Building a ‘Truly Great Place to Work and Bank’

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FS Bancorp’s cultural revolution kicked off about a decade ago. It’s a journey that’s still ongoing for the holding company of 1st Security Bank of Washington, according to CEO Joseph Adams.

The predecessor of Mountlake Terrace, Washington-based FS Bancorp was a credit union from its founding in 1936 until 2004, when it converted to a mutual state savings bank. In 2012, upon converting from a mutual to stock ownership structure, Adams and his team began to reconsider the bank’s business lines and culture.

“We had to figure out what we wanted to be when we grew up,” says Adams. “We had difficulty attracting top talent in our market.” The bank posted a 0.5% return on assets as of December 2011, according to S&P’s Capital IQ database.

But that has changed. “If you look at the financials of this organization, for the last 10 years, you will see a hockey stick,” says Adams. “You will just see it growing and growing.” FS Bancorp reported a return on assets of 2.1% at the end of 2020. Overall performance drove FS Bancorp to place No. 1 among the Best Community Banks in the 2022 RankingBanking study, based on a variety of metrics including profitability, growth and total shareholder return, which totaled 125% over five years (2015 to 2020). Executive leadership, board oversight, innovation and growth were also examined, with FS Bancorp topping the Best Leadership Teams subcategory.

The $2.2 billion bank focuses on five areas: deposits, home lending, indirect consumer lending, commercial & industrial (C&I) and commercial real estate. But its business lines aren’t the sole driver of the bank’s success. Adams points to a cultural shift that started around a decade ago, when Adams promoted Vickie Jarman — previously part of the consumer lending group — to lead a team focused on transforming the bank. They proposed a new set of core values, along with a mission and vision for the company. It’s pretty simple: FS Bancorp wanted to create a “truly great place to work and bank,” says Adams. “We believe if you build a great place to work, it will be a great place to bank. We intentionally put those words in that order.”

What’s developed is a culture that values collaboration and humility, according to three FS Bancorp executives I spoke with in October: Adams, Chief Financial Officer Matt Mullet and Jarman, the bank’s chief human resources officer. Self promoters often don’t feel at home there, explains Mullet.

FS Bancorp wants “smart, driven, nice” people, says Adams. “Jerks” need not apply. “We all have to work someplace. Why not work someplace where we have each other’s back, where you wake up every morning excited to go see the people you get to work with?” he says. Getting all three qualities isn’t easy, so the bank makes prospective hires go through hoops to join the organization — the more senior, the more hoops. “Our head of retail, she joined us about four years ago, and she had 16 interviews,” says Adams. “But she kept coming. And she’s here, she does a great job.”

By all appearances, the lengthy hiring process isn’t keeping FS Bancorp from adding the talent it needs to drive growth. The company had 78 employees when its transformation began, says Jarman; now it employs more than 500.

Building a strong culture requires constant work and attention. FS Bancorp has worked with a corporate coach for more than a decade; Adams is also an avid reader of books on leadership and organizational development, including Jim Collins’ “Good to Great” and Simon Sinek’s “Leaders Eat Last.” Combined, the books shine a light on leaders that put their organizations ahead of their egos. Adams wants to adapt those concepts to FS Bancorp, and he’s working with their corporate coach to do it. That will include building a training process to help FS further develop its leaders so they get the culture, too. “It’ll probably take us a year or two, as we move into the future, to get it to a point where we believe we’ve really nailed it,” says Adams.

And they’re putting practices in place that take care of employees, including raising the starting wage to $20 an hour in July — in line with rates paid by big banks such as Bank of America Corp. and First Republic Bank. It was Mullet’s idea, says Adams. “He was concerned — with how expensive things are in the Seattle area — that we have a livable wage,” says Adams.

Adams was an attorney before becoming a banker but says he’s truly passionate about organizational development — getting the right people in the right positions to excel. “We work really hard to get people in roles that play to their strengths, not their weaknesses,” he says. “If you get somebody in a role that plays to their strengths, they do wake up every morning excited to do that role.”

That passion for people comes through in how Adams leads the organization, according to Jarman. “Joe isn’t someone who comes in and says, ‘OK, what do you have on your plate today?’ … He says, ‘Hey, how can I help you? What are you working on?’ It’s from a different angle. It’s not at you. It’s with you, and it’s supportive.”

“Playing to different strengths, and creating a collaborative environment where people are encouraged to think differently, builds a stronger bank,” Jarman continues. “We’ve created a space where people do feel safe saying, ‘I don’t agree with you’ or, ‘Can we try it this way?’” she says. Providing employees with the culture to foster those types of questions builds future leaders, and it comes from the top. “That’s what Joe does,” says Jarman. “He gives us the opportunity to grow.”

FS Bancorp CEO Joseph Adams will be part of a panel discussion at Bank Director’s Acquire or Be Acquired event in Phoenix, Jan. 30 – Feb. 1, 2022. Click here to access the agenda or learn more about the conference.

How Innovative Banks Fight Covid Through Giving

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Charitable initiatives are not new to banks.

Many have foundations, donation-matching programs or standing committees dedicated to giving back. What is new to banks, however, is how fast they’re being expected to contribute to vital causes while juggling other time-sensitive priorities created by the Covid-19 crisis.

Launching an impactful, Covid-specific relief program could be a non-starter for banks unless they leverage technology to make it happen quickly. Two Northeastern banks have proved that it’s possible to spin up new products and programs in days with the help of fintech partners.

As the extent of the Covid-19 crisis became clear, the Community Engagement Steering Committee at The Cape Cod Five Cents Savings Bank, a unit of Cape Cod Five Mutual Company, kicked its planning into high gear. The committee includes employees from different areas of the Massachusetts-based bank.

Before Covid-19 struck, it convened on a weekly basis to plan community initiatives and review applications for support. Now, the committee needed to move quickly to help local healthcare organizations battling the virus on the frontlines. That goal led to a partnership between the bank and Pinkaloo, a charitable-giving fintech the bank connected with at an industry event last year.

Pinkaloo had been presenting to the bank’s internal teams since January, but the arrival of Covid pushed Cape Cod 5, as the bank is called, to formalize the partnership. “Speed to market was important to us because of the emergent need,” says Stephanie Dennehy, chief marketing officer for the $3.6 billion bank.

In a week, the fintech and bank launched giving portals for seven different healthcare providers in the bank’s footprint.

To make it happen, Pinkaloo stayed in close contact with the bank’s team and everyone — from information security to legal to executive leadership — worked quickly to streamline the implementation process. The result was that a vendor management program that would normally take two to three weeks was completed in two to three days, says Adrian Sullivan, the bank’s chief digital officer.

Covid has showed banks that they can move fast in exigent circumstances, but will those lessons last beyond the current crisis?

Sullivan thinks they will. “The way we’ve done things remotely and in such an expedited fashion — I think that becomes new normal,” he says. “We realized how fast it really can be done, so I think we will shift for the better and start to work in a more agile fashion.”

To the southeast of Cape Cod 5 is a single-branch, digital-first bank that’s no stranger to iterating quickly. Quontic Bank, based in Astoria, New York, chose to support relief efforts with a new savings account.

The Drawbridge Savings account pays depositors an annual percentage yield of 0.50% on balances up to $250,000; the bank matches the interest paid on these accounts with a donation towards its #BeTheDrawbridge campaign. The savings account approach made sense to Quontic. They didn’t want to rely on a transaction-based account when people are changing their spending habits and stockpiling funds, says Patrick Sells, Quontic’s chief innovation officer.

To make the idea a reality, Sells put in a call to one of the bank’s existing technology partners, MANTL. MANTL’s account-opening solution automatically books new accounts to the bank’s core. MANTL engineers worked through the weekend and delivered the new savings product in three days. The bank’s team worked all weekend too, preparing disclosures, developing marketing plans and completing all the other steps required to bring the new financial product to market.

Although the stakes are higher in times of crisis, the $395 million bank is used to working in an agile manner. “One of the core values that applies here is progress, not perfection,” says Sells. “Striving for perfection so often gets in the way of progress, and especially quick progress.” Quontic can pivot if it makes a decision that doesn’t work, but the bank recognizes it can’t make any decisions when it’s frozen in the planning stage.

Covid-19 is changing the world quickly. Banks that want to help will need to lean on technology to put their plans in motion fast.