Parkway Bank practices under scrutiny for years

FDIC ordered corrections in 2010
Apr. 30, 2013 @ 07:48 AM

Donald Bumgarner planted himself inside the lobby of the former Parkway Bank branch on Wilkesboro Boulevard Monday morning just after 10. With a fistful of paperwork, he tried to get the attention from one of the many officials in suits trying to keep the day’s banking business as routine as possible. He had a few questions.

“What about my stocks?” Bumgarner askd. “I have three CDs (certificates of deposit). Are they going to be safe?”

Bumgarner was among many bank customers with questions Monday after learning over the weekend that the Federal Deposit Insurance Corp. closed Parkway Bank at the end of the business day on Friday and transfered all deposit accounts to CertusBank, which is based in Easley, S.C. The three former branches of Parkway -- Wilkesboro Boulevard, Central Street in Hudson, and Falls Avenue in Granite Falls --  re-opened Monday morning as CertusBank, and CertusBank officials were in all three branches assisting customers with questions.

The FDIC was asking questions of its own three years ago. Parkway had been experiencing large losses due to under-performing loans. On July 14, 2010, the FDIC issued a consent order calling for the bank to correct a long list of deficiencies related to weakness in capital, management, earnings, liquidity, asset quality and sensitivity to market risk. Parkway Bank was ordered to devise a plan to collect, charge off or improve substandard or doubtful debts owed to it in excess of $200,000 in a report dated March 8, 2010. The bank’s plan also was to reduce by 80 percent substandard or doubtful debts within two years of the order.

However, Parkway Bank continued to experience large losses on loans. In 2011 the bank hired a consulting team to explore the best options for raising additional capital but was unsuccessful.

Local residents were largely unaware of the bank's troubles. As recently as January, bank President and CEO Jim Sponenberg III told the Caldwell Community College and Technical Institute Board of Trustees, of which he is a member, that a survey of customer perceptions in Caldwell County found that Parkway was considered a strong community business.

CertusBank learned of a potential take-over of Parkway before Friday, and was told in advance it was awarded a bid to acquire Parkway Bank, CertusBank executive vice president Kelly Owens said.

CertusBank took on Parkway's deposits, assets and certain liabilities, but those did not include Parkway Insurance. The insurance company formerly was a subsidiary of Parkway Bank but is now owned by the FDIC, according to Parkway Insurance President Todd Perdue. Parkway Insurance eventually will re-emerge with a new identity, Perdue said.

“It’s sad to see Parkway Bank not remaining, but CertusBank has made a commitment to continue Parkway’s strong presence in the community,” said Perdue, who also is a Lenoir City councilman. “It’s an unfortunate sign of the times, but CertusBank is going to be a great corporate citizen for the city.”

CertusBank now operates in 10 states, with 32 branches in the Carolinas, Florida and Georgia, and lists assets of $1.8 billion. It’s prior acquisitions include certain assets of CommunitySouth Bank & Trust of Easley, S.C., First Georgia Banking Co., Atlantic Southern Bank, and Hometown Community Bank of Braselton, Ga.

Parkway Bank was founded in 2001 and has been led since February 2008 by Sponenberg. Sponenberg previously was a senior vice president of SunTrust Bank from February 1978 to December 2005 and has a total of 32 years of banking experience. Parkway Bank held assets of $110 million at the time of its closure by the FDIC. Under CertusBank, Sponenberg will "still have a role with the bank, but we're still assessing staffing and roles," Owens said.

Sponenberg was not available for comment for this story.