Headquartered in Minneapolis, Minnesota, U.S. Bancorp (popularly known as US Bank by customers) operates as a bank holding company that offers diversified financial services to individuals and institutions through various segments such as Consumer and Business Banking; Corporate and Commercial Banking; Payment Services; Wealth Management and Investment Services; as well as Treasury and Corporate Support. The bank traces its roots to the approval of the National Charter No.24 of 1863.
Considered to be systematically important, US Bancorp has built a reputation as one of the most well-run banks in the US. And it has achieved this by largely sticking to the basics. US Bank is primarily a consumer bank that generates revenues the traditional way – take deposits, loan money, pay minimal interests, and pocket the difference. This ‘old-fashioned’ model has allowed US Bancorp to build a strong asset base that is backed by high-quality lending. The evidence of good governance was particularly witnessed during the 2008 Great Recession when US Bancorp was among a very, very limited group of banks that fared well during that period. Despite the bank’s strong traditional background, US Bancorp has also sought to embrace organic growth by deepening the integration of its niche payments service as well as implementing an innovative digital strategy to keep up with the demands of modern customers. The bank has also dipped its toes in the M&A pool, acquiring companies that complement its underlying business strategy. Some of the major buys over the years include Piper Jaffray, Vail Banks, Syncada, and Union Bank.
US Bancorp is listed on the NYSE where its stock trades under the ticker symbol USB. USB is categorized in the Financial Services sector, under the Banks-Regional industry.
USB Stock History
US Bancorp has implemented 5 stock splits in its history, but none have happened since the turn of the millennium. In the early 2000s, the US Bancorp share price steadily climbed from below $20 to print a peak of just below $40 by late 2008. The Great Recession-inspired stock market selloff then triggered a fall to below $10 by February 2009.
The US Bancorp stock then embarked on a long-term rally that saw it print a peak above $60 by late 2019. The 2020 Great Lockdown then inspired a sharp fall to lows of circa $30 by May 2020, but the succeeding stock market boom saw the USB stock print its all-time high above $63 by January 2022. The stock currently trades above $45 as of June 2022.
When it comes to the US Bancorp dividend per share, US Bancorp’s strong business fundamentals have seen the bank sustain generous dividend payouts over the years. The bank has, in recent years, averaged a lucrative annual dividend of 4%, making it one of the best dividend stocks on Wall Street.
How to Trade U.S. Bancorp Stock
Here are some of the factors to consider when trading US Bancorp stock:
- Monetary Policy
Banking stocks are very sensitive to prevailing monetary policy, especially interest rates. Because US Bancorp has limited exposure to the volatile (but sometimes cushioning) investment banking sector, it is particularly more vulnerable to interest rate changes. The bank primarily depends on interest rate income for the bulk of its bottom line. As an illustration, USB stock suffered as interest rate cuts were applied during the COVID-19 pandemic period, but it remained buoyant as rate hikes were implemented post-Lockdown.
Commercial banking is a very competitive space. As a regional bank, US Bancorp faces a two-pronged threat from large banks as well as emerging challenger banks. Large banks benefit from solid reputations and their ability to offer comprehensive banking solutions to customers, whereas challenger banks are nimbler and are capable of offering localised services as well as introducing differentiated products quickly with as minimal costs as possible. Overall, competition is based on reputation, range of products, cost of services, customer service, and convenience, as well as lending limits.
- Legislative Policies
As a major systemic bank, US Bancorp is subject to close regulatory scrutiny and oversight. Since the 2008 Great Recession, there have been major legislative policies that have specifically targeted the financial sector. Some of the major legislative areas include tax regulation, anti-money laundering policies, know-your-customer guidelines, sustainable finance, governance, and conduct, as well as financial technologies. Major changes in legislative policies can trigger significant price changes in the stock price of US Bancorp.
- Periodic Earnings Reports
The US Bancorp fiscal year follows the calendar, running from January to December. The bank releases quarterly and annual reports that serve as an update on its business health and performance in the market. As an important bank, investors track metrics such as earnings per share, gross revenue, interest income, and future guidance. Strong numbers can inspire higher USB stock prices, whereas weak figures can trigger lower prices.
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