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


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

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