Itís Marketing that Matters
Ray Davis powers Umpqua Bankís energetic
bolt to the top of Oregon-owned banks
by Jim Pasero
one CEO’s personality make a difference to a company? Can it help
that company grow in a bad economy? In a regional economy that Inc. magazine
lists in the nation’s top ten of worst places in the country to
do business? Well…yes.
Can one dynamic company
help turn around a region’s poor economy? Well… probably not.
But that company’s
growth can make an impression
on the thousands of individuals who make the daily micro decisions about
whether incentives are right
for investing in a particular region. In Oregon, the company holding that
aggressive image is Umpqua—Umpqua Bank. And the dynamic CEO is
Today Umpqua bank
has close to 1,000 employees, $3 billion in assets, and more than 65 branches
in Oregon and southwest Washington. Last year Umpqua grew by more than
15 percent. Umpqua Bank is now the largest locally owned bank in the Northwest,
with plans to stretch its boundaries from Seattle to Sacramento. Umpqua’s
unique “community bank” culture developed by Ray Davis has
landed the bank on the front page of The Wall Street Journal, as well
as on a recent CNBC feature. Ray Davis knows why Umpqua is getting attention.
It is because of the company’s unique corporate culture. But, also,
it’s due to Davis’ extraordinary marketing talent and his
ability to inspire a corporate culture that Umpqua employees buy into.
Scott Chambers, president
of Chambers Communications in Eugene, and a man whose business is to know
something about how you reach the public, remembers how he came to be
on what is now a very prestigious corporate board. “I was asked
by Dave Frohnmayer, and by Ray Davis, and I said no. I’m on too
many boards, and I travel too much, and I have young children. But it
was classic Ray. He wouldn’t take no for an answer. He said, ‘I
would like you to know Allyn Ford. Come have dinner with us.’”
“I walked away
from dinner thinking there were two things I could learn. First of all,
the man is a brilliant marketer. The notion of a bank being a store is
phenomenal. And, second, having service at the highest level, on a par
with a fine hotel like Disney was something I could apply to my business.
I thought maybe a two-year stint, but I survived several acquisitions.
I enjoy my board involvement.”
Last month Chambers
was impressed again when he attended Umpqua’s annual black-tie award
“Oscar Night” for employees. “My wife turned to me after
the event and said ‘I think the Chambers Christmas party could use
of ’02, Bank Director magazine noticed Davis’ energy and the
direction Davis has taken Umpqua. They wrote, “Bankers from around
the world, including the likes of Citigroup and London-based HSBC Holdings,
have come to take pictures of Umpqua’s ‘stores,’ sip
the bank-branded coffee in front of computer screens, and flip through
financial magazines with ‘Bloomberg Financial News’ on the
big screen TV in the background—all in hopes that they might learn
something to make their institutions more successful.”
That same author
goes on to describe the company’s culture and how hard it is to
of the small-town Texas banker who stopped in one afternoon. After giving
the typical branch tour, Davis walked him through some of the behind-the-scenes
factors that he credits, more than branch design, for Umpqua’s ascension:
the use of “universal associates”—branch personnel who
all are trained at a special bank “university” in every facet
of the bank and who rotate those jobs weekly; the money and effort devoted
to branding; the intense measurement and competition that is part of every
employee’s life; and the big black-tie awards ceremony that has
become for many employees the focal point of the year.
“After we chatted
a couple of hours, I looked at him and said, ‘Roy, you’re
not going to do any of this, are you?’ And he said, ‘Nope.’”
duplicating Umpqua’s singular community bank culture takes leadership
and hard work. But the Umpqua Board chose that vision a decade ago when
it hired Nevada native Ray Davis away from financial consulting firm U.S.
Banking Alliance in Atlanta, Georgia. When Davis interviewed for the job
in ’94, Umpqua Bank consisted of six branches in Douglas County
with total assets of $159 million.
In the interviewing
process Davis spoke frankly to Umpqua’s Board. Said Davis, “The
decision is not who you hire, but what do you want to do with the bank.
If you want to run it as it has been run, that’s not me. If you
want to create intrinsic value, that’s me.” Bankers don’t
usually talk this way.
Allyn Ford of Roseburg
Forest Products and now chairman of Umpqua’s Board remembers the
process that he and Lynn Herbert and other board members went through
when they hired Davis.
gone through some tough times in Douglas County, but still we’d
been growing steadily. We had two choices—be the breakout community
bank, or be forced to merge. We wanted to maintain our independence and
be that breakout bank.
was an unknown quantity in a way—heading a consulting firm in Atlanta.
He had limited organizational management experience but the committee
was impressed with Ray’s energy. He is very, very sharp analytically,
but because of his experience it was a leap of faith when we brought Ray
on. We were a very conservative bank at the time, and in a traditional
search we would look locally within our state and within our culture.
But we were breaking out of the mold.”
Umpqua was impressed
with Davis and the board decided to jump. Says Ford, “When we hired
Ray the die was cast. This institution was going to grow.”
An electric personality
like Davis, and a traditional, rural conservative bank. How would it mix?
“Like any major
change,” says Ford, “there were some bumps and grinds. The
standards Ray brought in created a tremendous change in our bank’s
culture. You bring that type of change and it doesn’t all go smoothly…but
Ray is change. He brought a set of high standards and has done a better
job of institutionalizing these high standards that people usually only
give lip service to. Ray has the ability to structure these ideas. It
is one of his great gifts.”
would be based on Davis’ service strategy. “We couldn’t
compete on resources and we couldn’t compete on bank products,”
says Davis, “but we could build a unique delivery system and we
could score the quality of our service programs.”
Bill Lansing, owner
of Menasha Lumber in North Bend and an Umpqua board member, sums up Davis
and Umpqua’s philosophy. “In order to grow business you are
going to be acquired or acquire somebody. We chose the latter. At Umpqua
we will grow by acquisition as well as by starting up new branches. But
starting up new branches is slower. Acquisition penetrates the market
Lansing liked what
he saw in Davis. “Ray is aggressive, high energy, highly talented.
You need to run to keep up with him. He’s constantly in motion.”
Constantly in motion
would describe Davis and Umpqua’s triumphant march through Oregon’s
community banking industry the last few years.
In ’96 Umpqua
launched the concept “bank store,” opening the first branch
in Eugene under the campaign “Pretty Cool For a Bank.” In
’99, Umpqua bought the oldest brokerage firm in the state, Strand,
Atkinson, Williams & York. In December of ’00 Umpqua acquired
Valley of the Rogue Bank. In the summer of ’01 Umpqua added two
more acquisitions: Independent Financial Network and Linn Benton Bank.
One year later, Umpqua purchased Centennial Bank, giving the community
bank more than 60 outlets and a presence for the first time in the Portland
area. In ’03 Umpqua opened its “next generation store”
in Portland’s Pearl District, which is just about the time that
CNBC came calling to show Davis’ marketing strategy off to the nation’s
business community. This winter Davis gave the keynote address at the
national conference for Bank Director magazine, hosted by former FDIC
Chairman, William Seidman, entitled “Acquired or Be Acquired.”
An apt choice.
Giustina, Umpqua board member and owner of Giustina Resources, was on
the other side of one of Davis’ mergers when he chaired the board
of Centennial Bank in the summer of ’02. “Ray approached our
bank and wanted to meet the directors. We were looking to grow and be
the breakout bank, fill the void that was left behind when U.S. Bank merged
with First Security and moved to Minneapolis. We felt there was a void
there and someone would take advantage of this. Ray Davis--his vision
was our vision, but Umpqua had more of a retail component that Centennial.
It was clear from our conversations with Ray that he had the vision and
the energy to make it work. A lot of us are high-energy people, but when
you look at Ray you think, where did this guy come from? I mean he’s
a whirling dervish.”
the Centennial merger?
“It was very
significant what we did here,” says Giustina. “We took two
banks, one with $1 billion in assets, and the other with $1 1/2 billion
in assets and put those two banks together without a glitch. Our concern
was that we maintain the community culture of the bank. The merger of
the two banks was seamless when you compare it with other mergers of banks
that have gone on.”
Davis has put together
what may be the highest profile board in Oregon. It includes, Dave Frohnmayer
(Univ. of Oregon President), Gary DeStafano (NIKE), Diana Goldschmidt,
Katherine Keene (former head of SAIF), Lynn Herbert (Herbert Lumber),
James Coleman (Crater Lake Motors), Brian Obie (Obie Media), and Allyn
Ford, Dan Giustina, Bill Lansing and Scott Chambers.
Despite the board’s
high profile, the excitement is in working with Davis. Says Lansing, “Davis
is always talking about Umpqua, whether we are having a glass of wine
or in a board meeting. I’d much rather be on a board where you have
to pull the CEO back by the reins because he is too far out ahead, rather
than on one where you have to push him out.” Seattle’s Jay
Tejara of Ragen Mackenzie told Bank Director magazine, “This is
the best community bank board I’ve ever come across.”
economy has been a problem. Especially if your industry gets most of its
income from a region with the weakest economic vibrancy in the nation.
The most successful companies in Oregon, the multi-national corporations,
such as NIKE, Columbia Sportswear, or Jeld-Wen, make
the vast majority of their income from outside of Oregon, so they are
not so vulnerable to a weak regional economy.
Not so for Umpqua Bank.
Davis comments on
the local economy in his direct style. “I hate it. I don’t
like it any better than the next guy.” “But,” he adds,
“I can’t change the hand I’ve been dealt. My responsibility
is to work through it. We make progress every single day.” Still
Davis believes that Oregon’s tax environment has been adverse to
And where will future
leadership in Oregon come from? Will it come from the business or political
communities? “That’s the $64,000 question,” says Davis.
According to Davis
Oregon needs leadership that says we’re doing it “because
it is the right thing to do, even if it means ‘I’m only in
office for four years.’ I know that’s a very idealistic statement,”
Davis says, “but something has to happen (leadership) before something
good will happen. Because we are headed for a disaster before we do it
Davis adds, “Why
not head off the disaster before it happens? People resist change. They
hate it. They don’t think change will be all right. Why do they
see it as bad? Why not say it’s cool? This could be positive.”
That’s classic Davis. Classic Umpqua.
One of the reasons
Umpqua Bank grows in a bad economy is that Davis understands consumers.
Independent Banker magazine wrote in the late ‘90s that Davis “reminds
bankers that 67 percent of retail purchases are impulse acquisitions,
and there’s no reason the same can’t be true for retail banking.”
But to have consumers
buy on impulse, your product has to be branded in their minds. And there
may be nobody in Oregon better at branding that Ray Davis. Last summer
Davis accelerated his branding campaign when he joined forces with the
Klamath Falls-based door and window manufacturer, Jeld-Wen, to become
the presenting sponsor for The Jeld-Wen Tradition--one of only nine major
tournaments on the PGA Tour, and one of only two majors that has a permanent
home, the other being The Masters in Augusta, Georgia.
the largest privately owned company in Oregon, Jeld-Wen, with the Northwest’s
largest locally owned bank, Umpqua Bank, was an idea most likely first
hatched by Ed Ellis, president of Peter Jacobsen Productions.
Rod Wendt, president
and CEO of Jeld-Wen, comments about the companies coming together for
the tournament. “We were familiar with the bank. We read of their
merger with Centennial Bank. We knew they had expanded their reach to
Portland, and we knew their roots in Roseburg. I called Ray and invited
him to a meeting at Waverly Country Club.”
Davis would later
describe that meeting at Waverly as a full-court press by Jeld-Wen executives
and Peter Jacobsen and Ed Ellis to get Davis and Umpqua to join the tournament.
After the meeting, Peter Jacobsen, Rod Wendt, and Bob Turner of Jeld-Wen
played a round of golf with Davis. Jacobsen and Davis walked the course
together and got on well. Within days Umpqua and Jeld-Wen had a deal.
a great partnering,” says Wendt. “It’s not just a deal
between two companies, but the marrying up of two Oregon-based companies
that have a lot of historical interest in Oregon, and who want to showcase
the state. Companies that have similar roots and ideas. Companies who
believe in the state in the long-term. Umpqua is doing innovative things,
fun things. They are a great partner.”
And how does Wendt
feel about Davis? “He’s a very interested person. A high-energy
person. He likes to get things done, and he has the ability to make decisions
and act on them, and that’s refreshing.”
One of the things
that Davis wants to act on as he continues to brand Umpqua’s regional
image is making the Jeld-Wen Tradition a big success. Again, Davis is
direct: “The PGA tour is held up by ticket holders, but the Champions
Tour is funded mostly by corporate sponsors. Corporate Oregon, southwest
Washington need to decide if they want a world class event and get behind
it--buy tickets and boost the economy. Millions of dollars flowed into
the economy last year from the tournament. It’s a challenge to the
Ray Davis has been
in Oregon for ten years and in Portland for two. Unlike some in the Portland
business community who treat the business climate in Oregon like a golf
hole with a water hazard they’ve never quite made it over, Davis
is unafraid. He’s about building new traditions. He’s done
it with the company’s culture, and he’s done it with how banking
is delivered—and Oregon is a place that could use some new business
BrainstormNW - March 2004