Mechanics Bank CEO | Steve Buster

Episode Transcript of: Mechanics Bank CEO | Steve Buster

 

Alan
Welcome back. I’m here today with Steve Buster. Steve is an accomplished executive here in Silicon Valley where he spent several years as a CEO of a regional bank, and then went over to a life science company. And I’d like to talk about the career transition. But welcome to today’s show here, Steve

Steve Buster of Mechanics Bank
Alan. It’s a pleasure to be here. And thank you for your interest.

Introduction to Steve Buster of Mechanics Bank, bio below

Alan
So why don’t we go into your background first, how you got to where you are today?

Steve
Well, I should explain that I was a very, very lucky young man to be born down in Orange County, southern California, and to grow up in such a simple and naive time born in 1950, wonderful parents, six kids, good values.

And my dad was an industrialist down there, he had a company called Cherry rivet, which became part of Textron and they make fasteners for all types of aircrafts from military to commercial, Boeing’s, etc. Wonderful company, part of Textron Corporation today so that in Orange County growing up in the 50s 60s 70s, we never knew what recession was.

It was a wonderful time to grow up. I went to public high school down there Foothill High School, and then to USC, University of spoiled children. And my dad told us go to any school you want. And there’s no question about what he was prepared to do. That was his priority. So I go to USC, I then got an MBA from USC and I realized all five of my siblings, everybody went to private schools.

And when I graduated and went to work, it was called United California bank. I realized how hard it was to make ends meet. I said, My gosh, Dad, why didn’t you tell us to go to public schools, something less expensive. We all went, you know, Stanford and Occidental College and USC, all went to private schools. He says, this is the one gift I want to give you with no strings.

After this. It’s up to you good values. Both my parents were wonderful people.

Alan
And and so did you spend all your early career days down in Southern California then or did you

Steve
all initially, yes, I lived I located in Pasadena. I got married in 1973. Right when I started the training program for United California bank, and I think I was there 23 years. It changed his name to first interstate. And a lot of wonderful interesting things happen for me at that bank. I think it was one of the best major banks that ever existed.

It was originally part of Bank of America and APG and NEA, the founder of Bank of Italy, built this organization and they made a mistake. They opened an office in New York and made JP Morgan and others jealous. And so what happened is they passed the bank holding company act that forced a breakup of this major Bank of America organization.

First interstate was the kickoff. Back then it was called western bank Corporation of Bank of America is divest station of everything out of California. Plus part of California, BMA became California and trans America became insurance and all those other things. So that was our heritage.

And interestingly, so when I was at first interstate, we tried to put it all back we made a offer for Bank of America that was not well received by Clawson or the powers that be have at the time, but they were really hurting and our position was we’re just trying to put back what was the original vision of APG and any a very good one.

Unfortunately, it didn’t happen. And today first interstate was finally acquired by Wells Fargo.

Alan
You know, I have to have to fast forward a little bit because the last eight years you were running a large regional bank here in the Bay Area very successfully. But I want to I you know, when this downturn came in 2008 and and tarp managers being passed that you made the news there,

Steve
I did indeed and and what we had is kind of a very unusual situation. First of all, I left the major banks I was in international capital markets for quite a while with both first Interstate in London for five years and later on, they sold my division international capital markets to standard Charter which on who owned Union Bank for a while, but I was off to Singapore. So I lived there five years.

And suddenly I realized I didn’t want to be in a major bank. The the the way they operate you know, I remember getting a call fire 200 people before the end of the quarter because I promised the analysts and I said we can’t operate without fuel. People that was when I was in Singapore, I had Asia Pacific. And the CEO said, doesn’t matter. I promised him you can hire back what you need.

And the next quarter after that, I thought, gosh, what kind of operation is that, that you have to do these kinds of things. So I left and I went to work for a community bank, very different mechanics bank as the name, there are $3 billion bank. And we have quite a few offices in Northern California 33. And it is owned or controlled by a family this had it for 107 years.

And as the downer family, and the instructions are very clear, always do the right thing for the long term. Take care of our customers take care of our people. Don’t make quarterly decisions for money, do the right thing for the long term, what marching orders I like.

Alan
I’m visiting here today with Steve Bester. He’s the recent CEO and mechanics bank right here in this silicon or the San Francisco Bay Area. And we’ll be right back after these messages and I want to talk to you about doing the right thing and when you hand it back the TARP money lender first guys to do so. We’ll be right back after these messages.

Alan
Esteem Buster Steve is the recent CEO of mechanics makes right here in the San Francisco Bay Area. And before the break, we’re talking about your career and your your build up into becoming the CEO for the past eight and a half years. And I left off with you were one of the first guys to tell our federal government, you know, I don’t need your TARP money. Yes, what would happen here and it was a response. It

Steve
was very interesting, Alan, because, first of all, with my background of international capital markets, I knew how serious this meltdown was internationally, if you don’t believe in your banking system, as your foundation, you don’t have any economy at all, if we had let it fail. And I I, you know, Secretary Paulson’s engagement to try and salvage this was a very important step and and subject to a lot of criticism.

As much as I hate big banks being bailed out and little banks being closed. I do agree you had to save the banking system. So I back that move. Ironically, because I so believe in the capitalistic system. But when it comes to banks, there’s a reason we’re regulated. And that’s because we have got to be a sound confidence system for the economy to work at all.

And I’ve seen runs on banks in Hong Kong, I saw a run on our bank at Standard Chartered because a bus broke down, people lined up and they thought it was a run on the bank and they came flooding out of the buildings. They don’t have FDIC insurance. And at the end of the day, we paid everybody with loads of money from the central bank.

And then they lined up again to put it back because they didn’t want it under their mattresses. So I know how this happens. Now, this gets around to tarp, they had to take a very, very big position. And they made the pitch at the government level, that they wanted us to take tarp because they wanted us to invest in things and stimulate the economy early and they made it an attractive deal financially.

So we applied for it. We were approved. We were a very solid, strong bank, but we accelerated the next o year to maybe three years of investment of things that we’re going to do and try and do it now. We thought we were being good citizens. But when I listened to Barney Frank and some of the others in Washington, DC, I heard this rhetoric, they have to punish the banks.

They want seats on the board. de minimis maximum dividends, if any to the shirt. I said, Wait a minute. We’re not sick. We’re healthy. We got a great bank. We were trying to do our share. So I turned it down. Well, this made Fox News. Fox News called me down to their to their studios. And they asked me why did you do this?

And I said because I’m now listening to the response of what the government wants in terms of controlling banks. So what I thought would be strings have turned into ropes. And for banks, not well capitalized like us ropes have turned into News. We don’t want any part of this. So we dropped tarp. Treasury was upset with us. The central bank was upset with us. But we were the first out ironically, I get back to my office.

The row phones are ringing off the hook of the call center. What did you do? My secretary said, I just told him we were turning down tarp on the news. The call center is flooded with people trying to open accounts all across the country to reward mechanics bank for turning down a government handout. So ironic ending but I’m glad it happened. That’s

Alan
a good story. And also it’s it’s a tribute to you for how you ran the bank and the business. It was it was in a well capitalized good financial position. Steve. It’s been a wonderful, wonderful having you on my show today. Thank you very much. We’ll be right back after these messages. You’re listening

 

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This transcript was generated by software and may not accurately reflect exactly what was said.

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About Steve Buster

Steven is the Chairman of Previvo Genetics and provides a wealth of experience and acumen to the company. Steve is the recent President and Chief Executive Officer of Mechanics Bank, the largest bank headquartered in Northern California’s East Bay region.

The bank serves tens of thousands of consumer and business clients in Alameda, Contra Costa, El Dorado, Marin, Napa, Placer, Sacramento and San Francisco counties.