If Cathleen Nash got rattled easily, she might have let that first investor conference get to her.
It came three days after her appointment in January 2009 as the CEO of Citizens Republic Bancorp, and four days after the company announced a $195.4 million quarterly loss that prompted widespread doubt about its ability to survive. "I'd never done an investor presentation," says Nash. "I had no clue what I was doing."
She picked all the wrong talking points, based on how her audience reacted. And the investors seemed to completely dismiss the one thing Nash considered paramount: the way she envisioned her relationship with employees.
"I realized that there were people invested in our stock who had a very different set of values than I did," she says.
"We did not believe in the same things. They couldn't care less about the employees feeling free to disagree with me. It wasn't even on their radar screen of important things. I would say to them, 'It is one of the most important things.' And we would debate."
Now that the $9.7 billion-asset Citizens is profitable again and being sold to FirstMerit of Akron, Ohio, for $912 million in stock, Nash still believes her relationship with employees is paramount. (She credits teamwork for the success.)
The sale price, at 1.26 times Citizens' tangible book value, would have been unthinkable before Nash executed on her recovery plan—and pulled it off in long troubled Michigan of all places. The sale is expected to close in the second quarter.
"She's done a great job strategically," from managing the company through the crisis to selling it, says Matthew
Schultheis, an analyst with Boenning & Scattergood.
Nash made several bold moves along the way.
She rolled $926 million of stressed assets off Citizens' balance sheet in a six-month period ending March 2011, dramatically improving its risk profile. The purge allowed the company, after 12 consecutive quarters of losses, to post a profit in the second quarter of last year, one quarter ahead of stated expectations.
She also led a risky, but ultimately successful, reverse stock split in July 2011, to improve Citizens' share price and avoid being delisted. The stock jumped 85 percent in 2011, while the KBW Bank Index dropped 25 percent that year.
At her first board meeting, Nash recalls, "I said, 'My job is to get this bank back to a place where it has options. Today we don't have any options.'"
She says she did not know then what the options might look like, but she came up with a recovery plan. It entailed recognizing the size of the problem, proactively communicating with regulators, and being reliable.
"If we said to our regulators we were going to do 'X,' we went and did 'X,'" she says. "We didn't miss our forecasts.
They were ugly forecasts. For 12 quarters, they were ugly. But we didn't miss them."
Nash says she has only two regrets about how she handled Citizens' recovery.
After exchanging trust preferred securities and subordinated debt for common shares in September 2009—a move that added $199 million of Tier I common equity—Citizens filed a shelf registration. Though Nash says she had no intention of raising capital, filing a shelf seemed like a practical thing to do, in case the need ever arose in the future.