Banking on Culture

BY ERIN J. BERNARD

Pacific Continental and Capital Pacific Banks merge assets and approaches.

BY ERIN J. BERNARD

Pacific Continental and Capital Pacific Banks merge assets and approaches

In any big merger, much is made of the numbers. But what about the less obvious yet equally essential qualitative gains? How do you measure them, how do you manage them and how do you ensure you’re making the most of what you’ve acquired? 

{pullquote}By listening, together you create something even better than the sum of the parts.     {/pullquote}

These were the million-dollar questions facing Eugene-based Pacific Continental Bank this spring when a merger linked its fates and finances to Portland-based Capital Pacific Bank. 

Through the acquisition, Pacific Continental upped its Portland-market deposits to $519 million and its Portland-market loans to $600 million. It also added a new downtown Portland branch to its retinue of 15 banking offices in Oregon and Washington and increased its workforce by 28%.

But joining forces also made sound strategic and cultural sense for these two like-minded community banks, says Pacific Continental Bank’s Bob Harding, president, greater Portland market. He describes the math simply: “One plus one clearly equaled more than two.”

Former Capital Pacific CEO — and newly christened Pacific Continental executive vice president and chief nonprofit and sustainability officer — Mark Stevenson agrees: “We’ve been bumping up against each other in the market on an increasing basis, and we both have a distinct niche in nonprofits. It was natural as competitors running up against each other, and there’s something that feels good about being able to combine those forces.”

Of course, no two banks are ever completely identical. Pacific Continental was an older bank six times Capital Pacific’s size. But the two shared in common a small-company feel, an emphasis on stewardship and a deep commitment to a similar cross-section of community-based businesses, health care professionals, professional service providers and nonprofit organizations. 

Company culture is the glue that bonds the people of any organization, and both banks brought capable, well-defined cultures to the negotiating table. What’s the recipe for blending two strong organizational cultures into a single, even stronger system? You start by acknowledging that people are at the heart of both systems, Harding and Stevenson say, and you ensure that employees, customers and other stakeholders are prioritized throughout the process. 

Pacific Continental was thrilled to gain 22 well-connected, community-oriented bankers, two of whom joined Pacific Continental’s leadership team, Harding says. But successfully shepherding employees through an acquisition requires a lot more than simply switching out a few signs and nameplates: “You need to seek to understand first: their passions, motivations, what made them successful. And by listening, together you create something even better than the sum of the parts.”

Simply forming ad-hoc groups and committees also doesn’t cut it, notes Stevenson, who joined Capital Pacific in 2006, served as CEO till the merger and guided Capital Pacific through the acquisition. In the process, he discovered that faithful, diligent teamwork and a shared desire to make the acquisition successful wins the day. 

Bumps in the road are unavoidable during operational integration, but they’re easily mitigated when you share core values.

“Anytime you bring dedicated professionals together, you have growing pains,” says Harding. “You’re used to doing things a certain way, and the other is doing things the other way and a different way. It takes time and patience.”

On the client side, Harding adds, the key is to lead with your reputation, keeping always in mind that the customer is king: “Our vision of providing high-touch, high-quality customer service has stayed the same. We’ve learned a lot about how to improve processes from the acquisition. We’ve built a better bank from it. But we’re still hyper-focused on the client.”

Pacific Continental is well capitalized with four decades of experience, and acquiring Capital Pacific has only bolstered that reputation for service. Robust credentials put customers at ease in times of change, he says, and beyond that, it’s about listening deeply to your clients — the ultimate arbiters of any organization’s success or failure — as you move forward. 

At a recent Pacific Continental client event, a prominent nonprofit client recounted to Stevenson management guru Peter Drucker’s famous observation: “Culture eats strategy for breakfast. Every single day.” 

Never is this more true than during the process of a merger, Stevenson has learned: “You can have the best strategic plan in the world on paper … but if we didn’t start with similar cultures and an intent to respect each other’s culture, none of that matters.” 

In keeping with this truth, the bankers of the new Pacific Continental Bank will continue to view themselves as connectors and not just bankers, promises Harding. “A banker provides a loan-and-deposit service. A connector provides a network and a community. We now have a lot more resources to share with our relationships. That’s how we continue. We keep growing as our banks grow, we keep growing with our clients and connecting them to new relationships, and together we grow.”

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