Transformation Continues at Cardinal Bankshares in Va.

The dominoes continue to fall at Cardinal Bankshares.

Less than a week after losing three board seats to a group of irate investors, the Floyd, Va., company said late Friday in a regulatory filing that two directors who survived the vote have resigned. Meanwhile, Leon Moore, Cardinal's longstanding chief executive who lost his board seat, has gone on administrative leave, according to a company representative.

Kevin Mitchell and G. Harris Warner Jr. resigned on Wednesday, a day after Schaller Equity Partners won a proxy battle to replace half of the six-member board. Mitchell and Warner were among the directors who had vowed in recent weeks to quit if Schaller's nominees were elected. Moore, who had been chairman, and Michael Larrowe, the company's presumed CEO-in-waiting, were among those ousted from the board.

The only director left from before the annual meeting is J. Howard Conduff Jr., a private dentist in the community who has been on the board for a decade. Conduff, who received the highest number of votes at Tuesday's meeting, has agreed to serve on the restructured board, a company representative said.

Larrowe said in an interview Tuesday that the board would meet later that day to discuss the vacancies. "Rather than have a fractured board, the two members agreed to step aside," Larrowe said. "The board will replace the vacancies with people who have a shared common vision with the new group," Larrowe said.

Larrowe said he is filling in for Moore — as outlined by the succession plan — until the board can confirm an official CEO.

Douglas Schaller, whose firm is Cardinal's largest outside shareholder with a 9.9% stake, initially had qualms with Larrowe's banking experience but has since expressed an interest in having Larrowe lead the company. "He is certainly capable of being president," Schaller said in an interview last week after the annual meeting. "He has an unproven track record but he's very sharp as an accountant."

Moore said in an interview after the annual meeting that he was unsure of his future with the company, though he had repeatedly talked about retiring in past interviews.

Four days before the annual meeting, Cardinal revised Moore's employment agreement, establishing a retirement date of Dec. 31, 2012, according to a May 23 filing with the Securities and Exchange Commission. The amended agreement locked in Moore's Supplemental Executive Retirement Plan and Bank-Owned Life Insurance, even if he was fired without cause. Finally, the new agreement requires the company to pay Moore's legal fees if he has to pursue litigation to enforce the new agreement and prevails. Moore had been working without an active employment agreement since December 2009, the filing said.