Lisa A. Welch is senior portfolio manager, Manulife Asset Management, and portfolio manager of the $1.8 billion John Hancock Regional Bank Fund (FRBAX), Boston. JHFunds.com
Today’s Stock of the Week is a bank that’s just the right size—big enough to invest in improvements and small enough that it’s not subject to too much regulatory scrutiny.
US Bancorp (USB) is in a sweet spot in terms of its size—big enough to invest in the latest technology and compete with huge money-center banks for business but not big enough to be subject to the largest banks’ extra regulatory scrutiny and systemic requirements.
Based in Minneapolis and focusing its 3,100-plus branches in the Midwest and West, the bank has been in business since 1863. It has a significant payments business in issuing credit cards for other banks, and it is the largest payment processor for the federal government. It is the fifth-biggest US bank, based on assets of $454 billion. Like all banks, US Bancorp is likely to benefit as interest rates rise because it will be able to raise what it charges for loans faster and to a greater extent than it will have to increase what it pays for deposits.
Revenue of $20.3 billion in 2015 should be reported to have grown to $21.2 billion in 2016 and should reach $21.9 billion in 2017. The dividend of $1.12/share/yr. recently yielded 2.19% and appears secure.
Earnings per share: 2017 est./$3.44… 2016 est./$3.23… 2015/$3.18.
Lisa Welch is senior portfolio manager, Manulife Asset Management, and portfolio manager of the $1.4 billion John Hancock Regional Bank Fund (FRBAX), Boston. JHFunds.com