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Community banks defy 'Godzilla' trend Mail Tribune / Jim Craven Mike Sickels, chief executive officer for People's Bank of Commerce in Medford. Strong growth results from better customer service By GREG STILES People's Bank of Commerce has one office, doesn't flood the Medford market with advertising and doesn't pretend to be everybody's bank. Nonetheless, after less than three years of operation, the Biddle Road company has carved out a healthy niche and twice achieved five-star status from one of the industry's leading rating services. "The first time was particularly significant, because banks don't normally achieve five-star status so quickly," said People's Bank CEO Mike Sickels, of the rating earned from Bauer Financial Reports Inc. "It's reflective of strength and stability. Large depositors use (Bauer's) reading to choose stronger banks to make their deposits." People's Bank is representative of what can happen in today's banking economy, where the major banks have turned their attention to metropolitan markets. "Big banks will look at a map of Oregon and see only one city in the state, even though there are excellent opportunities in second-level cities," said Ken Thomas, a lecturer at the University of Pennsylvania's Wharton School of Business for 30 years. "The consolidation of what I call the Godzilla banks has created a tremendous void for customer service. Consolidation, followed by a high-tech push for efficiency and increased productivity pushed people out of teller lines to ATMs and the Internet. All that played into the hands of community banks." People's Bank is not alone among local banks in achieving Bauer's five-star status. Umpqua Bank, formed in a merger of Valley of the Rogue Bank in November, also has a five-star rating. PremierWest Bank and South Valley Bank & Trust have four-star ratings, which put them on Bauer's recommended list as well. Bauer Financial Reports Inc. introduced its rating system in 1988. The Coral Gables, Fla., firm analyzes and reports on the financial condition of banks, thrifts and credit unions from a depositor's perspective, while other rating services are aimed at investors. Their business plans vary, but each of the regional institutions have prospered. Southern Oregon's community banks aggressively court small business and entrepreneurial customers, make themselves visible beyond their four walls and rely on veteran leaders - whose careers in the region began long before their present institutions were formed. "The state as a whole is good for community banking," said PremierWest Chief Executive Officer Jon Anhorn. "The state is made up of a lot of small businesses who need the extra attention and touch only a community banker can give them. "We're able to make decisions quickly, sometimes on the spot, because of our understanding of the local economy and what makes a small business tick." The goal for People's Bank wasn't to go out and grab every deposit possible, and it purposely keeps things low-key. "We wanted to keep things somewhat simple," Sickels said. "Some financial institutions target volume and try to get all the accounts they can get regardless of size or individual profitability. They make up for it in volume and fees. We have a relatively small lobby with a few windows and no 5,000-square-foot operations center." People's Bank saw its niche in business and commercial lending to customers too small for First Interstate, Keybank or Bank of America. But it actually expanded its lending faster than planned. "We originally planned not to be active on the construction side," Sickels said. "But when the opportunity arose, we took advantage." People's Bank should move into the local market's top 10 in deposits with $38.2 million this year. "It used to be that a conservative bank was something considered negative," Thomas said. "Now, it's recognized as quite the opposite. Especially in a slowing-down economy, to act cautious like that makes for a well-run bank." Overall, FDIC figures show a trend of diminished market share of deposits for major banks in the Rogue Valley. In 1994, First Interstate Bank of Oregon topped the local bank deposit list with 19.53 percent of the market's $1.27 billion total. It fell to second place the next year and after being taken over by Wells Fargo, slipped to 16.22 percent in 1996. By 1999 it slipped to 9.38 percent - behind No. 4, Valley of the Rogue Bank. Local Wells Fargo deposits as of 2000 dropped the bank to sixth place at 9.78 percent. Rich Hieb, PremierWest's chief operating officer, said the latest numbers show the bank now owns nearly 15 percent of the Medford-Ashland market. Washington Mutual entered the local market through its offices at Fred Meyer shopping centers. In 1994, Washington Mutual had 0.65 percent of the county's bank deposits. But by acquiring community banker Western Bank, Washington Mutual soared to 14.76 percent in 1996. "You reach a half-billion in deposits and eventually you're bought up," Thomas said. "It's not that they're for sale, it's .just the life cycle the way it goes in terms how banks evolve. Then another start-up will come along." Reach reporter Greg Stiles at 776-4463 or e-mail [email protected] Mail Tribune Home | Ottaway Newspapers, Inc. | Dow Jones & Co., Inc. | Privacy | Contact Us Copyright � 2001 Mail Tribune, Inc.