As a young Californian with a driven personality and a knack for winning over customers, as well as rivals, Mr. Grundhofer rose quickly through the banking ranks. As he did, those who worked with him and followed his illustrious career say, he never lost his zest for making a sale or sealing a deal.
"Jerry was always — always — the classic salesman," said Richard K. Davis, the longtime lieutenant who succeeded Mr. Grundhofer as the chairman and chief executive of U.S. Bancorp. "It's his passion."
In an interview, Mr. Davis recalled how Mr. Grundhofer would stroll through U.S. Bancorp's downtown Minneapolis headquarters in his shirtsleeves, asking employees about their latest sale. "If you ended up on an elevator with him, you could be sure he'd ask you what you sold that day."
Building on that enthusiasm while steadily but cautiously buying out competitors and constantly fostering a culture of cross-selling and performance-based pay, Mr. Grundhofer created and presided over one of the strongest and most consistent operations in banking. Today, a year after his retirement and nearly a decade after its most transforming deal, U.S. Bancorp continues to produce strong profits, despite the credit crisis and foundering economy that surrounds it.
For the consistent success of his companies, in a banking career that spanned more than four decades, Mr. Grundhofer, the chairman of U.S. Bancorp from 2002 until his retirement in December of last year, is the 2008 winner of American Banker's Lifetime Achievement Award, eight years after he won the newspaper's Banker of the Year award.
"What we tried to do is make banking as simple as possible and break it down so people could understand it — not only our employees," but also "our customers, who need to understand what banking is about so we can provide them services," Mr. Grundhofer said in an interview. "We tried to make our bank simple and safe and give our shareholders a return that was in excess of what other banks give them. And I think we were successful at that and continue to be successful."
In the late 1990s, Mr. Grundhofer's company grew fivefold; he pieced together a string of successful acquisitions, often driven by an aggressive but genial sales pitch of building a powerhouse banking company, not in terms of whopping quarterly profits, but more in terms of producing profits consistently, quarter after quarter and year after year.
First, in late 1998 the $15 billion-asset Star Banc Corp. of Cincinnati — which he joined in 1993, when it had just $7.6 billion of assets in three states — acquired the $20 billion-asset Firstar Corp. of Milwaukee. In 1999 he completed the purchase of the $35.5 billion-asset Mercantile Bancorp of St. Louis.
By 2000 his company, which had adopted the Firstar name, had grown to more than $70 billion of assets, making it big enough and influential enough to tackle what would become a crowning achievement: the acquisition of an even larger company, U.S. Bancorp.
That company was run by Mr. Grundhofer's older brother, John F. "Jack" Grundhofer. In February 2001, Firstar took the U.S. Bancorp name and kept the seller's headquarters in Minneapolis.
In 2006, Jerry Grundhofer started to turn over leadership of the company to Mr. Davis. During and since the transition U.S. Bancorp has never faltered and has never fallen out of the black — a notable feat during the most brutal industry headwinds in nearly two decades.
"He really positioned us well for this difficult time," Andrew Cecere, U.S. Bancorp's chief financial officer, said in an interview.
Steve Dale, a vice president and the longtime head of corporate communications at U.S. Bancorp, said that from within the walls, the transition was seamless to employees.
"Where was the bump in the road? There just wasn't one," Mr. Dale said.
By the time Mr. Grundhofer retired as the chairman, U.S. Bancorp had grown to nearly 2,500 branches in 24 states and more than $219 billion of assets. (It now has nearly $250 billion.) During his tenure as the CEO, U.S. Bancorp shareholders got the highest total return among the nation's largest banking companies, with an average annual growth rate of 21%.
"No company has done everything right, including U.S. Bancorp, but there's no question this bank has done a very good job overall. There's no question it's well managed," Gerard S. Cassidy, a veteran analyst at Royal Bank of Canada's RBC Capital Markets, said in an interview.
"Jerry Grundhofer, going way back to Cincinnati and before, has always run companies that have been regarded as well-managed, efficient, and steady high performers," Mr. Cassidy said. "And he was always aware of and able to navigate the industry's biggest challenges, especially when it came to credit."
Despite an aversion to criticizing other bankers in the press, Mr. Grundhofer did not shield his disappointment in the industry's follies during the subprime mortgage boom.
"Banks get themselves in trouble not because they don't grow fast enough, but because they grow too fast and don't understand the businesses they are in. … I think you control risk by getting into businesses that you understand, not following the crowd. Bankers tend to follow each other," he said.
"We decided that the subprime business was something we didn't want to engage in in a big way. … We did some subprime lending, but not to the extent anyone else or many others did," Mr. Grundhofer said. "It's another good example of having the discipline to look at your businesses, seeing if they give you the kinds of returns you like — and you like that risk profile. … We were very disciplined. Whether it was in acquisitions, whether it was in business lines, we were a very disciplined group of men and women, and that's a legacy that I'm proud of, and it's still being executed at U.S. Bank today."
Mr. Grundhofer has faced criticism from Wall Street for focusing heavily on expanding fee-based businesses at the expense of U.S. Bancorp's retail banking business. However, he contends the company's stability is based in large part on the dependable revenue generation of its fee-based businesses. U.S. Bancorp never lost sight of the retail business, Mr. Grundhofer said, it merely planned changes over a longer time frame than some observers thought necessary to pump up short-term profits.
He views U.S. Bancorp's steady earnings in today's down cycle as validation of his efforts to bolster the fee-based businesses.
Colleagues credited Mr. Grundhofer's success in part to his infectiously high energy level and charisma. "Whenever you were in Jerry's presence, you were energized," Mr. Davis said.
People who worked for Mr. Grundhofer were trained and given incentives to sell. Bonuses were based on quarterly evaluations that took into account commendations for customer service and referrals that led to sales. Scores were calculated on a curve to discourage employees from resting on their laurels. Mr. Grundhofer said he personally reviewed the performance of several hundred employees.
"I think, No. 1, I was fortunate enough to find quality people and give them the opportunity to perform, and I think every one of them knew that if they performed, they would be rewarded," he said. "And I do believe people would say that about me — that I was very fair. I was probably very tough, but I was completely objective."
Mr. Grundhofer grew up in the Los Angeles area and starting working at a bank while he was in college. By the mid-1980s he was a rising star at Wells Fargo & Co. He led the San Francisco company's retail business first for Southern California and later for the entire state.
In 1987 he was lured away to become the president of Security Pacific National Bank in Los Angeles; he was later promoted to CEO. When BankAmerica Corp. took over Security Pacific Corp. in 1992, Mr. Grundhofer was recruited to lead Star Banc, and he took Mr. Davis with him.
"We weren't always in agreement on everything … but I worked with Jerry almost as long as anyone, and I'm much better for it," Mr. Davis said. "He has impeccable integrity. Jerry was always focused on doing things the right way."
Today, in retirement, that means a sort of relaxation defined by constant activity that happens to be a little less stressful than the daily treadmill of running a major corporation.
Mr. Grundhofer, 64, and his wife, who have a grown daughter, divide their time between Los Angeles and Las Vegas, where the couple has a home close to several golf courses and a state park. He likes to hike, golfs regularly, and is an avid skier in winter months. He is a director at Ecolab Inc., a Minneapolis producer of cleaning, food safety, and health protection products, and Midland Co., an insurance company in Cincinnati.
"My plate is full," he said.
When asked if he would ever consider coming out of retirement, he said simply, "I'm going to hold mute on that question entirely."
