U.S. Bancorp posted impressive fourth-quarter 2013 results. The
company's earnings per share surpassed the year-ago figure as well
as the Zacks Consensus Estimate. Reduced non-interest expenses and
a lower provision for credit losses acted as the tailwinds. Yet,
non-interest income moved down, mainly driven by lower mortgage
banking revenues. Further, net interest income declined.
Nevertheless, U.S. Bancorp's attractive core franchise, diverse
revenue streams and a strong performance in the past years are
impressive. A solid capital position, improving credit quality and
an increase in strategic acquisitions augur well. Yet, regulatory
issues along with the expectation of a continued low interest-rate
environment are likely to limit the stock's upside potential in the
Headquartered in Minneapolis, Minn., 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. On a full-time equivalent basis, as of
Dec 31, 2013, U.S. Bancorp employed 65,565 people.
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 29.8% of total loans as of Dec 31, 2013,
followed by residential mortgage loans (21.7%), retail loans
(20.2%), commercial real estate loans (17.0%), credit card loans
(7.7%) and covered loans (3.6%).
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US BANCORP (USB): Free Stock Analysis Report
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