Checks and Balances

In an age when big bank mergers are de rigueur, Joe Boutin and Mike Tuttle are working to assure Merchants Bank stays small and strong

by Pip Vaughan-Hughes

Photos: Jeff Clarke

A visit to the Merchants Bank service center, a large, brick building near Burlington International Airport, is likely to shatter preconceptions about the banking industry. Bank president Joe Boutin's greeting is warm and informal. Strolling around the four story operation, he is on first-name terms with seemingly everyone. The atmosphere is busy but relaxed, and decidedly non-corporate. "This is the nerve center of the bank, not its headquarters," he stresses. "We choose to think of each of our 33 branches as our headquarters." The president's office is a windowless unit off a central corridor. "Just like all the others," he says. "That way, no one can pull rank." The most striking piece of decoration is a large painting of a lynx, the Merchants Bank logo, that watches over the office with feline eyes. The big cat seems to have found a home in Boutin's heart as well: His business card sports a tiny paw-print in one corner.?

Joe Boutin

Merchants Bank president Joe Boutin is marking his 30th year in the industry as the bank celebrates its 150th anniversary. "We'll go to an extreme to position ourselves as the opposite of the big organizations," he says in light of recent mergers within the sector.

Boutin introduces Mike Tuttle, the bank's chief operating and senior loan officer, as "co-leader," a job description Tuttle modestly eschews. "We do work very closely together," he concedes. "Neither of us makes many decisions without deferring to the other." It's clear though, this is a successful working partnership. The two worked together at Howard Bank prior to Boutin's move to Merchants in 1994, and Boutin brought Tuttle to Merchants as senior lender in 1995. It was a change Tuttle welcomed. "Number one, I really like working with Joe," he says, "but it was also a great opportunity to work for an independent banking company."

"Michael is the best I've ever seen at what he does," Boutin says. "Say I had to take a six-month sabbatical. Michael would continue to lead the organization, and no one would skip a beat. People would respond to his leadership in the same way they respond to mine -- if not better," he adds.

"Joe doesn't necessarily defer to me," says Tuttle, "but he does look to me for guidance on issues that maybe I have a more specialized knowledge of -- as I do with him."

Boutin hails from across the border in Laconia, N.H. "I went to the French school there until I was 13," he recalls. Then came a move to Washington, D.C., and then college at Saint Michael's in Colchester, where he earned his degree in economics in 1969. Boutin has been married 29 years to Dale Boutin, a native of Burlington he met at Saint Michael's. The couple has four children, Rene?, Jason, Michael and Robert; and a grandchild, Mackenzie, who's 3. The Boutins love to go camping, to find a place in the woods and get away from it all -- although it isn't easy to find the time. "And I love to garden. I get up very early -- 5 a.m. -- go outside and just get my hands in the soil."

Tom Havers & Janet Spitler.

Joe Boutin and Mike Tuttle stress the importance of creative input from every level of management. Pictured: Tom Havers and Janet Spitler, two of the bank's five management council members.

Visiting the placement office at Saint Michael's just after graduation, Boutin remembers that "the guy I talked to had just been on the phone to Howard Bank. He sent me down for an interview, and I was there for 25 years," the last five of those as president and CEO.

"I started out as a teller and did just about everything else," he says. Boutin spent most of his career in the bank's branches in lending and management roles. The period that seems to have formed his approach to banking and leadership, however, are the 10 years he spent in Rutland. "Howard had bought a bank down there, and they asked me to go and assimilate it into the organization. I didn't do it," he admits, smiling happily. "Howard was very much a white-collar bank, and the Rutland bank was blue collar. I convinced Howard that it was unique, and that we shouldn't try to force a square peg into a round hole." They listened.

"My experiences in Rutland taught me that flexibility is key in a small state like Vermont. I never thought I'd leave Howard," he admits. About the time he was offered the presidency and CEO position at Merchants, "Howard had just joined the Banknorth Group. I felt that it had outgrown me -- not the other way around," he emphasizes. "The chance to run my own business really appealed, of course, but what especially attracted me was the entrepreneurial spirit of Merchants."

Tuttle, a native of Bridgeport, Conn., went to St. Lawrence University in Canton, N.Y., where he earned his degree in economics in 1977. He entered the world of banking the same year and met the woman who became his wife, Anita Reeves, in Boston, where she was studying law. Vermont entered their lives when Anita interviewed at the Vermont State Supreme Court in Montpelier for a clerking position. She got the job, they fell in love with Montpelier, and Tuttle went to work for the Industrial Development Authority. He spent four years at Merchants Bank from 1986 to 1990, then went to Howard, where Boutin was president, before returning to the Merchants in '95. "Nowadays, when I'm not at work I'm doing something with my family," says Tuttle. These days, Anita is an attorney in Burlington, and the couple have two children: Rob, who is 6, and 2-year-old Andy, "who was born on Joe's birthday," laughs Tuttle.

"At least I didn't insist they name him Joe," jokes Boutin.

This is Boutin's 30th year in banking, and Merchants Bank marked its 150th anniversary in May. From modest beginnings on Battery Street, by 1859 the bank had moved to College Street, and soon expanded into a building on Church Street. The bank remained a small, Burlington-centered business -- solidly based in commercial banking with, in the 1930s, a strong focus on the carriage trade -- until the presidency of Dudley Davis, who took over in the mid 1960s. Davis, whom Boutin remembers as having "an uncanny knack for picking people who were going to succeed, and backing them," began acquiring banks around Vermont and converting them to Merchants Bank branches. "Dudley made 10 acquisitions," says Boutin, "and of these, the first seven were small, one-office, neighborhood banks. At that point," he continues, "Merchants was very much a blue-collar bank, serving people who had started their businesses with a pickup truck and a pick and shovel."

Sandy Matthews.

Merchants Bank boasts 33 branches throughout Vermont, and emphasizes its people-oriented, neighborhood roots. Pictured: customer service representative Sandy Matthews

The bank boasts 33 branches throughout Vermont, but Boutin emphasizes it has retained its people-oriented, neighborhood roots. "Three years ago, banking went through a process of deregulation," he explains. "Now, 75 percent of deposits in this country are controlled by the largest 50 banks. Five years from now, that 75 percent will be controlled by the 10 largest." Instead of rapid expansion, Boutin, Tuttle and the Merchants decision-makers opted to stay small. "We decided to be the equivalent of a convenience store rather than a supermarket. A big bank will have chandeliers, marble, mahogany desks, and 15 specialists who will shuttle the customer around between them," says Boutin. "A branch of Merchants might have three people, all of whom can give customers exactly what they need. We'll go to an extreme to position ourselves as the opposite of the big organizations." It's a strategy that seems to be working. The bank's goal for their FreedomLYNX free checking account is 60,000 accounts in five years. "We're at 18,000 today," Boutin proclaims, "and we're adding 1,000 new accounts a month, net."

Boutin and Tuttle have brought their hands-on approach to all aspects of the business. "In 1994 we brought focus groups together and asked them how banking fitted into their lives," recalls Boutin. "From that we created what we have today." The bank's Lynx motif came out of that process, as did free checking for life. "That's what people want," says Boutin. It is in the day-to-day running of the business that the pair's philosophy finds its fullest expression. "I would say that 95 percent of decisions made within the company are made jointly," says Boutin.

"These are strategic things -- companywide in their impact," adds Tuttle.

"There are five other people who make up our management council," Boutin explains, "who we rely on in the decision-making process." These are Tom Leavitt, Tom Havers, Janet Spitler, Zoe Erdman and Bill Heaslip.

Below them are the supervisors "out on the line," as Tuttle puts it, "working alongside the staff. There's no real middle management."

"We operate on the honor system here," Boutin explains. "No one punches in or out. I've never felt happy in a command environment," he confesses. "I allow people to make mistakes -- to learn from mistakes -- more than would be possible in a bureaucratic system. And we have risk management, of course."

"Joe makes people know their input is important," says Tuttle. "We're a lot less formal than a typical corporation. A great deal of feedback comes to us from -- I don't like to say from below, I prefer from across." Boutin and Tuttle welcome, even expect, input from everywhere in the organization, from the staff of the service center to the branch presidents, or "franchisees" as they are known.

"I really don't do much!" grins Boutin. "I spend most of my time facilitating, acting as a sounding board for people's ideas. I like that a lot." It's clear that if the system works for the company, it also works for its "co-leaders." "The worst decisions I've made, I've made by myself," Boutin says, "but my best decisions have been made through consensus management."

Boutin's style of leadership obviously leaves an impression. Richard Park, former head of human resources at Howard Bank and Banknorth, remembers "the senior management team Joe put together was one of the most satisfying work experiences of my life. He's an exciting personality," says Park. "He combines analytical skills and high energy with a real desire to please and support other people. When you're working for Joe you feel you're working with Joe. He doesn't just create a feel-good environment -- he produces results. But it also feels good!"

Merchants Bank seems slightly out of place in these days of mergers and acquisitions, of giant banks' swallowing their little competitors. Boutin and Tuttle, not to mention the bank's shareholders and customers, are confident their stripped-down, hands-on philosophy is the right one. "My dream of dreams," Boutin says, "is to have one of our banks, our corner stores, right next to the branches of those major banks." It sounds like David and Goliath, but Boutin and Tuttle are proving there's no substitute for the human touch.

Pip Vaughan-Hughes is a free-lance writer recently arrived in Vermont from London.