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WASHINGTON — One Richmond-area bank saved a homeowner from foreclosure while another expanded its business into Maryland.
These are two ways 19 Virginia banks are using a total of $4.1 billion received through the federal government’s Troubled Assets Relief Program.
Community Bankers Trust Corp., based in western Henrico County, received $17.7 million from the Treasury Dec. 19.
Six weeks later, the bank holding company announced it had acquired Suburban Federal Savings Bank with $312 million in deposits and seven branches in the Baltimore-Washington area.
C&F Financial Corp. of West Point used some of the $20 million it received Jan. 9 to take slightly riskier approaches to lending.
Of the 19 Virginia banks that have received government help so far, the median amount received is $20 million.
Despite the sour economy, Community Bankers is growing.
The company leapfrogged two states in November to buy four branches from federal regulators of The Community Bank of Loganville, a failed community bank in suburban Atlanta. It assumed about $600 million in Georgia bank’s deposits, paying 1.36 percent on those deposits for about $3.2 million.
Community Bankers acquired Suburban Federal Savings Bank in late January.
The company credited the Treasury bailout money with helping it expand.
"The enhancement allows us to continue growing the bank," said Gary A. Simanson, vice chairman of Community Bankers.
But he added there was "no direct tie" between the government funding and the bank’s latest acquisition.
"We would have still looked at transactions, whether we raised the Treasury funding or not," he said.
Borrowers are unlikely to see a difference in lending based on the added capital from Treasury, Simanson said, calling the government funds "an insurance policy for uncertain times."
"We’re not functioning any different today than we were then [before the government infusion]," Simanson said, adding the bank maintains its "conservative lending standards."
Community Bankers operates 13 locations across Virginia, including branches for the Bank of Essex, Bank of Powhatan, Bank of Goochland and the Bank of Louisa.
Profit rose 32 percent to $1.4 million in the first nine months of 2008 compared with the same period in 2007. The company has not released fourth quarter results.
The increase stems in part from the company’s May merger of Falls Church-based Community Bankers Acquisition Corp., Henrico-based TransCommunity Financial Corp. and Tappahannock-based BOE Financial Service of Virginia Inc.
At year-end, the bank’s capitalization ratio, a measurement of strength, was 15.9 percent, the bank said. The Federal Deposit Insurance Corp. considers anything above 10 percent well-capitalized.
Officials of C&F Financial, which operates 18 branches of C&F Bank between Hampton Roads and Richmond, said the Treasury money is making a more tangible difference.
In the fall, after Congress passed the bailout, C&F officials had no plans to apply for the money.
But, "there were regulators out there saying if you can get it you should take it," said Tom Cherry, the company’s chief financial officer.
Some borrowers have already felt a loosening of credit, he said.
For example, he said a Virginia military veteran who had bought a house and then lost his job faced foreclosure on his home mortgage. Instead, C&F deferred interest on the loan, allowing the veteran more time to find new income without worrying about the full house payment.
"I don’t know in the past we would have done that," Cherry said. "We are thinking differently with the TARP money and trying to live by the spirit of it."
In another instance, Cherry said, the bank helped restart a stalled construction project through a slightly riskier loan than it would have granted without the added capital from the government.
In December, the company reported a healthy capitalization ratio of 12 percent.
But it reported a profit of $4.2 million, which fell 50 percent last year compared with 2007. Its net income for the year included an impairment charge of $976,000 related to the company’s investments in Fannie Mae and Freddie Mac.
Powhatan-based Central Virginia Bankshares received $11.4 million from Treasury Jan. 30.
Company officials were initially split on whether to seek the government money, said Charles F. Catlett III, the bank’s chief financial officer.
But after losing $17.8 million in preferred stock in Fannie Mae and Freddie Mac last year, the company was in serious need of new capital.
"We would have preferred to raise this in the private markets, but you can’t .¤.¤. right now," Catlett said.
The TARP funds will help the company continue to make, what he called "plain vanilla" home loans.
"It adds to our ability to absorb any future losses if the economy continues to decline," he said.
But he said bank officials find it "frightening" that Treasury could change the nature of the program at any time.
Treasury has invested $195.3 billion in 359 institutions in 45 states and Puerto Rico as of Jan. 30.
The money goes to banks in the form of preferred stock purchases, which means the government gets paid back first when the bank pays dividends to stockholders.
If the stock improves, the government gets a better return on its investment. If the bank goes under, the money is gone.
The preferred shares pay a dividend of 5 percent a year for the first five years and 9 percent annually thereafter, unless redeemed. Additionally, Treasury will receive warrants, with a term of 10 years, to buy common stock.
The TARP program was originally billed as a Wall Street bailout.
Then the Treasury Department morphed it into the current capital purchase program. The change made banks that had been skeptical eager to obtain the extra capital, analysts said.
At first, certainly healthy banks thought there was going to be some stigma with the money," said Susan Chaplinsky, professor of business administration at University of Virginia’s Darden School of Business.
That stigma, she said, "is fading as people see a need for more lending."
Some bankers worry that the Obama administration will put new rules on how the money can be used.
Virginia bankers said they were less concerned about restrictions on CEO pay or lavish expenditures than having the government require banks to loan money to certain borrowers or offer certain rates.
"A lot of banks would say this is not what we signed up for," C&F’s Cherry said.
If the rules change, he said, banks should be able to give the money back. "We were trying to be good citizens."
Federal funds for banks
Nineteen Virginia-based banks received a total of $4.1 billion through the federal government's Troubled Assets Relief Program:
Capital One Financial Corp. (McLean): received $3.6 billion on Nov. 14
Hampton Roads Bankshares Inc. (Norfolk): $80.3 million, Dec. 31
TowneBank (Portsmouth): $76.5 million, Dec. 12
Virginia Commerce Bancorp (Arlington): $71 million, Dec. 12
Union Bankshares Corp. (Bowling Green): $59 million, Dec. 19
First Community Bankshares Inc. (Bluefield): $41.5 million Nov. 21
StellarOne Corp. (Charlottesville): $30 million, Dec. 19
Eastern Virginia Bankshares Inc. (Tappahannock): $24 million, Jan. 9
Middleburg Financial Corp. (Middleburg): $22 million, Jan. 30
C&F Financial Corp. (West Point): $20 million, Jan. 9
Community Bankers Trust Corp. (Henrico County): $17.7 million, Dec. 19
Valley Financial Corp. (Roanoke): $16 million, Dec. 12
Monarch Financial Holdings Inc. (Chesapeake): $14.7 million, Dec. 19
Community Financial Corp. (Staunton): $12.6 million, Dec. 19
Central Virginia Bankshares Inc. (Powhatan): $11.4 million, Jan. 30
Farmers Bank (Windsor): $8.8 million, Jan. 23
WashingtonFirst Bank (Reston): $6.6 million, Jan. 30
United Financial Banking Cos. Inc. (Vienna): $5.7 million, Jan. 26
Citizens Community Bank (South Hill): $3 million, Dec. 23
SOURCE: U.S. Treasury Department
(E-mail nsimon@mediageneral.com)
These are two ways 19 Virginia banks are using a total of $4.1 billion received through the federal government’s Troubled Assets Relief Program.
Community Bankers Trust Corp., based in western Henrico County, received $17.7 million from the Treasury Dec. 19.
Six weeks later, the bank holding company announced it had acquired Suburban Federal Savings Bank with $312 million in deposits and seven branches in the Baltimore-Washington area.
C&F Financial Corp. of West Point used some of the $20 million it received Jan. 9 to take slightly riskier approaches to lending.
Of the 19 Virginia banks that have received government help so far, the median amount received is $20 million.
Despite the sour economy, Community Bankers is growing.
The company leapfrogged two states in November to buy four branches from federal regulators of The Community Bank of Loganville, a failed community bank in suburban Atlanta. It assumed about $600 million in Georgia bank’s deposits, paying 1.36 percent on those deposits for about $3.2 million.
Community Bankers acquired Suburban Federal Savings Bank in late January.
The company credited the Treasury bailout money with helping it expand.
"The enhancement allows us to continue growing the bank," said Gary A. Simanson, vice chairman of Community Bankers.
But he added there was "no direct tie" between the government funding and the bank’s latest acquisition.
"We would have still looked at transactions, whether we raised the Treasury funding or not," he said.
Borrowers are unlikely to see a difference in lending based on the added capital from Treasury, Simanson said, calling the government funds "an insurance policy for uncertain times."
"We’re not functioning any different today than we were then [before the government infusion]," Simanson said, adding the bank maintains its "conservative lending standards."
Community Bankers operates 13 locations across Virginia, including branches for the Bank of Essex, Bank of Powhatan, Bank of Goochland and the Bank of Louisa.
Profit rose 32 percent to $1.4 million in the first nine months of 2008 compared with the same period in 2007. The company has not released fourth quarter results.
The increase stems in part from the company’s May merger of Falls Church-based Community Bankers Acquisition Corp., Henrico-based TransCommunity Financial Corp. and Tappahannock-based BOE Financial Service of Virginia Inc.
At year-end, the bank’s capitalization ratio, a measurement of strength, was 15.9 percent, the bank said. The Federal Deposit Insurance Corp. considers anything above 10 percent well-capitalized.
Officials of C&F Financial, which operates 18 branches of C&F Bank between Hampton Roads and Richmond, said the Treasury money is making a more tangible difference.
In the fall, after Congress passed the bailout, C&F officials had no plans to apply for the money.
But, "there were regulators out there saying if you can get it you should take it," said Tom Cherry, the company’s chief financial officer.
Some borrowers have already felt a loosening of credit, he said.
For example, he said a Virginia military veteran who had bought a house and then lost his job faced foreclosure on his home mortgage. Instead, C&F deferred interest on the loan, allowing the veteran more time to find new income without worrying about the full house payment.
"I don’t know in the past we would have done that," Cherry said. "We are thinking differently with the TARP money and trying to live by the spirit of it."
In another instance, Cherry said, the bank helped restart a stalled construction project through a slightly riskier loan than it would have granted without the added capital from the government.
In December, the company reported a healthy capitalization ratio of 12 percent.
But it reported a profit of $4.2 million, which fell 50 percent last year compared with 2007. Its net income for the year included an impairment charge of $976,000 related to the company’s investments in Fannie Mae and Freddie Mac.
Powhatan-based Central Virginia Bankshares received $11.4 million from Treasury Jan. 30.
Company officials were initially split on whether to seek the government money, said Charles F. Catlett III, the bank’s chief financial officer.
But after losing $17.8 million in preferred stock in Fannie Mae and Freddie Mac last year, the company was in serious need of new capital.
"We would have preferred to raise this in the private markets, but you can’t .¤.¤. right now," Catlett said.
The TARP funds will help the company continue to make, what he called "plain vanilla" home loans.
"It adds to our ability to absorb any future losses if the economy continues to decline," he said.
But he said bank officials find it "frightening" that Treasury could change the nature of the program at any time.
Treasury has invested $195.3 billion in 359 institutions in 45 states and Puerto Rico as of Jan. 30.
The money goes to banks in the form of preferred stock purchases, which means the government gets paid back first when the bank pays dividends to stockholders.
If the stock improves, the government gets a better return on its investment. If the bank goes under, the money is gone.
The preferred shares pay a dividend of 5 percent a year for the first five years and 9 percent annually thereafter, unless redeemed. Additionally, Treasury will receive warrants, with a term of 10 years, to buy common stock.
The TARP program was originally billed as a Wall Street bailout.
Then the Treasury Department morphed it into the current capital purchase program. The change made banks that had been skeptical eager to obtain the extra capital, analysts said.
At first, certainly healthy banks thought there was going to be some stigma with the money," said Susan Chaplinsky, professor of business administration at University of Virginia’s Darden School of Business.
That stigma, she said, "is fading as people see a need for more lending."
Some bankers worry that the Obama administration will put new rules on how the money can be used.
Virginia bankers said they were less concerned about restrictions on CEO pay or lavish expenditures than having the government require banks to loan money to certain borrowers or offer certain rates.
"A lot of banks would say this is not what we signed up for," C&F’s Cherry said.
If the rules change, he said, banks should be able to give the money back. "We were trying to be good citizens."
Federal funds for banks
Nineteen Virginia-based banks received a total of $4.1 billion through the federal government's Troubled Assets Relief Program:
Capital One Financial Corp. (McLean): received $3.6 billion on Nov. 14
Hampton Roads Bankshares Inc. (Norfolk): $80.3 million, Dec. 31
TowneBank (Portsmouth): $76.5 million, Dec. 12
Virginia Commerce Bancorp (Arlington): $71 million, Dec. 12
Union Bankshares Corp. (Bowling Green): $59 million, Dec. 19
First Community Bankshares Inc. (Bluefield): $41.5 million Nov. 21
StellarOne Corp. (Charlottesville): $30 million, Dec. 19
Eastern Virginia Bankshares Inc. (Tappahannock): $24 million, Jan. 9
Middleburg Financial Corp. (Middleburg): $22 million, Jan. 30
C&F Financial Corp. (West Point): $20 million, Jan. 9
Community Bankers Trust Corp. (Henrico County): $17.7 million, Dec. 19
Valley Financial Corp. (Roanoke): $16 million, Dec. 12
Monarch Financial Holdings Inc. (Chesapeake): $14.7 million, Dec. 19
Community Financial Corp. (Staunton): $12.6 million, Dec. 19
Central Virginia Bankshares Inc. (Powhatan): $11.4 million, Jan. 30
Farmers Bank (Windsor): $8.8 million, Jan. 23
WashingtonFirst Bank (Reston): $6.6 million, Jan. 30
United Financial Banking Cos. Inc. (Vienna): $5.7 million, Jan. 26
Citizens Community Bank (South Hill): $3 million, Dec. 23
SOURCE: U.S. Treasury Department
(E-mail nsimon@mediageneral.com)