First Security Group will pay ousted CEO Rodger Holley about $2 million in accrued and vested benefits under a severance agreement signed last week, according to regulatory filings released Wednesday night.
Holley, who headed FSG Bank from its start in 1999, resigned as chief executive last Thursday after the bank reported losses of nearly $82 million over the past two years.
In a Securities and Exchange Commission filing Wednesday, FSG said the bank doesn’t believe the payments violate the “anti Golden Parachute” provisions of the Troubled Asset Relief Program that provided a $33 million federal loan to FSG Bank.
But regulators still will have to sign off on such payments to ensure they don’t violate federal guidelines for institutions that took TARP money like FSG and have yet to pay the money back.
In its annual report released earlier this month, FSG reported that despite its losses Holley’s wife was paid $103,000 and occasionally was provided a car over the past three years for design and construction of bank branches and repossessed properties.
As the sole proprietor of Alpha Antiques, Judy Holley was paid $23,000 in 2010, $40,000 in 2009 and $40,000 in 2008 for interior design and other work for the bank and its properties.
During 2009 and the first half of 2010, Judy Holley also was provided the use of a company car “to assist in managing” the bank’s foreclosed property portfolio, according to the bank report.
FSG also disclosed that bank director Ray Marler, who owns a construction and waste management business, was paid $13,000 for advice and services for the bank. Marler also bought some bank repossessed property for $20,000.
In a recently released outside audit of the bank, Joseph Decosimo and Co. PLLC auditors concluded that the bank “did not maintain an effective control environment” and had “a failure to establish a culture of integrity and high ethical standards.”
In its annual report, First Security acknowledged that, “an effective ‘tone at the top’ related to internal control over financial reporting was not embedded in our culture.”
FSG replaced its former chief financial officer, Chip Lusk, nearly two months ago.
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