Introduction

Thank you for inviting me here today. Originally Bob Glassman, co-founder, co-chairman and the social visionary behind Wainwright Bank, was invited to speak this evening but unfortunately he was unable to join you. However, I’ve worked closely with Bob for over 15 years in helping to fulfill his vision of a profitable financial institution committed to social justice.

I’m aware the focus of this course is about building and managing a sustainable business enterprise. Rather than providing you with abstract theories about corporate social responsibility and sustainability, I’d like to share the story of how -- as one writer described Wainwright years ago -- a small, spunky bank from Boston evolved into what is now the country’s leading socially progressive bank.

First, let me explain a little about my personal journey that has lead to me to stand here before you tonight. I’m currently the Senior Vice President of Consumer Banking at Wainwright.

I’m regarded within the company as being instrumental in the development of the bank’s social agenda, as we call it. As the bank has grown my duties have evolved from sales and product development to marketing, public relations and brand development.

I’m also the current chairman of the American Bankers Association Communications Council, a group of approximately 20 or so of the allegedly top communications and branding professionals in the banking industry. And only because I’m proud of it, I’d like to mention that I sit on the board of the American Civil Liberties Union of Massachusetts. Their first banker, I believe.

But, as with so many other people who’ve wound up in banking, I never intended to be a banker -- maybe a rock star, an architect, a landscape designer or a DJ – but definitely not a banker.

I grew up in Central Maine – farm country -- and came to Boston to attend Berklee College of Music as a piano performance major. Actually, my first apartment wasn’t too far from this building. I left Berklee after a couple of years and attempted to make a living as a musician, which I quickly learned was a dubious method of paying the rent on a regular basis. So in 1979 I got a day job – a real job -- as a teller at Shawmut Bank, then the second largest bank in New England.

I wasn’t particularly interested in banking, but gradually rose through the ranks simply because of my personal work ethic – whatever I attempt to do, I like to do well. For several years I studied architecture nights at Wentworth Institute and the Boston Architectural Center and also studied for the then, brave new world of computer programming. However, I eventually accepted an officer position at Shawmut that sealed my fate. I had become . . . a banker.

How It All Started

Although Wainwright Bank was founded in 1987 as a private bank for wealthy individuals and organizations, by 1991 the board decided it wanted to diversify and expand the bank’s customer base by entering consumer, or retail, banking. (Well, to be honest, it wasn’t entirely their decision to make: a few customers held the majority of deposits and the FDIC wanted to see a broader depositor base.)

Up until that point the two co-founders of the bank, Bob Glassman and John Plukas, had mostly been behind the scenes, but sensing their fledgling enterprise was going adrift, they parted ways with the original executive management team and took the reigns as Chairman and President, respectively. They were technically not bankers but had experienced financial success with prior business endeavors. Today, Bob & John are co-chairmen of the bank and continue coming to work every day, sharing an office as they have in every business enterprise they’ve run since graduating from Harvard Business School 38 years ago.

So in 1992 I interviewed with Bob and John for the executive manager position of their new consumer banking initiative. Basically the job was to create a bank within a bank and I thought I had no chance of getting it, but a banking friend encouraged me to go for it anyway.

It was a strange interview. They stated they wanted to influence the banking industry by creating a new model and definition of success and to profitably allocate capital to underserved markets. Bob said, "We'd like to contemplate a second bottom line, a noble social experiment if you will."

After 13 years at a typical commercial bank and having barely heard of Wainwright one month prior to the interview, I thought they were nuts. I had no idea what they were talking about. But we seemed to click and they offered me the job, even though I was the least qualified candidate they had interviewed. When I asked them why, they said I was the only applicant who answered their questions directly, questions such as, “if we wanted to raise $10 million in new IRA deposits, how would you go about doing it?” Or, “if we wanted to reach out to the gay and lesbian community, how do you feel about that?” It was a very strange interview.

But it was the career opportunity of a lifetime: they basically showed me to my desk and said create a retail bank; how we did that didn’t matter as long as it was profitable and had a commitment to social responsibility. Again, I still didn’t entirely understand what they were talking about, but it sounded like fun and I was more than willing to give it a try.

My counterpart on the operations side of things, Lil Sanchez, and I gathered all the shell-shocked employees -- including the tellers -- that came with the three branches the bank had purchased from the failed Coolidge Bank. By the way, after 15 years Lil is still with the bank and the two of us are still referred to as the “Retail Team”. We must be doing something right – the $29 million in deposits that came with the original three branches has now grown to $335 million – that’s over 1000% growth!

The poor employees – within one year they had been owned successively by Coolidge Bank, the FDIC, then Pioneer Financial and finally Wainwright. I think they thought we had gathered them at headquarters to fire them or something.

We explained we all had a once in a lifetime opportunity here – to create an ideal bank – and have fun doing it. They were like, “huh?” We made lists of all the things we loved and hated at the banks we had previously worked at and what our customers had loved and hated. From that we created a strategic plan that still guides us to this day. Basically, it is to provide true financial value, an outstanding customer experience and a commitment to social justice (although we didn’t call it social justice then, from today’s perspective that’s what we meant).

In 1992, none of us really knew what form that commitment would take. I've been asked many times what the strategic plan for implementing this so-called social agenda was; well, there was none. It’s developed organically over time – we’ve just done what feels like the right thing to do. And that’s the key to our success.

Wainwright Bank is headquartered here in Boston with about $850 million in assets and branches throughout Greater Boston, including Cambridge, Watertown, Somerville, Brookline, Newton and next spring, Ashmont Station in Dorchester. When the bank opened its doors 20 years ago there were 12,000 banks in the U.S. There are now 8,000 banks and Wainwright is among the 700 largest.

In 1987 there were 20 de novo banks that opened shop up and down the Atlantic coast. Most of them failed in the late 80’s real estate depression and those few that survived have long since been gobbled up – all except Wainwright. Although we’re publicly traded – NASDAQ symbol “WAIN” -- Bob & John own nearly 70% of the voting stock and they have asserted in many forums, including annual reports and shareholder meetings, that Wainwright is not for sale. You may think that’s not a good thing for shareholder value, but wait until you hear more.

We basically offer the same products and services at generally the same pricing as any other bank. But as we’ve been told several times by bank analysts, consultants, and other industry observers, Wainwright is unlike any other bank in the country, even among those that profess to be socially responsible.

The Mission

I think now would be a good time for me to do the obligatory reading of 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 progressive bank committed equally to all its stakeholders - employees, customers, communities and shareholders alike."

As dry as that sounds, at its heart our mission statement reflects the concepts of collaboration and partnership. In the typical corporate model, shareholder concerns reign supreme, and in most cases still is the only consideration. We think this is a very one-dimensional view and one that will increasingly not be sustainable as society continues to move towards greater social consciousness.

When I describe our social agenda, I like to break it down into internal and external practices and initiatives. This is where the social justice rubber meets the road, so to speak.

Internal Practices

Internally we have management practices that have been lauded nationally as among the most progressive. We strive for diversity throughout the bank with twenty- two languages represented among our 160 employees. We have one of the most diverse boards of any commercial bank in the country with women or minorities comprising 40% of the directors. Over 50% of our officers are women, approximately 10% of our employees are openly gay or lesbian, including two senior vice presidents, and minorities comprise over 33% of our employee base.

We believe that by creating an open and embracing environment, employees are able to bring their whole selves to work every day. The rewards to the Bank are greater loyalty, increased productivity and public recognition, such as being named one of the Best Places to Work in Massachusetts and, along with AT&T, Subaru and Starbucks, as one of the Top 10 companies in the country for gay & lesbian employees.

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 (although considering the incredible benefits Wainwright employees receive I can’t imagine that happening). The bank provides a minimum "living wage" to all full time employees that, according to United for a Fair Economy, is currently $11.27 an hour.

Back in the mid-90’s the bank lobbied the Massachusetts Bankers Group Insurance Plan for two years to obtain employee domestic partner benefits for same-sex couples. We eventually received a letter stating they had decided to make these benefits available to all 160 member banks and their 10,000 employees, due to our efforts.

In the banking industry, a teller trainee is generally provided an annual one week paid vacation; at Wainwright all full-time employees receive three weeks to start.

We provide flex-time schedules and job sharing. Employees receive a generous benefit package including full dental coverage, free life insurance, a health club subsidy and a 401(k) plan that is nearly unmatched in the industry.

We provide employees with a subsidy to encourage public transportation usage to help reduce traffic congestion and pollution.

And once a month we hold "Casual for a Cause Fridays" where employees pay a fee to dress casual; the total amount raised is matched by the Bank and donated to a nonprofit nominated by employees.

The tangible benefits to all this?

Greater productivity: the average bank our size would generally have more employees and as I’m quite sure you’re aware, employee compensation is the greatest expense for nearly any company.

Dedicated employees: for better or worse, employee turnover is expensive. When we held our most recent off-site strategic planning session, the facilitator marveled that in the 8 years he had been meeting with us, only one of the 20 officers in attendance was new. In addition, we often receive resumes from people who assert they are not necessarily looking for a new job, but if something should become available at Wainwright they’d love to work for us.

Customer loyalty: I believe one of the primary keys to customer loyalty -- and greater profitability – is this: if employees are happy, customers will be happy too. It’s so simple! But luckily for us that’s something the larger banks in particular don’t seem to get.

External Practices

Partnerships and collaboration are at the heart of our external practices as well. This includes our lending practices, how we invest our depositors' money, the products and services we offer, our philanthropy, and perhaps unique to Wainwright, how we use our voice. It is driven by our commitment to social justice and dedication to all our stakeholders.

Community Development Lending

Wainwright is one of the few banks in the country with a department solely committed to socially responsible community development lending. Our Community Development group consists of five commercial lenders led by Senior Vice President Pam Feingold, with whom I worked with at Shawmut. In fact, we both started at Wainwright about the same time. Bob calls us his social zealots.

Back in the early 90’s, Pam, and eventually her entire group of lenders, employed unique skills and techniques to successfully underwrite highly complex loan packages for nonprofit borrowers. To date the bank has committed over $600 million in these types of loans to finance projects such as homeless shelters, food banks, affordable and special needs housing, HIV/AIDS services, immigrant services, inner-city schools, community health centers, breast cancer research and other progressive causes.

Our clients consist of a who’s who roster of nonprofits in the Greater Boston area including: the Pine Street Inn, Rosie's Place, the Massachusetts Breast Cancer Coalition, The Trust for Public Land, AIDS Action Committee, Greater Boston Food Bank, Union of Concerned Scientists, New England Foundation for the Arts, Oxfam America, The Boston Foundation, Earthwatch, the Visiting Nurse Association, Amnesty International and many, many others. For the Pine Street Inn alone we’ve financed a dozen projects over the last 18 years.

Community development lending is a significant part of our business strategy. Currently, over 50% of our commercial loan portfolio is committed to these types of loans. The vast majority of commercial banks in this country couldn’t say even 1% of their portfolio -- if any – was allocated to this sector.

Most bankers still assume these loans are unprofitable and risky, and just another form of charity. But nothing could be further from the truth. Our community development loans are not discounted – they are market priced just like any commercial loan we book, so they are quite profitable. But here’s the amazing part: of the $600-plus million in these loans we’ve provided, we’ve never lost a penny. Hardly any bank could point to a $600 million segment of their portfolio and say they had experienced zero losses over 18 years. Whenever I mention this to other bankers from around they country they shake their heads in disbelief.

The question often arises, if this is such good business, why don't more banks do it? Beyond ignorance of the actual financial performance of these loans, most banks do not have the underwriting know-how and do not want to commit the resources to do it. Our Community Development Lenders are personally motivated to make these loans and they often get involved far beyond the role of a typical banker. They’ve helped nonprofits establish functional boards of directors. They’ve also coordinated – and at times, mediated between -- the needs and desires of various constituencies such as grassroots community groups, government agencies and charitable foundations in order to see a project realized.

So beyond the financial, what are the tangible benefits of socially responsible community development lending?

New business: over the years Wainwright has developed a reputation as the bank that seeks opportunities to help nonprofits realize their objectives. In many cases they come to us first if they are looking for project financing. That’s a Madison Avenue dream – to have first right of access to new business. Nearly all the nonprofits we provide loans to move their deposit accounts to us as well, some of them quite substantial. And we have the opportunity to interact with the boards, employees and volunteers of these organizations, many of whom are motivated to move their personal banking to Wainwright.

Customer acquisition and loyalty: our customers are aware their deposits -- be it their paycheck, savings account or retirement CD -- help fund these loans. We attract many new customers because they like the idea their money is supporting social change. And once they’re with us, not only become fiercely loyal, but also are motivated to tell their family and friends about us.

Publicity: not only has there been extensive media coverage about the projects we’ve financed, the bank has also received numerous awards, including receiving the U.S. Treasury’s Bank Enterprise award multiple times over the last eight years. The award recognizes a bank’s commitment to providing financing for projects located in underserved communities and is accompanied by a cash reward. Over the last 8 years Wainwright has received a total of $1.8 million dollars from this program -- the money can be used in any way we wish.

Unique Products

In addition to our community development lending, Wainwright has created some unique products within the banking industry.

In 2001 we launched an online service for nonprofits called CommunityRoom.net that, among other things, offers free hosted web pages to any nonprofit client of the Bank and the ability to accept online donations. Using a simple content management program similar to MS Word, nonprofits create their own pages in which they can describe their mission and programs, seek volunteers, post their events (which feeds into a master event calendar) and link to their own websites.

Visitors to the site can review a nonprofit's programs and services, make a donation, check out the events calendar or read position papers on social topics such as HIV/AIDS, the current state of civil liberties, and global sustainability. Donors also have the option of becoming members so each time they visit the site, they don’t have to reenter their personal information and at tax time can print out a history of their giving.

Over 200 of the bank’s 600-plus nonprofits have joined CommunityRoom.net and donations generated through this channel will total more than $1 million this year.

Other examples of collaboration and partnership are The Wainwright Bank Green Loan and the Equal Exchange CD.

In 1999 Solar Boston and the Massachusetts Consumers Energy Alliance approached us and asked if we would consider offering a discounted home equity loan to homeowners for the financing of solar energy systems. We thought it was a great idea and have since expanded The Green Loan to include financing for of a variety of energy-efficient home improvements.

Last year we collaborated with one of our clients, Equal Exchange – a Fair Trade coffee, tea and chocolate purveyor – to create what several industry observers claim is the first of its kind product in the banking industry. The Wainwright Bank Equal Exchange CD is a 3-year certificate of deposit that provides a competitive interest rate for depositors and also acts as collateral for a line of credit to Equal Exchange. As the CD deposits grow so does the available credit to Equal Exchange to further support their efforts to provide third world farmers with a livable income.

Green Banking

One area the bank has received significant and continuing attention for is our environmental initiatives. Although we never intentionally focused on environmental issues, once again simply doing what we felt was right has resulted in us being recognized as one of the pioneers of the “Green Banking” movement, including being named one of the Top 10 Green Banking Firms in the country and one of the Top 20 Sustainable Stocks in the world. This has also come about at a time when the general public has become aware of environmental issues to an unprecedented degree.

Besides The Green Loan, other initiatives include: being a signatory to the CERES principles (an acronym for Coalition for Environmentally Responsible Economies), retrofitting the lighting at our headquarters under the EPA Green Lights program, and other practices such as using recycled paper, recycling paper and cans, providing the public transportation subsidy to employees, and promoting the use of online banking and bill pay to reduce paper and energy consumption.

We recently became one of the first banks in the country to offer business and nonprofit clients a service we call Desktop Teller. Instead of driving to the bank to make a deposit, our clients can now scan checks to be deposited right in their offices and instantly transmit the funds over the Internet into their accounts.

Perhaps the most significant of our environmental activities, and one that has garnered much press attention, is building our newest branches to LEED, or Leadership in Energy and Environmental Design, specifications. The U.S. Green Building Council awards certification levels from bronze to platinum for meeting certain criteria in design, construction and the use of sustainable building materials. Our Coolidge Corner branch in Brookline became the first bank branch in New England to be certified “Silver” and our Newton Centre branch is the first one built in this country to be awarded a “Gold” certification. And both our new Harvard Square and Ashmont Station branches will seek LEED certification as well.

Criteria includes recycling at least 50% of demolition materials and filtering dust from the air during demolition; using recycled materials such as aluminum window frames, rubber and bamboo flooring, compressed cornhusk cabinetry, and rehabbing used furniture; installing low-energy HVAC systems, appliances and computers; maximizing the use of natural light including skylights and Sun Tubes; purchasing renewable energy certificates; being located next to public transportation and other considerations.

Just as an aside, our Ashmont Station branch opening next Spring will be unusual not only because it will be LEED certified, but that it will feature a full-service espresso bar in the lobby run a local Fair Trade coffee company, Flat Black, and will include outdoor café seating. Considering 17,000 commuters stream through Ashmont Station daily, we’re anticipating our joint endeavor to be mutually supportive and successful.

Philanthropy

As far as our philanthropic initiatives, we have committed to providing at least 2.5% of our pre-tax income annually to charitable organizations but the actual amount is usually closer to 3%, or three times more than the average financial institution. Because we have over 600 nonprofit clients we decided several years ago to only provide charitable donations to organizations we have a banking relationship with.

Each year at our Champagne Reception customer appreciation event, attended by nearly 500 of our for-profit and nonprofit clients, we present the Wainwright Bank Social Justice Award to an individual and their associated organization that has significantly affected social change in their particular field. The Award is accompanied by a $10,000 dollar donation to the organization.

Several employees of the bank are registered to conduct financial literacy classes for public and private high school students in partnership with Project Hope. Groups of employees also volunteer their time to some of our nonprofit clients such as sorting food at the Greater Boston Food Bank or serving the homeless at Pine Street Inn.

In addition to CommunityRoom.net we also provide physical Community Rooms at most of our branches. These are free after hour conference rooms available for our nonprofit clients to use for meetings.

Between CommunityRoom.net, the branch Community Rooms and our employees’ volunteer efforts, our annual in-kind contribution is estimated to be the financial equivalent of $100,000 dollars.

Our Voice

Perhaps one of the most unique aspects of our socially progressive agenda, especially considering we’re a publicly traded company, is, if you will, our voice. Because of the progressive causes we champion and support in various ways, and the recognition we receive for that we believe, we’ve created a certain amount of cultural capital. And we’re not afraid to use it.

For instance, one of our directors represented the bank to testify before Congress in support of the Employment Non-Discrimination Act. A few years ago our Board filed a letter, and a Director read it, before the Massachusetts General Court in opposition to an anti-gay constitutional marriage amendment. We were the only publicly-traded company, much less a bank, to do so. We are also a signatory to several social justice initiatives including most recently endorsing the establishment of a living wage in Massachusetts.

Wainwright is also the largest shareholder in Trillium Asset Management, the oldest and largest socially responsible investment firm in the country. Of great interest to us is their shareholder activism, whereas they pool the shares held by their clients in a particular company and file proxy resolutions in order to change a negative behavior within that company. They have been quite effective at this, influencing environmental and equality practices at major corporations including MacDonald’s, Johnson & Johnson and Chrysler to name a few.

A brand is in essence a promise to a company’s stakeholders and arguably one of its most important attributes to be supported, protected and nurtured. Wainwright Bank has developed into a highly distinctive brand and at this point for us not to use our voice in support of a particular social cause would be reason for our stakeholders to wonder how sincere our commitment to that brand is.

Public Relations

I’ve touched on some aspects of this previously but I’d like to just quickly mention public relations. Media coverage of Wainwright over the years has been extensive. The bank has been featured in news sources such as NPR, Time magazine, The Wall Street Journal, the Today Show, CNBC, Fox News and dozens of local, national and international magazines and newspapers.

Just this year a book was published by Harper Collins entitled The High-Purpose Company by award winning author, Christine Arena. She and a group of ten McGill University graduate students developed a new methodology to measure corporate social responsibility and then applied it to 75 companies that claim to be socially responsible. The selected companies ranged from IKEA, Toyota and Tom’s of Maine to Halliburton (yes, Halliburton does claim to be socially responsible!).

When we received a galley of the book three weeks before it was published we were totally blown away to discover that Wainwright was ranked at the very top of the list as the “ultimate” high-purpose company and was the only company mentioned in the book to have an entire chapter devoted to it. In September, Ms. Arena will post an online iTV series targeting investors entitled Focus Earth that will provide video profiles of the companies mentioned in her book. Wainwright will be the first to be featured.

Another award-winning author, Patricia Aburdene, who has sold 20 million copies worldwide of her Megatrends series of books, included a three page description of Wainwright in her latest edition, Megatrends 2010. The book is interesting in that it predicts the transition from our current “age of knowledge”, which followed the industrial age, to a new age of “consciousness’ wherein not just crunchy granola social flakes, but blue collar workers and soccer moms will care about the ethical and sustainable behavior of the companies producing the goods and services they buy, including how their wealth is invested.

The bank has also received dozens of national and international awards and I’ve previously mentioned some. Just last week we were informed that after a rigorous screening process, Bob Glassman and Wainwright Bank will be the first recipient of the annual Social Leadership Award sponsored by Grand Circle Foundation and the Boston Business Journal. The award will be presented before 700 guests on September 6 at the Boston Business Journal Corporate Philanthropy Summit, with Timberland President and CEO, Jeff Schwartz providing the keynote address. The award is accompanied by a $100,000 prize, with $50 thousand to be donated to charities of the bank’s choosing and $50 thousand to fund a new initiative that will support social change.

As you can see, although we employ no public relations firm, we have no lack of publicity and media attention!

Financial Value

You’ve now heard how the bank provides value to our customers, employees and communities. What about our fourth stakeholder constituency – our shareholders?

In 2007, community banks nationwide are experiencing their most financially challenging year in quite awhile. Shrinking margins, an inverted yield curve and non-bank competition are working against all of us.

RBC Capital periodically publishes a report of the 73 publicly traded banks headquartered in New England, comparing a whole range of financial metrics including ROA, ROE, efficiency ratios, and others. Between January and June of this year the median increase in stock value for these 73 banks was negative 2.2%. Wainwright’s stock value increased 26.4 % during that same period, the highest increase of any bank in the report.

Why? We’re not entirely sure, but we suspect recent media attention and continuing customer loyalty are major factors. It could be Wainwright is at a tipping point. We’re definitely a pioneer among financial institutions, and corporations in general, that is poised to meet consumer demands in the this dawning age of consciousness, as Ms. Aburdene defines it.

Closing

So there’s the story of the spunky little bank from Boston who set out to influence an entire industry and prove one can be profitable, and socially conscious as well. In some ways, we’re proof to the corporate world in general that “doing well by doing good” is not an oxymoron.

Thank you for listening.

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