The images on Nova Savings Bank’s Web site include a retired couple driving carefree in a convertible, a father fishing with his young son, and a middle-aged couple talking about finances at a kitchen table.
These are not exactly the images one might expect from a Philadelphia thrift that is a direct descendant of the hip, cutting-edge USABancshares.com, which once put its certificates of deposit on an online auction and sponsored a private-label bank named for the rocker David Bowie.
Then again, there is little about Nova that resembles its predecessor. USABancshares.com and its subsidiary, vBank — which at one time had a partnership with Amazon.com — had ambitions to become a nationwide Internet bank. Nova is going in the opposite direction. It aims to establish itself as a traditional community bank with a special focus on wealth management.
“We kind of have switched to a grassroots, community bank focus,” said Brian M. Hartline, the $366 million-asset thrift’s president and chief executive. “And the look and feel of the bank has changed.”
Mr. Hartline, USABanc-shares.com’s former chief financial officer, led the investor group that acquired the Internet thrift in October 2002 for $3.4 million. The group was then called Berkshire Financial Holdings Inc. but has since changed its name to Nova Financial Holdings Inc.
In the two years before the purchase, Mr. Hartline had been the CEO of the $1.5 billion-asset Main Street Bancorp Inc. of Reading, Pa. (Sovereign Bancorp Inc. bought Main Street in March 2002.)
The new USABancshares.com team’s first task was cleaning up the balance sheet. vBank had lost $1.4 million in a customer’s check fraud scheme. It also had credit quality problems and inadequate capital; it had been operating under a cease-and-desist order from the Pennsylvania Banking Department and the Federal Deposit Insurance Corp. for more than a year.
In the last 18 months, though, the enforcement order has been lifted and Mr. Hartline’s group has infused $35 million of capital. Many bad loans have been charged off, though nonperforming assets are still high, at 4.36% of total loans. (Mr. Hartline said that all of the bad loans were made to just three customers, and that the thrift is hopeful it will collect on them.)
First-quarter earnings jumped 278% from two years earlier, to $431,000, and the risk-based capital ratio rose nearly 3 percentage points, to 11.53%.
With most of its troubles behind it, last month Nova hired its first two wealth management experts, from Millennium Bank of Malvern, Pa., which the $2.9 billion-asset Harleysville National Corp. acquired in May.
Rick Weiss, an analyst with Janney Montgomery Scott LLC in Philadelphia, said some community banks in the area, such as the $7 billion-asset Wilmington Trust Corp. and the $636 million-asset Bryn Mawr Trust Co., provide extensive wealth management services. However, there is still plenty of business for Nova.
He also said that Mr. Hartline, 39, has turned every institution where he has worked into a high performer, and that he expects the same from Nova Savings. “Brian’s a smart guy, and wherever he’s been, people tend to make money.”
When Mr. Hartline joined Main Street in August 2000, it had just reported a $2.4 million second-quarter loss and had entered an agreement with regulators over management failures. A year later, under a new management team, it reported second-quarter net income of $6.8 million. A year after that Sovereign paid $182 million for the company, about 1.83 times its book value.
Before joining Main Street, Mr. Hartline had been the chief financial officer of the $2.3 billion-asset ML Bancorp in Villanova. Sovereign bought ML in 1998 for nearly two times its book value.
Despite his track record, he said selling Nova Savings is not in his game plan. He is focused on expansion — he plans to double the branch count, to 10, within a year and open as many as 11 branches by the end of 2006.
Nova Savings faces intense retail competition in the Philadelphia area, but one advantage it may have over the likes of Sovereign, Wachovia Corp., and PNC Financial Services Group Inc. is its name. “Nova” is the common nickname for Villanova University in Philadelphia.
The thrift has an automated teller machine on the Villanova campus, and its chairman, Barry R. Bekkedam, is a Villanova alumnus, but Mr. Hartline said the Nova name, adopted last year, was not inspired by the university. His inspiration, he said, was a show on the Science Channel that explained that a supernova is the brightest and most dynamic type of star in the sky.
“We would like customers to think of our bank like that,” he said.
