Interim CEO Helps Mend Strata Bank | Hjerpe is looking forward, not backward
Photo/Strata Bank
Edward Hjerpe.
Edward Hjerpe III loves a challenge and he certainly has one in his newest job as CEO of troubled Strata Bank based in Medway.
He became its interim CEO in late September after Strata CEO Pamela Montpelier stepped down citing personal reasons. Her resignation quickly followed Strata’s disclosures that it had several million dollars in construction loan losses and its investments in companies like Fannie Mae had become almost worthless.
And with three weeks under his belt, Hjerpe is looking ahead.
“We’re in a really challenging situation and we need to be thinking about how we can move forward, not looking backward,” he said. “There have been issues on the loan side and uncertainty around the CEO’s position, but we feel we’ve gotten the worst behind us. I think we’ve stabilized.”
Local Roots
Hjerpe grew up in Northborough and attended Algonquin Regional High School and Worcester Academy before heading off to college.
He has worked at First Federal Savings Bank of America and its parent FirstFed America Bancorp., based in Swansea. He later headed up Massachusetts and Rhode Island operations for Webster Financial Corp. of Waterbury, Conn., which acquired First Federal.
Hjerpe credits the staff at the bank in helping him get acclimated in such a short time.
“My first impression was not much different from what I expected. The board was very forthcoming in explaining the situation and much of it had been publicly disclosed,” he said.
The worst times for the bank included a drastic drop in the value of its investments in Fannie Mae and Freddie Mac, Lehman Brothers and AIG shares; a third-quarter loss of $8 million due mostly to the reduced stock values; and capitalization woes from non-performing loans and reduced stock investment values.
When Strata wrote down the value of its stock, the bank went from well capitalized to adequately capitalized in September and is working with the Federal Deposit Insurance Corp. to devise a plan to improve it.
“I can’t really talk about specifics because the process is confidential, but we’re working with them more closely to get in a much stronger position. We’re fortunate to be in productive relationship with our regulators as we try to strengthen our operating strength.”
So, what does Hjerpe believe that Strata has to do to turn the bank around?
“We need to certainly improve the loan portfolio, but we’re already moving in the right direction as non-performing loans are decreasing. We need the financial markets to stabilize and recover, and we always need to manage our expenses carefully. Investors need to get a return on their assets and the bank needs to generate earnings and build capital.”
And speaking of investors, what about Kenneth Lehman, the unhappy investor who has publicly castigated Strata Bank officials about the bank’s financial performance for months before the financial hash hit the fan? Hjerpe said has spoken with Lehman a little in very cordial conversations, but he declined to say what they discussed.
Hjerpe said he doesn’t know how long he’ll stay, but he may be willing to discuss staying on somewhere down the road if the directors are interested.
“It’s way too early for that, it’s not really on my radar screen.”
At least one other banker thinks Strata picked the right person for the job. “He is going to do as good a job as anyone can in such a situation,” said Robert Twomey, president of Webster Bank’s Massachusetts and Rhode Island division. He was hired by Hjerpe and worked under him for two years before Hjerpe retired early from the bank.
“He’s very even-keeled, he’s smart, he works well with other people, he asks good questions and doesn’t beat people up,” he said. “I think this is the ideal situation for him.” Twomey said everyone at Webster Bank was sad to see Hjerpe go and still misses him.
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