Patrick O'Brien's "abrupt" resignation as president and CEO of CB Financial Services Inc. and its unit Community Bank could spur buyer interest, an analyst said.
As the company searches for a new leader, its former CEO, Barron McCune Jr., has stepped in to help continue the growth initiatives started by O'Brien. McCune said in an interview that O'Brien would stay on for a "brief period" as an executive consultant. In the meantime, buyers who have been eyeing CB Financial could see the unexpected exit as an opportunity to gauge the bank's interest in a potential deal, said Michael Perito, a managing director at Keefe, Bruyette & Woods.
Western Pennsylvania is a concentrated market dominated by large banks such as PNC Financial Services Group Inc. CB Financial's top market is the Pittsburgh metro area, where PNC holds 43.3% of total deposits, as of June 30, 2019. Because of the lack of community banks in the region, CB Financial is an attractive potential target, Perito said in an interview.
"Any bank that has been interested in CB Financial will certainly inquire about what is going on and whether they can make a deal happen," Perito said. However, he said the company might not be interested in selling.
Perito pointed to the company's recent growth initiatives, such as expanding its lending team, as a reason for not selling.
"The biggest question now is who they bring in to finish those growth prospects," Perito said.
McCune, who was CEO from 2005 to 2018, was named interim president and CEO while the bank searches for its next leader, according to a news release.
"The company is fortunate to have Mr. McCune step back in. [He] still knows the customers and the employees fairly well and will hopefully help them continue to invest in and focus on those growth initiatives," Perito said.
Perito said the consultant agreement signals that O'Brien is departing amid good relations with the bank.
While some have speculated health issues or a disagreement with the company, McCune said neither of those are true and O'Brien is simply "taking some time to reflect with his family and continue his community endeavors."
Despite the reason, O'Brien's "abrupt and surprising" departure could cause the company's shares to modestly underperform in the near-term, Perito wrote in a note about the news.
CB Financial's stock price fell 2.93% on Jan. 9, compared to a 0.36% gain in the SNL U.S. Banks & Thrift index.