FASTalert: U.S.Bancorp Making Money The Old-Fashioned Way

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U.S.Bancorp’s CEO Richard Davis likes “consistent, predictable, repeatable performance” with no surprises. In describing the bank’s Q3’10 earnings performance, he says “… it may not be that exciting, because it doesn’t have a lot of unexpected outcomes, but it is one that we’re proud of and we’re excited to tell the story”. ‘Old-fashioned’ banking (a phrase CEO Davis used several times during the earnings conference call) is a guiding principle at USB.

For U.S.Bancorp, financial performance has been anything but boring and unexciting. Diluted EPS is up 88% year-to-date, and true to form, USB has not reversed loan-loss reserves to artificially boost earnings. (See Bank Earnings Booming, But Don’t Fall Into The Trap!) The top line is growing too; USB reported record revenues in the third quarter.

For sales professionals seeking to gain executive sponsorship at this “old-fashioned” banking behemoth (fifth largest in the U.S.), the roadmap for success lies in the last two major public presentations: the third quarter earnings conference call and the annual Investor Conference presentation held in September. These two events described numerous key business initiatives underway in the four business lines of USB.



Key Business Initiatives

Here’s a sampling of the business priorities at USB:

  • Ramping Technology Investments in 2010/11 – USB has forecast 2010 CapEx spending of $850 to $900 million. Technology projects include: Tier 4 data center, branch hardware and software, internet channel, home mortgage origination platform, mobile banking channel, call center telephony, and distribution channel integration.
  • Enterprise Customer Segmentation – This funded business initiative is centrally managed by USB’s Enterprise Revenue Office (ERO). The objective is to acquire customer insights and understand preferences. Key performance indicators include customer profitability, number of new customers, customer retention, and number of products per customer.
  • Aggressive Low-Cost Deposit Category Growth – The bank is exploring all avenues to expand noninterest-bearing, interest checking, money market and savings relationships with customers. This category of low-cost deposit was 9% higher in the third quarter than the year before. CEO Davis is charged up: “I’ve instructed our team to be aggressive on deposit gathering … I think whichever bank exits this downturn with the most deposits … will end up winning in the next [economic upturn] cycle.”
  • Ramping Investments in the Home Mortgage Business – USB’s refinancing business is booming, but they’re already planning for the mix shift to traditional originations. They have several business initiatives underway to shore up their mortgage origination technology platform.
  • International Expansion in the Payment Services Business – This large line of business (17% of revenue) is building scale to leverage technology and business processes in international markets, particularly in Brazil, India, and Western Europe.

Sales Implications



U.S.Bancorp represents a compelling strategic target for sales professionals who are grounded in facts. If you’re planning an executive engagement any time soon, take my advice offered in a recent blog post What Executives Want. Get your facts straight before you start talking and asking questions. The best way to do that is to review the transcripts of these two events that are archived on USB’s website.

I’ve summarized my takeaways and thoughts on potential sales implications in a FASTfacts report. If you’re interested in receiving this report at no charge, email me at [email protected]. I would be happy to help you improve your executive engagement outcomes at U.S.Bancorp.

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