Washington Federal, Inc.

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Washington Federal, Inc.

425 Pike Street
Seattle, Washington 98101
(206) 624-7930
Fax: (206) 624-1893

Public Company
1917 as Ballard Savings and Loan
Employees: 411
Total Assets: $4.57 billion (1995)
Stock Exchanges:
SICs: 6712 Bank Holding Companies; 6035 Federal Savings Institutions

One of the largest savings and loan institutions in Washington, Washington Federal, Inc., operates as the one-bank holding company for Washington Federal Savings, a thrift that traces its roots to 1917. Washington Federal was formed by Washington Federal Savings in 1994 to effect a reorganization completed in February 1995, when Washington Federal Savings officially became a wholly owned subsidiary of Washington Federal. During the mid-1990s, Washington Federal operated 89 branch offices scattered throughout a five-state area surrounding its headquarters in Seattle, Washington, with 30 offices located in Washington, 20 offices located in Idaho, 21 offices in Oregon, 11 offices located in Utah, and seven offices located in Arizona. During its rise from a fledgling, state-chartered savings and loan association in 1917 to a formidable, federally chartered savings and loan in 1990s, Washington Federal carved a distinct niche for itself by remaining a traditional bank while others in its industry pursued frequently destructive business strategies. Throughout its history, Washington Federal achieved its consistent record of growth by obtaining funds primarily through savings deposits from the general public and by providing low-risk, single-family housing loans. In addition to its mainstay Washington Federal Savings subsidiary, Washington Federal also owned another subsidiary, First Insurance Agency, Inc., which provided general insurance services to the public.

Founded in the Late 1910s

Concurrent with the United States entry into the First World War, the predecessor to Washington Federal entered into business itself, taking root in a bustling section of Seattle known as Ballard. The community of Ballard, like the city it was a part of, was growing by leaps and bounds. Its mostly Scandinavian residents and its predominate businesses of fishing and milling, added to the Northern European flavor of the community. Aside from providing the perfect setting for a largely immigrant, Scandinavian neighborhood, the fishing and milling industries supported many of Ballards families and fueled the communitys growth, creating the need for financial institutions, which historically had played in integral role in the development of burgeoning communities. One such financial institution, the Ballard Savings and Loan Association, was the predecessor organization to the Washington Federal of the 1990s.

Ballard Savings and Loan was organized on April 24, 1917, beginning business as a savings and loan institution to serve the surrounding and rapidly expanding milling and fishing community. The thrift was created to take deposits and provide single-family home loans, a mission it would pursue throughout its existence. Like the conservative residents that populated Ballard, Ballard Savings and Loan wavered little from its original objectives of the late 1910s, remaining steadfast to its original principles and business strategy into the 20th century as other financial institutions, and particularly savings and loans, adjusted their strategies to conform with prevailing banking trends. Ballard Savings and Loans self-restrained and conservative business approach held it and its future parent company, Washington Federal, in good stead from the thrifts first days of business into the 1990s, enabling it to weather the numerous financial storms punctuating the 20th century. The steadfastness with which Ballard Savings and Loan Stuck to its principles was never more important than during the thrifts 12th year of business, when the collapse of the stock market touched off the decade-long Great Depression. In response to the economic chaos that ensued, Ballard Savings and Loan assuaged the fears of its customers by vowing to only collect interest on home loans and promising it would not move aggressively toward repossession as long as the property was kept in good repair and the taxes and assessments were paid. Before the financial panic of the 1930s gave way to the economic boom years of the 1940s, more than half of the countrys financial institutions collapsed, financially ruined by the devastating affects of an anemic national economy. Ballard Savings and Loan, however, persevered and made it through the Great Depression without a loss to any of its depositors.

Aside from distinguishing itself as one of the minority of financial institutions to survive the Great Depression, Ballard Savings and Loan also joined the ranks of federally chartered financial institutions during the decade. In 1935, the state-charted savings and loan converted to a federal charter and adopted Ballard Federal Savings and Loan Association as its official corporate title. Revitalized economic conditions and population growth in the Seattle area during the 1940s and 1950s eliminated any lingering effects of the economically moribund 1930s, giving Ballard Federal Savings and Loan a two-decade-long opportunity to build on the pace of growth established during its inaugural decade. The thrift opened its first branch office in an outlying area of metropolitan Seattle, Lynn-wood, Washington, in May 1958. The following month Ballard Federal Savings and Loan completed its first merger, the first of many to come.

Post-World War II Expansion

In June 1958, Ballard Federal Savings and Loan merged with Washington Federal Savings and Loan Association of Bothell, a deal that marked the departure of Ballard from the associations corporate title and the adoption of Washington Federal Savings and Loan Association as the new corporate title. The decision to take on Washington Federal as the new name for the thrift was a telling one, one made at the time because of the greater geographic stature the new title lent to the financial institution. In the wake of this signal deal, Washington Federal made good on the geographic presence its new name suggested and embarked on the most prolific era of growth in its history, beginning its rise with more than $35 million in assets. Much of the associations physical expansion was achieved through external means, rather than by establishing its own branches. Although Washington Federal continued to add its own branches from 1958 forward, the thrifts greatest geographic leaps were made overnight, with the quick stroke of a pen on a contract ceding Washington Federal control over an already established network of branches. But Washington Federal also expanded through internal means, opening its first downtown Seattle office in April 1961 and another branch office in nearby Rainier Valley two years later.

By the end of the 1960s, roughly one decade after assets amounted to $36 million, Washington Federals assets had eclipsed the $100 million mark to reach $101 million. Though the 1960s had engendered vigorous financial growth for Washington Federal, the physical and financial growth recorded during the 1970s far exceeded the thrifts animated rise during the 1960s. As would be the case for the ensuing two decades, Washington Federal achieved its greatest strides by acquiring other financial institutions, such as the 1971 merger with Seattle Federal Savings and Loan Association, a thrift formed by ten Seattle businessmen one year before Washington Federal first opened its doors. The union with Seattle Federal Savings and Loan added three branches offices to Washington Federals slowly expanding network of branches, giving the thrift a total of eight branch offices at the beginning of the decade. The boost to Washington Federals assets was more explosive. A scant few months after assets had nudged past the $100 million plateau, Washington Federals asset total leaped to $173 million by virtue of the merger with Seattle Federal Savings and Loan.

An equally beneficial merger was completed in late 1978 when Washington Federal merged with First Federal Savings and Loan Association of Mount Vernon, a thrift founded by prominent Pacific Northwest businessmen in August 1934. The merger added 10 new branch offices to Washington Federals fold, extending its territory of service up to the Canadian border and lifting assets to $733 million. By the end of the 1970s, after recording a phenomenal increase in assets, Washington Federal stood positioned as one of the venerable and most stable financial institutions in the state of Washington, its conservative, low-risk lending policy proved to be a winning formula. In the decade ahead, the thrifts growing presence in Washington would be extended throughout a four-state area, as Washington Federal built upon the momentum achieved during the 1960s and 1970s to develop into a formidable power in the western United States.

Strong Growth During the 1980s

In 1982, Washington Federal become a public company supported chiefly by its customers who purchased 62 percent of the subscription offering. Concurrent with the switch from private to public ownership, Washington Federal converted from a federal mutual to a federal stock association. As a public company, Washington Federal, embarked on a decade that would prove disastrous for the savings and loan industry, but conversely constructive for Washington Federal. During the 1980s, when many of the nations thrifts fell by the wayside after embracing imprudent investment strategies, Washington Federal bucked the industry-wide trend and grew significantly stronger. According to analysts who monitored the savings and loan industry during the 1980s, Washington Federals success was attributable to its emphasis on providing single-family housing loans and to its location in the Pacific Northwest where the housing industry flourished during the 1980s. Buoyed by its prime location and its concentration on providing low-risk loans, Washington Federal increased its asset total from $705 million following its public offering to $2.2 billion by 1988. Perhaps more encouraging to the thrifts management was the percentage Washington Federal earned on its swelling assets. By the end of the 1980s, Washington Federal was recording the highest return on assets of any savings and loan institution in the United States, distinguishing itself with a percentage that was between two and two-and-a-half times the figure averaged by regional banks in the country.

As was the case throughout the thrifts history, stability was the primary characteristic describing Washington Federal during the late 1980s. For the previous two decades, the association had been led by the same four executives, a constancy that permeated throughout the organization. With this cadre of management >at the helm, Washington Federal once again resumed its acquisition program and completed several deals that extended the thrifts presence beyond Washingtons borders. In July 1987, the thrift made a bold move into Idaho by acquiring United First Federal and Provident Federal Savings and Loan Association, both of which were headquartered in Boise, Idaho. The acquisition of the two financial institutions gave Washington Federal 22 new branch offices in Idaho. Another four offices in Idaho were added a little more than a year later when Washington Federal purchased Boise-based Northwest Federal Savings and Loan Association. One month after the acquisition of Northwest Federal Savings and Loan was completed in August 1988, Washington Federal moved resolutely into Oregon by acquiring the 13 branch offices operated by Corvallis, Oregon-based Freedom Federal Savings and Loan Association.

Acquisitions in the 1990s

Entering the 1990s, Washington Federals acquisitive pace picked up speed, as the thrift bolstered its presence in the four-state area surrounding its headquarters in Seattle. In June 1990, Washington Federal acquired the eight branch offices belonging to Family Federal Savings Association, then merged with Idaho Falls, Idaho-based First Federal Savings and Loan Association and added three more offices to its growing branch network. Next, on the last day of 1991, Washington Federal concluded an agreement with First Western Savings Association, an Oregon-based Metropolitan Savings Association, to acquire its deposits in Eugene, Oregon, and its deposits and leased buildings in downtown Portland, Oregon. By this point, Washington Federal was nearing $3 billion in assets and continuing to draw praise for its industry-leading return on assets, leading one industry analyst to remark to a Financial World reporter that they [Washington Federal] are the pinnacle of the industry in terms of return on equity.

The deal struck with First Western Savings also gave Washington Federal two branch offices in Las Vegas, adding the state of Nevada to the thrifts expanding service territory. Another state was added to the Seattle-based companys geographic scope in March 1993 when Washington Federal acquired First Federal Savings Bank of Salt Lake City, Utah. The purchase of the Salt Lake City bank lifted Washington Federals assets by $352 million, its deposits by $294 million, and gave the thrift ten new branch offices in Utah. In 1994, when the talks of forming a holding company for Washington Federal turned to action, the thrift opened seven new branch officesthree in Washington, two in Arizona, and one each in Oregon and Utahand acquired the deposits at two branch locations operated by Great American Federal Savings Association in Tucson, Arizona.

In November 1994, Washington Federal, which had shortened its name in May 1992 from Washington Federal Savings and Loan Association to Washington Federal Savings, formed Washington Federal, Inc., the holding company for the thrift and another subsidiary, First Insurance Agency, Inc., a provider of general insurance services. During the next several months the Washington Federal system was reorganized to create the structure for the new holding company. On February 3, 1995, the work was completed and Washington Federal became the new parent company for the 78-year-old thrift, with its inaugural year of existence highlighted by another year of strong growth for its consistently stable subsidiary. By the end of 1995, assets had increased an encouraging 20 percent, climbing from $3.8 billion to $4.6 billion, and the number of branch offices operated by Washington Federal had risen to 89. As Washington Federal charted its course for the late 1990s and its 80th year of business, there was every expectation that the enviable achievements of its past would continue to describe its future. Reliable, conservative, and embracing the same business philosophy formulated during the late 1910s, Washington Federal moved toward the late 1990s and beyond, intent on holding sway in the western United States as one of the regions dominant banks.

Principal Subsidiaries

First Insurance Agency, Inc.

Further Reading

Barrett, Amy, Washington Federal: The Old-Fashioned Way, Financial World, March 17, 1992, p. 16.

Chithelen, Ignatius, Buying Opportunities, Forbes, December 23, 1991, p. 189.

Hawkins, Robert, The Old Neighborhood, Seattle: Washington Federal, Inc., 1985.

Hornblass, Jonathan, Washington Federal Shows Throwback Can Win, American Banker, June 28, 1994, p. 9.

Neurath, Peter, Same Old Washington Fed: Dollars Keep Coming, Puget Sound Business Journal, January 22, 1990, p. 14.

Pascual, Beatriz, Washington Federal Savings and Loan Association, Puget Sound Business Journal, February 13, 1989, p. 18.

Schultz, Ellen, Savings and Loans with a Winning Formula, Fortune, January 1, 1990, p. 27.

Washington Federal Savings and Loan Association, Puget Sound Business Journal, January 27, 1995, p. 24.

Jeffrey L. Covell

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Washington Federal, Inc.

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Washington Federal, Inc.