Two CertusBank founders and former bank executives have resigned from the company’s board of directors, saying they had hoped “to build a great company of historic magnitude” but were fired in a corporate overthrow, federal court records show.
Walter L. Davis and Milton H. Jones Jr. said in a June 9 letter, included in a court filing, that they were fired without justification.
Davis and Jones also allege in the letter to Robert L. Wright, board chairman, that a special committee of the board took control of the Greenville-based bank and associated companies in violation of bylaws and possibly regulators’ rules of governance.
A Certus spokesperson Friday confirmed Davis and Jones had resigned, but she wouldn’t comment further on board matters.
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The letter was part of a filing in the former executives’ lawsuit in the Greenville Division of U.S. District Court against the bank, an investor and a firm managed or controlled by the investor. The suit alleges the executives were unjustly fired and defamed as part of a conspiracy to spread false information amid allegations of financial mismanagement.
“We started this journey and invited you and others along to build a great company of historic magnitude,” Davis and Jones said in their letter to Wright.
Since their firings, “You and the special committee of the board have taken control of the bank and associated companies and are in violation, having done so, of the bylaws and arguably the OCC’s (Office of the Comptroller of the Currency) rules of governance,” according to the letter.
An OCC spokesman declined to comment.
Earlier this year, the $1.6 billion-asset bank said Jones, Davis and Angela Webb, another founder, were terminated from their respective posts as executive chairman, chief executive officer and president. Webb joined Davis and Jones as plaintiffs in the federal suit.
“Certus’ actions allowed the present management team of Certus to stage a coup d’état,” the former executives said in a court filing.
In opposing CertusBank’s motion to compel arbitration in the case, the former executives said the issue before the court was simple.
In a court filing, they said, “Will the court allow Certus to skulk into arbitration to escape public scrutiny of defendants’ concerted actions in wrongfully and falsely destroying plaintiffs’ hard earned professional reputations via racist and professional occupation defamatory statements, or will this court allow plaintiffs a public forum to rehabilitate their professional reputations through the sunlight of a jury trial?”
CertusBank, formed by Jones, Davis and Webb in 2010, initially was capitalized by a commitment of $500 million in private equity through a small group of investors, according to court documents.
The plaintiffs, who are African American, built CertusBank into the largest minority founded and operated financial institution in American history, according to the documents.
CertusBank said in a court filing the former executives were part of a leadership team that failed to provide timely and accurate budgets, develop updated business plans to reflect the institution’s changing financial condition and adjust overhead expenses downward in light of that change.
In its answer to the former executives’ complaint, CertusBank said its independent, outside directors lost confidence in the leadership team to manage the bank’s business affairs effectively and voted unanimously to terminate the executives April 9.
CertusBank’s interim chief executive, John Poelker, told The Greenville News this week he isn’t certain when the bank will return to profitability, but that it is making good progress in righting the balance between revenues and expenses.
Certus lost $9 million in the first quarter ended March 31, continuing its string of financial losses, according to a report filed with bank regulators.
In an interview, Poelker and Kelly Owens, the Certus executive responsible for core banking, emphasized the bank’s efforts to build retail and commercial relationships in Greenville and markets in four Southeast states.
“My sense of the company is that it is a very strong banking franchise,” Poelker said.
CertusBank is a subsidiary of CertusHoldings Inc., formerly Blue Ridge Holdings Inc., according to federal court records.
In their letter to Wright, Davis and Jones said “the collective set of actions and inactions that you have chosen to take regarding the board and the role and scope of the special committee is beyond the limit of good governance, our common sense and patience.”
“Therefore, we resign from the CertusHoldings Inc. board of directors and the CertusBank Board of Directors effective immediately,” their letter said.