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5 Buy-Rated Banks With Increased Upside: FBR (Update 1)

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3. U.S Bancorp

Shares of U.S. Bancorp closed (USB - Get Report) at $28.74, returning 6% year to date, after returning 2% in 2011. Based on a quarterly payout of 12.5 cents, the shares have a dividend yield of 1.74%.

The Minneapolis lender reported fourth-quarter earnings of $1.35 billion, or 69 cents a share, improving from $1.27 billion, or 64 cents a share, during the third quarter, and $974 million, or 49 cents a share, during the fourth quarter of 2010. The company has been one of the strongest earnings performers among regional banks, with its ROA steadily increasing from 1.30% in the fourth quarter of 2010 to 1.61% in the most recent quarter.

In a report titled "They Make It Look So Easy," Paul Miller on Thursday raised his price target for U.S. Bancorp by a dollar to $33, saying that the fourth quarter "was another strong result where the company continued to take market share from other commercial lender," while continuing to "show considerable improvement in credit metrics while others are starting to see the pace slow."

Miller said that the "results highlight the value of USB's core franchise, and we believe that it further justifies the premium valuation on its shares," and that "conservative stance, USB's diverse platform, and the company's significant C&I and auto lending businesses have positioned USB to thrive in any economic environment."

The analyst raised his 2012 EPS estimate to $2.75 from $2.65.

The shares trade for 2.6 times tangible book value, according to SNL, and for 10.5 times Miller's earnings estimate.

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

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