MINNEAPOLIS ( TheStreet) -- U.S. Bancorp (USB - Get Report) is on the hunt for another acquisition, as the sixth-largest U.S. bank according to assets looks to leverage its capital hoard and become an even bigger player in banking.
U.S. Bancorp is conducting due diligence on FBOP Corp., a privately held Illinois bank with $18 billion in assets. The Federal Deposit Insurance Corp. has solicited bids for FBOP, which has eight bank subsidiaries in Arizona, California, Texas and Illinois, according to the Wall Street Journal. U.S. Bancorp has already agreed to buy $16 billion in assets of failed banks since the credit crisis began last year.
U.S. Bancorp today posted $603 million in third-quarter net income, beating analysts' earnings estimates. It achieved an annualized 0.90% return on average assets and 10% return on average common equity, along with increased fee income and an improved net interest margin of 3.67%. Those are strong numbers for a bank with $265 billion in total assets in this stultifying economic climate.
The bank appears to be firing on all cylinders and is very well-capitalized, with a tier 1 leverage ratio of 8.6% and a total risk-based capital ratio of 13.0%. These ratios need to be at least 5% and 10% for most banks to be considered well-capitalized under regulatory guidelines.The strong level of capital and generous loss-sharing deals being offered by the FDIC for acquirers of failed institutions make this a perfect time for U.S. Bancorp to expand its footprint. FBOP has been in serious trouble for some time, with four bank subsidiaries representing most of its total assets being included in TheStreet.com's list of undercapitalized banks and thrifts based on preliminary second-quarter regulatory data.