The ratings on U.S. Bancorp reflect its strong profitability, which was maintained over the past six quarters in the face of a challenging economy and sluggishness in the manufacturing base within the footprint of their 24-state banking franchise. Although the slower economy has led to higher net charge-offs (NCOs) and higher NPAs, profitability measures remained strong. Revenue diversification is strong at U.S. Bancorp and has improved in certain nonbank business lines through acquisitions (NOVA and State Street Corporate Trust). Noninterest income is a high component of total revenues at 46%. ROA continues to be among the highest in the large regional bank group, reflecting the company's low cost and abundant retail deposit funding base and extremely good operating efficiency measures.
