at year’s end, cut almost in half from the end of 2011. It remains under written agreement with state and federal regulators.
The bank also had two consecutive quarters of profitability in 2012 after almost three full years of losses.
Zoeller is at the head of an entirely new management team and board put together over the past couple of years. Cordia Bancorp, a group led by Zoeller, began a takeover of Bank of Virginia when it took a majority stake of the 11-year-old bank and invested $10.3 million in December 2010.
Cordia then brought in another $3 million in fresh capital last August.
Last week, the bank became a wholly owned subsidiary of Cordia.
Beginning today, the bank’s stock is replaced by the holding company’s stock with a new ticker symbol of BVA.