J.P. Morgan Raises USB Estimates

J.P. Morgan is raising its EPS estimates on U.S. Bancorp USB to $2.10 and $2.58 in 2011 and 2012, respectively, from $2.05 and $2.55. “Our revisions largely reflect faster recovery in deposit service charges, a little faster loan growth, lower loan loss provisions (in 2011), and continued market share gains in mortgage banking,” J.P. Morgan writes. “These are partly offset by a greater decline in net interest margin (5-8 bp per quarter in 2011) from shifts in asset-liability mix to be better positioned for liquidity coverage ratios under Basel 3. “We expect liquidity coverage ratio proposals may change, but they will not be completely eliminated, and therefore USB does need to make some changes. We understand USB is adding some shorter duration, lower yielding securities to improve this profile, but also some Ginnie Maes. See earnings note dated January 25 for more details.” U.S. Bancorp closed Monday at $27.00.