10 Best Bank Stocks To Invest In For the Long Term

7. U.S. Bancorp (NYSE:USB)

Number of Hedge Fund Investors In Q3 2024: 46

U.S. Bancorp (NYSE:USB) is an American regional banking behemoth. As of Q3, it had a whopping $686 billion in assets and roughly 70,000 total employees. When compared to some of its peers, U.S. Bancorp (NYSE:USB)’s shares have been lackluster in 2024 as they have gained a modest 18%. The share performance is due to the fact that the bank has struggled to balance between its interest income growth and the corresponding rise in interest expense. During the first nine months of 2024, U.S. Bancorp (NYSE:USB)’s net interest income dropped by 8.6% as despite higher interest income its interest expenses out-shot the interest income growth. Consequently, the impact of lower interest rates on the bank’s interest expense is a key factor driving its hypothesis. Additionally, U.S. Bancorp (NYSE:USB) benefits from the fact that discretionary services such as card payments and mortgages account for 40% of its $20.4 billion in net revenue as of the first nine months of 2024. The high percentage exposes it to sectors that typically do well in a high consumer spending and low interest rate environment.

Meridian Funds mentioned U.S. Bancorp (NYSE:USB) in its Q2 2024 investor letter. Here is what the fund said:

“U.S. Bancorp (NYSE:USB) provides banking, payments, investment, trust, and mortgage services to consumers, businesses, and institutions. We own the company because of its historically strong profitability and consistent dividend payouts. The stock underperformed in the quarter due to a downward revision in net interest income guidance, driven by the ongoing shift from non-interest-bearing deposits to higher-cost interest-bearing accounts. To help mitigate the lower net interest income, management is focused on expense control initiatives. We are holding our position in U.S. Bancorp as we monitor the trajectory of net interest income and the success of these expense reductions.”