U.S. Bank CEO: Colorado a top growth market
U.S. Bancorp — parent of U.S. Bank, one of the Denver area’s largest — considers Colorado one of its five top growth markets nationwide, president and CEO Richard Davis said.
In an interview Monday with the Nashville Business Journal, a Denver Business Journal sister paper, Davis said that the other four states targeted for growth by the Minneapolis-based bank (NYSE: USB) are Arizona, Nevada, Tennessee and Utah.
Davis said U.S. Bank’s ambition is mainly to deepen its presence in markets where, like Colorado, it already has a footprint, not spread to new territory. Growth could come, he said, in the form of natural growth, investment in new locations and the purchase of banks or branches in the right circumstances.
U.S. Bank is the Denver area’s fourth largest by local deposits, which total $6.21 billion, amounting to a 10.73 percent market share, up from 10.14 percent last year, the FDIC says.
Ahead of U.S. Bank in the market are Wells Fargo & Co. (NYSE: WFC, Lakewood-based FirstBank Holding Co. and JPMorgan Chase & Co. (NYSE: JPM), parent of Chase Bank.
In making the case for U.S. Bank, Davis noted that the bank’s balance sheet has remained clean compared to most other banks and it has remained consistently profitable, a result of avoiding high levels of risky loans, a fact that Davis attributes to both brains and luck.
It also has a diverse business model, he said, in lending and also fee income from issuing credit and debit cards and handling corporate treasury transactions.
But a fee-heavy model is susceptible to hits to income as a range of regulations aimed at protecting consumers come into play. Other big banks — like Bank of America — have retreated from instituting new fees after consumers balked.
Davis acknowledged the risk and said it looks like a $1.7 billion hit, out of U.S. Bank’s total $18 billion in annual revenue, as new regulations set in. He said the bank has made up about 30 percent of that through new growth and convincing customers to pay fees for additional services.
Other banks have also tried the cross-selling approach, but Davis said the distinction with U.S. Bank is no customer will pay for something he or she currently gets for free. The rest of the plan — he’s pledged to make up half the loss — is still developing, with Davis saying he intends to remain patient.
In the meantime, he said he wants to convince people to start trusting bankers again: “The industry just has lost a lot of respect.”