OUTLET: Richmond BizSense

By: Michael Schwartz

Another big Virginia bank is zeroing in on Richmond.

Suffolk-based TowneBank, one of the three largest community banks headquartered in the state, has a plan in the works to make its first move into Richmond with a veteran local banker leading the charge. It marks the $4.8 billion bank’s first major step west outside the Hampton Roads market, where it has grown to more than two dozen branches since its founding in 1999.

Its effort is the latest in a continued trend of out-of-town banks looking to Richmond as a new source of revenue. TowneBank will bring to the market a reputation for building branches from scratch and appointing separate boards of directors for each city it operates in.

“We’ve pretty much built what we need to do in Hampton Roads,” said Bob Aston, TowneBank chief executive officer. “So we can turn our capital plans toward Richmond. It’s a logical place for us to expand.” Aston said plans for a Richmond branch are still in the early stages, and the company hopes to have its business plan and strategy for the market finalized in the next couple weeks.

The first big piece of that plan fell into place recently when TowneBank hired longtime local banker Pat Collins as its Richmond market head. A former SunTrust executive, Collins most recently led the Richmond operations of StellarOne Bank until it was acquired by Union Bank in January.

“We felt pretty fortunate to get somebody of his caliber and experience,” Aston said of Collins. Collins for now is a one-man show for the company’s banking operations here. The bank’s mortgage operations have been in Richmond since it acquired Innsbrook-based Benchmark Mortgage in late 2011. The company’s emphasis since adding Collins has been on its strategy for recruiting talent and approaching the market. In addition to recruiting bankers, Aston said the company will appoint a Richmond board to help govern its operations here. It will do the same should it expand into Chesterfield or other localities in the market, as its done in Hampton Roads.

“It localizes the decision making and keeps us well-grounded and in touch with the community,” Aston said. “That’s served us well. Every city has its own political structure, power structure and even its own style, if you will.”

Aston said it’s still too early to discuss whether TowneBank will enter the market through an acquisition or by building branches from the ground up.

“Unless something comes along from an acquisition viewpoint, we obviously have an option of going either way or a combination of the two,” he said. “We certainly don’t object to building them from scratch.” The company hasn’t been a major acquirer of banks over the years. It bought Portsmouth-based Harbor Bank in 2004 and took on assets and branches from the former Bank of Currituck a few years later. TowneBank does have the fuel for an acquisition should it decide to take that route.

Not only has been consistently profitable, it recently increased its available shares of common stock from 45 million to 90 million. That leaves open plenty of shares to exchange in a possible acquisition. Once it’s here, TowneBank will make business banking its initial priority in Richmond, Aston said. “We’ll focus on the business market from pretty much top to bottom,” he said, emphasizing that TowneBank tends to seek medical businesses, legal firms and nonprofits as customers. It will also look to be a player for big commercial loans. The bank’s size gives it a lending limit that allows it to fund loans of up to nearly $80 million, Aston said.

“That means most everything that happens we can participate in, if we choose to,” he said. “We feel like we can pretty much compete with the major banks in the market.”

Competition will be fierce when TowneBank does arrive in Richmond. The market has about a dozen established community banks, as well as the big national players like Wells Fargo, Bank of America, SunTrust and others.

Also fighting for a piece of the action are smaller rural banks like Bank of Lancaster, Middleburg Bank, and Chesapeake Bank, as well as larger out-of-town institutions such as Park Sterling Bank that have descended on the market in recent years.

Aston said TowneBank has the ability to be patient in the face of competition.