1st Security's first impression of Anchor was lasting

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Kelli Nielsen knew she had a great match when she saw a roomful of branch managers laughing and having fun.

Some of the managers came from 1st Security Bank of Washington in Mountlake Terrace, Wash., where Nielsen is executive vice president of retail banking and marketing. Others were from Anchor Bancorp in Lacey, Wash., the company that 1st Security was poised to buy.

Nielsen had all of the branch managers get together at an Italian restaurant last summer — before the deal closed in November 2018 — to make sure the staff from the two banks meshed culturally.

"We all took the time to get to know each other and talk about ourselves," Nielsen said. "What we saw was a lot of laughter, a lot of playfulness, a lot of fun."

The Anchor employees also asked a lot of questions and got a lot of reassurance. "They would say, 'Really, how is it here?' And our folks would say, 'It really is fun here,' " Nielsen said.

If it sounds like an atypical pre-merger event, it was an atypical merger.

Anchor originally was set to be purchased by Washington Federal. The $15 billion-asset Seattle bank had announced a deal to buy Anchor in April 2017. Anchor had about $441 million in assets and nine branches at the time.

The merger was halted in 2018 because Washington Federal had to resolve some regulatory issues tied to the Bank Secrecy Act. But it had been a tense time for Anchor employees, who worried about the potential for job cuts and branch closings in that deal, Nielsen said.

Those concerns went away with 1st Security since its branches did not overlap with Anchor's, she said. Anchor's sale to 1st Security was announced in July 2018. The 1st Security branches were clustered in and around Puget Sound, and Anchor's were in more rural areas southwest of Seattle and along the Pacific Coast.

But the cultural fit helped seal the deal. The two banks had collaborative workplaces and a commitment to the communities they serve, Nielsen said. In addition, she said, the leaders of both were passionate about creating a positive experience for employees.

"We just kept coming back and saying, 'This feels good,' " Nielsen said. "And I know that's pretty hard to quantify, but it just felt right." (After buying Anchor, 1st Security had 21 branches and $1.6 billion in assets.)

The focus on retaining branch staff, including managers, is a lesson 1st Security learned from buying four Bank of America branches in early 2016. Soon after that deal closed, deposits slipped. But most employees stayed on, and customers came back. Between the end of 2016 and the end of 2018, the four branches picked up a combined $55 million in deposits, Nielsen said.

So far the same is holding true for the Anchor deal. About 85 Anchor employees have stayed on, with fewer than 10 deciding to retire or leave, Nielsen said.

1st Security, a former credit union with about 430 employees, has seen deposits at the former Anchor branches tick up slightly, Nielsen said. It spent about $3 million in 2018 and 2019 to remodel the BofA branches, which dated back to the 1970s and 1980s, Nielsen said.

In some of the branches, the bank wanted to add community rooms, which can be used by local nonprofits and for after-hours events. But the primary goal was to create a better environment for staff and customers at all four branches.

"It's part of our value system," Nielsen said. "We want to make it a great place to work and bank."

During the Anchor merger, some of the former BofA employees stepped forward to help with the integration, Nielsen added. They spent two weeks at former Anchor branches alongside others from 1st Security, acting as on-site resources.

A similar process helped BofA managers when they initially joined 1st Security.

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"They remembered how helpful it was to them and they wanted to pay it forward, which was awesome," Nielsen said.

With the Anchor merger behind it, 1st Security has been introducing some of its community-focused events to its new markets. For example, each branch holds an annual after-hours networking event.

The bank invites its top customers and influential community members to the events for an informal evening of wine and appetizers. Bank executives, including Chief Executive Joseph Adams, try to attend as many as possible, Nielsen said.

"That has been really successful for us because it allows everybody to be in a casual environment," she said, noting that several events have already been held at former Anchor branches.

Another event, started two years ago at 1st Security, is called "Mission: Possible." The bank invites nonprofit leaders to free educational sessions on issues such as tax-law changes and board diversity. The sessions are held in Seattle once a year, Nielsen said. But the bank is looking to include more nonprofits, perhaps by holding them in other places.

"There are a lot of small nonprofits in these rural markets that may not want to make the trip to Seattle," she said, adding that the bank may hold three events in 2020.

But the ideas are flowing from Anchor to 1st Security too, reflecting 1st Security's commitment to honoring good ideas no matter where they arise, Nielsen said.

The dress code for branch staff is one example. While 1st Security allows casual dress nearly everywhere, its branch employees are an exception, Nielsen said. They stick to business casual, except when they occasionally wear jeans to support local professional sports teams, like the Seattle Seahawks and Seattle Mariners.

Anchor, however, allowed jeans every Friday and employees wanted that to continue, Nielsen said. Bank executives met to discuss the issue and decided to institute the Anchor policy bankwide.

"If that was something that was important to them," Nielsen said, "then why not?"

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M&A Consolidations Employee engagement Workforce management Workplace culture Washington Best Banks to Work For