Thank you for inviting me here today to share the story of -- as one investor newsletter has described - a small, "spunky" bank from Boston.
First, let me explain what I do at Wainwright Bank. My functional title is Consumer Banking Group Manager, which means I am the executive manager of the Branch Banking, Consumer Lending, Electronic Banking, Marketing/PR and Community Development areas. I guess you could say I keep myself busy!
In 1992 I was interviewed by Bob Glassman and John Plukas, the two co-founders of Wainwright Bank, for the newly created position of Retail Sales Manager. In my interview they stated they'd like to influence the banking industry by providing a new model and definition of success. "We'd like to contemplate a second bottom line, a noble social experiment if you will," one of them said.
After 13 years at a large commercial bank and having barely heard of Wainwright two weeks prior to my interview, I thought they were nuts. But their ideals seemed to match mine, and it was the career opportunity of a lifetime: help create a retail bank in any manner I saw fit as long as it was profitable and maintained a commitment to social responsibility.
In 1992, none of us really knew what form that commitment would take. I've been asked before what the implementation plan for this was; well, there was none. We've developed our social agenda, as we call it, rather organically - we've done what feels like the right thing to do.
Wainwright Bank was founded in 1987 and is headquartered here in Boston with about $475 million in assets and branches throughout Boston, Cambridge, Watertown and soon, Davis Square in Somerville. Technically we're a publicly traded, state chartered commercial bank, but as you'll hopefully realize when I'm through, we are virtually unlike any of the 12,000 banks nationwide and indeed, have influenced other banks around the country.
What makes us different can best be summarized by our mission statement:
"With a sense of inclusion and diversity that extends from the boardroom to the mailroom, Wainwright Bank & Trust Company resolves to be a leading socially responsible bank committed equally to all its stakeholders - employees, customers, communities and shareholders."
Our mission statement explains the role we believe social responsibility should play in American corporations. At its heart, it is a concept based on partnerships. In the typical current corporate model, shareholder concerns reign supreme, and in most cases, is the only consideration. We believe this is a very one dimensional view and one that not only diminishes benefits to general society, but one that robs a corporation of many rewards.
When I describe how our commitment to social responsibility works, I like to break it down into internal and external practices. This is where the rubber meets the road, so to speak.
Internally we have management practices that have been lauded nationally as among the most progressive. The key is embracing diversity, or, forming a partnership with our employees. 22 languages are represented among the 130 employees we have. 40% of our directors are women or minorities and includes, as we've often been informed by investment research firms, the only open lesbian on the board of a publicly traded bank in this country. Over 50% of our officers are women; we have openly gay and lesbian officers, and ethnic minorities comprise over 33% of our employee base.
We believe that by creating an open and embracing environment, an employee is able to bring their whole selves to work every day. The reward to the Bank is greater loyalty and increased productivity. A bank our size would normally operate with 33% more employees, but because most of us generally love working at Wainwright, we don't mind wearing a few extra hats.
Wainwright was one of the first companies to endorse the National Organization for Women's "Workplace Pledge," which among other things, allows employees to organize if they wish. We've also endorsed the "Equality Principles" of the Alliance for Corporate Equality which seeks to end discrimination against gays and lesbians in the workplace.
Other internal practices include:
Providing a minimum "living wage" to all employees (which is currently defined as $8.08/hour). In addition, the banking industry on average provides 1 week paid vacation to a starting teller; we provide 3 weeks minimum to all employees.
Wainwright lobbied the Mass Bankers Group Insurance Plan for two years to obtain domestic partner benefits for same-sex couples. We eventually received a letter stating they were now offering this to all 160 member banks and their 10,000 employees because of our efforts.
We provide flex time schedules for child and elder care.
We offer very generous benefits such as dental coverage, life insurance and 401(k) plans where the bank picks up most of the tab.
We provide self directed vacation and sick days: an employee's vacation and sick days are gathered into a pool the employee can then use for any reason; no pretending to be sick to get a mental health day. This provides dignity and respect to the employee.
We provide a public transportation subsidy.
And we have "Casual for a Cause Fridays" where employees pay a fee to dress casual; the total amount raised is matched by the Bank and is given to a nonprofit nominated by the employees.
Partnerships are at the heart of our external practices as well. This includes how we put our depositors' money to work, our charitable giving, and the products and services we offer. It is based on the relationships we have with our communities, both residents and the nonprofits serving them.
We have a dedicated Community Development Lending department with three lenders devoted solely to this segment. Currently, 40% of our commercial loan portfolio is committed to socially responsible community development projects; most banks would find it difficult to point to even 1% of their portfolio dedicated to this market segment.
For example, although we represent less than one quarter of one percent of the banking assets within greater Boston, we've financed over 50% of all housing facilities for people living with HIV/AIDS within the same area.
Our commitment represents over $170 million in loans to local nonprofit organizations such as the Pine Street Inn, Rosie's Place, the Massachusetts Breast Cancer Coalition, the Trust for Public Land, the AIDS Action Committee, the Greater Boston Food Bank, and many others.
These projects provide affordable and special needs housing, food banks, homeless shelters, AIDS housing and services, breast cancer research, wilderness preservation, community health centers, and immigration services, among others.
Within the banking industry it is often assumed these loans are not profitable and risky, but nothing could be further from the truth. These loans are not discounted; they're market priced like any commercial loan we do. This segment of our loan portfolio also has a less than 1% default rate - a performance record that virtually no bank could claim for any segment of their loan portfolios. So it's extremely good business and represents a win/win for the bank and for the communities we serve.
The question often arises, if this is such good business, why don't more banks do it? Beyond ignorance of the actual performance of these loans, most banks do not want to commit the energy it takes to do them. Our Community Development Lenders often have to help a nonprofit establish a functional board of directors. They also have to coordinate the needs of grassroots community groups, government agencies and charitable foundations. It can take years sometimes to bring a loan to closing. Obviously, it's important to have employees who are not only empowered to make these loans, but who are personally committed as well.
Wainwright has developed a couple of unique products within the banking industry.
The first was our Community Card MasterCard which was launched in 1994 and received, much to our surprise, international media attention. Wainwright provides charitable donations equal to 1% of a cardholder's purchases to local nonprofits chosen by the cardholder from a list that is focused on HIV/AIDS services, gay and lesbian equality, and women's issues.
Upon its release, the Card was covered by over 70 major newspapers, the Today Show, Good Morning America, and Paul Harvey. I did interviews with Irish and German magazines. This was pretty heady stuff for a little bank in Boston. We knew the Card would be somewhat controversial locally and our Board decided it would be OK if customers left us because of the progressive nature of the organizations the Card benefited. Not only did we not lose any customers, but we received notices of congratulations from some of the most conservative firms in the Boston Area. We now know that we've gained thousands of personal and corporate customers because of what we stand for.
Last year we launched CommunityRoom.net which among other things provides a free hosted website to any nonprofit customer of the Bank. Visitors can review a nonprofit's programs and services, check out events calendars, read position papers on topics such as land mines and HIV/AIDS, and lastly, make online donations. CommunityRoom.net was recently mentioned on the front page of the Wall Street Journal.
We envision CommunityRoom.net to eventually be franchised to other organizations and foundations throughout the country. Again, as a product, this enhances and strengthens our relationship with the communities and customers we serve.
Our most recent product is a discounted home equity loan called The Green Loan which we developed in partnership with Solar Boston and the Massachusetts Consumers Energy Alliance. These organizations approached us to help them develop an incentive for consumers to install home solar energy systems as part of the nationwide Million Solar Roofs initiative. The goal in Massachusetts is 10,000 home solar systems installed by 2010.
So what are some of the other benefits for a company making a commitment to social responsibility?
One major benefit is we now are the first bank many large nonprofits in the Boston area go to for financing. This is a position many companies ideally try to be in - getting a first pass on any new business that pops up in their field.
We often get resumes with notes attached stating the person is not looking for a new job, but if something opens at Wainwright they'd move. We also have a very low turnover rate among officers compared to industry standards.
Another benefit is frequent and positive PR and media coverage. CNBC has done a segment on us, which can be viewed on our website. We've been profiled in many newspapers, magazines and on public radio. Harvard Business School did a case study on us which is now used within the marketing curriculum there.
We employ no PR firms, yet we have received the national Business Ethics award, taking our place among huge multi-national companies.
Along with companies like Lotus, Polaroid and Timberland we've received the annual New England Award from the Human Rights Campaign. Last year the Advocate, often described as the "Newsweek" of the gay and lesbian community, named Wainwright one of the Top 10 companies in the country for gay and lesbian employees. All 9 of the other companies were in the Fortune 500 and included AT&T, Subaru, Starbucks, and Sun Microsystems. We didn't know we had been named and were blown away when customers started calling to congratulate us!
Another award is given each year by the U.S. Treasury Department recognizing a bank's commitment to under-served communities. Wainwright has received the award, which is cash to be used as we wish, for 4 years in a row. In the last 2 years we received more money than all the other banks in the Boston area combined including Fleet and Citizens. We've used our award to establish a donor-advised Community Fund at the Boston Foundation. The Awards to Wainwright have totaled almost half a million dollars.
This last summer we went to New York to receive the highly prestigious international Community Partnership Award from the Center for Responsibility in Business (formerly known as the Council on Economic Priorities). Again, we were in the company of huge corporations such as Toyota and Canon USA. The director of the Center told us we were the darling of the 20 member international jury; in 15 years they had never come across a company with commitments to such a broad range of social justice.
Our customers are generally aware of our activities and social commitment and many of them are with us exclusively for that reason. Most of our new business is referred by current customers. At events we are deluged with comments like "we love you Wainwright" and "you guys are the greatest," with our booth mobbed while other banks' booths are empty.
Finally, how does social responsibility affect the bottom line? Our financial performance, by standard measurements, is currently within the middle third of our peer group averages. Wainwright's customer base grew by over 80% in the last year, due in part to having neighbors like Fleet and Sovereign, but also because our commitment to social responsibility is getting to be more widely known.
So as you've heard, the consideration of a "second bottom line" provides many rewards. Our stakeholder concept creates benefits for every constituency we serve and not only are we in partnership with every one, they are with each other as well. We think its a very successful model and one that should and will be embraced by more and more companies. It's just smart business! Thank you.
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