Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 14, 1995 TAG: 9505120066
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
Unlike other banks and thrifts that have come and gone in recent years - attempting to provide services that the super-regional banks have abandoned - Valley Bank is the product of a home-grown desire to anchor Roanoke's money in town. For some, it represents a direct reaction to seeing Roanoke-based Dominion Bankshares Corp. swallowed two years ago by First Union Corp. of Charlotte, N.C.
"I liked the idea of Roanoke having a bank it could call its own," said lawyer Frank W. Rogers III about his investment in Valley Bank. "You could say that about Dominion, but not First Union."
His stock, Rogers said, offered "the prospect of a good investment, but also an investment in Roanoke."
That theme was repeated again and again by stockholders and organizers of Valley Bank, which will hold its "soft" opening Monday at its initial office. The bank's headquarters at the corner of Church Avenue and First Street Southwest is in what formerly were offices for First Federal and later CorEast savings banks. The soft opening allows the bankers to practice their trade on friends and investors before the May 22 "grand opening."
President Guy W. Byrd Jr., a 30-year banking veteran - with 13 of those years in Roanoke at Signet, Colonial American and Crestar banks - said Valley Bank aims to compete with every other institution in town.
More than mere nostalgia for a Roanoke-based bank is involved, according to an official with a more objective perspective.
"Yes, I think it's very important to have a locally owned bank," said Phil Sparks, Roanoke's acting director of economic development. In fact, Sparks said, it's important to have a local headquarters for all types of businesses.
He believes, moreover, that this bank will succeed.
A consultant told him, Sparks said, that Valley Bank must capture only 3 percent of the market to be successful. "Enough people want to do business with a locally owned bank to reach that goal," he said.
The Roanoke Valley has about $3 billion in bank deposits.
More than 200 festive stockholders crowded into the Holiday Inn-Tanglewood ballroom for the bank's first annual meeting on April 20. Faced with only minimum business, the shareholders responded enthusiastically by applauding suggestions that they all become depositors.
Valley Bank opens with more than 800 shareholders, 90 percent of them Roanoke Valley residents. They paid $10 each for their shares.
The organizers, who now constitute the board, have said the bank will pay no dividends at first as it builds business. Stockholders face an unknown scenario, ranging from an unlikely failure of the bank to steady growth.
In recent memory, only one bank founded in Roanoke has failed, though others have left the market or merged for a variety of reasons. The sole failure was First Security Bank, which raised capital of only $2.5 million compared to Valley Bank's more than $8 million, and its organizers made small investments. Security Bank had one branch in the Crossroads Mall area. Under Virginia law, all banks opertaing in the state must buy federal insurance to protect depositors.
Byrd said he is prohibited from discussing Valley Bank's goals and projections until the public stock sale ends July 15, but Valley Bank needs only "a modest share to be successful."
One person who hasn't purchased stock is Ben Jenkins, president of First Union National Bank of Virginia.
He said the organizers of Valley Bank have "a great sense of spirit, a great sense of pride."
"I think competition is good for everybody," Jenkins said. "I take all competitors seriously; I take Valley Bank seriously."
Arnold Danielson, president of Danielson Associates, a bank consulting firm in Rockville, Md., said he believes that "the new bank will probably have fewer problems than First Union and NationsBank."
We are heading into a banking world, he said, in which the biggest banks will control 70 to 80 percent of the business, handling most home mortgages and loans.
At the same time, he said, the small, community banks will have 15 percent to 20 percent shares of their markets. They will serve local people, issue small-business loans and offer home equity lines. The rest of the business will go to the shrinking share of mid-size banks.
Any city the size of Roanoke can support a community bank with assets of up to $100 million, Danielson said. Valley Bank opens with capital of more than $8 million.
Danielson reported that 30 small banks that opened in Virginia between 1985 and 1994 are still in business. Others have been sold and disappeared from the scene. In 1993 and 1994, his studies show, eight new banks opened on the East Coast.
Small, community banks are "doing wonderfully," Danielson said.
In fact, Byrd pointed out, three small financial institutions in the Roanoke Valley sold $16 million worth of stock last year. While Valley Bank raised more than $8 million, Salem Bank & Trust added to its capital, and Southwest Virginia Savings Bank converted from a depositor-owned thrift to a public stock company.
Valley Bank board Chairman George Logan, the largest shareholder with 60,000 shares (or 7.4 percent of the stock), noted that the 14 organizers have the same class of stock as every other shareholder. No special privileges were accorded the founders.
The organizers took a greater risk than the shareholders whose money was held in escrow until the required capital was raised. The organizers' money was spent to support the stock sale.
Logan said he was motivated by "a visceral feeing that every community should have a financial institution to call its own." That feeling," he said, "is deeply rooted "into the soil of the Roanoke Valley."
But if the bank is well managed, he said, it will be a profitable institution. "Profit is not a dirty word."
Valley Bank, Logan said, offers "a rare opportunity to combine a community-serving institution with an opportunity for a reasonable return on an investment."
Logan said no one organizer knew every other one. The group, he said, was built from one person suggesting another person. There was no pre-existing commonality of interest.
"Part of the joy of this was weaving together a diverse group with a common thread," he said.
Logan said Richmond has eight community banks that operate "under the nose" of the headquarters of three regional and statewide giants: Crestar, Signet and Central Fidelity - all $10 billion banks in terms of assets. If that's the case in Richmond, he said, the organizers had to ask, "are we missing something here?"
"I don't see a whole lot of difference among big banks," Logan said, "Bank X and Y are not doing anything different."
"We've had a lot of fun doing this, too," despite the many long hours of meetings, Logan said. "It's a very exciting thing to start an enterprise like this. It's personally rewarding. ... It's a labor of love; it's not a burden."
A. Wayne Lewis, an organizer and senior vice president and formerly corporate secretary at Dominion Bankshares, said Valley Bank's customers will come from a cross-section of the community, regardless of where they bank now. The investors, however, will be the core.
Byrd added that Valley Bank is not going after any particular competitor. "We're going after customers, not some competitors." And, he said, "the vibrations seem to be good in terms of community interest."
What the customers will find will be a bank in the old tradition, Byrd said.
"We won't have brokerage services; we won't have annuities; we won't have mutual funds," Byrd said. That is, he added, unless customers want those features down the road.
Those services increasingly are products the banking industry is selling as lines blur among financial institutions. For Byrd, they "tend to be a trendy thing. I'm not sure any bank needs to offer them, certainly not on Day One." If they are offered, Byrd said, the bank will find a way to do it without licensing bank personnel as sales people, because the other bank products they sell are government insured.
Nor will Valley Bank offer trust services at first. Byrd sees trust departments at other banks as tending to become "a stand-alone type of service." In the future, he said, he has some ideas about how to offer trust services "without becoming a major drag on this bank's operations." He said the service ultimately will be provided in-house or through contractual arrangements with another bank.
The downtown office won't have an automated teller machine at first, although the Starkey Road branch now under construction will have a drive-through window and ATM from the time it opens in September. Downtown has a space for an ATM, but Byrd said its installation will depend on customer demand.
Valley Bank will offer the staples of banking: checking accounts, savings accounts, consumer and small-business loans, credit cards and safe-deposit boxes. "We will have the full range of consumer services," Byrd said.
Valley Bank will boast the latest in technology. It has contracted with EDS, the old Electronic Data Systems once owned by Ross Perot, for computer systems. Valley Bank's computers will be connected to the EDS system in Bluefield.
Tellers will be able to call up not only the name of a customer, but the signature verification as well. Tellers, and even the branch ATM, can call up and print a copy of a customer's latest statement.
"There's nothing here that isn't automated," Lewis said. He said the bank's 13 employees - there will be a total of 20 when the branch opens in September - all have extensive experience at other area banks, but none has previously worked with such an advanced degree of automation.
Customers can take advantage of "the Valley connection," a 24-hour telephone access that will allow them to move their money around among their accounts.
Logan said the organizers decided early to have a top-grade operation and "not lean on customer time." He said the organizers wanted top-quality data processing, plus experienced and committed employees.
The employees, he said, "like what they are doing. It's a first-string team."
Eighteen of the bank's 20 employees will have customer contact, Byrd said. The "back office" or operations center that plays such a big role at most financial institutions will hardly exist at Valley Bank. Only two people will be processing checks in Roanoke through the Bluefield data center.
Byrd said the back office, which accounts for a great deal of expense at most banks, is subject to technical obsolescence and is an area in which many banks lay off employees.
"For a start-up bank, we're going well beyond the norm" in staffing and automation, Lewis said.
Valley Bank
Opening: May 15; grand opening on May 22.
Offices: 32 Church Ave., downtown Roanoke. A branch opening in September on Starkey Road in Roanoke County.
Employees: 13
History: Date of organization, Jan. 6, 1994; date of incorporation, March 15, 1994.
Competition: Valley Bank hopes to earn 3 percent of the region's banking business. It's major competition is seen as First Union National Bank, which has 41 percent; Crestar Bank, 15 percent; NationsBank, 12 percent, and First Virginia Bank, 10 percent.
Financial data: As of Dec. 31, 1994, Valley Bank in organization reported assets of $577,227 and a net loss of $296,318.
Organizers:
Abney S. Boxley III, president of W.W. Boxley Co., a crushed stone supplier.
W. Jackson Burrows, vice president of Virginia Construction Supply, a distributor of construction products to commercial and highway contractors.
Guy W. Byrd Jr., Valley Bank's president and chief executive officer.
William D. Elliot, president of Davis H. Elliot Co., a construction and maintenance contractor specializing in overhead electric power lines.
Lawrence H. Hamlar, president of Hamlar-Curtis Funeral Home Inc.
Eddie F. Hearp, president of National Financial Services Inc., a personal and business insurance planning company.
Anna L. Lawson, civic leader.
Barbara B. Lemon, civic leader.
A. Wayne Lewis, Valley Bank's senior vice president and chief operating officer.
George W. Logan, president of Valley Motorsport, a dealer of imported automobiles. He is chairman of Valley Bank.
John W. Starr, a physician and member of Consultants in Cardiology and director of the Hemodynamic Laboratory at Roanoke Memorial Hospitals.
Ward W. Stevens, physician and member of Neurosurgical Associates of Roanoke Inc.
Maury L. Strauss, chairman of Strauss Construction Co., a real estate development firm.
Michael E. Warner, private investor.
by CNB