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Nearly six months after some CertusBank investors demanded a total management overhaul, the Greenville, S.C., company elected six new board members at an annual meeting last week. Yet investors remain very concerned about the company's ongoing losses and capital levels, new Chairman John Poelker says.
August 14 -
Barney Frank, Maxine Waters and nine other Democrats urged financial regulators in 2010 to consider Certus' charter as a way to create a large minority-run bank headed by managers of "unquestioned character." That bank's big problems since suggest that, at minimum, the vote of confidence was misguided.
April 7 -
The "dream team" of bankers who set up Greenville, S.C.-based CertusBank attracted half a billion dollars from hedge funds to buy failed banks. Lately, the focus has shifted to big losses, lavish spending and payments to a consulting firm owned by top executives.
March 27 -
The Greenville, S.C., company hired John Poelker as interim CEO and ousted its top executives less than two weeks after allegations of financial mismanagement surfaced. Poelker, known for stabilizing struggling banks, could be tasked with cleaning Certus up for a buyer.
April 10 -
Three of Certus' ousted executives depict a behind-the-scenes struggle at the Greenville, S.C., bank as management, directors and investors were often working at cross purposes. The lawsuit also discusses a possible merger with an unnamed bank that never took place.
April 24
The new leadership of the troubled South Carolina lender CertusBank has not yet managed to stem the bleeding.
The $1.5 billion-asset bank lost $15 million in the third quarter, its twelfth straight quarterly loss, according to a Federal Deposit Insurance Corp. call report made public Friday.
Certus matched its $15 million second-quarter loss, a result it blamed at the time on nonrecurring costs related to its reforms.
In a statement Friday, the bank tried to emphasize the positive in its third-quarter results. "In the third quarter, CertusBank continued to make progress toward aligning our business model more closely with that of a traditional community bank," the bank said in a statement.
The statement noted that some metrics improved during the quarter. Positives included a $44 million increase in deposits and declines in both nonperforming assets and noninterest expenses, apart from credit-related costs, the bank said.
Certus has now lost $39 million through the first nine months of the year, after losing $76 million last year and $20 million in 2012.
Those results along with
Poelker has announced far-reaching reforms, but has so far not been able to put an end to the bank's losses. He has said he wants to slim down its outsized infrastructure, and in the past six months Certus has sold branches and laid off employees. Its headcount fell to 515 at Sept. 30, down from 690 at the end of last year. Last month, Certus announced the sale of its wealth management and mortgage businesses.
Certus has also sold loans to shore up its capital and attempt to reach the 10% capital level required by its charter. Its Tier 1 leverage ratio fell further in the third quarter, to 6.37%, and its total risk-based capital dropped to 9.91%.
Certus' expenses have remained stubbornly high, at $97 million through the first nine months, compared to $110 million through the same period last year.
CertusBank was founded in 2011 to roll up failed banks in the Southeast, and was backed by a $500 million commitment from a group of hedge funds. The founders were former Bank of America and Wachovia executives, and they received support from key members of Congress in their successful effort to secure a banking charter, as
Investors eventually tired of the losses, however, and forced out the three founders and lead executives, Milton Jones, Walter Davis, and Angela Webb. A fourth founder, Charles Williams, resigned shortly before the firings.
Weeks later, Jones, Davis and Webb sued CertusBank and Benjamin Weinger, a New York hedge-fund manager who agitated for their dismissal. Their
Certus recorded $2.4 million in legal expenses through the first nine months of the year.
