The Invisible Bank

its Seattle-area customers have remote-capture deposit systems at their offices so they can make deposits from their desktops. For those who don't, Washington Trust offers a courier service that picks up deposits from its clients.

"We have a number of different strategies," Heath says. "Market share isn't always what drives our model. It's finding the right customers on whom you can get a good return and for whom you can provide a long-term value."

Heath says this past year has been a challenging one for all financial institutions, but Washington Trust's real estate portfolio has held up well. The bank has been "pretty fortunate" in Washington state, he says, but it has experienced softness in Boise and Salt Lake City residential real estate loans. In the commercial real estate market, lenders are bracing for some stress in the coming months, but Heath says Washington Trust hasn't seen much in the way of troubled commercial assets yet.

Commercial-centric

While Washington Trust has a strong retail presence in some of its markets, the bank historically has been focused on commercial banking and wealth management. Put another way, it concentrates on serving companies, their principals and stand-alone, high-net-worth individuals.

Luttinen says a typical commercial client for Washington Trust needs to borrow between $1 million and $15 million. Depending on the industry, that can be a company with anywhere from $2 million to $100 million in annual sales. The bank serves clients in most industries, from professional firms to software companies to conventional manufacturers.

To successfully serve commercial banking customers, Luttinen says, a bank needs employees who are essentially experts in their customers' industries, so they can understand why the customer is asking for money and give the customer an answer promptly. Over the long term, the bank's goal is to become a trusted financial adviser for the company.

In the near future, industry observers say, more banks will try to break into the commercial market, not the least of which is JPMorgan Chase & Co., which acquired Washington Mutual in 2008. A couple of Northwest banks have acknowledged this financial giant's entry into the market with advertising campaigns that promote their local roots while playing up the fact that Chase is based on the East Coast. In commercials Washington Trust rolled out last fall, the Spokane-based bank shows a deposit to an unnamed competitor traveling across the country, going through fields, under the St. Louis Arch and through small towns until finally reaching a big East Coast city. The commercial then points out that Washington Trust is based locally, with decisions made locally.

Luttinen says Chase has the potential to be formidable and has made some hires that suggest it's going to compete in the commercial banking market. Still, he adds, it might not be an easy transition for the old Washington Mutual operations, which focused primarily on mortgage lending. He says real estate-focused banks are driven by transactions, whereas Washington Trust concentrates more on long-term relationships and fee-based services.

"The culture of those banks is more real estate-centric. Switching that over is difficult." He adds, "The kind of companies we go after, the ones that value what we have to offer, may not be attracted to that larger banking model."

 

Washington Trust Bank

• Spokane-based, privately held bank with $4 billion in assets
• $2.5 billion in managed wealth assets
• 10th in Seattle market share with just two offices and no retail branches