Where stability meets innovation

A combination of profitability, strong customer relationships and a willingness to take risks means that Sushil Tuli’s Leader Bank more than lives up to its name.

By Ed Avis

Some bankers button their collars and pursue safe opportunities. Others thrive on the unpredictability of innovation. Sushil Tuli, president and CEO of Leader Bank in Arlington, Mass., is the rare combination of those extremes. His bank is a careful lender with a high-quality portfolio, but he has encouraged the development of banking tools that make Leader Bank look like a Silicon Valley startup.

The result: The bank, which Tuli started with $6.5 million in capital 15 years ago, has assets of $1.1 billion. It has seven branches and $800 million in deposits and is one of the top residential loan originators in Massachusetts.

When you manage your business well and maintain profitability but don’t take advantage of your customers, they keep coming to you and send their family and friends to you.”
—Sushil Tuli, leader bank

“When you manage your business well and maintain profitability but don’t take advantage of your customers, they keep coming to you and send their family and friends to you,” Tuli says. “Leader Bank was started with the idea of providing a community service, and we are doing that.”

Built on mortgages
Tuli, who immigrated from India in 1976, got the idea to launch Leader Bank in the late 1990s. At that time, larger institutions were acquiring many community banks in his area, and he already owned a successful mortgage company, Leader Mortgage Company, so he knew the territory.

“But when you do a mortgage, you establish a relationship, sell the mortgage, and then your relationship with the customer is over,” Tuli says. “I spent a lot of time developing those relationships, and I wanted an opportunity to maintain them.”

In February 2001, his application for a new community bank was approved. Leader Bank opened in May 2002.

“Leader Mortgage Company and my name were well known in the neighborhood, so it was easy to find customers who wanted to do banking with a small bank,” Tuli says. “And I was able to hire employees from banks that had been taken over.

“For example, I hired our CFO, the chief operating officer and a lender from those banks, and they are still with us.”

Residential mortgages remained a focus of Tuli’s, and by the end of its first year of business, the bank had almost $80 million in assets. When the mortgage crisis struck, Leader Bank—which had assiduously avoided subprime lending—was well positioned to serve customers with shrinking choices.

Leader Bank

Arlington, Mass.
Assets: $1.1 billion
Retail locations: 7
Employees: 263
Founded: 2002
Website: leaderbank.com

“Due to financial crisis and new regulations, several mortgage lenders were getting out of business,” Tuli says. “This provided us the opportunity to hire qualified mortgage originators, and customers had more confidence to do business with a bank mortgage originator.”

A turning point came in 2007, when 1st Mariner Bank in Baltimore closed its mortgage operation in Massachusetts. By that time, Tuli’s son, Jay Tuli, had joined Leader Bank after stints at JP Morgan and a technology M&A firm. After careful consideration, the men decided to incorporate 1st Mariner’s 13-member loan officer team, increasing Leader’s lending staff fivefold.

Fork in the road

Jay Tuli, now the bank’s senior vice president of retail banking and residential lending, remembers the stress of that decision.

“It was very nerve-racking,” he says. “I don’t know if either of us would have made the decision alone, but together we decided to move forward. That changed the whole path of the bank. From that, our mortgage platform grew, and that team did a billion dollars in loan originations last year.”

Leader Bank’s growing mortgage business led to a demand for more deposits. “Our asset side was growing so fast, even good deposit growth was not enough,” Jay Tuli says. “So by 2013, we decided to develop a deposit product to really differentiate ourselves.”

$2 million

The amount of rent payments Leader Bank’s ZRent platform processes each month

The result was Zeugma, a personal checking account loaded with rewards. For example, customers who opt for direct deposit and e-statements and who conduct at least 10 debit transactions per month get 1 percent cash back on Visa purchases and 2.05 APY on their savings. They also receive 10 percent off at certain merchants. Jay Tuli says the program has attracted about 2,000 customers and $50 million in deposits.

Group effort—Sushil and Jay Tuli with employees Jonada Peti (l) and Juliana Pérez (r).

The next innovation was ZRent, a program that automates rent collection for landlords. Tenants can set up monthly transfers from their checking accounts to ZRent, which forwards the funds to the landlord and generates a detailed report. Landlords with accounts at Leader Bank or a “partner” bank get the service for free and the money in two days; landlords without such an account pay a monthly fee and see their money in four days.

“It’s been an amazing account acquisition tool,” Jay Tuli says. “There are 3,000 people in the system, including about 300 landlords. We process about $2 million of rent every month.”

Marketing innovation

The Tulis are not keeping their innovations to themselves. They have a growing network of small banks that access their jumbo mortgage platform, and they have begun to license Zeugma and ZRent to other banks.

Sushil Tuli does not attribute Leader Bank’s success entirely to his successful mortgage operation and technological innovations. He says another key is a diverse and highly educated board of directors that challenges him.

And both Tulis consider community involvement essential for businesses to flourish. Sushil sits on various advisory councils in housing and banking and mentors young entrepreneurs, and Jay mentors high school students.

“Seeing other people succeed that I have helped really satisfies me,” Sushil says.

“It’s a real pleasure to help somebody become a homeowner, or contribute to the success of a small business owner. And I have about 260 employees at Leader Bank. They are my family. I feel happy when they have kids, and buy houses, knowing that we are driving security and safety to these people.”

Ed Avis is a writer in Illinois.