This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

U.S. Bancorp Is Still Underappreciated

NEW YORK ( TheStreet) -- Shares of U.S. Bancorp (USB - Get Report) are still having a hard time gaining any sort of momentum following the bank's first-quarter earnings report. Although the stock has been up lately, shares have barely moved since January.

U.S. Bancorp has been a consistent performer in the financial sector for a number of years but the bank is taken for granted because it's not JPMorgan Chase (JPM) or Wells Fargo (WFC). It doesn't have to be. Investors should appreciate U.S. Bancorp has not had the struggles of Bank of America (BAC) and Citigroup (C).

The only "mistake" U.S. Bancorp has committed is lacking flair. When it comes to the metrics that should really matter -- operating margin, earnings per share and return on equity -- there are very few banks that can match USB's performance.

But can it continue?

Although the first-quarter results didn't overwhelm, including a 1% decline in operating revenue, relative to expectations, the performance wasn't all that bad. Besides, after having taking time to dissect earnings reports from some of the more prominent banks mentioned above, growth has been lacking across the board.

At USB, operating revenue fell 1% year over year and 5% sequentially. Although this is not entirely a surprise, the company posted strong growth in the previous January quarter of 5%, so some air was let out of USB's sails. Fee income was softer than expected, down 4% year over year and 7% sequentially. While U.S. Bancorp is not alone in these struggles, making a case for respect is hard when you're not showing much differentiation.

However, when keeping up with the same performance criteria, USB actually bested solid performers JPMorgan and Wells Fargo in some key areas. For instance, USB posted a 1% increase in net interest income (NII), while also posting strong results in average earnings assets.

By contrast, JPMorgan's net interest income declined 6% year over year and 2% sequentially due to margin erosion. Although USB's net interest margin (NIM) also declined by 12 basis points, this was almost half of JPMorgan's decline. Along similar lines, Wells Fargo's NIM declined 33 basis points from last year, which lead to a 3% year-over-year decline in net interest income.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
USB $42.50 0.00%
AAPL $95.18 0.00%
FB $117.43 0.00%
GOOG $692.36 0.00%
TSLA $232.32 0.00%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs