- About Us
Renton savings bank makes changes at top; Victor Karpiak remains as CEO of holding company
Thirty five years ago, Victor Karpiak started his banking career in Renton in a small office shared with two others – including the CEO – lending money to the people of Renton to buy homes.
The assets of what was then known as First Savings and Loan Association of Renton totaled about $40 million and were owned by the depositors.
Today, the bank is First Savings Bank Northwest and those assets – mostly the value of the real-estate loans – total about $1 billion, down from a high of about $1.3 billion.
“When I was a loan officer, we did loans for the grandparents and then the kids would come along and then all of a sudden you saw generation after generation making loans,” he said.
In those 35 years Karpiak went from loan officer to CEO and president of the savings bank and chairman of the bank’s board of directors and to CEO of the bank’s publicly traded holding company, First Financial Northwest, and chairman of its board.
Karpiak and the bank has weathered economic downturns and most daunting, the Great Recession that still casts a pall over the economy and the housing market. And he’s come to know activist investor Joseph Stilwell, who is trying to get Karpiak off the board and maybe even sell the bank.
Karpiak, who is 58, along with the board have devised a succession plan that will ensure the bank has a strong executive team in place when he retires, possibly in 2014 when he’s 60.
The succession plan has been in the works for about two years that includes splitting Karpiak’s executive duties.
“I wanted to make sure the bank gets top focus in anything we do,” he said, which includes continuing to move forward with improving the bank’s financial performance.
Significantly, in August First Financial Northwest announced that Karpiak will retire as CEO and president of the savings bank, replaced by California banker Joe Kiley. Kiley, 56, with more than 20 years of banking experience in California, will run the day-to-day operations of the bank.
Kiley will start the job on Sept. 17, the day that Karpiak’s bank retirement becomes effective.
However, Karpiak will remain as CEO of First Financial Northwest and chairman of the holding company’s board. He will focus on bank regulations and on shareholder relations, including with Stilwell and a lawsuit that could lead to Karpiak’s ouster from the board.
He’ll also help with Kiley’s succession.
Another executive position also was split – the chief lending and credit administration officer. Herman L. Robinson, who held that job, is now the bank’s chief credit officer and Simon Soh is chief lending officer.
The management changes have nothing to do with Stilwell’s efforts to place his own person on the holding company’s board, Karpiak said, but they will help the bank comply with orders from regulators to improve the knowledge and expertise of the bank’s management and board of directors.
Stilwell, who manages investment funds in New York, became a player in the holding company when he purchased about 8 percent of its stock. According to Karpiak and media reports, he is known for buying a community bank’s stock, then pushing for its sale.
Stilwell has called for Karpiak’s ouster, claiming he’s incompetent, and filed a lawsuit over a disputed shareholder election in which Karpiak kept his seat on the holding company board by beating Spencer Schneider, Stilwell’s candidate. The lawsuit will now go to trial.
Schneider had been appointed to the board, but then resigned and started a “proxy” battle to get back on the board. Schneider maintains that his millions of votes weren’t counted, but Karpiak points out an inspector of elections ruled that no ballots were actually cast for Schneider even though Schneider had proxies.
Before he resigned, Schneider offered three suggestions: remove the photos of board directors and executives from the stairwell leading to the bank’s upper floor, eliminate the position of director emeritus and serve hard candy instead of cookies at the annual meeting.
The photos remain; the board is seeking legal advice on eliminating the director emeritus position. Regarding the hard candy vs. cookies: “That’s ridiculous,” Karpiak said.
In his letter of resignation on Feb. 16, Schneider wrote the board and management lost more than $130 million in shareholder money and was under regulatory orders.
“So, when I agreed to come on the board, I did it with the assumption that management and the board wanted to turn over a new leaf and put the interests of the bank and its shareholders first,” he wrote. “But after just five weeks, I see that there has been no change of mind.”
He wrote that the three ideas were “symbolic that the board is headed in a new direction.”
Karpiak points out that savings bank has posted a profit for the last eight quarters.
The bank, whose business is primarily real-estate loans, “did a pretty good job” surviving “the greatest downturn in the housing market in history,” he said.
The bank lost money because of the decline in home values – and thus the value of its assets, its loans – during the Great Recession, he said. Also counted against the bank’s bottom line was the $16 million in stock that funds the First Financial Northwest Foundation. The foundation works with the Renton Community Foundation to award grants throughout the community.
Karpiak said the board was “receptive” to Stilwell’s ideas of paying dividends and buying back company stock. Then Stilwell suggested selling the company.
The board was willing to consider a sale, but it had to be within the right price range, Karpiak said.
“Right now, no one is buying any bank,” Karpiak said and, besides, there is no reason financially to sell the company.
“We don’t understand what is his real motive,” Karpiak said of Stilwell. But Karpiak points out that money is made in selling banks, not buying them.