The deal to create the largest bank in the Pacific Northwest has just closed, but the man leading Umpqua Bank is already thinking about what the bank's further expansion into the West might look like.
"We talk a lot about the Pacific Northwest, but I'm really excited about us taking these two, what I think are premier, Northwest-rooted banking franchises and putting them together and growing throughout the West," Clint Stein, CEO of Umpqua Bank, said in an interview Tuesday.
While waiting for deal approval from regulators, both Umpqua and Columbia started lending teams in the Phoenix area, where the bank's new executive team "sees a tremendous amount of potential," Stein said. Columbia also
Columbia Banking System's $5 billion deal to acquire Umpqua Holdings officially closed at the end of business on Tuesday. The deal creates a powerhouse bank in the Pacific Northwest with more than $52 billion of assets.
The combined entity will do business as Umpqua , which has a strong consumer brand. Its holding company, Columbia Banking System, will trade under the "COLB" ticker symbol.
In addition to the bank's expansion into numerous Western states, Stein talked to American Banker about the pending integration and the benefits of being a larger bank. The following has been edited for clarity and length.
Is the systems conversion still on track for the first quarter?
Yes. I'm always hesitant to give an exact date, but it will happen in Q1.
One thing you've mentioned in the past is the difficulty of competing against Umpqua in the markets where you overlap. How and how quickly will the closing of the deal give you some relief on that front?
It gives us relief starting tomorrow. That's been part of the challenge of the past year and a half, that we've been two separate companies, and in the marketplace, we've still been competing against each other. But, from an administrative perspective, we've spent time developing relationships and talking about philosophies.
The fact that we'll be teammates and not competitors is a huge lift and benefit not only for our associates, but for our customers in our communities and the groups that are excited about having a bank of our size and scale to support their activities.
Speaking of that larger size and scale, what in your mind are the biggest benefits and challenges of being a bigger bank?
We've spent a lot of time talking about being a community bank at scale. A lot of people have a definition of a community bank, and some have the threshold as low as $1 billion and say that banks with more than $1 billion in assets are not community banks. We really think that size is irrelevant. It's how you go to market, the activities that you do, your presence within the communities you serve that really define it.
The scale part of it is important because we'll have the breadth of products and services and technological capabilities to compete with the largest banks. But we can do that in a more personalized way, and I think that resonates with customers of all sizes, from consumers with basic banking needs all the way up to some very large companies that have significant treasury-management needs.
Now that you have this big task, closing the deal, checked off, what's top of mind on your to-do list?
We have to deliver on the promises we've made. When we announced this, we set certain parameters in place in terms of what we're going to be able to accomplish and deliver for our shareholders, and we want to absolutely make sure that we execute on that. We committed to growing with our clients, and we have some of our larger customers in both organizations that are excited about the ability, as they continue to grow their company, to have a bank that they can have a single relationship with and not outgrow.
Both banks have been very engaged in community service and community groups within the footprint, and that's something we've committed to maintaining and, in some instances, expanding. We want to make sure that we deliver on the promises we've made underneath our community benefits agreement.
The last thing is, the deal also creates a lot of different career pathways for our associates, and I'm excited about watching them grow and develop and take on new challenges in the coming years.
When it comes to the conversion, how do you go through all of the capabilities at each bank and choose which to keep? How do you kind of slice and dice there?
There's a whole team of people who have spent thousands of hours on that. Some of the decisions are just that — you look at it platform by platform and ask which one is going to best serve the needs of a $50-billion bank the best?
Once we made the decision to keep the Umpqua core, well then that made the decision on which data warehouse we were going to maintain. It makes it pretty easy because it's already all set up for that core system, versus if we had said that we're going to keep the Columbia system.
It's literally a platform-by-platform type decision. We wanted to limit the amount of change and moving parts because that just increases the chance of success and minimizes the potential pitfalls or problems.
One of the main outcomes of the deal is obviously projected cost savings. How does becoming a bigger bank affect how much you're paying vendors?
I'll get on a soapbox here and say that, especially core providers, the more successful you are, the more they penalize you because they think you can afford to pay them more.
What I'll say is that there is significant cost savings on the vendor side because you eliminate the redundancy of maintaining two cores. Volumes are higher, so you end up paying more than what you did pre-merger to the vendor that remains. But if you're pretty effective at negotiating your contracts, your per-unit cost should go down.
Is there anything else on your radar that I haven't mentioned?
The Northwest hasn't had a true regional bank since U.S. Bank sold almost 30 years ago. [Editor's note: Oregon-based U.S. Bancorp was acquired by First Bank System in 1997, which is how Minneapolis-based U.S. Bancorp got its name.] So I'm excited about what this does for our markets, and I'm also excited about being in eight states, and there's plenty of opportunity to grow in the California market.
We entered Utah last year and are really excited about that market. Both Columbia and Umpqua started banking teams in the Phoenix market, and just see a tremendous amount of potential there as well, and then Colorado is the other new market. We talk a lot about the Pacific Northwest, but I'm really excited about us taking these two, what I think are premier, Northwest-rooted banking franchises and putting them together and growing throughout the West.
