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Kai Ryssdal: The banking story right now is a distinctly mixed bag. The big ones — Wall Street, basically — are doing fine. On the order of billions of dollars in profits fine.
Down the financial food chain though, things aren’t quite so rosy. A lot of regional banks are struggling from the still-sagging housing market. Some of them haven’t been able to pay back their TARP bailout money. Even the ones in decent shape have been playing it safe — trimming staff, making fewer loans and generally tightening up on standards.
One mid-sized bank in the Pacific Northwest has taken the post-Recession path less traveled, though. Umpqua Bank has been buying up failed competitors and opening flashy, if unusual, new branch offices.
From the Marketplace Entrepreneurship Desk at Oregon Public Broadcasting, Mitchell Hartman has the story.
Mitchell Hartman: I live in one of these funky urban neighborhoods in Portland, Ore. Just blocks from my house is an upscale grocery store, highly organic. There’s a brewpub, there’s the local head shop.
Shop clerk: How’s it going, man?
And the banks — Chase, Wells Fargo and the newest branch of Umpqua Bank — though you’d barely know it’s a bank from the storefront. Instead of posters screaming “NO-FEE CHECKING” and “LOW MORTGAGE RATES,” there’s this whole “stream-of-hip-urban-consciousness” thing going on.
Jaime Richardson, a newcomer to Portland, stops to take in the marketing tag words painted on Umpqua’s huge plate-glass windows.
Jaime Richardson: Latte, Rain Barrels, Sidewalk Art, Off-the-Grid, Frisbee Dog.
Inside the bank, it’s more like a trendy cafe — no brick-bunker security walls, just comfy chairs, bar tables, laptops. Also, free cookies and Umpqua’s own blend of coffee.
Richardson: It’s intriguing, you know, Wells Fargo doesn’t have anything like this.
Bill Taylor: It’s almost sort of in the Constitution today that the experience of going to your bank has to be dull, drab.
Bill Taylor is co-founder of Fast Company magazine and he’s got a new book titled “Practically Radical.” It looks at maverick brands that are shifting the economic landscape, or as he puts it, “passion brands in industries devoid of passion.” Taylor’s pick for most maverick bank? Portland-based Umpqua and its CEO, Ray Davis.
Taylor: Starting 15 years ago, Ray Davis and his colleagues asked the very simple but very radical question: “What would happen if we re-imagined what visiting a bank was like?”
It was the early ’90s, and Davis was the financial hotshot brought in to jumpstart a sleepy six-branch community bank in southern Oregon. He was aiming for hundreds of branches across the West. He had a plan.
Ray Davis: Bank products are a commodity. Everyone has different-colored checks and terms on a loan, but basically the same products. We weren’t going to out-resource or outgun the bigger fellows. So how do you differentiate a bank?
Start calling your branches “stores.” Play music from local bands, and let local merchants show off their wares. Offer free Wi-Fi.
Davis: What we want our people to think is “I’m going to the bank store and browse, shop, And by the way, while I’m there, I might cash a check or make a deposit.” And that is a huge behavioral change.
A change helped along by the financial crisis, which has made big banks seem heartless and impersonal. S&P’s Erik Oja says smaller banks now have an opening.
Erik Oja: To differentiate themselves through customer service, clever branding. People enjoy going to a bank where they know the tellers.
And they offer something besides your cash passed through the bulletproof glass.
Joy Fowler: Every month we hold a Wii bowling night.
Yep, Wii video-bowling on the bank’s big-screen. Also available for community get-togethers. Joy Fowler is a branch manager in Portland.
Fowler: We just took on some home owner association meetings, the Metropolitan Youth Symphony that will be performing down here.
Even without the lowest checking fees and highest CD rates, Umpqua gets customers like David Arrow in the door.
David Arrow: Staff is very friendly and courteous, and they have a lot of little perk things about what’s going on in the neighborhood. So if I need to know something I come over here and ask.
But for all its small-bank flavor, Umpqua isn’t small anymore — with nearly 200 branches and $12 billion in assets. And it got caught up in the financial crisis just like the big guys when its California real estate loans started going bad. Again, Ray Davis.
Davis: We went public with it. We said, “Look, if the economy continues to sag, those loans are going to be in trouble and we’re going to have a problem with them.” Wall Street didn’t like me for saying that.
Umpqua lost money in 2009 but returned to profitability last year. And it’s been taking over competitors seized by the FDIC in Nevada and Washington, where customers can expect free lattes and Wii bowling nights sometime soon.
I’m Mitchell Hartman for Marketplace.
Ryssdal: You can check out that book “Practically Radical” that Mitchell talks about: There’s a profile on Umpqua Bank as well as a bunch of other companies. It’s on our Big Book blog.
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