Conservative approach pays off for Washington Federal

Chairman says bank doesn't sell off its loans to other companies or outsource tasks

Washington Federal played it close to the vest in the months before the real estate bubble imploded.

While the giant down the street, Washington Mutual, collapsed, the Seattle-based bank kept moving cautiously forward as it has for more than a century.

It now boasts the sixth-highest capital ratio among the top 100 publicly traded banks. The conservative fiscal practices that built its $2 billion in shareholder equity has allowed Washington Federal to expand its horizons in the aftermath of the Great Recession.

"We were not willing to take the same risks as Washington Mutual, making us effectively a nonplayer from 2004 to 2008," Roy Whitehead, the bank's chairman, president and chief executive officer, said in an interview Wednesday. "But those of us who survived are stronger now."

The company snapped up Klamath Falls-based South Valley Bank & Trust last year for less than half its book value, obtaining offices in Central Oregon, the Klamath Basin and the Rogue Valley. Former South Valley Chief Executive Officer Bill Castle is staying on as senior vice president and manager of Washington Federal's business banking division and other key players are staying on as well.

Whitehead, who oversees the eight-state, 190-branch community bank, is touring the newly acquired territory this week, discussing Washington Federal's involvement in the region.

Whitehead said the bank doesn't outsource tasks or sell off loans, preferring to master systems and collect its own payments.

"You're going to make far better loans if you know you have to collect your own loans," he said. "The secondary market is corrupt and bad for society. Every single loan we make stays on our books."

During the recession, he said, the bank had the ability and flexibility to modify between 3,000 and 4,000 loans to its customers.

"They lived to fight another day and we retained a customer," Whitehead said.

The bank also is making commitments to its new territory, pledging to provide $250 million for community development funding in Oregon during the next five years, resulting in loans for affordable housing, economic development, revitalization projects, small business and farms.

It has set aside $10 million for Enterprise Housing Partners for seniors in La Pine and rehabilitation of a residence for seniors and the disabled. Another $50 million will go to mortgages for low- and moderate-income buyers.

Washington Federal also plans to donate more than $100,000 to nonprofits in Central and Southern Oregon, including $5,000 each for ACCESS in Jackson County and the Food Bank of Josephine County.

Reach reporter Greg Stiles at 541-776-4463 or e-mail business@mailtribune.com.


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