New Richmond bank to focus on small and mid-sized businesses

by Jack Milligan
for Virginia Business
February 2006

It seems to be a never-ending cycle in a banking industry that has been merger crazy for most of the past 15 years. A bank president with a long Rolodex of contacts decides that he doesn’t want to work for a large organization any longer, so he raises a pot full of money and starts a community bank. That’s pretty much Merlin A. Henkel’s story — and he’s having the time of his life.

Henkel, 50, has spent most of his professional life as a Virginia banker. From 2000 to February 2005, he was a regional president for Resource Bancshares in Virginia Beach — which was acquired by Lancaster, Pa.-based Fulton Financial Corp. in September 2003. From 1993 through 1997, Henkel was a senior executive at Regency Bank in Richmond, serving as president during his tenure. Regency was acquired by Martinsville-based MainStreet Bank Group Inc., and Henkel spent 1998 as president of MainStreet’s Cen-tral Virginia operation.

When it comes to bank acquisitions, Henkel has been there and done that. So when he started to feel the itch to run his own show again, he teamed up with former colleague Thomas L. Hotchkiss, who had been MainStreet’s senior credit officer. The two men have since raised $16.8 million in equity capital to start the Virginia Business Bank, which will be based in Richmond and focus on its business community. The bank will operate from a single office in the Stony Point Office Park. It will offer a full range of loan and deposit products for consumers and businesses, although its primary focus will be on small and mid-sized companies. Henkel will be president and CEO, and Hotchkiss will serve as the bank’s chief credit officer.

In an interview, Henkel says that large banks “just don’t pay attention to the under $5 million [business] market any more,” while most community banks concentrate on companies with $1 million in annual sales or less. He allows that there have been a number of community bank startups in Richmond over the past five years, but he intends to target that $1 million to $5 million niche.

Virginia Business Bank expected to open its doors next month.