Back to top

Analyst Blog

U.S. Bank National Association – the lead bank of U.S. Bancorp (USB - Analyst Report) – entered into a definitive agreement to obtain Deutsche Bank AG’s (DB - Analyst Report) municipal bond trustee unit. The deal is anticipated to be completed in the third quarter of this year.

The agreement will expand the reach of U.S. Bank’s global corporate trust business, which has presence in CA, MS, NY, TN and TX.

The transaction will add roughly $57 billion in assets to U.S Bank’s existing $3 trillion of assets under administration, managed by the bank’s corporate trust division. The deal with Deutsche Bank will add an additional 1,100 contracts to the roughly 125,000 trust and agency contracts currently held by the bank.

Management at U.S. Bank believes that the acquisition is a step forward in augmenting its leadership position in municipal trustee and agency services. The deal is also part of U.S. Bank’s strategy to make opportunistic investments in order to further enhance its corporate trust services. Further, the MN-based bank will be committed to provide high-quality services, which it is known for, to the acquired clients.

According to Deutsche Bank, the partnership with U.S. Bank will be profitable as it will provide a better platform to serve clients with the help of U.S Bank’s expertise.

U.S. Bancorp seems to be on an acquisition spree. In Mar 2012, U.S. Bank National Association, acquired the Indiana corporate trust business of UMB Bank – a subsidiary of UMB Financial Corporation (UMBF - Snapshot Report). In the same month, it inked a definitive agreement to buy its institutional trust business from Union Bank, N.A. – a subsidiary of UnionBanCal Corp., which is owned by Mitsubishi UFJ Financial Group Inc. (MTU - Analyst Report).

In Feb 2012, through its lead bank, U.S. Bancorp acquired the banking operations of BankEast, a subsidiary of BankEast Corporation, in a deal assisted by the Federal Deposit Insurance Corporation.

U.S. Bancorp has a well-balanced business model, with non-interest revenue representing nearly half of its total revenue. Its results have been driven by a combination of acquisitions and organic growth. Also, we expect continued investments in core banking and fee-based operations to generate long-term revenue growth.

Going forward, we expect U.S. Bancorp to benefit from its diversified revenue base and strategic acquisitions, thereby posting growth in core earnings going forward. Yet, a tardy economic recovery and a low interest rate environment, along with regulatory issues, remain our concerns.

U.S. Bancorp shares carry a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%