Also on Wednesday, Jim Cramer said he was "really annoyed" with a downgrade by Credit Suisse of U.S. Bancorp USB to a "neutral" rating from an "outperform" rating, since the company "just picked some great branches," and because "has historically been one of the best banks in the country."
U.S. Bancorp on Tuesday announced a deal to acquire Charter One's Bank's 94 branches in Chicago from RBS Citizens Financial Group, which is a subsidiary of Royal Bank of Scotland RBS. USB will take on 800 Charter One employees, along with $5.3 billion in deposits and $1.1 billion in loans, paying a premium of $315 million, or 6%, on the deposits.
For the first three quarters of 2013, U.S. Bancorp's return on average tangible common equity (ROTCE) was 24.18%, which was, by far, the strongest performance among the 24 components of the KBW Bank Index.
Over the previous three full years through 2012, U.S. Bancorp's ROTCE improved from 18.36% during 2010 to 22.28% during 2012, according to Thomson Reuters Bank Insight.
U.S. Bancorp's stock rose 0.4% Wednesday to close at $41.09.
The shares trade for 3.1 times tangible book value, and for 11.3 times the consensus 2015 earnings estimate of $3.65 a share, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $3.19. That price-to-tangible book value ratio is rather high, but it reflects USB's status as a consistently strong earner, with few of the surprises that have plagued so many other large banks. The forward P/E valuation is a different story, representing a rather slight premium to other large-cap banks with considerably weaker track records.
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