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.
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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