...Standard & Poor's Ratings Services believes that U.S. Bancorp (USB) will continue to outperform its peer group of large regional and large complex banks as a result of a relatively low-risk business mix and growth strategy. However, the severity of the economic cycle as it results in mounting credit costs could weigh on the bank's earnings prospects such that these would not be consistent with the '##+' rating level. The bank's strengths, corroborated by our own and the regulatory stress testing results that showed USB did not need further capital to absorb expected losses under our current assumptions of a stress scenario, should provide an advantage in the competition for depositors and clients. The perception of its strength should be further solidified as USB frees itself of government support. USB's results, although they have deteriorated in the current challenging economic environment (pretax profit margin of 17% for the first quarter) have remained better than peers'. This is largely...
