President and CEO George Longest Jr. of Glen Allen-based Community Bankers Trust Co. and its subsidiary Essex Bank stepped down Thursday as the company announced it would lay off 10 percent of its full-time workforce.
The company lost $29.3 million in 2009 and lost $23 million through the first six months of this year. It didn’t give an exact number of how many workers were being eliminated, but Essex Bank had 304 employees as of June 30, according FDIC records. If those numbers are still current, about 30 CBTC employees will lose their jobs during the third and fourth quarters.
Those layoffs will occur in all three markets in which the bank has branches: Central Virginia, Maryland and Georgia. The cuts will save the company $2.3 million, it said in the release.
CBTC Chairman Alexander Dillard Jr. acknowledged in a company release last week that the decision to cut workers was a difficult one.
“It is, however, important for the company to implement this expense reduction initiative consistent with the best interests of its stockholders,” Dillard said.
Although Longest has left his post at the head of the company, he hasn’t left completely. The company said Longest will assume new responsibilities at a non-management level within the bank.
Calls to Longest were not returned.
BizSense obtained a letter Longest sent to CBTC employees last Thursday, but it didn’t give any further clues as to why or how his decision was made.
CBTC said its board will immediately begin a search to replace Longest. Rex Smith III, the company’s chief banking officer and the former head of Bank of Richmond, will replace Longest in the interim.
With $1.2 billion in assets, CBTC has grown through acquisition. After acquiring several rural Central Virginia banks, it acquired the assets of failed banks in Georgia and Maryland in 2008 and 2009. Today it has 25 branches, 14 of which are in Virginia.
It has $46 million in non-performing assets on its books that aren’t covered by an FDIC loss share agreement. That agreement, which the company entered into when it acquired the assets of the two failed banks, forces the FDIC to cover a certain percentage of losses on loans acquired from the failures.
Including both loans that are covered by the loss share provision and those that are not, the company has more than $100 million in impaired loans.
CBTC also received $17.7 million in December 2008 from the U.S. Treasury as part of the Troubled Asset Relief Program. However it recently informed the Treasury that it was unable to pay the $221,000 in dividends due this quarter.
Longest’s departure from his post comes as a bit of a surprise, because he recently vowed to return the company to profitability by any means necessary. (You can read about that in an RBS story here.)
In the banking world these days, a change in leadership at the top of struggling banks sometimes signifies the early stages of a bank looking to comply with watchful regulators. But neither Essex nor CBTC is currently under any such agreement.
Michael Schwartz covers banking for BizSense. Please send news tips to [email protected].