By Laura H.F. Callender for Peninsula Daily News
PORT ANGELES — Karen McCormick, who rose from teller to president and CEO of First Federal, the largest locally owned bank on the North Olympic Peninsula, is planning to retire.
January 2010 is the effective date of retirement for McCormick, who US Banker magazine voted in 2003 one of the most powerful women in banking.
While other banks are in the throes of the nation’s financial problems, First Federal has been largely untouched — and is riding high on a wave of success that was born of McCormick’s prudent business practices, dedication, determination and perseverance.
McCormick wants time to spend with her family and grandchildren and travel, with Port Angeles as her home base.
“I’ll probably be a snowbird,” she told Peninsula Daily News in an interview.
“I live here. Port Angeles is where I live and where I always will be.”
In September, BauerFinancial Inc. observed that, through increasingly difficult economic times, First Federal boasts its top safety rating: a five-star superior rating.
The rating, the announcement noted, indicated that “First Federal is one of the strongest banks in the nation.”
The total assets for First Federal have nearly doubled over the 12 years that McCormick has served as CEO and president.
Hunt for successor
McCormick joined First Federal on July 5, 1977, as a teller at First Federal’s east side branch in Port Angeles.
She advanced through many positions and was named president and chief executive officer in January 1997.
Her decision to retire at age 55 is not a surprise, she said.
She told First Federal’s board of directors three years ago that her intention was to step out at 55.
First Federal’s new CEO has not been selected yet, but the hiring process will be completed soon, McCormick said.
“Most important is to find someone as passionate about the community and loves [banking] mutuality,” she said.
When the new CEO has been selected, he or she will work closely with McCormick until her official last day.
“I have committed to the board that I will see it through to a smooth transition,” she said.
First Federal, which has been in business for more than 85 years, operates branches in Port Angeles, Forks, Sequim and Port Townsend.
First Federal Chairman Jimmy D. Ray praised McCormick:
“The board of directors and our entire First Federal team are extremely grateful for Karen’s outstanding leadership and dedication to First Federal, and to the communities we serve.
“For over 30 years, she has been instrumental in creating the growth, vitality and strength we enjoy today.”
Conservative plan
Sticking to a conservative plan in lending, and dedication to the community, have kept First Federal a tower of strength in a financial earthquake, McCormick said.
She added that it is the resolve of First Federal’s board to remain a community bank and a mutual banking institution.
That tradition is one that was passed to her when she became CEO.
“I remember on Jan. 1, 1997, when I took over as CEO from Jim Harvey, I felt that legacy. I really felt it,” she said.
Her dedication, with the backing of a board she described as positive and supportive, has been to keep First Federal strong.
That included being conservative when no one else was.
“We’re enjoying it now,” she noted.
Assets growing
First Federal’s total assets in 1996 were $388.6 million.
Today, the bank’s assets total $716.6 million.
The industry begins to worry, McCormick noted, when a bank’s capital ratio falls to 6 percent or lower.
The bank’s capital ratio in 1996 was 8.05 percent.
Today, it is 10.06 percent.
It has doubled its number of loans — from $244 million in 1996 to $564 million in 2008 — and the deposits have nearly doubled from $353.6 million to $507.1 million.
And what of those conservative loan measures that left some loan applicants grumbling or flouting that they obtained loans from other institutions?
First Federal has one foreclosed property — one — at $172,000.
McCormick said her mentor, Del Gustafson, told her, “Don’t bury people.”
She said that he meant that other lending institutions looked upon loans only as a way to make money, without a care for the people purchasing products they could not afford. McCormick said, in her opinion, that sort of activity was illegal.
“And that’s what has irked me so much, because people are being buried,” she said.
McCormick has overseen First Federal with a set of values — not just monetary — that was bequeathed to her and she believes those values will continue into the future.
She said she tried to encourage such values nationwide.
National work
In 2001 and 2002, she served on the Federal Reserve Board’s Thrift Industry Advisory Council, or TIAC.
One of three advisory councils to the Federal Reserve Board, TIAC advises on matters related to housing.
McCormick’s two-year term with TIAC was extended for a year. She served as its president in 2003.
McCormick recalls her days of sitting at the center of an oblong table, the council on one side and chairman of the Federal Reserve, Alan Greenspan, facing them.
Some of the council members, she noted, are now suffering the consequences of their participation in what she considered ill-advised industry measures.
The only woman to have served as the chair of TIAC said that members offered warnings.
“What kills me is we told them at the time that Fannie Mae and Freddie Mac were nothing but trouble,” she said.
“We [TIAC] really tried to ring the alarm bells. That I feel pretty good about.
“We were concerned with them wandering far afield from what their original mission was.”
McCormick noted that she believes Greenspan, in one of his sessions before Congress, said he felt Freddie Mac and Fannie Mae were a risk.
Still, she said, those on the council and the Federal Reserve Board didn’t know how bad it was — no one knew how bad it was.
That First Federal has resisted temptation to be drawn into schemes that could put the bank, its customers and the community at risk is status quo for the bank.
Community is what’s important.
Community program
McCormick has overseen the introduction this year of First Federal’s Community Dividends Program.
With no stockholders to pay, since First Federal is a mutual, the board is reinvesting in the community through a series of grants.
The board determines the amount of capital the bank needs for its stability and then invests the remainder in its community — Clallam and Jefferson counties.
Several grants have been awarded from the initial $1 million the board allocated for the program.
McCormick said that, with the Community Dividends Program up and running, she feels that she has accomplished the goals she set for herself at First Federal.
“I am extremely fortunate to have had the opportunity to contribute to First Federal’s success,” McCormick said.
“With the introduction of our new Community Dividend Program, I’ve accomplished my professional goal of ensuring that our communities have a bank devoted solely to their own well-being.
“I look forward to watching First Federal continue to grow and prosper in the years ahead.”
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Features Editor Laura H.F. Callender can be reached at 360-417-3550 or at laura.callender@peninsuladailynews.com.
