Cordia Bancorp in Midlothian, Va., has sold its student loan platform.
Cordia said in a press release Tuesday that it sold its CordiaGrad platform to Jack Zoeller, the $348 million-asset company's chief executive. Zoeller also resigned from Cordia and its bank in connection with the transaction, which did not involve any loans.
Ed Barham was named president and CEO and was added to Cordia's board. Barham, who was CEO of StellarOne in Charlottesville, Va., when it sold itself to Union Bankshares, was hired by Cordia last year to run the company's bank.
CordiaGrad, formed in late 2014, is an online lending channel that offers refinancing to individuals holding federal, private, or parent student loans.
Cordia said its bank transferred certain marketing agreements, internet domains and intellectual property to a newly formed unit that was sold to Zoeller in exchange for "nominal consideration" and the executive's "agreement to relinquish his rights under his employment agreement" with the company. Five employees also transferred to the entity.
"The divestiture … will help Cordia to focus on its core businesses, while allowing us to facilitate and explore future growth opportunities," Barham said in the release.
"This transaction will permit CordiaGrad to accelerate its growth and focus on competing in the dynamic market for online lending and student loan refinancing without the constraints of operating within a small community bank," Zoeller said. "At the same time, the transaction will reduce Cordia's noninterest expense."
Cordia said it expects to record $1.6 million in charges — and a $740,000 million reduction to book value — in the first quarter tied to the transaction. Still, the sale is expected to be immediately accretive to Cordia's earnings with an earnback period for tangible book value dilution of a year or less. Cordia said it also expects the transaction will accelerate its ability to recapture the valuation allowance on its $6.1 million net deferred-tax asset.
Cordia's bank will continue to originate student loans on behalf of CordiaGrad over an interim period.
RP Financial provided a fairness opinion.