What U.S. Bancorp actually does
U.S. Bancorp is the parent of U.S. Bank, one of the largest banks in the country. It serves consumers and businesses with checking, loans, credit cards and wealth management, and it has a large payments business that processes card and merchant transactions.
How the business makes money
It earns net interest income from the gap between loan interest and deposit costs, plus fees from payments, cards, trust and wealth services. The payments businesses add a source of fees that is less sensitive to rates than lending.
The dividend story
U.S. Bancorp pays a quarterly dividend and has raised it each year for more than a decade. It is among the higher-yielding large banks. As with all banks, regulators’ stress tests and capital needs affect how much can be paid out.
What to keep an eye on
- Credit quality. Unpaid loans rise in recessions.
- Commercial property. Office loans are a worry for many banks.
- Interest rates. They change margins and bond values.
- Competition. Large banks and fintech firms.
Quick take
U.S. Bancorp is a well-regarded bank with a payments edge and a steady dividend, subject to the usual cyclical risks.