Bank of Virginia (BOVA) in Midlothian is seeking more capital to fuel bank acquisitions following a prolonged restructuring.
The company said in a proxy filing earlier this month that it is looking to raise between $2 million and $10 million in fresh capital through a private placement and that it is asking shareholders to vote for its plan before its annual meeting June 28. It is also asking for shareholders to authorize a reverse stock split that would occur before Nov. 30.
"While the bank's asset quality and recent operating results have improved, the Board of Directors has determined that the bank requires additional capital to achieve and consolidate its [goals]," the bank said in the proxy, adding that it is eyeing acquisitions in Virginia or other Mid-Atlantic states.
In 2009, a group of veteran bankers formed Cordia Bancorp to invest in distressed banks, including the $165 million-asset Bank of Virginia. By December 2010, the group bought a majority stake in the bank and appointed its co-founder, Jack Zoeller, as the new chairman and chief executive. Cordia owns 59.8% of the company's common stock and six of the 10 members on Bank of Virginia's board are also shareholders of Cordia Bancorp.
Since the takeover, the company has made strides in cleaning the up balance sheet but it still faces delisting and remains under a written agreement with regulators.
A successful reverse stock split could go a long way toward making the company more attractive to potential investors. The company faces being delisted from the Nasdaq if it can't raise its stock price above $1 per share by the end of October. Bank of Virginia's shares last traded at 82 cents a share on June 14.
"We believe the delisting from Nasdaq could adversely affect the liquidity and the marketability of shares of our common stock," the proxy said.
The bank turned its first profit in nearly three years in the first quarter, posting net income of $345,000. The bank was well capitalized at March 31, with a total risk-based capital ratio of 12.31%.