U.S. Bancorp's Steady Excellence Worth A Premium
Stephen Simpson, CFA
Stephen Simpson, CFA
Thu, Dec. 1, 7:29 AM
- All four are valuation calls after major runs higher since the election, and analyst Jack Micenko says optimism about higher rates, boosted economic growth, reduced regulation taxes is priced in.
- Regions Financial (NYSE:RF) is up 24% since Nov. 9, Zions (NASDAQ:ZION) 23%, Wells Fargo (NYSE:WFC) 16%, and U.S. Bancorp (NYSE:USB) 10%.
- Source: TheFly
Wed, Nov. 30, 11:45 AM
- While the pick of ex-Goldmanite and Hollywood player Steven Mnuchin for Treasury Secretary can hardly be called "draining the swamp," Pantheon's Ian Shepherdson says it should make Wall Street happy.
- In his first public comments after being selected, Mnuchin promised to "kill" swaths of Dodd-Frank.
- Also making Wall Street (and other bankers/insurers/brokers) happy today is another big move higher in interest rates, with the 10-year Treasury yield up 10 basis points to 2.394%.
- The S&P 500 is just marginally higher, but the KBE is ahead 1.9%, and the KRE 2%. XLF +1.35%
- Bank of America (BAC +3.4%), Citigroup (C +1.9%), JPMorgan (JPM +1.5%), Wells Fargo (WFC +1.8%), Morgan Stanley (MS +2.1%), Goldman Sachs (GS +3.9%), U.S. Bancorp (USB +1%), PNC Financial (PNC +1.4%), KeyCorp (KEY +2.2%), Fifth Third (FITB +2.5%), Regions Financial (RF +2.9%), BB&T (BBT +2.4%), SunTrust (STI +2%)
- MetLife (MET +2%), AIG (AIG +0.8%), Lincoln National (LNC +1.7%), Prudential (PRU +1.1%), Hartford (HIG +1.3%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IYG, FNCL, SEF, FXO, RYF, FINU, RWW, XLFS, FINZ, JHMF, FAZZ, FNCF
Thu, Nov. 17, 12:18 PM
- In no surprise, the list is dominated by the ripping financial sector:
- Allstate (ALL +1.4%)
- Ameriprise (AMP +0.2%)
- TD Ameritrade (AMTD +1.6%)
- BB&T (BBT +2.1%)
- Citigroup (C +2.4%)
- Citizens Financial (CFG +2%)
- Comerica (CMA +1.5%)
- CNA Financial (CNA +0.6%)
- Loews Corp. (L +0.9%)
- Marsh & McLennan (MMC +1.9%)
- PNC Financial (PNC +2.6%)
- Royal Bank of Canada (RY +0.7%)
- U.S. Bancorp (USB +1.9%)
- Aetna (AET +1.5%)
- Best Buy (BBY +10.4%)
- CBS (CBS +0.6%)
- Celanese (CE +0.1%)
- Comcast (CMCSA +1.5%)
- Dell Technologies (DVMT +1.1%)
- The Gap (GPS +0.4%)
- Humana (HUM +1.4%)
- KLA-Tencor (KLAC +2.7%)
- Liberty Media (LMCA +1.6%)
- Lam Research (LRCX +1.9%)
- Micron (MU +5.3%)
- Nvidia (NVDA +2.7%)
- Rockwell (ROK -0.5%)
- Teck Resources (TCK +0.5%)
- Texas Instruments (TXN +1.1%)
- New lows:
- Novo Nordisk (NVO +0.3%)
Wed, Nov. 16, 7:09 AM
- Fans of USB shouldn't take it personally. Bank downgrades are flying across the wires this morning as the big rally in the names - capped by what might or might not be a blow-off since the election - takes share prices north of bullish price targets.
- Today, Piper's Kevin Barker cuts to Neutral, with the stock closing yesterday at $48.70 vs. his price target of $48.
- Previously: U.S. Bancorp downgraded at Morgan Stanley (Nov. 14)
Mon, Nov. 14, 7:16 AM
- Amid a big bull run for the financial sector, analyst Betsy Graseck finds cause to downgrade U.S. Bancorp (NYSE:USB) to Underweight from Equal Weight.
- Though the election results are positive for all financials thanks to higher growth and rates, and lower taxes and regulation, says Graseck, USB's fancy valuation combined with slower loan growth, deteriorating credit, lower fee growth, and declining NIM make for the downgrade.
Wed, Nov. 9, 4:19 AM
- Donald Trump's victory throws into question the core assumption the Fed will raise interest rates soon and follow with further gradual hikes over coming years.
- Banks are struggling on the news. Fed Funds futures are now pricing in less than a 50% chance of a December move and the ECB is likely to interpret the uncertainty with stimulus and lower rates for longer.
- Premarket movement: GS -8.3%, WFC -3.5%, C -3.2%, BAC -2.4%, CS -2.3% JPM -2.2%, LYG -1.8%, HSBC -1.7%, USB -1.4%, BCS -1.5%, ING -0.6%, MS, DB, RBS, UBS
Thu, Oct. 27, 10:51 AM
- Rates are up across the globe again today, with the 10-year U.S. Treasury yield looking like it's ready for another assault on 2% - up 7 basis points on the session to 1.865%.
- Alongside a sharp move lower in REITs, the utility sector (XLU -0.9%) is facing a rough go of it.
- In the green though is the banking sector - (KBE +0.2%), (KRE +0.4%) - which has been awaiting a real move higher in rates for years. A big move on the long end while short rates hold (for now) is an added boost as it widens the yield curve.
- Bank of America (BAC +0.4%), Citigroup (C +0.4%), JPMorgan (JPM +0.4%), Wells Fargo (WFC +0.5%), PNC Financial (PNC +0.5%), Fifth Third (FITB +0.9%), U.S. Bancorp (USB +1.2%), BB& T(BBT +0.7%)
- Other high-yield beneficiaries include: MetLife (MET +0.9%), Lincoln Financial (LNC +1.3%), Schwab (SCHW +0.4%), Voya Financial (VOYA +0.9%).
- ETFs: XLF, FAS, FAZ, XLU, UTG, IDU, VPU, UYG, VFH, GUT, BUI, IYF, BTO, FUTY, IYG, FNCL, SEF, RYU, FXO, UPW, RYF, FXU, FINU, RWW, SDP, XLFS, FINZ, FUGAX, JHMF, FAZZ, FNCF, JHMU, UTLF
Wed, Oct. 19, 6:48 AM
Tue, Oct. 18, 5:30 PM
Wed, Oct. 5, 3:27 PM
- The continued rise in interest rates - the 10-year yield today breaching 1.70% - is giving additional fuel to the financial sector rally.
- The XLF's 1.7% advance today puts it in a tie with the energy sector's XLE. The S&P 500 is up just 0.45%.
- Banks, insurers, and brokers are all sharply ahead as investors envision the return of spread income. Even Wells Fargo (WFC +2.8%) is in the green - it's in fact atop the TBTF movers.
- Other gainers: Goldman Sachs (GS +2.4%), Morgan Stanley (MS +1.7%), U.S. Bancorp (USB +2.1%), SunTrust (STI +2.5%), PNC Financial (PNC +1.3%), E*Trade (ETFC +2.1%), Voya Financial (VOYA +4.7%), Lincoln National (LNC +2.4%).
Thu, Sep. 22, 3:31 PM
- Consumer complaint rates are likely to be an important metric for analyzing bank stocks going forward, and Piper's Kevin Barker and team combed through the CFPB database to see if any flags might be raised.
- What they found was that the biggest banks had the largest share of complaints (no surprise), but those with the highest rate of complaints per $1B of deposits were Fifth Third (NASDAQ:FITB), Citizens Financial (NYSE:CFG), BB&T (NYSE:BBT), and U.S. Bancorp (NYSE:USB).
- Running another screen, Barker found Citizens Financial, Wells Fargo, and Huntington Bancshares (NASDAQ:HBAN) were the lenders which most emphasized "cross-sell" or "increasing wallet share" in management comments over the past year.
Mon, Sep. 19, 9:28 AM
Thu, Sep. 15, 9:30 AM
- The lender only holds these events once every three years, and CEO Richard Davis kicked things off about an hour ago.
- Webcast and presentation slides
- The theme in this year's presentation is lowered expectations. Three years ago, the bank's ROE target was 16-19%, but it's achieved only 14.8%. The new ROE target is 13.5%-16.5%. Three years ago, the bank's ROA target was 1.6-1.9%, but it's achieved just 1.54%. The new ROA target is 1.35-1.65%.
- The targeted efficiency ratio three years ago was the low 50s, and 53.1% has been achieved since. That target remains the same.
- Embedded in these new expectations are a combined four 25 basis point rate hikes in 2017 and 2018, a steepening of the yield curve beginning in 2018, and GDP growth of 2-3% by 2018.
- USB -1.55%
Tue, Sep. 13, 2:09 AM
- Despite the penalties imposed on Wells Fargo (NYSE:WFC), there is probably no broader problem in the U.S. banking industry over abusive sales practices, according to the head of the Consumer Financial Protection Bureau.
- Regulators fined the company a total of $185M last Thursday, while Moody's warned the episode would negatively affect the bank's debt. Wells paid another $5M to customers for creating more than 2M fake accounts.
- Related tickers: JPM, C, BAC, MS, USB, COF, FITB, TD, PNC, STI
Thu, Sep. 1, 4:09 AM
- Despite an increasing regulatory burden and lackluster share performance, the U.S. banking industry just logged its most profitable quarter ever, according to figures from SNL Financial and S&P Global Market Intelligence.
- Earnings for the three-month period totaled $43.6B, compared to the $43.01B in Q2 of 2015, a 1.4% beat.
- On a sequential basis, the April-to-June period topped the previous quarter by $4.56B, an 11.7% rise.
- Related tickers: JPM, C, BAC, WFC, GS, MS, USB, BK, STT, PNC, COF
Fri, Jul. 22, 2:52 PM
- "Both the knuckles are white, but we’re hanging in there," said U.S. Bancorp (USB +0.6%) CEO Richard Davis on his company's earnings call last week.
- Net interest margins for banks got a brief boost early this year after the Fed hiked rates in December, but there's been no hikes since, and margins are back on the decline.
- "This is really difficult for banks," said Huntington Bancshares (HBAN +1.1%) CEO Steve Steinour, whose bank last year stopped assuming any rate increases when making financial projections.
- "There are ways to compensate," said Citizens Financial (CFG +0.8%) CEO Bruce Van Saun, whose company topped expectations, and announced new cost-cutting initiatives.