Following the release of the Federal Reserve's Comprehensive
Capital Analysis and Review (CCAR) results,
) gets the nod for its capital plan along with other major banks.
With the approval, the company plans to augment its capital
distributions over the 4 subsequent quarters.
U.S. Bancorp intends to put forward a proposal regarding an
increase in the annual dividend rate, commencing with the second
quarter dividend to be paid in Jul 2013, to its board of
directors in June. The company expects to pay a dividend of 28
cents per share, an 18% increase from the present dividend of
Additionally, the board of directors announced an unchanged first
quarter dividend of 19.5 cents per common share. The dividend
will be paid on Apr 15 to shareholders of record at the close of
business on Mar 28. Alongside, the company announced preferred
dividends on its Series A, Series B, Series D, Series F and
Series G Non-Cumulative Perpetual Preferred Stock to be paid on
the same day.
Further, the board of directors agreed to a one-year share
repurchase authorization of up to $2.25 billion of its
outstanding stock, commencing on Apr 1, 2013. This represents an
increase of 20% over the $1.88 billion shares repurchased in
2012. The latest share repurchase authorization also replaces the
existing program, which carries an expiry date of Mar 31, 2013.
Since 2011, the bank has successfully cleared the stress test and
had raised dividend by 150% and 56% in 2011 and 2012,
respectively, along with engaging healthy share repurchase
We believe that U.S. Bancorp has a disciplined approach to
capital management and capital redeployment remains its top
priority. In fact, management expects to return 60%-80% of
earnings to shareholders in the form of dividends and buybacks
over the long term. Such shareholder-friendly approach instills
investors' confidence in the stock.
In addition to U.S. Bancorp, the other major banks on Wall Street
that have cleared the stress test requirements, and therefore
plan to boost capital redeploying efforts include
Wells Fargo & Company
Bank of America Corporation
PNC Financial Services Group Inc.
We believe that U.S. Bancorp's diverse revenue stream, improving
credit quality and solid capital levels are impressive. Though a
low interest rate environment and regulatory issues remain our
concerns, we believe that the company's loan growth will be
encouraging attributable to the improving economic conditions.
We also believe that the passing of the stress test along with
the capital redeployment plans will boost U.S. Bancorp's stock
price going forward.
U.S. Bancorp currently carries a Zacks Rank #3 (Hold).
BANK OF AMER CP (BAC): Free Stock Analysis
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US BANCORP (USB): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
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