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U.S. Bancorp

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's steady pace of acquisitions throughout the financial crisis reverberated in the Midwest institution's better-than-expected third quarter results on Wednesday.

The bank, which has $265 billion in assets and operates the sixth largest commercial bank in the United States, topped Wall Street expectations as revenue rose 26% year-over-year to $4.25 billion. The stock was gaining more than 6% in recent trades to $25.23.

Earnings totaled $603 million, or 30 cents a share, in the three months ended Sept. 30, up from a year-ago equivalent profit of $576 million, or 32 cents a share, and its second-quarter earnings of $471 million, or 12 cents a share. The latest results were ahead of the average estimate of analysts polled by Thomson Reuters was for earnings of 27 cents a share in the September period.

While much of the non-interest revenue growth at U.S. Bancorp was organic, particularly from strong mortgage loan volume and commercial products, the bank's recent acquisitions are starting to add up. The company is clearly positioning itself for growth as opposed to


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, which is divesting many assets, even profitable ones such as energy trading unit Phibro, as it works to claw its way out of the precarious position it's found itself in as a result of the financial crisis.

U.S. Bancorp's average loan growth rose 9.3% over the year-earlier quarter. Excluding acquisitions, loan growth rose 2.6%, the bank said. Deposit growth surged 24.6% with strong average noninterest bearing deposits and total savings deposit growth. Without the acquisitions, growth was 16.1%.

And while expenses are rising -- year-to-date non-interest expenses rose 10.6% to $6.23 billion -- the company is making a lot more revenue and plans to reinvest the capital for growth, it says. U.S. Bancorp's revenue to date this year has risen 11.2% to $12.3 billion.

"Our third quarter results once again validated the strength of our diverse business lines and effectively demonstrated that the momentum we have created has and will continue to effectively carry us through the current cycle while positioning us to capitalize on the coming recovery," Chairman and CEO Richard Davis said in the company's conference call earlier Wednesday. "U.S. Bank remains open for business and we are managing this company for the long term."

Davis acknowledged that credit concerns are likely to persist, (U.S. Bancorp took $1.45 billion provision in the quarter -- $415 million of which was added to reserves for loan losses), but expects problem loans could peak in 2010.

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U.S. Bancorp's acquisitions of failed banks through the assistance of the Federal Deposit Insurance Corp. include California banks Downey Savings and Loan and PFF Bancorp, as well as the deposits of First Bank of Idaho. Most recently, the company agreed to purchase failed bank Colonial Bank's branch and deposit base in Nevada from


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, which had acquired Colonial in a federally assisted deal.

The company has also been chugging along with acquisitions in other parts of its vast operations as well, including the bond trustee business of First Citizens, the mutual fund administration and accounting arm of Fiduciary Management, the Diner's Club merchant portfolio from Citi, and credit card issuing programs from


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Associated Banc-Corp


, among other deals.

The plan from here is to stay opportunistic. Davis reiterated on its conference call that that company won't do dilutive transactions. "You'll find that every one of them does add up, they may take us a little longer to be highly accretive but

they start out as non-dilutive," he said.

At the bank level, the company is looking to deepen its presence within its 24-state footprint, as opposed to expanding into unknown territory. At the same time, U.S. Bancorp is also looking to expand its corporate bank and trust business on the national level, management says.

U.S. Bancorp has "clearly distinguished itself as one of the 'winners' to emerge from the cycle -- managing to stay profitable in each quarter, repay TARP and add to its normalized EPS power through small fill-in bank and non-bank acquisitions," writes Sanford Bernstein analyst John McDonald in a note.


perhaps could take a lesson from the success of U.S. Bancorp's opportunistic acquisition strategy. Instead of making deals, Citi has been working to reduce its extensive business operations by selling or winding down non-core assets or loan portfolios.

The company has received $45 billion in government bailout funds since the start of the financial crisis, and completed a $58 billion preferred-to-common stock deal this summer, which made the U.S. government its largest investor. Last Thursday Citi posted a third-quarter per share loss of 27 cents, despite making a small profit of $101 million, primarily due to the impact of the stock swap on retained earnings and the payment of government-held dividends.

During its conference call to discuss its quarterly results, Citi said as a result of its extenuating factors, combined with a continued uncertain economic environment, it is only making "selective investments" in faster growth businesses.

True, Citi's vast businesses across the globe are not directly comparable to U.S. Bancorp's operations, but it's interesting to note the success the company, which is nonetheless similar in many ways, is having with a strategy that runs counter to the tact Citi is taking.

--Written by Laurie Kulikowski in New York.