U.S. Bancorp Chairman and CEO Richard Davis. Image source: U.S. Bancorp.
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There are a lot of reasons that investors can and should feel good about owning U.S. Bancorp (NYSE: USB) stock. It's the most profitable big bank in America, it's highly efficient, and it's run with the degree of prudence that's necessary to survive the not-infrequent panics that besiege the bank industry.
There's another reason, however, one that isn't as easy to quantify but is nevertheless incredibly important: Its leadership has earned an enormous amount of respect from its employees.
U.S. Bancorp CEO's high approval rating
You can get a sense of this by looking at reviews of U.S. Bancorp on Glassdoor.com, a job and recruiting website that's amassed a leading database of company reviews, CEO approval ratings, salary reports, and other things of interest to current and prospective employees.
When it comes to the approval rating of U.S. Bancorp's CEO, Richard Davis, only one other big bank CEO measures up: Capital One's Richard Fairbank. On this score, as you can see below, the two executives are tied for first place among the nation's biggest banks.
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Data source: Glassdoor.com. Chart by author.
Why bank leadership is so critical
There is no other industry where the quality of an executive team, and a CEO in particular, is as important as it is in the bank industry. Warren Buffett explained the reason for this in his 1990 shareholder letter:
The banking business is no favorite of ours. When assets are twenty times equity -- a common ratio in this industry -- mistakes that involve only a small portion of assets can destroy a major portion of equity. And mistakes have been the rule rather than the exception at many major banks. Most have resulted from a managerial failing that we described last year when discussing the 'institutional imperative:' the tendency of executives to mindlessly imitate the behavior of their peers, no matter how foolish it may be to do so. In their lending, many bankers played follow-the-leader with lemming-like zeal; now they are experiencing a lemming-like fate.
That U.S. Bancorp's executives are uniquely skilled at operating independently and prudently is obvious from its performance through the financial crisis. Unlike many of its peers, the Minneapolis-based bank didn't record a loss in a single quarter throughout the second worst economic downturn of the past century.
Data source: YCharts.com. Chart by author.
And U.S. Bancorp's prudence isn't only visible from the outside. Even a cursory glance through the employee reviews of U.S. Bancorp on Glassdoor.com shows that its financial strength, and the job security that comes with that, is one of the things its employees admire most about it.
Don't get me wrong, there will always be unhappy employees at any company. This is particularly the case at one the size of U.S. Bancorp, which has over $450 billion worth of assets on its balance sheet and employs more than 65,000 people.
Moreover, because efficiency is such a critical component of any bank's success, and no one is better at this than U.S. Bancorp, many of its employees will undoubtedly think they're underpaid -- either directly, by way of lower salaries, or indirectly, by way of less generous benefit packages.
But these are inevitable and inescapable concerns that, even in the minds of U.S. Bancorp's employees, are clearly less important than the quality of the people leading them and the culture and stability of their workplace.
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