Tappahannock-based bank eager to make loans

About the time the U.S. Treasury was breaking out the taxpayer checkbook, Eastern Virginia Bank was breaking out the dark-green-and-white banners:

"EVB has money to lend," they say.

Even before a January phone call from Washington -- followed by reams of paperwork -- announcing the Tappahannock-based bank's $24 million capital infusion, President and Chief Executive Joe A. Shearin was doing everything he could to get the word out that he wanted to lend money.

"People would walk in and say they'd heard on CNN that banks weren't lending," he said. "We make our money by lending."

Shearin thinks it may take a while to see the impact of the money from Washington on EVB's balance sheet, since the first effects are subtle -- things such as conversations between borrowers in a jam and bank officers that lead to agreements to skip a few payments or pay only the interest on a loan for a while.

"The capital gives us the flexibility to try different things," Shearin said.

Many of EVB's construction-company clients are hurting, and like other bankers, Shearin is looking at putting together a mortgage loan to help builders move unsold homes.

But other businesses are doing all right -- some are even looking to expand and with bigger banks still fairly cautious, Shearin sees opportunity. He's hoping to see strong growth in lending by the second quarter

First Market Bank, based in Richmond, received a $33.9 million capital infusion from the Treasury three weeks ago.

Like other recipients, the price was an exchange of preferred stock that requires paying a 5 percent dividend to the Treasury.

"It's a quick source of capital with a definite cost to it," said David Fairchild, the bank's chief executive officer. "The only way we can make it work is to convert it into loans."

Central Virginia Bank, based in Powhatan County, received about $11.4 million from the Treasury at the end of January and plans to use the money to restore its capital, which took a big hit in September when the federal government took over Freddie Mac and Fannie Mae. The bank lost $18 million that it had invested in the two institutions.

"Overnight, it disappeared," said Ralph Larry Lyons, president and chief executive officer of the bank.

With the new capital, the bank plans to grow its deposit base by about $100 million, of which about $85 million would be available for lending. That will take time, Lyons said. "We just haven't had a chance to really put it to work yet."

Federal funds also could play a role in the strategy of Genworth Financial to weather the recession and strengthen its position in its U.S. insurance businesses, including mortgage insurance.

The company, based in Henrico County, is waiting for federal approval to complete the purchase of a Minnesota savings bank that would make it eligible to participate in federal programs to stabilize markets.

Contact David Ress at (804) 649-6051 or .

Contact Michael Martz at (804) 649-6964 or .