This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

U.S. Bancorp Is Still Underappreciated

Stocks in this article: USBJPMWFCBACC

NEW YORK ( TheStreet) -- Shares of U.S. Bancorp (USB) 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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.99 -9.95 -0.06%
S&P 500 2,069.26 +2.23 0.11%
NASDAQ 4,773.8820 +15.63 0.33%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs