Jones out after Cornerstone loses $5.2 million

Jones out after Cornerstone loses $5.2 million

November 17th, 2009 by Amy Williams in Business

After nine straight months of net losses totaling $5.2 million, changes have come at the top of Chattanooga-based Cornerstone Bancshares.

Greg Jones resigned last week as chairman and chief executive officer of the bank holding company, parent of Cornerstone Community Bank.

The bank's president, Frank Hughes, has been named interim CEO while a search is conducted for Mr. Jones' replacement. Mr. Jones had been with Cornerstone for more than 10 years.

"The entire bank and the board appreciate his efforts and I think he knew and the board knew it was time for a change," Mr. Hughes said.

Miller Welborn has stepped in as chairman. Mr. Welborn, who been a board member for five years, has served on the boards of numerous banks and has worked for the Federal Reserve Bank of Atlanta at its Birmingham branch.

Following an examination of the bank by the Federal Deposit Insurance Corp., Cornerstone was required to increase its loan loss provisions to $3.39 million in the third quarter. The bank had a net loss of $1.7 million, or 27 cents a share, during the quarter.

Mr. Hughes said the losses are the result of the recession.

"It is a reflection of the general Chattanooga economy," he said. "We reflect the community and there is a lot of small businesses out there that are hurting right now and there a lot of developers that are struggling."

Mr. Welborn said the bank will move forward and is working to resolve the problems that have led to more than $5 million in losses in the first nine months of the year.

"We have experienced some losses and a couple of unfortunate frauds in a not-so-kind economy," he said. "But we do feel like we have properly identified, properly addressed and properly reserved for the potential losses that we see and are positive about the future of this bank."