SEATTLE -- Cars used to have fins, but no more. Stock market tickers used to have tape, but no longer.

Thrifts used to make money by investing deposits in fixed-rate loans. Not any more - unless you're talking about Washington Federal Savings and Loan, Seattle, which still makes profits the old-fashioned way.

"We look at ourselves as being a little different," said Charles R. Richmond, Washington Federal's executive vice president and secretary, "We have never really changed our business."

It's noteworthy that Washington Federal is still operating - profitably - as though deregulation never happened.

Is management hopelessly out of date? Hardly. "It's arguably the best-managed major thrift in the country," said Thomas O'Donnell, an analyst at Smith Barney Inc. New York.

Washington Federal is the 55th-largest U.S. thrift, with assets of more. than $3.2 billion at the end of last year. It is the second-largest in Washington State, behind Washington Mutual Savings Bank, Seattle.

In his spacious office overlooking a swank Nordstrom department store, Mr. Richmond does not look old-fashioned. His curly, salt-and-pepper hair and pin-striped suit are tidy and sleek in this city that put grange fashion and music on the cover of Time magazine.

But Mr. Richmond is gatekeeper of Washington Federal's traditional ways in home lending. He said the thrift would continue to originate fixed-rate loans and take savings deposits, often from the stereotypical grandmother.

Washington Federal will continue to expand its franchise, he said. Most recently, it opened two branches in Tucson, a far-off market much different from the Pacific Northwest.

Consider Arizona a test. If the Washington Federal way works there, its executives will no doubt spread their wings farther.

Washington Federal makes and services primarily fixed-rate loans. If interest rates drop to extremely low levels, say 6%, the thrift will simply cut back on making loans.

The thrift's executives would rather not lend at a low rate when they plan to hold loans in portfolio a long time. And they just don't like adjustable-rate products: ARMs don't have the high yields of fixed-rate loans, they said.

Mr, O'Donnell of Smith Barney said thrifts must monitor costs, rate risk, and asset quality.

Washington Federal is "zealous" about keeping its costs down, he said. It also lends only to extremely-low-risk borrowers, he said. So rate risk is the only factor Washington Federal spends much effort watching.

To keep costs down, the thrift has only 500 employees in its 78 branches. It operates no automated teller machines and uses tellers as loan processors.

Of course, ARMs are available at Washington Federal. But only 4% of the thrift's $2.7 billion portfolio is at adjustable rates.

The thrift's formula has worked. Mr. Richmond remembers when Washington Federal executives thought they were a "bunch of country bumpkins" because the thrift was not keeping up with the massive changes in its business during the 1970s.

"Maybe we weren't the smartest," he said, "but everything turned out O.K. for us."Old-Fashioned ThriftA savings and loan that'sfond of fixed-rate lendingCOMPANY:Washington Federal SavingsHEADQUARTERS:SeattleASSETS:$3.3 billionBRANCHES:78LOCATIONS:Washington, Arizona, Utah,Oregon, Idaho

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.