US Bancorp to Get $6.6B Federal Investment

US Bancorp (USB Quote) on Monday became the latest bank to say it would take part in the Treasury's capital injection plan.

The Minneapolis-based company said it has received "preliminary approval" from the government for the sale of $6.6 billion of preferred stock and related warrants to Treasury. The amount is the tenth highest amount to be earmarked for a single institution thus far, since the initial investments were announced last month.

Under the plan U.S. Bancorp will issue the preferred stock at a rate of 5% a year for five years. After that the rate rises to 9% a year if the shares are not redeemed by the company. Treasury will also receive 10-year warrants that will entitle the government to purchase US Bancorp's common stock with a value equal to 15% of the amount of the preferred stock issuance, the bank said.

"Over the past few weeks, we have been evaluating the U.S. Treasury's capital purchase program and the impact that the company's participation in the program might have on our ability to serve our customers, support our communities and create long-term value for our shareholders," CEO and chairman Richard Davis said in a statement.

"U.S. Bancorp is operating from a position of strength," Davis added. "During these uncertain times, the company has benefited from both a prudent approach to risk management and a diverse mix of business. Our capital position is solid."

The capital injection will "augment" US Bancorp's ability to make loans, "invest" for the future and assist in stimulating the economy, he said. >

The U.S. Treasury has so far allotted about $170 billion of the $250 billion it plans to invest in banks through the $700 billion Troubled Asset Relief Program, or TARP, approved by Congress last month. Some 35 banks have agreed to participate in the program, ranging from large-cap companies such as Citigroup (C Quote) and Wells Fargo (WFC Quote) to small community banks like Washington Federal (WFSL Quote) and First Niagara (FNFG Quote).

The Wall Street Journal reported Monday that up to 1,800 private and public banks could apply for the capital in the coming weeks. Banks have until Nov. 14 to take part in the capital plan.

US Bancorp's Tier-1 capital ratio was 8.5% at the end of September. With the addition of the new capital, the bank's Tier-1 capital will be 11.4%.

Shares were rising 1.2% to $30.18 in recent trading.

Banks Receiving Government Investments
Bank	Ticker	Amount (in billions)
JPMorgan Chase	JPM	25.000
Bank of America*	BAC	25.000
Citigroup	C	25.000
Wells Fargo	WFC	25.000
Goldman Sachs	GS	10.000
Morgan Stanley	MS	10.000
PNC Financial Group	PNC	7.700
US Bancorp	USB	6.600
Capital One	COF	3.550
Regions Financial	RF	3.500
SunTrust	STI	3.500
Fifth Third	FITB	3.400
BB&T	BBT	3.100
Bank of New York Mellon	BK	3.000
KeyCorp	KEY	2.500
Comerica	CMA	2.250
State Street	STT	2.000
Marshall & Illsley	MI	1.700
Northern Trust	NTRS	1.500
Huntington Bancshares	HBAN	1.400
Zions	ZION	1.400
First Horizon	FHN	0.866
City National	CYN	0.395
Valley National	VLY	0.330
United Commercial	UCBH	0.298
Umpqua Holdings	UMPQ	0.214
Washington Federal	WFSL	0.200
First Niagra	FNFG	0.186
Old National	ONB	0.150
First Community	FCBC	0.043
HF Financial	HFFC	0.025
Redding Bank	BOCH	0.017
FFW Corp.	FFWC	0.007
Saigon National	SAGN	0.001
Provident**	PBKS	0.000
TOTAL		169.832
Source: The Financial Services Roundtable, KBW *Includes Merrill Lynch **Hasn't decided to participate