Washington State Bank CEO Steps Down Amid Lawsuit Allegations
A Washington state bank is parting ways with its CEO one month after a hedge fund alleged in a lawsuit that the bank was complicit in a borrower’s Ponzi scheme.
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.”
CEO Resignation and Transition
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.
Allegations and Lawsuit
Last month, 352 Capital Partners, a unit of Jefferies Financial Group, sued First Northwest in Washington state court, seeking $106 million in damages. The hedge fund alleged that First Northwest abetted a scheme by Water Station Management to misuse proceeds from a bond sale.
Deines declined to comment on the lawsuit but has previously denied any wrongdoing on the part of First Northwest, claiming that the bank also fell victim to the fraud.
Despite the controversy, analyst Feddie Strickland reiterated his positive rating on First Northwest, emphasizing the focus on returning the company to profitability and resolving legal issues.
Transition and Leadership
First Northwest expressed confidence in Geri Bullard’s leadership during the transition period, while thanking Deines for his service to the company.
Deines expressed his honor in leading the bank as CEO and mentioned the positive developments in the bank’s balance sheet and credit quality.
In conclusion, the departure of CEO Matthew Deines from First Northwest Bancorp amidst allegations of complicity in a Ponzi scheme has sparked a period of transition and change within the organization. As the company navigates through legal challenges and seeks a new permanent CEO, the focus remains on restoring profitability and trust within the community banking sector.
Source: American Banker
