Miller WelbornTwo and a half years after fraudulent and soured loans put Cornerstone Community Bank under a regulatory consent order, bank regulators last week removed Cornerstone from its list of troubled banks.
Cornerstone Bancshares Inc., the parent company of one of Chattanooga’s biggest community banks, was lifted from the increased regulatory oversight imposed in April 2010 after Cornerstone lost $14 million from a number of questionable loans made prior and during the Great Recession.
Over the past two years, Cornerstone has raised $12.5 million in new capital through a preferred stock offering. The Chattanooga bank also cut its loan portfolio by nearly 30 percent, closed its Knoxville loan production office and added additional oversight and risk assessment of bank lending activity.
“This is a huge benchmark for Cornerstone and underscores the changes we’ve made and the ongoing strength of the bank,” said Miller Wellborn, the transportation consultant who was elected chairman of Cornerstone in early 2010 to help shore up the bank. “We had taken our eye off the ball and probably grown too fast (prior to 2010). We want to grow in the future, but in a controlled, measured way.”
Cornerstone opened its first branch in 1996 and was growing nearly 20 percent a year before the housing slump hit in 2008 and a pair of fraudulent loans cost the bank $11 million. Other questionable loans added to the bank’s fiscal woes.