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While many of his peers are hunkering down in the financial crisis, U.S. Bancorp chief executive Richard Davis is on the offensive.
This spring, for instance, the Minneapolis-based bank announced plans to open a new capital markets and corporate banking office in Charlotte. On Monday, Davis, 51, was in town to meet employees, visit with clients and check out a trading floor set to open Monday in the bank's Hearst Tower offices.
The bank has nearly 150 employees here in corporate banking, capital markets and a corporate trust business purchased from Wachovia Corp. in 2005. It has said it's adding a total of about 70 employees here by the end of next year, although Davis said the number could be higher. He said he hasn't put a cap on hiring here, led by former Wachovia bankers Jim Kelligrew and Dee O'Dell.
"These fellows have no limits on who they can bring in as long as we know ... the opportunity is as strong as we think it will be," Davis said in an interview during his visit.
U.S. Bancorp, better known as U.S. Bank, is struggling with rising loan losses like other banks, but it managed to report a profit of $603 million in the third quarter, up more than 4 percent from a year earlier. Its shares - closing Tuesday at $23.64 - are down about 25 percent since the end of 2007, compared to a 50 percent drop in the KBW Philadelphia Bank Index. In June, the nation's sixth-biggest bank by assets bank paid back the $6.6 billion it received from the U.S Treasury's Troubled Asset Relief Program.
Davis, whose career includes a stint with the former San Francisco-based BankAmerica Corp., joined a U.S. Bank predecessor in 1993 and became CEO in December 2006. He's among the banking leaders who have been mentioned as possible candidates to replace outgoing Bank of America Corp. CEO Ken Lewis.
"I'm going to have to report that my entire day is filled with U.S. Bank activity," he joked of his one-day stop in Bank of America's hometown. "I will not be AWOL anywhere today. I don't talk about that stuff, but I'm very, very excited about the future of U.S. Bank. I think I'm the No. 1 cheerleader so it would be pretty awkward for me to decide to do something different at this point."
U.S. Bank's corporate banking group, which includes capital markets, aims to be a "national stronghold" that extends beyond the company's 24-state retail banking platform, Davis said. But he noted the unit, led by vice chairman Dick Payne, accounts for just 1,700 of the company's 58,000 employees. That means the bank won't be hiring by the thousands, but in increments of 20 and 50 over time, he said.
In addition to Kelligrew's investment-grade bond unit and O'Dell's Southeast corporate banking business, the Charlotte office has also added employees with expertise in syndicated loans, compliance and municipal bonds. The bank could also make hires in commercial real estate, portfolio management and treasury management.
In retail banking, U.S. Bank recently hired a Wachovia executive, Becky DeGeorge, who helped the Charlotte bank become the leader in customer service among large banks. She will remain based in Charlotte, although U.S. Bank doesn't have any retail banking locations in the Carolinas. San Francisco-based Wells Fargo & Co. bought Wachovia last year.
"I have declared this at analyst conferences and in earnings calls that we really are going to reach up and grab that brass ring and be the company that replaces Wachovia as the large bank top-quality service provider," he said. "It's great to have someone (who has) been there done that."
U.S. Bank is more focused on filling out its current footprint, than expanding into new states, Davis said. The bank has determined that being one, two or three in a market boosts its bottom line and provides the best return on its investment. That means it's more to likely to build out in its own Midwestern and Western territory through FDIC-assisted deals and organic growth.
Davis said he is on the record saying he doesn't expect any "transformational deals" for U.S. Bank, but he does hedge: "You never say never."
While he's plucking talent from some of Charlotte's big banks, Davis said U.S. Bank isn't a predator. The bank decided to ramp up its corporate bank before the recession took hold, starting with an expansion of its New York office in January 2007. Its new hires aren't necessarily leaving because they're worried about their jobs, but because they're attracted to an entrepreneurial opportunity, he said.
"There's going to be a lot of jobs here in Charlotte in banking," he said. "There is a great confidence that there will be plenty of people here doing the jobs they have been doing for years. What we want is people who want to be part of something different, something they can build."
When the economy was roaring in 2004 and 2005, Davis said his bank faced criticism for not jumping into hot products such as subprime lending that are now causing problems for his competitors. Instead, he said the bank focused on quality underwriting, expense control and finishing a series of mergers that created today's U.S. Bank.
"I say to many people we've always been the best defense you're going to find," he said. "But what we really didn't do was go on offense too often. Now that the mergers are well behind us, we've got this great strength of prudent underwriting and high-quality earnings. We have this chance now to start investing in our future."
