Umpqua Bank Executive Summary

Executive Briefing for Umpqua Bank
To: Re: Ray Davis, President and CEO Strategic Growth Plan From: Date:

Executive Summary
Umpqua Bank’s goal is to differentiate the customer experience with a creatively nontraditional culture and a radically different mindset of branding locations as “stores” and not “branches” supported by highly innovative and environmentally friendly design. The issue of cost vs. value of design for the Bend Wall Street Project and Humboldt stores is addressed as Umpqua seeks to maintain its culture and values and brand image while undergoing rapid growth through acquisitions and mergers. Two key recommendations are to take steps to create value across their future stores through reconfiguring the stores into two
formats, “Full Service” and “Express” and expediting the development of new stores to position the organization for future expansion.

Opportunities to Create Value through Reclassification and Restructuring
Strategic Area: Decision Sciences: Location Logistics Opportunities to Create Value:
 Classify the Humboldt locations as

Challenges to Create Value:
 Market and customers may not

‘A’, ‘B’ and ‘C’.
 Prioritize their development based on

fully match.
 The distinct cultures (cost v.

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Management: Organization of Stores

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Accounting: Tracking as Profit Centers

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estimated revenues according to the area population. More lucrative locations are built first. Divide Umpqua stores into two categories: “Full Service” (like Pearl district) & “Express” stores. Build Full Service stores in larger metropolitan areas and malls while Express stores serve smaller communities such as Bend. Numerous small size stores in busy neighborhood will grow the visibility of brand & attract crowd. Complement this store reorganization by restructuring financial statements to track performance of the Full Service and Express categories.

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differentiation) may make it hard to adopt this approach. Revenues are estimated & not accurately calculated i.e. Risk. Compromise certain cultural values. Indifference amongst the associates regarding organization’s cultural and brand image. Small stores may not have all facilities.

 Time and resources will be

Finance: Funding Expansion

 Review all acquisition and merger

data and financial impact.
 Utilize cash reserves and secure

required to make these changes from the existing geographic approach.  This must still comply with state tax information requirements.  This may conflict with the use of cash for other initiatives within the organization.

Marketing: Customer Perception

additional funding through available loans to support expansion activities into the new markets.  Customized each store with cultural values surrounding its neighborhood.  Introduce technology driven automated ‘Interactive Assistants’ to improve customer service levels.

 Marketing and Management

overhead because of extra work to create local cultural values.  All problems cannot be solved by machines.

Opportunity and Challenge Overview
Restructuring the branch concept through the “Full Service” and “Express” stores format will enable Umpqua to expand more rapidly and build stores more efficiently on lower cost and preserve the novelty “cultural experience” of these venues.
Prioritizing the construction of stores based upon expected revenue will enable Umpqua to carry out large merger and acquisition process smoothly (in terms of maintaining their cultural bank image) and efficiently (in terms of cost) such as in Humboldt situation. Blending local neighborhood cultural values along with Handshake Marketing into Umpqua’s own cultural value in Bend will create ‘home’ kind of atmosphere and consequently Umpqua’s ‘Brand Experience’ will get embedded into local population. The idea of “Express” stores may face internal opposition. Change is not always readily welcome. In addition, smaller size stores may not reflect the exact cultural feel and effect as compare to regular Full Service stores. Prioritizing the development of Humboldt stores may give advantages to Umpqua’s competitors by entering into the market before them. Creating local cultural values in the store may create overhead in terms of extra money and
management.

Recommendations
Based on above analysis, we make following recommendations for how Umpqua can create cultural values and brand image in the new neighborhood community and how it can complete the Humboldt acquisition phase by steady and cost effective development of new stores.
Recommendation 1: Spin Off Spin off “Express” size stores into middle and upper-middle class neighborhoods with solid analysis to support the specific location selection. Benefits and Anticipated Results Spinning off the express stores offers a more efficient building process and will be instrumental in minimizing costs. Umpqua will be able to increase the customer experience through this customization based on local preferences and tastes. The outcome will be to attract clients to the branch location. Promotional mediums will be selected based on these local attributes. Recommendation 2: Humboldt Prioritization Prioritize the development of Humboldt stores based on demographics and expected revenues in concert with the implementation of the Express store concept in markets such as Bend. Benefits and Anticipated Results A systematic prioritization of the Humboldt stores will allow faster revenue generation and a more even distribution of the finance load. Performance will be tracked and this will offer more in-depth management information to measure and control performance as the process progresses. This will result minimizing risk involved in estimating revenues and allowing Umpqua to be more flexible and adaptive
throughout the process.

Action Steps
The following are the initial implementation steps to resolve this issue and support these important strategic recommendations:

Action Steps
1. Introduce the Express store idea to executive management team through a comprehensive strategic business plan.

Who
Strategic Planning Team

When

Outcome

On or Agreement and before support from February 1st executive management March 1st Complete Strategic Plan with Financials All stores in prioritized order as Full Service and Express Blueprints completed and permits secured Break ground for tier one stores

2. With management’s approval, incorporate input and refine the strategic plan with comprehensive financials. 3. Simultaneously categorize the Humboldt stores into the Full Service and Express formats.

Strategic Planning Team and CFO CFO

March 1st

4. Solidify construction and remodeling efforts for the Humboldt and Bend stores based on above idea to attain the community feel that has proven valuable. 5. Begin construction for customized stores with local culture and values and convert them into more “coffee-shop” like stores to create friendly community.

CFO and VP of Marketing

3rd Quarter

Creativity & Marketing

4th Quarter

Conclusion
Implementing these recommendation and tracking progress on the actions steps will offer the greatest opportunity to differentiate the customer experience for Umpqua customers and support our goal of being the “World’s Best Bank.”

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