With 2012 squarely in the rearview mirror, it's a perfect time to see how some favorite financial stocks fared throughout the year. While past performance does not indicate future results, looking at recent successes and failures can be a good place to start as you build your investment thesis.
Today, I'm going to take a look at US Bancorp (USB +1.01%), a favorite regional bank that is the eighth largest bank in the country. The Minnesota-based bank currently operates in 25 states with over 3,000 branches and 5,000 ATMs. Here is a quick look at some important stats for the bank:
|
2012 Stock Return |
15.7% |
|
Market Cap |
$61.1B |
|
Total Assets |
$352.3B |
|
Price-to-Earnings Ratio |
11.6 |
|
Price-to-Book Value |
1.83 |
|
Dividend Yield |
2.4% |
|
Banks of similar size |
PNC Financial Services Group (PNC +0.36%) |
Source: Yahoo! Finance; Total assets as of quarter ending September 2012.
The year in review
US Bank started the year off strongly by passing the Federal Reserve stress test used to test 19 banks' capital strength against various economic forecasts to simulate how they would perform should the country face another financial crisis. US Bank was among the best performers of those tested, checking in with the fifth-highest capital ratio. Its strong performance prompted the bank to raise its dividend by 56% and authorize a brand-new 100 million share repurchase program.
With interest rates remaining low, many banks are boosting revenues by increasing their mortgage lending. US Bank was no exception during 2012, doubling its mortgage revenue during the first and second quarters as compared to 2011. This trend continued into the third quarter, which saw US Bank post record profits, helped greatly by over $500 million in revenue from mortgage lending.
During the summer, US Bank settled with customers to the tune of $55 million, relating to the overzealous application of overdraft fees for its debit card customers. But US Bank wasn't alone in this -- it was the 14th bank to settle similar charges, and its settlement amount dwarfed the $110 million paid by PNC Financial or the $203 million awarded to Wells Fargo (WFC +0.66%) customers in California.
What it all means
With its own CEO readily admitting that he runs a "pretty boring bank," the lack of major news during the year reiterates why US Bancorp is a favorite among investors, including Warren Buffett and Charlie Munger. I personally think it's one of the best options in banking out there, but you don't have to take my word for it.
