Thursday, January 24, 2013

US Bancorp Earnings Review: Peaking Performance?

US Bancorp reported QE December 2012 financial results on January 16

US Bancorp earnings continue at excellent performance levels as CEO Richard Davis posts quarter after quarter of maximized profits in a difficult macroeconomic environment. In fact, 2012 was a record year. This quarter, Davis was able to maintain earnings per share, net revenues, operating income, net income, operating margin, net margin, and return on assets near last quarter's record levels. US Bancorp remains on top as the very best larger USA bank.

Diminishing returns is the uphill climb for US Bancorp. CEO Davis, through stellar performance, may have reached the summit of efficient profits. However, CEO Davis has proven me wrong in previous quarters so do not count US Bancorp out yet. There is only so high financial institution performance can reach without expansion or acquisitions. Risk management has proven excellent. Financial position and capital are very strong.

At QE 12-31-12 I have rated US Bancorp an "A" on a scale of A+ to G-. This is no change in the rating from the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position strength is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.

U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis said, “2012 was a great year for our Company, as we achieved record annual earnings of $5.6 billion, or $2.84 per diluted common share. Further, our 2012 full year results included record total net revenue of $20.3 billion, representing growth in net interest income and fee revenues, as well as controlled expenses. Additionally, we achieved positive operating leverage for both the year-over-year quarter and full year. Our returns on average assets and average common equity for 2012 of 1.65 percent and 16.2 percent, as well as our efficiency ratio of 51.5 percent, surpassed our performance in 2011 and remain industry leading.


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