Both U.S. Bancorp and Wells Fargo posted their first-quarter earnings recently, and at least one analyst believes the two banks have more in common than expected.
Ray Merola, a private investor, compared the two banks in an article in Seeking Alpha, saying the two financial institutions have similar fundamentals, business models and management styles.
Despite Wells Fargo (WFC) being much bigger than U.S. Bancorp (USB), Merola says both banks reported modest revenue declines on falling mortgage originations.
U.S Bancorp acknowledged the slowdown by reporting that “new lending activity” totaled $57.3 billion in the first quarter versus $71.5 billion in the previous quarter. However, this 20 percent reduction was concentrated in the commercial side of the business. Mortgage and Retail banking new activity was down but 4 percent.
On the other hand, Wells Fargo reported that mortgage originations were down 13 percent, and new applications were down 8 percent versus linked quarter.
