On Nov 15, 2016, we issued an updated research report on U.S. Bancorp (USB - Free Report) . Rising loans and deposit balances, diversified product mix, capital strength and a strong retail franchise supported U.S. Bancorp’s growth prospects.
U.S. Bancorp has experienced solid growth in average loans and deposits in the past few years, as it continued to expand and deepen relationships with current customers, as well as acquire new customers and market share. Notably, the company’s average deposits and loans reflected a 5-year CAGR of 7.7% and 5.6%, respectively, in 2015, with the trend continuing in the first nine months of 2016.
The company has consistently enhanced its shareholders’ value, with steady capital deployment activities. Notably, following the Federal Reserve’s approval to the capital actions in Jun 2016, U.S. Bancorp’s board of directors approved a four-quarter authorization to repurchase up to $2.6 billion of its outstanding stock, starting Jul 2016. Also, as part of its capital plan, the company raised the quarterly dividend by 9.8% to 28 cents per share in Sep 2016.
Shares of this major regional bank have recorded year-to-date return of 17.4%.
US BANCORP Price
However, rising costs remain a concern for U.S. Bancorp. Further, as the company continues to invest in technology platform owing to its business initiatives, we believe such costs might weigh on its expense base to some extent in the upcoming quarters.
Like most banks, U.S. Bancorp continues to face margin compression stemming from the persistent low-rate environment. Given the current shape of the yield curve, management expects net interest margin to decline by a couple of basis points.
Notably, the Zacks Consensus Estimate over the past 30 days remained stable at $3.24 and $3.38 for 2016 and 2017, respectively. Hence, U.S. Bancorp currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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