Raymond P. Davis' business card says he's president and chief executive officer of South Umpqua State Bank in Roseburg, Ore.
But Mr. Davis, 48, doesn't consider himself a banker.
"I'm in the retail business," he says. "I just happen to sell bank products."
Indeed, seven of the bank's 11 branches-including four in fast-growing Eugene-feature coffee bars, where customers can sip South Umpqua's special blend while reading the morning paper. Those branches-er, stores-also include a computer cafe, where customers can surf the Internet or pay a bill on-line, and a self-service post office, open 24 hours a day.
"For the past 20 years, banks have been very successful at getting people out the door," said Charlene Stern, a Berkeley, Calif., marketing consultant who counts South Umpqua as a client. South Umpqua's approach is to bring customers back in the door-and sell them more checking accounts, business loans, and individual retirement accounts as a result.
"The goal is for every visit to result in increased awareness of what the bank offers," said Ms. Stern.
"Sales culture" is something many community bankers talk about but few can explain in detail. For Mr. Davis, developing a sales culture meant retraining employees and converting branches into retail destinations.
That approach has been gaining a following among large banking companies. Minneapolis-based Norwest Corp., for example, boasts one of the highest cross-selling numbers in the industry, mainly because its branches double as retail stores and its bankers are trained salespeople.
But among community banks, South Umpqua is viewed as a pioneer.
"South Umpqua will never be the cheapest, but consumers perceive a quality difference in their banking experience," said Ms. Stern. "Nobody is going to pay more unless they see a value difference."
The strategy appears to be working. In June, South Umpqua surpassed regional giant U.S. Bank as the No. 1 deposit institution in Douglas County, where South Umpqua is headquartered.
"When I started, we were No. 3 in deposits and set a goal to be No. 1 by the end of 1998," beamed Mr. Davis. "We beat that by a year and a half."
Mr. Davis joined South Umpqua in June 1994. A longtime consultant at U.S. Banking Alliance in Atlanta, Mr. Davis was referred by a friend who himself had been approached about the South Umpqua job.
"I first had to pull out a road atlas to find out where Roseburg was," Mr. Davis said of the small timber town 180 miles from Portland.
When he interviewed for the job, Mr. Davis made clear that if the board wanted to maintain the status quo he was not a candidate. But if South Umpqua's directors wanted to tap new markets-Douglas County was and remains one of the state's most economically depressed-and try new approaches to banking, then he would toss his hat in the ring.
"I was surprised he was hired by such a conservative bank because Ray's a get-it-done-yesterday type of guy," said Robert J. Rogowski, a principal at Columbia Financial Advisors in Seattle.
Mr. Davis' first order of business was to improve the bank's financial performance, which he did by aggressively courting more small-business customers. When he took over in 1994, South Umpqua had assets of $140 million and returned about 1% on those assets. By late 1995, assets had grown to $172 million, and the company was on its way to posting a return on assets of at least 2%.
That's when South Umpqua changed course.
"Our attitude was, once we got the financial performance up we were going to invest in the future of the bank and not be so concerned with how much we made last month," said Mr. Davis.
Having been a bank consultant for 11 years, Mr. Davis had his opinions about how to run a community bank.
In his view, community banks cannot beat the big banks with technological wizardry because big institutions have more money. And if small banks offer a nifty new product, "bigger banks will either have it or get it the day after you got it."
So Mr. Davis set out to reinvent the way South Umpqua sold bank products. That included retraining employees and hiring Ms. Stern to help redesign South Umpqua's branches.
"Most bank merchandising is two-dimensional-posters, placards, brochures," said Ms. Stern, a former Levi Strauss & Co. executive who later created retail-friendly bank branches for Wells Fargo & Co. At South Umpqua, products are displayed three-dimensionally, which, said Ms. Stern, heightens customers' awareness of what the bank sells.
Want investment information? South Umpqua branches have entire investment centers, where customers can peruse a business magazine or mutual fund prospectus and monitor their investments on the Bloomberg channel.
"If you look in the window of Eddie Bauer, you see sweatshirts lined up on a rack," said Mr. Davis. "I look at that display and say, 'Those are installment loans.'"
South Umpqua spent $650,000 in 1996 to build a prototype branch a mile from its Roseburg headquarters. Since then, it has redesigned two existing branches and built four new ones, the last of which was opened in Eugene six months ago.
The bank is not done growing, however. It is planning an $11 million public offering in March to help fund its expansion up Interstate 5 into Portland.
Despite the prospect of lower returns on assets and equity, Mr. Davis said, he had little trouble convincing South Umpqua's board to go along with his plan. More difficult was selling the bank's employees, who weren't quite sure what to make of their new chief executive.
"There were a lot of skeptical employees who thought this was another one of those CEO projects that would go away in six weeks," said Mr. Davis.
It wasn't. With the help of Ms. Stern, South Umpqua created a college for its employees in which they can take classes ranging from How to Process an IRA to Five-Star Service. For the retail concept to work, Mr. Davis said, he believes employees should be trained in all facets of banking so they can process a business loan as easily as they handle a deposit.
"We don't ever want to get into a situation where we have to say, 'So- and-so went out to lunch. Can you come back in an hour?'" Mr. Davis said.
South Umpqua's attention to employee training has benefited both the bank and its employees. The average South Umpqua branch sells 2.2 products per customer, up from 1.2 in 1994. That, of course, has generated fee income.
"People want to go in there because there are things for them to touch and feel," said Thomas M. Savinar, executive vice president at Black & Co., a Portland investment bank.
And rank-and-file employees, many of whom work on incentive programs, are earning an extra $300 to $400 a month selling bank products, according to Mr. Davis.
The South Umpqua approach to banking is starting to be noticed. Last summer, the bank was ranked the state's 55th-best place to work by Oregon Business magazine, the highest for any bank.
Mr. Davis said he doesn't mind sharing his trade secrets with other bankers. He routinely leads bank CEOs on tours of South Umpqua branches and speaks regularly at community banking conferences. There's even talk about franchising the whole concept, with Mr. Davis and his staff working with fellow bankers on redesigning branches and retraining workers.
"Retail is coming, and community banks have got to get busy," Mr. Davis said. "They can't just sit back and do business the way they always have." u
