Richard Davis, who started his banking career as a teller and ultimately led U.S. Bancorp through the worst economic crisis since the Depression, will step down as its chief executive in April.
Davis, 58, spent a decade in charge of the Minneapolis-based banking company, becoming one of the most powerful and candid figures in the battered industry — and one of the most visible civic leaders in Minnesota.
He led charitable campaigns; advocated for early childhood education; was embroiled in the Minnesota Orchestra's labor dispute; promoted the region to outside businesses; helped broker the deal for the new Minnesota Vikings stadium, for which his company bought naming rights, and lobbied the NFL to bring the Super Bowl to it in 2018.
He will be succeeded by Andy Cecere, 56, a 32-year U.S. Bank veteran who became its chief operating officer two years ago at the start of a carefully orchestrated leadership transition. "Today, it is time for me to officially start passing the torch to Andy," Davis wrote in a note to employees Tuesday.
The company said the change will formally occur at the annual meeting of shareholders on April 18. The two executives have worked closely for years and, in a joint interview, said employees, shareholders and customers would see little change as a result of the transition.
"We are very much aligned in how we think about things and how we think about leadership," Cecere said. "So I do not expect major changes."
Davis became chief executive in December 2006 and chairman in December 2007. He succeeded Jerry Grundhofer, a key figure in the banking mergers of the 1990s who drove the deals that ultimately made U.S. Bancorp the nation's fifth-largest bank company. As Grundhofer's protégé, Davis frequently handled the operational work of the deals Grundhofer crafted.
Less than two years into Davis' tenure, the collapse of real estate prices and credit spawned a banking crisis that created the biggest economic downturn since the 1930s. The Federal Reserve cut interest rates to nearly zero to stimulate a recovery, and the Bush administration forced the largest banks to take bailout funds and accept repayment conditions even if, as was the case for U.S. Bancorp, they didn't need the help.
A habitual user of sports metaphors, Davis portrayed the company's performance during the downturn as similar to what happens to a race car driver during a yellow flag. "You can't change positions, but you can close the gap," Davis said.
U.S. Bank was not a major issuer of subprime loans during the boom a decade ago. As other banks dealt with cleaning them up, U.S. Bank didn't need to and, partly as a result, its performance began to outpace the industry's. For the last several years, it has led all major U.S. banks in several key measures of financial performance, such as return on equity.
The company's stock, which traded around $35 a decade ago, fell to $14.31 by early 2009 and now trades around $50.
"Even I, and Andy, were surprised to see how we kept rising higher and higher," Davis said. "It wasn't because we were so thoughtful and realized a downturn might come. It was because our philosophy was we never do anything we can't sustain and repeat."
Even in 2013 and 2014, when U.S. Bank and others started making sizable profits refinancing home mortgages in the low-rate environment, Davis warned investors that it wouldn't be a profit driver for long. Over the past three years, he publicly prodded the Federal Reserve to begin raising interest rates.
His candor came into play on the national stage most prominently on a day in December 2009 when Davis, along with other bank CEOs, met President Obama at the White House. The meeting happened just after Obama criticized "fat-cat bankers" on national TV for opposing tighter regulation and awarding themselves big bonuses. "We're not sensitive," Davis told reporters after the meeting.
Asked to explain his candor, Davis on Tuesday attributed it to the company's position in the industry. "The great thing about U.S. Bank is we are a Main Street bank," he said. "As the largest bank that is not considered globally systemic and the largest bank of regional type, we hold the banner to say, 'This is what is good about banking. We do things on the street corner for people that have real names and families.' "
Davis began as a bank teller in Fullerton, Calif., a position he took after he was deferred for admission to the Air Force Academy. Working days at a bank, Davis attended night school at California State University, Fullerton, where it took him eight years to get a degree in economics.
By age 30, he had become a senior executive at Security Pacific Bank, which was soon bought by Bank of America. In 1993, he followed Grundhofer to Cincinnati-based Star Banc. He then helped Grundhofer with a series of acquisitions in the 1990s that eventually led to the 2001 merger of Firstar Corp. and U.S. Bancorp. The new company kept the name and the Minneapolis headquarters.
U.S. Bancorp began its latest executive transition two years ago when it announced that Cecere would become its first chief operating officer since Davis held the position a decade earlier. Cecere rose through the original, Minnesota-based U.S. Bancorp and his role in the company for years had been a sign of the inclusive approach Grundhofer and Davis took to executive appointments.
Davis said he would remain active in charities and boards in the Twin Cities. Among other activities, he is one of three co-chairs of the 2018 Super Bowl Host Committee Executive Board and chairman of Greater MSP, a group that promotes the region.
"Teresa and I are devoted to the Twin Cities," Davis said, referring to his wife. "We've never been happier anywhere."