Bank owned by a union, for unions, sets its sights on Washington


Keith Mestrich, senior vice president of Amalgamated Bank, is leading the union-owned bank’s expansion in Washington. (Jeffrey MacMillan/JEFFREY MACMILLAN FOR THE WASHINGTON POST)

Keith Mestrich likes to say he’s the most unconventional banker in town.

And he might just be right.

As senior vice president of Amalgamated Bank, an institution founded and owned by a labor union, Mestrich’s mission is more worker solidaritythan bottom-line profits.

Amalgamated, which was founded in New York in 1923, has begun beefing up its Washington presence. As the labor movement shifts from local trade unions to more national operations, so too has the bank’s focus.

“Over time, national organizations have taken on a greater importance,” Mestrich said. “Many of them have ended up here in Washington because they’re increasingly trying to influence Congress and national policy.”

In the past year, Amalgamated has brought on former Obama staffers and wooed Democratic candidates as part of a plan to position itself as the bank of the left. Mestrich, formerly chief financial officer of the Service Employees International Union, was hired to oversee the Washington expansion.

“We’re probably late to the party in getting here,” he said. “But it’s a great place to build out our business.”

A major turning point came late last year, when the Democratic National Committee announced that it was moving its funds out of Bank of America and into Amalgamated, which is largely owned by Workers United.

“That’s really when our renaissance began,” Mestrich said. “We were able to carve out a space as a bank for progressive politics.”

Since then, Washington area deposits have risen 70 percent to about $150 million. More than 100 new unions, non-profits and Democratic party campaigns have opened commercial accounts at the bank, which also handled funds for President Obama’s second inauguration.

“We are a partisan bank that’s owned by a union,” Mestrich said. “There’s no question that unions are very tight with the Democratic party, and we make no bones about that.”

Changing focus

Amalgamated Bank arrived in Washington in 1998 and set up shop in an unlikely spot: K Street. For 15 years, there were only were a handful of employees and less than $1 million in deposits.

“It was kind of sleepy branch for us,” Mestrich said. “For the longest time, the bank was focused on New York. It’s a big city. It’s a banking center. It’s one of the most union-dense places in the country.”

But as local labor unions became more dependent on national organizations and the Democratic Party gained popularity, it was increasingly clear that Washington was central to the progressive moment.

It also became an opportunity for the bank, which had been battered by the financial crisis, to attract new clients and turn things around.

During the economic downturn Amalgamated posted millions of dollars in losses, which were aggravated by the bank’s investments in mortgage-backed securities and troubled real estate. Regulators cracked down on Amalgamated for its dwindling liquidity levels.

“That was obviously tough,” Mestrich said. “We took a hard hit and had a couple of years that weren’t profitable at all.”

To remain afloat, the bank raised $100 million in private equity capital that it used toward making additional loans and updating its technology. Today, the firms WL Ross & Co. and Yucaipa Cos. each own a 20 percent stake in Amalgamated, which has $3.6 billion in assets.

“The biggest part of our business, the traditional part, continues to be labor unions and their funds — pension funds, health and welfare funds,” Mestrich said. “But everyone is thinking more globally. Fewer decisions are being made on individual shop floors.”

Labor unions such as the International Association of Fire Fighters say they appreciate the bank’s narrow mission.

“We just weren’t satisfied with our old bank,” said Eric Pittman, comptroller of the Marine Engineers’ Beneficial Association, which transfered its money to the bank about eight months ago. “Switching to Amalgamated made a difference in that when we pick up the phone and talk to someone, they’ll understand.”

For starters, Amalgamated’s nonmanagement employees, including tellers and security guards, are also part of a union.

But, Mestrich said, that shared camraderie isn’t enough.

“Nobody is going to make that switch unless the price is right,” he said. “We have to win on our message, we have to win on our service and we have to win on our pricing.”

Abha Bhattarai covers local banking, retail and hospitality for The Washington Post’s Capital Business section.
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