Mutascio also listed
as a possible acquirer for CIT Group. U.S. Bancorp has been an even stronger earner than Wells Fargo, with an ROA of 1.59% for the 12-month period ended June 20, and an ROA of 14.79%. USB's shares closed at $34.04 Friday, returning 27% year-to-date. With the company remaining profitable right through the credit crisis and among the best earners among the largest industry players, USB trades for 3.1 times tangible book value, and 11 times the consensus 2013 EPS estimate of $3.04.
According to Mutascio, an acquisition of CIT Group by U.S. Bancorp, assuming a 50/50 split of cash and stock, or a 100% cash deal, "would actually be more accretive" to earnings than an acquisition of CIT by Wells Fargo.
"However, we think the chances of a USB acquisition of CIT are lower than WFC," Mutascio said, "because USB may have traditional bank acquisitions higher on its radar screen in order to expand its geographical footprint."
"In addition, we believe WFC may be more comfortable (from a risk perspective) with CIT's specialty finance loan portfolios than USB, given its experience with such lending as evidenced by the fact WFC has purchased two portfolios from CIT in the past."
Written by Philip van Doorn in Jupiter, Fla.