Could VNB come to Culpeper?

CHARLOTTESVILLE —Veteran banker Glenn Rust has been a licensed locksmith, a molecular biologist at NASA, a state championship-winning high school football coach in Texas, a paramedic and an adviser to the U.S. Department of Homeland Security.

Since June 2007, Rust has been CEO and president of Virginia National Bank — a Charlottesville-headquartered bank with eight branches and roughly $330 million in assets.

Rust sat down with The Daily Progress to discuss the Charlottesville region’s economy, the nation’s financial crisis and his plans for Virginia National Bank’s future growth.

Q. There’s an awful lot of bad economic news out there right now. How do you think Charlottesville’s economy is faring?

A. We know the housing market is slow. We know appraisals are down. That’s not a big secret. Those issues have hit Charlottesville and have hit the rest of the country.

But while it’s hit here, the numbers aren’t showing the crazy decline that we’re seeing elsewhere, like in Northern Virginia.

Now, that being said, we’re also seeing almost all businesses in Charlottesville getting somewhat more conservative. What I mean by conservative is that they don’t know how this is going to affect them yet, so they just hunker down. We are seeing a wait-and-see attitude start to happen. It doesn’t mean they’re not growing their business, it just means that if they don’t need to spend, they’re not going to do it. Discretionary spending, both on the personal side and the business side, is starting to tumble downward.

The other thing in the economy, which has been great for Virginia National Bank, is that some other banks aren’t willing to lend in certain areas, such as real estate. Ever since this mess started, we’ve always said that we have money to lend. We’re still looking at deal after deal after deal. Some banks have called a time out on certain sectors of lending, including real estate, student loans and home equity loans.

Q. Do you support the proposed $700 billion bailout of the financial industry?

A. We have learned from history that sometimes things can be so big that if you let them fail, things just keep getting worse. Is this one of those things? I happen to think it might be.

I assess this $700 billion - and let’s just call it what it is: it’s not going to be $700 billion. At the end of the day, it’s probably going to be more like $900 billion. Plus, you add in the AIG, you add in all that. You get what? $1.1 trillion?

If we’re going to do it, let’s make sure we get the oversight right. Let’s make sure that we’ve got some really solid experts. Let’s put some regulation into this. We’ve created a regulatory hole and that needs to be firmed up. Regulatory laws need to be put into place to make sure that this never happens again.

And lastly, whether it’s $700 billion or $1.1 trillion or whatever, we’ve got to come back and find a way to balance the federal budget. Because you know what? It’s [the younger] generation that’s going to be paying for it.

Q. Through all this economic uncertainty, how is Virginia National Bank performing?

A. The economy’s in a rough patch, there’s no two ways about it. We’re doing good for the following reasons. First reason is, this bank has had a loan discipline.

Our asset quality is very good at the bank. Our loan portfolio is functioning very well. And that’s because in how they made loans, they’ve shown very strict discipline. We don’t have to worry about our asset quality. And that, by the way, is the single biggest thing that a lot of banks are dying on. We don’t have that problem.

Second biggest thing: What’s in our investment portfolio? Because you read about that now. A guy has a $100 million in their investment portfolio, but guess what? It was all in hedge funds. And now it’s all down to $30 million.

Our balance sheet is simple. It’s easy to read. There’s not a lot of junk in it. When you go to our securities portfolio, it’s government-backed securities. There’s no hedge funds in there. There’s none of this garbage that was deemed acceptable and got better returns for a lot of years. When you asked the question, what if? And they didn’t have an answer. We stayed away from that. Again, discipline.

Our investment portfolio has done very well and continues to. We’re not posting losses. We may not be making 9 percent. But it’s a return. And it’s got a positive number next to it. It’s not got a negative number next to it. That’s another aspect of the bank doing very well.

Q. Where in Virginia would Virginia National Bank like to expand?

A. We have four offices in Charlottesville, two in Winchester, one in Arvonia and one in Orange.

So where would I like to go? Richmond. It’s got a nice tight triangulation — there’s Charlottesville, Arvonia and Richmond.

Culpeper. I’m not saying that we’re going there. But when you look at a map, you would say a natural triangulation would be Culpeper. It’s not doing so good now, but a few years ago it was doing great. It may do well again. It probably will. Culpeper? Hmmm. That makes good sense. As far as distance goes, the triangulation there is fairly small. Then you could work your triangulations out across the state. If you stay small, most of the time, it really helps you because you understand the market.