U.S. Bancorp Evaluation

Income statement

  • Multiple income streams: interest and non-interest revenues
  • Interest income has increased to $12.4B and interest expense has fallen to $1.4B
  • Provision for credit losses has also been decreasing because of a slowly growing economy
  • Non-interest income has increased to $9.1B, non-interest expense has exceeded this
  • 70% of non-interest expense is attributed to compensation, employee benefits and net occupancy and equipment
  • Bottom Line: net income has been increasing steadily to the current $5.9B

Statement of cash flows

  • Investing activities shows most cash flows out to issued loans and investments into securities
  • Financing activities show that they are seeing approximately $3B increases in deposits each year
  • U.S. Bancorp has been consistently buying back common stock
  • Acquired $1.4B in assets and $4.8B in liabilities in 2014

Balance sheet

  • $421.8B in assets, $73B of these would be considered current assets
  • This allows them to be able to pay down almost a quarter of their deposits on short notice
  • $30B in "other assets" which includes assets tied to their wealth management, merchant processing, and other services provided by U.S. Bancorp
  • Minimal common stock to limit ownership dilution, but over $5.5B in preferred stock outstanding
  • Retained earnings has continued to rise faster than the cost of common stock in treasurey over the last 3 years

Final thoughts

  • Overall, U.S. Bancorp looks to have a management and growth strategy that is working
  • Recent acquisitions to expand its market share in Chicago and continued investment into subsidiaries shows confidence in the business
  • The real test will be when the economy slows and individuals and companies are once again under pressure to repay debts
Created By
Robert Smith
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Credits:

Created with images by UnTapping The World - "Bank Vaults under Hotels in Toronto, Ontario"

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