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U.S. Bancorp Shines Among Regional Banks (Update 1)

U.S. Bancorp's return on average assets (ROA) has increased steadily from 1.30% in the fourth quarter of 2010 to 1.62% in the most recent quarter, putting the company well ahead of most competing regional banks. The firm also remained profitable all through the credit crisis.

The company estimated that its Basel III Tier 1 common equity ratio was 8.2% as of Dec. 30, which was the same ratio as the previous quarter, but increased from 7.3% at the end of 2010.

Davis said that following the completion of the Federal Reserve's third round of bank stress tests in March, the company looks "forward to moving closer to our long-term goal of returning a majority of our earnings to shareholders in the form of dividends and buybacks."

The quarterly dividend is currently 12.5 cents a share, for a yield of 1.74%, based on Tuesday's closing price of $28.77. The company repurchased roughly 6 million shares during the fourth quarter.

U.S. Bancorp's shares were up 6% year-to-date through Tuesday's market close. The shares trade for 11 times the consensus 2012 EPS estimate of $2.64, with the relatively high forward P/E -- in the current discounted bank stock environment -- reflecting the company's strong, consistent earnings.

Out of 26 analysts covering U.S. Bancorp, 15 rate the shares a buy, nine have neutral ratings, and two analysts recommend selling the shares.

Interested in more on U.S. Bancorp? See TheStreet Ratings' report card for this stock.

PNC Financial Services Group on Wednesday reported fourth-quarter net income of $493 million, or 85 cents a share, which missed the consensus earnings estimate of $1.41, mainly because of "$156 million after tax, or $.30 per diluted common share, of residential mortgage foreclosure-related expenses primarily as a result of ongoing governmental matters and a noncash after-tax charge of $129 million, or $.24 per diluted common share, related to redemption of trust preferred securities."

In comparison, the company earned $826 million, or $1.55 a share in the third quarter, and $798 million, or $150 a share, in the fourth quarter of 2010.

The company said "noninterest expense for the first quarter of 2012 is expected to return to third quarter 2011 levels excluding legal and regulatory-related contingencies and integration costs that may be incurred in first quarter 2012."
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