A Washington state bank is parting ways with its CEO one month after a hedge fund
First Northwest Bancorp, the corporate parent of First Fed Bank in Port Angeles, disclosed late Wednesday that CEO Matthew Deines will step down on Saturday, after leading the $2.2 billion-asset company for nearly six years.
In an interview Thursday, Deines told American Banker he would likely seek another position in the financial services industry after spending time with family and friends. He praised First Northwest’s board and management team, adding that he intends to retain the stock he’s accumulated while leading the company.
“I’ll hold onto that position and be their biggest cheerleader,” Deines said. “I’m grateful to the board. They’ve treated me incredibly well.”
Deines’ resignation came “by mutual agreement between Matt and the Board,” First Northwest said Thursday in a statement to American Banker. “After 6 years with Matt as CEO, the Board and Matt agreed that it was time for a transition.”
First Northwest named Chief Operating Officer Geraldine Bullard to serve as CEO on an interim basis while it searches for a permanent replacement. The company said it has retained an executive search firm to assist with the process.
“At this point, we are considering all options,” First Northwest said in its statement.
Last month, 352 Capital Partners, a unit of Jefferies Financial Group, the New York-based investment bank, sued First Northwest in Washington state court, seeking $106 million in damages.
The hedge fund alleged that First Northwest abetted a scheme by Everett, Washington-based Water Station Management to use proceeds from a 2022 bond sale to satisfy creditors, including the bank, instead of for their intended purpose, which was to improve and expand Water Station.
Deines declined to comment on the record Thursday about the lawsuit, but he has previously denied wrongdoing on the part of First Northwest. He claimed that it, too, fell victim to the fraud.
For Deines, who served as chief financial officer at two Washington banks before taking the helm at First Northwest in August 2019, the change of fortunes came quickly.
In May, First Northwest’s shareholders re-elected Deines to a board seat by an overwhelming margin. Since then, First Northwest has disclosed the lawsuit and revised its first-quarter earnings to reflect $7.7 million in net charge-offs for loans connected to Water Station, as well as the creation of a significant legal reserve.
Despite the controversy, Hovde analyst Feddie Strickland reiterated his “outperform” rating on First Northwest following a meeting with key executives. “We came away feeling that incoming Interim CEO Bullard and [Chief Financial Officer Phyllis Nomura] are squarely focused on returning First Northwest to profitability, reducing problem assets and resolving outstanding legal issues in a timely manner, with an ultimate focus on restoring franchise value,” Strickland wrote.
First Northwest has “full confidence in Geri to lead the organization during this transition,” Chair Carolyn Finnie said in a Wednesday press release. “With deep experience and a strong understanding of First Fed’s mission, Geri is well-positioned to provide stable, effective leadership as we conduct a thoughtful and thorough search for a replacement CEO.”
At the same time, Finnie thanked Deines “for his dedicated service and commitment to the Company.”
Deines said in the press release that he is honored to have led the bank as CEO. “This Company is made up of a very special group of people who serve Western Washington at a time when the role of community banks has never been more essential.”
In the interview Thursday, Deines said he believes he is leaving First Northwest in good shape. “There are some very positive things happening with the balance sheet and credit quality,” he said.