Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, July 15, 1994 TAG: 9407160012
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
The company hopes to sell 800,000 to 1.2 million shares at $10 a share in order to raise the bank's initial capital of $8 million to $12 million.
The stock is being offered through a group of brokers led by Scott & Stringfellow. Its co-agents are Wheat First Butcher Singer, Ferguson Andrews & Associates, A.G. Edwards & Sons and J.C. Bradford & Co. All have offices in Roanoke and throughout Virginia.
Shares will not be listed on any national exchange, although the agents expect to make a market in the shares, the company said.
The stock sale's prospectus, released Thursday, said Valley Financial Corp. was chartered by the State Corporation Commission in March, but federal regulators have yet to approve founding of the new bank.
Therefore, money raised from the stock offering will be held in escrow by Wachovia Bank, based in Winston-Salem, N.C., until the minimum number of shares have been sold and the U.S. Comptroller of the Currency has granted the bank preliminary approval to operate.
If those conditions are not met, the prospectus said, the money will be returned to the initial subscribers.
If the conditions are met so that steps are taken to open the bank, stock will be issued and the shareholders would assume risk if the bank fails to open as planned.
The Office of the Comptroller of the Currency is expected to grant its preliminary approval in August.
The minimum number of shares must be sold by Dec. 31, although the directors could extend this deadline until Aug. 1, 1995.
The 14 organizers of the bank - who will be the initial board of directors - have contracted with their families to buy 301,750 shares. That is 37.7 percent of the minimum number of shares and 25.2 percent of the maximum number of shares. Some of them may buy more.
The largest single shareholder will be the bank's chairman, George W. Logan, who proposes to buy 40,000 shares, or 5 percent of the minimum stock issue, the company said.
The prospectus said the shares owned by the directors will give them effective control of the company.
The bank will not pay dividends in the foreseeable future, the prospectus said. All earnings will be retained for expansion of Valley Bank in the near future. Nor will the directors earn fees.
Valley Bank will be capitalized at $7.5 million. The balance of the money raised in the stock sale will be used for working capital.
The company will remodel leased space in the old First Federal Building at a cost of about $500,000. That will be its headquarters branch.
Also, Valley Financial has contracted to purchase a one-acre site on Starkey Road, just north of Electric Road in Roanoke County, for $272,250. Although $25,000 will be paid in advance, closing isn't scheduled until Nov. 30 and is contingent on success of the stock sale and regulatory approvals.
The prospectus said Valley Bank will be limited by its $7.5 million capital to a maximum loan to any one person of $1,032,000, although a secured loan could go as high as $1,720,000.
Valley Financial said it will engage in a general commercial and retail banking business emphasizing the needs of small businesses, professional concerns and individuals in the Roanoke Valley.
by CNB