First Financial Northwest Settles Litigation with Activist Investor

By Paul Davis December 20, 2012, 1:19 p.m. EST 1 Min Read

Community banking

First Financial Northwest in Washington Blames Activist for 3Q Loss

First Financial Northwest in Renton, Wash., a $973 million-asset company, lost $791,000 in the third quarter, compared to net income of $1.4 million in the second quarter and profit of $623,000 a year earlier.

By Paul Davis

October 19
Community banking

Stilwell Nominee Claims Victory in Fight With First Financial Northwest

The Renton, Wash., company has yet to announce the results of Thursday's vote, but an activist investor believes his group has won and warns that First Financial could challenge the outcome. Stilwell is attempting to oust Victor Karpiak, the company's chairman and CEO.

By Rachel Witkowski

May 25
Community banking

Cooler Heads Must Prevail in Bank Fights with Shareholders

Avoid the bluster and the defensiveness, and focus on communication and steps to improve the bank, veterans of activist investor fights like John Palmer of PL Capital advise.

By Paul Davis

May 17
Community banking

Stilwell Launches Proxy Battle at First Financial in Washington

Activist investor Joseph Stilwell wants the company to find a seller a month after one of his representatives quit the board.

By Andy Peters

March 21

First Financial Northwest's chairman is stepping down to settle a contentious legal dispute with an activist investor.

Victor Karpiak agreed to resign his post as soon as Spencer Schneider, a representative of Stilwell Group, joins the board. Schneider will become a director as soon as he is approved by the Renton, Wash., company's regulators. Karpiak will resign from the board next September, the company said in a Thursday press release.

First Financial and Stilwell Group have been involved in a nasty legal battle since June. That's when Stilwell Group filed a lawsuit seeking to invalidate the results of the $973 million-asset company's board elections, in which Karpiak defeated Schneider.

The outside investor claimed that the results were bogus, disputing a decision by a proxy tabulation service to invalidate the votes encompassing 8 million shares in favor of Schneider. First Financial had contended that Carl T. Hagberg and Associates made the right call because Schneider had failed to sign a master ballot.

The lawsuit has been costing First Financial a considerable sum of money. In October, the company said that it incurred $868,000 in legal costs this year fighting Stilwell. The lawsuit was on a course for a January evidentiary hearing before the sides opted to settle.

First Financial will rack up more costs as a result of the settlement. The company agreed to reimburse a portion of Stilwell Group's proxy solicitation expenses tied to this year's annual meeting. Stilwell Group agreed to support the board's nominees for the next three annual elections.

"We are delighted that we have found a solution to this costly election dispute that, we believe, is in the best interests of our shareholders," Karpiak said in a press release. Joseph Stilwell, whose firm owns 9.4% of First Financial's outstanding shares, added that his company is "very happy that our candidate will be seated on the board."

This will be Schneider's second stint on the First Financial board. He resigned as a director last February after just a few weeks of service, citing concerns about the board's spending habits and suggesting that they replace refreshments with hard candy at the annual meeting.

Paul Davis