The officers and directors of Virginia Commerce Bancorp Inc. have infused the Arlington company with $25 million in fresh capital, the first step in a larger capital-raising plan that its chief executive said would help it "withstand current pressures from increased credit costs" and "provide an additional cushion for unforeseen market challenges."
The $2.7 billion-asset company said in a press release late Thursday that capital was raised through the sale of trust-preferred securities to the officers and directors. The company also issued 1.5 million warrants with an exercise price of $6.83 and intends to raise $25 million in a private offering of equity instruments in October.
Virginia Commerce has seen its asset quality deteriorate somewhat in recent quarters as loans to developers soured. At June 30, 1.71% of its loans were nonperforming, up from 0.21% a year earlier.
Peter A. Converse, the company's CEO, said he is "grateful" to the officers and directors who "stepped up" to buy the trust-preferred securities. Virginia Commerce officials did not return calls.
Bryce W. Rowe, an analyst at Robert W. Baird, calculated in a Friday note that the $25 million should increase the company's total risk-based capital ratio from 10.42% at the end of the second quarter, to 11.24% at the end of the third.
He said it is possible officers and directors were the only buyers of the securities because the company approached other investors and was unable to get the terms it wanted. Or they decided that the best way "to show to the market that we believe in the viability" of the company was to raise the capital out of its own directors' and executives' pockets. Consequently, when Virginia Commerce tries "to raise another $25 million, there will be another level of confidence in the company," he said.
