City Holding Co. of Charleston, W.Va., is keeping its options open and its mouth shut.
Steven J. Day stepped down as chief executive two weeks ago. Company officials -including acting president and CEO Robert A. Henson - declined to comment.
Mr. Day's resignation is emblematic of City Holding's hard times. In the last six months it has seen two deals fall through, boosted loss reserves to address regulators' concerns about credit quality, and reported a fourth-quarter loss for the second straight year.
Its stock price - which was trading as high as $27 in June 1999 - has lost about 75% of its value since then. Though it shot up above $9 on June 14, the day that Mr. Day's resignation was announced in a news release, the stock was trading at $7.25 midday Friday.
In the release, Mr. Day said it was "the right time" for a change for him and for $2.8 billion-asset City Holding, which he said "needs a new leader." Mr. Day, 47, had been CEO for 10 years.
A search is on for a new CEO, and Mr. Henson, 38, the former chief financial officer, will be considered, the release said.
City Holding's reticence about its problems has made it difficult for analysts to take its pulse. First Union Securities had been following the company but stopped doing so recently because it has been "unable to get any information" from management, said Christopher Murphy, an analyst at the Richmond, Va., company.
City Holding, which owns seven banks in West Virginia, Ohio, and California, also did not respond to American Banker's phone calls seeking comment. Mr. Murphy said City Holding's recent troubles have put pressure on the board of directors "to make some changes and turn the company around." He speculated that the board "felt that Steve Day had to go in order to do that."
Earnings in particular have troubled City Holding. In April the company restated 1999 earnings after regulators forced it to increase loan-loss reserves by $6 million. This increase was in addition to a $5.9 million provision made in 1999 to address concerns about the loan portfolio's credit quality.
In the fourth quarter of last year, City Holding lost more than $8 million, partly because of a $9.2 million writeoff in connection with the securitization of loans, it said. A year earlier it lost $15 million in the fourth quarter, mostly, it said, because of charges related to its merger with Horizon Bancorp of Beckley, W.Va., in 1998. In the first quarter of this year, net income fell 23%, to $4 million, from the year-earlier period.
The company has also had trouble closing deals. Last month, an agreement with PSB Lending, an affiliate of Pacific Financial Group in Dallas, was mutually terminated for unknown reasons. City Holding's lead bank, City National Bank of West Virginia, was to sell a $1.75 billion servicing portfolio to PSB for $42 million. After that deal fell through, the company said it would downsize its loan and origination division and relocate it from Irvine, Calif., to its offices in Virginia and West Virginia. That restructuring cost $1.1 million.
Weeks earlier City Holding's deal to buy $201 million-asset Summit State Bank in Rohnert Park, Calif., was canceled. Mr. Day said at the time that City Holding's falling stock price was the deal-breaker.
