The Business Journal interviewed John Biggs, CEO and president of Luther Burbank Savings. North Bay’s largest financial institution was started in 1983 and is based in Santa Rosa.
In September, Luther Burbank Savings converted from a federally chartered unitary thrift to a state-chartered bank. The company lends only for real estate, with 60 percent of loans in multifamily apartments and the rest single-family homes. Luther Burbank Savings has nine branches. In February 2016, the company moved to new headquarters on Third Street across from Old Courthouse Square.
Biggs has his office on the top floor of the building with a grand view of the square under construction in a reunification project that started in May and is expected to finish in spring 2017.
You have been with Luther Burbank Savings how long?
The owners of Luther Burbank Savings are still Vic(tor Trione), Mark (Trione, sons of Henry Trione) and George (Mancini, former president)?
Those are the only owners. George comes (into the office) two days a week.
You’re not an owner?
Do they promise (ownership) at some point?
I am well taken care of in a different way (laughs). I’ll leave it at that. George started the bank in 1983. He had some shares when he first started. Vic is the primary shareholder. Mark is second. George has a little bit. That has been the shareholder ownership since day one.
Vic is very much involved?
That’s his office there. I meet with Vic regularly. We have a very good, close relationship. We talk quite a bit about strategy, what we’re doing. He’s very involved — chairman of the board.
The Federal Reserve didn’t balk at your transition to a state-chartered bank?
I think it was September. We are officially converted. It’s a funny cycle we went through. We were originally a state-chartered savings institution.
A savings institution, not a bank?
Not a bank. FIRREA (Financial Institutions Reform, Recovery and Enforcement Act of 1989) came in post-savings-and-loan crisis (more than 1,000 out of 3,200 S&Ls failed from 1986 to 1995 after investors moved money to money-market funds; the Federal Savings and Loan Insurance Corp. needed a $124 billion bailout and some 700 S&Ls were closed by Resolution Trust Corp.). That created the Office of Thrift Supervision in 1989. We decided that was a good regulator for us, and why have two regulators.
Luther Burbank Savings became a federal thrift?
We gave up our state charter, became a federally chartered savings institution, still a thrift. The OTS got the short end of the stick with Dodd-Frank (Wall Street Reform and Consumer Protection Act, 2010, enacted in response to financial crisis of 2008).
They supervised IndyMac. [Independent National Mortgage Corp., closed in July 2008 and turned over to Federal Deposit Insurance Corp., which sold it to OneWest Bank, 2009; CIT Group acquired OneWest in 2015.]
They supervised Countrywide. [In 2006, it financed some 20 percent of all U.S. mortgages. In 2008 it was sold for $4.1 billion in stock to Bank of America, which was ordered in 2013 by a federal jury to pay $1.27 billion penalty for Countrywide’s loans to unqualified buyers in so-called “hustle” program. That fraud penalty was overturned on appeal in May of this year.]