Umpqua Bank is tweaking its branch design again, this time to fit better in dense urban neighborhoods.
The unit of the $5.4 billion-asset Umpqua Holdings Corp. in Portland, Ore., unveiled its store concept - branches featuring Internet kiosks, Umpqua-branded coffee, and sales associates who walk the floor - a decade ago. The idea was that by making its branches more inviting it would attract more customers.
In 2003, Umpqua began rolling out its "next-generation" stores, where customers can check out laptops from a concierge desk, download music from local artists onto compact discs, attend poetry readings, or view exhibitions by local artists.
Now it is set to launch its "neighborhood store," which will have many of the features of its two other branch designs - as well as some new ones - but will be about half the size.
Raymond P. Davis, the president and chief executive of the bank and the holding company, said that because the branches can be built in about the half the time and for about half the cost of next-generation branches, Umpqua can open several at once.
"I see this as a way to generate additional market share in existing markets, by opening up several of these neighborhood stores in and around next-generation stores," Mr. Davis said. "It's also a great, inexpensive way to introduce the bank to new markets."
Construction costs for a neighborhood branch would be about $350,000, he said.
Umpqua pilot tested a neighborhood branch it opened in Bend, Ore., two years ago; the branch now has $75 million of deposits. It expects to open its first neighborhood branch in Portland by the end of the year and a half-dozen or so more within the next 12 months.
Mr. Davis would not say where the new branches will be built, but it is likely some will be in the Sacramento area.
Last month Umpqua announced it was buying the $1.3 billion-asset Western Sierra Bancorp in Cameron Park, Calif. It plans to transform Western Sierra's branches into Umpqua branches and to open additional branches in and around Sacramento after completing the acquisition. (It is expected to close in the second quarter.)
The neighborhood stores will provide tables where customers can drink coffee and browse the Internet. They will also have what Umpqua calls a Discover Wall, where customers can view video displays of homes or cars for sale in the neighborhood.
Louis Feldman, an analyst with Hoefer & Arnett Inc. in Portland, said that though Umpqua's branches have been successful in bringing in business, not all neighborhoods need a full-scale next-generation store. In many places the specialty coffee, Internet kiosks, and sales associates may be enough, he said.
Chris Stulpin, a bank equity analyst at Cohen Brothers & Co. in Philadelphia, says that Umpqua will certainly modify its store concept again - particularly as others keep adopting some of its elements. "As they open additional branches, there'll always be changes, so that their branches continue to be unique," he said.
