The Seattle-based bank, WaFd Inc., has taken a significant step in its journey to expand its small business banking services, just three months after exiting the mortgage lending market. According to the bank’s president and CEO, Brent Beardall, the company has made “good progress” in this new direction. The bank has hired two former Small Business Administration (SBA) executives to spearhead this initiative, and as a result, has seen significant growth in its small business lending.
- WaFd reported making 382 small business loans in the first quarter of 2025, up from zero the prior quarter.
- The bank originated all 382 loans through its own small business express loan program.
- The company hopes to book a healthy mix of conventional and SBA 7(a) loans going forward.
“We are enthusiastic about the shift toward business banking… and are pleased to see early successes,” said Brent Beardall, President and CEO of WaFd Inc. in the company’s quarterly earnings release.
WaFd Chief Marketing and Communications Officer, Brad Goode, noted that the bank’s recent focus on small business banking is part of a larger strategic pivot. This decision was made after the bank exited the home lending market, a business it had pursued since its founding in 1917.
| Reasons for exiting home lending | Effects on the bank’s strategy |
|---|---|
| Commoditization of the sector | WaFd decided to focus on higher-margin business lines, such as small business banking. |
| Impact of technology on the sector | WaFd recognized the need to adapt to changing market conditions. |
| Growing regulatory burden | WaFd aimed to simplify its operations and reduce its risk profile. |
WaFd’s move into small business banking is not an isolated event. Other banks have also made similar decisions in recent months, with Detroit-based Ally Financial and Long Island-based Flagstar Financial announcing their exits from mortgage lending. Highlights
* WaFd has hired two former SBA executives to spearhead its small business banking initiative. * The bank has reported making 382 small business loans in the first quarter of 2025, up from zero the prior quarter. * WaFd aims to book a healthy mix of conventional and SBA 7(a) loans going forward. WaFd’s current emphasis on small business lending is a strategic pivot, made in the wake of its exit from home lending. The company’s decision to focus on small business banking was influenced by the increasing levels of commoditization in the sector, as well as the impact of technology and a growing regulatory burden.
The 7(a) program offers guarantees of 50% to 85% on loans of up to $5 million. WaFd has participated in this program for over four decades but never made it a significant line of business. WaFd’s decision to pivot to small business banking is part of its efforts to expand its services and increase its revenue streams. The company’s focus on this area is expected to be measured in years, not quarters, according to Brent Beardall. WaFd is not the only bank eyeing a bigger footprint in 7(a) lending. Community Bancshares in Georgia has announced plans to expand into this area, creating a separate subsidiary to act as an originator and servicer. Key Statistics
* 382 small business loans made by WaFd in the first quarter of 2025. * 9,000 PPP loans made by WaFd to small businesses in 2020 and 2021. * $56.3 million quarterly net income, up 19% from the previous quarter. As WaFd continues to grow its small business banking services, it is clear that the company is committed to providing its customers with innovative and tailored solutions. With its strategic pivot and focus on this area, WaFd is well-positioned for future success.
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