Midlothian-based Bank of Virginia to enter written agreement with regulators

Bank of Virginia expects to enter into a written agreement with the Federal Reserve Bank in the current fourth quarter to improve its capital levels.

"While we do not know the exact contents of the written agreement at this time, we expect that it will require us to implement plans to improve our risk management and compliance systems, oversight functions, operating and financial management and capital gains," said Frank Bell, president and chief executive officer of the Midlothian-based bank.

"We also expect to curb asset growth and focus on improving profitability until capital levels are increased."

Bank of Virginia made the disclosure yesterday in its earnings release.

The bank said it intends to raise money by offering up to $10 million of common stock.

It will be the second bank in the Richmond area under written agreement with regulators. Virginia Business Bank must improve its management and operations.

Bank of Virginia also reported third-quarter net income of $530,000, or 17 cents per share, compared with $117,000, or 4 cents per share, in the year-earlier period.

Bell said he was encouraged to report recoveries in the third quarter of $420,000 on questionable loans.

"The bank is focused on understanding and proactively addressing issues in the loan portfolio," the bank said in a statement.

Despite the quarterly gain, the net loss for the first nine months of the year is $2.7 million, or a loss per share of 90 cents per share, compared to net income of $85,000, or 3 cents per share, in the year-earlier period.

Bank of Virginia operates five branches in Chesterfield and Henrico counties.

Shares of Bank of Virginia closed unchanged at $3.

Contact Carol Hazard at (804) 775-8023 or .