- The Washington Times - Sunday, March 22, 2009

With big banks in turmoil and investment scams claiming victims across the country, more people are opting to place their trust and money in small community banks.

Burke & Herbert Bank & Trust Company is one family-run bank that continues to thrive while bigger banks fail.

“When you walk into Burke & Herbert, you won’t find gold faucets in the bathrooms,” said Hunt Burke, president of the Old Town Alexandria bank that has served Northern Virginia since 1852. “There is nothing fancy about us.”

Burke & Herbert remains family oriented. Hunt Burke’s brother, Taylor Burke III, serves as the bank’s vice president. Hunt and Taylor Burke are great-great-grandsons of the bank’s founder.

Hunt Burke was interested in banking as long as he can remember. He started working at Burke & Herbert when he was 13 years old, spending summers there with his father, Taylor Burke Jr. He worked in the bookkeeping department, making sure checks were endorsed, among other important things.

“It wasn’t until after college that I began working at the bank full time to figure out what I wanted to do with my life,” he said. “I guess I never figured it out, which is why I am still here.”

Burnham Financial Services Fund recently placed Burke & Herbert fifth on its list of the nation’s 10 biggest and healthiest banks.

“To be listed as one of the top 10 banks was a real surprise to Burke & Herbert because we don’t consider ourselves big,” Mr. Burke said. “It shows that not many banks out there are profitable these days.”

The 20-branch bank earned $25.2 million last year compared with $18.5 million in 2007, a healthy increase of 36 percent, while assets and deposits increased by 11 percent and 8 percent, respectively. Burke & Herbert’s assets totaled $1.7 billion at the end of 2008.

Burke & Herbert benefits from a vibrant economy in Northern Virginia, which is still considered to be somewhat recession-proof, Hunt Burke said.

“Burke & Herbert is doing very good during this big bank turmoil. Usually our target [deposit] growth that we hope to gain is 4 to 5 percent. Presently we are at 8 or 9 percent because of all the people coming from larger banks that are in trouble,” Mr. Burke said.

Wayne A. Babb, an Alexandria real estate broker, walked into a Burke & Herbert branch office earlier this month holding an envelope stuffed with $55,000 after withdrawing his savings from Bank of America, the Charlotte, N.C., banking behemoth.

“After doing much research over the past two months on safe banks, I decided to put my money in a bank that is well capitalized and highly ranked,” Mr. Babb said. “Even though I don’t feel like I would lose anything with Bank of America, I am more comfortable with having my money at Burke & Herbert; I feel psychologically safer and I like the personal touch they have.”

Joann Gaskins sought sanctuary at Burke & Herbert’s new Manassas branch after abruptly withdrawing her money from Wachovia Bank, Hunt Burke said. Ms. Gaskins carried around a metal box filled with $19,000 before deciding to open an account with Burke & Herbert.

Mr. Burke said he is amused when customers come into the bank and believe the bank’s trademark parrot approved their loans.

Taylor Burke Jr. brought home a parrot as a pet for his children, but his wife refused to let him keep it in their house. The parrot, named Runyon, was sent to live in the bank, where employees and customers were quick to adopt it. Runyon’s successor, Harvie, lives with Hunt Burke’s sister and still graces the bank’s Web site and advertisements.

Burke & Herbert’s bottom line is benefiting from the bank’s conservative strategy as well as its personal touch.

“We stick to things we know and understand such as local real estate and investment,” Mr. Burke said. “In our investment portfolio, we only invest in bank-qualified investments which are ranked high, and we do things such as stress-testing them so that in bad times we know they will hold up.”

Burke & Herbert also did not get involved in lending to large housing developments, shopping centers or commercial real estate projects.

“We lend to ‘mom and pop’ businesses and to local people,” Mr. Burke said. “Relationship banking is big with us. We could probably make a lot more money if we chased other things, but we don’t understand them so we steer away.”

Burke & Herbert is not cut out for high-risk loans, Mr. Burke said. They can make a lot of money when things go right, but when things go wrong, bad loans kill profits, he said.

Burke & Herbert chose not to take any money from the U.S. Treasury’s Troubled Assets Relief Program because the bank did not need any help, especially at 5 percent interest.

“My outlook for the banking industry in general is that we will pull out of this current crisis,” Mr. Burke said. “Hopefully, we have learned a lesson that we will not forget right away when the economy turns around and gets better.”

There will always be trust in small community banks that are well run, Mr. Burke said, but people tend to forget about Burke & Herbert when the economy is doing well.

“It’s not until the economy is in bad times when people put their trust and money into Burke & Herbert,” he said.

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