From Master's Thesis to a Financial Phenomenon
by James E. "Butch" Larcombe

The idea is still tucked under the worn cover of a nearly sixty-year-old master’s thesis. Hatched at the University of California, Berkeley, it was more than an academic exercise. It had a flesh-and-blood purpose: transforming a struggling stock brokerage in Great Falls, Montana, into a viable enterprise.

The author of the thesis was Ian Davidson. The brokerage was Gibson Associates, a two-person shop owned by his father, David Adams Davidson. The brokerage’s income in 1957 totaled about $17,000.

“He didn’t really make money,” says the son of his father’s business. Not in 1957, not in most years. The brokerage opened in 1935 during the depth of the Great Depression and struggled mightily, the 1929 stock market crash fresh on most people’s minds.

The Great Falls office, in its first years, was the only branch of a Butte-based brokerage far too small to own a seat on the New York Stock Exchange. The firm relied on an agreement with a Salt Lake City brokerage to execute stock and bond trades. The Utah firm got the sales commission, leaving Gibson with just a small fee it tacked on to trades. Just steps away in downtown Great Falls, another brokerage, part of a larger firm with a stock exchange seat, didn’t charge the extra trading fee. The gap left Gibson and David Davidson with a future short on promise.

With his thesis, the younger Davidson had a plan of action when he returned to join his father’s firm in 1958. “I came back and knew we could turn this around by using regional stock exchanges,” Davidson says, nearly five decades later. In short order, the younger Davidson talked his way into a seat on the Pacific Coast Stock Exchange, paying $2,500 for the privilege. “We were profitable within six months,” Davidson says. “It just kind of went from there.”

“There” was a small storefront where David A. Davidson kept an office in an elevator shaft and used a small stepladder to post stock prices on a chalkboard. These days, Davidson Companies occupy two sizable buildings in downtown Great Falls that serve as the headquarters for the largest financial services operation based in the Pacific Northwest. Ian Davidson chairs an enterprise with more than 870 employees that manages more than $18 billion and has offices stretching from Seattle to Florida.

“There” was a small storefront where David A. Davidson kept an office in an elevator shaft and used a small stepladder to post stock prices on a chalkboard. These days, Davidson Companies occupy two sizable buildings in downtown Great Falls that serve as the headquarters for the largest financial services operation based in the Pacific Northwest.

Davidson Companies is the corporate parent of four companies: D.A. Davidson & Company, the securities brokerage firm that is largest of the four; Davidson Trust Company; Davidson Investment Advisors; and Davidson Travel, an operation with offices in Great Falls and Missoula. “I never dreamed we would be where we are today,” admits Davidson.

The first seat on the Pacific Stock Exchange led to buying specialists posts. D.A. Davidson had fourteen at one point, where employees acted as dealers in stocks, sometimes working with industry customers such as Charles Schwab, who found buying and selling through the Pacific cheaper than trading through other exchanges. At one point, the operation on the Pacific trading floors in San Francisco and Los Angeles accounted for as much as 25 percent of the D.A. Davidson revenue. Today, the Pacific Stock Exchange is history, replaced by electronic trading networks, and the days of needing a seat on a stock exchange to efficiently trade stocks and bonds are long past.

Davidson served as vice chairman of the Pacific Stock Exchange in the early 1990s, the first of several increasingly visible roles in the securities industry. He also served as a director of the Securities Industry Association, a trade group, and in 1995 was elected chairman of the board of governors of the National Association of Securities Dealers, which runs the NASDAQ stock market. Being chosen to lead the NASD was truly an honor for Davidson and the Montana-based company and helped boost its name recognition among the big players on Wall Street.

Being active in the industry has paid dividends. “The company’s reputation is excellent,” notes Bill Johnstone, Davidson Companies’ chief executive officer, crediting Davidson’s industry involvement with boosting the company’s profile over the years. “We are well-known and quite well-respected for the quality of business we do and the integrity with which we do it.”

Johnstone, who took the helm of Davidson Companies a couple of years ago, is quick to note that the growth of D.A. Davidson and the other companies under the Davidson umbrella involved more than one person. “There have been a lot of people who have helped build the company over the years,” he said. “But Ian has played an integral role. He’s been the primary mover and developer of the company, from three people to where it is today.”

Not long after buying the stock exchange seat, D.A. Davidson began to grow geographically. The first branch office opened in 1959 in Helena, a potential location noted in the thesis. From there, growth came at a measured pace. The third office, in Missoula, didn’t happen until 1965, followed by an operation in Butte. Along came others in Montana’s larger cities, followed by forays into northern Wyoming, Idaho, and Spokane. In the late 1990s, D.A. Davidson set up shop in urban markets such as Seattle, Portland, and Salt Lake City. Today, D.A. Davidson has thirty-eight retail offices.

While the opening of retail offices has largely been driven by the recruitment of established financial consultants, Davidson points to several acquisitions as pivotal in the company’s growth. The 1998 purchase of Jensen Securities, a twenty-person Portland-area research and institutional investment firm, boosted the company’s profile in Oregon and Washington. The deal also opened the door to significant growth in investment banking for D.A. Davidson. Investment bankers advise companies on mergers and acquisitions, raise money for expansion, and sometimes help arrange stock offerings. “We don’t have many merger and acquisition opportunities in Montana, but there are a ton of them out in Portland and Seattle,” Davidson says.

A second growth-spurring deal came just last year. Davidson Companies made a deal with Mutual of Omaha, the insurer, to buy the Kirkpatrick Pettis investment firm. That deal added eighty-six employees and gave D.A. Davidson’s public finance and fixed-income investment business a big boost. The deal also gave the company a new batch of offices in the Midwest and East, including Chicago, Pittsburgh, and a small office in Orlando, Florida, that specializes in financing of stadiums and other athletic venues.

“They made a hell of a (financial) contribution last year,” says Davidson of Kirkpatrick Pettis, which assumed the D.A. Davidson name just a couple of months ago.

Davidson, a non-executive chairman, plays a significant role with Davidson Companies, even though he is no longer calling the shots from the corner office. “He’s still very interested in the company and engaged and involved,” Johnstone says. “He serves as a senior adviser and statesman and often serves as the public face and spokesman for the company. He does that very well.”

While Davidson and his family once owned a majority of the shares in the enterprise that bears their name, there has been a gradual transition to employee ownership. Today, there are about 390 shareholders in Davidson Companies, with a significant piece of the company owned by a stock ownership plan that includes many company employees.

Davidson maintains a knack for low-key company promotion and he’s not about to rest on his laurels. Case in point: the Davidson 99, a regional stock index made up of Northwest companies launched in 2004. Modeled after the Dow Jones Industrial Average, the Davidson 99 features companies such as Microsoft and Nike and has found its way into newspaper stock tables and computer screens across the region. The index was the brainchild of Davidson and Fred Dickson, D.A. Davidson chief market strategist.

And there is the student investment program, born of Davidson’s interest in education and frustration with unrealistic stock-market games. Each year, the firm provides teams of university students with $50,000 to invest, with the participating schools pocketing a share of any profits. The company covers the costs of any losses. Started at Montana State University years ago, the program has spread to twenty colleges and universities, including UM. It’s a real-money, real-life investing experience that has netted D.A. Davidson headlines in college-town newspapers across its operating region.

Since yielding the CEO role several years ago, Davidson and his wife, Nancy, spend some of the winter in Southern California and a fair share of the summer at a home on Flathead Lake. But he still phones the office most days when he’s out of town, keeps up via e-mail, and often comes to work when he’s in Great Falls. Even though Davidson plays a little golf and enjoys friends and family, work is still a significant part of his life. “I’m semi-retired and the emphasis is on semi,” he says.

If the work isn’t Davidson Companies business, it could involve the affairs of Plum Creek Timber, the Seattle-based company that holds more than 8.2 million acres of timberlands, making it likely the largest private landowner in the nation. The company is clearly the largest private owner of land in Montana, with 1.28 million acres. Davidson served on the Plum Creek board for about a dozen years before being elected chairman in 2005. “It does require a lot of my time, but I just love that company,” Davidson says. “We’ve got a wonderful board and it’s a great management team. It’s helped me at our company because you learn things from them.”

While most folks might be inclined to take life a bit easier at seventy-four, the woman with a front-row seat for most of Davidson’s career isn’t a bit surprised at his continuing devotion to work.

“Part of it comes from his growing up,” Nancy Davidson says, noting her husband pursued his father’s business but carries the outgoing personality and optimism of his mother, “Scottie.” Ian is the younger of two children; his brother, Dave Davidson, a retired architect, also lives in Great Falls. “His folks were a Depression couple and raised their kids in that time. His dad worked very hard and made something like $300 a month,” she says.

Ian, she believes, saw hard work “as the key to the opportunity to succeed. That’s something he’s never shied away from. He has a huge belief in a work ethic. Sometimes, I think it’s been a little extreme.”

But early on, her husband’s motivation was as clear as the neatly typed pages of that master’s thesis. “I think he saw the potential of the company,” says his wife of forty-five years. “Then it sort of started to fall into place.”


Nancy and Ian Davidson are two of UM’s staunchest backers. Their philanthropy was instrumental in creating the Davidson Honors College and their ongoing efforts in fundraising for the University have paid dividends over several decades.

Nancy’s involvement with the University stretches back to her days as a student. A Great Falls native, Nancy Preston spent a year at Northwestern University in Evanston, Illinois, before transferring to UM, where she earned degrees in biological science and education in 1959. “I was quite active when I was a student,” she says, noting a term as president of the Associated Women Students group and involvement in other campus activities.

After graduation, she did genetic research work in immunology at the University of Minnesota. Returning to Great Falls, she worked for a time at the McLaughlin Research Institute and taught science for a year in the Great Falls Public Schools before marrying Ian. He graduated from UM with a degree in business in 1953 and had a brief tenure as an instructor at the University after earning an MBA in finance from the University of California, Berkeley.

Nancy credits her husband for what would become extensive involvement with UM. “Ian got involved with the [UM] Foundation in the early years of our marriage and kept at it,” she says. “He developed a deep loyalty to something he cares so much about. And, of course, he’s the world’s greatest Grizzly fan.”

Over the years, both Nancy and Ian have served on the UM Foundation Board of Trustees. In the 1990s Nancy was elected board chair and played roles in several successful fundraising initiatives. While they have scaled back their foundation activity in recent years, the Davidsons serve as honorary co-chairs of the current capital campaign, joined by UM President George Dennison, his wife, Jane, and Phyllis and Dennis Washington.

Nancy continues to serve on the Davidson Honors College advisory board. Both are members of the Order of the Grizzly and have been granted honorary doctorates from UM.

The philanthropic support and deep ties to UM seem natural to the Davidsons. “We both had a wonderful experience at the University and got a great education there,” she says. The decision to make a major gift to an honors college stemmed from a general awareness of the desire for such a program at the Missoula campus. “I said to Nancy, ‘Why don’t we just do this?’ They didn’t even really ask us,” Ian recalls. “The best thing we ever did was start that honors college. I think it has raised the academic appearance of the University.”

The Davidsons’ three children—Lauren Descamps, Sydney Maxwell, and Andrew Davidson—are all UM graduates, as well as two of their children’s spouses, Paul Maxwell and Wendy Davidson. The third spouse, Tim Descamps, is doing graduate work at the University.

Nancy and Ian share a devotion to public education. Ian’s mother, “Scottie,” taught in Great Falls schools for many years and Nancy served as a trustee for the Great Falls Public Schools. Both have also worked to promote voter passage of the university system mill levies.

“Education is the key to economic development and it’s the key to personal development,” says Ian, who admits, even as the son of a teacher, “when I was in high school and college, I didn’t take education as seriously as I should have.” Education, Nancy says, “is one of those things we feel is absolutely the basic foundation for anyone. It’s the backbone of how you are going to progress, develop, and prosper, whether you are a country or an individual.”


James Larcombe graduated from UM in 1978 with a degree in political science and economics and taught social studies in Darby before pursuing a newspaper career. Currently the business editor for the Great Falls Tribune, he also has worked for the Missoulian.

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