US Bancorp (NYSE:USB)

CAPS Rating: 4 out of 5

One of the largest bank holding companies in the country, U.S. Bancorp is the parent of U.S. Bank, a U.S. bank.

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Player Avatar FoolishMikee (22.86) Submitted: 3/15/2012 7:19:56 PM : Outperform Start Price: $28.66 USB Score: +13.44

As outlined in my blog post, I believe this is the best regional bank, and still believe so:
http://beta.fool.com/foolishmikee/2012/01/19/you-should-bank-usb/1023/

By listening to Chairman, President & CEO Richard Davis in a number of conferences and meetings, he repeats that the bank is conservative: “It’s pretty boring, it’s pretty steady and it’s pretty consistent and I hope to you that’s pretty good”, during the U.S. Bancorp at Goldman Sachs US Financial Services Conference (12/07/11). During the Citi Financial Services Conference (03/08/12), he said that “we’re a fairly simple company…we are larger than a few, we are less complicated than most.” However, don’t take his word for it. Look at the financials and see for yourself.

The recent “stress test” not only support but reaffirm my argument and belief in the stability of the bank. It has improved its Tier 1 Common Ratio from 5.1% in 2009 to 7.7% for 2012, giving it a ‘Well-Capitalized’ rating, thus signifying that its dividend is also stable. Other results of the “stress tests” show that the bank, in a worst case scenario, fairs up in the top six in terms of losses. It sticks to its business model of four main segments, deals for its clients and does not engage in any exotic securities that take longer than fifteen minutes to explain.

One of the biggest negatives though is that during the recession, where the company saw its share price slashed by over 50% from 2008 highs, there were no share buybacks.

It currently trades at a premium to book value at 1.90, however, it deserves to trade at this level as it can boost its dividend, has a high revenue growth in an industry that is known to be challenged, a strong balance sheet, as mentioned above, and is managed by a conservative team, especially with regard to its size.

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