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West Coast
Bancorp (Oregon) is building out their commercial lending area with good customer
relations
Financial
Regional Banks
(WCBO-NASD)
West Coast Bancorp (Oregon)
5335 Meadows Road, Suite 201
Lake Oswego, OR 97035
Phone: 503-598-3241
Robert D. Sznewajs
President and
Chief Executive Officer
Interview conducted by:
Lynn Fosse
Senior Editor
CEOCFOinterviews.com
November 2003
BIO:
Robert D. Sznewajs – President and CEO
Bob Sznewajs (Snuh-vice’) was named President and CEO of West Coast Bancorp in
January 2000 after serving as Vice Chairman at U.S. Bancorp in Minnesota.
He previously served as President and CEO, out-state
region, of Michigan National Corporation, a company with similar characteristics to West
Coast, and as executive vice president and manager of retail banking at Valley National
Bancorp, now BancOne Arizona. In addition, he was President and Chief Operating Officer of
BankAmericard, the credit card division of Bank of America.
Sznewajs earned a master’s of business
administration in finance and a bachelor of science in accounting from the University of
Detroit and is a certified public accountant.
Bob’s professional affiliations include Portland
United Way campaign cabinet member, Coinstar Board of Directors, Oregon Bankers
Association (OBA) Board of Directors, and Association for Corporate Growth (ACG) Board of
Directors.
As President of West Coast Bank, Bob Sznewajs
oversees more than 650 employees and 47 branches throughout Oregon and Washington.
Company Profile:
West Coast Bancorp (NASDAQ-WCBO) is a Northwest bank holding company with $1.7 billion in
assets, operating 47 offices in Oregon and Washington. West Coast Bancorp, the parent
company of West Coast Bank and West Coast Trust, is headquartered in Oregon. West Coast
Bank serves clients who seek the resources, sophisticated products and expertise of larger
financial institutions, along with the local decision making, market knowledge, and
customer service orientation of a community bank. The Company offers a broad range of
banking, investment, fiduciary and trust services.
West Coast Bank has built a solid community banking foundation by offering exceptional
customer service, delivered by local employees who care about customers and about their
communities. By valuing service above all else, they have created a leading Pacific
Northwest community bank, while maintaining the local focus that customers rely on.
CEOCFOinterviews: Mr.
Sznewajs, what attracted you to West Coast Bancorp and how has it changed under your
leadership?
Mr. Sznewajs: “What
attracted me to West Coast Bancorp was its excellent reputation in the community. In the
late nineties it was an organization consisting of four independent banks. I thought it
was an opportunity to bring those organizations together, develop a strategy and move
forward.”
CEOCFOinterviews: How
has it worked out?
Mr. Sznewajs: “I
think it has worked out very well; we have had significant improvement in all of our
operating ratios. And our stock price, which is the ultimate judge of success, has
appreciated nicely over the last three years.”
CEOCFOinterviews: Please
tell us a little about the economy in the area that you service.
Mr. Sznewajs: “The
economy is weak at the moment. Oregon has the distinction of having the highest
unemployment rate in the country. Things have been relatively slow here for the last
several years and we are hoping that things will get better soon.”
CEOCFOinterviews: You
have continued to prosper; what are you doing right?
Mr. Sznewajs: “Our
strategy is oriented towards taking market share away from larger institutions. There has
been a significant amount of disruption in the marketplace through M&A activity and
changes in operative paradigms. We have been successful in attracting, recruiting, and
keeping good people so we can grow our share.”
CEOCFOinterviews: With
the 47 branches, how do you keep the personal touch and feel?
Mr. Sznewajs: “It
is actually quite easy for us to maintain a personal touch because each branch manager is
viewed as the main manager of their market area. Whether in a rural or urban area, they
have their own goals, objectives and marketing budget. It’s easy for them to
represent themselves with local decision making and they have access to experts to the
extent that they need them. These leaders are very involved in their local
communities—serving on boards and participating in organizations like the Chamber of
Commerce. The managers each develop their own community sponsorships based upon the nature
of their service area within the strategy of the whole company.”
CEOCFOinterviews: What
is the bank’s area of focus-commercial or retail-and do you see that changing?
Mr. Sznewajs: “The
bank’s area of focus is commercial. Previously, the bank was oriented toward
commercial real estate lending, which was and still is a successful and profitable
business for the bank. However, we made the decision to broaden the company to other
customer segments, primarily through commercial and industrial loans. We have added 25-30
experienced commercial loan officers. We have significantly increased our product offering
with cash management products, commercial services, lock-box, and other things that
support the commercial loan customer. We have also increased our consumer activities,
primarily in the area of home equity lending. We have built on the strengths of the
commercial real estate lending capability and have enhanced the more classic commercial
lending, as well as with the consumer and home equity loans.”
CEOCFOinterviews: As you
mentioned, the economy hasn’t been great in your area, and the interest rates are
very low. Does that play into the development of the commercial lending area?
Mr. Sznewajs: “The
interest rates aren’t necessarily a factor in the commercial lending area; the
commercial lending area, like most businesses, is a relationship business. Of greater
importance is our cadre of established officers along with the officers we have added that
bring with them long and deep relationships. They are well-known in the communities they
serve. It’s a matter of taking advantage of those relationships, letting people know
about the bank and our capabilities, and differentiating ourselves from our larger
competitors.”
CEOCFOinterviews:
Speaking of differentiation, you have mentioned local decision making. What else is
someone going to find when they go into a West Coast Bank that they might not find
anywhere else?
Mr. Sznewajs:
“Several things. If a customer has an issue or problem, the branch personnel will
commit to resolving it and keeping the customer informed where they are in the process.
Compare that with the operating paradigm of a larger bank. The customer walks in with a
problem and is told, “I don’t deal with those issues here; pick up the phone and
call our service center.” When the customer finally reaches the service center (which
is usually not local), then the bank’s team of experts deals with the problem. They
may or may not get back with the customer. It forces the customer to constantly call back
into a general area. He can’t specifically know who is handling his problem or the
status of the problem. At West Coast Bank, our branch numbers are published in the phone
book. If a customer wants to talk, he can sit down and talk with a branch employee, who
often knows him by name. And he can call the branch directly and inquire about the status
of the problem. Our customer-oriented operating paradigm just doesn’t exist in larger
institutions. And problem resolution is a significant part of customer loyalty.”
CEOCFOinterviews: Do you
do any advertising?
Mr. Sznewajs: “Yes,
we do. Our advertising is marketed to our customer segments. We have found that, in most
markets, one-on-one marketing and relationships are most effective. In dealing with
commercial, construction and real estate lending, our marketing is done with the loan
officers that have the relationship. We also do a significant amount of home equity
advertising since that is a product where we have to be competitive.”
CEOCFOinterviews:
Word-of-mouth is probably a very big factor for you!
Mr. Sznewajs:
“Absolutely! Customer referrals are clearly a powerful source of new business.
Satisfied customers cross-sell more effectively than any advertising we could pay
for.”
CEOCFOinterviews: Do you
see the home equity market drying up as interest rates turn, or is that a phenomenon that
is here to stay?
Mr. Sznewajs: “The
home equity loan is probably the most efficient customer-friendly form of borrowing that
has ever existed with favorable attributes from both the customer’s standpoint and
the institution’s standpoint. The rates are attractive, the interest is tax
deductible and the account is easy to access. The customers are comfortable borrowing. In
the past when customers wanted a car, boat, or personal loan, they had to fill out credit
information, get a note and pay it off over a 24 or 36 month period. If they wanted
another loan, they had to complete another set of financial information, etc. With a home
equity loan, it is easy for customers to pay down their user line of credit based on their
needs. Home equity lending has been around a long time and I think it’s here to
stay.”
CEOCFOinterviews: Please
tell us about any trust investments and fee-based services, and how are customers
utilizing your services?
Mr. Sznewajs: “We
have a full-service trust department with fiduciary powers. Larger financial institutions
rarely accept trusts under a million dollars. However, West Coast Bank has the ability to
transact trust services of all sizes. In terms of investment products, we have
investment reps selling annuities and mutual-funds, and giving stock advice. This is a
very successful and growing part of our business.”
CEOCFOinterviews: Are
there any services that you are not offering that you feel are necessary?
Mr. Sznewajs: “I
think the thing that appears to be growing in the financial marketplace is the need for
financial planning. We haven’t figured out an economic way to deliver value-added
financial planning to our customers in a way that makes sense to them and us. Consumers
say they want it, but they are not at the point where they are willing to pay for
it.”
CEOCFOinterviews: How
are you doing with non-performing loans?
Mr. Sznewajs: “Our
ratios are well within peer guidelines; we generally operate at or below peers. Our
numbers rise and fall with the economy, but historically, we have always stayed within the
peer numbers.”
CEOCFOinterviews: What
are your plans for additional branches going forward?
Mr. Sznewajs: “We
tend to be very opportunistic; at any given time we have a list of eight to ten areas we
are interested in. If we find the right combination of location and people to man the
location, then we will react to that.”
CEO/CFOinterviews: How
do you keep in touch with your customers, and how do you as CEO, get feedback from all
your branches about what’s happening on the front-line?
Mr. Sznewajs:
“There are a number of ways I maintain contact with our customers. I regularly meet
one-on-one with customers or prospects in terms of the business development and marketing
activities. Bank personnel and I generally schedule eight to ten breakfast or lunch
meetings during the year with a large group of customers. We talk about the institution,
how we do things and how things are going. I also answer my own phone, so if customers
have an issue, I am accessible.”
CEOCFO interviews: In
closing, why should potential investors be interested and what should they know about West
Coast Bancorp?
Mr. Sznewajs: “We
have about thirty-six percent institutionally, held by shareholders. We spend a lot of
time talking to shareholders. We have a quarterly investor’s call where we announce
the earnings and go through the significant events of the quarter, the balance sheet and
the income statement. Our goal is to predict the bulk (inaudible) earnings growth in the
eight to ten percent range, with an ROE in the area of about fifteen percent. That is our
goal and that is how we intend to manage the company.”
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