USB US Bancorp

U.S. Bancorp’s (USB) unit, Elan Financial Services, has acquired $700 million in Financial Institution credit card portfolios from FIA Card Services, N.A., a Bank of America Corp.’s (BAC) credit-card unit.

The portfolio acquired by the U.S. Bancorp unit comprises credit card assets of 28 financial institutions and includes small business and consumer cards. Terms of the deal were not disclosed.

Elan Financial Services provides a complete range of processing and payments services, including credit card issuing, prepaid card solutions and ATM and debit card processing. The deal is of strategic importance to both U.S. Bancorp as well as Bank of America. According to management, the portfolio of financial institutions represents a significant opportunity for Elan.

For Bank of America, the deal is part of its effort to reduce non-core assets. In June, Regions Financial Corp. (RF) also acquired a $1 billion portfolio of credit-card loans from FIA.

U.S. Bancorp has a well-balanced business model, with non-interest revenue representing nearly half of its total revenue. Its results have been driven by a combination of acquisitions and organic growth. In recent years, U.S. Bancorp has been an active acquirer on the processing side of the business. The payment business is expected to continue to help maintain growth in an otherwise unfavorable operating environment.

U.S. Bancorp currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. Considering the fundamentals we have a Neutral recommendation on the stock.

 
BANK OF AMER CP (BAC): Free Stock Analysis Report
 
REGIONS FINL CP (RF): Free Stock Analysis Report
 
US BANCORP (USB): Free Stock Analysis Report
 
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