Fall-on-your-sword service – How Citizens Bank has thrived 10 years among national competition
The fingerprints of Citizens Bank of Nevada County are all over the western part of the county.
The bank financed the renovation of the Holbrooke Hotel, Del Oro Theatre and the Center for the Arts, all in Grass Valley.
Revitalization of the Nevada City City Hall relied on money from Citizens, which has since refinanced the loan at a rate more favorable to the city.
The bank has also provided a line of credit for the design and planning of the upgrade to Nevada City’s wastewater treatment plant.
The Nevada County Community Network, which provides free or low-cost Internet service to more than 200 nonprofit organizations, got started in 1995 when the bank loaned NCCN $24,000. (About 95 percent of the bank’s $149.3 million in loans are in Nevada County.)
Then there are the 99 nonprofit organizations with which Citizens and its 61 employees work. Bank employees serve on the boards of 20 nonprofits, and the bank makes donations to 79.
It’s all part of the concept of “fall-on-your-sword service,” said Judy Hess, president and CEO of the five-office bank. “We are locally owned and operated. Our shareholders live in the community. All of us have a stake in the community.”
That stake is also a profitable one. Citizens Bank celebrated its 10th anniversary last week by announcing record profits for the fourth quarter and year ended Dec. 31.
Citizens, with assets of $174.6 million, has prospered against much larger competitors because of its detailed understanding of the local economy and a laser-like focus on customer service.
“Every day, each of our employees puts their reputation on the line,” Hess said. “That leads to a high level of service.”
Customers apparently appreciate the effort. A recent online query to The Union’s Reader Circle brought several positive responses.
“I personally chose Citizens because of my association with the arts council, which had an account with the bank,” wrote Penelope Curtis of Cedar Ridge.
“I found them to be thoroughly customer-friendly. The tellers are courteous, friendly and very helpful. If there is a line, someone makes sure the customers are helped. … Going to a bank to watch television is not my idea of spending my precious business time.”
“They say hello and actually talk with you when you go to the counter in a branch,” wrote Chip Carman. “The ‘big’ banks drove us away with service charges, high business credit-line rates, higher still credit card rates, and bad credit reporting.”
To make sure it is responsive to the micro-communities it serves, Citizens has five branches in a triangle that extends from Nevada City to Penn Valley to Lake of the Pines. None of its competitors has more than three branches in the same area.
Hess believes that Penn Valley, Lake of the Pines, even Brunswick Basin have unique characteristics that are served better by people than ATM machines.
“Part of it is getting more than your fair share of the market,” she said. “But we are committed to banking the community … Employees are empowered to make decisions. We’re looking for ways to say yes.”
The bank attributed much of its record 2004 performance to the strong demand for construction and commercial real estate loans, industries that drive the local economy.
Citizens has made it a point to get involved. It stays close to construction and real estate organizations, has appraisers and other personnel who work with developers in the early stages of a project, and has a group of underwriters with more than 125 years of industry experience.
“We’re only as good as our customers’ belief in us,” Hess said. “As long as our customers believe in us, we’ll do well.”
Service is what Jack Crombie had in mind when he decided to start Citizens Bank in 1994, and that you provide good service by empowering employees. “You get the most out of people by letting them do their job,” he said recently.
Crombie had helped organize two community banks that were purchased by larger banks, and he moved to Grass Valley to get out of the business. Instead, he ended up opening and running the local branch of Truckee River Bank for three years.
But he was aware of a consultant’s report that said the area was ready for a new community bank, and an advisory board of local businessmen he organized validated that observation.
So after a minor dispute with bank management, Crombie said he met with Richard Malott, president of Ridgewood Associates in Nevada City, to float the idea.
Malott, now vice chairman of the bank’s board of directors, set up a meeting of local businessmen who would be interested in organizing a new bank. Ken Baker, president of Nevada City Engineering and the bank’s current chairman, was elected chair of the organizing committee.
The organizers set a goal of raising $5 million in capital. They managed to raise $5.2 million in just 46 days. “That was the best indicator the community was ready for the bank,” Crombie said.
(Based on the recent price of the bank’s thinly-traded stock, that investment is currently worth more than $30 million.)
Citizens Bank opened its doors on Railroad Avenue in Nevada City on Feb. 8, 1995. Crombie was president and CEO, and Tom Conley, hired aware from WestAmerica Bank, was chief credit officer. (Conley now owns LectraMedia in Nevada City.)
“We put together an excellent board of directors that has contributed greatly to the success of the bank,” Crombie said. “The focus was serving the community in general, but we catered to the small business operator.”
From the start, the bank emphasized service. “It was a directive from me to interact with the customers,” he said. “(Employees) were encouraged to listen. By listening, you pick up business opportunities.”
Crombie said the first person he met in Grass Valley was Hess, who he eventually hired away from a competitor as a branch manager. She succeeded him when he retired in 2003.
Still a major shareholder, Crombie stays current on the bank’s progress – but that’s all.
“The bank was designed to run without me,” he said. “If you can’t do that, you haven’t done your job.”
Crombie believes there will always be a place for community banks. “There’s a group of folks who want a certain type of service you can’t get from an ATM,” he said. “People like a smile and a handshake.”
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