Henry Dubroff

When Mike Towbes stepped down as chair at Montecito Bank & Trust on April 3, he deftly handed the reins of the region’s largest banking company to incoming Chair Janet Garufis and President George Leis.

As with just about everything Towbes does, the move was carefully calibrated. At age 87, Towbes has earned the right to spend more time with his family.

Over the 18 years the Business Times has been publishing, I’ve had several opportunities to visit with Towbes, arguably the region’s most successful home-grown entrepreneur and a member of the Business Times Hall of Fame.

It is worth noting that the day he stepped down, Montecito Bank & Trust achieved one of his long time goals, becoming the largest independent community bank in Santa Barbara, Ventura and San Luis Obispo counties.

Since Garufis joined the bank roughly a decade ago, assets have grown from around $500 million to $1.3 billion and its fortress-like balance sheet was strong enough that the bank declined the U.S. Treasury’s offer of funding under the TARP program during the Great Recession.

So, after watching Towbes methodically build his bank and achieve a major milestone, it seemed like a good time to jot down a few of the many lessons that have made him so successful over the years.

• Always a buyer, never a seller. Montecito Bank & Trust originally sought a savings and loan charter and turned to commercial banking only after its application was turned down by regulators. After his initial investment, Towbes acquired the stock from a number of investors over the years, providing liquidity when they wanted to cash out. He grew the bank through acquisitions and new branch openings. His long term plan is for a trust to own the bank for decades to come to keep it independent. It wouldn’t surprise me to see the bank increase its footprint into Santa Maria and San Luis Obispo, following its customers and Towbes Group real estate initiatives.

• Make giving back part of your corporate culture. A key reason for keeping the bank independent is that it will give Garufis and her team the freedom to continue to direct a portion of the bank’s profits to philanthropic efforts, including the annual “Community Dividends” program that provides $1 million a year to area nonprofits. It’s an amazing example that helps define the region’s business DNA and creates  a unique connection to the community.

• Stay close to your core. Towbes has repeatedly said he doesn’t like to do business in areas that are more than an hour’s drive from the office and that you should be able to easily get to your destination and back in one day. That made the Tri-Counties a natural footprint for his banking empire and he wisely didn’t follow customers who made risky bets outside the market during the housing boom. Montecito Bank & Trust’s deep understanding of its markets paid off hugely during the Great Recession, when it was one of very few banks that did not need government help or substantial outside capital.

• Make haste slowly. Montecito Bank & Trust was quick to grasp opportunities but disciplined in its approach to deploying capital. Perhaps because it was owned by a single individual, it kept its leverage ratios low and never tried to outgrow its capital. Towbes, a Princeton trained engineer, seemed to enjoy the engineering of the bank’s balance sheet. The bank methodically expanded its wealth management efforts and more recently launched a mortgage unit, following the needs of its customers. It made investments in technology to provide easy access on desktops and mobile platforms.

• Have a few professional skeptics on your board. Towbes picked his directors carefully but he could count on business owners such as Peter Jordano, another Business Times Hall of Fame member, and the late George Bliss to ask questions and give straight talk advice about the economy and the creditworthiness of a potential borrower.

From the banking trenches to the board room, Towbe’s lessons created a road map for success — in banking, in business and in life.

• Reach Editor Henry Dubroff at hdubroff@pacbiztimes.com.