Business

Small bank giant: US Bancorp outperforms all Wall St. titans

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Forget JPMorgan Chase’s Jamie Dimon. Wall Street has a new golden boy: US Bancorp’s Richard Davis.

“He’s become very , very well-respected on Wall Street,” said bank analyst Scott Siefers of Sandler O’Neill.

“A lot of regular Americans know who Jamie Dimon is, but unless you look at regional banks, the public at large probably doesn’t know Richard Davis. But they should,” said Siefers.

At a harrowing time for financial firms, when most banks find themselves battered and bloodied due to a raft of new regulatory changes under Dodd-Frank and an economy on the brink of a second recession, Davis’ bank is separating itself from the pack.

Indeed, net income in the second quarter for the Minneapolis-based bank was up 57 percent to $1.2 billion, compared to $766 million in the same period a year ago.

And so far the bank, which is the fifth largest in the nation, is No. 1 in terms of performance, or return on equity — one measure of performance.

US Bancorp’s ROE over the past five years is 17.08 percent — more than double the average bank’s 7.32 percent. By comparison, Dimon’s JPMorgan has seen an ROE of 8.13 percent during the same period, and John Stumpf’s Wells Fargo, 13.07.

Much of the success of the bank’s performance is a result of the fact that Davis, 53, who took the helm of the firm in 2006, avoided the pitfalls of his peers by shunning the underwriting of toxic subprime mortgages.

In the wake of the credit collapse, Davis has pushed to ramp up US Bancorp’s assets and market share while sidestepping the merger hangovers that Brian Moynihan inherited when he took over Bank of America 18 months ago.

“They’ve been very prudent about making acquisitions,” said Siefers.

Currently, US Bancorp has about 3,086 branches in about 25 states largely located in the Midwest and West Coast.

By comparison, Bank of America operates in all 50 states and has more than 6,000 branches.

US Bancorp has $321 billion in assets and a market share of about $44 billion, which is larger than investment bank Morgan Stanley, with a $30 billion.

Davis’s bank was one of the first to return the $6.6 billion that financial firms accepted from Uncle Sam during the heart of the financial crisis.

Back then, Davis drew the ire of Washington by referring to the government’s rescue efforts as a “lousy program” that tarnished well-run banks, which avoided dicey loans.

Since then it seems that Davis has gotten back into Washington’s good graces — largely due to his bank’s performance.

As recently as last week, Davis was one of only a handful of captains of industry enlisted to go to Washington to help noodle ways of breathing fresh life into the moribund economy.

A 30-year banking veteran, Davis’s career started out humbly enough wit him taking a job as a a bank teller in California in order to pay his his way through college at California State University.

Bank on him

Richard Davis, CEO of US Bancorp, is highly regarded by his Wall St. peers.

Wells Fargo

Ret. on equity 5-yr. 13%

Share price 1-yr. -3%

Citigroup

Ret. on equity 5-yr. 0.1%

Share price 1-yr. -29%

Bank of America

Ret. on equity 5-yr. 6.3%

Share price 1-yr. -46%

JPMorgan Chase

Ret. on equity 5-yr. 8.1%

Share price 1-y -7.3%

US Bancorp

Ret. on equity 5-yr. 17%

Share price 1-yr. 4%