Sushil Tuli has rented 1,800 square feet of space in Arlington to house Leader Bank.

These days, even large, multibillion-dollar financial institutions are claiming to be community-centered, but one local businessman is pinning the success of a new venture on following the true spirit of community banking. When his new bank opens this summer, according to Sushil Tuli, its executives will be available and accessible to concerned customers regardless of the sum sitting in their bank accounts.

Tuli, well-known in Massachusetts as the founder and president of Leader Mortgage in Arlington, recently received a long-awaited phone call from the Office of the Comptroller of Currency preliminarily approving his plan to open Leader Bank just down the street from his current business.

“This had been my dream for many years,” said Tuli, who began his career in the banking industry 30 years ago. Tuli emigrated from India when he was 26 and first worked at Boston Safe Deposit and Trust as a teller. In 1979 he became an accountant at Suffolk Franklin Savings Bank, which later merged with Mutual Bank. He left his position as assistant controller there in 1986 to start Leader Mortgage.

Tuli, who served as chairman of the Massachusetts Mortgage Bankers Association in 1999, said he started his mortgage business because he recognized that people needed guidance when it came to the mortgage process, someone who would take the time to work with the customer. Over the years, Tuli centered his business around a customer as “king” model. This fall, he appointed a new president at Leader Mortgage so he could spend more time developing the bank project.

The Leader Bank project took seed in 1994 when many banks were either going out of business or being acquired by larger banks. “I started to realize there was another need – for a small community bank,” Tuli said.

In the mortgage industry, there is a limited relationship built between the institution and the customer, he explained.

“Once you close the loan and you sell it, the relationship is over,” Tuli said.

He met with local regulators about the possibility of opening a bank and talked it over with other businessmen. “Then I made a promise to myself that by the time I’m 50 years old, if I haven’t applied for the license, I wouldn’t.” Tuli, who turned 50 on Sept. 8, met his shelf-imposed goal.

Tuli received oral approval for his application on Feb. 12, exactly 199 days after he applied to the Office of the Comptroller of the Currency for a national bank charter. He is awaiting the written approval.

“Initially, I wanted to open [under] a state charter,” said Tuli, who eventually decided against that option for two reasons. The first, the state requires $8 million in capital to be raised while the national charter required $5 million in this instance. Tuli has pledged $6.5 million and has raised roughly 40 percent of the capital already. There will be 1 million shares of common stock offered, of which 650,000 shares will be issued when the bank opens for business. Organizers will purchase 245,000 shares for $10 a share, which secures 37.7 percent ownership of the bank.

The second reason for selecting a federal charter has as much to do with Tuli’s track record as it does his optimism.

“Our client base will come from all over, so we thought it would be better,” he said.

Personal Service
Although Tuli is reserved and soft-spoken, he’s become a respected businessman through his success and personal dealings.

“I have tremendous confidence in him as a person who will provide a level of service that will be very hard to duplicate today,” said Dr. Donald Korb, who will serve as one of the directors of the bank.

Other directors include Eric S. Silverman of Brookline, a businessman and venture capitalist; Nitin Nohria, a professor who lives in Lexington; William P. Monahan, a lawyer and selectman in the town of Belmont; and James M. McKenna of Rockport, who Tuli has been working with in developing marketing and public relations documents and as an attorney.

“To be successful, the bank will have to attract a loyal customer base to really choose that bank for a lot of business,” said Bob Segal, portfolio manager with J. William Mantz Investment Advisors in Gloucester.

“Since I have received approval, we’ve talked to some people and the first thing they’ve said is ‘when do we move our accounts over,'” said Tuli. While that certainly sounds promising, Tuli isn’t depending on those assurances alone; he is working with three companies in Chelmsford, Burlington and Billerica to establish employee direct deposit into Leader Bank and supplying them with an ATM in the lobby of their buildings.

“We’ve done this [relationship-building] with the mortgage company, and we’ve been very successful,” he said.

There will be no lending relationship between the bank and the mortgage company, said Tuli.

“One key in being successful in a bank is the ability to get low-cost deposits, things like checking accounts, NOW accounts, money market accounts – that’s what’s hard to come by. That’s what every bank wants, because it’s the cheapest source of funding,” said Segal.

In addition, the checking account is viewed as the anchor account in a bank/customer relationship which can be used to cross sell other products, such as credit cards.

To foster the growth of such accounts, Tuli said Leader Bank will focus on community banking and customer service. “Personal service – that’s how I’ve been very successful. They [customers] will not get the runaround. They will be able to talk to myself or the CFO. That’s what I believe in – personal service,” said Tuli.

The bank will be located at 141 Massachusetts Ave. in Arlington. The lease was signed Jan. 1 for the 1,800-square-foot space, with plans to acquire the office next door when its lease runs out.

Starting a new venture in the face of the looming economic downturn, however, was a point that raised some concern. But Tuli and other directors say it may actually help them.

“That will be a positive thing. In an economic slowdown we see the small business owners get hurt more with the big bank fees, [and] the same with consumers. We think we’ll be able to benefit from that,” said Tuli.

“I think the slowdown, oddly enough, is a good thing because people are taking more cautious approaches to investments and reconsidering where they have their investments,” said McKenna. “We see the problem right now in banking consolidation where so may people are arguably being a little bit disenfranchised by the charging of fees and the nickel-and-diming they are experiencing with the larger institutions,” said McKenna.

Segal said that during a slowdown, people are more likely to put their money in a bank and keep it there even if it doesn’t yield as much in interest rates as a riskier stock might.

Since gaining preliminary approval, Tuli, who will serve as president and chief executive officer of the bank, has had much to do, including raising the rest of the capital before the OCC grants full approval. But according to Dean Debuck, spokesman for the OCC, the business plan and experience of the management team has been approved. It is now conducting background checks on the directors.

Tuli has yet to hire a chief financial officer and said that while there are many qualified individuals, he wants to find people who share his vision of what a community bank should be. He also has to hire a branch manager and other employees as well as incorporate the right technology for the bank.

“But I’m a fighter. I’ve been able to get things done when I needed to. We should be able to open the doors in June. It’s a lot of work for me and my board, but we are committed,” said Tuli.

Since 1990, 94 community banks have gone by the wayside, many lost to mergers, generating an outcry from community- and consumer-focused groups, which is why Tuli feels the time is right for his venture.

Tuli’s business model boils down to a very simple philosophy: “Provide them good service, give them reasonable rates, and they will provide you with more business.”