With its fourth-quarter 2008 results now in, US Bancorp
That's an obvious statement, but it's easy to forget when the KBW Bank Index has already lost more than 40% this year, thanks largely to declines exceeding 50% in two of its largest components: Citigroup
A few shiny numbers
In that context, it's instructive to look at some numbers. In 2008 -- which will be remembered as one of the worst years ever for banks -- US Bancorp managed to earn almost $3 billion. The fourth quarter was profitable, to the tune of $330 million. Yes, loan loss and delinquency ratios increased during the quarter, but in many cases, the rate of increase has slowed.
Financially, the bank looks like to be on a sure footing, with a tangible common equity-to-assets ratio of 4.5% -- and for a reference point, the same ratio for JPMorgan Chase
Finally, as I have written in the past, the most conservative, best-capitalized lenders will take business from competitors in a financial crisis. At US Bancorp, organic average loan growth was 12.7% year-on-year in the fourth quarter, with average deposit growth up 9.6%. Who said banks aren't lending?
The bottom line for value hunters
US Bancorp must be a "buy" in this sector, right? Well, at 1.33 times book value per share and nearly three times tangible book value per share, shares don't look particularly cheap.
If you're looking at banks with an opportunistic eye (not a bad idea), I think there may be better bargains among less prominent, regional names, including Regions Financial
Prudent by nature, Motley Fool Inside Value gave banks a wide berth in 2008. However, the bear market could spell opportunity in 2009 and beyond. Lower equity prices mean better future returns for those who have the conviction to invest in straightforward, outstanding businesses now. The team at Inside Value can help you find those businesses. To find out their latest picks now, sign up for a 30-day free trial.
Fool contributor Alex Dumortier, CFA, has no beneficial interest in any of the companies mentioned in this article. US Bancorp and JPMorgan Chase are Motley Fool Income Investor recommendations. Bank of America is a former Motley Fool Income Investor recommendation. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.