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Cardinal Bankshares Corp. in Floyd, Va., has settled a dispute with a former executive it claims was conspiring with an investor to force its sale.
June 29 -
Cardinal Bankshares in Floyd, Va., is developing a comprehensive plan just weeks after a proxy battle brought in three new directors and led to the ouster of its chief executive.
June 15 -
Recent proxy battles show that the high-stakes clashes are getting pricey for management teams and irate shareholders.
June 4
Cardinal Bankshares (CDBK) posted a loss in its first quarter since a shareholder revolt reshaped the Floyd, Va., company's board and accelerated the departure of its longtime chief executive.
The $278 million-asset company posted a loss of $3.3 million in the second quarter, after a $321,000 profit a year earlier. It said in a press release that the quarter included about $3.2 million in special expenses from costs tied to a proxy battle, compensation for former CEO Leon Wood, subordinated debt chargeoffs and litigation settlement costs.
Cardinal was embroiled in a yearlong proxy battle with its largest shareholder, Schaller Equity Partners in Winston-Salem, N.C., after Henry Logue resigned as president of the Bank of Floyd in May 2011. Schaller succeeded at this year's annual meeting in getting three directors added to Cardinal's six-member board. Moore, who was ousted as chairman, left the company, and two other directors resigned.
The new directors have since forged an alliance with Michael Larrowe, a Cardinal executive who was also removed as a director at this year's annual meeting. The board reinstated Larrowe as a director and promoted him to succeed Moore.
Cardinal said in June that it had
The new board also decided to take a hard look at the loan portfolio during the second quarter. The company's loan-loss provision jumped to $4 million in the second quarter, from just $253,000 a year earlier. Chargeoffs totaled $3.9 million, with most involving commercial loans. Cardinal also incurred $407,000 in foreclosed asset expenses, compared with $27,000 a year earlier.
"Our management team and board … made the decision to clean our balance sheet of weaker assets that were diverting our attention from where we really needed to focus," Larrowe said in the release. "Addressing these charges now provides a more accurate, conservative view of our current financial position."
Larrowe said Cardinal believes it has identified and properly established reserves for any remaining loan problems.
Noninterest expense rose nearly doubled from a year earlier, to $2.7 million. In its quarterly filing with the Securities and Exchange Commission, Cardinal also highlighted an increase in salaries and employee benefits tied to former executive expenses and a supplemental executive retirement plan for Larrowe.
