The firing of Trans Financial Inc.'s chairman and chief executive last week apparently was the culmination of dissatisfaction with his business strategies and the poor performance of the bank's stock.
"These things don't just happen in a day," said Michael J. Moser, senior vice president at the Bowling Green, Ky., banking company "It boiled down to the direction the company was taking, and the board had one idea of what would return shareholder value, and he had another - and they were not exactly in sync."
During his 12 years in charge, Douglas M. Lester built the bank into a $1.8 billion-asset multiservice company, nearly 10 times its original size. But its stock value has suffered, languishing in the mid-teens after reaching as high as $23 three years ago.
Mr. Lester could not be reached for comment.
Last Wednesday, a day after Mr. Lester's firing, the company's stock jumped by more than 10%, to $17.50 - its highest in six months. Morgan Keegan & Co.'s analyst, John Moore, immediately raised the bank's rating from "hold" to "buy" at the news and boosted his 1997 earnings estimate for the company by 15 cents, to $1.75.
"The real challenge for them right now is to find the right person who can quickly get the company back on the road again," Mr. Moore said.
Trans Financial said in a release that the board is forming a search committee that will consider candidates both inside and outside the company. In the meantime, Thomas R. Wallingford, a director, has stepped in as acting chairman, and executive vice president Vince A. Berta has been appointed acting president and CEO.
Displeasure with Mr. Lester's approach focused on his diversification efforts in recent years and the company's failure to achieve cost savings from the moves, analysts and institutional investors said.
Specifically, Mr. Lester pushed the company into a variety of new product areas - including subsidiaries in trust, investment, travel, and employee development services - in an effort to make it a one-stop financial services company.
Mr. Lester, 53, also made a string of bank and thrift acquisitions in the 1990s that ultimately proved dilutive to earnings and hurt the company's stock price, the analysts said.
Trans Financial's efficiency ratio, a source of concern in recent years, climbed to 73.17% in the first quarter. Mr. Moore said that's the highest ROE among the 50 banks in the region that he covers. The average ratio for those banks is 61.5%, he said.
Among the legacies from the Lester regime most likely to be jettisoned in the coming months is an eight-seat, twin-engine corporate jet the former chairman and his management team used to travel to the company's various locations in Tennessee and Kentucky. The company hopes to get around $3 million for it, an official said.
"It seemed very big-cityish, and ultimately I don't think it sat very well with the board," said a Kentucky lawyer who requested anonymity.
