U.S. Bancorp is a multi-state financial services holding company. It provides a full range of financial services, including lending and depository services, cash management, capital markets, and trust and investment management services. U.S. Bancorp is the parent company of U.S. Bank National Association and the fifth largest commercial bank in the U.S. by assets.
U.S. Bancorp had $476 billion in assets as of March 31, 2019. The bank operates through a network of more than 3,000 banking offices in 25 states across the U.S. and over 4,600 ATMs. It also has a strong online presence and can be accessed over mobile devices. The company operates through consumer and business banking (40% of Q4’18 revenues), payment services (29%), corporate & commercial banking (18%) and wealth management and investment services segments (13%). The bank caters to millions of retail, business, corporate, and wealth management and investment services customers across the country.Investment Data
- Opportunity Score: 49
- Ticker: NYSE:USB
- Sector: Financial Services
- Industry: Banks
- Market Cap: 85.46B
- P/E: 12.81
- Dividend Yield: 2.76
- Dividend Payout Ratio: 35.32
- FFO Payout Ratio: Dividend Snapshot Members Only
- FCF Payout Ratio: Dividend Snapshot Members Only
- Chowder Score: Dividend Snapshot Members Only
- Piotroski-F Score: Dividend Snapshot Members Only
- 3, 5, 10-year Revenue Growth: Dividend Snapshot Members Only
- 3, 5, 10-year Dividend Growth: Dividend Snapshot Members Only
Revenue Growth & Market Exposure
With over 150 years in business, U.S. Bancorp has developed a comprehensive line of banking, investment, mortgage, trust and payment services which it offers to a wide range of clients including consumers, businesses, and institutions. U.S. Bancorp carries a strong reputation for its quality of services and customer trust. It has also been named as one of the world’s most ethical companies by the Ethisphere Institute in 2019, for the fifth consecutive year.
The bank operates several diversified businesses with fee-based businesses like credit-card processing and wealth management services accounting for a major portion of its overall revenues. The bank has little exposure to riskier businesses such as investment banking and trading operations. U.S. Bancorp’s corporate credit cards and cards for federal employees (No.1 payments provider to the U.S. Federal Government) also provide attractive returns.
As one of the largest financial institutions in the country, the company is in a good position to leverage from the breadth and depth of its payments capabilities and sharpen its competitive advantages, by investing both digitally as well as geographically. U.S. Bancorp has a good opportunity to cross-sell its products and benefit from a high concentration of customers in its priority demographic markets. Presently, it has a large number of existing single-product customers with good credit relationships.
U.S. Bancorp reported a 14% increase in revenues in the last year, due to total net revenue growth, lower non-interest expenses and positive impact of the tax reforms. The bank launched several new digital lending products during the last year, which enabled customers to gain access to funds instantly. It is targeting to increase its investment in these digital technologies to create more value for its customers in the future.
U.S. Bancorp recently received no objection to its 2019 capital plan by the Federal Reserve Board, which also includes a 13.5% dividend hike. The company also approved an authorization to repurchase up to $3 billion of common shares.
U.S. Bancorp currently has a low payout ratio of 35% and a dividend growth of 8.6% CAGR over the last five years. Its earnings have also registered a 9.8% CAGR growth per annum during the last decade. The company last raised its dividend by 23%. It is a dividend starter and has a dividend yield of 2.8%.
The company has returned close to 74% of its earnings to shareholders through dividends and share repurchase program last year. The bank has been successful in maintaining its payout ratio in the reasonable 30% range, over the last five years.
U.S. Bancorp is one of the highest-rated banks globally by major credit rating agencies. It was one of the very few banks to remain profitable in every quarter of the financial crisis. The bank also delivered record net income and EPS during the last year.
The commercial banking business is highly competitive. U.S. Bancorp competes with other commercial banks, savings and mutual savings banks, finance companies, mortgage banking companies, investment companies, and other financial services companies. It faces intense competition from major financial organizations such as Citigroup, Wells Fargo, UBS, RBS Group, Bank of America, Capital One, Deutsche Bank, JPMorgan Chase, Goldman Sachs, etc.
|Ticker||Company||Sector||Industry||Score||Quote||Market Cap||PE||FPE||EPS||Yield||Payout Ratio||Payments||Dividend||Chowder||Ambassador||Achiever||Aristocrat||King||Graph|
|JPM||JP Morgan Chase||Financial Services||Banks||57||113.49||368.16||12.20||11.34||9.30||3.17||38.71||4||3.60||8.19||NO||NO||NO||NO||1|
|BAC||Bank of America||Financial Services||Banks||48||29.26||278.21||10.72||10.33||2.73||2.05||21.98||4||0.60||-11.21||NO||NO||NO||NO||1|
|WFC||Wells Fargo||Financial Services||Banks||53||47.77||214.69||10.50||10.27||4.55||3.77||39.56||4||1.80||6.12||NO||NO||NO||NO||1|
|USB||U.S. Bancorp||Financial Services||Banks||49||53.68||85.46||12.81||12.55||4.19||2.76||35.32||4||1.48||0.41||NO||NO||NO||NO||1|
|PBCT||People's United Financial Inc.||Financial Services||Banks||59||17.00||6.77||13.18||12.50||1.29||4.18||55.04||4||0.71||5.65||NO||YES||NO||NO||1|
U.S. Bancorp has a sound track record of being profitable as well as consistently returning excess capital to its shareholders. It continually invests in new technology, infrastructure, cybersecurity and risk management. Large scale, distribution and ATM networks, and a growing digital presence are its huge competitive advantages. Attractive demographics and a growing population act as strong tailwinds for U.S. Bancorp. A low payout ratio also indicates significant room for future dividend growth.
Better but not good enough yet. I believe I will stick to the S&P 500 index for now.
DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.