Governance

Banking Woes Affect McCain’s CFO Son

Andrew McCain, son of the Presidential candidate and CFO of Cindy McCain's beer distributorship, resigned last month from the board of a bank that ...
Stephen TaubAugust 15, 2008

The banking industry’s ongoing woes were already a subject in the Presidential campaign. But the issue became more personal for one of the candidates on Friday when The Wall Street Journal reported that Andrew McCain, son of presumptive Republican Presidential nominee Sen. John McCain, had resigned his position on the board of troubled Silver State Bancorp.

The younger McCain is CFO of Hensley & Co., an Arizona beer distributor owned by his stepmother, Cindy McCain. He resigned his position as board member of Silver State Bancorp on July 25, citing “personal” reasons.

One week after McCain resigned from the board, Silver State Bancorp announced a $62.7 million net loss for the second quarter, as well as the resignation of the bank’s CEO and chairman.

The bank announced in a regulatory filing on Thursday that its second-quarter net loss was actually $73.2 million, higher than the loss it had previously announced the week after McCain’s resignation. The bank said the higher loss was the result of an increase in the company’s provision for loan loss reserve for the quarter to $69.1 million from the previously reported $58.6 million. As a result, the bank also announced uncertainty about its ability to “continue as a going concern.”

The increased provision is due primarily to the company receiving an updated appraisal on the collateral underlying one of the its commercial land loans subsequent to issuing the initial earnings press release, the company said. Those loans appear to be one of the causes of the bank’s current troubles — there is no indication that McCain or other bank officials did anything wrong.

McCain previously served as a director of Choice Bank in Scottsdale, Arizona, from 2006 to April 1, 2008, when it merged into Silver State Bank. He had been appointed to the boards of Silver State Bancorp and Silver State Bank in February 2008, and served on Silver State’s three-person audit committee.

According to the Journal, McCain resigned at the urging of associates who felt his position on the board could become a liability in his father’s Presidential bid. McCain also had recently accepted the chairmanship of the Greater Phoenix Chamber of Commerce, and, according to the sources cited by the Journal, had concerns about balancing his responsibilities as a CFO and as Chamber of Commerce chairman with the demands that the troubled bank was likely to place on its board members.