The interim president and chief executive of CertusBank said Thursday the Greenville-based financial institution remains on solid footing and its new leadership is developing a strategic plan to restore profitability.
The bank “is being built to be a larger operation and so there’s a pretty heavy infrastructure cost that’s been imposed and incurred in order to position the bank for future growth,” said industry veteran John S. Poelker, named interim Certus president and CEO this week after the termination of three top company executives.
The challenge in the next couple of years is “to make sure that we have equilibrium between the amount of revenue that we can produce and the amount of expenses we’re incurring on a day-to-day basis,” Poelker said in an exclusive interview with The Greenville News.
“My own belief is looking at the businesses we’re in and the structure that we have here is that there will be a significant contribution from improved revenue production out of our core businesses,” he said.
“As we go through that growth period we will very carefully be looking at operating expenses to make sure that we’re keeping them in the proper balance.
“Right now, they’re out of balance.”
Poelker also said bank customers “should be entirely comfortable doing business with Certus.”
Poelker and Robert L. Wright, the bank’s new chairman, discussed the bank’s new direction following the termination of the top executives and issues raised by a trade publication about alleged company mismanagement.
The $1.66 billion-asset bank said Wednesday that Milton Jones, Walter Davis and Angela Webb were terminated from their respective posts as executive chairman, chief executive officer and president.
Earlier this month, Certus officials said Charles M. Williams resigned as vice chairman in a long-planned move.
None could be reached for comment.
Wright, a Certus board member and chairman and CEO of FE Holdings Inc., succeeded Jones as the bank’s chairman.
Certus has lost $84.1 million in the last two years, according to Federal Deposit Insurance Corp. records, and has been dealing with questions about a number of the privately held company’s expenses.
On March 29, The Greenville News reported Certus was looking into issues raised in a story by trade publication American Banker that cited sources alleging “gross mismanagement by senior executives.”
American Banker reported some investors questioned several expenses by Certus.
Those expenses, the publication reported, include “nearly $10 million paid to a consulting firm owned by Certus’ top officers; $146,000 for three months of work by an executive’s son fresh out of college; $2.5 million for three executive apartments and high-end upgrades; $347,000 for private plane trips; $131,000 for Carolina Panthers games; several hundred thousand dollars for sponsorships and charitable gifts; and more than $500,000 for American Express bills.”
Poelker told The News the consulting contract ended last year. He didn’t discuss specifics of the other allegations.
“We’ve got a good, solid physical presence in terms of our branch network,” Poelker said. “We’ve got solid products and services that we’re delivering to our customers and we’ve got a solid financial footing in terms of our capital base.”
He said credit losses have been a serious threat to banks’ profitability and Certus has been no exception.
“A very important part of what we’re doing moving forward is continuing to add new high-quality, good-performing loans to the (bank’s) portfolio,” Poelker said.
“There’s nothing fundamentally flawed with the business model of CertusBank,” Poelker said.
He also said, “The last thing that we want to do, and that I have never been a believer in, is say, ‘we’ve got some profitability problems, let’s start a bunch of across-the-board expense cuts.’
“What you end up doing there is cutting expenses in the wrong places.”
In a message to employees Wednesday, Poelker said he was grateful for the Certus board’s confidence.
“As I assess the situation of the bank and report to the board of directors about what needs to be done to move forward, I will need your help and your continued commitment to doing the right thing every step of the way,” Poelker said.
“Together, we will work diligently to strengthen CertusBank and emerge successfully from this challenging period.”
He said he will maintain an office in Greenville.
Poelker has more than 40 years of experience in commercial banking and consumer finance.
Since 2005, Poelker has been president of The Poelker Consultancy Inc. — an Atlanta-based firm that provides strategic and advisory services to financial services organizations.
Wright has been a member of AFLAC Inc.’s board of directors since 1999. He is director emeritus and past chairman of AFLAC’s audit committee.
FE Holdings has interests in motorsports, gaming, entertainment, real estate and lighting.
Wright told The News that Poelker “has a real clear understanding of what the task is.”
“The board is completely behind John,” Wright said. “We’re here to support and help. But we’re not here to micromanage.”