At U.S. Bancorp, one of the banking industry's most tightly knit executive teams suddenly doesn't seem so well woven.
Of the four executives who have run the Portland, Ore.-based company for the last six years. vice chairman Edmund P. Jensen has left and president Kevin R. Kelly is making extraordinary public declarations of restlessness.
To some, these developments reflect a combination of personal circumstances and office politics.
Mr. Jensen, for example, left to take the plum job of chief executive at credit card giant Visa International. And both Mr. Jensen and Mr. Kelly may have seen their path U.S. Bancorp's top job blocked.
But, to others turnover at the top is a symptom of a deeper malaise at the Pacific Northwest's largest financial institution.
Some analysts believe U.S. Bancorp has lost its rudder. The company lacks a clear direction forward, they say, and may be wandering toward a sale.
"Strategic drift has contributed to management turnover at U.S. Bancorp." said R. Jay Tejera, a Seattle-based analyst with Dain Bosworth.
At the same time, performance issues may also be breeding dissatisfaction in U.S. Bancorp's executive suites. The company's once superior record has taken a turn for the worse, compared with other banks.
U.S. Bancorp's return on assets of 1.24% for the first nine months of 1993 is the highest in the company's recent history. Yet, the industry is passing it by.
Bottom Half
Formerly among the top tier of the nation's 50 largest bank companies, U.S. Bancorp has slipped to the bottom half in profitability, efficiency and capital strength.
And, for those company executives who have been vocal advocates of change, the management style of Roger L. Breezley, U.S. Bancorp's 55-year-old chairman and chief executive, may be a source of frustration.
Mr. Breezley is generally given credit for intelligence and competence. But, an accountant by training, he is not viewed as the kind of dynamic or visionary leader inclined to shake the company up.
"Roger Breezley has said not to look for major changes," noted PaineWebber analyst Lawrence W. Cohn. "That stand-pat strategy may not be some people signed on for."
To be sure, many analysts doubt that the company is in a strategic crisis. "The company is doing very well," said Montgomery Securities analyst J. Richard Fredericks.
What's more, evidence linking management turnover at U.S. Bancorp with problems of strategy and performance is ambiguous. Some observers believe any discontent on the part of Mr. Jensen and Mr. Kelly mainly reflects internal politics.
According to this reasoning the changes taking place now stem from a senior management reshuffling that occurred a year ago.
That reorganization put U.S. Bancorp.'s most important operating units under the authority of vice chairman Gerry B. Cameron, establishing him as the most likely successor if Mr. Breezley retires early. Before that Mr. Kelly Mr. Jensen and Mr. Cameron had been about equal in status.
For its part, U.S. Bancorp strenuously denies that it is stagnating or ripe for a takeover.
"I don't think there is any drift in any way," declared investor relations chief Donald F. Bowler Jr.
Mr. Bowler defined U.S. Bancorp's strategy as building "the best regional bank franchise in the Pacific Northwest - and we have done that."
As for performance, Mr. Bowler said the company compares favorably with its peers over the last five years. "We are not here for this quarter - we're here for the long haul," he stressed.
All the same, in the company's home town, recent executive changes have fuelled chronic speculation about a takeover.
"The rumor mill has been consistent that U.S. Bankcorp. is for sale," said Jim Bradshaw, a Portland-based analyst with Pacific Crest Securities." [Mr.] Jensen's leaving has heated it up."
Headquarter in a city remote from centers of financial power, U.S. Bancorp is an insular company that has experienced little of the executive upheaval common in the industry. The company long prided itself on the solidity of its senior management.
But no longer.
Recently, Mr. Kelly company's 44-year-old president, raised eyebrows in Oregon when he responded to rumors that he would leave U.S. Bancorp.
Rather than dismissing the scuttlebutt outright, Mr. Kelly told the Portland Business Journal that sometimes in a career an excutive must ask what is next. He, however, was "not at that point yet," he insisted.
Asked about these statements, Mr. Kelley said in a telephone interview, "I haven't made any decisions" about leaving U.S. Bancorp.
Mr. Kelly's public airing of his restlessness may in part reflect his own situation, and not that of the bank as a whole. In last year's management shakeup, he lost authority over the company's lead Oregon bank and was given responsibility for more obscure functions such as leasing and insurance.
But there may also strategic issues at play.
Arguing for Change
Mr. Kelly has been among those arguing most vociferously that the company needs dramatic change to survive in an era of banking consolidation. His statements have sometimes put him at odds with Mr. Breezley, who has played down talk of a strategic crisis.
At the next management level, 57-year-old chief financial officer Paul M. Devore is taking early retirement. A yearlong search has failed to produce a replacement.
Meanwhile, the company in November forced out John MacGalliard, the chief operating officer of its mortgage subsidiary, just four months after hiring him. The ouster reportedly was due to differences in style and philosophy between Mr. MacGalliard and other senior executives.
Some argue that these developments reflect a fundamental dilemma confronting U.S. Bancorp. "The bank is in a real identity crisis," said on headhunter who asked not to be identified. "That's one of the things driving these changes."
The Pacific Northwest, the company's home region, is relatively thinly populated. The company's strategy rests on increasing the number of products and services it sells within that territory.
"We have to do more things in our region." Mr. Breezley declared in an interview several years ago. "We have to be everything to everybody."
But last year U.S. Bancorp lost out to Keycorp in a competition to acquire Tacoma-based Puget Sound Bancorp. the only major independent bank left in Washington State. Around the same time, the Justice Department blocked the Oregon company on antitrust grounds from buying Washington branches and deposits divested by Bank-America Corp. following its takeover of Security Pacific Corp.
Those twin blows stymied U.S. Bancorp in the Northwest's most populous state, raising questions about the viability of the company's game plan.
"Their strategy has substantially played itself out and now it's a matter of maintenance or sale," said Mr. Bradshaw of Pacific Crest Securities.
While the share prices of other banks have soared, U.S. Bancorp stock has been stuck in a narrow trading range for nearly two years, further fueling takeover talk.
For the record, U.S. Bancorp counters by pointing to its rapid growth in six years under Mr. Breezley
A Solid No. 3
During that period, Mr. Bowler noted, the company has boosted assets by 58% to $21 billion, mainly through acquisitions. From its base in Oregon, it has built a five-state empire stretching from Vancouver, Canada to Las Vegas.
Despite regulatory roadblocks to growth, the company's six-year-old Washington unit is solidly entrenched as the third-largest bank in the state.
Last year, U.S. Bancorp bought Nevada operations divested by BankAmerica Corp., establishing itself as the third-ranking bank in one of the country's fastest growing markets. And the company has launched an ambitious branch-opening program in booming Idaho.
At the same time, U.S. Bancorp his built up new sources of revenue from national businesses such as credit reporting and affinity credit cards tied to membership organizations.
But, whether or not U.S. Bancorp is on the right track, it remains dogged by the perception that it is a company in the doldrums. Management turnover is feeding that image.
"If you are growing dramatically, if your stock is going up, if you are getting a lot of new responsibilities that come with growth, then you tend to stick around," said Mr. Tejera, the Dain Bosworth analyst. "It is when there is stagnation that people head for the door."
