Over the last month, U.S. Bancorp's (NYSE: USB) stock has sold off by about 24%, along with the rest of the banking sector, which has been rocked by the collapse of SVB Financial and Signature Bank and broader concerns about potential contagion.

There are certainly reasons to have some worries about the bank. At the end of 2022, U.S. Bancorp was sitting on about $10.9 billion of unrealized losses in its held-to-maturity bond portfolio. If the bank ever had to sell these bonds to cover deposit outflows, it would wipe out a significant amount of U.S. Bancorp's nearly $29.8 billion tangible common equity.

However, I consider this situation quite unlikely. I believe U.S. Bancorp has a broad and diverse deposit base, many attractive business lines, and a history of generating consistently strong earnings, which will allow the bank to weather the challenging environment in the banking sector successfully.

Continue reading

Source Fool.com