Martha J Raup

October 21, 2005

Foothill College BUSI022

Fundamentals of Business

Instructor: Dr. Sara Seyedin

Outstanding Businessperson Report

Marion Sandler - “The Jeff Bezos of Banking”

1. Why did you select this individual? (2 points)

In preparation for retirement, I’ve been studying economics, investing, and business, and a consistent recommendation for investment in the banking field was the Golden West Financial Corporation. It has a reputation as a solid, consistent performer, with a risk-averse, conservative approach to the savings-and-loan business. Furthermore, a customer (on my mail delivery route) banked there. So, a few years ago, I persuaded my partner to take advantage of the CD offerings at World Savings Bank, a subsidiary of GWFC. At the time, I thought of it as the bank where the “ladies with the blue hair” went. I’ve since read that the average age of its customers is 58¹. The tellers were always quick to attend, and if the line got too long, an officer (I presumed) would quickly step away from (typically) her desk and go behind the counter to service the customer’s needs. When we purchased the CD, we were given a bank book, just as I was given as a child. I found it odd that a bank would still use such an old-fashioned method, but over time I learned to love it. I enjoyed the ritual and feeling of going into the bank and getting dividends posted into the book, and I liked the opportunity to explore other investment options. In short, I liked what I saw and felt as a customer.

Other information I read also impressed me. I learned that Golden West was run by a woman, who was joint owner and founder, along with her husband, Herbert, and that this business now serves over 1 million retail accounts², and it’s one of the nation’s largest residential lenders.³ In short, I’ve been impressed by all that I’ve learned about the GWFC, and about its owners and management. Eager to learn more, I selected Marion Sandler, the co-CEO of Golden West Financial Corporation and World Savings Bank, as my “Outstanding Businessperson”.

2. Give a BRIEF history of his/her personal life, education, and business experiences leading up to the present position. (5 points)

I’ve nicknamed Marion Sandler the “Jeff Bezos of Banking”, because she came to California as an entrepreneur in much the same way Amazon’s originator went to Washington some 30 years later. Like him, she saw an opportunity in a newly emerging field (publicly held savings and loans), and like Bezos, her business survived its industry meltdown. Over the years, the corporation she co-created has earned her the reputation as “the Grand Dame of banking”⁴. Some day, some other student’s Outstanding Businessperson will be nicknamed the “Marion Sandler of Management”, for she is an icon and a leader among CEOs!

Unfortunately, I found very little information about her early years. Brother Bernard Osher hails from Biddeford, Maine, and his parents owned a hardware and plumbing business, so this must be true for her too. ⁵

Marion Osher met Bernard Sandler in The Hamptons, where they both had summer house shares.⁶ She was a Phi Beta Kappa graduate of Wellesley,⁷ he was a graduate of Bowdoin College.⁸ After getting a one-year certificate from a Harvard-Radcliffe business program⁹ (because “they didn’t admit women into Harvard in those days”),¹⁰ she did a short stint training at Bloomingdale’s. ¹¹ When she found a job on Wall Street, she became only “the third woman to hold a non-clerical job”.¹² As an analyst following the financial services companies, Marion realized the S&L bosses were weak managers,¹³ and she convinced Herbert (now her husband) they could do better. Besides, Marion had concluded she would never be made a partner on Wall Street, and the next best bet was to be a boss.¹⁴ All of the few publicly-held S&L’s were in California. Herbert Sandler, as a practicing lawyer, had a few clients with S&L’s out there. So, with her persuasion, they moved to west. In 1963, they bought Golden West Savings, an institution headquartered in Oakland, and with a branch in Castro Valley, for a little over $4 million, ¹⁵ (with a loan of $3.8 million from her brother Bernard)¹⁶. This business emerged into what is today the Golden West Financial Corporation.

3. In which area of business did this person make his/her largest contribution (3 pts.)

A savings and loan association is part of the financial services field. One of the Sandlers’ innovations was to build a publicly-owned S&L into a financial powerhouse. Up until then, most S&L’s were mutual associations, did not dabble in real estate investments (or speculation), and were not allowed to offer checking accounts. When the banking industry was de-regulated in the early 1980’s, many such institutions were active. Now, few of those survived the S&L debacle of the late 80’s, and GWFC has emerged as “one of the nation’s largest and most profitable financial institutions.”¹⁷

What is most remarkable about the Sandlers, and their management of the GWFC, is what they did NOT do: they did not abandon the tried-and-true fundamentals of the S&L’s raison d'être: 96% of their loans still go for residential mortgages¹⁸. They have 477 offices in 38 states, and are one of the “largest residential lenders in the United States, originating $25.1 billion of mortgages during the first nine months of 2003 and almost $27 billion in 2002.”¹⁹ Furthermore, most of these loans are ARMs (adjustable rate mortgages), “whose interest rate is raised or lowered at periodic intervals according to the prevailing interest rates in the market.” By keeping the mortgages, rather than selling them, the Sandlers maintain more control over their finances. And, they’ve managed to create an excellent bank by running a tight ship.²⁰ In this process, GWF has provided their investors with earnings-per-share of over 35% since 1980²¹. This is such a remarkable record that the GWFC 2004 annual report rightly proclaims their bank to be a “special situation” – a business without peers.

Marion Sandler was a professional financial analyst when few women were. Even now, she is still one of only 7 female CEOs in the Fortune 500 largest corporations.²² She also ranks as the 6^th most powerful woman in banking (in 2004, she was ranked #1), and by far the woman with the most experience (42 years).²³ Finally, Marion and her husband Herbert were awarded the 2004 CEO of the Year Award from Morningstar. What a dynamo, and what a duo!

4. What challenge(s) did this businessperson face? (3 points)

The biggest challenge was certainly the prejudice against women, especially in the financial services field. However, with the support from her husband and brother, a good education, and the personal will and strong character to succeed, she surmounted these difficulties. An even greater challenge may have been surviving the temptations of the hoopla in the 1980s heyday of the S&L’s. It must have been tough to see others going for the quick riches of selling off their mortgages, speculating in real estate, and even classifying “goodwill” (customer loyalty and market share) as a part of the capital base.²⁴ Yet Marion and her partners held true to the mission and the goals of their corporation, and managed it with both bold vision and sturdy fortitude during a time when over 500 others failed.²⁵ This is a remarkable record of leadership.

5. What characteristics did this person possess that you feel helped him/her to succeed? (3 points)

Marion, her husband Herbert, and her brother Bernard helped create a truly fine financial institution, one that is remarkable for its corporate governance, its treatment of its employees, its support of the local communities where it is based, and its respect for the needs and wishes of its customers. The Board of Directors is one of the few boards that is comprised by a majority of women. The company is regarded as one of the best managed companies in the country, and is well-regarded as a place to work. What speaks to me, above all, is that Marion Sandler had a strong sense of ethics and integrity, and she helped create an institution that incorporated those ideals. She is the embodiment of a manager who leads, innovates, and lives her values, and she’s an inspiration to others. Furthermore, she has the self-confidence in her own abilities to pursue many avenues untrod by others. For instance, GWFC does all its advertising in-house,²⁶ and she herself has a big hand in the marketing. Also, with her guidance, GWFC has built hundreds of architecturally-designed facilities that, once again, stand out and above others in the financial services field.²⁷

6. If this person is still alive, what types of changes do you believe he/she would need to make in order to remain successful in the 21^st century? (2 points)

The expansion of this business into the international arena is not so likely a scenario. However, there are many areas in which S&L’s can still make headway. The upcoming retirement of the Baby Boomer generation, and the surge in immigration, are just two areas where expansion might prove profitable. I’ve read that many of the new retirees are purchasing second homes, for investment purposes. This is not the traditional customer for the Sandlers, but it may prove a lucrative market, one requiring once again the creativity and conscience for which GWFC is renowned. The newly-arriving immigrants are another underserved market, eager to buy homes, and receptive to creative programs that extend a helping hand. A third area which has not been explored by the GWF is the younger generation. So many Americans lack the basics of financial literacy. Since this company is such a paragon of democratic financial values and corporate governance, it might be an ideal institution to educate the young, and introduce them to saving and investing, as well as budgeting, and the basics of charity and financial leadership. Perhaps they could even expand overseas, and “franchise” their example of entrepreneurship. In short, the Sandlers have a brand of excellence, and we would be well-served if they extended that brand into new markets and populations.

7. If you were to emulate one aspect of this person’s business career, what would it be and why? (2 points)

I would love to be a CEO like Marion Sandler. The extent to which her recent career includes philanthropy and political contributions is also a real plus. I would love to make money, and use it to help create the world I’d like to live in. As a CEO, as a community leader, and as a businesswoman, she stands out from the crowd, and she stands up for what she believes in. I like that, and I would like to be more like that.

Works Cited