Activist Claims to Win Board Seats at Cardinal Bankshares

An activist shareholder claims to have won half the seats on the board of Cardinal Bankshares in Floyd, Va.

"The coalition won three of six seats on the board," Douglas Schaller, the president of Schaller Equity Partners in Winston-Salem, N.C., wrote in a brief email to American Banker. "The independent vote counter will be certifying the final results this morning. All of the former board members have continued to say they will not serve with the new directors"

A lengthy and contentious proxy battle concluded with an annual meeting in Floyd Tuesday. Cardinal had not issued any results as of Wednesday morning; a woman answering the phone for the company said late Tuesday that the meeting was ongoing with no results ready to report.

Schaller and the $254 million-asset Cardinal have been at odds for a year. The battle began last summer, soon after Henry Logue resigned as Cardinal's executive vice president. Leon Moore, the company’s chief executive, brought in Michael Larrowe, intending to tap the newcomer as his successor. That led Schaller to file his first open letter in September, questioning Larrowe's banking expertise.

Schaller has also questioned the delayed time it took for Cardinal to disclose its loan classifications despite having a new accountant. Cardinal's board, convinced that Schaller's only goal is to get the company to sell itself, has fought back, eventually rallying its employees to its defense.

Schaller, who owns nearly 10% of the company’s stock, supported the Coalition to Improve the Bank of Floyd, a group that proposed having up to five local residents join the board.