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Their Small Bank Approach makes Cashmere Valley Bank very unusual as a $2 Billion Bank

Greg Oakes

President & CEO

Cashmere Valley Bank


Interview conducted by:

Lynn Fosse, Senior Editor

CEOCFO Magazine

Published – February 22, 2021

CEOCFO: Mr. Oakes, according to the Cashmere Valley Bank website, you are “The little bank with the big circle of friends.” Would you explain?

Mr. Oakes: That slogan is actually some sixty years old. Originally, we were quite a small bank. We are growing rapidly and it represented the demand that we saw for our kind of service from a small bank.

CEOCFO: What do you see as your kind of service and how does it differ from what other banks might offer?

Mr. Oakes: It is actually quite simple; most people will admit that America has stopped answering their phones. Many people have many different kinds of services they deal with, and if they need to make a phone call to that company, it is virtually impossible. You get menus and call-centers, and all the things that seem to get in the way of a solution.

At Cashmere Valley Bank we do have a call-center but we answer the phone. Every phone in this bank is human answered. When you want to get to a particular person we do not hassle you, you get transferred right to that person. Believe it or not that makes us very unusual as a $2 billion bank.

CEOCFO: As any bank, I would venture to say!

Mr. Oakes: Yes, we just find over-and-over again, when we get feedback from the market that they just really enjoy banking with us. They know that there is somebody that they can call. We also have a fairly dense full-service branch network. These are branches that are staffed more like banks used to staff them. We have authority in those branches and have lending teams in those branches.

They are very busy branches and we find that customers still make a decision about where to bank based on where there is a building. They may not use the building like they used to but they still do not want to open an account when they do not drive by that building once in a while. It is kind of interesting. We are in a rural community however; we are not in the Seattle area.

CEOCFO: Would you tell us about the communities you serve?

Mr. Oakes: Initially this is an agricultural based part of the area of the State of Washington. There are about 200 million boxes of fresh apples grown in the country today and a little more than a 100 million of those boxes are grown in eastern Washington and they are brought both here and in Yakima, both markets that we cover, for processing. There is a strong agricultural backbone to our communities that we serve.

At the same time, we are on the sunny side of the state because we lye right on the eastern slopes of the Cascade mountain range, the gateway to the great alpine wilderness area. We have a lot of tourism, and a lot of retirees moving here. There is a lot of real estate growth. We also have the cheapest power in the world, so we are now becoming the hub for datacenters which is getting to be a big thing.

CEOCFO: Are apples less risky to grow than some of the other crops that always seem to suffer from droughts and floods and other things?

Mr. Oakes: They are better than some. The quality and the procedures used to grow and process apples have evolved a lot over the last twenty-five years. When you walk into your grocery store now you see multiple varieties and you see them all year long, however they are a commodity like anything else in agriculture and as a grower you are subject to ever increasing regulations and also on a commodity price that you cannot control. It is still a relatively risky business.

CEOCFO: How do you help your customers in general?

Mr. Oakes: We have a saying around here that if we are on the fence we always fall on the side of the customer. You do not ever win by being right because that may not be the customer’s perception. We will sometimes make a decision that serves that customer’s perception whether they are right or we are right. You do not win long-term by being right all the time. We just try to put the customer first when we are trying to solve a problem and then we are also diversified in our product offerings too.

We have a full-service network of insurance agencies for home and auto and commercial. We have wealth management services and just about anything you need we can provide you with the same manner that we provide other banking services. We also have a full-service mortgage operation with origination and servicing.

CEOCFO: Do you find that many of your customers take advantage of the full range of services at Cashmere Valley?

Mr. Oakes: Yes, not as much as we would like of course. They find out they can get their car insurance from the same company that they trust with their financial transactions and that rings true for a lot of people.

CEOCFO: How do you encourage your customers to look at some of the services over and above typical banking, without seeming too pushy?  How have you learned to walk that line?

Mr. Oakes: You hit on something that is another culture here, we do not have a sales organization here. We sell products simply by solving problems. It does not mean that we won’t mention it in a conversation with somebody but nobody gets paid by the number of products they sell. The only commission jobs we have in this bank are mortgage lending which is the traditional model for that product, and wealth management as well as insurance producers.

As far as bank employees including regular bank lenders that do commercial lending, nobody gets paid by the deal. Everybody gets a competitive salary with some participation on a system-wide basis at the end of the year. We do not have a bunch of annoying people that have to mention so many different products at the teller window every day.

CEOCFO: Was that always the case?  When did you recognize the right way?

Mr. Oakes: It has always been the case here. I have been here thirty-eight years and we have never required employees to hit a certain amount of cross-sell goals like other financial institutions often do.

CEOCFO: We came upon Cashmere Valley Bank as one of the Top Two Hundred Healthiest Banks, so clearly you are doing something right. How are you helping clients through COVID and other unexpected situations?

Mr. Oakes: We offer payment deferrals that you have heard so much about. We participate in the PPP program and are now participating in the second round and that has brought in people from other banks because they cannot get through to them on the phone. We had to make our branches available by appointment only just like everybody else but we have such a strong market presence here. We have a lot of drive-up lanes which is really saving the day currently.

When we build a building, we put in three drive-up lanes, which is a little unusual, but this enables us to service that customer through the drive-ups. However, anybody that wants to come inside during COVID can make an appointment. We have also gone way beyond what was required in support of our employees, anybody who needs time off related to COVID in any way, be it children at school, or relatives that have been exposed to exposure themselves, is all covered and they are paid and not required to use any of their own accrued leave. That continues today.

CEOCFO: How do you know when someone is right fit to represent the bank?

Mr. Oakes: You don’t know; you do the best you can and it can be a gamble at times. When the economy is doing well, which believe it or not ours is doing fairly well, the applicant pool is much more difficult than other times. I impress upon the HR department to pick people who have an ability to communicate, that is my bias when I am hiring. All I care about is if you are pleasant and if you can communicate well because I can teach you everything else.

CEOCFO: What is the competitive landscape in terms of community banks in your area?

Mr. Oakes: We do not have any community banks headquarters here. We have a couple credit unions and we have a couple of other community banks, one of which is owned by a larger bank, and then you are up to the regionals and the majors, like US Bank and Wells Fargo. B of A was here but they left our market some eight years ago or so. Although they are present in one of our markets which is Yakima to the south of us. We have a community bank that is headquartered in Bellingham that has a branch here and they are about our size and we run into them as competition sometimes.

CEOCFO: Pretty much you have the community bank market cornered!

Mr. Oakes: In the Wenatchee MSA we have 46% market share, which is very unusual if you look at market share and communities across the country. If they are an MSA there is generally not a player much higher than the low thirties. There are usually three top players. Within our primary market we are number one and number two is half the size of us and that happens to be Wells Fargo, and they bought most of that when they bought a community bank here about twenty years ago.

CEOCFO: Do you do much outreach?

Mr. Oakes: When I hire, particularly lenders and management people, one of the questions I ask is what do you do for fun? That tells me a lot about somebody. What I tell them is a successful banker is someone who is active in his or her community at whatever he or she likes to do. I do not care whether it is sports, coaching, opera, service clubs or whatever, I want to hire people that are plugged-in to the community. I want people to know who you are, I want you standing with them shoulder-to-shoulder washing dishes in at a community event because now they know a banker and it is really handy to know a banker you can call.

Everybody in this bank has a DID line and a business card. DID means Direct Inward Dial. That is their own phone number and we require that number to be public. When you have a problem and it is usually on a Saturday or Sunday afternoon, and you need to call somebody, now you know who to call. That is important for building a network. The other banks generally choose not operate that way so they can’t compete with that, they cannot put that many feet on the ground like we do. If you have ever read the book Marketing Warfare, it is about numbers and we have a lot of people on the ground and involved in the community.

CEOCFO: What about the bank’s involvement with the community?

Mr. Oakes: We have a donation budget. Our bias here has always been children so we do a lot of support for children’s activities and schools. We cover the gambit, local chambers, food banks, community foundations. We equip our branches with a set amount of dollars that they are the sole decision point for a donation, they do not have to run up the flag pole.

We have a saying around here which is we don’t want any little kid leaving the bank asking for money for his soccer team, without a check. We do not say no to anybody on the kid end of things, which is all handled by the branches. Local festivals is another thing that we help with.

We have dedicated dollars to Hispanic marketing (which is 30% of our population) and we have people who run that operation. It is pretty typical of what other banks do; we just force it more down into the branches where they get to make the decision as to where the money goes.

CEOCFO: Do you see expansion into additional areas or the need for more branches?

Mr. Oakes: We have two branches in Yakima and property for a third. De novo branching is slow. It is a lot safer than buying a bank but we are always open to making a purchase of another institution. However, the targets are getting fewer and fewer. I plan branches for the next generation so that somebody that follows me is going to get those branches when they are starting to get some momentum.

We tell our story the same as what I have been telling you in the community and we are starting to get some traction in Yakima but it takes a little while.

CEOCFO: What is the next for Cashmere Valley Bank; what do you see in 2021?

Mr. Oakes: I see filling in more in Yakima, perhaps building another building on the property that we own, it is actually in the town of Union Gap, which is adjacent to Yakima. It is part of the same valley. We also own a series of property in casualty insurance agencies.

We are about to make another acquisition there and that expands at least our customer contact area over a wider area. Perhaps more in the King County area east of I-5, the more rural parts of King County look are appealing to us but that will depend on a lot of things.

CEOCFO: Was it more opportunistic adding to the insurance or are you actively seeking to build that up?

Mr. Oakes: We are actively seeking to build that up, we use that as a market entre, so a lot of times we will buy an insurance agency in the market before we open a branch. For instance, when we went to Yakima, we bought an agency that gave us contact with three thousand households and that is a nice thing to integrate with.

We consider the entire state as an opportunity for our insurance division. Those acquisitions can happen with a lot less risk than buying a bank. As it turns out once we learn the area we might plan a branch there, slow and steady. We have lots of capital, in fact we have too much capital. Things are good. Banking is a plodders business, you just got to keep moving but you do not need to set the world on fire overnight.

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“In the Wenatchee MSA we have 46% market share, which is very unusual if you look at market share and communities across the country. If they are an MSA there is generally not a player much higher than the low thirties. There are usually three top players. Within our primary market we are number one and number two is half the size of us.” Greg Oakes