Bursting in bright orange and blue, the new Rabobank branch in Roseville screams for attention.
While most of the banks, title companies and other financial institutions that line Douglas Boulevard sit tucked behind dignified smoked-glass windows, the Rabobank office stands apart. Customers are greeted by a vintage Chevy farm truck parked in the lobby, painted in the corporate orange and blue of Rabobank’s parent in the Netherlands. A video-conference screen is available for talking with loan officers at remote locations. There are twice as many Adirondack chairs (four) as there are teller windows (two).
This blend of old and new is an experiment in creating a bank for a tech-savvy age in which customers rarely walk into physical branches. It’s also a fitting calling card for a bank with an unconventional profile.
Rabobank N.A. is a financial giant, based in Roseville, and one of the largest Sacramento-area companies that most Sacramentans have barely heard of. It operates just two branches in the region, both in Roseville.
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But in cities like Chico and Fresno and Salinas, the bank is a household word. Rabobank is a leader in agricultural lending and community banking throughout rural California, with 119 branches and more than $9.7 billion in outstanding loans. Its $4.25 billion in California farm loans represents the second largest ag-loan portfolio in the United States. Although its profits declined last year, the bank’s loans and deposits grew.
Rabobank’s extensive footprint in California agriculture didn’t happen by accident. Its Dutch parent, Rabobank Group, is historically an agricultural lender and has been expanding over the years in parts of the world where farming is king. As the leading U.S. farm producer, California is a natural for Rabobank, and since 2002 the Dutch company has spent more than $1.4 billion buying up smaller agricultural banks up and down the state.
“Rabobank has its roots in rural lending,” said Berry Marttin, a member of Rabobank Group’s executive board, during a recent visit to the Roseville headquarters. “We said, ‘If we’re going to go international, we’re going to do it in our core business. If you want to go out there and invest in the world, you have to look at where the production is going to be and where the consumption is going to be.”
The company also operates farm-lending offices elsewhere in the United States, and a “wholesale” bank based in New York that deals in large corporate loans. In terms of traditional retail banking, however, the bank based in Roseville represents Rabobank’s sole U.S. operation.
Rabobank employs more than 200 workers in Roseville. The bank moved its California headquarters to south Placer County four years ago from El Centro, mainly because the Roseville area had become such a mecca for financial services in the past few years. That translated into a deep talent pool.
“You’ll see a lot of the finance people here, marketing people,” said Jeroen Meerburg, a Dutch native who is the California bank’s senior vice president and director of strategy, planning and implementation.
But the heart of the bank remains in farm country, a region battling a devastating drought. Despite late-winter rains, the drought is expected to erase billions in agricultural production and rural economic activity this year, according to the California Farm Water Coalition. Rabobank executives acknowledged their business will be affected.
“There will be less planting; you can be sure of it,” Meerburg said.
But bank officials say they and their farmer customers will be able to ride out the drought.
“Being a global rural bank, we have seen droughts in different areas of the world,” Marttin said. “You can’t get scared of it; it’s normal.”
Meerburg said the bank has been working with its borrowers throughout California to make sure they’re prepared for the drought and haven’t over-extended themselves financially.
“We can’t make it rain,” Meerburg said. “What we can do is bring in expertise.”
Aside from the drought, the Roseville-based bank has been dealing with other problems.
Profits fell to $56 million last year from $65 million the year before, according to statistics filed with the Federal Deposit Insurance Corp. Bank spokesman Greg Jones said the decline was due mainly to higher loan losses, the result of lingering sluggishness in the economy.
The bank also was cited by the U.S. Office of the Comptroller of the Currency last fall for “deficiencies” in its oversight of suspicious customer activity, such as money laundering, although it paid no fine.
Marttin said the citation was the result of growing pains; Rabobank has expanded so quickly that its oversight systems have struggled to keep up. “We are going to be a much stronger bank coming out of it,” he said, referring to the citation.
Overall, company executives said they’re pleased with Rabobank’s progress in California and flatly denied a recent Bloomberg news story that said Rabobank Group was considering a sale of the California operation.
“California is a key,” Marttin said. “It completely fits within our strategy.”
The parent company has been struggling somewhat. Profits fell 2 percent last year, and the company warned of “continuing difficult conditions and an uncertain outlook.” Last fall, the company paid a $1 billion fine to settle accusations that it had manipulated interest rates, prompting the resignation of its chairman. In January, Rabobank said it would eliminate more than 1,000 jobs in the Netherlands, on top of a previously announced decision to cut 8,000 jobs.
Marttin said the downsizing is largely a function of changing times in the banking industry. With customers conducting more of their banking via computer or smartphone, foot traffic has dropped considerably at branches.
A similar change is underway in the United States, and the Douglas Boulevard branch, opened six months ago, represents Rabobank’s effort to create the bank of the future.
Because fewer customers walk into banks for routine tasks like deposits or withdrawals, the Douglas Boulevard branch has only two teller windows. Tellers are known as “banking service officers” and handle additional chores such as opening accounts. Customers with questions for loan officers might be directed to a private room, where they’ll communicate via video conference.
The idea is to adjust staffing levels to new realities. While a traditional Rabobank branch might employ as many as two dozen workers, the Douglas Boulevard site employs eight.
At the same time, some customers still want a brick-and-mortar place to visit, and branch manager Scott Cisneros said the Roseville location was designed to make people feel at home. The dominant feature, a farm truck from the early 1950s, is a nod to Rabobank’s ag roots. It also serves as the staging area for the branch’s coffee maker. Adirondack chairs add to the casual feel.
“It’s got a much different feel than traditional U.S. banking, by design,” Cisneros said. “In the future, you’re not going to have these old-school behemoth branches with 25 tellers.”