Your Father's Bank

Bob Fitton, another board member at the bank, recalls Taylor Burke as "one of the more natural people I've ever met." He says that Burke's true legacy, beyond the memorable theatrics, was turning Burke & Herbert into "a bank that reveres the customer" in an age of increasingly depersonalized service. "If customers call in and want to talk to the president of the bank, they'll talk to him," adds Fitton. "That's just part of the culture. It's no big deal."

One customer passing through -- petless -- this day is John McCaslin, a syndicated political columnist. He recalled bouncing checks during his college years, in the 1970s. "The bank would call up my mother and ask her to put another $40 in my checking account," he says. "They would never penalize you." McCaslin says that the bank also serves as a social locus. "It's a fun place to bank," he says. "It's the sort of place where you can come in and grab $20 and run into 15 people you know."

A few years ago McCaslin needed to grab more than $20, namely a $12,000 loan for personal reasons on short notice. After a brief conversation with Hunt Burke, he got the loan. The process was so ad hoc that when McCaslin came back days later to repay the loan, officials at the bank couldn't find the accompanying paperwork and kept asking him who exactly lent him the money. To Hunt Burke that was not extraordinary. "We make loans here that on paper wouldn't fly at other banks," he says. "There's no rule we can't bend with a few days' notice."

Around the corner from the front entrance of the main bank branch, a narrow door in the side of the building leads from the street into Hunt Burke's office. Burke urges employees and customers alike to drop in anytime they have a concern. "People need more than salary to like the place they work," he says. "They need to be able to say, 'I yelled at Mr. Burke today, and he actually listened to me.'"

A new class of tellers comes through Hunt Burke's office. He welcomes them and urges them to call him if they have questions. Then, deadpan as ever, he urges, "Have fun -- but don't lose the money."

The day I visited with Burke a new class of tellers came through his office. Burke welcomed them and urged the tellers to call on him if they had questions. Then, deadpan as ever, he urged, "Have fun -- but don't lose the money."

Given its history and character, it's natural to think of Burke & Herbert primarily in terms of its connection to the past. But the bank has a long tradition of mixing progressiveness with tradition. Back in the 1950s, Burke & Herbert made loans to African Americans when few other banks in then-segregated Virginia would. The bank also caught heat from state regulators in that era for lending to women without having their husbands co-sign for the loans. More recently, during the recession of the early 1990s, the bank worked with customers who fell behind on their mortgages. It reaped a lot of goodwill and a surge in business when the local economy improved.

All of it -- the tradition and the risk-taking, the efficiency and the slow-paced informality, the dog biscuits and the free checking -- makes a difference. Burke & Herbert chairman Charles K. Collum Jr. says these factors, among others, explain why so many customers are content to put their money in the bank and leave it there. Of the $1.25 billion in deposits at Burke & Herbert, $240 million is in checking accounts on which the bank pays no interest. The differential between interest earned and interest paid out by a bank is called the net interest margin. Burke & Herbert has a net interest margin of 4.3%, about 35 basis points above its peer group.

That's a big competitive edge, and in 2002 the bank's return on assets of 2.03% was the highest among all large banks (those controlling more than $1 billion in assets) belonging to the Independent Community Bankers of America, a national trade association representing 5,000 community banks. Given that community banks tend to be more profitable than larger banks, Burke & Herbert was the most profitable non-Internet bank of its size in the country that year. (Internet banks can be more profitable because they have so little overhead.) Yet it was also one of the safest. Burke & Herbert's loan to asset ratio is currently a conservative 57%, just below the industry average. The combination of customer loyalty and prudent management has made Burke & Herbert one of the 10 safest banks in the country, according to Weiss Ratings, which is a national rating service for financial institutions and insurance companies.

Dan Testa's old bank has changed its approach -- "Today," a spokesman for Riggs National says, "we think we have a compelling set of small-business products and services." But Testa, whose business now does $10 million in sales a year, hasn't looked back. It's not widely known even among the bank's admirers, but Burke & Herbert is a public company, after a fashion. The stock is mainly held by the Burke family and some insiders, but a single broker in Alexandria does make a market in it, and five years ago Testa got his hands on some shares. They now trade for about $2,500 each, more than four times what Testa paid. "It's been the best-performing stock in my portfolio," he says. His bankers are glad to hear it. i

Ed Welles, formerly a senior writer at Inc., is now a freelance journalist and personal coach. His book True Spirit, True Self: Living Sensibly in the 21st Century will be published this fall by Vital Mind Press.

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