U.S. Bancorp Marking Time In A Banking Sector That's Still Out Of Favor

Summary

• U.S. Bancorp shares have been among the weakest performers in its peer group over the past six months, despite a growth outlook that is no worse (and arguably better).
• The Fed's proposals for new capital rules have come under fire and the final outcome remains uncertain, but USB management has moved quickly to boost its capital ratios.
• Higher deposit costs and weaker loan demand are weighing on revenue growth potential, but synergies from the Union Bank (including cross-selling and cost savings) can help drive above-average growth.
• The market seems to be pricing in less than 1% core earnings growth (relative to pre-pandemic levels) from U.S. Bancorp, and that just seems too low.

Sundry Photography

Writing about U.S. Bancorp (NYSE:USB) just ahead of the bank sector meltdown precipitated by the failure of Silicon Valley Bank, I said that I thought the bank was unvalued on what looked like unusual operating income

Analyst’s Disclosure:I/we have a beneficial long position in the shares of TFC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.