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 Making Its Way to $40

NEW YORK ( TheStreet) -- For more than a year I've sung the praises of U.S. Bancorp's (USB - Get Report) consistent operational performance, which in my opinion had gone underappreciated by investors who were more enamored with growth.

I won't disagree there's considerably more "flair" associated with the likes of Bank of America (BAC) and Citigroup (C). But they also come with an equal amount of risk. I don't believe in substituting "high profile" for fundamental metrics such as operating margin, earnings per share and return on equity -- areas where U.S. Bancorp has consistently outperformed. After another solid earnings report, shares of this bank still look cheap.

After having studied the results of the "big four" banks, which include JPMorgan Chase (JPM) and Wells Fargo (WFC), it became clear that revenue growth was a struggle across the entire sector.

So it came as no surprise that U.S. Bancorp posted a 2.4% revenue decline. Relative to expectations, I would say the performance wasn't that bad, especially since the bank improved revenue by 1.5% sequentially, which was on par with both Citigroup and JPMorgan.

As with Bank of America and Wells Fargo, U.S. Bancorp seemed to have had a hard time this quarter with mortgage lending, which led to slight decline in net interest income (NII). But unlike Bank of America, which posted 4% decline in fees, U.S. Bancorp was able to offset its net interest income weakness with a 5% sequential increase in fees.
[Read: <a target="blank" data-add-tracking="true" href=""><em>Buying Yahoo! for 50%</em></a>]

What's more, amid a highly competitive banking market where everyone is scrounging for loan growth, it should not be taken for granted that U.S. Bancorp was able to post 5.2% year-over-year growth in average total loans, which grew by more than $11 billion. That number is 2% better when excluding covered loans on the bank's run-off portfolio.

What this tells me is that U.S. Bancorp is doing better than just holding its own against Bank of America and JPMorgan in commercial lending, which grew 11% year over year. If there was any cause for concern or a minor red flag, I would point to the 4% sequential increase in operating expenses, which missed Street expectations.
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 $39.10 0.00%
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs