UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Form 8-K
______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): March 1, 2016
CORDIA BANCORP INC.
(Exact Name of Registrant as Specified in Charter)
| Virginia | 26-4700031 | |
| (State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification Number) |
| 11730 Hull Street Road, Midlothian, Virginia 23112 |
| (Address of Principal Executive Offices) (Zip Code) |
(804) 744-7576
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 1.01. Entry into a Material Definitive Agreement.
On March 1, 2016, Bank of Virginia (“Bank”), the wholly-owned subsidiary of Cordia Bancorp Inc. (“Cordia”), entered into a Stock Purchase Agreement with its President and Chief Executive Officer, Jack Zoeller, pursuant to which the Bank transferred certain marketing agreements, internet domains, and intellectual property relating to its student loan origination platform, called CordiaGrad, to a newly formed subsidiary, which it then sold to Mr. Zoeller in exchange for nominal consideration and Mr. Zoeller’s agreement to relinquish his rights under his employment agreement with Cordia. In connection with the closing of the transaction, Cordia took all action necessary to vest all unvested restricted stock, performance shares and stock options held by Mr. Zoeller. No loans are being sold as part of this transaction.
Pursuant to a Transition Services Agreement, the Bank, in exchange for a monthly fee, will provide the new entity with certain transition services through June 30, 2016. These transition services include certain (i) accounting and payroll services, (ii) facilities services, and (iii) information technology services.
The Bank will continue to originate student loans on behalf of the new entity for a transition period ending on June 30, 2016 under a Loan Program Agreement up to a funding limit set forth in the agreement, subject to the existence of an agreement for the purchase of the loans originated after the first 90 days of the arrangement. Pursuant to the Loan Program Agreement, the Bank will grant the new entity an exclusive right to purchase or direct the sale of all refinanced student loans held by the Bank. The Bank will pay the new entity an origination fee based on the principal amount of the loans that it originates, as well as a fee on the sale of the loans.
A copy of the press release announcing the transaction is included as Exhibit 99.1 to this Report and is incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Pursuant to the Stock Purchase Agreement described above, effective as of March 1, 2016, Jack Zoeller resigned from his positions as President and Chief Executive Officer and a director of Cordia. In connection with the closing of the transaction, Cordia took all action necessary to vest all unvested restricted stock, performance shares and stock options held by Mr. Zoeller.
Cordia has appointed O.R. (Ed) Barham, Jr. to serve as President and Chief Executive Officer of Cordia and to serve on Cordia’s Board of Directors effective as of March 1, 2016.
Item 9.01. Financial Statements and Exhibits.
| Exhibit Number | Description | |
| 99.1 | Press release dated March 1, 2016 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CORDIA BANCORP INC. | ||
| Date: March 1, 2016 | By: | /s/ Mark A. Severson |
| Name: Mark A. Severson | ||
| Title: Executive Vice President and Chief Financial Officer | ||
EXHIBIT 99.1
Cordia Bancorp Inc. Sells CordiaGrad Student Loan Origination Platform
MIDLOTHIAN, Va., March 01, 2016 (GLOBE NEWSWIRE) -- Cordia Bancorp Inc. ("Cordia") (NASDAQ:BVA), parent company of Bank of Virginia, announced today that it has sold its student loan origination platform, CordiaGrad, to its chief executive officer, Jack Zoeller, who has stepped down from his positions with Cordia and Bank of Virginia in connection with the transaction. The transaction was approved by a committee of disinterested directors and the Board of Directors. RP Financial, LC. provided a fairness opinion.
CordiaGrad, which launched in late 2014, is an online lending channel that offers refinancing to highly qualified borrowers holding federal, private, or parent student loans.
Under the terms of the agreement, Bank of Virginia transferred certain marketing agreements, internet domains, and intellectual property to a newly formed subsidiary, which it sold to Mr. Zoeller in exchange for nominal consideration and Mr. Zoeller’s agreement to relinquish his rights under his employment agreement with Cordia. Five Bank of Virginia employees, in addition to Mr. Zoeller, will transfer to the new entity. No loans are being sold as part of this transaction. In connection with the transaction, Ed Barham has been appointed as President and Chief Executive Officer of Cordia, as a director of Cordia and as Chairman of the Board of Directors of Bank of Virginia.
"This transaction will permit CordiaGrad to accelerate its growth and focus on competing in the dynamic market for on-line lending and student loan refinancing without the constraints of operating within a small community bank," said Jack Zoeller, President and CEO of Cordia. "At the same time, the transaction will reduce Cordia's non-interest expense. I know that I will leave Bank of Virginia in the competent hands of the Bank's experienced management team led by Ed Barham."
“The divestiture of Bank of Virginia’s online student lending business will help Cordia to focus on its core businesses, while allowing us to facilitate and explore future growth opportunities,” commented Ed Barham.
Cordia anticipates recording charges totaling $1.6 million in the first quarter relating to the loss on the sale of the CordiaGrad business and the vesting of equity awards held by Mr. Zoeller. The reduction to book value is expected to be approximately $740,000. The transaction is expected to be immediately accretive to Cordia’s earnings with an earnback period for tangible book value dilution of one year or less. Cordia also anticipates that the transaction will accelerate its ability to recapture the valuation allowance on its $6.1 million net deferred tax asset.
Bank of Virginia will continue to originate student loans on behalf of CordiaGrad for an interim transition period.
About Cordia Bancorp
Cordia Bancorp Inc. is a public bank holding company founded in 2009 seeking to invest in undervalued community banks and pursue organic and strategic growth in the Mid-Atlantic banking market. Substantially all of the assets of Cordia consist of its investment in Bank of Virginia. Bank of Virginia provides retail banking services to individuals and commercial customers through six full-service banking locations in the greater Richmond market, including Chesterfield and Henrico Counties and Colonial Heights, Virginia. CordiaGrad provides student loan refinancing services through two offices in Midlothian, VA and Washington, DC.
For more information about Cordia Bancorp, Bank of Virginia and CordiaGrad, visit our websites: www.cordiabancorp.com, www.bankofva.com and www.cordiagrad.com.
DISCLAIMER
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company's periodic filings with the Securities Exchange Commission. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.
FOR MORE INFORMATION CONTACT:
Mark Severson,
EVP and CFO, Cordia Bancorp Inc.
804-763-1322