Troubled Va. Bank Lures Framingham Investment
For the past few years, Framingham couple Daniel and Shawnet Thibeault, who own the Waltham-based financial planning service Graduate Leverage, have been looking to invest in a bank as a way to diversify their holdings.
After a failed attempt a few years ago to start a bank in Lawrence, the Thibeaults decided to take a slightly different route, and recently announced plans to pump about $6 million into a failing Martinsville, Va.-based bank named Imperial Savings & Loan.
The investment couldn't come at a better time for tiny Imperial Savings. The bank has been under a corrective order issued by the federal Office of Thrifty Supervision because of its shaky financial footing.
"This bank is at a point where it's had a rough couple of years, so what we're looking to do is step in, shore it up, show the clients and regulators that this is a first-rate bank, give it some capital and look for it to grow," Daniel Thibeault said.
Capital Investments
Thibeault founded Graduate Student Leverage in 2003 with his wife, and in the last five years he said the loan modification and financial planning company has worked with more than 65,000 graduate students mostly in the veterinary and medical fields to match them with lenders. In 2008, the private company had $64 million in revenue and about 80 employees.
Thibeault said he had been researching various banks to invest in and found Imperial Savings through a business partner.
Simone Redd, president of Imperial Savings, said the bank arrived at its low capital position after a planned merger fell through.
Today, Redd said the bank has about $9.5 million in assets with about 1,500 customers in the Martinsville and Henry County area in central Virginia.
On June 3, the Office of Thrift Supervision called on the bank to recapitalize itself by Aug. 1. Thibeault and Redd said they hope to convert the bank's assets into stock, which Thibeault will own, by that deadline.
Redd said the $6 million Thibeault plans to invest in the bank will be an adequate amount to recapitalize. She said the money will be used to expand home, car and business loans and offer new services, such as online banking, to customers.
The deal must be approved by the Office of Thrift Supervision before it is finalized.
Jim Gardner, a banking analyst and chairman of Commerce Street Capital LLC in Dallas, said corrective action orders have become more commonplace in the past few years as the federal government is intensifying efforts to ensure banks are well capitalized. He said if the fundamentals of a bank are stable, banks that are in regulatory trouble can still be good investments.
"It all depends on what's on the books," he said. "If the bank's liabilities and deposits are safe, are from local customers and are priced at market levels, then it can be turned around."
Wayne Rodgers, an independent financial analyst from Los Angeles, said if banks are well positioned, they have a good chance of steadily growing in the coming years.
"These small, local community banks that have a core deposit base and ties to the community are pretty solid," he said.
Still, Rogers said he's fairly skeptical of an investor, like Thibeault, buying a bank that has garnered so much regulatory attention.
"A lot of small banks have been getting in trouble for low capital, and it really all comes down to management," he said. "It all comes down to just being run well."
Thibeault said once the purchase is approved he plans to sit on the bank's board of directors. He said in the future he hopes to expand the bank's locations in Virginia and possibly even in Massachusetts.
WBJ Web Partners
Most Recent
Most Recent
0 Comments