James Smith
Title: CEO and chairman of Webster Bank and Webster Financial Corp.
Age: 68
Experience: 42 years
After three decades at the helm and more than four decades with the company, a banking legend is preparing to pass the torch of a family business that has become a centerpiece of Connecticut banking. James Smith, the CEO and chairman of Webster Bank and its holding company, Webster Financial Corp., announced he will retire at the end of the year and become non-executive chairman of the board of directors. Smith is the second CEO in the 82-year existence of Webster Bank, which was founded in 1935 by Smith’s father Harold Webster Smith. When John Ciulla, the current president, replaces Smith on Jan. 1, he will be Webster’s first leader outside the Smith family. Since becoming CEO in 1987, Smith has transformed the Waterbury-based community bank, which was named First Federal Savings and Loan Association of Waterbury until 1995 when it was renamed Webster Bank, into a regional player. His 42 years with the bank have included acquisitions of HSA Bank, which turned Webster into a national leader with health savings accounts, NewMil Bank and 17 Citibank branches in Boston. According to the FDIC, the bank has grown its assets from $500 million in 1992 to more than $26 billion as of June 30 of this year. But although quite different from when it first started, Smith has always tried to stay true to his father’s values that first led him to open the bank. The corporate headquarters today is only three blocks from the original 400-square-foot office where Harold began the company. “You can see my father in the values of the company,” Smith told The Commercial Record. “The mission evolves, the vision expands and the values endure.”
Webster Bank founder Harold Webster Smith delivers the bank’s first mortgage in 1935.
Q: Describe growing up as the son of Harold Webster Smith and then going to work at and eventually lead the bank he founded? Was there a lot of pressure?
A: You wouldn’t have known he was special or iconic by being around him. He was just a regular father. He didn’t talk about the bank at home. I didn’t feel a lot of pressure growing up until I got here and realized there was a lot to live up to, and I am still trying to. We both went to Dartmouth College. I was a stockbroker for four years while my father worked at the U.S. Treasury Department. It was special because I knew I had a rare opportunity and that my father would be a good mentor. He was firm and fair, modest, but very competitive.
The values we treasure are personal responsibility and respectfulness. Those are the principles that guided my father from 1935 and it’s at the core of the relationship I had with my father. He once told me that “my relationship with you begins and ends with truth.” I always respected him and we had a close relationship. I wanted to learn from him. While it was special, seeing my father up close in a business environment made me realize how hard it would be to measure up. There were times I thought I could never be that smart. When you go to work in your parent’s business, you’re the son of the boss. So, you have to work even harder to establish yourself. Because of that, this was a perfect environment for me. When I first got here, I didn’t know much. But what started as a job became a career – and if you are really lucky, it becomes your life. My wife, Cathy feels the same way, which is why we are so invested in the communities we serve.
Q: What was the most important lesson he taught you?
A: It’s hard to say there was only one, but an important one was to “be the example.” Also, I would say “be strong and true.” It’s all about what’s at your core. Who are you? What do you believe in? And stay true to your core. Hold yourself to the highest standard. I’ve got to credit my mother, too; I can’t just talk about my dad. Mom was extraordinarily instrumental in my development. She taught me to work hard and help others that rely on you.
One thing my father taught me was that if we were going to be a bigger company, I would have to manage the company differently than he did. My father’s message to me was that the only way to succeed in a big company was to find people that knew more about their specializations than you did, and then support them, make sure they believe in the values and help them work together.
Q: Did you always want to get into banking? If you weren’t a banker, what profession would you be in?
A: Partly because my father didn’t make a big deal when I was growing up, I wasn’t obsessed with the idea of being a banker. I didn’t know what I wanted to do leaving college. So, I tried financial services in New York. My father and I agreed at that time it was good for both of us that I go to New York. But eventually, when my father was 64, I was about to change firms in New York City, and I just knew this would be the last chance to work with him if I wanted to. I called him up and said, “What do you think?” He said he’d talk to the board about it, then came back to me and said: “We could find a place for you,” but he said “there would be no argument about what your salary is,” and no titles to speak of, really. I was fine with that, and I became the insatiable volunteer. I wanted to learn more and more about the business. I was made assistant secretary so I got to go to the board meetings.
My mother had a great sense of humor. She said that if I weren’t a banker, I would have been a singer or a bartender. Or, if all else fails, she said, maybe I could have become a fundraiser, or, as my father said, maybe an actor. I was involved in theater back in the day. Actually, I might have gotten involved in politics.
Q: How has Webster changed from when you first started there to now?
A: The market cap was $540 million in 1986, just after we went public, and is $5 billion today. We used to want to be the best bank on the block. Then we wanted to be the best bank in the community, then the state and then southern New England, and today, our commercial business covers the Northeast and our HSA business is national in scope. The biggest difference is we are bigger. We are stronger, we are better, we provide more products and services to our customers and greater opportunity for the people that work here, we have ample capital to invest in our future and there is more complexity in our business. Our strategies and performance set us apart. We are one of the few mid-size banks that earn more than our cost of capital.
Q: What is the biggest challenge you faced during your time as CEO?
A: That’s easy. It was the Great Recession because everything changed on the dime in the third and fourth quarter of 2008. Everything we did was tested. We had to deploy all our resources to make sure we were there for our customers all the time. We had to decide whether we should raise capital. We learned what you could do different and better, so if the financial system ever ended up in that situation again, we will hopefully sail through. We built out our risk infrastructure, which today is one of the strongest groups in the company. We learned so much getting through it; there was so much angst and turmoil. I think our team really, really distinguished themselves, and we proved to be worthy of our heritage.
Webster Bank CEO James Smith reenacts the delivery of the bank’s first mortgage, delivered by his father, with the grandson of the first mortgage’s recipient.
Q: What is one of your favorite memories from your time at Webster?
A: One of my favorite memories was last December after our 81st anniversary. I went to Joe Baltrush’s house with his grandson, Peter Baltrush, who is still a Webster customer, to re-enact the photo taken of my father and Peter’s grandfather receiving the first-ever mortgage from the bank in 1935. I stood on the doorstep, in exactly the same place where my father stood 81 years before, with my father’s hat in hand, to give Peter a framed copy of the photo that ran in the newspaper the day it happened. I call that photo, “The Humble Banker – hat in hand, living up to his customer.” It was such a moving moment for me. This is an example of the rewards that can be achieved by the commitment to community. We only excel and succeed because of the confidence our customers have in us.
Q: Can you tell The Commercial Record readers about the direction Webster is going in the future?
A: I am really excited about the succession plan. John Ciulla is an extraordinary leader and has been a Webster banker for 14 years. It was very important that our successor comes from within. John, our former chief credit risk officer, will be a reliable steward of Webster’s values and meets the stringent criteria our board and I set for my successor. He’s a gifted strategic thinker and perennial high performer with compelling leadership qualities. The beauty of this is we are making this choice from a position of strength. We’ve had record financial performance, made great progress in our strategic initiatives; have created meaningful shareholder value and achieved good organizational alignment. There couldn’t have been a better time to make the switch. A lot of companies want to have a thorough succession plan, but a lot of times events get in the way or it’s not applied efficiently.
Q: Although Webster is now a regional player, the bank was once a community bank. What do community banks in Connecticut need to keep in mind or focus on if they are to succeed in the future?
A: We are a large community bank today and in every community we are in, we focus on that community, making sure we meet the expectations and services of all communities we serve. I probably learn more from the competitor community bankers in our markets than they do from me. I still have very strong relationships with most community banks in Connecticut and we work together in our communities’ interests. Community banks will always need to live up to their customers and they know this and don’t need to hear this from me.
Relationship banking is our competitive advantage. Our ability to stay close to our customers and their issues is what sets us apart. We are not going to out-tech the big banks, but our relationship on the ground is what is more important. Remember your roots. Remember why you exist, why you are here and always remember that without your customers, you wouldn’t be where you are today. For me this is easy. All I have to do is look at the photo of the humble banker, the constant reminder of our purpose and our values.
Smith’s Five Tips For Success – AKA ‘The Webster Way’
- Take personal responsibility for meeting customers’ needs.
- Respect the dignity of every individual.
- Earn trust through ethical behavior.
- Give of ourselves in the communities we serve.
- Work together to achieve outstanding results.
