U.S. Bancorp (USB): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
U.S. Bancorp's second-quarter 2014 earnings per share of $0.78 outpaced the Zacks Consensus Estimate by $0.01. Moreover, this compared favorably with $0.76 earned in the prior-year quarter. Organic growth was reflected in the quarter aided by higher revenues, loans and deposits. Moreover, strong capital position, and improving credit quality were other positives. However, non-interest expense increased due to recent settlement with the U.S. Department of Justice (DOJ) worth $200 million. After reviewing the results, we are maintaining our Neutral recommendation on the shares.

Overview:

Headquartered in Minneapolis, MN, U.S. Bancorp (USB) is one of the nation's top 10 financial holding companies. Its current structure was formed in Feb 2001 with the merger of the former U.S. Bancorp and Firstar Corporation. The company has operated a well-balanced business model, with non-interest income representing 46% of net revenue in 2013.

The company offers a wide array of financial services through five operating segments:

The Consumer and Small Business Banking segment (accounted for 39% of net revenue in 2013) offers banking services to individuals and small businesses.

The Wholesale Banking and Commercial Real Estate segment (16%) extends traditional banking services, such as lending, depository and treasury management, to mid-sized and larger corporations, financial institutions and public sector organizations.

The Payment Services segment (24%) provides services relating to credit/debit cards, merchant processing and customized technologically advanced products and services to consumers, merchants, institutions and affinity partners.

The Wealth Management & Securities Services segment (8%) includes private banking, trust, custody, investment management and related financial advisory services, which are extended to individuals and institutional investors.

The Treasury and Corporate Support segment (13%) includes the company's investment portfolios, funding, capital management, asset securitization and interest rate risk management.

Commercial loans, which form the largest section of the loan portfolio, represented 30.9% of total loans as of Mar 31, 2014, followed by residential mortgage loans (21.7%), retail loans (20.0%), commercial real estate loans (16.8%), credit card loans (7.2%) and covered loans (3.4%).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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