Cardinal Bankshares Announces Detente

The dust has seemingly settled at Cardinal Bankshares.

Cardinal's board has settled on a new chief executive and elected a new chairman, just weeks after a divisive proxy battle raised questions about the future leadership of the Floyd, Va., company.

Michael Larrowe was named president and CEO of the company and the Bank of Floyd, according to a Thursday filing with the Securities and Exchange Commission. Larrowe had been handling Cardinal's day-to-day operations since late May, when R. Leon Moore went on leave shortly after shareholders voted him off the board.

The filing said that Moore had been terminated on May 29, exactly one week after the annual meeting.

Two other directors, including Larrowe, were voted out at the annual meeting, replaced by three nominees of activist investor Schaller Equity Partners. Following the vote, two more directors left, making good on a threat to leave if the Schaller nominees were elected.

Earlier this week, the board also reinstated Larrowe as a director and named John Paul Houston, one of the Schaller nominees, as its new chairman. The board is still one member shy of its previous size, but the once-fractured group claimed to have buried the hatchet in a press release.

"It may surprise some how well the new leadership and the new board are coming together," Houston said in the release. "We were elected because shareholders believed that the right people could make a good bank better."

Houston also praised Larrowe as their future leader, striking a stark contrast to past rhetoric. Douglas Schaller, Cardinal's largest shareholder, once derided Larrowe as inexperienced before warming up to the executive in recent weeks.

Larrowe "has proven himself over and over during his banking career as someone with an extraordinary range of skills and experience," Houston said. "Mike is exactly what our bank needs."