Amalgamated Bank in New York hopes an inside-the-Beltway mind-set will help it return to profitability.
The union-owned community bank has made headlines in recent years for attracting marquee clients in Washington, D.C., such as the Democratic National Committee and the Presidential Inaugural Committee. Despite such high-profile clients, the bank has struggled to turn a profit.
So Keith Mestrich, a former labor executive who became the $3.7 billion-asset bank's chief executive in August, is treating his job like that of a campaign director, comparing efforts to obtain new customers to courting voters. For Amalgamated, those efforts will largely skew left along the political spectrum.
"All you have to do is look at the last two elections people figured out how to target the right people to turn out to vote," he said in a recent interview. "We think by utilizing a lot of similar information and data techniques that have been used in politics, we could find a cohort of customers that are perfect customers for this bank."
Amalgamated has faced its fair share of challenges while it looks to expand beyond its labor-focused roots.
The bank has posted a string of quarterly losses since the financial crisis. It lost $12.7 million in 2014, after losing $1.2 million a year earlier, based on call reports filed with the Federal Deposit Insurance Corp. data. The losses also followed a $100 million investment in late 2011 from private equity firms of WL Ross and Yucaipa.
Amalgamated also faces pressure from a shrinking balance sheet. Deposits have fallen 16% in the past five years, to $2.5 billion. Loans are down as well, as the bank has relied more heavily on its securities portfolio.
"We absolutely need to increase our deposit base," Mestrich said.
A renewed focus on political banking at Amalgamated shows how Mestrich who previously ran the bank's Washington operations is making his mark on the 92-year-old institution.
Amalgamated's lone Washington branch has been bright spot in recent years. Deposit balances at the K Street office have more than doubled since 2011, to $220 million, according to FDIC data.
"When I was hired to run the bank in the Washington region, [a political focus] was something I really emphasized," said Mestrich, who is still based in Washington. "Because we've had tremendous success there, I think it's taken on increased emphasis."
Looking toward the next few years, however, Mestrich has set his sights beyond the bank's core markets. In the second half of this year, Amalgamated is planning to market its digital banking services to liberal customers across the country ahead of the 2016 campaign cycle.
In preparation for the launch, bank has tweaked its image to emphasize its appeal to liberals. It has also upgraded its mobile banking app, adding features such as person-to-person transfers.
"It's really our vision that Amalgamated will be seen less as a New York bank, and more of a bank that offers a set of services that can be valuable for a national constituency," Mestrich said.
Mestrich has also recruited prominent White House staffers to build a larger commercial base of advocacy groups and electoral committees. Recent hires include Sam Brown and Molly Culhane-Benameur, who held senior-level roles in the Obama administration; they also worked on the finance staff for the president's re-election campaign.
"I think what we have been able to do is recruit a small team of executives who have a deep understanding of how the finances of those organizations work," Mestrich said.
Attracting political powerbrokers should help the bank assess the risks involved in financing campaigns and advocacy groups.
Amalgamated is one of a just a handful of banks that lends to political action committees. As the bank looks to expand, it will become critical to build a team that understands the cash flows of such groups as a way of assessing risk, Mestrich said.
"To someone who is not familiar [with PAC finances] it would seem very risky," he said. "Because we have people who come from that world, and can really look at the financials and understand exactly what repayment looks like, we can do that."
To be sure, there are challenges involved in building a business model around a political niche. "There are definitely political cycles, just like there are business cycles," said Craig Engle, a lawyer in the political law group at Arent Fox.
Still, there is a lot of business to target. Campaign finance was a $7.4 billion industry during the last presidential campaign cycle, Engle said.
For a bank that understands financial risk as it relates to politics knowing, for example, about a group's donor base or fundraising potential attracting big-name clients can provide a valuable marketing boost.
"It's not a matter of the bank thinking, 'Am I going to lose this money?' It's a matter of the bank thinking, 'Do we want to be known as Kamala Harris' banker?'" Engle said, referring to the California's attorney general who is running for Senate.
Amalgamated could face competition from other community banks as it looks to add political clients. Chain Bridge Bank in McLean, Va., for instance, caters to advocacy and campaign groups.
The $337 million-asset bank is run by Peter Fitzgerald, who served in the Senate as an Illinois Republican. Its clients include the political action committee for Altria Group, the parent of cigarette maker Philip Morris, according to data from the Federal Election Commission.
Chain Bridge did not respond to a request for comment.
As Amalgamated looks rebound from a tough few years, it has also positioned itself for growth among liberal groups.
The bank has entered into marketing partnerships with national electoral groups, such as Rock the Vote and America Votes. It also has also begun banking Ready For Hillary, the Super PAC that's raising money in anticipation of Hillary Clinton's presumptive presidential run.
Asked whether the bank plans to pursue Clinton's possible presidential campaign as a client, Mestrich initially demurred before calling it a "thrilling" opportunity. "There is no campaign yet, but we would be more than happy to bank Hillary Clinton if she runs for president," he said.