10 Best Local Bank Stocks To Invest In Now

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

Number of Hedge Fund Holders In Q2 2024: 43

U.S. Bancorp (NYSE:USB) is one of the biggest regional banks in America as evidenced by its sizeable employee count of 70,000 and total assets of a whopping $663 billion. Both of these provide the bank with all the tools that it needs to weather most economic storms, a fact that’s evident through the stock’s 24% gain over the past twelve months. Additionally, in a US banking industry that’s looking forward to a slowdown in interest income in the future, U.S. Bancorp (NYSE:USB) appears to have positioned itself well through its fee generating business. As of H11 2024, $5.5 billion of the firm’s $13.5 billion in net revenue was from fees, payments, and other areas which provide a good source of diversification to U.S. Bancorp (NYSE:USB)’s income statement. At the same time, this also leaves it vulnerable to economic downturns, especially since roughly $2.4 billion of the $5.5 billion non interest income is from discretionary spending sources such as merchant fees and card revenue. U.S. Bancorp (NYSE:USB) is also a market leader in several American states when it comes to deposit shares, leading to a well capitalized balance sheet that has also led to an exemption of Capital 2 requirements for it until 2024 end.

Aristotle Capital shared three key bullish indicators for U.S. Bancorp (NYSE:USB) in its Q4 2023 investor letter:

“Catalysts we have identified for USB, which we believe will cause its stock price to appreciate over our three- to five-year investment horizon, include:

•  Enhanced revenues and cost-savings through expense synergies following the recent acquisition of Union Bank;
•  Continued balanced and relatively low-risk loan growth coupled with deposit share gains in most geographies in which it operates;
•  Improvement in return-on-assets through both efficiency gains and a more robust product offering; and
•  Increased returns to shareholders following a near-term period when, as a result of enhanced regulatory requirements due to higher total assets from the Union Bank acquisition, share buybacks were paused.”