Deutsche Bank Downgrades U.S. Bancorp (USB) to Sell
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Deutsche Bank downgrades U.S. Bancorp (NYSE: USB) from Hold to Sell and lowers their price target from $31 to $20, following earnings results, citing higher problem loans at what many consider a more conservative than average bank.
The firm said, "US Bancorp reported 2Q08 EPS of 53 cents or 56 cents excluding securities losses. Reserve builds were 8 cents, so depending on how much of this is included determines proximity to consensus of 59 cents. Nevertheless, the issue is higher problem loans at what many consider a more conservative than average bank, which has potential industry ramifications for regional banks. Problem loans increased by 1/3rd linked (vs. 1/5th increase last quarter) due to a 1/3rd increase in commercial and 1/2 increase in com'l real estate. Loan losses increased by 22 bp to 98 bp (vs. our target of 85 bp), partly due to a noteworthy increase (from both a company and an industry standpoint) of credit card losses from 3.93% to 4.84%."
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