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VCC Opens Virginia's First Community Development Bank

8/28/2008

VCC Opens Virginia’s First Community Development Bank
Bank will be wholly-owned by the non-profit, non-stock CDFI
 
CHRISTIANSBURG, Va. – August 26, 2008 – Virginia Community Capital (VCC), a non-profit Community Development Financial Institution (CDFI), announces the opening of the first state-chartered community development bank in the Commonwealth of Virginia, wholly-owned by a non-stock, non-profit entity. This innovative new financial model, funded initially through a state grant, will be utilized to leverage millions of dollars of capital into underserved communities throughout the Commonwealth of Virginia.
 
Community Capital Bank of Virginia (CCB), which opened today at 990 Cambria Street, N.E. in Christiansburg, Va., is a for-profit, FDIC-insured, commercial bank. Unlike traditional banks, however, CCB does not offer consumer services such as ATM’s, on-line banking or debit/credit cards. Rather, deposit services are targeted to institutional investors, community banks, and socially conscious investors. Loan products include commercial loans for affordable housing and mixed-use projects, economic development deals and community facilities.
 
“By definition all banks, including community development banks, must be a for-profit entity,” said Dixon Hanna, Associate Provost for Academic Planning, Resources, and Space at Virginia Tech and VCC’s Board of Directors Chair. “Because the new bank is wholly owned by the non-profit CDFI, all profits can be retained in the bank or paid as dividends to the non-profit to further VCC’s mission. This model ensures that all capital and earnings stay focused on community development and improving underserved neighborhoods and towns throughout Virginia.”
 
Planning for the bank began in 2005 when the Commonwealth of Virginia granted $15 million to create and build capacity for a statewide community development financial institution (CDFI) and community development bank. By year-end 2007, VCC was a viable, statewide non-profit CDFI actively lending money to affordable housing and small economic development projects.
 
“The new bank will expand VCC’s ability to attract capital to fund more community development projects, acquire deposits from socially conscious investors, and further leverage existing capital to provide products and services to underserved markets in Virginia,” said Jane Henderson, President and CEO of VCC. “We are excited about this new phase of our business plan and hope to demonstrate that this innovative capital contribution, combined with a new financial structure and governance from both financial and community development professionals, can be a very effective solution to some of the most pressing capital needs throughout the state.”
 
Sandy Fitz-Hugh, a founding board member of VCC, said the new community development bank will also leverage valuable technical assistance needed to meet these capital needs.
 
“As a veteran banker of a large national financial institution, I have seen first-hand how experienced community development bankers can work to transform neighborhoods and small communities,” said Fitz-Hugh. “They bring experience and understanding of how to blend government, private, and foundation capital in order to initiate change and revitalization. VCC has a team of these experienced bankers ready to serve the Commonwealth.”
 
The CCB and VCC business models allow community banks to receive Community Reinvestment Act credit for any loan participation, deposit or investment they do with CCB or VCC.
 
“CCB will not compete directly with other community banks in the state, but rather be an active partner with these organizations,” Henderson said. “We hope community banks will consider us as an additional source to do more community development projects.”
 
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About Virginia Community Capital:
Virginia Community Capital (VCC) is a multi-million dollar non-profit, community development financial institution (CDFI) and banking entity providing innovative loan and investment solutions for affordable housing and economic development projects in the Commonwealth of Virginia. Our mission is to offer innovative, flexible financial products designed to support housing and community development ventures, increase jobs and build sustainable communities. VCC offers loan capital that is broader than bank lending to projects that have a positive community impact in low- to moderate-income communities in underserved geographies and markets. To learn more about the organization, visit: www.vacommunitycapital.org.