In 1983, McDonald’s introduced McNuggets, the original version of Microsoft Word was released, Nicky Hilton was born and Luther Burbank Savings opened its doors for the first time.
Shortly after, Apple introduced the Mac, Clara Peller became famous for uttering “Where’s the beef,” and New Coke came and went. Ten years later, Bill Clinton was inaugurated for his first term as president of the United States, David Letterman switched network alliances and Domino’s Pizza abolished its 30-minute delivery guarantee. In 2003, President George W. Bush claimed victory in Iraq, Martha Stewart was indicted and Steve Bartman interfered with a foul ball during baseball’s NationalLeague Championship Series between the Cubs and the Marlins.
The good, the bad, the ugly and the bizarre. And through it all, from its modest roots just steps away from the main business district on Fourth Street in Santa Rosa, Luther Burbank Savings, today with assets of $1.88 billion—slowly, methodically, quietly—became Sonoma County’s biggest home-based bank.
When one looks at the unique success of Luther Burbank Savings, a pattern emerges. This is not an organization that celebrates its accomplishments with great fanfare. No clever ditties on the radio, no branches next to the bread aisle in the grocery store, no ATMs on every street corner. Just good, solid asset performance, year in and year out—and a steady management team headed by President/CEO George Mancini, a gentleman and a banker whose leadership style embodies the statement “less is more.”
“Everything about the bank is understated,” says Ben Stone, executive director of the Sonoma County Economic Development Board. “It’s not a bank that’s in your face every day.” Stone emphasizes that home-grown banks like Luther Burbank Savings are critical to the local economy: “A bank that has roots in the community feels interconnected and is an active stakeholder in the area.” Stone goes on to tell a story about Mancini attending a meeting of between 300 to 400 representatives from local nonprofit organizations.
“Luther Burbank Savings does a lot for the community,” Stone says. “Here we were, with all these people, and George offered to meet personally with everyone in the room to see if the bank could help any of them. The fact that he was willing to take all those phone calls really says something.”
“In a sense, it’s just an old country bank,” says Dusty Destruel, owner of Mead Clark Lumber and a longtime bank customer who is also an emeritus member of the Exchange Bank board of directors. “Luther Burbank Savings is a personal, people-oriented bank. Each customer is handled hands-on—there’s nothing mechanical about it. It’s truly a gift to our community. And George makes it happen. In the banking business, he’s a gentleman’s gentleman banker. He is so conscientious about this community, yet he goes about his business so quietly that most of the time he’s in the background and you don’t even know he’s around!”
Competitor Pat Kilkenny, former president and CEO of National Bank of the Redwoods and former adviser to Westamerica Bank, is also a fan. “Luther Burbank Savings is very highly thought of in the banking community,” he says. “It’s a very unique success story in that it’s very closely held, with a tremendous amount of background and history in both the ownership and the management. It’s a relatively quiet institution that knows its business very well. That’s based on the longtime experience they’ve had in all aspects of the business, not only in savings but also in real estate mortgage.”
Kilkenny further notes that, when Luther Burbank Savings and National Bank of the Redwoods both opened for business within months of each other (National Bank of the Redwoods opened in 1984), “they were kind enough to sell us participating interest in loans they were making to help us get started.
“It’s extremely rare for a competitor to do anything like that,” Kilkenny says.
In the beginning
The bank was founded by Victor and Mark Trione, scions of Sonoma County banking pioneer Henry Trione. Henry was the founder of Sonoma Mortgage Company, which was purchased by Wells Fargo in the late 1960s. Afterward, Henry started Imperial Savings and Loan. Victor got involved in the banking business at an early age and was a director and major shareholder of Sonoma County Savings and Loan, which was sold to Great American Bank in 1981. Following the buyout, Victor felt there was a need for a local savings bank, so he hired a consultant to help establish a new bank to fund mortgages.
After getting a charter, Victor and Mark settled on the name Luther Burbank Savings because they wanted a distinct local identification. Today, Victor is the bank’s chairman, and Mark is its secretary.
When news of the new bank reached Mancini’s ears, he picked up the phone and called Victor. “I thought it might be a good opportunity,” he says. At the time, Mancini was the Northern California branch administrator for Santa Barbara Savings. Prior to that, he’d been a branch administrator for San Francisco Federal Savings.
Victor knew of George from his various affiliations inside the banking industry. When the two met, “we hit it off right away,” says Trione. “We have a tremendous chemistry. In all the years we’ve been in business together, we’ve never had an argument.” Trione attributes their strong relationship to shared basic business philosophies. “We believe in maintaining our reputations at the highest levels and in exhibiting the utmost in integrity to our customers, our employees and regulators,” Trione explains. “And it also helps that we both share an appreciation for good Italian wine!”
Luther Burbank Savings got its start with “six people, $2 million in capital and our reputations, such as they were,” says Mancini. “We were, essentially, innocents.”
Innocents with an eye on the prize, some would say. “We all had very positive feelings about real estate in California,” Mancini says. “And it’s done OK. And that’s the story.” Such understatement is typical of Mancini.
What’s happening now
Today, the bank’s offices on the 800 block of Fourth Street in Santa Rosa are laid out much like a college campus, with separate buildings housing a loan service office, a loan production office, an accounting office and a savings office. The bank also has full-service facilities in Palo Alto and San Rafael (acquired in 1996 from New Horizons Savings), plus a loan production office in Walnut Creek. Approximately 95 people work for Luther Burbank Savings throughout the state.
In December 2005, Luther Burbank Savings opened a loan production office in Los Angeles. “We were making multi-family loans through brokers in the Los Angeles market,” Trione explains. “We decided we needed our own people on the ground for quality control and to enhance production.”
The Economic Development Board’s Ben Stone, in particular, is excited about the bank’s Los Angeles presence. “Any time you’re able to generate business out of Southern California and bring new dollars into Sonoma County, it’s very good news,” Stone says.
It’s that sort of insight that’s made things happen all along. In fact, the bank has been profitable almost from the very beginning. “We became profitable in our fourth month of operation,” Mancini says, “and we’ve been profitable every single month since. Our numbers are among the best of any bank in the state, and regulators give us very high ratings.”
Luther Burbank’s ratio of non-performing assets is an unheard of 0 percent. It manages to retain 92 percent of maturing certificates of deposit. Its efficiency ratio—the amount of company resources needed to produce $1 in income—is 24 percent. “A good bank will try to get an efficiency ratio below 50 percent, and the national average is 70 percent,” explains Mancini.
Because of its conservative approach to lending, Luther Burbank Savings’ risk-based capital is “extremely high and well above the requirements” of federal banking laws, Mancini says. “As a result, we pay the lowest premiums for FDIC insurance,” which lets the bank pass along savings to customers in the form of higher-paying interest rates.
The bank operates on a “simple, solid business plan,” says Trione. “We’re not trying to be all things to all people.” The company offers traditional mortgages, funded primarily with certificates of deposit, but it’s shied away from interest-only and other newer mortgage instruments. Its focus is on residential and multi-family (read: apartment complexes) lending. It doesn’t make business loans, and it doesn’t offer credit or debit cards. It also doesn’t offer a wide range of checking plans. That said, Trione insists the bank is “quite nimble.”
“We make loans to fit our customers’ needs,” he says. “I call them ‘non-vanilla loans.’ Our loan officers go to great lengths to get the best instrument for each individual customer.”
Trione credits much of the bank’s success to the leadership of Mancini. “George is a stickler for efficiency and quality—not just in customer service but also in attracting quality, superior employees. Because of our devotion to quality control, we don’t have any major problems. And while we’re conservative, we always look at new markets and new opportunities,” he says.
“Thanks to George, we always maintain our focus on our basic business strength and our ongoing customer relationships, both in savings and lending.”
Longtime customer André Bertauche of Healdsburg is a testament to that statement. Bertauche has been a customer of the bank since 1984. Now retired, he was once the corporate credit manager for Sonoma Vineyards, which is now Klein Family Vineyards.
“I’ve been in finance for more than 30 years, and Luther Burbank Savings is the most professional institution I’ve ever dealt with,” says Bertauche, whose personal investments are with the bank. “The reason I’ve dealt with them is because I know George so well. The day-to-day operations of the bank are all under George’s supervision, and they have a conservative approach to investing their dollars that I appreciate. They’re totally honest, professional and ethical.”
Bertauche is particularly impressed by the bank’s performance at the operational level.
“They’ve always managed to maintain a very consistent employee base. There are a number of people there who were there when I first walked through the door more than 20 years ago. Any business that has an employee retention rate like that is extraordinary—and there’s a good reason for that,” Bertauche says.
“Plus, the employees at their other branches are of the same caliber. I’ve got family members in Marin, so I introduced them to the bank’s San Rafael branch. The people there are just as top-notch as the ones in Santa Rosa.”
Mancini notes the bank has always emphasized service and striven to hire superior people with high standards and a belief in quality operations. “It has served us well,” he says of the goal. “We believe in doing things right the first time and following all the rules all the time, not merely from an ethical standpoint but because it’s just good business.
“You know, it’s been said that as far as employment goes, Luther Burbank Savings isn’t for everybody,” he continues. “But in the end, we’re always recognized for our high standards and good people.”
