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Old Dominion National injects $38.7M in capital to grow balance sheet

Funds from Old Dominion National Bank's recent capital raise will help it bulk up its balance sheet as it continues its Washington, D.C., metro area expansion, President and CEO Mark Merrill said.

The North Garden, Va.-based company, with $185.5 million in total assets, raised $38.7 million in a May 17 common equity offering. Funds from the offering will support lending, investment activities and market expansion, the company said.

Merrill said in an interview the capital raise will help the company build its balance sheet to over half a billion dollars. "This is the capital we need over the next two years or so in order to get to that size," he said.

Old Dominion has raised nearly $69 million in capital since late 2016.

When Merrill joined the bank in December 2015, he said the bank had nearly $50 million in total assets. Since then, he said he has worked to expand and reposition the franchise in the D.C. area.

"We repositioned the board and then the entire executive management team," he said. "...We see profitability next year, and then from there, continued growth. This capital should give us a pretty good runway."

Merrill said the company has carved a niche in the D.C. market, largely serving real estate, government contracting and healthcare customers with revenues of $100 million or less.

"Those are the three sectors where we've focused our efforts," he said, "and that's where we see the opportunity. There's fewer banks in that space than what we've seen here in a long time."

Proceeds of a previous capital raise helped the bank open branches in Charlottesville, Va., and Northern Virginia. Over the next couple of years, Merrill said the bank will place boutique-style branches in its D.C. metro area footprint, and may open a loan production office in Pennsylvania, where he said many of the banks investors are located.

Merrill said while nearly 80% of Old Dominion's growth stems from D.C. markets, its presence in Charlottesville and Central Pennsylvania will provide lower-cost deposits and loan portfolio diversification.

The bulk of the company's growth will be organic, he said. The company disclosed it has grown loans organically by more than 225% over the last two years.

The recent offering was upsized from $30 million, and raised by about 320 accredited individual investors in the D.C. metro area and Pennsylvania. Merrill said shareholders now own nearly 95% of the company.

"We strategically place these shares in local hands," Merrill said, "because we know it's going to bode well for business development and shareholder value."