An activist investor at Cardinal Bankshares Corp. in Floyd, Va., is protesting the company's latest executive hire.
In a letter to the board last week, Douglas Schaller, who has a 9% stake in Cardinal, questioned the recent appointment of Michael D. Larrowe as executive vice president of the $238 million-asset company and its subsidiary, Bank of Floyd. Larrowe's appointment was announced July 25.
Larrowe was public accountant for 29 years, largely working with banks, including Cardinal.
But Schaller's main concern is with Larrowe's hands-on banking experience.
Cardinal said in the release that Larrowe had "practical banking experience" by serving as chief operating officer and chief financial officer at two community banks.
Schaller argues that his experience is limited because he worked at those two banks, Bank of Carolinas in Mocksville, N.C., and Waccamaw Bank in Whiteville, N.C., for a total of just three years' experience. He also contended that Larrowe was fired from Bank of Carolinas and left Waccamaw after five months on the job.
"Frankly, and with due respect for Mr. Larrowe, those experiences hardly qualify as stellar or extensive for purposes of leading the bank," said Schaller in his letter dated July 27.
Schaller, a general partner at Schaller Equity Partners, became active with Cardinal after its chief executive officer, Henry Logue, abruptly resigned May 31. Leon Moore was then appointed as chairman, president and chief executive. Schaller said in his letter that he believes Larrowe is being groomed for the CEO position.
In a phone interview Monday, Moore said the company was considering "a lot of options" with regard to the chief position and would file a formal response to Schaller shortly.
Schaller said he was disappointed in the appointment, further fueling his "deep and broader concern about whether the board is discharging faithfully its fiduciary duty to ensure high quality, continuity and stability" in the company and bank. He's calling for the bank to sell itself and said he is reviewing further legal action.