Five Questions With: Mark K. W. Gim

MARK K. W. GIM, Washington Trust president and chief operating officer, said there doesn’t appear to be any “immediate catalysts” for a recession on the horizon. / COURTESY THE WASHINGTON TRUST CO.

Mark K. W. Gim is responsible for overseeing the strategic planning process and daily operations of key business lines at Westerly-based The Washington Trust Co., one of Rhode Island’s largest banks based on market share of deposits. Those business lines include retail banking, mortgage and consumer lending, and wealth management.

He joined Washington Trust in 1993, serving in executive leadership capacities before being promoted to his current title. A Rhode Island resident, he graduated magna cum laude from Brown University with a bachelor’s degree in 1987 and received a master’s degree in 1988 from the London School of Economics in England.

PBN: What is a strongpoint for Washington Trust that helped place it on the S&P Global Market Intelligence list of the 50 top-performing community banks in the nation?

GIM: One factor is the diversity of our business lines and the consistency of their performance. Washington Trust has performed at a high level in many different economic environments, not only in earning strong returns to shareholders, but in providing comprehensive financial solutions for our customers when they are most needed. Delivering reliable results in both good and bad economic cycles makes a big difference to both constituencies.

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PBN: With all the consolidation in U.S. banking, where does that leave community banks such as Washington Trust?

GIM: Different sizes of banks have different approaches to addressing the needs of their larger and smaller clients, but community banks tend to understand the unique needs of their markets on a deeper level. While Washington Trust has been around for 218 years, we’re aware that we can’t be complacent in a world of change. But the fact that we have persisted and thrived suggests that there is plenty of room in the future for community banks as long as they remain profitable enough to keep operating, and as long as they stay relevant to the communities they serve.

PBN: In the years since the big recession, corporate debt has risen sharply in the U.S. Is that cause for concern?

GIM: Increased corporate debt does carry some risks, but the low level of interest rates today results in lower interest payments for corporate borrowers and means that U.S. business balance sheets since the Great Recession are in better condition – with more cash, lower corporate tax rates – than they were in 2008. And the U.S. financial services industry, which has provided some of that lending to corporations, has more capital to absorb losses than in the last economic downturn. So, there may be less systemic risk, overall, than higher levels of corporate debt might indicate.

PBN: Now that U.S. business is into the second year of the corporate tax cut, will the impact on Washington Trust be as great as the first year?

GIM: The boost from tax reform in 2018 helped corporate earnings, but most of the near-term impact of those gains on us, and on U.S. economic growth in general, is behind us. Obviously, the higher levels of after-tax earnings are incorporated into our plans for additional investment in services we provide and returns to shareholders, but the windfall won’t be felt as strongly in 2019, or in future years.

PBN: Do you see any warning signs of another recession looming, and how deep might it be?

GIM: The current cycle of U.S. economic growth has been going on for a long time, and there are some indications that it may be slowing. The changing shape of the yield curve and the Federal Reserve’s shift of stance on future interest rate increases are a couple of examples of “warning signs” in the press today. And there is still uncertainty about the potential negative impact of broader global issues, [such as] the ongoing U.S. trade dispute with China and the unresolved status of Brexit. But there don’t appear to be any immediate catalysts for recession on the horizon, and the health of U.S. consumer, business and bank balance sheets suggest that any downturn might be less severe than a full-blown crisis.

Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.