First Virginia Community Bank was born six years ago, just before the U.S. financial crisis, and has grown quickly to $500 million in assets through a strategy based on accommodating technology and low fees.
"People say it was a horrible time to open a bank," says David Pijor, CEO. But in a way the timing was not bad. Just around the time the bank opened, there was significant collapse in real estate collateral values. "When you're a bank making new loans in a market and you're lending to discounted real estate, your values don't go down too much," Pijor says. "It was the best of times, it was the worst of times."
The bank focuses on the commercial sector; about 85-90% of its business comes from small and mid-size businesses in the area.
One technology that has been popular with these clients is remote check deposit. The bank gives its business customers free desktop scanners that take batches of up to 100 checks, so they can make deposits at their convenience; 50% of the bank's deposits arrive this way. If a scanner breaks, the bank sends over a replacement the same day.
Some competitors charge $49 to $99 a month for check scanner rental.
Along with the desktop check scanners, the bank also provides software that gives customers detailed cash flow reports, at little or no charge. "We want to make it very easy for our large depositors to deposit with us," Pijor says.
"We made a big investment early on in hardware, software and people to provide state-of-the art remote deposit capture and online cash management tools," Pijor says. "We use technology with little or low fees as a hook to create sticky relationships with our large business clients."
The popularity of its remote deposit capture means First Virginia has a higher percentage of DDA to total deposits than many of its peers, which reduces its cost of funds. "That means I'm a little more profitable when I do make loans," Pijor says.
That means less need to rely on fee income or the bank's securities portfolio, which hasn't been reaping high yields of late.
One recent tech initiative at the bank was a website redesign that went live in October. (A recent Accenture study found that what consumers most want their banks to invest in is a better website.) [www.fvcbank.com] LM&O Advertising in Arlington helped create the new design.
The site makeover was designed to make it easier for customers to access information and log into their accounts.
"We used strong, powerful imagery with minimal text, it's sleek and intuitive, and I've gotten a lot of positive response from our peers in the community as well as our customers about how easy it is to use," Pijor says. Through adaptive design, content automatically configures to the device accessing it.
The bank has not tried to calculate a return on investment for the new site. "I don't know how we would," he says. "We were seeking to portray an image of a bank that was comfortable with technology. We felt it was something we had to do." The project wasn't all that expensive anyway, Pijor says, although he declined to share specifics.
The community bank has carved out three market niches.
One is government contractors, which in spite of sequestration and D.C. budget woes (which have put a damper on borrowing) are appealing due to their large deposit bases. "A lot of small government contractors are hoarding cash, trying to figure out what's going to happen, and borrowing less on their lines," Pijor says.
The second niche is not-for-profits, of which there are many in Washington, D.C., and Alexandria. One "coup" not-for-profit client is the Prince William Circuit Court Clerk's office. Courts have to handle fees, fines, escrow accounts, and accounts for incompetent or disabled people.
Pijor says his bank won the court's RFP against BB&T and several other competitors because of its remote deposit capture and electronic banking.
"We didn't win based on pricing, we're not lending money, and we don't have high deposit rates it was the strength of our technology platform that enabled us to win that account," Pijor says.
A third industry the bank serves is professional services, such as law firms and accounting firms. Pijor himself was a lawyer for 34 years.
Law firms and accounting firms tend to not to have huge credit needs, but often have large deposit needs, both for their own funds and escrow accounts and the balances that they hold for the benefit of clients.
Technology has helped here, too. The bank created an escrow manager product that lets these customers segregate and allocate interest among different clients.
"We're never bleeding edge, and we're not a consumer bank, but for our commercial clients, the use of technology has enabled us to grow beyond the normal geographic footprint," Pijor says of the bank, which now has five branches.
First Virginia continually considers new features for its cash management and online banking offerings to business clients, Pijor says. "We have focus groups, we listen to what our customers like and don't like," he says. "The CFOs or treasurers of corporate clients will let us know what is not working and what they would like us to add. We try to be very responsive. We're not always able to accomplish what our customers would like us to do, but we know what they're saying and we try to stay ahead of the curve whatever will make it easier for them to continue to bank with us."