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Buffett to SEC: U.S Bancorp Worth It

U.S. Bancorp shares have risen a mere 4.8% year-to-date, but it's enough to keep Warren Buffet invested.

OMAHA, NEB. (

TheStreet

) --

U.S. Bancorp

(USB) - Get U.S. Bancorp Report

shares have risen a mere 4.8% year-to-date, but it's enough to keep Warren Buffett's

Berkshire Hathaway

(BRK.A) - Get BRK.A Report

invested.

Berkshire Hathaway on Monday released copies of a letter sent to the

Securities and Exchange Commission

in May, in which the insurance firm justified its accounting treatment for U.S. Bancorp and other stock investments, including

Kraft

(KFT)

, according to

Reuters

.

The SEC inquired earlier this year why Berkshire Hathaway did not write down losses taken on shares in the two companies. According to the article, the SEC sent a letter to the company in April asking why it was not using write downs on shares that it held for over a year which had the potential for $1.86 billion in unrealized losses.

Compared to what Berkshire Hathaway paid for the two stocks when it originally took equity positions, U.S. Bancorp's stock was down 27% as of the end of 2009 and 18% on its Kraft investment, according to a

Bloomberg

report.

>>View Warren Buffett's Portfolio

In a response, Berkshire predicted that shares of the two companies would eventually move higher than the original cost of each stock, based on their earnings potential.

"We believe it is reasonably possible that the market prices of Kraft Foods and U.S. Bancorp will recover to our cost within the next one to two years assuming that there are no material adverse events affecting these companies or the industries in which they operate," Berkshire CFO Marc Hamburg said in the letter, according to

Reuters

.

The KBW Bank Index is down 4.2% year-to-date.

As of June 30, Berkshire Hathaway was one of the largest institutional owners of U.S Bancorp shares, holding approximately 69 million shares, or 3.6% of the bank's stock, according to

Yahoo! Finance

. That stake was worth $1.63 billion as of Friday's close, up roughly 5% from June 30.

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U.S. Bancorp is the fifth largest bank in the country behind

Bank of America

(BAC) - Get Bank of America Corp Report

,

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. (JPM) Report

,

Citigroup

(C) - Get Citigroup Inc. Report

and

Wells Fargo

(WFC) - Get Wells Fargo & Company Report

. Last week,

U.S. Bancorp

reported another solid quarter of profit, topping Wall Street estimates. It is one of the few banks these days that is

profitably lending - a key indicator to bank investors

these days.

The stock got yet another vote of confidence on Friday when it received a

buy upgrade by Oppenheimer

.

U.S. Bancorp shares were falling marginally on Monday.

--Written by Laurie Kulikowski in New York.

To contact the writer of this article, click here:

Laurie Kulikowski

.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.