Bank president makes “tough decision” to retire

With his company having lost nearly $19 million in the last two years and regulatory examiners breathing down the company’s neck, the head of Central Virginia Bankshares announced his plans to retire by year’s end, the company said Friday.

Larry Lyons’ retirement isn’t the only major event playing out at the $471 million company.

CVB, the holding company for Central Virginia Bank, has been hit by just about every scenario that could have damaged a small bank during the recession.

Its troubles trace back to the earliest days of the financial crisis when Lehman Brothers went belly up and Fannie Mae and Freddie Mac were taken over the federal government. Those debacles cost CVB about $19 million in the latter part of 2008.

“Since the issues that we had with Fannie Mae and Freddie Mac, everything has been different,” Lyons said yesterday.

The Powhatan-based company, which controls more than $300 million in local deposits, has since: taken $11.3 million in capital from the U.S. Treasury through the Capital Purchase Program, part of the controversial Troubled Asset Relief Program; battled troubled loans that peaked, for now, at $31.2 million or 11 percent of $278 million in loans in the first quarter; and finally decreased and then suspended its dividend to shareholders to conserve capital.

Meanwhile, bank examiners came in during 2009, and when they left, the company announced it expects to enter a written agreement with the Virginia Bureau of Financial Institutions and the Federal Reserve by the end of the second quarter of 2010, under which CVB must devise and adhere to a turnaround plan.

It will be the third local bank to fall under such an agreement, joining Bank of Virginia and Virginia Business Bank.

Banks under such agreements often try to upgrade management.

But Lyons said his decision to retire was not a result of discussions with regulators.

“Once you pass 60, you start thinking about the possibility of retirement,” he said.

Lyons, according to CVB’s most recent proxy, is 61.
He joined the bank in 1973, when it was two-months old. “Banking was a lot simpler,” he said.

He has held the position of president since 1983.

“After 37 years, it’s just time maybe to do something different and give the bank the opportunity to do something different,” he said. “This bank is sort of a part of me. It was a tough decision.”

CVB said in a regulatory filing that it has contracted with Strategic Risk Associates, a local firm whose specialty is working with troubled banks. SRA will “support the bank and the board in the transition process,” approaching and following Lyons’ departure, CVB said.

SRA will also provide “interim senior management resources” during that transition. It has assigned Herbert E. Marth Jr., to assist CVB. Marth, who will serve as interim COO, most recently was an executive with Regions Bank in the Richmond area. He was also head of the former Regency Bank, a local bank that was acquired by BB&T in the 1990s.

CVB, which has seven branches in the area and about 100 employees, is also in midst of trying to convince shareholders to vote in favor of a proposed increase in the amount of shares it can offer, a move that will allow it to sell shares and raise capital to not only bolster the company’s reserves against bad loans, but get the regulators at least partly off its back and possibly buy its way out of TARP.

Trying to dig its way out of a $9.6 million loss in 2008, a $9.1 million loss in 2009, the company did turn a small profit, $87,000, in the first quarter, compared to a $261,000 profit in the first quarter 2009.

“We think this year will be much better, but it won’t be anything like it used to be,” Lyons said.

Lyons was paid a total of $260,632 in 2009, down from the $278,125 he made in 2008, according to the company’s recent proxy. His base salary during those two years was $224,744.

Lyons said upon retiring on Dec. 31, he plans to take a few months off and “do something a little less stressful.”

Upon retirement, Lyons will remain a director, the company said. He still owns more than 45,000 shares or 1.75 percent of the company’s common stock.

“I’ll be around,” he said.

About the Bank:
Seven branches
$278.8 million in loans
380.9 million in deposits
87 full-time and 17 part-time employees at December 31, 2009.

Michael Schwartz covers banking for BizSense. Please sends news tips to [email protected]

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