First Federal realigning in wake of resignations and retirements; interim chief in line to take helm

By Paul Gottlieb
Peninsula Daily News

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PORT ANGELES — Larry Hueth, the interim president-CEO of First Federal, is on track to step up to the position permanently as the bank realigns its top management team in the wake of former President-CEO Levon Mathews' abrupt resignation, bank officials said.

In addition, former President-CEO Karen McCormick has been hired by the bank to temporarily fill the position vacated by Chief Credit Officer Cliff Frydenberg, who has retired, bank officials said.

The bank announced the resignations of Mathews and Chief Banking Office-Senior Vice President Gina Lowman the same day, Dec. 21.

Bank board of directors Chairman Richard Kott said that Lowman's resignation was not related to Mathews' resignation.

Lowman said Dec. 22 that she had been gone from the bank the third week of November and had left to spend more time with her family.

She said the announcement of both resignations at the same time was “purely coincidental.”

Hueth is First Federal's executive vice president and chief financial officer.

The California native was named to the interim position when Mathews abruptly resigned from the financial institution, which has broad reach in Clallam and Jefferson counties.

Kott said then that Mathews' resignation “has nothing to do with the financial condition of the bank.”

Kott would not comment on whether the board of directors had asked Mathews to resign. Mathews was also a member of the board.

Employees who asked not to be named told the PDN that Mathews' departure had been preceded by an investigation by an outside human-resources expert and that the investigation had been prompted by letters written by First Federal employees to Kott and other members of the bank's board of directors.

Both Lowman and Kott said they couldn't confirm that report. Hueth also had not comment.

Mathews, reached in Indiana, would not comment on the investigation. He said he retired for personal reasons having to do with his family business.

Kott and Hueth said they have not had any contact with Mathews since his resignation.

First Federal, based in Port Angeles, is the 18th largest bank in Washington state and has almost 70,000 accounts, Hueth said.

It has $775 million in assets, 20 percent to 30 percent of which are in Jefferson County, Hueth said.

Hueth has worked at First Federal for four years and wants to move up to the financial institution's top spot, he said.

“That is my hope and desire,” Hueth said Friday.

“I would appreciate the opportunity.”

Hueth, 50, and his wife, Cyndi, live in Sequim.

Hueth will present a forward-looking report to the bank's board of directors that will have his stamp on it at its regular Jan. 22 meeting, Kott said.

The report will “put forth his vision of how the bank should be operated” and will include recommendations on “a variety of aspects” of bank operations, Kott said.

Kott said the bank has not advertised for the president-CEO position in the weeks since Dec. 21, when the bank announced Mathews' resignation and Hueth's likely temporary-for-now promotion.

“Every vote on our board is very supportive of his efforts,” Kott said.

A board decision on hiring a new president-CEO is expected “in the not-too-distant future,” he added.

“We've had some talk about within 90 days.”

Kott said a decision has not been made on whether Lowman's former position will remain intact or its duties distributed elsewhere.

“We haven't decided to fill that position at this point,” Kott said.

“We may restructure the way we handle that sector of our banking,” he said, adding that the position covers business lending.

“It's a matter of looking at the proper organization for the bank,” Kott said.

“The board is evaluating this, along with our new CEO,” he added. “We're looking at all the options.”

Lowman did not return calls for comment Friday.

Frydenberg, who retired at the end of December and has moved to Bellingham, was not asked to leave his job, Kott said.

Frydenberg's departure had nothing to do with Mathews' resignation, Kott added.

There is no regulatory action pending against the bank, Kott said.

The Federal Deposit Insurance Corp. recently completed an audit of the bank's finances, he said.

“We came through that with good results.”

FDIC spokesman David Barr said Friday that no regulatory action has been taken against First Federal in the past 12 months, adding that the agency does not comment on ongoing investigations.

The state Department of Financial Institutions is not investigating First Federal, agency spokeswoman Lyn Peters said.

“The resignations, to our knowledge, are not the result of regulatory action,” Peters said in an email. “DFI feels the depth of leadership is sufficient to continue safe and sound operations.”

There also are no pending complaints against the bank or any of its employees before the federal Equal Employment Opportunity Commission, spokesman Rudy Hurtado said Friday.

McCormick, the bank's former president, was its director of lending from 1990 to 1997. She had the skills and experience to temporarily fill the position “in this bridging period of time,” Kott said.

McCormick said Friday she expects to stay in the position for three to six months.

Both she and Hueth were named in the bank's “succession plan” as people who would fill roles at the bank should sudden vacancies occur, McCormick and Hueth said.

Hueth, for example, was named in the plan to succeed Mathews on an interim basis should Mathews suddenly not hold the president-CEO position, Hueth said.

“We do have succession plans that account for these changes,” Hueth said. “This was the succession plan all along.”

“I need to develop one so there would be someone to take over my position to operate the bank, should something happen to me, so the community is well-served.”

Mathews succeeded McCormick after she retired in 2009.

“This is my role in accordance with the succession plan,” McCormick said.

“When I got the call, I was ready to step in and fill any role I was needed to do.”

Succession plans for sudden and planned resignations at the bank were established after a 1972 midair plane crash killed bank CEO Perry Brackett; Brackett's wife, Marjorie; and the bank's chief financial officer.

Two people in the other aircraft, including a 10-year-old boy, also were killed, McCormick said.

McCormick also has a contract with the bank to write a history of the financial institution, she said.

She is co-writing the book with Port Angeles author and playwright Rebecca Redshaw.

First Federal, the only locally owned and managed savings bank on the North Olympic Peninsula, opened in 1923.

The bank has branches in Port Angeles, Sequim, Forks and Port Townsend, and lending centers in Poulsbo and Bellingham.

First Federal employs more than 170 people and annually pours $12 million to $13 million into communities in Clallam and Jefferson counties in payroll, community support and payments to vendors, Hueth said.

The bank has $77 million in capital on hand and plans to raise more by converting to a shareholder company, Kott said.

Federal banking regulators are requiring that banks increase their levels of capital, so mutual banks such as First Federal are converting to stock-held companies to raise money, he said.

“It makes the bank a sounder bank,” Kott added.

First Federal filed an application to convert to a shareholder company with the state Department of Financial Institutions on Nov. 18.

But the bank board has put on hold further action on the switch until after making decisions such as who will be the bank's next president-CEO, Kott said.

“We are temporarily delaying going forward once we receive regulatory approval,” he said.


Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at

Last modified: January 05. 2013 8:25PM
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