U.S. Bancorp (USB.US) is a U.S. bank holding company, ranked among the top 5 U.S. banks. The company's share price has fallen to the levels of the 'covid panic' of March 2020, despite sharply better-than-forecast Q1 financial results. However, the bank's relatively low capital ratios show that it may be more vulnerable to shocks from 'larger competitors. Yesterday, the bank's shares slid nearly 3.5% and today in pre-opening trade they are continuing their discount:
- The bank's shares were unable to make up for declines from the first wave of the crisis, caused by the SVB. Credit rating agency Moody's downgraded 11 U.S. banks on Monday, including U.S. Bancorp as the only one outside of regional banks;
- In Q1 2023, the bank's revenue grew more than 28% year-on-year, and earnings per share rose 17% year-on-year. Net interest income rose 46%, and y/y loan growth was nearly 23%;
- At the same time, the bank increased loan loss provisions to $427 million compared to $112 million in Q1 2022. The CET1 ratio, however, increased by less than 0.1% k/k;
- The number of shares sold short (short interest) recently rose to levels last seen in Q3 2022, showing a large increase in speculators betting on a deeper discount and US Bancorp's problems.ย
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Create account Try a demo Download mobile app Download mobile appAt the end of 2022, the bank ranked 391st out of 393 U.S. banks with more than $1 billion in assets, in terms of capital (CET1) ratios. CET1 (capital-to-asset ratio) is an indicator that can express a bank's ability to withstand various types of crises. In Q1 2023, CET1 increased from 8.4%, to 8.5%. At the same time, 4 larger banks maintained CET1 at double-digit levels. Source: S&P IQ Pro, US Bancorp, Holdco Asset Management
US Bancorp's capital position could suffer in the event of a recession, and further Fed rate hikes could put additional pressure on the bank. Indicators measuring resilience to bank stress at the end of last year showed that US Bancorp is definitely lagging behind the largest banks. In Q4 2022, almost all of US Bancorp's shares were sold by Warren Buffett. Source: S&P Global, Holdco Asset Management
The number of USBancorp shares short-sold has risen on the wave of recent declines. Source: Bloombergย
US Bancorp (USB.US) shares, W1 interval. Bulls on USB with the banking crisis are faring less well than the largest in the US, JP Morgan (JPM.US, yellow chart) and other large banks. The next important level according to Fibonacci may be the level near $30, where we see the 61.8 Fibonacci retracement of the 2008 upward wave. Source: xStation5
