As a result of [WORD ILLEGIBLE] of Virginia bank branching laws, Virginia National Bankshares Banks in Richmond, Lynchburg and Martinsville will merged into the corporation's lead bank here by late August, bank officials announced at the company's annual meeting yesterday.
The Virginia General Assembly earlier this year passed a bill allowing the bank was a home office at any time in its history to establish new branches within its area, as if it were an independent bank. Gov. John Dalton supports the measure.
Previouly, Virgnia banks could acquire other banks and establish new branches in their market areas only if they did so as a bank holding company, making, each acquired [WORD ILLEGIBLE] a separate affiliate.
"The change in the law will allow us to extend all of our services to the communities served by these banks the way we do with our lead bank. Virginia National President [WORD ILLEGIBLE] Cutchins III told shareholders [WORD ILLEGIBLE] merging these banks is a much [WORD ILLEGIBLE] cumbersome way of handling our business." Cutchins said merger of Virginia National Affiliates into [WORD ILLEGIBLE] bank would offer better operation efficiency and eliminate separate [WORD ILLEGIBLE] requirements for each of the banks.
"This legislation permits us to become a 'one-bank' holding company, which is corporate structure enjoyed by the banking industry in most southeastern states," he said.
Turning the bank earnings, officials reiterated that income for 1978's first quarter marked the bank's best first securities transactions of $3.8 million (84 cents a share) a 38.9 percent gain over $2.76 million (61 cents) a year ago.
W. Wright Harrison, board chairman and chief executive officer of Virginia National, said 60 of the nation's 100 largest bank holding companies have reported first-quarter earings and that Virginia National's increase ranked fourteen largest among them.
He doesn't expect to notch similar gains for the rest of the year. "But we do expect to exceed last year's earnings with some ease," he said.
In 1977, Virginia National enjoyed the highest earnings in th company's history, with per share income up 14.4 percent and net income per share up 15.3 percent.
Among other things, Harrison attributed the 1977 increase to improved economic conditions and a hefty increase in average deposits and average loans. He said that first-quarter results reflected similar trends, especially in loans.
"Virginia National continues to be a retail-oriented participant in the economy of Virginia, and thus it continues to benefit from the stable diversity and health conditions of Virginia's economy." Harrison said. "Bank loans throughout Virginia, both in average installment and credit card loans (net of unearned income) increased a significant 18.8 per cent over the first quarter of 1977.
" . . . We see no impending deterrents to continue growth throughout 1978 and perhaps well into 1979."
Harrison also pointed to a federal grand jury investigation of Virginia National underway in Richmond of allegations that the bank illegally transferred stock among trust funds in 1976.
A former investment officer of the bank has told authorities that it was a practice of other officers to buy stock, and then wait a few days to see if it went up or down before deciding in which trust account to replace the stock.
harrison said representatives of the office of the Comptroller of the Currency, which regulates national banks, and & Ernst. the certified public accounting firm, reviewed the bank's entire trust operation. He said they concluded that there were "certain breakdowns" in documentation procedures in block trading and inadequate formal written procedures for handling such matters.