SPOTLIGHT
eNews edition
shines
SPOTLIGHT
on an individual (or a team) who has (have) a positive and significant impact on the lives of New England residents.
This month we are shining the
SPOTLIGHT
on Mr. Sushil Tuli,
Founder, Chairman, President and CEO; Leader Bank, N.A.
IAGB
:
Welcome to IAGB SPOTLIGHT. Can you talk about your journey to become the Chairman and CEO of Leader Bank, N.A.?
Sushil Tuli:
With a Masters degree in Public Administration from Punjab University I immigrated to US. After moving to US my first job here was in banking. I worked as an Assistant Controller and Investment Officer at a Bank. My job was to sell home mortgage loans for that bank in secondary markets. During this job role I realized that there was a need in the immigrant community in regards to mortgages as lot of people in this group did not know how to apply for and get their mortgage loans approved. This immigrant groups included people from Greece, China, India among other countries. In 1986 I decided to open a mortgage company. I made that a fastest growing Mortgage company and got all kinds of recognition. This run continued until 2000 when I observed that lot of small community banks were being taken over by big financial institutions. I saw an opportunity as I realized that the small business customers were not happy in dealing with these big financial institutions and at the same time even the small community bank employees did not enjoy working for the big guns in the industry. That is when I made up my mind to open a community bank.
So in year 2000 I met with various state and federal regulators including FDIC and submitted our application for opening up a community bank. The filing happened in year 2000 and in 2002 we opened our first branch of Leader Bank in Arlington, MA. We started with six and half million dollars in capital which was primarily raised from family and friends. As my good reputation and name recognition followed me from my Leader Mortgage Company, I was fortunate that I did not have to struggle much to attract new clients to my bank. Within a year we opened our second branch and that progress continued with more branches being opened almost every other year.
IAGB:
How well has Leader bank fared and what are your strengths? How do you compare against your peers and competitors?
Sushil Tuli:
So we started with six and half million dollars in capital and now the bank is worth one and half billion dollars in assets and hundred and forty million dollars in capital. Most of our business has grown by word of mouth. We rely on providing great and excellent service and the good word spreads and more and more clients approach us. Advertising certainly helps especially in building a brand name. The bank is privately held. We are primarily a retail bank and the sixth largest small business lender. We offer the same products and services that the big banks offer, as we have the same license as say Citi Bank or Bank of America. We offer all the retail banking services such as money market accounts and CDs, etc. On the commercial banking side, we do loans for commercial real estate which include shopping malls, hotels, motels among others. In the area of small businesses, we offer loans for startup businesses as well as well established businesses. In regards to our peers/competition I would say we compete with small community banks in the neighborhood. Both the big commercial banks and the not for profit credit unions are not our direct competitors.
IAGB:
What are the advantages and challenges of being an Indian-American entrepreneur in banking industry?
Sushil Tuli:
It’s true that when I was considering to start my own business in 1990s, I did realize that most Indian immigrant entrepreneurs were into the high tech industry. Some of them were striking rich with highly successful exit strategies. This was the new trend amongst Indian diaspora entrepreneurs after mostly being in Motel and Hotel industry. In my discussions with my family I always expressed a desire to do something different, something unique. I wanted to do something where the barrier to entry was high, as that is more challenging. Opening a bank fit with this challenge, and well complimented by my experience to date. Frankly lot of people I knew at that time thought it was a crazy idea. Now those very people use me as an example. Even today I am the only Indian American to have started a Bank in the New England region. The challenge has been that this industry is not a high growth industry and returns are healthy but not stellar. For example, in order to grow our bank to one and half billion dollars in assets, it took us 15 years. That said, the growth forward is exponential and it may take much less time for asset size to grow by another one and half billion dollars.
Finally, lot of our business is cost driven from customer’s point of view when it comes to interest rates on loans or returns driven for depositors. While we pride in being competitive on these fronts, we take greater pleasure in providing the best possible service to our clients. Our business has primarily grown out of the good reputation that we earned through our excellent service to our customers.
IAGB:
What was the impact of the 2008 financial crisis on your banking operations and bottom line?
Sushil Tuli:
We were not adversely affected by the 2008 financial crisis, as we always have been ethical and we came to a conclusion before the crisis that we will not partake in the business segment relating to subprime mortgage loans. Before the crisis, subprime mortgage loan business was very lucrative but we did not let greed over power us. Eventually after the near market collapse, we gained in a way by attracting more business as we helped customers of failed banks migrate to our branches. And since we did not do bad loans we did not lose money on bad debt.
IAGB:
Post crisis, congress passed some stringent regulations and more recently some of those have been watered down. What is your take on these regulatory and deregulatory actions by congress?
Sushil Tuli:
When the regulations were being formulated and eventually brought in place by the act of congress, people like me were very happy. The reason being many ‘bad apples’ who were in the banking business primarily for themselves, and were ethically challenged, got eliminated due to the stringent regulations. It is true that more regulations mean more challenges, but as a banker I was never afraid of those. Banking is a regulated business, so one cannot complain about regulations. It is an important part of the industry structure. So personally I have always maintained that – I am not scared of regulations and in fact I welcome regulations, because at the end of the day, they are good for customers, and as a service driven business, I am happy with what is good for my clients.
I believe the current relaxation of regulations is not worrisome as the industry is well trained now and is well attuned to the set higher expectations. I don’t think any bank will go back to the old ways of doing business. The industry has learnt from past mistakes and with that past knowledge the bankers, investors and bond buyers will stay away from such products
IAGB:
What is the mix of clientele your bank has – both in terms of economic strata and on the diversity matrix?
Sushil Tuli:
As far as the diversity goes, about 10-15% of our business is from ethnic minorities and the rest is general population. In regards to the economic statuses of our clientele – since most of our branches are in Middlesex and Suffolk counties, we do have clients residing here in these counties who are influential, but as part of CRA (Community Reinvestment Act) we also do significant amount of business with local minority community. Not just because it is regulated, I in fact take a lot of pride in serving the minority community. We also sponsor educational programs and give money to organizations that help these communities.
IAGB:
Who do you hire? What should a prospective employee be aware of the work environment at Leader bank?
Sushil Tuli:
Our workforce is very mixed. We have about 250 employees, and this group is a mix of all backgrounds. Our focus is on the individual’s qualifications, skills and personality aspects and not on the color of their skin.
We love hiring people fresh out of college. We do campus interviews at some of the local colleges such as Babson and Bentley to name a couple. We hire fresh undergraduates and train them. Some of them go back to grad school while others stay in workforce and are elevated amongst the ranks. In addition to these, we do hire experienced professionals in some positions such as investment officers, loan underwriters, branch managers etc. Those we advertise in media. We hire out of the excellent pool of applications we often get in response to our ads. Lastly, I am a big believer in promoting within the company. So many of my managers, vice presidents have grown from within the Bank. We also have graduates from top business school like Harvard working at very senior level positions. At least 80 % of our workforce have at least an undergraduate degree.
IAGB:
What is the future for Leader Bank?
Sushil Tuli:
I believe community banks are going to play a very important role in the economy and especially those that continue to improve and innovate their product offerings. We have developed three unique products ZRent®, ZDeposit® and Zeugma® which have become so popular that we are now licensing these products to other banks. Additionally, even the consumers want to deal with small community banks. The future of community bank is very bright and plus we being on the innovation curve I strongly feel that we are going to contribute significantly in this industry by serving the needs of our clients. As for the physical expansion, opening more branches is not our primary goal in regards to growth, but rather we want to keep innovating and the focus is more on creating a larger and larger digital footprint. This way we aspire to expand our business beyond the New England (NE) region. We already have some presence outside of NE and we plan on growing that more in near to far future. Since we are a national bank, we don’t need to apply for State by State license. My son Jay who graduated from Harvard Business School, and has been working with Leader bank as Executive vice president for past 12 years is part of the succession plan.
IAGB:
Beyond your leadership at Leader bank how else do you contribute to industry in general?
Sushil Tuli:
I do get appointed on various boards. I was on Fannie Mae’s Regional Advisory board (term expired last year). I have been on and off on this board every three-year cycle as the rules require it. Currently I am serving on the Federal Reserve Bank of Boston, on its community Depositary Institutions Board. Governor Baker has appointed me to Mass Capital Growth Corporation Board. I was also on Mass Housing Board but I resigned from it recently as there was conflict of interest because we have some overlapping business. Being on industry board, you stay connected, knowledge grows and of course you make great connections. I have fiduciary duties in my role as board of director but not on Advisory boards like the Federal Reserve board that I am on. I have OPM – Owner/President Management degree from Harvard and recently I also received my honorary PhD degree from Franklin Pierce University.
IAGB:
What is your legacy? As a significant member of both the local business community and Indian American community, how do you find ways to leave your mark on the community’s wellbeing?
Sushil Tuli:
My legacy would probably be as someone who ventured out into a banking industry, worked hard and in an ethical manner, and created a business that is profitable. As for community involvement Leader Bank and I personally believe in giving back to the community. Last year we received Corporate citizenship award from Boston Business Journal. There are about 40 odd organizations that we give money to, organizations that we pick and choose. Objectives wise I support organizations that help in eradicating hunger. A close second objective is Housing. Any organization that helps in creating housing projects for underprivileged, we contribute to them. We help with education issues by conducting seminars on credit protection and general financial planning. And finally we give to many other organizations that care for habitat, work in cancer research etc. In this group we also have organizations that have Indian American objective and cultural aspects. These nonprofits such as Saheli, Vison Aid among others are on our list. We mostly try to identify organizations that are primarily doing community work locally. This also helps with our corporate objective of community reinvestment. For last five years we have been funding scholarship for two deserving students of minority background at Harvard Business School and several other scholarships at local high schools. In India I personally funded the construction of an Exhibition Hall at the Partition Museum in Amritsar, Punjab in my wife’s memory. The family has a foundation and the bank has its own community reinvestment fund, so in multiple ways we are finding ways to give back to community.
IAGB:
How do you relax and chill?
Sushil Tuli:
I am social person, like to go to events especially fund raisers for the benefit of nonprofits’ objectives. I like to play golf, and my most favorite chilling time is spending time with my family, especially my four grandchildren.
IAGB interviewing team:
Sanjay Kudrimoti
