US Bancorp Disappoints: Fool by Numbers

On July 17, US Bancorp (NYSE: USB  ) released second-quarter earnings for the period ended June 30.

  • The flat yield curve and US Bancorp's commitment to credit quality squeezed net interest margins by 24 basis points year over year, and 17 basis points sequentially.

  • Non-interest expenses increased 7.2% year over year, compared to flat revenue growth. The company spent money ramping up growth initiatives, resulting in some front-loaded expenses.

  • Despite its mediocre results, the company continues to perform well, with returns on assets and equity of 2.1% and 23%, respectively.

  • In Motley Fool CAPS, the bank currently sports a so-so three-star rating. CAPS players must feel pretty average about the space, since fellow banks such as Wells Fargo (NYSE: WFC  ) and Bank of America (NYSE: BAC  ) also rate three stars.

(Figures in millions, except per-share data)

Income Statement Highlights

Q2 2007

Q2 2006

Change

Total Revenue

$3,505

$3,452

1.5%

Net Interest Income

$1,650

$1,697

(2.8%)

Net Profit

$1,156

$1,201

(3.7%)

EPS

$0.65

$0.66

(1.5%)

Get back to basics with the income statement.

Margin Checkup

Q2 2007

Q2 2006

Change*

Net Interest Margin

3.4%

3.7%

(0.2%)

Efficiency Ratio**

44.1%

41.8%

2.3%

Nonperforming Assets / Assets

0.4%

0.4%

0%

Return on Average Assets

2.1%

2.3%

(0.2%)

Return on Average Equity

23%

24.3%

(1.3%)

*Expressed in percentage points.
** Tangible efficiency ratio.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q2 2007

Q2 2006

Change

Cash & Investments

 $46,048

 $45,696

0.8%

Loans

 $148,232

 $141,932

4.4%

Liabilities

Q2 2007

Q2 2006

Change

Deposits

 $119,702

$122,719

(2.5%)

Total Liabilities

 $202,200

$192,990

4.8%

The balance sheet reflects the company's health.

Bank on further Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

US Bancorp and Bank of America areMotley Fool Income Investor recommendations. Dividend-loving investors can try the service risk-free for 30 days.

Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates your comments, concerns, and complaints. The Motley Fool's disclosure policy won't nickel-and-dime you.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 532101, ~/Articles/ArticleHandler.aspx, 8/28/2014 5:30:13 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement