A Bridge Over ​Troubled Water: A Timely Q&A with the CEO & the Marketing ​Communications Director of Washington Federal, A True Innovator In Community Banking

Washington Federal ($16.4B; Seattle, WA) has made news recently for its Small Business Lifeline loan program, designed to help both current and new customers get through current economic turbulence. Recently, we had the chance to speak with Brent Beardall, CEO, and Brad Goode, Marketing Communications Director, not only about the Lifeline, but also about why WaFd is uniquely positioned to provide leadership to the banking industry.

TTG|Align:  We’ve heard fantastic things about your lending program, designed to meet challenges that small businesses face in the midst of economic uncertainty.  Can you tell us about it?

Brent Beardall:  We’re offering small businesses, which are impacted the most, access to our Small Business Lifeline, a 5-year loan with the first 90 days at 0% interest.  The thinking is:  Let’s bridge the gap.  Let’s hope that 90 days is enough for them to get on their feet, and let’s help them keep their employees employed and their paychecks coming.

TTG|Align: We heard that you first did this in response to the government shutdown last year.

Brent Beardall:  That’s true.  In January 2019, we rolled out a program to help impacted government employees.   As they missed a paycheck, we gave them a line of credit with no interest and no payments for 90 days. We all thought the government would reopen and they would get back pay, but there was no promise, right?  They were stuck between a rock and a hard place.  Most banks were saying, “Come to us if you have a loan with us and we’ll defer payments.”  Pardon the French, but that’s chickenshit.  Most people who work in the public sector don’t have mortgages. They live paycheck to paycheck.  In three days—and I’m so proud of our team for it—we rolled out this program.  We had 20,000 people on our website in less than 10 days.  We added roughly 2,000 new accounts.

TTG|Align: And how does the Lifeline provide thought leadership to community banking, as an industry?

Brent Beardall:  This isn’t just about WaFd or community banking. We’re a small player in the industry. We need to lead others.  If Tim Sloan had done it, it would have changed the paradigm for Wells Fargo. He could have said, “We’ve made all kinds of mistakes.  We own them.  Now what we can do now is help people.”  For whatever reason, the big banks just don’t get it done. The $100M we’re offering is relevant but we’re small enough to be nimble. And we’re in a great position where our Board supports us.

Brad Goode:  Brent appeared on CNBC last year talking about shutdown relief and, more recently, about the Lifeline.  Both times, he called for other banks to do this.  Banks are strong and well-capitalized, and we’re encouraging them to help those in the communities they serve.  It’s time for us all to do our part.

And it’s good business.  There is significant demand for Small Business Lifeline.  We turned this on last week, and we’re getting 70 applications a day.  We’re up to about 350 applications from small businesses throughout our eight-state footprint.  We’re forging new, potentially lasting relationships.

Brent Beardall:  Those 350 applications represent $25M in requests for credit.  There will be government programs, but they’re down the path.  We’re here to help small businesses now rather than later, to fill the void.  Otherwise, they’ll fill unemployment rolls, and we’ll all pay for that.

TTG|Align: All stakeholders notice optics, and not just your investors or customers but even your own employees. How are your people responding to this?

Brent Beardall:  Our government relief program was a home run for new and existing customers, as well as for our team. For a 103-year-old bank of our size to launch a program in three days… unheard of.  At the end of the day, we want to be able to go home, look ourselves in the mirror and be proud of who we are and who we work for.  What are the metrics of success?  Our turnover is near a record low, and our Glassdoor ratings are trending favorable.  People want to be here.

TTG|Align: Are your people excited about the Lifeline, too?

Brent Beardall:  Our people are swamped but excited.   And it’s not just our people; it’s our clients.  They’re so proud to bank here.  They’re part of the solution because they’re part of us.

TTG|Align: To deal with the overwhelming response, are you adapting your staffing model in any way? Are you leveraging people that aren’t as busy now, like the front-line tellers?  One bank we know turned their tellers into mortgage payment processors.

Brent Beardall:  We have such demand, and it’s not so much underwriting: It’s loan processing and opening deposit accounts.  We never say, “OK, front lines, you’re going to do this.”  We say, “We have this opportunity.  Who has capacity?”  People raise their hands.  Our front lines are now doing loan administration to get these loans coming from the Lifeline ready.

TTG|Align: Engaged employees step up at tough times.  What specific policies and practices to you use to engage your people?

Brent Beardall:  We’re not naïve.   Mission and culture are important, but we work to put food on the table.  At WaFd, we’re focused on long-term compensation.  If an employee contributes 4% to their 401(k), the bank contributes 11%.  It’s the most generous 401(k) plan I know of, not just in banking, but in any industry.  Two years ago, we started issuing stock options to all employees, down to the teller level.  It’s formulaic, so everybody knows what they’re getting.  Recently, when our stock tanked with everyone else’s, I believed it was trading well below its intrinsic value. We talked to the Board, which moved quickly to issue stock options to all employees.  Those are 10-year stock options.  If we deliver value to our communities, those stock options will be immensely valuable to our employees.  All the more reason for them to be all-in.

TTG|Align: That’s practically out of a textbook on strategic compensation and high-performance work systems.  More importantly, this is what community banking is about. 

Brent Beardall:  And you know what’s amazing?  We have banks coming to us wanting to sell themselves to us because of our culture and what we do here.  Our strategic goal is to be a highly profitable, digital-first bank.  Culturally, we want to be the bank that everyone wants to work for.  It’s hard to replicate momentum, and we have it.

TTG|Align: Many banks talk about culture, but it doesn’t translate it into policies and practices that are meaningful to employees.  Are there other specific policies and practices that reflect your culture, besides compensation?

Brent Beardall:   Here’s an example: employee involvement.  Our people need to be part of the solution.   If they’re in a meeting and disagree with something, they need to address it.  If I’m taking things in the wrong direction, somebody needs to raise their hand and say, “Brent, we’re pointing in the wrong direction.  Here’s where we go.”  Further, I empowered every employee to get up and leave a meeting if they’re getting nothing from it.  And they should never sit through a meeting and let something slide that they know is patently untrue.  It’s been fun to see engagement pick up at WaFd, as a result.

Brad Goode:  Brent’s door is always open, and people know that they’re heard.  It doesn’t take two weeks to get a meeting here.  We are not at all siloed.  That’s another reason people want to join us.

TTG|Align: Speaking of “join us”, are you hiring?  If so, how are you onboarding new hires, if you can’t do so in person?

Brent Beardall:  Many banks are on hiring freeze.  It’s a great opportunity for us to fill positions that we’ve had open.  I have an admin who’s starting a week from Monday.  How do I train that admin?  We’ll work through it logistically.

We see this crisis as a chance to build.  We found out yesterday that US Bank is no longer lending in the hospitality, restaurant or extended stay space.  They pulled out entirely.  Do you know what that does?  If you get in with the right sponsor, what an opportunity!   So many banks have no backbone.   We do.

Brad Goode:  I’m adding a digital marketing specialist to my team today.  We’ll get her onboarded.  If she has to do it via Skype or Teams, we’ll figure it out.  We’re not letting onboarding stop us.

TTG|Align: So, it doesn’t sound like there’s any hiring freeze at all.

Brent Beardall:  Just the opposite.  We’re hiring.  Full speed ahead.

TTG|Align: Speaking of virtuality in onboarding, in the midst of this crisis, what more can you learn more broadly about virtuality?  How important is in-person contact?

Brent Beardall:  We were already embracing the mobile workforce.  We’ve invested heavily in technology, such that 70% of our workforce can now work virtually.  We own our headquarters building at the corner of 5th and Pike in downtown Seattle.  Besides the retail level, which we’re redoing, we’ll put a coffeehouse in the corner and the branch right next to it to be able to drive traffic into it.  We’re going to go from occupying all five of the upper floors to just two.

But we’re not overreacting.  IBM has been working with a mobile workforce for a long time, and they found it to be a disaster because they lost their culture.  Virtually, I get done a lot of the things that I want to get done and I don’t have to spend two hours a day commuting.  But I don’t get a chance to chase Brad Goode in the hall and say, “Brad, I was thinking about talking to you about this.”  The spontaneity that can happen just being together in the office cannot happen remotely.  Hopefully, we can achieve the best of both worlds.  People who just want a remote workforce that is totally disconnected run the risk of losing their values and culture.

We’re nothing if we don’t have a strong culture.  I studied Washington Mutual extensively, and they failed because they lost their culture. So, it’s all about culture to us.  We believe that a bank’s mission is to provide certainty in uncertain times, and we aspire to be a bank with heart.  That’s WaFd’s culture