Hoosier Banker Interviews CEO Claude Davis

June 22, 2012

By Laura Wilson | June 2012

Claude E. Davis Jr. was no stranger to leadership when he was named president and chief executive officer of First Financial Bancorp, Hamilton, Ohio, in 2004. Concurrently he was named director and chairman of the board of First Financial Bank, NA. By then, Davis already had served for eight years as president of Irwin Union Bank and Trust, Columbus, Ind.

Davis, 51, likewise fills multiple leadership roles for community outreach organizations. He is a trustee of the Hamilton Community Foundation and of Butler University; a member of the Cincinnati USA Partnership for Economic Development board of governors and executive committee; a member of the American Bankers Association Chairman's Task Force on the Effects of Dodd- Frank on Mid-Sized Banks; and a member of the Cincinnati Business Committee, Commercial Club of Cincinnati and Young Presidents Organization-Indiana.

Previously Davis served as a board member of the Indiana Bankers Association and of the Federal Home Loan Bank of Indianapolis. He also had been active with the Columbus Area Chamber of Commerce, Columbus Economic Development Board, Ohio Bankers League, Irwin Financial Foundation, Dan Beard Council of the Boy Scouts of America, Columbus Area Arts Council, Big Brothers Big Sisters of Columbus, Housing Partnership Inc., Columbus Area Visitors Center, Friends of the Commons and Butler County United Way.

Hoosier Banker recently interviewed Davis in the Cincinnati office of First Financial Bancorp and First Financial Bank, NA. In addition to its Ohio offices, the institution operates 63 banking centers in Indiana and four in Kentucky. With the 2011 acquisition of Flagstar branches, the bank has grown its presence in Indiana and views greater Indianapolis as a strategic opportunity for growth.

How would you describe your responsibilities with First Financial Bancorp and First Financial Bank, NA?

"My responsibility as CEO, first and foremost, is to set the strategy of the company. That includes communicating the strategy to our shareholders, board of directors and associates.

"Second, it is my responsibility to act as a good steward. Next year we are celebrating our 150th anniversary, and I want to honor that history and continue to integrate our core mission and values throughout the organization for future generations.

"Third, I need to make sure the institution stays focused on all of our constituents—our shareholders, associates, clients, the communities we serve, and our regulators.
We have to make sure that the organization is simultaneously serving all of them well.

"We treat regulators with the same respect that we treat our shareholders and other constituents. Regulators are an important part of the banking system. They represent society, and our responsibility to society is manifested through them."

What does it mean to be a good steward?

"A good steward respects the institution and its values, so that the institution can exist in perpetuity. If the institution lives up to its core values, it will be successful and will continue to thrive over time.

"For any banking institution, core values center on integrity, honesty and respect of others, both internally and externally, regardless of how they interconnect with the organization. These fundamental values represent who we are as individuals and as an institution."

Why did you choose banking as a career?

"I like to say that banking chose me, as opposed to my choosing banking. I started my career in public accounting in Indianapolis, working at what is today known as PricewaterhouseCoopers.

"One of the firm's clients, Irwin Financial Corporation, recruited me to serve as controller. At the time it wasn't unusual for a client of an accounting firm to recruit from the firm's staff; today it's prohibited.

"I was attracted to the offer. I had always wanted to run a business, but I didn't know what type of business that might be. Working in a bank gave me exposure to a variety of options.

"As it turns out, I thoroughly enjoyed banking. That was in 1987, and I continue to find challenge and satisfaction in this industry."

What is it that you enjoy so much about banking?

"First of all, I enjoy finance, and obviously the financial side of banking is important. But what I discovered is that banking is all about people and trust. I enjoy engaging with people, so it's a perfect fit.

"I also enjoy running a business. I realize I don't need complete ownership, but I appreciate being in a leadership capacity and working with people."

How did your leadership develop at Irwin Financial Corporation?

"I was fortunate to join Irwin at age 25 and then become president 10 years later. The company was focused on talent development, and they took the time to develop me.

"I had the opportunity to work with some very wise people—John Nash, Mike Ryan, Will Miller and a board member by the name of Bob Haddad. They were values-driven and willing to share their perspectives and experiences.

"I also was fortunate to have opportunities to be in positions of taking calculated risk and to occasionally deal with failure. It is an uncomfortable feeling in the pit of the stomach to take a risk, if the results aren't what you had hoped for. But you learn from it.

"I told one of our younger associates, when we were in the worst part of the recent economic crisis, to pay close attention. I said that what he was learning by dealing with this difficult economy is far better than earning 10 MBAs. It's giving him an understanding of what can go wrong and, more importantly, how to recover."

In your leadership role, what leadership traits do you seek in others?

"First, I look for values consistency.Does this person have the values that align with our organization?

"Second, does he or she have a sense of personal responsibility and accountability? I have made my share of bad decisions, but I am willing to own up to them and course-correct.We all make mistakes. What is important is having a plan to correct them.

"Third is an ability to work with people. A leader has to be part of the team, not just sit in an office all day. A good leader enjoys being with others.

"Fourth is the ability to multitask. For example this morning I participated in our quarterly earnings call. From there I met with one of our larger clients, then addressed some internal issues, then sat down to talk with you for this interview. Later today I am making a presentation to our wealth management team. It's important to be able to click off and click on to different areas of responsibility.

"The fifth trait I look for—and I intentionally list it last—is skill expertise. Even if someone doesn't have the fifth trait developed, if the first four are in place, then we can work on skill expertise. Those first four traits are foundational."

How do you make sure that you are part of the team at First Financial?

"First, I schedule myself to be out in different parts of our franchise at different times. One way is to call on clients in order to stay in close touch with them. Second, I try to do as many town halls or presentations to associate groups as I can. Also, wherever I am, I take 15 or 20 minutes in any given day to walk around the floor to practice 'management by walking around.' This gives me the opportunity to talk with associates and hear how their day is going.It's important for me to really get to know our associates and encourage them to continue doing great work for the company and our clients.

"Twice a week, we host informal lunches or breakfasts where we'll invite 10 associates. There's no agenda. I don't have a presentation. We simply talk and get to know each other.

"All of this outreach needs to be scheduled, or it won't happen. It's also important to do it in a variety of different approaches, in order to touch people in different ways."

What are the challenges to leading a bank holding company and bank?

"The first challenge is managing the inherent conflicts that exist among constituents. The current regulatory environment makes it more difficult to serve clients well and, at the same time, earn a healthy profit for shareholders.

"Second, we're at a unique time in the industry when we are asking, 'How are we relevant to our clients, and how is that relevancy changing?' Obviously we have become more technological as we interact with clients, but our value can't be concentrated solely in the ability to cash a check or deposit a check in person. Our value has to be about the advice, the accessibility and how we stay current with competitors, including our non-bank competition."

How do you meet these challenges?

"First, we make sure that we are client-centered. Everything that we do, and everyone that is a part of the company, centers around our clients first.

"Second, we don't let ourselves get caught up in the past. We may have 136 branch locations, but if our clients one day prefer to interact with us entirely through electronics, then we're willing to adapt. Even if it's painful in the short-term, we adapt.

"Finally, we as an industry have to become more transparent with our clients. We have to start laying everything out for them—including how we charge them, how we make money, what is good for them—and then we have to make sure we get paid in a way that is good for them and good for us.

"As an industry, we have to realize that we no longer have an information advantage. For a long period, we held all the information about financial products. A few sophisticated people understood the products, but most were not well informed or financially savvy.

"We no longer have that advantage, because of the Internet, disclosures and other available information. And we shouldn't have it. People who are buying our financial products ought to know every detail: what they're buying, why they're buying it, and what they're paying for it.

"We need to embrace that concept and be very clear about how we're getting paid for the financial services we provide. Transparency helps ensure that we are providing the right products for clients, and that they're paying a fair price.

"We don't want to find ourselves in the situation where 20 percent of the people are paying for the other 80 percent. Many times the 20 percent pay in the form of penalty fees, and that's not a sustainable model. We've got to embrace a new model."

What is your community service philosophy?

"We have three areas that we target in our community service: economic development; neighborhood development; and education, with a specific focus on financial literacy. Those are the three areas where we've got something to offer beyond dollars.

"Community service is more than donations; it's about the time-treasure- talent model of stewardship. We want to make our associates available to give of their time and expertise. We're glad that they're involved in the community.

"My current personal involvements include serving on the board of Butler University, my alma mater. I'm also active with two economic development organizations, the Hamilton Community Foundation and Cincinnati Business Committee. Plus I'm involved in an organization called 3CDC, which is dedicated to neighborhood redevelopment. It's done an amazing job of revitalizing a Cincinnati area called Over-the-Rhine."

How does your full work schedule accommodate community service?

"It can be challenging, but I'm fortunate that we've got a great team. I'm able to schedule those other activities as a part of my day. It's a matter of prioritizing and focusing on the right areas.

"I also find I have more energy if I exercise. We promote an active wellness program at First Financial that involves everything from health screenings to Weight Watchers to our '10,000 step challenge.'

"We're trying to get everybody walking 10,000 steps a day. It's like management. If you measure it, you'll get it done."

How does IBA membership benefit First Financial?

"I have been familiar with the IBA since the late '80s, when I first joined banking. I have great respect for the Association.

"What I appreciate most is the advocacy that IBA plays for banks. There's a long list of legislative battles that I've experienced over my 25 years in the business.

"A recent example is the Public Deposit Insurance Fund and the concerted effort by IBA to preserve it. Our organization is a large public fund depository in the state of Indiana. Keeping the PDIF was important to us. IBA did a terrific job."

What do you most enjoy about banking?

"I really enjoy the people we work with and watching them succeed. Our tag line is, 'Another step on the path to success.' It's a pleasure to see clients succeed in reaching their goals.

"Today, as an example, I met with a client of our franchise lending business. He's an immigrant who came to the United States as a young man with literally no money in his pocket. He's gone on to become a very large franchisee and incredibly successful.
"We're fortunate in our business to see lots of different examples of success, for both business clients and individual clients. I also enjoy seeing our associates do well and achieve their career goals."

How do you spend time away from the bank?

"Most of my time away from the bank is with family, both immediate and extended. My wife Sara and I are both from Indiana, so our families are nearby.

"We have two children. Our daughter is studying electronic media and communications at Butler University, and our son just finished his freshman year of high school.

"We travel to Butler often. It's a short trip, and we're season ticket holders for basketball.

"We're fans of our son's basketball team, too, and enjoy going to his games. Plus my son and I enjoy playing golf together.

"Now that the kids are older, we recognize that we've got a limited number of years with them. Sara and I want to take full advantage of our time with them."