Bloodlines

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For Henry Walker, chief executive of Farmers & Merchants Bank in Long Beach, every day at work is a family affair. His brother, Daniel, is president and chairman, while a niece, nephew and great uncle also rank among the bank’s employees. Walker’s father, Ken, still spends time at the bank even though he stepped down as chief executive last year. In fact, since Walker’s great-grandfather founded the bank more than 100 years ago, Farmers & Merchants has been headed by a Walker. Even the d & #233;cor in Henry’s office reflects his family ties: a stuffed mountain lion shot by his grandfather stands just outside Henry’s office window. “He tracked it for four days and shot it down on the rim of the Grand Canyon,” said Walker, proudly. “It kind of blocks my view, but it’s staying.” Walker attributes much of the long-running, successful ownership to the family’s deep, nondenominational Christian faith. He sat down recently with the Business Journal at the bank’s ornate headquarters to discuss his family, his career and how the bank is faring during the recession.


Question: You and your brother are now in the top positions at the bank that has been in your family’s hands for more than a century. Were the two of you groomed for these careers?

Answer: We grew up in a business environment because of my father. Even as children, we were always involved in business. He was always entrenched in banking. He would oftentimes quiz us on percentages and interest rates, and work with us in that environment to help us understand.


Q: Did you ever consider not going into banking?

A: I considered my other options.


Q: What would you have done if you hadn’t taken this path?

A: If I hadn’t chosen banking, I often think I probably would have picked construction or some level of development.


Q: Why?

A: The creative aspect.


Q: In this environment, you’re probably thankful you did not choose that career.

A: (Laughs) For sure.


Q: Did you ever work anywhere other than a bank?

A: Yeah, I worked in machine operations in a machine shop as a youth. And I managed some horses and some laborers in my youth as well.


Q: How old were you when you picked banking?

A: It wasn’t till I was in my late teens in college that I decided that I wanted to go into banking. Obviously I am blessed to have other family in the bank with me. It creates a great team environment with the other family members. I have a core belief that you enjoy what you do well so pick something early, work hard at it and when you do it well you will enjoy it. So that drives my decision-making. Since I had advantages in the area of banking, I chose to continue on in banking.


Q: What did you do when you started?

A: Immediately when I started with the bank I was brought in at all levels of the transaction everything from being a teller to dealing with clients and dealing with any problems that might arise.




Q: How many family members currently work for the bank?

A: My father, my great uncle, my brother and also a nephew. I have a niece who works in the trust company. We have a separate company here called Farmers & Merchants Trust Co., where we handle estates and trusts.


Q: How did the bank get its start?

A: The bank was started in 1907 by my great-grandfather, C.J. Walker. In 1907 there was a severe recession that was hitting the country and hit Long Beach as well. My great-grandfather, who was a founder of Long Beach and well-respected citizen, was called upon to take over (First National Bank of Long Beach) and he did so with his own capital and with the capital of a few others.


Q: He was a founder of Long Beach?

A: He was one of the city fathers that helped transition it from Wilmore City to the city of Long Beach. He came here I think in 1885.


Q: Why was First National struggling?

A: (They) didn’t have the controls or the banking regulations that we have today. That allowed the original investors of First National Bank of Long Beach to take their capital and put it into illiquid equities. When there was a call on the deposits, they didn’t have the liquidity to service their depositors and the bank was failing.


Q: So your great-grandfather and other investors took over in 1907. Then what?

A: They recapitalized the bank, helped it survive and then changed the name a month later to Farmers & Merchants Bank of Long Beach.


Q: Has your family always held the top positions at the institution?

A: Always been held by the Walker family, yes. (C.J.) was succeeded by Gus, my grandfather, who was succeeded by my father. Then I succeeded my father as CEO and my brother succeeded him as president.


Q: Do you think your children will join the bank as well?

A: I don’t know. It depends on if they really have a passion for the business. I have three children. They’re fairly young at this point in time and while I would welcome them into the business, it is a business of service, it is a business of relationship and it is complex. It takes a lot of hours. If they want to devote the time and the effort, and have a passion for it, I would welcome it. But if they don’t, they don’t.


Q: Since taking over as chief executive a year ago, the banking industry has fallen on very hard times. Has your first year been a rocky one?

A: You know, fortunately we’ve got a phenomenal team of individuals as executive officers and as senior officers. We have a well-seasoned team that has a long tenure with the bank, so to transition into the CEO position of Farmers & Merchants was maybe not as abrupt or rough as you might think.


Q: How long a tenure are we talking?

A: Daniel’s been here 35 years, and is well-versed in the business. Our CFO has been here 45 years. My father has been here now 61 years. And I’ve been here 22 years. You move down a level to senior vice presidents and the average tenure of that group is almost 15 years. You don’t find that kind of tenure anywhere in banking. That makes managing much easier because you’re dealing with people that you’ve always dealt with.


Q: What have you learned from working with your family?

A: A level of patience. A constant and steady pace for progress and growth. Not to be hurried, not to be rash, but to be solid in your decision-making and contemplate it well.


Q: How is the bank itself faring?

A: The bank is actually doing quite well during these economic times. Not only have we had a strong brand that speaks to our conservative balance sheet and the safety of the bank, but it’s recognized in the public. We’ve had strong growth in deposits and we’ve had strong loan demand. So we’ve been benefiting during these times.


Q: Did you ever consider participating in the government’s Troubled Assets Relief Program?

A: We looked at it and we declined to accept it. We found the cost of the money expensive.


Q: A number of banks seem to have noticed that too late and are now suffering from buyer’s remorse.

A: It’s interesting. I think that there are banks that took the money that are concerned as to what the final rules and the strings attached to the money will be.


Q: What needs to happen in the financial services industry before it can regain its footing?

A: What needs to happen in the financial sector is that the consumer needs to become more disciplined. They need to learn to save their money and buy with cash. Credit also needs to be tightened, and it is.


Q: Wow, that doesn’t sound like a modern-day banker talking.

A: You have to understand that safety and soundness has been part of our strategy for over 100 years. When other banks were lending 75 or 80 percent of collateral value, we were lending 50 percent of collateral value. As the economy started to strain, we really went into a position monitoring and working with our borrowers, while the other banks really fell into a position of having to change and having to panic. Our conservative philosophy started long before the downturn in the economy.


Q: Do you have any fun outside the office?

A: I play polo, snowboard, golf.


Q: Polo? How long have you played?

A: Since I was about 14 or 15.


Q: How did you get into it?

A: My grandfather played and my father played, and that transitioned down to my brother and I.


Q: How often do you play?

A: I’ll play five months out of the year. I was playing in Indio, and I’m moving to Santa Barbara and I’ll play for probably three months in Santa Barbara.


Q: Every weekend?

A: When I’m playing, it’s pretty consistent that it will be on the weekends.


Q: With whom?

A: I usually play with my brother and nephew, and other people who have a passion for the sport.


Q: Do you own your own horse?

A: Yeah. My brother really is the lead on the horse program. I participate along with him. We have several horses and actively participate there in Santa Barbara, which is the third-oldest club there in the United States. It’s called the Santa Barbara Polo & Racquet Club.


Q: How about snowboarding. How long have you done that?

A: For about 17 years. I was skiing up in Big Sky, Mont., and we had a friend who was an instructor. It was a brand new sport. We became friends with a young guy that was promoting the sport there in Big Sky and I decided I wanted to take it up and do it.


Q: Are you good?

A: Yeah, I’m pretty good.


Q: What’s your favorite book?

A: The Bible.


Q: How important is your faith in running the bank?

A: We’re consistent. For us, we have a

common Christian belief and we draw from that Christian belief for the basis of our decision-making, and that has blessed us. It allows us to have a very consistent approach to business and consistent approach to our relationships. It removes the jealousy and envy that might otherwise be present in a family business.


Q: But didn’t things get a little rocky a few years ago when Marcus Walker, a relative of yours, filed a lawsuit alleging that the bank was too conservative and not acting in the best interests of shareholders.

A: That was just a shareholder issue.


Henry Walker

Title: Chief Executive

Company: Farmers & Merchants Bank

Born: 1965; Long Beach

Education: B.S. in business administration from Pepperdine University

Career Turning Point: Managing credit for the bank during the down economy in the early 1990s

Most Influential People: His father, Ken Walker, and his brother, Daniel

Personal: Lives in Buena Park with his three children

Hobbies: Polo, snowboarding, golf: “I do a lot of things poorly.”

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