US Bancorp: buying opportunity but dividend not safe
At $13 and change, US Bancorp is an attractive stock. I've owned and sold the stock before. While their Q4 earnings were disappointing, they were to be expected. Their strong deposit and loan growth shows that clients consider them a safe haven.
The recent selloff shows that investors aren't considering this bank to be a safe haven. Investors are missing the point, I think. USB has no investment banking division to cause it write downs. Their deposit and loan growth indicates that they should take market share through the downturn. I've heard it said that Wells Fargo is the best managed superregional or national US bank and I agree - except that their new investment bank division (courtesy of Wachovia) and their relatively thin capital ratio concerns me enough that I'd avoid the stock at present. US Bancorp is also very well managed and it's a Buffett holding.
However, I will say that I believe the dividend will be cut. Unless the economy recovers quickly (which I don't foresee), the bank won't earn enough to cover its dividend. I would rather that USB cut the dividend.