What to expect when Circle Bank becomes part of Umpqua.
Walk into an Umpqua Bank for the first time and you’ll likely think you stepped into the wrong place. Just relax. You’ve stepped into an Umpqua store, which is definitely not your typical bank branch. Take a deep breath and enjoy yourself, because you’ve found a place where you can get all your banking needs met and then some. Oh, and by the way, the staff members have been trained by The Ritz Carlton.
Everything about an Umpqua Bank store is different. What you won’t see is the typical velvet rope guiding you into line so you can speak with a teller, or a loan officer sitting at a desk. And there are no obligatory plants.
Instead, you’ll find a community events calendar, letting you know what’s going on in your area; a coffee station where you can help yourself to the bank’s private blend; an interactive Discover Wall that might show a video or play music; and artwork that looks as if it belongs in a gallery. What else you might find varies from bank to bank, but you may encounter a mime entertaining children, a yoga class in progress or your neighbor participating in a Wii bowling league (yes, you read that right—yoga and Wii).
Umpqua is more than a bank, it’s a cool place to go—an experience—and a community center rolled into one. And if you don’t bank there, you’re still welcome to come in and kick back. You can get a cup of coffee, read the paper and surf the Web. You’re even welcome to host a meeting there.
“Most people who walk in the first time stop and then look back out at the sign. People say our stores look like a gallery, a salon or a Gap because they look great. But that’s not our secret sauce. The secret sauce is what goes on inside,” says Ray Davis, president and chief executive officer of Umpqua Bank, based in Portland, Ore. “In an Umpqua store, our only job is to blow your socks off with service.”
If you’re a customer at Marin County-based Circle Bank or shopping around for a new bank, prepare to get your socks blown off soon. Umpqua Holdings Corporation will be purchasing Circle Bancorp by the end of this year. The purchase agreement provides for cash consideration to Circle’s common shareholders of $20.4 million (or $17.75 per share). In addition to the planned cash redemption of $3.5 million in preferred stock and the value of outstanding options and warrants, the total aggregate deal value is about $24.9 million.
Once the acquisition is complete, all Circle Bank branches will operate under the Umpqua Bank name, and customers will see some pleasant changes at the branches in Corte Madera, Novato, Petaluma, San Francisco, San Rafael and Santa Rosa. The first, of course, will be a new sign, but you’ll also get to try the Umpqua coffee blend. And after your banking transaction, you’ll be served a foil-wrapped chocolate on a platter.
Why the switch?
Chances are if you’re a Circle Bank customer, you’re perfectly happy with the way things are. That’s because Circle has had a similar way of doing business. “We admired Umpqua’s delivery system, so we modeled our branch designs after its stores about six years ago,” says Kim Kaselionis, chairman and chief executive officer of Circle Bank in Novato. Case in point: Walk into a Circle Bank branch, and you’re likely to find a media center, customer café with fresh-baked cookies and a kids’ corner.
What’s more, Circle Bank has been operating successfully for 53 consecutive quarters. It survived the global financial collapse in 2008 and has $326 million in assets. The bank was rated by its own employees as one of the best places to work in the North Bay for the past six years consecutively and, in January, it celebrated its 50th straight profitable quarter by donating 50,000 pounds of groceries to the food banks in its footprint.
So why the switch?
“We knew we had a successful business formula and our approach to community banking was strong. The challenge for us is capital. We had a plan, but we didn’t have the capital to execute it. We needed more to grow,” says Kaselionis.
About two years ago, Circle Bancorp planned to raise capital through an initial public offering (IPO) on the stock market, but because of the global climate, the board thought the timing wasn’t right. “The IPO raised the bank’s profile on a national level and suitors came calling,” adds Kaselionis.
One potential suitor was Umpqua. For the decision makers at Circle Bancorp, there was only one way to go. “If an IPO isn’t an option, then you find a financial partner with shared values and vision,” says Kaselionis.
What to expect
If you’re currently banking at Circle, there will be little impact. “Account numbers will stay the same 99.9 percent of the time and customers won’t initially need new checks,” says Kaselionis. “Our goal is to make the transition as seamless as possible.”
However, customers will immediately be able to enjoy the benefits of doing business at a larger bank with greater resources. They’ll have access to higher lending limits, additional deposit products, wealth management services, greater ATM access and more. Of course, you may come across an entertainer or another customer walking in to attend a yoga class, but other than that, it will be business as usual.
Customers will continue to see the same familiar faces when they stop by to do their banking. “Our customers can expect to have us walk with them, step-by-step, through the transition and beyond,” says Ruth Ramirez, assistant branch manager at Circle Bank’s Santa Rosa location.
“Our job is to make sure the process is flawless and invisible. There are always hiccups, but we have a good track record,” says Davis.
The beginnings of Umpqua
So how exactly did Umpqua become Umpqua? First off, you’re probably wondering about the name. Umpqua (pronounced UMP-kwa) is a Native American word that translates to “raging water.”
“It’s meant to describe the sounds water makes as it moves through canyons and gorges and over rocks, enriching soil and sustaining life,” says Eve Callahan, senior vice president of corporate communications at Umpqua Bank.
Umpqua’s earliest beginnings were humble. The bank was founded in 1953 with one branch, six employees and $70,000 in Canyonville, Ore., and was named South Umpqua State Bank (though there wasn’t a North Umpqua State Bank). The mission then was practical: Canyonville was a lumber town, and the men who started it needed a place for the employees who worked in the mills to cash their checks. The bank was small, but strong.
At a crossroads
In the early 1990s, Umpqua was still a small community bank. The previous CEO had retired, and the board was looking for a change. One candidate for the job was 45-year-old Ray Davis, who was running a bank management consulting firm in Atlanta, Ga., and working with banks of all sizes across the United States.
“The bank was at a crossroads,” Davis writes in his book, Leading for Growth: How Umpqua Bank Got Cool and Created a Culture of Greatness. “It was a solid bank and well respected in the small communities it served. But it wasn’t really going anywhere….”
When the board interviewed Davis, he told them if they wanted things to stay the same, he wasn’t their man. Davis’ personal philosophy is that change is key to growth. “Companies can never stay the same,” he writes. “The simple fact is, you get better or you get worse. You can’t stay the same.”
He likes to use the metaphor of treading water to make his point. “Businesses that want to stay the same are trying to tread water indefinitely. And it doesn’t work…,” he explains in his book. “Suppose I row you out into a lake and tell you to jump in. I tell you to tread water. Then I tell you I’ll be back in three days. When I come back are you still treading water? No, either you swam back to shore, improving your situation, or you were stupid enough to drown. I guarantee you, you won’t have stayed the same treading water.”
The board hired Davis and, in 1994, he took the helm as president and CEO. The goal was to stop treading water and create value for Umpqua’s shareholders. At the time, Umpqua had $140 million in assets and six small branches.
Coloring outside the lines
When it comes to doing business, Davis is all about change and coloring outside the lines. After years of consulting with banks, what struck him most was that banks were bland and all the same: the velvet rope, a row of tellers, stale coffee in a pot. What’s more, banks offer mostly the same products and services, says Davis, and people can get their financial needs met anywhere. What could they do to make Umpqua stand apart from the competition?
Davis met with his management team to gather fresh ideas. “The question we asked ourselves was this: Why bank with us?” Davis wanted to create an environment that customers found exciting and made them want to linger a while. During his early days at Umpqua, he says he had a motion picture of this sort of environment playing in his head. He wanted to devise a new kind of bank that was stimulating and, well, cool.
So where do people like to hang out? Places with pizzazz: Starbucks, the mall, stores like Nordstrom and the Gap, says Davis. At first, you might wonder what those businesses have to do with banking. Financial institutions sell products and services just like the companies that sell perfume, Levi’s or coffee, Davis points out. Retailers have stores and so do banks.
Davis decided it was time to reinvent the banking business, so he and his management team immediately made some changes. The first thing they did was stop hiring people who had only a banking background. They began calling their banks stores (not branches) and their associates (not employees) had a full understanding of their products and services, so each one could help customers with anything they needed. What’s more, their associates were empowered to make decisions.
There were other small changes to come.
One associate, for example, had a banner made up for the outside of the bank store that read “Welcome to the World’s Greatest Bank.” Later, this associate asked Davis what he thought of the sign. “I told him it didn’t sound like the world’s greatest bank when I’d called the store,” says Davis. The next time he called, Davis was greeted with a cheery, “Thank you for calling the world’s greatest bank!” It’s an early change that’s become a tradition at Umpqua—but it’s not part of the marketing slogan: “It’s a state of mind,” says Davis. “It’s how we choose to operate the company, and it’s what we aspire to be.”
Davis also hired a consultant who focused on retail design and marketing, and started gathering ideas and developing a concept store. What’s more, he turned to businesses that were operating successfully, studied what they were doing and set about making it work for Umpqua.
A banking revolution
In early 1996, Umpqua was ready to relaunch itself as a new kind of bank. Davis and his team prepared to open a new store—a $4 million project—in Roseburg, Ore. Impressive as the building was, Davis knew a store is only as good as the employees who run it, so he rented a suite at a local hotel and conducted an intense six-week training program.
The new store featured a computer café with free Internet access and its own Umpqua coffee blend. There was also an “Investment Opportunity Center” and a “Serious About Service” center that offered general information about the bank and a phone that connected to Davis’ office. If you had a problem, you could call Davis directly and talk to him about it.
When customers first walked in, it wasn’t uncommon for them to wonder if they were in the right place. When they asked an associate if they were really in an Umpqua Bank, and then assured they were, the response was often, “Wow.” It was exactly what Davis had hoped for.
At first, the competition scoffed at Umpqua’s so-called “stores” and thought answering the phone with “Thanks for calling the world’s greatest bank” was gimmicky. But Umpqua’s success spoke for itself.
In 1996, Umpqua expanded with four new branches in Lane County and OregonBusiness magazine named it one of the 100 Best Companies to Work For. Umpqua has made the list 13 times since then. In the years that followed, South Umpqua State Bank was shortened to Umpqua Bank.
All the rage in banking
Eighteen years after Davis took the helm, Umpqua has managed to revolutionize the banking industry, and banks across the country have adopted some of its strategies. “The word ‘Umpqua’ represents our long history in Southern Oregon, and its definition reflects our culture, which is focused on moving forward through innovation and service to our communities,” says Callahan.
What Starbucks did for coffee, Umpqua is doing for the banking business—and the company still prides itself on progress and growth.
The numbers tell part of the story. Today, Umpqua has 193 bank stores in four states (California, Oregon, Washington and Nevada), about 2,400 employees and $11.5 billion in assets. In addition, Umpqua has made Fortune magazine’s 100 Best Companies to Work For list six years in a row, the only bank to do so.
Its philosophy of supporting the communities it serves tells the other part of the story. Despite its size today, each store operates like a small community bank and, as a company, Umpqua believes in giving back . “We ask every associate to volunteer 40 hours of their time each year to work at a nonprofit that centers around youth and education,” says Davis. “It’s paid time for our employees, which they arrange with their supervisors. It’s not mandatory, but we have 90 percent participation.”
Of course, if the Umpqua store experience sounds too good to be true, well, even Davis admits that the world’s greatest bank can make mistakes. “It’s not that we don’t make mistakes—we do—but the difference is how we respond to it,” he says. “We’re a good company and extremely accessible.” Walk into any Umpqua store and you’ll find a phone. Press number eight and you can tell Davis what’s on your mind. Chances are, Davis will answer the phone, but if not, his assistant, Lorelei Brennan, will. If she can’t help you, Davis will call you back.
“Our plan in the North Bay is to do exactly what we’ve done elsewhere,” Davis says. “We try to do it differently. We’re not better, but we are uniquely different.”
“For us, partnering with Umpqua Bank is coming full circle and very serendipitous,” adds Kaselionis. “The primary difference between Umpqua and Circle is $11.5 billion in assets.”
