U.S. Bancorp Comparative analysis

Assets

  • U.S. Bancorp has 2.6% of assets in cash; more than Wells Fargo (1%) and Citigroup (1.2%)
  • 60.9% of assets are loans compared to 50.6% (Wells Fargo) and 35% (Citigroup)
  • Less inherent risk for U.S. Bancorp because other asset classes for these banks include investment securities that can fluctuate

Liabilities

  • Deposits make up 80.1% of liabilities for U.S. Bancorp compared to 76.8% (Wells Fargo) and 35% (Citigroup)
  • Lower cost of equity for Wells Fargo and U.S. Bancorp because cost is interest paid on deposit accounts
  • Less debt taken out from other institutions and less restrictions on use of money

Equity

  • 11.8% of equity for U.S. Bancorp is from preferred stock compared to 11.5% (Wells Fargo) and 7.5% (Citigroup)
  • Common stock makes up 0.04% of equity for U.S. Bancorp compared to 4.7% (Wells Fargo) and 0.01% (Citigroup)
  • Retained earnings makes up 99.1% of equity for U.S. Bancorp compared to 93.7% (Wells Fargo) and 108.5% (Citigroup)
  • Citigroup accumulated other comprehensive loss that brought retained earnings below total equity

Income statement

  • U.S. Bancorp has 81.1% of interest income from loans (74.2% for Wells Fargo)
  • Next major contributor was investment securities while investment securities and trading assets were next two contributors for Wells Fargo
  • Interest expense was 49.9% from long-term debt for U.S. Bancorp (65.2% Wells Fargo)
  • Deposit interest is 36.2% of interest expense for U.S. Bancorp (24.2% Wells Fargo)
  • Noninterest income is spread evenly for U.S. Bancorp with management fees and processing services provided 14.5% and 17% of noninterest income. Wells Fargo earned 35% of noninterest income from trust and investment fees
  • Compensation and employee benefits are 54.7% of noninterest expense for U.S. Bancorp (61.4% Wells Fargo)

Strengths and weaknesses

  • Uses deposits efficiently, does not have many loans for sale (1.7% of assets)
  • Investment securities and loans make up 97.2% of interest income. Low expectations of credit loss and rising stock market are favorable for this position
  • Deposits make up 32.6% of interest expense. Revenue from loans offsets these costs
  • Major contributor to interest income was investment securities (16.1% of interest income) which is good but also risky
  • 17.5% of interest expense came from short term borrowing. Money must be paid back soon with cash or liquidated assets

ROA & ROce

  • ROA was 1.4% for U.S. Bancorp (1.3% Wells Fargo and 1% Citigroup, Industry Avg. 1%)
  • ROCE was 6.3% for U.S. Bancorp (4.9% Wells Fargo and 2.1% Citigroup)
  • U.S. Bancorp is using assets well and equity is invested in the right places to increase net income which will drive the company's value up
Created By
Levi Smith
Appreciate

Credits:

Created with images by winnifredxoxo - "balance scale"

Report Abuse

If you feel that this video content violates the Adobe Terms of Use, you may report this content by filling out this quick form.

To report a Copyright Violation, please follow Section 17 in the Terms of Use.