Heard about U.S. Bancorp (NYSE:USB) lately? Probably not, and that’s a good thing. U.S. Bancorp (NYSE:USB) is the big bank with small drama: quietly — but profitably — going about its business year in and year out, and rewarding the patient, insightful investor who’s looking for something a bit off the beaten path.
As a quick way of introduction to U.S. Bancorp, here are seven of my favorite things about this often overlooked bank.
1. U.S. Bancorp is a bigger bank than you think
Again, it’s not bank that’s in the news everyday, but for its size, it easily could be. With more than $353 billion in total assets, it’s the seventh largest bank in the country, just ahead of The Bank of New York Mellon Corporation (NYSE:BK), another low-drama bank that rewards the patient, long-term investor.
In and of itself, being big means nothing. But a big bank that’s well-managed and conservatively run — like U.S. Bancorp — means it has enough resources and reach to generate profit, but likely won’t get itself, or its investors, into trouble.
2. Great 2012 share-price performance
We all know that investor darling Bank of America Corp (NYSE:BAC) returned better than 100% for investors in 2012, but less well-known is the fact that shares in U.S. Bancorp gained a big 15.81% in the same time period.
3. Great return on assets
ROA measures how well a company performs relative to its total assets and is broadly a measure of management effectiveness.
U.S. Bancorp’s ROA is a big 1.58% trailing 12 months. JPMorgan Chase & Co. (NYSE:JPM)‘s ROA is only 0.92% TTM — this from a bank widely recognized to be very well run.
4. Great return on equity
ROE is another measurement of management effectiveness, and looks at the amount of net income a company makes with its shareholder’s money.
U.S. Bancorp’s ROE is a big 14.59% TTM, significantly better than JPMorgan’s 10.98%, and slightly better even than the normally indomitable Wells Fargo & Co (NYSE:WFC), which has an ROE of 12.89%.
5. Solid fourth-quarter earnings
In the fourth quarter of 2012, U.S. Bancorp grew its revenue by 5.1% year over year, and its net income by 5.2% year over year. Not staggering, but solid, and easily beating B of A’s -20.7% and -63.2% for the same respective categories.
6. U.S. Bancorp pays a solid dividend
2.3% isn’t the biggest dividend in the world, but it’s healthy. Wells Fargo & Co (NYSE:WFC) only pays 2.7%, The Bank of New York Mellon Corporation (NYSE:BK) only pays 1.9%, and investor-favorite B of A only pays 0.3%.
7. Great stress-test performance
U.S. Bancorp had a Tier 1 common ratio of 9% for 2013 and a stressed minimum of 8.3%, arguably better than JPMorgan Chase & Co. (NYSE:JPM)’s 10.4% and 6.3% (respective) performance. As a result, U.S. Bancorp will be raising its dividend by 18% and will be buying back $2.25 billion in shares.
Foolish bottom line
In banking, it pays to be healthy and strong. U.S. Bancorp is practically the poster child for this. It’s a low-drama, steady performer — the perfect bank stock for Foolish investors.
Looking for in-depth analysis on U.S. Bancorp? If so, then look no further than this Motley Fool premium report — expertly researched and written by senior banking analyst and U.S. Bancorp specialist Matt Koppenheffer.
The article 7 Things You Need to Know About U.S. Bancorp originally appeared on Fool.com.
Fool contributor John Grgurich owns shares of JPMorgan Chase. Follow John’s dispatches from the bleeding heart of capitalism on Twitter @TMFGrgurich. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
