Patrick Patrick's retirement as president and CEO of Seattle Bank, which was on the financial precipice when he arrived on the scene in September of 2010, has now completed the latest chapter in a career of turning around troubled banks.
Patrick, now 72, figures he'd be interested in another turnaround opportunity and is quite certain there will always be banks in need of turnaround. And he thinks that perhaps what he sees emerging in the industry may continue to produce more of them.
"There will always be troubled banks," said Patrick in an interview following his retirement. "The question is the degree of trouble in determining if they need to bring an outsider in."
It took Patrick less than a year at the helm of Seattle Bank before he put together an unusual team of non-bank people, prominent local business executives who put up $50 million to recapitalize the bank. That provided the capital for Patrick to start bringing the bank back out from under the weight of soured real estate loans that had brought the bank under the thumb by regulators since July of 2009.
Since its establishment as Seattle Mortgage Company in 1944 by Ben Smith Sr. to help veterans returning from World War II to buy homes, the bank had been a highly regarded, family owned financial firm.
It became Seattle Savings Bank in 1999 but changed its name to Seattle Bank in 2009, shortly before the bank and its Seattle Financial Group holding company were placed under a cease-and-desist order and told to create a capital-infusion turnaround plan.
Now that he has turned the bank around and stepped, perhaps briefly, into retirement again, Patrick sees a familiar, troubling pattern re-emerging.
"We're going back to doing the same things we did when the financial industry got into trouble. Because competition is fierce and interest rates are extremely low, some banks are making loans on terms we shouldn't be considering," Patrick added.
Patrick's perspective extends back over four financial crises, with his first opportunity to assume the role of turnaround CEO coming after the savings and loan crisis of the early '80s when, in 1983, he was asked to take the helm at Seattle-based Prudential Savings, which was in danger of being closed.
Two years later, he found himself also overseeing Westside Federal as well, running both thrifts simultaneously for a year before melding Westside into Prudential and, on "Black Monday" in 1988, selling Prudential to Tacoma-based Pacific First Federal.
Thus the role Patrick played at Seattle Bank is one he's been playing over the 30 years, a role that could be characterized as the financial version of an old television western series called "Have Gun, Will Travel" in which the hero went from town to town to resolve problems created by the bad guys.
As I pointed out in a column on Patrick soon after he stepped in at Seattle Bank, in his case the "bad guys" have been those who've taken actions that jeopardized community banks thus putting at risk the important role such institutions have traditionally played in the economic health of their communities.
Not all his assignments have been successful, as his role immediately preceding Seattle Bank, guiding the hoped-for turnaround of Towne Bank of Phoenix, failed as the bank went down four years ago next month, two years after Patrick came in with the bank under the cloud of federal oversight.
"It was the target of one of the first cease-and-desist orders in the country and had one of the highest amounts of non-performing assets I'd ever seen," Patrick said. "In the end it wasn't possible for the turnaround effort to succeed."
As a career-long believer in community banks, Patrick expressed concern about their future in the 2010 interview, and retained that concern in the interview following his Seattle Bank retirement.
"Community banks are the framework of any town or city and the framework is in great jeopardy," he said in the 2010 interview, "even though not one dollar of taxpayer money has been spent on any problems that individual community banks have encountered. Any money that's gone to community banks has come from assessments and insurance premiums."
He has similar concerns still, noting that "many of the new regulations put forth in the past couple years have made community banking much more difficult."
"Sometimes the law of unintended consequences makes the cure worse than the issue," he said. "Without community banks, who is going to help the small businesses that drive our neighborhoods? We can't doubt the sincerity of those who want to provide protection for everything, but there is a point where we create even bigger concerns."