U.S. Bancorp's fourth-quarter 2014 earnings per share of $0.78
outpaced the Zacks Consensus Estimate by $0.01. Moreover, results
were above the prior-year quarter earnings of $0.76. Organic growth
was reflected in the quarter aided by higher revenues, loans and
deposits. Moreover, strong capital position was other positive.
However, non-interest expense increased. After reviewing the
results, we are maintaining our Neutral recommendation on the
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.
In Jun 2014, U.S. Bancorp, doubled its deposit market share in
Chicago with the closure of the acquisition of the Chicago branch
network of the Charter One Bank franchise owned by RBS Citizens
Financial Group, a subsidiary of The Royal Bank of Scotland Group
plc. The deal was inked in January this year. Apart from the
Chicago branch network of Charter One Bank, U.S. Bank also assumed
small business operations and select middle market client
relationships. With this deal, U.S. Bank now has over 160 branches
in Chicago. The Charter One branches are now recognized as U.S.
Bank branches. The company acquired approximately $969 million of
loans and $4.8 billion of deposits with this transaction.
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 32% of total loans as of Sep 30, 2014,
followed by residential mortgage loans (21%), retail loans (20%),
commercial real estate loans (17%), credit card loans (7%) and
covered loans (3%).
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