Sounds like a bacterial disease, called "shot-hole" is causing the leaf problem. It is more prevalent during mild, wet summers and when overhead sprinklers are used. The bacteria has been identified, but I don't know if a treatment has been recommended. The normally recommended fungicides (Kocide101, Benomyl, etc.) doesn't seem to be effective in controlling it.
The growth problem could be caused by lack of lateral root growth into the surrounding soil. I had several that experienced similar symptoms and upon digging them up found that the roots were all wound and entangled into a tight ball, with no lateral expansion. By the time I discovered the problem, the roots were so large and rigid, that correction wasn't possible and had to discard the plants.
Good luck with yours!
Rb

It's been shown that this disease is caused by a number of pathogens, including fungal. Because bacterial agents are also at work, it can be difficult to control. One study indicated that Daconil provided reasonable results, especially when combined with common-sense cultural practices.

Work as Master Gardener here in Northern California. Have a case of shothole disease on a Carolina Laurel here after a wet winter.