Front & Center: From painter to president, Jack Heath has grown up with Washington Trust Bank

Jack Heath began his banking career earlier than most.

“When I was in eighth grade, I planned to spend the summer at my family’s lake cabin. But my neighbor insisted I get a job.

“I told him I was too young, but he disagreed, and hired me to paint.”

The neighbor was Bill Scammell, then vice chairman of Washington Trust. What needed painting was one of the bank’s drive-throughs.

“He showed us – me and three other kids from the neighborhood – how to put together a business plan and bid the job, then sent us to the paint store to set up an account.

“Unbeknownst to us, Bill had already called the store, so when we arrived the manager invited us into his office, went over our business plan and extended us credit.

“The whole process was a great experience,” Heath said – and his first step toward becoming president and COO of the nation’s fourth-largest privately held bank.

Washington Trust also currently ranks 48th on American Banker magazine’s list of best banks to work for.

During a recent interview, Heath discussed robbery, interest rates and what he’d change about himself.

S-R: Where did you grow up?

Heath: Here in Spokane. I went to Gonzaga Prep, the University of Idaho, and got my MBA at Gonzaga University.

S-R: Did you have a favorite class at Prep?

Heath: Probably my math class with Phil Kuder. He’s a very dynamic teacher.

S-R: How about favorite activities?

Heath: I played football and basketball my freshman year, but wasn’t good enough for varsity. I also played violin in the Junior Symphony.

S-R: Did you envision a particular career back then?

Heath: I always wanted to be in banking. My dad was a litigator for Witherspoon Kelley, and did a lot of work for Old National Bank. I had an opportunity to watch him in the courtroom, and decided early on I either wanted to be an attorney or a banker. I eventually got into the JD/MBA program at Gonzaga. My dad encouraged me to get my MBA and working in banking a couple of years before going to law school. So I joined Washington Trust, and never went back.

S-R: Was that your first bank job since painting a drive-through?

Heath: No. During high school I worked in the operations center, did deliveries for the mail room, and was a summer teller. While in college I interned in our marketing department and investment services group.

S-R: And after you got your MBA?

Heath: l went to work for our commercial lending program. When I was 34, I got the opportunity to run a bank in Coeur d’Alene – Northern State. After we merged that into Washington Trust, I came back and ran our retail division until I was 39, when I became president.

S-R: Any bad memories?

Heath: One of the most stressful things that ever happened to me was during my junior year in college, when I was a teller in our Francis branch. A fellow walked in with a gun and a note that read, “Empty your cash into my bag.”

S-R: How are tellers taught to react in those situations?

Heath: Give them whatever they want and get them out of the bank as quickly as possible. And branches today have less cash and more security.

S-R: How else has banking evolved?

Heath: When I started, there was talk about the demise of the branch. Call centers were coming online, then we moved into automated call centers, then internet banking, and now you have P2P (peer-to-peer) and B2B (business-to-business) payment systems. But customers still want a branch where they can talk to someone across the table.

S-R: Did the recession have much impact on Washington Trust?

Heath: It had a huge impact. First of all, it reinforced the importance of relationships with our employees and customers. We saw a lot of people lose a lot of money during that down cycle. We froze salaries and discontinued dividends to shareholders. But we didn’t cut staff, and we were profitable every quarter.

S-R: When was the recession over?

Heath: I’m not sure it’s over yet. Everyone talks about the seven-year recovery, but what I think has happened is consumers have adjusted their mentality – going back to the fundamentals and changing the way they live. And I don’t think that’s a bad thing. It’s a healthy calibration to the market and expectations.

S-R: What’s the best business advice you ever got?

Heath: To hire people who are smarter than you and better at what you do. Ironically, that hasn’t been hard for me. (laugh) But it’s true – don’t be afraid to surround yourself with great people.

S-R: What’s your typical workday?

Heath: I arrive around 7:30 and work through until about 5:30, then usually attend a couple of meetings and wrap up the day dining with a client.

S-R: What do you like most about your job?

Heath: Watching our customers build their businesses and have an impact on the community. Recently I had an opportunity to tour some projects with the Jacklin (Seed) family. We’ve banked them for 82 years, and seeing those relationships move on to the third and fourth generation is fun.

S-R: What do you like least?

Heath: Having to say no to a person who has a great idea, but the risk is so high that we can’t participate. The difference is we’re a bank, and we rely on cash flow and collateral. Our risk tolerance is lower than that of venture capitalists or investment bankers.

S-R: How do you attract young customers?

Heath: One thing we don’t do is send credit-card applications to a bunch of college students or folks outside our footprint. But we do go out to the schools and talk about good financial planning – how to use a credit card and plan for the future – and then we provide online products that leverage technology.

S-R: Chase is getting a lot of publicity about a new, metal credit card. It’s so popular that they ran out of the metal stock to make the cards. Is that a gimmick, or good marketing?

Heath: It’s good marketing if it creates a better customer experience. We don’t offer metal credit cards, but now that you mention it I’m going to find out about it.

S-R: Do you encounter common misperceptions about banks?

Heath: In general, the difference between banks and investment banks is misunderstood. Leading up to the recession, investment banks changed the way underwriting was done for mortgages, providing the opportunity for people to buy homes they couldn’t afford, creating a run-up in pricing that led to disaster.

S-R: Is the economy headed in the right direction now?

Heath: I think so. I’m concerned about the low-interest environment we’ve been in for such an extended period. It’s time to let rates climb, so that if we find ourselves in another recession, the Fed has the tools to battle that.

S-R: What qualities do you look for in job applicants?

Heath: People who are excited about working in banking and have strong interpersonal skills. If it’s a technical position, people who have strong technical skills or the capacity to build them.

S-R: What advice would you offer a young person who’s considering a banking career?

Heath: Call a banker and invite him for coffee to talk about the business.

S-R: And ask if anything needs painting?

Heath: (laugh) Probably not. I’d ask about internships or a flex-hour teller jobs.

S-R: What challenges does banking face?

Heath: Consolidation. We’re losing community banks every day, and new banks aren’t being formed. When our chairman started, there were 18,000 banks. Now there are fewer than 6,000.

S-R: Have big banks tried to acquire Washington Trust?

Heath: People used to knock on our door, but that’s really fallen off. They realize Pete (Stanton) is the fourth generation of a family-controlled bank, we perform well and we’re not for sale.

S-R: Does your bank plan to grow?

Heath: No. We’re only made three acquisitions in our history – a bank in Portland, one in Coeur d’Alene, and a bank in central Washington. Our strategy of building the company one customer and employee at a time has worked really well. It means slower growth, but it’s a much more manageable risk, and preserves the culture.

S-R: If you could change one thing about yourself, what would that be?

Heath: To be more balanced – to get more exercise and enjoy life a little more. I preach it, but I don’t do it as well as I’d like. I literally live the bank 24 hours a day.

S-R: What’s at the top of your bucket list?

Heath: To attend the Ryder Cup, which I’m going to do this year in Minneapolis. I heard (former Notre Dame football coach) Lou Holtz speak when I was in high school, and he was a big advocate of bucket lists. So I have a list of 100 things. The first 20 are easy and the next 80 are tough. The toughest one I’ve done so far was skydiving – letting go of that airplane and jumping.

S-R: I thought you were averse to risk?

Heath: I’m risk-averse when it comes to managing our clients and shareholders’ wealth, but I love great personal adventures.

This interview has been condensed. If you’d like to suggest a business or community leader to be profiled, contact Michael Guilfoil at mguilfoil@comcast.net.