Wash. bank rocked by scandal chooses new CEO

• Forward look: Veteran financial services executive Curt Queyrouze will take office as CEO of Port Angeles Washington-based First Northwest Bancorp on Sept. 17.
• Key insight: Queyrouze has been President at Coastal Financial in Everett Washington since 2022. He served six years as CEO of Ogen, Utah-based TAB Bank prior to that. 
• What’s at stake: The $2.2 billion-asset First Northwest is continuing to battle allegations it abetted a $200 million Ponzi scheme orchestrated by one of its borrowers. 

A Port Angeles, Washington-based community bank that became enmeshed in a $200 million Ponzi scheme has tapped a veteran financial services executive to serve as its next top executive. 

First Northwest Bancorp, the holding company for First Fed Bank, announced Friday that it had appointed Curt Queyrouze as CEO, effective Sept. 17. Queyrouze joins the $2.2 billion-asset First Northwest from Coastal Financial in Everett, Washington. Queyrouze had served the past three years as the $4.5 billion-asset Coastal’s president.

Queyrouze’s predecessor, Matthew Deines, resigned in July. Deines departure came after a hedge fund filed a $106 million lawsuit alleging First Northwest abetted a Ponzi scheme orchestrated by one of its borrowers, Water Station. About two weeks after his departure, First Northwest settled a separate suit filed by Water Station investors. While the bank admitted no wrongdoing, it agreed to pay between $2.87 million and $5.74 million to resolve the action. 

First Financial had reported a $9 million loss for the quarter ending March 31, including a $5.8 million legal reserve created in anticipation of the settlement.  

Though it settled with some Water Station investors, First Northwest said in its most recent 10-Q report, filed Aug. 7 with the Securities and Exchange Commission, that it intends to “strongly dispute the allegations contained in the complaint” by 352 Capital, a hedge fund associated with Jefferies Financial. 

A First Financial spokeswoman wrote Friday in an email that the company chose Queyrousze “following a comprehensive search conducted by a leading executive search firm and multiple rounds of interviews with the Board of Directors and executive team.”

“Curt’s sterling performance leading financial institutions, combined with his clearly demonstrated dedication to his community, made him the obvious choice among a field of exceptionally strong candidates,” Chair Cindy Finnie stated in a press release. 

Queyrouze, who also served as CEO of the $1.7 billion-asset TAB Bank in Ogden, Utah, from 2016 to 2022, called it “a privilege” to lead First Northwest, which was founded in 1923.

“First Fed has a remarkable 100-year-plus history,” Queyrouze said in the press release. “”My goal is to honor that by continuing to deliver long-term value for our shareholders and by building a modern, forward-thinking financial institution that remains a trusted partner for our communities.”

Geraldine Bullard, who has served as First Northwest’s interim CEO, will return to her permanent position of executive vice president and chief operating officer. 

In a research note Friday, Piper Sandler Managing Director Nathan Race described Queyrouze as “a logical and excellent CEO choice” given his 40-year financial services career. “We expect a relatively smooth transition and hopefully positive progress unfolds resolving” the Water Station controversy, Race stated.

Coastal CEO Eric Sprink told American Banker he was “super excited” for Queyrouze. Sprink called Queyrouze’s appointment as First Northwest CEO “a great compliment,” to Coastal. 

“It’s kind of like winning the Super Bowl,” Spring said. “Then they come and pick off your best players.”  

Last month, the U.S. Attorney for the Southern District of New York charged Jordan Chirico, 352 Capital’s portfolio manager connected to 352 Capital, with investment advisor fraud connected to the purchase of $100 million in Water Station Bonds. According to the government, Chirico concealed the fact that he had a personal stake in Water Station and that he eventually became aware of the fraud being perpetrated by its owner, Ryan Wear. 

The government charged Ryan Wear with securities and wire fraud. 

Water Station is accused of raising more than $200 million from investors who purchased water vending machines, some through Small Business Administration 7(a) loans. Many of the machines allegedly didn’t exist. Others were said to have been placed in locations different from the sites Water Station promised investors. Ultimately, Water Station began paying promised returns using new investors’ money, the government claims.